ANNUAL REPORT

2015

Year Ended March 31,2015

This symbol in the shape of Kansai’s six prefectures is suitable for the new financial group,
leading the Kansai region characterized by a spirit of openness. The vertical lines stretching
upward express the spread of the various networks linking the Kansai area that were createdwith the birth of the new financial group.
The brand color is associated with water, a clear blue that symbolizes the growth potential of
the new financial group and the corporate culture of unrestricted freedom.

Management Principle

Strive to become a financial group that is “relied on the regional
community by providing services tailored to customers’ needs, whilevaluing “broad networks of relationships” and “an enterprising spirit.”

Management Policy

1. Create a “most trusted by customers” financial group which
respects personal relationships and promotes honest andapproachable banking.
2. Create a financial group with a commanding regional presence byresearching and predicting trends to provide advanced, high-quality services.
3. Pursue transparent operations and live up to the trust of theshareholders, while maintaining a competitive edge through strong
financial standing, high profitability and management efficiency.
4. Promote “coexistence with the region” by utilizing industrial,academic and management networks for business matching.
5. Focus on gaining the trust of the community through compliancewith laws and regulations and corporate activities that are considerate of the environment.
6. Provide a workplace for employees of the financial group which
encourages employees to exercise talents and develop skills, with
an emphasis on proactive self improvement, thereby contributing to
the development of upstanding citizens.

CONTENTS
Message from the President …………………………… 2
We strive to become the “No. 1 Reliable Bankfor Regional Communities and Customers”
to realize “Coexistence and Co-prosperity”
with the regional communities. ………………………… 3
Business Strategies of The Senshu Ikeda Bank ……… 5
CSR Activities…………………………………………… 7

Business Overview of Senshu Ikeda Holdings……… 8

Business Overview of The Senshu Ikeda Bank ……… 9
Corporate Governance ………………………………… 11
Compliance Structure …………………………………… 15

1

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2015

Risk Management Structure …………………………… 17
Approach to Facilitation of Financing ………………… 21………………………………… 23
Business Description of the Group …………………… 25
Organization and Board of Directors ………………… 26

Corporate Information

Consolidated Financial Informationof Senshu Ikeda Holdings ……………………………… 29
Non-consolidated Financial Informationof The Senshu Ikeda Bank (Unaudited) ……………… 65

To become the “No. 1 Reliable Bankfor the Regional Communities and Customers”
I sincerely thank you for your continued support and patronage of Senshu Ikeda Holdings Group.
On May 1, 2015 the Senshu Ikeda Bank marked the fifth anniversary of its merger. All the employees and officers of the bank appreciate your support.
With regard to the financial results for the fiscal year ended March 31, 2015, on a Senshu Ikeda Holdings consolidated basis, we recorded net income of ¥17.5 billion, up ¥0.9 billion from the previous fiscal year—a record
high for the second consecutive year including sum of the each former bank prior to the merger.
The balance of deposits at the Senshu Ikeda Bank increased ¥155.2 billion from the previous fiscal year, andthe balance of loans and bills discounted increased ¥71.2 billion mainly for regional small and medium enterprises. Assets under management increased ¥20.9 billion, with steady business performance at both theSenshu Ikeda Bank and Senshu Ikeda Tokai Tokyo Securities.
Senshu Ikeda Holdings announced a long-term capital policy in February 2015 and achieved a capital increase
through a public offering in the amount of ¥21.3 billion in May 2015. By using this capital effectively, we willcontinue to promote financing for regional small and medium enterprises aggressively to contribute to theregional revitalization.
Based on “community-oriented” and “customer-oriented” principles, we will strive to become the “No. 1 Relational Regional Financial Group in the Kansai Area” and “No. 1 Reliable Bank for the Regional Communities andCustomers.”
We look forward to serving you with the best services for many years to come.
July 2015

Hirohisa Fujita
Representative Director and President of Senshu Ikeda Holdings, Inc.
Representative Director and President of the Senshu Ikeda Bank, Ltd.

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 20152

We strive to become the “No. 1 Reliable Bank for Regional
Communities and Customers” to realize “Coexistence
and Co-prosperity” with the regional communities.
Advanced Traffic Network

Sanda
Kyoto

Beijing

Ikeda

SuzhouShanghai
Kobe
Osaka

Sakai

Gateway to Asia and China
Kishiwada

Wakayama~Further Strengthen Relationships with Regional Communities~(organizational change in May 2015)
Strive tobecome theStrengthen
relationships withcustomers

Purpose of theorganizational changeof the CS Headquarters

Planning promotion
at the Headquarters(New) Relationship Promotion Division

Relationship Promotion
Group(Supporting the operationof branches)

Asia andChina Business
Headquarters(Revitalization ofregional communities)
Start-up Supporting Desk

Advanced
Technology
Business Supporting Private Banking
Headquarters
Headquarters

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2015

Virtuous cycle of“Coexistence and Co-prosperity”
with the regional communities
Expand growth power of
Senshu Ikeda Holdings
as a regional financial group

Contribute to theregional revitalization“Kindness and Innovation”(Supporting regional enterprises)

Becoming a distinctive regional
financial group

Regional Revitalization Promotion Office

Branches Supporting OfficeMergerStrengthen
relationships with
regional communities

Enhancement of the strengths of
the Senshu Ikeda Bank

(New) Business Management Division

3

Enhancement of Senshu Ikeda’scontribution to and influence
on regional communities“No. 1 Relational Regional Financial
Group in the Kansai Area”
Practice the “customer-oriented”
principle

Four Government-OrdinanceDesignated CitiesGroup
companies

Other Operation
Headquarters

Expand “Regional Power and Potential”

The business areas we cover are Japan’s leading market area and have an advanced traffic network, twoports in Osaka and Kobe, three airports called “a gateway into Asia and China” and four government-ordinance-designated cities. The number of business offices and population in those areas are comparable withthat of Metropolitan Tokyo.
Furthermore, in addition to the existing well-balanced industrial structure, large-scale projects are currently
under way such as the privatization of SEMBOKU RAPID RAILWAY CO., LTD., the opening of EXPOCITY and
the implementation of the concession for the airport operation of Kansai International Airport. As such, thesemarket areas have extremely high potential power called “Regional Power” and will further grow.
In the above circumstances, to promote our “customer-oriented” principle, the Senshu Ikeda Bank made apartial change to our Head Office in May 2015 to reinforce “relations” with regional communities. Within the
CS Headquarters, we established the Business Management Division and the Relationship Promotion Division. Within the Relationship Promotion Division, the Regional Revitalization Promotion Office was newly
established to nurture “coexistence with the region” further by concluding collaborative agreements on theregion’s revitalization with local municipalities and prefectures and the promotion of industries. Inside theRegional Revitalization Promotion Office, the Start-up Supporting Desk was set up to support entrepreneurs
by helping establish a network of expert organizations to support businesses start-ups and promote collaborations with local government organizations.

Long-Term Capital Policy
Senshu Ikeda Holdings announced a long-term capital policy in February 2015 and procured capital of ¥21.3
billion in May 2015 by issuing new shares of common stock of the Company.

Outline of the Capital Procurement(1) Convert the second-class preferred stock of ¥25.0 billion to Basel III compliant products
Second-class preferred stock
First series of seventh-class preferred stock(corporate bond type)(mandatory convertible shares)
Capital procured: ¥21.3 billion(2) Issued and registered common stock of ¥20.0 billion

Purposes and Aims
Minimum capital procurement to comply with Basel III
Achieve our Long-Term Business Plan

Uses of the Procured Capital
Appropriate all the procured capital of ¥21.3 billion forinvestments in the Senshu Ikeda Bank

Cope with Basel III
Accumulate retained earnings by reducing expenses
for “dividends and subordinated borrowings”
Future capital policy~Strengthen return to shareholders
and management with improving ROE

Promote financing forregional small andmedium enterprises
aggressively

Support new
businesses andstart-ups

Make strategic IT
investments

Shareholder Return Policy
We adopt business performance–based shareholder returns in the fiscal year ending March 31, 2016. We will
strengthen the return of profits to shareholders by using retained earnings.
Performance-based concept
Sustain steadied dividend of ¥15 per share.
Set the base profit at ¥17.5 billion; if consolidated net income exceeds that amount, 30% of the excess shall be returned
to shareholders by paying dividends or acquiring treasury stock, while taking other elements into consideration.
Assess each term with a target shareholder return ratio of 25%–30%, taking into account the market trend and othermatters.

Consideration of an Interim Dividend

Emphasis on a Dialogue with Shareholders

To meet the needs of investors,
we will consider the distribution of interim
dividends.

Hold roundtableconferences withshareholders

Enrich theshareholders’benefit system

Enrich IR activities
for individual
shareholders

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2015

4

Business Strategies of The Senshu Ikeda Bank
We will continue to strive to promote basic business strategies consisting of “improved efficiency strategies,”“alliance strategies” and “growth strategies (the three challenging strategies)” to become the “No. 1 Reliable
Bank for Regional Communities and Customers.”

Improved efficiency Strategies
Achieve merger synergies and strengthening the low-cost system
Realize maximal merger synergies by resolute low-cost operations.
Strengthen the low-cost system through revision of IT investment and framework for administrative consolidation.

Alliance Strategies
As an independent regional bank, we will develop the “unique business networks without conglomerate groups.”(Local governments, domestic and overseas financial institutions, universities and research institutions, government agencies, etc.)
In addition, to meet the various needs of customers, we will utilize these high-quality business networks and offer excellent products and services.

Collaboration with Local Governments
There are 20 municipalities and prefectures with which we
now have collaborative agreements to promote therevitalization of industries and regional communities andenvironmental and energy measures.
Furthermore, in conjunction with these collaborative
agreements, we have established the “Industrial
Promotion Funds” and the “Energy Creation and Energy
Conservation Funds.” We will continue to strive torevitalize regional communities by funding local
customers, developing “regional brands” andcommunicating these brands throughout Japan.

Financial institutions
Japan Bank forInternational Cooperation,
Japanese financial
institutions,and others

International logistics
NIPPON EXPRESS
CO., LTD.,and others

Legal firms,
Accountancy firms,
Consultants

India
State Bankof IndiaFinancial Network
China
Bank of China,
Industrial and Commercial Bankof China Limited,Bank of Communications,UOB

ThailandOverseas insurance
Nippon Export andInvestment Insurance,
Tokio Marine & Nichido
Fire Insurance Co., Ltd.,and others

KASIKORNBANK,UOBIndonesia
BNI,
UOB

Collaborative agreements with Inagawa Chambers of Commerceand Industry, Inagawa Town, January 2015

Trading

Collaboration with Universities

Mitsubishi Corporation,
MITSUI & CO., LTD.

Through efforts such as “Basic Agreements for
Business-Academia Collaboration,” we have enteredpartnerships with a total of 16 leading universities in the
Kansai region.
We will contribute to the development of local
communities through mutual exchange and stronger
business-academia collaboration in various fields
including financial support for university-launched venturecompanies, industries, business-academia research,human resources development, and community building.

Overseas leasing
Leasingcompanies

We are expanding business partnerships with banks in China, South Korea, the ASEAN countries and India. We currently havebusiness partnerships with 11 local banks in 12 countries and regions, forming the largest network among the Kinki regional banks.
We will actively support the Asia and China business of our local customers by expanding business network in Asia.
SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2015

SuzhouRepresentative
OfficeVietnamPhilippines
MetrobankVietcombank,
UOB

Overseas Local Banks

Collaboration with Overseas Banks

5

Experts

South Korea: Korea Exchange Bank
China:
Bank of China, Industrial
and Commercial Bank of
China Limited, Bank ofCommunications, UOB
Hong Kong: UOB
Taiwan:CTBC Bank Co. Ltd.
Vietnam:
Vietcombank, UOB
Myanmar:UOB

Japanese companies
Overseas expansion
Client companies

Thailand:
Malaysia:
Singapore:
Indonesia:
Philippines:
India:KASIKORNBANK,
UOB
UOB
UOB
BNI, UOB
Metrobank
State Bank of India

SENSHU IKEDA HOLDINGS,INC.

Three Challenging Strategies
Asia and China Business Headquarters: Enhance support for the Asia and China businessWe will support the overseas expansion and trade of local customers “enthusiastically,” “widely” and “concretely”
through collaborative networks among trading companies, banks and legal firms.
We will support our customers with useful information and services such as seminars with local governments andchambers of commerce and industry, overseas missions and business meetings with overseas companies.

Advanced Technology Business Supporting Headquarters: Promote industrial-academia-government collaboration and technological support for local companies
We will support growing companies with advanced technologies and contribute to the creation of new industries by means such as utilizing and expanding close
networks between the government, local governments, universities, and public research (support) organizations, etc., operating grant program systems (NewBusiness Grant Program, Consortium-based Research & Development Grant Program) and technology matching to companies applying for our grants while
promoting industry-academia-government collaboration.

Private Banking Headquarters: Promote private banking business
Our experienced “private bankers” provide customers with “custom-made” services to meet their various
needs such as business succession, asset succession, fund management, M&A, loan arrangements, themedical and elderly care business and investment trust agent operations from “professional,” “long-term”
and “diverse” perspectives.

Lease and Credit

Life and Non-life Insurance
Public Assistance Agencies
The Kansai Bureau of Economy, Trade and Industry
National Institute of Advanced Industrial Scienceand Technology
Organization for Small & Medium Enterprises andRegional Innovation, JAPANJapan International Training Cooperation Organization

Mitsubishi UFJ Lease &Finance Company Limited
IBJ Leasing Company, Limited
JCB Co., Ltd.
Visa Inc.

Life Insurance:
Domestically and internationallyNon-life Insurance:
Domestically and internationally

Securities Companies andInvestment Companies
Securities companies
Investment companies:
Domestically and internationallyManagement support,
technology
development support

Product provision(Insurance)

Asset based lending,card, leasing
Product provision(Investment trusts)

Senshu Ikeda
Bank GroupBanks

Total support in alliance
Personnel exchange, personnel training
Investment promotion, coordinated investment

Think Tank
Proposals and consulting

Mitsubishi Research Institute, Inc.
Japan Economic ResearchInstitute Inc.
Mitsubishi UFJ Research andConsulting Co., Ltd.

Responding to sophisticated needs
The business-academia collaboration

Megabanks
Development Bank of Japan Inc.
Japan Bank for International Cooperation
The Shoko Chukin Bank, Ltd.
Other regional banks

Collaboration on environment and energy policies
Collaboration for regional industrial promotion
Experts

Universities
Kyoto University, Osaka University, Kobe University,
Wakayama University, Osaka Prefecture University,
Osaka City University, University of Hyogo,
Kwansei Gakuin University, Konan University, Doshisha University,
Kansai University, Kinki University,
Ryukoku University, Ritsumeikan University,
Osaka Institute of Technology and Setsunan University

Local governments

Lawyers
Accountants
Tax accountants

Osaka Prefecture, Osaka-city, Sakai-city, Mino-city, Itami-city,
Kishiwada-city, Toyonaka-city, Kawanishi-city, Ikeda-city, Suita-city,
Settsu-city, Izumi-city, Kaizuka-city, Izumisano-city, Matsubara-city,
Takarazuka-city, Takaishi-city, Kumatori-town, Inagawa-town andIzumiotsu-city

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2015

6

CSR Activities
Senshu Ikeda Holdings promotes CSR Activities
Based on management principle, we will strive to become “a financial groupthat is relied on the regional customers and the most trusted by the regional communities”.
We will also live up to the expectations of all stakeholders
such as customers, regional communities,
shareholders(investors) and employees through business activities.
We will continue to aggressively promote“permanent” and “in-depth” CSR activities to realize the sustainability of our business.
CSR: Corporate Social Responsibility

Contribute to the economy,
community andenvironment

Hospitality basedon the stageof life

Customers

Management
principle

Regional
communities

To become a financial group that is relied on the regionalcustomers and the most trusted by the regional communities

Live up to the expectations of all stakeholders
through funding regional communities and customers

Shareholders
andinvestors
Sustain steady dividend
Consideration of shareholder
return ratio, etc.

7

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2015

Employees

Improve job satisfaction
Establish ideal working
environments andSupport humanresource development
Work-life balance

SENSHU IKEDA HOLDINGS,INC.

Business Overview of Senshu Ikeda Holdings
Consolidated

Non-consolidated■ Consolidated ordinary income / Consolidated net income (¥ million)■ Consolidated capital ratio (domestic standard)

Consolidated ordinary income

21,34222,000Old standards

Consolidated net income

New standards*

12.00

10.39
20,000

10.49

10.09

17,584

17,551

18,000(%)

16,6048.00

16,00014,00012,8064.00

12,00010,00010,10200March 2013

March 2014

Business Environment

March 2015

The Japanese economy in the consolidated fiscal year under review
showed a moderate recovery trend despite a reactionary decline indemand following the rush in demand before the consumption tax
raise in April 2014. Individual consumption remained solid thanks to
improvement in the employment and income situation, whereas
corporate earnings also showed improvement.
With respect to prices, domestic corporate goods prices showeda gradual increase during the first half, followed by a gradual decline
due to the falling trends in international commodities market, andconsumer prices were level.
In the financial markets, as the monetary base expanded remarkably thanks to the Bank of Japan’s innovative monetary easing, theunsecured overnight call rate stayed below 0.1%. Regarding thelong-term interest rate, a steady supply and demand of bonds
continued with the purchase of a large volume of Japanese government bonds by the Bank of Japan, and U.S. and European long-term
interest rates showed a declining trend. As a result, the rate of returnon 10-year Japanese government bonds dropped to a record low
0.195% in January 2015 and subsequently hovered in the 0.3%–0.4%
range.
The Nikkei Stock Average remained weak until mid-May 2015 but
showed a moderate rise in late May and thereafter, reflecting expectations for new growth strategies by the Japanese government andoptimism based on rising stock prices in the U.S. market, reaching
the 16,000 yen–16,500 yen range at the end of September. Although
the Nikkei Stock Average declined in October due to concern of thedownturn of the world economy, it bounced back sharply with theeffect of additional monetary easing by the Bank of Japan and roseto the 19,500 yen–20,000 yen range at the end of March with theeffects of yen depreciation, the postponement of additional rise in
consumption tax, the recovery of the domestic economy and the
expansion of corporate business performance.

End of March 2013 End of March 2014 End of March 2015

* Calculated in compliance with the new capital ratio regulation (Basel III) from the end of March 2014.

Business PerformanceWith regard to the consolidated performance of Senshu Ikeda
Holdings Group (“the Group”) in the fiscal year under review, consolidated ordinary revenue increased ¥9,469 million from the previous
fiscal year to ¥114,324 million. This was mainly due to an increase ininterest income primarily by an increase in interest and dividends on
securities at the Senshu Ikeda Bank, an increase in fees and commissions income due to increased investment product sales at
Senshu Ikeda Tokai Tokyo Securities and an increase in otheroperating income due to increased gains on sales of debt securities.
Consolidated ordinary expenses increased ¥5,679 million fromthe previous fiscal year to ¥92,982 million. This was mainly due to anincrease in other operating expenses such as a loss on sales of debt
securities despite decreases in interest expenses because of adecline in the deposit rate, general and administrative expenses due
to cost reduction and other expenses such as net credit costs at the
Senshu Ikeda Bank.
As a result, consolidated ordinary income increased ¥3,791
million from the previous fiscal year to ¥21,342 million. Consolidated
net income increased ¥980 million from the previous fiscal year to¥17,584 million—a record high for the second consecutive year.
Although gains on negative goodwill incurred of ¥1,596 million wererecorded as extraordinary income, the ¥2,291 million gain on contribution of securities to the retirement benefit trust recorded as
extraordinary income for fiscal year ended March 2014 did not exist
for the fiscal year under review and ¥4,277 million was recorded as
total income taxes.
The Group’s consolidated capital ratio was 10.09%, which is well
above the 4% level required of banks subject to domestic standards.

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 20158

Business Overview of The Senshu Ikeda Bank
Consolidated■ Consolidated ordinary income / Consolidated net income (¥ million)
Consolidated ordinary income
22,000■ Consolidated capital ratio (domestic standard)

Consolidated net income

Old standards
12.00

20,87210.35

20,00017,57018,000(%)

New standards*
10.96

10.51

17,537

16,6788.00

16,00014,00012,7494.00

12,00010,095
10,0000March 2013

March 2014

End of March 2013 End of March 2014 End of March 2015

March 2015

* Calculated in compliance with the new capital ratio regulation (Basel III) from the end of March 2014.

Non-consolidated■ Banking profit (before provision for general reserve for possible loan losses) (¥ million)■ Ordinary income / Net income(¥ million)

Ordinary income
25,00021,38014,74620,000Net income

17,70318,00015,034

13,517

14,00015,23415,00013,021
10,0008,075

10,000
6,000

5,000

0

0

March 2013

March 2014

March 2015

Business Performance (Consolidated)

With regard to the consolidated performance of theSenshu Ikeda Holdings Group (the “Group”) in the fiscal
year under review, consolidated ordinary revenue
increased ¥8,271 million from the previous fiscal year to¥112,586 million. This was mainly due to an increase ininterest income primarily an increase by an increase ininterest and dividends on securities, in fees andcommissions income due to increased investment
product sales and an increase in other operating income
due to increased gains on sales of debt securities.
Consolidated ordinary expenses increased ¥4,969
million from the previous fiscal year to ¥91,713 million.
This was mainly due to an increase in other operating
expenses such as loss on sales of debt securities
despite decreases in interest expenses because of adecline in the deposit rate, general and administrative
expenses due to cost reduction and other expenses
9

9,492

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2015

March 2013

March 2014

March 2015

such as net credit costs.
As a result, consolidated ordinary income increased¥3,302 million from the previous fiscal year to ¥20,872
million. Consolidated net income increased ¥859 million
from the previous fiscal year to ¥17,537 million—a record
high for the second consecutive fiscal year. Although
gains on negative goodwill incurred of ¥1,596 million
were recorded as extraordinary income, the ¥2,291
million gain on contribution of securities to the retirement
benefit trust recorded as extraordinary income for fiscal
year ended March 2014 did not exist for the fiscal year
under review and ¥4,038 million was recorded as total
income taxes.
The Group’s consolidated capital ratio was 10.51%,
which is well above the 4% level required of banks
subject to domestic standards.

SENSHU IKEDA HOLDINGS,INC.

Non-consolidated■ Non-consolidated capital ratio (domestic standard) (%) ■ Deposits
Old standards(¥ billion)

Individual

New standards*
4,800

12.00

9.91

4,512.8

9.69

9.27

■ Assets under management (¥ billion)
Investment trusts sales, etc.

Corporate

4,772.5

306.1

285.2

300

4,617.3

Senshu Ikeda Tokai Tokyo Securities

255.6

44.3

68.3

240.8

237.8

4,400

8.00
4,000

893.3

954.5

1,028.5

200

3,600
4.00

3,619.5

3,662.8

3,744.0

100

3,200

0

End of March 2013 End of March 2014 End of March 2015

00

* Calculated in compliance with the new capital ratio regulation (Basel III) from the end of March 2014.

■ Loans and bills discounted (¥ billion) ■ Housing loans
Consumer
3,800

Corporate

3,596.7

33.7(¥ billion)

3,680.1

32.2

24.0

1,800

125

1,721.0

1,806.0

1,852.8

Non-consolidated

1,700.3

1,716.6

Ratio

2.50%

2.37%
1.95%

100

1.88%

2.00%

69.6

1.50%

86.1

1,912.8

75

20.3

1,600

2,200

Business rehabilitation subsidiaries

Balance

1,700

3,000

■ Balance and ratio of credits disclosed under
the Financial Revitalization Law(¥ billion)
NPLs ratio

Business rehabilitation subsidiaries

3,617.0

March 2013 March 2014 March 2015

End of March 2013 End of March 2014 End of March 2015

71.1
20.3

13.3

1.00%

50
1,400

1,756.9

1,731.9

1,743.1

65.8

1,500

25

0

0

End of March 2013 End of March 2014 End of March 2015

50.8

56.3

0%

0

End of March 2013 End of March 2014 End of March 2015

Business Performance (Non-consolidated)

With regard to the non-consolidated performance of theSenshu Ikeda Bank in the fiscal year under review,
ordinary revenue was ¥99,739 million. This was mainly
due to increases in interest income, fees andcommissions and gain on sales of debt securities.
Ordinary expenses were ¥82,036 million. This was mainly
due to an increase in loss on sales of debt securities
partially offset by decreases in interest expenses, generaland administrative expenses and net credit costs.
As a result, banking profit (before provision forgeneral reserve for possible loan losses) increased¥2,213 million from the previous fiscal year to ¥15,234
million and ordinary income increased ¥4,186 million to¥17,703 million.
Net income for the fiscal year increased ¥288 million
to ¥15,034 million.

0.50%

End of March 2013 End of March 2014 End of March 2015

The balance of deposits at the end of March 2015
increased ¥155.2 billion from the end of March 2014 to¥4,772.5 billion. Assets under management, including
those at Senshu Ikeda Tokai Tokyo Securities, at the endof March 2015 increased ¥20.9 billion to ¥306.1 billion.
The balance of loans and bills discounted at the endof March 2015 increased ¥71.2 billion from the end of
March 2014 to ¥3,656.0 billion.
The balance of credits disclosed under the Financial
Revitalization Law at the end of March 2015, including
two business rehabilitation subsidiaries, decreased ¥1.5
billion from the end of March 2014 to ¥69.6 billion. As aresult, the non-performing loans (NPLs) ratio at the endof March 2015 declined 0.07% from the end of March2014 to 1.88%.

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201510

Corporate Governance

The Company is a holding company which has subsidiaries such as
the Senshu Ikeda Bank. In light of the public nature of our operation
as a regional financial institutions group, the Company is focused onan adequate development and maintenance of corporate governancestructure, which is one of the crucial management tasks.
Under the policy, the Company aims to be the trustworthy andindispensable institution for all of our stakeholders including customers and employees, as well as shareholders and investors. To thisend, the Company adopts the basic management policies focused oncompliance (with laws and regulations,) risk management and management transparency through emphasizing contribution to theregional communities, and sustaining management soundness andindependence.

Outline of Corporate Governance Structure
The Company has adopted a corporate governance structure forsustainable enhancement of its corporate value through reinforcing
supervision of management by electing the outside directors andcooperating with the Audit & Supervisory Board.
Specifically, directors who are familiar with banking business- involving complex and sophisticated management decisions - supervise business execution of representative directors, while audit &supervisory board members audit business execution of directors
through attendance to important meetings and inspection of critical
documents. The Company reinforces its corporate governancestructure through outside directors and outside audit & supervisoryboard members who possess well-seasoned characters and insights
presenting meetings including the Board of Directors and expressing
their opinions actively.
Furthermore, with the purpose to enhance transparency andobjectivity of management, the Company has established an Advisory
Board as consultative body to the Management Committee, for advice
from outside experts on the issues including critical management
strategies and agenda, latest issues in the financial industry and othermatters concerning general management of the Company.
The Company has concluded a liability limitation agreement withoutside directors and outside audit & supervisory board members to
the effect that their liability for damages set forth in Article 423,
Paragraph 1, of the Companies Act shall be the amount prescribed by
Article 425, Paragraph 1 of said Act, in accordance with the relevant
provisions of the Articles of Incorporation of the Company, as long as
they perform their duties in good faith and without gross negligence.
Corporate governance functions within the Company
The Board of Directors
The Board of Directors that comprises twelve directors (including
two outside directors) is responsible for making decisions on criticalmanagement issues while receiving relevant reports from within thecompany, and supervising the business execution of directors andexecutive officers under the rules of the Board of Directors. The
Board of Directors is held once a month in principle, attended also
by audit & supervisory board members, to make decisions in due
consideration of compliance and risk management.
Meanwhile, to improve the effectiveness of the Board of Directors, as well as to maintain the independence of and enhance thecollaboration with outside directors, the Company established theSecretary Office as of July 1, 2015, to develop the support system
and reinforce dialogues with outside directors.
The Audit & Supervisory Board
The Company has adopted a audit & supervisory board member
system. Under this system, the Company ensures transparency
through appointing two outside audit & supervisory board membersof the four audit & supervisory board members in all. Each audit &supervisory board member audits business execution of directors
through attendance to important meetings including the Board of
Directors and the Management Committee, inspection of critical
documents and other means, according to the auditing guidelines
and audit schedule decided by the Audit & Supervisory Board.
Outside audit & supervisory board members are qualified with high11

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2015

degree of integrity along with superior insight and capability, as well
as expertise and hands-on experience in respective area of specialty, providing advice on management from diversified points ofview.
Management Committee
With the purpose to make more adequate and prompt management
decisions in the execution of company business, the Management
Committee has been established under the Board of Directors,
which makes decisions on critical management matters based on
the authorities delegated from the Board of Directors while receiving
relevant reports from within the company. The Management Committee is held once a week in principle inviting audit & supervisoryboard members, to make decisions in due consideration of compliance and risk management.
Internal control, management and auditing functions
For the purpose of internal control, management and auditing
functions, the Company has established Corporate Planning
Division, General Risk Management Division and Internal Audit
Division.
The Corporate Planning Division is the department responsible
for the coordination of internal control, for the purpose of Companies
Act and Financial Instruments and Exchange Act. The General Risk
Management Division is responsible for compliance managementthat serves as a linchpin for internal management. Measures forcompliance are planned and their implementation status is managed under the compliance program approved by the Board of
Directors. Furthermore, the General Risk Management Division, as
an overall supervisory function of risk management, is responsible
for regular review and reform of the risk management structure,referring to the financial inspection rating system by the Financial
Services Agency.
On the other hand, the Internal Audit Division is responsible forinternal audits of all departments within the Company, according to
the annual audit plan approved by the Board of Directors every
fiscal year, and for the integrated management of the overall internal
audit work across the Group. The Internal Audit Division also audits
the respective subsidiaries on its own or on a joint basis with theinternal audit department of each subsidiary as appropriate, andprovides specific instructions and advice to improve business
operation at each subsidiary.
Accounting auditors
Mr. Kenichiro Arai, Mr. Hirokazu Tanaka and Ms. Mayumi Ikai are thecertified public accountants that conducted the latest accounting
audit of the Company, while accounting auditors that conduct auditsof the Company for the purpose of Companies Act as well as for the
purpose of Financial Instruments and Exchange Act, belong to Ernst& Young ShinNihon LLC. None of them have been engaged in theaudit of the Company for longer than seven years on continuous
basis, hence no statement in respect of the number of continuous
years of service engaged in the audit of the Company.
Assistants for the accounting audit of the Company are sevencertified public accountants and twelve others.
Basic approach to the internal control system and its status ofdevelopment
The Company and the Group companies are developing a structurenecessary to ensure the adequacy of operation based on the following
concepts through aiming to be a financial group which respects
personal relationship, sincerity and friendliness and become the most“trustworthy” for customers.
(1)	Structure to ensure that directors and employees of the Company
and the Group companies execute business in compliance withlaws and regulations as well as with the Articles of Incorporation
The Company and the Group companies focus on compliancewith laws and regulations (hereinafter “compliance”) as one of themost critical management task. The Company and the Group also
set out the code of ethics along with the code of conduct toensure that directors and employees behave in compliance withlaws and regulations as well as social norms, while setting out

SENSHU IKEDA HOLDINGS,INC.

basic rules of compliance under which overall compliancepolicies and specific measures are discussed at the Compliance
Committee.
To ensure the above compliance implementation, the Company and the Group companies appoint directors who areresponsible for compliance. In addition, the General Risk Management Division coordinates compliance arrangement across theCompany and the Group companies, while conducting educationand training for directors and employees by developing compliance program and compliance manual, and arranging complianceseminars.
Furthermore, the Group Compliance Hotline, a whistleblowing
system has been set up and managed to allow directors andemployees of the Company and the Group companies to directly
provide information about questionable conduct in light of laws
and regulations. The hotline system is structured to guarantee thatthe informants who provide such compliance-related information
are protected from being treated in a disadvantageous manner.
Basic rules that directors and employees must abide by are
set out for the prevention of insider trading.
Besides, the Company and the Group companies have taken
uncompromising stance against anti-social forces and organizations that threaten the order and safety of the community, while
making every effort to eliminate their involvement in any trading
activities. The Company and the Group companies have also taken
every measure to eliminate money laundering in consideration of
the possibility that funds transferred via financial institutions could
be used for criminal purposes including terrorism.
Moreover, the Company and the Group companies provide
effective customer management including customer protection,with the purpose to reassure our customers of their security and topromote their convenience in an effort to implement a thorough‘customer first policy.’(2)	Structure for the preservation and management of information
concerning the directors’ business execution
The Company and the Group companies have prepared and kept
documents such as minutes of important meetings including theBoard of Directors and the Management Committee, as records of
directors’ execution of duties.
The Company and the Group companies have also preparedand kept documents and attachment sanctioned by directors as
appropriate.
(3)	Arrangements including rules to manage the risk of potential lossesof the Company and the Group companies
With the purpose of ensuring the soundness of management andstable corporate earnings, the Company and the Group companies have set out basic rules of risk management. The Company
and the Group companies have classified risks into credit risk,
market risk, funding liquidity risk and operational risk, and defined
the department responsible for the management of each categoryof risk, while establishing the Risk Management Committee tomonitor the status of management of each such category.
Meanwhile, the Company and the Group have set out rules ofrisk management, with the purpose to minimize the financial loss
along with loss of confidence resulting from the crisis event, andto ensure business continuity through prompt restoration of normal
operational functions.
(4)	Structure to ensure efficient business execution by directors of theCompany and the Group companies
The Board of Directors sets out the management objectives of theCompany and the Group companies with the purpose of enabling
the directors and employees of the Company and the Group
companies to efficiently execute their business. The Board of
Directors also formulates the Group Management Plan and sets
forth operational plans on a semiannual basis to bring said Plan
into shape.
In addition, the Board of Directors establishes the Management Committee with the purpose of enabling directors toefficiently execute their business. The Management Committee

discusses beforehand the agenda of the Board of Directors tofacilitate the decision-making process at those meetings, while
discussing the critical issues for resolution in implementing thebasic management policies that have been resolved by the Boardof Directors on the basis of such policies.
The Management Committee also defines the headquarters
under the command of each director, along with the authority andresponsibility involved, while developing and maintaining a
structure for efficient business execution by utilizing IT.
(5)	Structure to ensure the adequacy of business operation at theGroup, which comprises the Company and the Group companies
The Company regards the respective Group companies as one
group under the flag of Senshu Ikeda Holdings. Thus eachmember company of the Group runs its operation through developing an adequate internal management structure according to
its scale and nature of operation under the adequate guidance of,and in coordination with the Company.
The Company, as a responsible entity for the administrative
management of the entire Group, has established administrative
management rules targeting its subsidiaries. The Company has
developed a structure in which it receives necessary reports
concerning the business execution of directors and employees
and other relevant matters from and consults on those issues withthe respective Group companies.
(6)	Matters concerning employees who assist audit & supervisoryboard members in the performance of their duties, the independence of those employees from directors, and structure to ensure
the effectiveness of the instructions to such employees
In order to support audit & supervisory board members’ businessexecution, the Company and the Group employ audit & supervisory board members’ staffs as secretariat for the Audit &Supervisory Board. Such audit & supervisory board members’
staff shall receive instructions from the audit & supervisory board
members for their business execution, while their personnel
changes and evaluations shall require an accord of the relevant
audit & supervisory board members to ensure the staff’s independence from directors.
Thus the Company and the Group companies ensure their
independence from directors.
(7)	Structure to facilitate reporting from directors and employees toaudit & supervisory board members and other arrangements toensure that audit & supervisory board members are adequately
informed, as well as the structure to ensure that no disadvantageous treatment is conducted because of having reported to audit& supervisory board members
Directors and employees of the Company and the Group companies shall immediately report to audit & supervisory board
members on matters that could have significant impact on the
Company and the Group companies, or any other matters asnecessary, in addition to matters legally required to be reported.
In addition, the hotline system is structured to guarantee thatthe informants who provide the Group Compliance Hotline withcompliance-related information are protected from being treatedin a disadvantageous manner.
Moreover, to complement this arrangement, the Company and
the Group companies have established a structure whereby audit& supervisory board members are permitted to attend important
meetings such as those of the Board of Directors, the Management Committee, the Compliance Committee, the Risk
Management Committee and the ALM Committee.
(8)	Other structure to ensure that audit & supervisory board members
conduct effective audits
Audit & supervisory board members hold meetings to exchange
opinions with representative directors, internal audit division andaccounting auditors.
Audit & supervisory board members attend important meetings such as the Board of Directors, the Management Committee,
the Compliance Committee, the Risk Management Committee andthe ALM Committee, in an effort to find out various problems theyneed to address in the execution of their duties.
SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201512

Furthermore, audit & supervisory board members shall bepermitted to request posteriori for redemption of the expenses thatthey deem necessary in executing their duties if such expenses
were previously budgeted by them and have been disbursed foran emergency or temporarily.

Status of Internal Audits and Audits by Audit & Supervisory Board Members
Internal audits
The Company has established the Internal Audit Division that
conducts internal audits based on the basic rules of intra-groupaudits, set out to provide objectives and guidelines of internal
audits. The Company develops effective internal audit structure that
has independence and expertise in order to ensure soundness andadequacy of operation. The Company also inspects and evaluates
adequacy and effectiveness of the risk management and internal
control practices, and makes recommendations as appropriate to
the senior management of the Company on ways to improve andrectify questionable areas. Thus the Company’s internal audit
guidelines facilitate effective achievement of management objectives including the improvement of the Group’s internal management
structure and the enhancement of its enterprise value.
The Internal Audit Division of the Company, which comprises
nine members who have been seconded from the banking subsidiary (three full-time members and six members serving concurrently
with other posts; as of March 31, 2015), conducts internal audits ofall departments within the Company according to the annual audit
plan approved by the Board of Directors every fiscal year and is
responsible for the integrated management of the overall internal
audit work across the Group. The Internal Audit Division also audits
the respective subsidiaries on its own or on a joint basis with theinternal audit department of each subsidiary as appropriate andprovides specific instructions and advice to improve business
operation at each subsidiary.
Audits by audit & supervisory board members
Each audit & supervisory board member audits the businessexecution of directors through attendance to important meetings
such as the Board of Directors and the Management Committee, as
well as inspection of critical documents, according to guidelines
such as the “guidelines for audits by audit & supervisory board
members” and the “guidelines for implementing audits of internal
control system,” generally subject to the auditing guidelines andaudit plan decided by the Audit & Supervisory Board, as an independent body mandated by shareholders.
Audit & supervisory board members and accounting auditors
are performing their audit duties efficiently and effectively throughestablishing close mutual cooperation by exchanging opinions
about various auditing issues. In addition, working together withaudit & supervisory board members of banking subsidiary, audit &supervisory board members and internal audit division are also
performing their audit duties efficiently and effectively throughestablishing close mutual cooperation by audit & supervisory board
members’ attendance to internal audits and exchanging opinions
about various auditing issues.
The Company has made every effort for efficient and effective
implementation of all audits including internal divisions, audit &supervisory board members, and accounting auditors through close
cooperation and communication between the departments andfunctions concerned. The Company has also made effort to audit
efficiently and effectively through receiving various reports from theinternal control division.

Outside Directors and Outside Audit & Supervisory Board Members
The Company has two outside directors and two outside audit &supervisory board members. Although we have no specific appointment criteria or policies to evaluate the independence of outside
directors and outside audit & supervisory board members, their
appointment is made in reference to each candidate’s business
relationship with the Company or its subsidiaries, along with the13

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2015

assessment criteria of the independence of independent officers
provided by the Tokyo Stock Exchange and so forth. All four outside
directors and outside audit & supervisory board members are designated as independent officers as they satisfy the requirements of
independence stipulated by the relevant stock exchange and there isno potential conflict of interest with the general shareholders.
Between the outside director Taro Ohashi and the Company or
any of the Group companies, there is no interest in terms of a personalor other interest relationship, except ordinary banking transactions
with The Senshu Ikeda Bank, Ltd. Also, he holds 13,710 shares ofcommon stock of the Company (as of March 31, 2015).
As he has experience in corporate management as a representative director of a listed company, we anticipate that he will sufficiently
perform supervision duties over the business execution of directors.
He also concurrently serves as an outside director of The Senshu
Ikeda Bank.
The outside director Kazuo Hiramatsu serves as a trustee ofKwansei Gakuin. Between he or Kwansei Gakuin and the Company or
any of the Group companies, there is no interest in terms of personal,
capital or other interest relationship, except ordinary banking transactions with The Senshu Ikeda Bank. He also concurrently serves as an
officer at Sumitomo Electric Industries, Ltd., ShinMaywa Industries,
Ltd., and DAIDO LIFE INSURANCE COMPANY. The Senshu Ikeda
Bank has ordinary banking transactions with Sumitomo ElectricIndustries, Ltd.; The Senshu Ikeda Bank, DAIDO LIFE INSURANCECOMPANY, and the Company have a capital relationship; and ShinMaywa Industries, Ltd. and The Senshu Ikeda Bank has ordinarybanking transactions.
As a director of the Company, he performs his duties of auditing
the business execution based on his extensive experience in educational corporations and in business. Also, he concurrently serves as
an outside director of The Senshu Ikeda Bank.
The outside audit & supervisory board member Toshiaki Imanaka
and the Company or any of the Group companies, have no interest interms of personal or other interest relationship, except ordinarybanking transactions with The Senshu Ikeda Bank. He also concurrently serves as a member of the Kansai Law and Patent Office, whichconcludes an advisory contract with The Senshu Ikeda Bank.
He is qualified as an attorney, and is also involved in general
finance and accounting duties as a reorganization trustee, having
accumulated a considerable degree of knowledge in those fields.
Based on such qualification, he sufficiently performs his duties as anaudit & supervisory board member.
The outside audit & supervisory board member Toshiaki Sasaki
serves as the President of Senshu Gakuen. Between he or Senshu
Gakuen, and the Company or any of the Group companies, there is nointerest in terms of personal or other interest relationship, except
ordinary banking transactions with The Senshu Ikeda Bank. Also, heholds 27,960 shares of common stock of the Company (as of March
31, 2015).
He performs his duties as an audit & supervisory board member
based on his wealth of experience and broad insight earned over theyears as an audit & supervisory board member in financial institutions.
The Company has appointed two outside directors out of twelve
directors while two outside audit & supervisory board members out offour. Thus the Company has developed a structure sufficient tocontinuously enhance its enterprise value through such appointmentof outside directors and outside audit & supervisory board members.
Outside directors receive reports about the status of audits byaudit & supervisory board members, internal audits and accounting
audits, as well as the status of internal control from the internal control
division through Board of Directors. On the other hand, outside audit &supervisory board members receive reports from full-time audit &supervisory board members about the status of audits by audit &supervisory board members, internal audits and accounting audits, aswell as the status of internal control from the internal control division.
Both outside directors and outside audit & supervisory board members give recommendations and advice in return for these reports.

SENSHU IKEDA HOLDINGS,INC.

Corporate governance structure of the Group[Senshu Ikeda Holdings](As of the end of July, 2015)

General Meeting of
Shareholders
Appointment/Removal

Accounting Auditors
Accounting audit

Appointment/Removal
Joint coordination
Reporton Audit

Reporton Audit

Board of Directors

Bringing important
issues to meetings/
Reporting on business Appointment/
execution
Supervision

Supervision

Audit & Supervisory Board
Audit

Joint
coordination

Reporton Audit

Representative Directors

Advisory Board

Appointment/RemovalInternal Audit Division

Advice(Risk Management Committee)(Compliance Committee)(ALM Committee)

Bringing discussed
issues to meetings/
ReportingManagement Committee

Directors/Executive Officers
Internal audit

Instruction/
Direction

Personnel andGeneral Affairs DivisionCorporate Planning Division[The Senshu Ikeda Bank]

General Risk Management Division[Senshu Ikeda Tokai Tokyo Securities]
General Meeting of
Shareholders

General Meeting of
Shareholders
Audit & Supervisory Board

Board of Directors

Board of Directors

Management Committee

Audit & Supervisory Board(Risk Management Committee)

Management Committee(Compliance Committee)(Compliance Committee)(ALM Committee)(SMES Supporting Committee)

Branches

Head Office

Branches

Head Office

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201514

Compliance Structure
The Company and the Group sets “compliance” as oneof the most important management priorities. We are coping with it in order to fulfill our social responsibility andpublic duties, and to earn the trust of our customers andregional communities.
The Company has set up a “Compliance Committee”
to deliberate important matters regarding groupcompliance. We have also formed the General Risk
Management Division under the “Chief Compliance
Officer” to manage matters regarding compliance
unitarily.

The General Risk Management Division ensurescompliance by creating, reviewing, and following up the“Compliance Program,” which is a practical plan forreinforcement of compliance, by creating, updating, anddistributing the “Compliance Manual,” which stipulates
basics regarding compliance, and by conducting compliance education activities through various training
programs.
We assign “Compliance Officers” and “ComplianceManagers” to each division and branch in order to implement and penetration of compliance. In addition, weSenshu Ikeda Holdings

Board of Directors and Management Committee
Bringing issues to meetings/Reporting

Instruction

Compliance Committee(Administrative Office: General Risk Management Division)

Chief Compliance Officer(Director in charge of General Risk Management Division)
General Risk Management Division
Consultation /Reporting

Instruction

Compliance Officers in each Division (General Managers)
Compliance Managers (Deputy General Managers)

Consultation /Reporting

Instruction

The Senshu Ikeda Bank, Senshu Ikeda Tokai Tokyo Securities, Shizen Soken
Subsidiaries and affiliates

15

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2015

SENSHU IKEDA HOLDINGS,INC.

check the operations from compliance point of view andfacilitate the conduction of training programs to ensurecompliance.
We also set up and operate a hotline including external contact point in order to find compliance problems inearly stages and take corrective actions.
Compliance has become an increasingly important
issue for financial institutions. The Company and theGroup are committed to strict observance of the Banking
Act, Financial Instruments and Exchange Act, and related
laws and regulations. We also work toward the eliminationof anti-social forces, and strive to strengthen an appropriate protection system for our customers.
We intend to enrich and enhance our compliancestructure through improving various regulations andgiving training to our employees continuously so that customers can deal with us “reliably.”

Code of Ethics
The Group sets up Code of Ethics as follows that our directors and employees mustabide by. The directors and employees will regard the observance of the Code of
Ethics as a fundamental part of routine operations and will conduct fair and honest
corporate activities, while complying with laws and rules strictly to implement theGroup’s management philosophy and policies.
1. Winning the trust from our customers
Taking its social responsibility and public duties into consideration, we will intend
to become the most reliable financial group for the customers through conducting
sound and appropriate operations, including information management and proper
disclosure.
2. Implementing “customer first policy”
We will always consider any matters on customer first basis and will contribute to
the development of the regional economy and community through providing
high-quality financial services that are both original and innovative.
3. Strict compliance
We will strictly comply with all laws and rules, and will conduct fair and honest
corporate activities that are consistent with social code.
4. Respecting human rights and the environment
We will respect personal relationship, characters and personalities of the others,
and conduct environment-friendly corporate activities.
5. Eliminating anti-social forces
We will take an uncompromising stance against anti-social forces and organizations, and resolutely eliminate all undue intervention by such forces andorganizations which threaten the order and safety of the community.

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201516

Risk Management Structuren Basic Approach to Risk Management
While business opportunities for financial institutions
multiply as a result of deregulation, sophistication andglobalization of financial operations, and the significant
development in ICT, the risks that financial institutions
face are becoming more complicated and diverse qualitatively.
Moreover, it has been more important for financial
institutions to monitor, assess and manage risks properly,
and to respond to the changes quickly in the environment in order to earn the stable and continuous profits,
while serving various needs of customers. Under suchcircumstances, the Group regards enhancing andstrengthening risk-management structure as a highpriority management task in order to maintain andenhance the soundness of its business execution.
Specifically, the Group determines the structure andvarious rules regarding risk management and the departments in charge of each risk category at the Board of
Director. The group has also set up the risk management
division to oversee the departments regarding risk management. Furthermore, the Risk Management Committee
and the ALM Committee, consisting principally of management personnel have been established, with the
purpose to identify the risk situation within the Group as
well as its subsidiaries, and to discuss the relevant
agenda and countermeasures which shall subsequently
be reported and further discussed at the Board of Directors. Thus the Group ensures effective risk management
structure at management level.
Meanwhile, as action plans for risk management
based on the Group strategies, basic risk management
principles are set out semi-annually and reviewed continually in order to deal with the risks newly emerging asa result of changes in environment for timely and adequate way.
With the purpose to objectively examine the adequacy and effectiveness of the risk management structure,
the internal audit division which independents from theaudited departments conducts an audit. Thus the Group
ensures appropriate administrative processing andsound business operations through finding out andimproving the matters on risk management.

face. The Company evaluates the risks divided into
categories of credit risk, credit concentration risk
outside the calculation of capital ratio, interest rate risk
in banking accounts, market risk and operational risk,
and compares them with its management strength(capital ratio).
The Group regards development and reinforcement of risk management structure as its crucial
management task. Furthermore, the Group has developed an integrated risk management structure that therisk management division manages all risks in order tocomprehensively identify and appreciate various risks
associated with the Company’s operations by asuniform as possible measurement, and to earn thestable revenue, realize appropriate capital composition and allot management resources properly.
l Risk capital management system
The Group is running its operation based on the risk
capital management system that controls all risks
within certain proportion of capital base, under the
integrated risk management structure.
Specifically, the Company allocates risk capitalsourced from core capital base to credit risk, market
risk and operational risk, based on the calculated risk
amount in each category. The Company has also
monitored risk amount continuously to ensure that it is
kept within the tolerable limit from management pointof view. Thus the Company ensures smooth operations
and management soundness across the Group.

Risk buffer: Provisions against unpredictablerisks and risks associated withaffiliated companies

Risk buffer
Credit Risk
Core
capital baseRisk
capitalto beallotted

Credit Risk
Market Risk
Market Risk
Operational
Risk

n Integrated Risk Managementl Integrated risk management
Integrated risk management refers to the process toadequately manage the risks that financial institutions
17

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2015

Financialresource forallocation

Allocatablerisk capital

Risk capital
to beallocated

Operational
Risk
Risk amountSENSHU IKEDA HOLDINGS,INC.

l Calculation method for capital ratio regulation
In respect to risk asset calculation for the purpose of
the capital ratio regulation, the Group applies thestandard method for credit risk and the gross profit
allocation method for operational risk.

n Credit Risk Management
Credit risk, as identified by the Group, is the risk of
suffering losses as a result of a decline or loss of thevalue of assets due to reasons such as the deteriorating
financial conditions of or default by the obligor.
The Group has set up “Credit Policy” in the banking
subsidiary that clarifies its policy for extending credit,
based on its management policy in order to maintain andenhance the soundness of its business execution.
Under this policy, the responsible division for the
management of credit risk, the Risk Management Division at banking subsidiary, in accordance with the
management methods stipulated in the Credit Management Regulations, administers finely-tuned responses torisks for the purpose of building up an optimum portfolio.
Specifically, the division analyzes and manages thecredit portfolio from various aspects including credit
concentration risk, type of business, borrower classification and credit ratings.
As for the credit analysis and management of eachloan at the banking subsidiary, the Group makes efforts
to ensure the independence of the audit division (Loan
Division and Solutions Division) from the business promotion division. The Board of Directors and otherappropriate body review each loan for large obligor aswell as the credit policy. Thus the Group has focused on
the development and improvement of its credit analysis
system. Meanwhile, Loan Business Division establishedwithin the Loan Headquarters, is managing housing
loans receivable.
The banking subsidiary has also established theInternal Audit Division, to manage auditing of the selfassessment of assets, in order to maintain and enhance
the soundness of its asset base.

n Market Risk Management
Market risk, as identified by the Group, points to “marketrisk” and “market liquidity risk.” Market risk is the risk of
suffering losses through changes in the prices of assets
and liabilities held by the Group due to the fluctuations ofmarket risk factors, such as interest rates, prices of secu-

rities, foreign exchange rates and so on. Market liquidity
risk is the risk of suffering losses arising from the inability
to execute sufficient transactions under appropriate
conditions, due to market confusion or an insufficient
trading base. The Group has established the Risk Management Committee and the ALM Committee, consisting
principally of management personnel, and discussed appropriate and timely measures to address the risks inorder to earn the stable and continuous profit throughmanaging its assets and liabilities in a comprehensiveway.

n Funding Liquidity Risk Management
Funding liquidity risk, as identified by the Group, is therisk of suffering funding difficulties from being unable toraise necessary funds due to market conditions or deterioration in the Group’s financial condition, as well as therisk of suffering losses from being forced to raise funds
at higher interest rates than usual.
The Group takes control of its funding situation
through careful monitoring of the fund management andfundraising. The Group also ensures liquidation of its
assets and diversifies the sources of fundraising. Thus
the Group has taken every possible measure to manage
funding liquidity risk.

n Operational Risk Management
Operational risk, as identified by the Group, is the risk of
suffering losses from the inappropriate business activityof the Group - including its employees-, systems, orexternal premises.
The Group has set a rule for operational risk management and classified the risks into the six categories asfollows; (1) administrative risk, (2) information asset(system) risk, (3) tangible fixed asset risk, (4) personnel
risk, (5) legal risk, and (6) reputation risk.
Furthermore, the Group identifies and evaluates all
risks associated with new products and services before
they are actually developed and provided, for the purpose of adequate risk management. Besides, the Groupmanages customer information sufficiently and ensuresmanagement soundness when outsources certain business operation.
l Administrative risk management
Administrative risk, as identified by the Group, is therisk of suffering losses from administration, fraud,
SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201518

accidents and other risks that the Group’s operations
will not be carried out as intended.
The Group prescribes detailed rules on administrative procedures and strives to prevent accidents
through doing the administration promptly and accurately, so that the customer can enter into transactions
with the Group without any concern. Meanwhile, theGroup makes every effort to eliminate administrativerisk by measures such as review of the administrative
procedure from identification of potential risks throughthe analysis of administrative processes.
l Information asset (system) risk management
Information asset (system) risk, as identified by theGroup, is the risk of suffering losses due to loss, alteration, unauthorized use, leakage of information, as wellas to system defects caused by natural disasters or
breakdowns.
In consideration of the fact that its business operations are supported by various computer systems, theGroup ensures the reliability and security of systems
and has established back-up systems and structuresin case of emergency.
The Group is also working to establish appropriate
operation and management systems to prevent theleakage of information and unauthorized access to its
systems through encoding of data and strengtheningof access authority management.
l Tangible fixed asset risk
Tangible fixed asset risk, as identified by the Group, isthe risk of suffering losses associated with damage ofbuilding and equipment or deterioration of working
environment as a result of disasters or poor asset management.
The Group is preparing for disaster through conducting quake resistance tests and implementing
countermeasures against power failures in order toensure business continuity in the event of emergencies.
l Personnel risk
Personnel risk, as identified by the Group, is the risk of
suffering losses associated with the delay of failing insuccession of expertise within the Group, as a result ofdrain or loss of key staff, or degradation of morale.
The Group is striving to develop working environment to enable each employee to fully exert ability,
while helping him or her to improve their skills.
19

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2015l Legal risk management
Legal risk, as identified by the Group, is the risk of
suffering losses from violations of laws and regulations,as well as inappropriate responses to changes invarious systems.
The Group strives to prevent the occurrence oflegal risk and to reduce the risk itself. To this end, theGroup has established the General Risk Management
Division to collect information concerning legal matters, and to manage legal risk identified from suchinformation, as well as appropriately responds to thelegal risk.
l Reputation risk management
Reputation risk, as identified by the Group, is the riskof suffering losses arising from deterioration of theGroup’s reputation due to circulation of unfounded
rumors or due to inadequate responses of the Group
concerning the facts.
The Group works to avoid reputation risk by disclosing information proactively thorough increases thetransparency of its management, taking into consideration the crucial influence on the management of theGroup.

n Crisis Management
The Group has established the “Crisis Management
Rules,” which set out the basic policies in responding toemergencies including large-scale disasters and system
failures. In the event of large-scale crisis, the Group sets
up a “Crisis Management Headquarters” take charge ofcompany-wide response. Specific action programs are
set out in a “Contingency Plan,” with the purpose toensure safety of customers and employees, as well as
set up business continuity structure of the financial
system.

SENSHU IKEDA HOLDINGS,INC.

The risk management structure of the Group(As of the end of July, 2015)

Senshu Ikeda Holdings
Board of Directors

Audit & Supervisory Board
Crisis Management Headquarters

Management Committee

Supervising
division

Type of risks

Responsible
divisions

ALM Committee

Risk Management Committee

General Risk Management Division

Credit Risk Market Risk

Funding
Liquidity
Risk

Operational Risk
Administrative
Risk

Information
Asset(system) Risk

General Risk Management Division

Divisions in chargeof operating
and managing

Personnel
Risk

Legal Risk

Reputation
Risk

Personnel and General
Affairs Division

General Risk
Management DivisionCorporate Planning
Division

Tangible Fixed
Asset Risk

Internal Audit Division

Committee

Banking subsidiary and outsiders

Direction of basic policies, etc.

Administration and management

Reporting on status of risk management

Consultation on risk management

The Senshu Ikeda Bank
Audit & Supervisory Board

Board of Directors

Crisis Management Headquarters
Management Committee

Supervising
division

Type of risks

Responsible
divisions
Divisions in chargeof operating
and managing

ALM Committee

Risk Management Committee

Risk Management Division

Credit Risk Market Risk

Funding
Liquidity
Risk

Risk Management Division

Operational Risk
Information
Asset(system) Risk

Tangible Fixed
Asset Risk

Personnel
Risk

Legal Risk

Reputation
Risk

Operations Management
Division

General Affairs
Division

Personnel Affairs
Division

Risk
Management
Division

Corporate
Planning Division

Administrative
Risk

Internal Audit Division

Committee

Each division of Headquarters, each branch, affiliates and outsiders

Senshu Ikeda Tokai Tokyo Securities

Shizen Soken

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201520

Approach to Facilitation of Financing
The Senshu Ikeda Bank (hereinafter the “Bank”) is focused on providing adequate and sufficient financial
intermediary function to customers in need of businessloans or housing loans, as one of the crucial management priorities. The Bank has formulated basic policy forfacilitation of financing (hereinafter the “Policy”) in orderto promote facilitation of financing to those in needparticularly under the current tight economic environment.
The Bank intends to communicate with our customers
and promote facilitation of financing positively.

l Organizational structure(1)	With the purpose to develop a management structurenecessary to supply facilitation of financing (hereinafter “Facilitation of Financing Management”) under the
Policy, the Bank appoints the Facilitation of Financing
Manager to check whether Facilitation of Financing
Management is effectively working.
(2)	The Facilitation of Financing Manager will engage inthe development and reinforcement of the structure
for Facilitation of Financing Management throughchecking the progress in respect of Facilitation of
Financing Management.
(3)	The Bank appoints the director in charge of the Loan
Headquarters to the Facilitation of Financing Manager. The Manager coordinates the overall businessin respect of Facilitation of Financing Management
such as instructions to the division responsible for

Facilitation of Financing Management, and drawing
up of the rules governing facilitation of financing, withthe purpose to ensure adequacy, sufficiency andeffectiveness of Facilitation of Financing Management.
(4)	The Solutions Division is responsible for Facilitation of
Financing Management. The Solutions Division engages in the adequate operation, examination andimprovement of Facilitation of Financing Management
under the command of the Facilitation of Financing
Manager through gathering information necessary for
Facilitation of Financing Management.

System for accepting consultation of facilitation of financing

The Senshu Ikeda Bank
[Headquarters][Branches]
Facilitation of Financing Manager
Consultation,
application andcomplaints

Reporting andconsultation

Development and reinforcement of the supervising structure

Facilitation of Financing Officer

Divisions managing Facilitation of Financing

Over-the-counter Consultation Service
Coordination[Consultation Service over holidays]

Sincere andadequate
respondence

Customers

Over-the-counter Consultation Service

Support andinstruction

Toll-free Consultation Service

Reporting

Divisions associated with Facilitation of Financing
Smooth financing
Appropriate explanations to customers
Dealing with complaints and consultations appropriately
Support in improving management
Support in restructuring
Personnel training
Analysis and improvement of management structureManagement
Committee
Instructions
SMES
Supporting
Committee[Consultation Service]Consultation, application and complaints

Toll-free Consultation Service
Repayment Consultation Approach

Sincere and adequate respondence

Coordination
Businesstransactions, etc.

21

Board
of
Directors

Facilitation of Financing Manager

Credit Guarantee Corporation, Enterprise
Turnaround Initiative Corporation of Japan,
Japan Housing Finance Agency and other financial institutions

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2015

Contact for opinions and requests(complaints) concerning facilitationof financing <Toll-free>

Reporting

Audit &
Supervisory
Board

Disclosure

ReportingPublicAuthorities

SENSHU IKEDA HOLDINGS,INC.

l Basic Policies(1)	On receiving consultations or applications for newloans, or changes in loan terms from customers, theBank intends to make sincere effort to conduct adequate and prompt credit screening throughconsidering customers’ recent financial results,
assets and income as well as future potential andprospect. The Bank also deals with the applications
for new loans, after changes in loan terms in a similar
way as referred to above.
(2)	The Bank intends to make efforts to supply funds(including new credit granting) smoothly as well as tomake changes in loan terms by monitoring the conditions of the customers carefully and fully coordinatingwith other related financial institutions including otherbusiness categories.
(3)	Additionally, keeping in mind the purpose of the provisions of Article 64 of the Act on Regional Economy
Vitalization Corporation of Japan (Law No. 63, 2009)(*), the Bank intends to appropriately and proactively
engage in the vitalization of the regional economy
and the facilitation of regional financing.
(Note) The provision sets forth, “The Corporation andfinancial institutions, when providing support
to business activities that contribute to thebusiness rehabilitation of business operatorsand the vitalization of the regional economy,
shall strive to mutually cooperate with eachother in order to vitalize the regional economy
and facilitate regional financing through theenhancement of overall economic capabilitiesof the region.”(4)	Consequently, the Bank intends to provide maximum

support to the business improvement efforts of its
customers not only through its role as a provider offinancing but also through various customer services
including business consultation and guidance.
(5)	Furthermore, keeping in mind the purpose of the“Guidelines on Proprietor Guarantees” (Study Groupon Guidelines on Proprietor Guarantees, December
5, 2013; hereinafter “Guidelines on Proprietor
Guarantees”), the Bank intends to further promoteloans that are not dependent on proprietor
guarantees, while at the same time making efforts todeal with its customers based on the concept ofreasonable guarantee contracts as set forth in the“Guidelines on Proprietor Guarantees.”(6)	On receiving consultations or applications for newloans, or changes in loan terms from customers, theBank intends to provide sufficient explanation in orderto gain customers’ understanding and satisfaction, on
the basis of past trading records, customers’
knowledge, experience and assets situation. If the
Bank has to decline customers’ application, we will
explain the reason background of the decision as
concretely and courteously as possible.
(7)	The Bank intends to improve capability of directors
and employees about facilitation of financing bygiving internal training, to enable them to makeappropriate decisions based on good understandingof customers' situations.
(8)	The Bank intends to respond to any comments,
requests, consultations and complaints from
customers in respect of facilitation of financing
promptly and sincerely.

l Policies for handling of application for loans from small and medium enterprises and sole proprietors(1)	On receiving applications for changes in businessterms such as loan terms from small and medium
enterprises and sole proprietors, the Bank intends toaccommodate such application and offer adequatechanges in terms adequately as far as possible,
taking into consideration of the specialty and thecircumstance of customers’ businesses.
(2)	The Bank intends to provide small and medium
enterprises and sole proprietors with management
consultation, guidance and other adequate assistance in support of their effort for management
improvement, taking into consideration the operational circumstance of customers.
(3)	In the cases that customers borrow from other financial institutions as well as the Bank, we will, uponcustomers’ approval, strive to make arrangements incoordination with the other financial institutions inorder to help to reduce the burden of repayment.
(4)	On receiving request for the corporate rehabilitation
procedure through Alternative Dispute Resolution(ADR) for corporate rehabilitation (*) or Enterprise
Turnaround Initiative Corporation of Japan, the Bank
makes utmost effort to respond adequately to such
request as far as possible, in full consideration of theprospect of improvement or rehabilitation of thebusiness.
(Note) This refers to certified dispute resolution procedure set out in Article 2, Paragraph 25 of the
Law on Special Measures for Industrial
Revitalization, in which a private third party
organization formulates a rehabilitation plan,
as coordinator of the interests of creditors.

l Policies for handling of application for housing loan(1)	On receiving applications for new loans or changes inhousing loan terms from housing loan customers, theBank intends to accommodate such application andoffer adequate new loans or changes in terms adequately as far as possible, taking into considerationof circumstances including customers’ assets andincome and transactions with other financial institu-

tions.
(2)	In the cases that customers have transaction withother financial institutions as well as the Bank or withJapan Housing Finance Agency, we will, upon customers’ approval, strive to make arrangements incoordination with the other financial institutions inorder to help to reduce the burden of repayment.
SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201522

Corporate Information
Corporate Data (As of the end of March 2015)
Senshu Ikeda Holdings, Inc.
Establishment: October 1, 2009
Location:18-14 Chayamachi, Kita-ku, Osaka-City, Osaka 530-0013, Japan
Phone:
81-(0)6-4802-0181
URL:
http://www.senshuikeda-hd.co.jp
Share Capital:¥79.8 billion (As of the end of July, 2015 ¥102.9 billion)
Business Activities: Management and other related operations of banks and affiliates
whose shares can be held in accordance with the Banking Act
and other related operations.
Number of Employees: 86
Stock Listing:Tokyo Stock Exchange

The Senshu Ikeda Bank, Ltd.
Establishment: September 1, 1951
18-14 Chayamachi, Kita-ku, Osaka-City, Osaka 530-0013, Japan
Location:
Phone:
81-(0)6-6375-1005
URL:
http://www.sihd-bk.jp
Share Capital:¥50.7 billion (As of the end of July, 2015 ¥61.3 billion)
Deposits:¥4.7725 trillion
Loans:¥3.6560 trillion
Number of Branches: 139
Number of Employees: 2,512

Asia and China Business Promotion Division Financial Market Division:(International Division)Suzhou Representative Office:Phone:
81-(0)6-6375-3484
Facsimile :81-(0)6-6375-3492
SWIFT Address : BIKEJPJS

399 East Baodai Road,
Wuzhong District, Suzhou,
Jiangsu, China
Phone:
86-(0)512-6585-1791
Facsimile :86-(0)512-6585-2312

Phone:
Facsimile :81-(0)6-6375-3879
81-(0)6-6375-3998

Senshu Ikeda Tokai Tokyo Securities Co.,Ltd.
Establishment: January 30, 2013
Location:18-14 Chayamachi, Kita-ku, Osaka-City, Osaka 530-0013, Japan
Phone:
81-(0)6-6485-0031
URL:
http://www.sittsec.co.jp
Share Capital:¥1.25 billion
Number of Branches: 3
Number of Employees: 78

23

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2015

SENSHU IKEDA HOLDINGS,INC.

Major Shareholders (As of March 31, 2015)
1. Common stock
Name

Number of Shares Owned (Thousands)

Japan Trustee Services Bank, Ltd. (Trust Account) *1

Proportion of Total Shares (%)

50,87621.33

11,8694.97

10,925

4.58

The Senshu Ikeda Bank Employees’ Shareholders Association

5,285

2.21

Mizuho Bank, Ltd.

4,192

1.75

The Bank of Tokyo-Mitsubishi UFJ, Ltd.
The Master Trust Bank of Japan, Ltd. (Trust Account)*1

Japan Trustee Services Bank, Ltd.(Trust Account 9G) .

4,040

1.69

Mizuho Securities Co., Ltd.

3,705

1.55

ITAMI SANGYO CO., LTD.

3,692

1.54

3,318

1.39

2,377

0.99

*1

OBAYASHI CORPORATION
Japan Trustee Services Bank, Ltd.(Trust Account 4G)*1*1: These shares do not disclose the names of beneficiaries.

2. Second-class preferred stock
Name

Number of Shares Owned (Thousands)

Proportion of Total Shares (%)

OC FINANCE CORPORATION

6,475

28.00

Daikin Industries, Ltd.

4,625

20.00

Fukoku Mutual Life Insurance Company

1,850

8.00

ITAMI SANGYO CO., LTD.

1,850

8.00

NICHIA STEEL WORKS, LTD.

1,850

8.00

ROHTO Pharmaceutical Co., Ltd.

1,850

8.00

DAINIHON JOCHUGIKU CO., LTD.

925

4.00

Hankyu Hanshin Holdings, Inc.

925

4.00

T.T CO., LTD.

925

4.00

Non-Destructive Inspection Company Limited.

925

4.00

Shionogi & Co., Ltd.

462

2.00

Nippon Paper Core Industrial Co., Ltd.

462

2.00

Number of Shares Owned (Thousands)

Proportion of Total Shares (%)

3. Third-class preferred stock
Name

Development Bank of Japan Inc.

1,500

20.00

Aozora Bank, Ltd.

1,500

20.00

DAIDO LIFE INSURANCE COMPANY

1,500

20.00

ITAMI SANGYO CO., LTD.

500

6.67

NEC Capital Solutions Limited

500

6.67

IBJ Leasing Company, Limited

500

6.67

SHIMA SEIKI MFG., LTD.

500

6.67

Sky Co., LTD.

250

3.33

Nankai Electric Railway Co.,Ltd.

250

3.33

Nihon Kolmar Co.,Ltd.

250

3.33

Fuyo General Lease Co.,Ltd.

250

3.33

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201524

Business Description of the Groupn Organizational Chart of the Group (As of the end of July, 2015)
The Senshu Ikeda Bank, Ltd.

Sub-branches: 5
Banking services

Representative offices: 2● Senshu Ikeda Turnaround Partners Co., Ltd.
● Senshu Ikeda Corporate Partners Co., Ltd.
● Senshu Ikeda Lease Co., Ltd.

Leasing services● Sengin General Leasing Company Limited● Senshu Ikeda Guarantee Co., Ltd.

Credit guarantee services● Kinki Credit Guarantee Company Limited● Senshu Ikeda JCB Co., Ltd.

Credit card services● Senshu Ikeda DC Co., Ltd.
● Senshu Ikeda VC Co., Ltd.
● Senshu Ikeda Capital Co., Ltd.
● Senshu Ikeda Business Service Company Limited● Senshu Ikeda Office Service Co., Ltd.
● S.I.M.S. Co., Ltd.
● Senshu Ikeda System Co., Ltd.
● Senshu Ikeda Investment Management Co., Ltd.

Other services

Bank Computer Service Corporation(Note:● indicates consolidated subsidiaries and○ indicates equity-method affiliates)

Station Network Kansai Co., Ltd.
● Investment enterprise partnerships: 12

Securities services

Head Office and branches: 3

Other services

Shizen Soken Co.,Ltd.

●

Senshu Ikeda Tokai Tokyo
Securities Co.,Ltd.

●

Senshu Ikeda Holdings, Inc.

Head office and branches: 134

n Subsidiaries and Affiliates (As of the end of July, 2015)

Affiliates

Subsidiaries

Name

25

Address

Major Business

The Senshu Ikeda Bank, Ltd.
18-14, Chayamachi, Kita-ku, Osaka-city Banking services
Senshu Ikeda Tokai Tokyo
18-14, Chayamachi, Kita-ku, Osaka-city Securities services
Securities Co.,Ltd.
Senshu Ikeda Turnaround Partners 18-14, Chayamachi, Kita-ku, Osaka-city Banking services
Co., Ltd.
(Business rehabilitation services)
Senshu Ikeda Corporate Partners
18-14, Chayamachi, Kita-ku, Osaka-city Banking services
Co., Ltd.
(Business rehabilitation services)
Senshu Ikeda Lease Co., Ltd.
3-1-22, Toyosaki, Kita-ku, Osaka-city Leasing services
Sengin General Leasing Company Limited 27-1, Miyamotocho, Kishiwada-city
Leasing services
Senshu Ikeda Guarantee Co., Ltd.
2-1-11, Jonan, Ikeda-city
Credit guarantee services
Kinki Credit Guarantee Company
2-1-1, Nishiki, Kaizuka-city
Credit guarantee services
LimitedSenshu Ikeda JCB Co., Ltd.
8-10, Kurehacho, Ikeda-city
Credit card services
Senshu Ikeda DC Co., Ltd.
8-10, Kurehacho, Ikeda-city
Credit card services
Senshu Ikeda VC Co., Ltd.
8-10, Kurehacho, Ikeda-city
Credit card services
Senshu Ikeda Capital Co., Ltd.
18-14, Chayamachi, Kita-ku, Osaka-city Venture capital services
18-14, Chayamachi, Kita-ku, Osaka-city Back-office administration
Senshu Ikeda Business Service
Company Limited
Senshu Ikeda Office Service Co., Ltd. 2-1-11, Jonan, Ikeda-city
Personnel services
S.I.M.S. Co., Ltd.
6-2-5-301, Minoh, Minoh-city
Appraisal of real-estate collateraland real-estate research services
Senshu Ikeda System Co., Ltd.
18-14, Chayamachi, Kita-ku, Osaka-city Computer software development
and sale services
Senshu Ikeda Investment Manage- 3-1-22, Toyosaki, Kita-ku, Osaka-city Investment advisory and discrement Co., Ltd.
tionary investment services
Shizen Soken Co., Ltd.
2-1-11, Jonan, Ikeda-city
Information offering services
Bank Computer Service Corporation 1-5, Rinku Oraikita, Izumisano-city
Development and sale of computer programs used for
operations at financial institutions
Station Network Kansai Co., Ltd.
1-4-8, Shibata, Kita-ku, Osaka-city
Planning and operation of ATM at station

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2015

Date ofestablishment

Share Capital Investment ratio (%)(millions of
Subsidiaries
Japanese yen) The Company and affiliates

September 1, 1951
January 30, 2013

61,3851,250

100.0060.00––

January 4, 2013100–

100.00January 4, 2013100–

100.00April 1, 1986
October 23, 1985
July 20, 1973
April 1, 1975

50
120
180
100

–
–
–
–

95.00
100.00100.00100.00February 1, 1983
September 5, 1990
November 2, 1990
March 6, 1989
April 1, 1983

60
30
40
90
30

–
–
–
–
–

100.00100.00100.00100.00100.00July 11, 1988
October 28, 1991

20
20

–
–

100.00100.00June 10, 1985

50

–

98.00

April 1, 1987

120–

100.00November 1, 1996
December 27, 2000

80
400

15.00
–

–
45.00

June 29, 2000

100

–

40.00

SENSHU IKEDA HOLDINGS,INC.

Organization and Board of Directors
Senshu Ikeda Holdingsn Organization (As of the end of July, 2015)
Advisory Board(Note)

Management Committee

Accounting Office

PR & IR OfficeInnovation Promotion Office

ALM Committee

Compliance Committee

Risk Management Committee

Personnel and General Affairs Division

Audit & Supervisory Board Members Office

Audit & Supervisory Board Members Audit & Supervisory Board

Board of Directors

General Meeting of Shareholders

Corporate Planning Division(Note) The Advisory Board was established as aconsultative body for Management Committee toseek external advice from experts and specialists inacademic circle and various fields. The Company
intends to enhance corporate governance throughthe transparent management while developing deep
relationship with local communities.

General Risk Management Division

Members: (In the order of the Japanese syllabary)·Noriyuki Inoue(Chairman of the Board of Daikin Industries, Ltd.)·Masahiro Shima(President of SHIMA SEIKI Mfg., Ltd.)·Motohiro Sugai(Former president of Hankyu Corporation)·Hidenobu Hiraoka(Chairman of the Board of Trustee of Seifu Gakuen Junior and Senior High School)·Makoto Yamanaka(Chairman of Nankai Electric Railway Co., Ltd.)Internal Audit Division

Secretary Officen Board of Directors (As of June 26, 2015)
Representative Director
and President

Hirohisa Fujita

Director

Akira Tahara

Director

Hiro Maeno

Audit & Supervisory
Board Member(Full-time)

Kazuhiro Masao

Representative Director
and Chairman

Kazuyuki Kataoka

Director

Atsushi Ukawa

Director

Koji Miyata

Takashi Nishi

Representative
Director

Hiroshi Kubota

Director

Motoshi Inoue

Director(Outside)

Taro Ohashi

Representative
Director

Jiro Tsuji

Director

Hirotsugu Maekawa

Director(Outside)Kazuo Hiramatsu

Audit & Supervisory
Board Member(Full-time)
Audit & Supervisory
Board Member(Outside)
Audit & Supervisory
Board Member(Outside)

Toshiaki Imanaka
Toshiaki Sasaki

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2015

26

The Senshu Ikeda Bankn Organization (As of the end of July, 2015)
Corporate Planning Division
Personnel Affairs Division
Career Development Supporting Office
Diversity Promotion Office
Health Promotion Office
General Affairs Division

Management Committee

Suzhou Representative Office
Risk Management Division
Compliance Management Office
Operations and System Headquarters

Operations Management Division
Operating Center
Risk Products Operations Office

ALM Committee

Regional Headquarters

SMEs Supporting Committee

Compliance Committee

Risk Management Committee

Branches (including Sub-branches): 139

Audit & Supervisory Board Members Office

Audit & Supervisory Board Members Audit & Supervisory Board

Board of Directors

General Meeting of Shareholders

Tokyo Office

CS Headquarters

Business Management Division
Branches Supporting Office
Securities and Insurance Business Promotion Office
Personal Loan Promotion Office
Relationship Promotion Division
Regional Revitalization Promotion Office
Customer Center

Asia and China Business Headquarters

Asia and China Business Promotion Division

Advanced Technology Business Supporting Headquarters

Advanced Technology Business Supporting DivisionInternational Division

Private Banking Headquarters

Private Banking Division

Financial Market Headquarters

Financial Market Division

Loan Headquarters

Loan DivisionMarket Operations Office

Solutions Division
Loan Business DivisionInternal Audit Division
Secretary Officen Board of Directors (As of June 26, 2015)27

Representative Director
and President

Hirohisa Fujita

Managing
Director

Akira Tahara

Director

Hiro Maeno

Representative Director
and Chairman

Kazuyuki Kataoka

Managing
Director

Atsushi Ukawa

Director

Koji Miyata

Representative Senior
Managing Director

Hiroshi Kubota

Managing
Director

Motoshi Inoue

Director(Outside)

Taro Ohashi

Representative Senior
Managing Director

Jiro Tsuji

Director

Hirotsugu Maekawa

Director(Outside)Kazuo Hiramatsu

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2015

Audit & Supervisory
Board Member(Full-time)
Audit & Supervisory
Board Member(Full-time)

Hiroaki Kobayashi

Audit & Supervisory
Board Member(Outside)
Audit & Supervisory
Board Member(Outside)

Tsuneo Yamada

Satoshi Kitagawa

Hideki Fukuda

SENSHU IKEDA HOLDINGS,INC.

Deputy General Manager, Business Headquarters

General Manager, Business Headquarters

Representative Director and Vice President

Representative Director and President
Compliance Committee

Audit & Supervisory Board Members Audit & Supervisory Board

Management Committee

Board of Directors

General Meeting of Shareholders

Senshu Ikeda Tokai Tokyo Securitiesn Organization (As of the end of July, 2015)
BranchBusiness Management Division

Product Management Division

Planning and General Affairs Division

Business Compliance DivisionInternal Audit Divisionn Board of Directors (As of June 26, 2015)
Representative
Director andPresident
Representative
Director andVice PresidentManaging
Director

Yasuo Kitamura
Hiromi Tajima
Mamoru Kudo

Audit & Supervisory
Board Member(Full-time)
Audit & Supervisory
Board Member(Outside)
Audit & Supervisory
Board Member(Outside)

Yutaka Sakato
Kazuhiro Masao
Hiroichi Wakita

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201528

Consolidated Financial Information of Senshu Ikeda Holdings
Consolidated Balance Sheets
Senshu Ikeda Holdings, Inc. and Consolidated Subsidiaries
As of 31st March, 2015 and 2014

AssetsCash and due from banks (Notes 27 and 33)
Call loans and bills bought (Note 33)
Monetary claims bought (Note 33)
Trading account securities (Notes 4 and 33)
Money held in trust (Notes 6 and 33)
Securities (Notes 5, 7, 12, 20 and 33)
Loans and bills discounted (Notes 8, 12 and 33)
Foreign exchange assets (Notes 9 and 33)
Other assets (Notes 10 and 12)
Tangible fixed assets (Note 11)
Intangible fixed assets
Net defined benefit assets (Note 18)
Deferred tax assets (Note 29)
Customers’ liabilities for acceptances and guarantees
Reserve for possible loan losses
Total assets

Millions of yen
2015
2014

Thousands of U.S.
dollars (Note 1)
2015¥544,513
616
87
177
27,0001,139,284
3,672,521
6,321
65,83537,276
7,470
16,014
17,22417,098(31,907)¥5,519,533¥215,658
775
1,128
122
27,0001,375,525
3,602,329
5,529
61,28238,447
8,045
6,496
26,36619,992(38,923)¥5,349,776$4,531,189
5,126
723
1,472
224,6819,480,602
30,561,046
52,600547,848
310,193
62,161
133,261
143,330
142,281(265,515)$45,931,039¥4,737,122
1,543
251,176
159,198
538
70,00045,123
1,682
137
39
409
199
351
1
121
–
17,0985,284,745¥4,580,769–
315,691
118,517366
70,00045,146
1,678
120
62
328
170
379
0
151
2
19,992
5,153,379$39,420,171
12,8402,090,172
1,324,773
4,476
582,508
375,493
13,996
1,140
324
3,403
1,655
2,920
8
1,006
–
142,281
43,977,240

79,811
59,19760,155(253)
198,91079,811
59,251
46,949(728)
185,284

664,150492,610
500,582(2,105)
1,655,238

21,101
5
6,214
27,321
69
8,485
234,788¥5,519,533

(147)
1
1,020
875
68
10,168196,397¥5,349,776

175,592
41
51,710227,352574
70,608
1,953,798$45,931,039

Liabilities and net assets

Liabilities
Deposits (Notes 12, 13 and 33)
Negotiable certificates of deposit (Note 33)
Payables under securities lending transactions (Notes 12 and 33)
Borrowed money (Notes 12, 14, 33, 34 and 37)
Foreign exchange liabilities (Notes 15 and 33)
Corporate bonds and notes (Notes 16 and 33)
Other liabilities (Notes 12 and 17)
Provision for employees’ bonuses
Net defined benefit liability (Note 18)
Accrued retirement benefits for directors and corporate auditors
Reserve for reimbursement of deposits
Reserve for point services
Reserve for contingent losses
Reserve under special laws
Deferred tax liabilities (Note 29)
Negative goodwill
Acceptances and guarantees (Note 20)
Total liabilities

Net assets
Shareholders’ equity (Note 21):
Common stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity
Accumulated other comprehensive income:Net unrealized gain (loss) on available-for-sale securities (Note 7)
Net unrealized gain on deferred hedges (Note 34)

Remeasurements of defined benefit plans

Total accumulated other comprehensive income
Stock subscription rights (Note 21)
Minority interests
Total net assets
Total liabilities and net assets
See accompanying notes to consolidated financial statements

29

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2015

SENSHU IKEDA HOLDINGS,INC.

Consolidated Statements of Operations
Senshu Ikeda Holdings, Inc. and Consolidated Subsidiaries
For the years ended 31st March, 2015 and 2014

IncomeInterest income:Interest on loans and bills discounted
Interest and dividends on securities
Other interest income
Fees and commissions
Other operating income (Note 22)
Reversal of provision for possible loan losses
Recoveries of written-off claims
Gain on negative goodwill
Gain on contribution of securities to retirement benefit
Other income (Note 23)
Total income

Millions of yen
2015
2014

Thousands of U.S.
dollars (Note 1)2015¥48,164
15,058459
21,514
11,036
1,350
1,768
1,596
–
15,054116,002¥51,103
9,459
307
19,784
6,933
–
1,634
3
2,291
15,633
107,150$400,798
125,305
3,819
179,029
91,836
11,234
14,712
13,281–
125,272
965,315

5,589
734
1,886
5,706
14,35051,79493
36
0
12,92093,112
22,890

6,203
866
1,736
5,672
6,592
52,58258
22
112
13,65087,496
19,65346,5096,108
15,69447,482
119,414431,006
773
299
0
107,514774,835
190,480

1,869
2,407
4,277
18,613
1,028¥17,584

889
1,631
2,521
17,132527¥16,604

15,552
20,02935,591
154,8888,554$146,326

Millions of yen
2015
2014
¥18,613¥
17,132Thousands of U.S.
dollars (Note 1)2015$154,888

21,2584
5,193
26,456¥45,069(7,931)
0–(7,930)¥9,201

176,899
33
43,213
220,154$375,043

44,030
1,038

8,649
551

366,397
8,637

Expenses

Interest expenses:
Interest on deposits
Interest on borrowings and rediscounts
Other interest expenses
Fees and commissions
Other operating expenses (Note 24)
General and administrative expenses
Loss on sales or disposal of fixed assets
Loss on impairment of fixed assets
Loss on change in ownership interest
Other expenses (Note 25)
Total expenses
Income before income taxes and minority interests

Income taxes (Note 29)
Current
Deferred
Total income taxes
Net income before minority interests
Minority interests
Net income
See accompanying notes to consolidated financial statements

Consolidated Statements of Comprehensive Income
Senshu Ikeda Holdings, Inc. and Consolidated Subsidiaries
For the years ended 31st March, 2015 and 2014

Net income before minority interests
Other comprehensive income (Note 30)
Net unrealized gain (loss) on available-for-sale securities
Net unrealized gain on deferred hedges
Remeasurements of defined benefit plans
Total other comprehensive income
Comprehensive income
Total comprehensive income attributable to:
Owners of the parent
Minority interests

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201530

Consolidated Statement of Changes in Net Assets
Senshu Ikeda Holdings, Inc. and Consolidated Subsidiaries
Year Ended March 31, 2015

BALANCE, APRIL 1, 2013
Issuance of common stock
Increase by merger
Cash dividends
Net income
Acquisition of treasury stock
Disposition of treasury stock
Retirement of treasury stock
Change in scope of
consolidation
Net changes in items otherthan shareholder’s equity
Total changes during the year
BALANCE, MARCH 31, 2014
Cumulative effect of changein accounting policy (Note 3)
Balance at the beginning ofcurrent period which reflects
the change in accounting policy
Cash dividends
Net income
Acquisition of treasury stock
Disposition of treasury stock
Change in scope of
consolidation
Net changes in items otherthan shareholders’ equity
Total changes during the period
BALANCE, MARCH 31, 2015

BALANCE,APRIL 1,2014
Cumulative effect of changein accounting policy (Note 3)
Balance at the beginning ofcurrent period which reflects
the change in accounting policy
Cash dividends
Net income
Acquisition of treasury stock
Disposition of treasury stock
Change in scope of
consolidation
Net changes in items otherthan shareholders’ equity
Total changes during the period
BALANCE, MARCH 31, 2015

Commonstock
72,311
7,500

Millions of Yen
Accumulated othercomprehensive incomeNetNet
unrealized
gain (loss) on unrealized RemeasureTotal
gain onments ofavailableStock
CapitalRetained Treasury shareholder’s for-saledeferreddefined subscription Minority
surplusearnings
stock
securities
equityhedges benefit plans rights
interests
62,23535,431(1,350) 168,627
7,808
0
–
63
8,888
7,500
15,000131
131(5,208)(5,208)16,604
16,604(10,390) (10,390)
(96)
624
528
(10,387)
10,387–(8)

7,500
79,811(2,983)59,251

11,51846,949

622
(728)

466
79,811

59,25147,415(4,832)
17,584(53)–
79,811

Commonstock
664,150

664,150(53)
59,197

Capitalsurplus493,059

493,059

12,73960,155Retainedearnings
390,688

0

1,020

4

1,280

(5,648)(7,955)
(147)

0
1

1,020
1,020

4
68

1,280
10,16811,008196,397
466(728)

185,750(118)
593(4,832)
17,584(118)
539(4,832)
17,584
(118)
539

(11)

(11)

474
(253)

13,160198,910

(147)

1

1,020

68

10,168

196,863

21,248

4

5,193

1

(1,683)24,764

21,248
21,101

4
5

5,193
6,214

1
69

(1,683)
8,485

37,924
234,788

Thousands of U.S. Dollars (Note 1)
Accumulated othercomprehensive incomeNetNet
unrealized
gain (loss) on unrealized RemeasureTotal
gain onments ofavailableStock
Treasury shareholder’s for-saledeferreddefined subscription Minority
Total netstock
securities
equityhedges benefit plans rights
interests
assets(6,058) 1,541,849(1,223)8
8,487
565
84,613 1,634,326
3,877

394,566(6,058) 1,545,726(40,209)146,326(40,209)146,326
(981)
4,485

(40,209)146,326
(981)
4,485

(91)

(91)

(91)

(441)
492,610(7,955)

3,877

(441)

–
664,150

16,657
185,284

(8)

466

(11)

106,008
500,582

See notes to consolidated financial statements.

31

(8)

Total net
assets185,389
15,000131(5,208)16,604(10,390)528–

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2015

(981)
4,934

3,944 109,511(2,105) 1,655,238

3,877(1,223)

8

8,487

565

176,816

33

43,213

8

176,816
175,592

33
41

43,21351,7108574

84,613 1,638,204(14,005)

206,074(14,005) 315,586
70,608 1,953,798

SENSHU IKEDA HOLDINGS,INC.

Consolidated Statements of Cash Flows
Senshu Ikeda Holdings, Inc. and Consolidated Subsidiaries
For the years ended 31st March, 2015 and 2014

Millions of yen
2015
2014
Cash flows from operating activities
Income before income taxes and minority interests
Depreciation
Loss on impairment of fixed assets
Amortization of goodwill
Amortization of negative goodwill
Gains on negative goodwill incurred(Earnings) losses from investments under the equity method
Increase (decrease) in reserve for possible loan losses
Increase (decrease) in accrued bonuses
Loss (gain) on contribution of securities to retirement benefit

Thousands of U.S.
dollars (Note 1)2015¥22,890
4,833
36
208
(2)
(1,596)(40)(7,015)3¥19,653
4,656
22
133
(2)
(3)
(29)
(15,890)(29)$190,480
40,218
299
1,730
(16)
(13,281)(332)(58,375)
24–(1,736)16(2,291)(1,538)12–(14,446)
133

Increase (decrease) in accrued retirement benefits for directors and corporate auditors
Increase (decrease) in reserve for reimbursement of deposits
Increase (decrease) in reserve for point services
Increase (decrease) in reserve for contingent losses
Interest income
Interest expenses(Gain) loss on securities(Gain) loss on money held in trust(Gain) loss on foreign exchange(Gain) loss on sales or disposal of fixed assets, net
Net (increase) decrease in loans and bills discounted
Net increase (decrease) in deposits
Net increase (decrease) in negotiable certificates of deposit

(22)
80
29
(28)
(63,681)
8,210
(560)
(1,670)(35,988)(17)(70,192)
156,353
1,543

(74)
13
7
(13)
(60,870)
8,806(5,060)219(31,497)57(24,104)
90,033
–

(183)
665
241
(233)
(529,924)
68,319(4,660)(13,896)(299,475)(141)(584,105)
1,301,098
12,840Net increase (decrease) in borrowed money (excluding subordinated borrowings)

48,68046,608405,092

Net (increase) decrease in due from banks (excluding due from the Bank of Japan)
Net (increase) decrease in trading account securities
Net (increase) decrease in call loans and bills bought(2,687)(54)
1,200(3,836)(14)
4,655(22,359)
(449)
9,985

Net increase (decrease) in payables under securities lending transactions
Net (increase) decrease in foreign exchange (assets)
Net increase (decrease) in foreign exchange (liabilities)
Interest received
Interest paid
Other

(64,514)(792)
172
65,823(9,444)
2,947

190,776(1,153)
157
61,215(10,313)8,300(536,856)(6,590)1,431
547,749(78,588)
24,52352,981(1,342)¥51,639

278,607(1,255)¥277,352

440,883(11,167)$429,716

Decrease (increase) in net defined benefit asset
Increase (decrease) in net defined benefit liability

Subtotal
Income taxes paid
Net cash provided by (used in) operating activities

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201532

Consolidated Statements of Cash Flows
Senshu Ikeda Holdings, Inc. and Consolidated Subsidiaries
For the years ended 31st March, 2015 and 2014

Millions of yen
2015
2014
Cash flows from investing activities
Purchases of securities
Proceeds from sales of securities
Proceeds from maturity of securities
Increase in money held in trust
Decrease in money held in trust
Purchases of tangible fixed assets
Purchases of intangible fixed assets
Proceeds from sales of tangible fixed assets
Proceeds of investments in subsidiaries resulting in charge in scope of consolidation
Net cash provided by (used in) investing activities
Cash flows from financing activities
Proceeds from issuance of common stock
Decrease in subordinated borrowings
Increase in subordinated bonds and bonds with stock subscription rights
Cash dividends paid
Cash dividends paid for minority shareholders
Purchases of treasury stock
Proceeds from disposition of treasury stock
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year (Note 27)
See accompanying notes to consolidated financial statements

33

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2015

Thousands of U.S.
dollars (Note 1)2015¥(841,250)
818,433
311,784(38)
1,691(1,761)(1,857)565–
287,566¥(1,123,362)$(7,000,499)

291,683
660,551(8,612)381(2,733)(1,500)56(2,400)(185,936)

6,810,626
2,594,524(316)
14,071(14,654)(15,453)
4,701–
2,392,993–(8,000)–(4,832)
(480)
(118)
593
(12,839)

15,000–20,000(5,208)(247)(10,390)624
19,778–(66,572)–(40,209)(3,994)(981)
4,934(106,840)

(199)

(239)

(1,655)326,167
206,317¥532,484

110,955
95,361¥206,317

2,714,213
1,716,876$4,431,089

SENSHU IKEDA HOLDINGS,INC.

Notes to Consolidated Financial Statements
Senshu Ikeda Holdings, Inc. and Consolidated Subsidiaries
For the Years Ended 31st March, 2015 and 2014

1. Basis of Presentation
Senshu Ikeda Holdings, Inc. (the “Company”) is a holding
company and conducts its operations through its subsidiaries
and affiliates. The Company and its subsidiaries (collectively,
the “Group”) maintain their books of account in accordancewith the provisions set forth in the Companies Act of Japan(the “Act”) and in conformity with accounting principles andpractices generally accepted in Japan, which are different incertain respects as to the application and disclosure
requirements of International Financial Reporting Standards.
The accompanying consolidated financial statements havebeen compiled from the consolidated financial statements
prepared by the Company as required by the Financial
Instruments and Exchange Act of Japan. Certain accounts
have been reclassified for the convenience of readers outside
Japan.
In preparing the accompanying consolidated financial
statements, Japanese yen amounts are presented in millionsof yen by rounding down figures below one million. As a result,
the totals in yen in the accompanying consolidated financial
statements do not necessarily agree with the sums of theindividual amounts.
The translation of yen amounts into U.S. dollar amounts is
included solely for the convenience of readers outside Japanand has been made at ¥120.17 = U.S.$1.00, the exchange
rate prevailing on 31st March, 2015. This translation should
not be construed as a representation that yen can beconverted into U.S. dollars at the above or any other rate.

2. Principles of Consolidation
The accompanying consolidated financial statements include
the accounts of the Company and the 30 (30 in 2014)
significant subsidiaries which it controls directly or indirectly.
Affiliates over which the Company exercises significant
influence in terms of their operating and financial policies
have been included in the accompanying consolidated
financial statements on an equity basis.
D.I. Co., Ltd. has changed its corporate name to Senshu
Ikeda DC Co., Ltd. on 1st October, 2014.
Change in the scope of consolidation
AD Stable Profit Seeking Fund Silent Partnership and SI Mirai
Fund No. 1 Investment Enterprise Limited Partnership havebeen included in the scope of consolidation from the fiscal
year ended 31st March, 2015 as a result of contribution by theCompany and its new establishment, respectively.

Ikegin Capital New Business Fund No. 2 Investment Enterprise
Limited Partnership and Ikegin Capital Yumejikomi Fund KGIInvestment Enterprise Partnership, both of which wereconsolidated subsidiaries of the Company in the previous
fiscal year, were excluded from the scope of consolidation
due to completion of their liquidation procedures.
The company has applied the equity method to its investmentsin three affiliates for the years ended 31th March, 2015 and2014, respectively.
All significant intercompany accounts and transactions havebeen eliminated in consolidation. All material unrealized profit
included in assets resulting from transactions within the Groupis eliminated.
The difference between the cost and the underlying equity inthe net assets of the consolidated subsidiaries measured atfair value at their respective dates of acquisition is presented
as “goodwill” or “negative goodwill”. Goodwill is amortized by
the straight-line method over a period of five years. However,goodwill recognized in the fiscal year is amortized over a year.
The balance sheet date of 11 subsidiaries is 31st December.
Appropriate adjustments have been made for significant
intervening transactions occurring during the period from 31st
December to 31st March.

3. Significant Accounting Policies(1) Trading account securities
Trading account securities are stated at fair value as of
the balance sheet date. Cost of trading account securities
sold is determined using the moving average method.
(2) Securities
Non-trading securities are classified into three categories:
held-to-maturity debt securities, equity securities of an
unconsolidated subsidiary and available-for-salesecurities. Held-to-maturity debt securities are carried atamortized cost, and the cost being determined by themoving average method. Equity securities of an
unconsolidated subsidiary are stated at cost determinedby the moving-average method. Equity securities andinvestment trusts classified as available-for-sale securities
whose fair values are available are stated at fair value
determined by the monthly average market price during
one month preceding the balance sheet date and othersecurities are stated at fair value determined based on
the quoted market price and other information at thebalance sheet date. Cost of sales of these available-forsale securities is determined using the moving averagemethod. Other securities, whose fair value is extremely
difficult to determine, are stated at cost determined by themoving-average method.
Unrealized gain or loss on available-for-sale securities is
included in net assets, net of income taxes.
SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201534

(3) Investment securities held in money trusts
Investment securities that are part of trust assets in
independently managed money trusts with the primary
purpose to manage securities are stated at the fair value
as of the balance sheet date.
(4) Derivatives
Derivatives are stated at fair value.
(5) Tangible fixed assets
Depreciation of tangible fixed assets of the Group, except
for leased assets, is calculated principally by the straightline method. The principal useful lives are as follows:
Buildings···················3 to 50 years
Other·························2 to 20 years(6) Intangible fixed assets
Intangible fixed assets are amortized by the straight-line
method. Amortization of the cost of software intended forinternal use is calculated by the straight-line method
based on a useful life (5 years) determined by theCompany and its consolidated subsidiaries.
(7) Reserve for possible loan losses
A reserve for possible loan losses is provided byconsolidated subsidiaries engaged in the banking
business (the “banking subsidiaries”) in accordance withthe prescribed standards. For claims on borrowers who
have declared bankruptcy or have commenced special
liquidation proceedings or similar legal proceedings(“bankrupt borrowers”), or borrowers who are not legallyor formally insolvent but are regarded as substantially inthe same situation (“effectively bankrupt borrowers”), a
reserve is provided based on the book value of theclaims, after the write-off stated below, net of the
expected amount recoverable from collateral andguarantees.
For claims on borrowers who are not currently bankrupt
but are likely to become bankrupt (“potentially bankrupt
borrowers”), a reserve is provided at the amount deemednecessary based on the overall solvency assessment of
the borrowers and the amount of the claims, net of the
expected amount recoverable from collateral andguarantees.
For other claims, a reserve is provided based on thehistorical loan-loss ratio.
The Group conducts self-assessments of asset quality at
its loan offices. The assessments are audited by the
independent credit audit section in accordance with theGroup’s policy and guidelines for the self-assessment ofasset quality. Based on the results of these assessments,
an appropriate reserve is provided for the resulting losses
and for write-offs of doubtful assets.

35

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2015

For consolidated subsidiaries other than the banking
subsidiaries, a specific reserve for possible loan losses at
the total amount of loans deemed to be uncollectible
based on a solvency analysis of each loan, in addition toa general reserve at an amount calculated based on
historical experience, is provided.
For collateralized or guaranteed claims on bankrupt
borrowers and effectively bankrupt borrowers, the amountof the claims exceeding the estimated value of collateraland guarantees is deemed to be uncollectible and iswritten off against the total amount of the outstanding
claims. These write-offs amounted to ¥65,356 million($543,862 thousand) and ¥62,365 million for the years
ended 31st March, 2015 and 2014, respectively.
(8) Provision for employees’ bonuses
Provision for employees’ bonuses is calculated based onan estimated payment amount, which is attributable to thefiscal year.
(9)	Accrued retirement benefits for directors and corporate
auditors
Accrued retirement benefits for directors and corporate
auditors are provided at an amount that would be
required if all directors and corporate auditors retired at
the balance sheet date.
(10) Reserve for reimbursements of deposits
Reserve for reimbursements of deposits is provided at an
estimate of the future payments to be made forreimbursement claims on deposits which were
derecognized and credited from liability to income basedon the Group’s historical experience.
(11) Reserve for point services
Reserve for point services, which is provided to meet
future use of credits granted to customers, is recorded in
the amount deemed necessary based on the estimatedfuture use of unused credits.
(12) Reserve for contingent losses
Reserve for contingent losses is provided at an estimateof the future loss on contingencies other than those
covered by other reserves or provisions.
(13) Reserve under special laws
Reserve under special laws consist of the financial
instruments transaction liability reserve of ¥1 million ($8thousand) as of March 31, 2015, posted by Senshu Ikeda
Tokai Tokyo Securities Co., Ltd., which were calculated
according to the specifications of Article 46-5 of the
Financial Instruments and Exchange Act and Article 175of the Cabinet Office Ordinace Related to the Financial
Instruments Business, to prepare for losses originatingfrom incidents relating to the purchase and sale ofsecurities or other transactions.

SENSHU IKEDA HOLDINGS,INC.

(14) Accounting treatment for retirement benefits
In the calculation of retirement benefit obligation, theCompany applies the benefit formula basis in attributing
expected retirement benefits to periods until the end of
the fiscal year under review.
Prior service cost is amortized by the straight-line method
over a period of 11 to 12 years, which is within the
average estimated remaining years of service of theeligible employees.
Actuarial gain or loss is amortized commencing the year
following the year in which the gain or loss is recognizedby the straight-line method principally over a period of 11
to 12 years, which is within the average estimatedremaining years of service of the eligible employees.
Unrecognized transitional obligation incurred at the timeof the accounting change in the amount of ¥9,894 million($82,333 thousand) is amortized over a period of 15
years.
Some of the consolidated subsidiaries calculate their net
defined benefit liability and retirement benefit expenses
by adopting the simplified method, assuming the amountof year-end retirement benefit payable due to voluntaryterminations as retirement benefit obligation.
(15) Foreign currency transactions
Assets and liabilities of consolidated subsidiaries
denominated in foreign currencies are translated into
Japanese yen at the exchange rates in effect at thebalance sheet date.
(16) Leases
Leased assets under finance lease arrangements which
do not transfer ownership of the leased assets to thelessee are depreciated over the respective lease contract
periods using the straight-line method with residual
values defined in the lease contracts, otherwise theresidual values is zero.
As lessee:
Finance leases which commenced prior to 1st April, 2008,
except for those substantially requiring the transfer ofownership of the leased assets to the lessee, areaccounted for as operating leases.
As lessor:
Finance lease income and related cost are recognizedwhen lease payment is received. Finance leases which
do not transfer ownership of the leased assets to thelessee and commenced prior to 1st April, 2008 aredeemed to have been entered into contracts at theamount of the cost less accumulated depreciation at 31st
March, 2008.

(17) Hedge accounting
Interest rate risk hedging
With respect to hedge accounting for the interest rate risk
arising from financial assets and liabilities of the banking
subsidiaries, the Group applies deferral hedge
accounting, under which gains or losses on derivatives
are deferred until maturity of the hedged transactions, as
stipulated in the Japanese Institute of Certified Public
Accountants (JICPA) Industry Audit Committee Report
No. 24.
Foreign exchange rate risk hedging
With respect to hedge accounting for derivativetransactions used to hedge the risk of financial assets
and liabilities denominated in foreign currencies of thebanking subsidiaries, the Group applies deferral hedge
accounting, under which gains or losses on derivatives
are deferred until maturity of the hedged transactions, as
stipulated in the JICPA Industry Audit Committee Report
No. 25. The Group assesses the effectiveness of its
currency swaps and foreign exchange swaps
transactions, etc. entered into in order to hedge the risk offluctuation in foreign exchange rates by comparing theforeign-currency amount of each underlying hedged itemwith the corresponding foreign-currency amount of therespective hedging instruments.
(18) Cash flows
In preparing the consolidated statement of cash flows,
cash and deposits with the Bank of Japan are considered
to be cash and cash equivalents.
(19) Consumption taxes
Transactions are principally stated exclusive of nationaland municipal consumption taxes.
(20) Consolidated tax payment system
The Company and certain of its consolidated subsidiaries
have adopted the consolidated tax payment system inaccordance with the Corporation Tax Act (Act No. 34,
1965).
(21) Change in accounting policy
The Company has applied the provisions specified in themain clause of Paragraph 35 of “Accounting Standard for
Retirement Benefits” (the Accounting Standards Board ofJapan (hereinafter “ASBJ”) Statement No. 26, 17th May,
2012; hereinafter “Accounting Standard Retirement
Benefits”) and in the main clause of Paragraph 67 of“Guidance on Accounting Standard for Retirement
Benefits” (ASBJ Guidance No. 25, 26th March, 2015;
hereinafter “Retirement Benefits Guidance”) from thefiscal year under review, and reviewed the method of
calculating retirement benefit obligation and service cost.
Based on the review, the method of period attribution for
projected retirement benefits has changed from thestraight-line attribution basis to the benefit formula basis,
while the method of determining the discount rate has

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201536

been changed from the method where the period forbonds, which forms the basis for determining the discountrate, is determined based on the approximate number ofyears similar to the average remaining service period of
employees, to the method using a number of discountrates set for each projected benefits payment period.
The application of Accounting Standard Retirement
Benefits and others by the Company is subject totransitional handling provided for in Paragraph 37 of
Accounting Standard Retirement Benefits. Consequently,
the effect of the changes in calculation methods ofretirement benefit obligation and service cost is added toor deducted from retained earnings at the beginning of
the fiscal year under review.
As a result, net defined benefit assets increased by¥1,616 million ($13,447 thousand), deferred tax assets
decreased by ¥257 million ($2,138 thousand), net defined
benefit liability increased by ¥892 million ($7,422
thousand), and retained earnings increased by ¥466
million ($3,877 thousand) at the beginning of the fiscal
year under review. Ordinary income and income before
income taxes and minority interests increased by ¥152
million ($1,264 thousand) for each, and net income
increased by ¥98 million ($815 thousand) during the fiscal
year under review.
The Company has applied “Practical Solution on
Transactions of Delivering the Company’s Shares to
Employees, etc. through Trusts” (ASBJ Practical Issues
Task Force No. 30, 26th March, 2015). The application
does not affect the consolidated financial statements of
the Company as the Company accounts for thesetransactions according to the conventional method which
had been put into practice previously.

(22) Unapplied Accounting Standards
Accounting Standard, etc. for Business Combinations(13th September, 2013)(1) Overview
The said Accounting Standard, etc., have beenrevised, with a focus on 1) treatment of the parent
company’s change in equity of subsidiaries when theparent company maintains control over subsidiaries
after additional acquisition of shares of subsidiaries;2) treatment of expenses associated with the shareacquisition; 3) transitional accounting treatment; and4) presentation of net income and change fromminority interests to non-controlling interests.
(2) Scheduled date of adoption
The Company will adopt the revised AccountingStandard, etc. from the fiscal year beginning on 1st
April, 2015.

37

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2015(3)	The effect of adopting the said Accounting Standard,etc.
The effect of adopting the said Accounting Standard,
etc. is currently under evaluation.
(23) Additional Information
The Company conducts transactions in which it delivers
Company shares to the Employees Shareholders
Association through a trust.
(1) Overview of the transaction
The Company has introduced the “Trust-type
Employees’ Shareholding Incentive Plan (hereinafter“the Plan”)” in order to provide incentive to increase
the medium- to long-term corporate value of theCompany for the employees of the Senshu Ikeda
Bank.
The Plan is an incentive plan in which all employees
enrolled in the “Senshu Ikeda Bank Employees’
Shareholders Association (hereinafter “Shareholders
Association”)” are eligible. Under the Plan, theCompany establishes a “Senshu Ikeda Bank
Employees’ Shareholders Association Exclusive Trust
Account (hereinafter “Employees’ Shareholder Trust”)
at a trust bank, and the Employees’ Shareholder Trustpurchases in advance a certain number of theCompany’s shares equivalent to the number ofshares the Shareholders Association is expected topurchase over the next five years.
Subsequently, the Employees’ Shareholder Trust is tocontinuously sell the Company’s shares to the
Shareholders Association, and if any gains on sale ofshares have accumulated within the Employees’
Shareholder Trust at the termination of the trust, theamount equivalent to such gains on sale of sharesare to be distributed to those who meet therequirements for eligible beneficiaries as residual
assets.
Meanwhile, as the Company is to provide aguarantee on the loan for the Employees’
Shareholder Trust to acquire the Company’s shares,
should the price of the Company’s shares falls andshould losses on sale of shares accumulate within
the Employees’ Shareholder Trust, and if remaining
debt exists equivalent to the losses on sale of sharesat the time of termination of the trust, the Company is
to repay such remaining debt pursuant to theguarantee agreement.
(2)	The Company has applied “Practical Solution on
Transactions of Delivering the Company’s Shares to
Employees, etc. through Trusts” (ASBJ Practical
Issues Task Force No. 30, 26th March, 2015).
However, the Company accounts for thesetransactions according to the conventional method
which had been put into practice previously.

SENSHU IKEDA HOLDINGS,INC.

(3)	The Company’s shares owned by the trust1)	The book values of the Company’s shares ownedby the trust was ¥112 million ($932 thousand) and¥675 million at 31st March, 2015 and 2014,
respectively.
The Company’s shares owned by the trust arerecorded as treasury stock under Shareholders’equity.
2)	The number of the Company’s shares owned by
the trust was 196 thousand and 1,175 thousand at
31st March, 2015 and 2014, respectively.
The average number of the Company's shares
owned by the trust was 644 thousand and 1,684
thousand during the year ended 31st March, 2015
and 2014, respectively. The number of theCompany’s share as of the year-end and theaverage number of shares for the year were
included in treasury stock to be deducted whencalculating relevant per share information.

4. Trading account securities
Valuation gain or loss on trading account securities included
in income before income taxes and minority interests was ¥(1)million ($ (8) thousand) and ¥(1) million for the years ended
31st March, 2015 and 2014, respectively.

5. Securities
Securities at 31st March, 2015 and 2014 consisted of thefollowing:Thousands of
U.S. dollars

Millions of yen
2014

2015
Stocks2015¥79,935 ¥68,880 $665,182

Bonds:
Government bonds

164,153319,287

Local government bonds

51,25653,642426,529

Corporate bonds

273,480

315,224

2,275,775

570,458

618,490

4,747,091

Other
Total

1,366,006¥1,139,284 ¥1,375,525 $9,480,602

Stocks in the above table include investments in affiliates of¥306 million ($2,546 thousand) and ¥265 million at 31st
March, 2015 and 2014, respectively.
Held-to-maturity debt securities with fair value at 31st March,2015 and 2014 were as follows:
Millions of yen
31st March, 2015
Government bonds

Carrying value¥

24,997

Fair value¥

25,071

Corporate bonds

31,307

Other

27,00027,434

Total¥83,305¥83,895

31,390Millions of yen
31st March, 2015
Government bonds

Difference

Unrealized Unrealized
gain
loss

¥73 ¥73 ¥–Corporate bonds

83

83

–

Other

434

436

(2)

Total

¥590 ¥592 ¥(2)Millions of yen
31st March, 2014

Government bonds

Carrying value¥

24,997

Fair value¥

25,024

Corporate bonds

45,406

Other

18,00045,601
18,321

Total¥88,403¥88,946

Millions of yen
31st March, 2014
Government bonds

Difference

Unrealized Unrealized
gain
loss

¥26 ¥26 ¥–Corporate bonds

195

200

(5)

Other

321

321

–

Total

¥542 ¥548 ¥(5)SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201538

Thousands of U.S. dollars
31st March, 2015
Government bonds
Corporate bonds

Millions of yen

Carrying value

Fair value

31st March, 2014

$208,013$208,629

260,522

261,213

Other

224,681

228,293

Total$693,226$698,135

Thousands of U.S. dollars
31st March, 2015
Government bonds

Unrealized Unrealized
Difference
gain
loss
$607 $607 $–Corporate bonds

690

690

–

Other

3,611

3,628

(16)

Total

Equity securities

Available-for-sale securities with fair value at 31st March, 2015
and 2014 were as follows:
Millions of yen
Carrying value¥73,869¥42,384

Government bonds

139,155

139,120

Local government bonds

51,256

51,095

Corporate bonds

242,173

241,243

Subtotal

432,586

431,460

Other

542,135

546,672Total¥1,048,590¥1,020,516

31st March, 2015
Equity securities

31st March, 2015
Equity securities¥31,484 ¥32,084 ¥(599)

53,64253,478

Corporate bonds

269,818

268,398

Subtotal

617,750

615,986

Other

599,415

613,388Total¥1,280,018¥1,277,260

Millions of yen
31st March, 2014
Equity securities

35

35

–

Local government bonds

161

174

(13)

Corporate bonds

929

1,029

(99)

Subtotal

1,125

1,238

(112)

(4,537)

5,947(10,484)

Other
Total

¥28,073 ¥39,270 ¥(11,197)

Difference

Unrealized Unrealized
gain
loss

¥14,966 ¥17,332 ¥(2,365)

Bonds:
Government bonds

179

194

Local government bonds

163

173

(9)

Corporate bonds

1,420

1,512

(92)

Total

(14)

1,763

1,880

(117)

(13,972)

2,245(16,217)¥2,757 ¥21,458 ¥(18,700)
Thousands of U.S. dollars
31st March, 2015

Equity securities

Carrying value

Acquisitioncost$614,704$352,700

1,157,984

1,157,693

Bonds:–

Government bonds
Local government bonds

426,529425,189

Corporate bonds

2,015,253

2,007,514

Subtotal

3,599,783

3,590,413

Other

4,511,400

4,549,155

Total$8,725,888$8,492,269

Bonds:
Government bonds

294,110294,290

Bonds:

Unrealized Unrealized
Difference
gain
loss

¥47,885

Government bonds

Other

Millions of yen¥62,852

Local government bonds

Subtotal

Acquisition
cost

Acquisition
cost

Bonds:$4,909 $4,926 $(16)There were no held-to-maturity debt securities sold during theyears ended 31st March, 2015 and 2014.

Carrying value

Thousands of U.S. dollars
31st March, 2015
Equity securities

Difference

Unrealized Unrealized
gain
loss

$261,955 $266,988 $(4,984)

Bonds:
Government bonds

291

291

–

Local government bonds

1,339

1,447

(108)

Corporate bonds

7,730

8,562

(823)

Subtotal

9,361

10,302(932)(37,754)

49,488(87,243)

Other
Total

$233,610 $326,787 $(93,176)

Available-for-sale securities sold during the years ended 31st
March, 2015 and 2014 were as follows:

39

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2015

SENSHU IKEDA HOLDINGS,INC.

6. Money Held in Trust

Millions of yen
2015
Equity securities

Proceeds
from sales

Gain

Loss

¥8,890 ¥3,818 ¥(429)

Bonds:
Government bonds
Local government bonds

93,072

647

–

–

–

–

Corporate bonds

83,766

1,597(0)Subtotal

176,839

2,245

(0)

639,907

7,336(12,323)

Other
Total

¥825,637 ¥13,400 ¥(12,752)

Equity securities

Proceeds
from sales

Gain

Government bonds
Corporate bonds
Subtotal
Other
Total

58,472

233

–

–

(17)
–

32,078490(4)90,550724(21)

175,927

5,357(2,927)2015
Equity securities

Proceeds
from sales

Local government bonds

Gain

Valuation gain (loss) included in consolidated¥97 ¥(2) $807
statements of income

7.	Net Unrealized Gain (Loss) on Availablefor-Sale Securities
Net unrealized gain (loss) on available-for-sale securities at
31st March, 2015 and 2014 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2015

Available-for-sale securities

Loss$73,978 $31,771 $(3,569)

2014

2015

Deferred tax liabilities
Differences between acquisition costand fair value, net of taxes¥28,073 ¥2,757 $233,610(2,813)(57,160)

21,203(55)

176,441

(101)

(91)

(840)

(6,869)774,502

5,384–

Amounts corresponding to minority interests

–

–

–

Net unrealized gain (loss) on availablefor-sale securities, net of taxes¥21,101 ¥(147) $175,592

Corporate bonds

697,062

13,289(0)

Subtotal

1,471,573

18,681(0)

5,325,014

61,046(102,546)

Total

2015

Differences between acquisition costand fair value:

Bonds:
Government bonds

2014¥27,000 ¥27,000 $224,681¥280,445 ¥11,903 ¥(3,421)
Thousands of U.S. dollars

Other

2015
Carrying valueLoss¥13,966 ¥5,822 ¥(472)

Bonds:
Local government bonds

Thousands of
U.S. dollars

Millions of yen

There were no money held in trust owned for other purposes
at 31st March, 2015 and 2014.

Millions of yen
2014

Money held in trust at 31st March, 2015 and 2014 consistedof the following:
Money held in trust for trading purposes$6,870,575 $111,508 $(106,116)

Impairment losses on securities
Available-for-sale securities whose fair value significantly
declined from the acquisition cost are valued at fair value andlosses on devaluation of those securities are recognized in the
consolidated statement of operations unless the value isconsidered recoverable.
Losses on devaluation of securities for the years ended 31st
March, 2015 and 2014 were ¥0 million ($0 thousand) and¥3,375 million, respectively, which consisted of ¥0 million ($0thousand) on equity securities for the year ended 31st March,
2015, and ¥7 million on equity securities and ¥3,367 million on
investment trusts for the year ended 31st March, 2014.

8.	Loans and Bills Discounted and Risk
Monitored Loans
Loans and bills discounted:
Loans and bills discounted at 31st March, 2015 and 2014
consisted of the following:
Millions of yen
2015
Bills discounted

2014

Thousands of
U.S. dollars
2015¥20,335 ¥18,256 $169,218

Loans on bills

78,562

83,430653,757

Loans on deeds

3,334,749

3,275,517

27,750,262

238,874

225,125

1,987,800

Overdrafts
Total¥3,672,521 ¥3,602,329 $30,561,046

Determining whether the fair value is “significantly declined” isbased on the fair value declining by more than 50% or thecriteria considering the trend of the fair value during a certain
past period and credit risks of the issuers when the fair value
declined between 30% and 50% of the acquisition cost.

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201540

Discounting of bills is accounted for as finance transactions
rather than as purchasing of bills in accordance with the
JICPA Industry Audit Committee Report No. 24. The Group
has the right to sell or pledge such bills without any
restrictions. These include bankers acceptances bought,
commercial bills discounted, documentary bills and foreignexchange bills. The total face value of such outstanding bills
at 31st March, 2015 and 2014 totaled ¥20,833 million($173,362 thousand) and ¥18,686 million, respectively.
At 31st March, 2015 and 2014, loans and bills discounted
included the portion of loans extended to original borrowers
based on loan participation agreements, as permitted by the
JICPA Accounting Committee Report No. 3, in the amount of¥15,590 million ($129,732 thousand) and ¥15,600 million,
respectively.
Contracts for overdraft facilities and loan commitments arecontracts under which the Group lends money to customers
up to their prescribed limits at the customers’ request as longas there are no violations of any of the conditions in thecontracts. The aggregate unutilized balances within the limitsof these contracts totaled ¥689,418 million ($5,737,022
thousand) and ¥659,510 million at 31st March, 2015 and2014, respectively, including the contracts whose contractual
periods were either less than one year or revocable at any
time, in the amount of ¥678,399 million ($5,645,327 thousand)and ¥648,268 million, respectively.
Since many of these commitments expire without being fully
utilized, the unutilized amounts do not necessarily represent
future cash commitments. Most of these contracts include
provisions which stipulate that the consolidated subsidiaries
can reject customers’ requests or decrease the contract limits
for an appropriate reason, (for example, a change in financial
situation or a deterioration in customers’ creditworthiness).
At the inception of the contracts, the Group obtains collateralin the form of real estate, securities, and so forth, if deemednecessary. Subsequently, the Group, based on its internal
rules, performs periodic reviews of the customers’ businessresults and may take necessary measures such asreconsidering the terms of the contracts and/or requiring
additional collateral or guarantees.

Loans to bankrupt borrowers
Loans past due for 3 months or more
Restructured loans
Total

Loans past due for 3 months or more represent loans on which
the payment of principal and/or interest has not been received
for three months or more from the due date, and which are notclassified as “loans to bankrupt borrowers” or “delinquentloans.”
Restructured loans are loans which have been restructured tosupport the rehabilitation of borrowers who are encountering
financial difficulties, with the intention of ensuring the recoveryof the loans by providing more flexible repayment terms forthe borrowers (such as reducing the rate of interest or
suspending the payment of principal/interest, etc.) or loans
which are not classified in any of the above categories.
The amounts presented in the table above are stated before
the provision of specific loan loss reserves.

9. Foreign Exchange Assets
Foreign exchange assets at 31st March, 2015 and 2014
consisted of the following:

2014

2015
Due from foreign correspondent banks

2014

2015

¥5,151 ¥4,485 $42,864

Foreign bills of exchange bought

429

362

3,569

Foreign bills of exchange receivable

740

681

6,157

Total

¥6,321 ¥5,529 $52,600

Other assets at 31st March, 2015 and 2014 consisted of thefollowing:

2015

2015

¥3,522 ¥4,000 $29,308

Thousands of
U.S. dollars

Millions of yen
Investment in leased assets

2014

2015

¥15,085 ¥15,937 $125,530

54,19562,173450,986

Other receivables

26,082

18,854217,042–––

Accrued income

6,934

8,318

57,701

13,5386,706

112,657

Prepaid expenses

302

301

2,513

17,42917,871145,036¥71,255 ¥72,881 $592,951

Other
Total

41

Thousands of
U.S. dollars

Millions of yen

Thousands of
U.S. dollars

Millions of yen

Delinquent loans

Delinquent loans represent non-accrual loans other than (i)loans to bankrupt borrowers and (ii) loans on which interest
payments have been suspended in order to assist or facilitate
the restructuring of borrowers who are experiencing financial
difficulties.

10. Other Assets

Risk monitored loans:
Risk monitored loans which were included in loans and bills
discounted at 31st March, 2015 and 2014 consisted of thefollowing:

2015

Loans to bankrupt borrowers represent non-accrual loans toborrowers who are legally bankrupt as defined in Articles
96-1-3 and 96-1-4 of the Order for Enforcement of the
Corporation Tax Act (the “Tax Act”) (Article 97 of the 1965
Cabinet Order).

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2015

¥65,835 ¥61,282 $547,848

SENSHU IKEDA HOLDINGS,INC.

11. Tangible Fixed Assets

13. Deposits

At 31st March, 2015 and 2014, accumulated depreciation of
tangible fixed assets was ¥45,130 million ($375,551 thousand)and ¥43,656 million, respectively.
Under the Tax Act, capital gains arising from the exchange orreplacement of assets under certain conditions are permitted
to be deducted from the cost of tangible fixed assets in orderto obtain certain tax benefits. The amount deducted from thecost of tangible fixed assets at 31st March, 2015 and 2014was ¥377 million ($3,137 thousand) and ¥517 million,
respectively.

Deposits at 31st March, 2015 and 2014 consisted of thefollowing:Thousands of
U.S. dollars

Millions of yen
2014

2015
Securities2015¥379,009 ¥488,918 $3,153,940

Loans and bills discounted

47,477–395,081

Other assets

1,277

1,069

10,626The liabilities secured by the above pledged assets at 31st
March, 2015 and 2014 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2014

2015
Deposits

2015¥7,718 ¥14,537 $64,225

Payables under securities
lending transactions

251,176

315,691

2,090,172

Borrowed money

99,09454,222824,615

86

205

715

Other liabilities

In addition to the pledged assets listed above, certain othersecurities were pledged as collateral for domestic exchangetransactions or as margins on futures contracts. Theseamounted to ¥29,003 million ($241,349 thousand) and¥34,982 million at 31st March, 2015 and 2014, respectively.
At 31st March, 2015 and 2014, margins on futures contracts inthe amounts of ¥2,532 million ($21,070 thousand) and ¥3,076
million, guarantee deposits of ¥5,190 million ($43,188
thousand) and ¥5,263 million, deposits for futures transactionsof ¥503 million ($4,185 thousand) and ¥503 million andcollateral money deposited for financial instruments of ¥1,000
million ($8,321 thousand) and ¥1,200 million were included in“Other assets”, respectively.

2015¥165,353 ¥149,018 $1,375,992

Ordinary deposits

1,958,234

1,789,366

16,295,531

Savings deposits

25,626

26,474

213,247

Deposits at notice

28,996

10,359241,291

2,491,375

2,524,345

20,732,087

67,536

81,204562,003

Time deposits
Total

Assets pledged as collateral at 31st March, 2015 and 2014
consisted of the following:

2014

2015
Current deposits

Other deposits

12. Assets Pledged

Thousands of
U.S. dollars

Millions of yen¥4,737,122 ¥4,580,769 $39,420,171

14. Borrowed Money
Borrowed money at 31st March, 2015 and 2014 consisted ofborrowings from the Bank of Japan and certain other financial
institutions.
Subordinated borrowings of ¥17,000 million ($141,466
thousand) and ¥25,000 million were included in borrowed
money at 31st March, 2015 and 2014, respectively.
The average interest rate applicable to borrowed money at
31st March, 2015 and 2014 was 0.42% and 0.75%,
respectively.
The aggregate annual maturities of borrowed money
subsequent to 31st March, 2015 were summarized as follows:Year ending 31st March,Millions of yen

Thousands of
U.S. dollars

2016¥67,372$560,639

2017

13,564

112,873

2018

1,629

13,555

2019

59,083491,6112020
2021 and thereafter
Total

477

3,969

17,072142,065¥159,198$1,324,773

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201542

15. Foreign Exchange Liabilities

17. Other Liabilities

Foreign exchange liabilities at 31st March, 2015 and 2014
consisted of the following:

Other liabilities at 31st March, 2015 and 2014 consisted of thefollowing:Thousands of
U.S. dollars

Millions of yen
2014

2015
Foreign bills sold

2015

2015

¥518 ¥363 $4,310

Foreign bills of exchange payable
Total

2

20

166

¥538 ¥366 $4,476

Thousands of
U.S. dollars

Millions of yen
Accrued expenses

2014

2015

¥4,370 ¥5,541 $36,365

Unearned income

16,223

9,666

Accrued income taxes

1,182

620

9,836

Other

23,34729,317

194,283

Total

135,000¥45,123 ¥45,146 $375,493

16. Corporate Bonds and Notes
Short-term and long-term bonds payable at 31st March, 2015
and 2014 consisted of the following:
Millionsof yenIssuerDescription

Issued2015

The Senshu Ikeda
Bank, Ltd.

1st subordinated bonds

17th Dec., 2010

¥15,000
10,000

2nd subordinated bonds

21st Sep., 2011

3rd subordinated bonds

16th Dec., 2011

5,000

4th subordinated bonds

23rd Mar., 2012

20,000

5th subordinated bonds

25th Sep., 2013

10,000

6th subordinated bonds

27th Dec., 2013

Total

Issuer

10,000¥70,000Millions Thousands ofof yenU.S. dollars Interest
2014

Secured/unsecured

Due

2015

rates (%)

The Senshu Ikeda ¥15,000 $124,823
Bank, Ltd.
10,00083,215

1.67

Unsecured 17th Dec., 2020

2.01

Unsecured 21st Sep., 2021

2.06

Unsecured 16th Dec., 2021

Total

5,000

41,60720,000166,430

2.23

Unsecured 23rd Mar., 2022

10,00083,215

1.40

Unsecured 25th Sep., 2023

10,00083,215

1.35

Unsecured 27th Dec., 2023

¥70,000 $582,508

The aggregate annual maturities of short-term and long-termbonds payable subsequent to 31st March, 2015 weresummarized as follows:Year ending 31st March,Millions of yen

Thousands of
U.S. dollars

2016

¥–

$–

2017

–

–

2018

–

–

2019

–

–

2020

–

–

70,000582,508¥70,000$582,508

2021 and thereafter
Total

43

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2015

The amounts of lease obligations included in “Other” were ¥21
million ($174 thousand) and ¥31 million at 31st March, 2015
and 2014, respectively. The average interest rates on leaseobligations at 31st March, 2015 with maturity dates on or
before and subsequent to 31st March, 2016 were 2.18% and1.99%, respectively. The average interest rates on leaseobligations at 31st March, 2014 with maturity dates on or
before and subsequent to 31st March, 2015 were 2.28% and2.07%, respectively.
The aggregate annual maturities of lease obligations
subsequent to 31st March, 2015 were summarized as follows:Year ending 31st March,Millions of yen

Thousands of
U.S. dollars

2016

¥9

$74

2017

7

58

2018

3

24

2019

0

0

2020

–

–

2021 and thereafter

–

–

¥21

$174

Total

18. Retirement Benefit Plans
Outline of the retirement benefit plan adopted by the Company
The consolidated subsidiaries have adopted funded defined
benefit plans to cover the payment of retirement benefits toemployees.
As for the defined benefit pension plans (funded) of theconsolidated subsidiaries, lump-sum benefits or pensions areprovided depending on the service years, etc. Retirement
benefit trust is established for the defined benefit pension
plan.

SENSHU IKEDA HOLDINGS,INC.

As for lump-sum payment plans of the consolidated
subsidiaries (which are unfunded plans, but after theestablishment of retirement benefit trust scheme, havebecome funded plans), lump-sum payments are made as
retirement benefits depending on the service years, etc.
Certain consolidated subsidiaries have adopted lump-sum
payment plans (all unfunded) as defined benefit plans, where
net defined benefit liability and retirement benefit expenses
are calculated by the simplified method.

Thousands of
U.S. dollars

2014

2015

2015

Retirement benefit obligation at¥31,304 ¥32,008 $260,497
beginning of the year
Cumulative effect of change inaccounting policy
Balance at the beginning ofcurrent period which reflects
the change in accounting
policy–(723)

Thousands of
U.S. dollars

Millions of yen
2015
Funded retirement benefit
obligation
Pension plan assets(1)	Reconciliation of the beginning balance to the endingbalance of retirement benefit obligation
Millions of yen(3)	Reconciliation of the ending balance of retirement benefit
obligation and pension plan assets to the consolidatedbalance sheet amounts of net defined benefit liability andasset

Unfunded retirement benefit
obligation
Net amount of liability andasset on consolidatedbalance sheets2014¥30,488 ¥31,184 $253,707(46,502)(37,680)(386,968)(16,014)(6,496)(133,261)

137

120

1,140

¥(15,877) ¥(6,376) $(132,121)
Thousands of
U.S. dollars

Millions of yen(6,016)2015
Net defined benefit liability
Net defined benefit asset

2015

2014

2015

¥137 ¥120 $1,140(16,014)(6,496)(133,261)

30,581

32,008254,481

Service cost

793

1,029

6,598

Interest cost

395

401

3,287

Net amount of liability and asset
on consolidated balance¥(15,877) ¥(6,376) $(132,121)
sheets(4) Retirement benefit expenses consisted of the following:

Actuarial gain or loss incurred
during the year

433

(356)

3,603

Payment of retirement benefits(1,592)(1,791)(13,247)

13

12

108

Other

Retirement benefit obligation at¥30,625 ¥31,304 $254,847
end of the year(2)	Reconciliation of the beginning balance to the endingbalance of pension plan assets
Thousands of
U.S. dollars

Millions of yen
2014

2015
Pension plan assets at
beginning of the year2015¥37,680 ¥29,370 $313,555

Expected return on plan assets

735

624

6,116

Actuarial gain or loss incurred
during the year

7,490

3,752

62,328Contributions from employer

1,750

1,756

14,562

Payment of retirement benefits(1,154)(1,202)(9,603)

–

3,378

–

Contribution of securities toretirement benefit trust
Pension plan assets at end of
the yearThousands of
U.S. dollars

Millions of yen
2015
Service cost

2014

2015

¥793 ¥1,029 $6,598

Interest cost

395

401

3,287

Expected return on plan
assets

(735)

(624)

(6,116)

Amortization of actuarial loss

201

892

1,672

Amortization of prior service
cost

(336)

(336)

(2,796)

Amortization of transitional
obligation

659

659

5,483

Net periodic retirement
benefit expenses fordefined benefit pension
plans¥978 ¥2,022 $8,138¥46,502 ¥37,680 $386,968

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201544

(5)	Remeasurements of defined benefit plans included inother comprehensive income	Remeasurements of defined benefit plans included inother comprehensive income (before related tax effects)
consisted of the following:

Prior service cost

Discount rate

Thousands of
U.S. dollars

Millions of yen
2014

2015

(8) The assumptions used for actuarial calculations

Actuarial gain or loss

7,258

–

60,397

Net retirement benefit
obligation at transition

659

–

5,483

Total

– $63,085¥7,581(6)	Remeasurements of defined benefit plans included inaccumulated other comprehensive income
Remeasurements of defined benefit plans included inaccumulated other comprehensive income (before related
tax effects) consisted of the following:Thousands of
U.S. dollars

Millions of yen
2014

2015
Unrecognized prior service
cost

2015

¥(2,113) ¥(2,450) $(17,583)

Unrecognized actuarial gain orloss(7,052)

205(58,683)

Unrecognized net retirement
benefit obligation at transition

–

659

–

Total

¥(9,166) ¥(1,585) $(76,275)(7) Matters related to pension plan assets1)	Ratio of the main components in the total pension plan
assets are as follows:
2014

2015
Bonds

10%

10%

Stocks61%

67%

Short-term investment fundincluding cash and deposits

14%

6%

Life insurance company
general accounts

4%4%

Others

11%

13%

Total

100%

100%

Note:
Total pension plan assets include retirement benefit trust ofwhich securities are contributed for the pension plan, which
accounts for 34% of the total.
2)	Setting of long-term expected rates of return on plan
assetsFor the purpose of determining the long-term expected
return on plan assets, the present and anticipatedallocation of plan assets and the present and expectedlong-term rates of return on various assets composing
the plan assets are taken into account.

45

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 20152014
1.0%-1.3%%

Expected rate of return on plan
assets2.5%

2.5%

Expected rate of salary increase

1.66%-3.45%

1.62%-3.37%

2015– $(2,796)¥(336)2015
0.08%-1.91%

19. Asset Retirement Obligations
Notes concerning asset retirement obligations are omitted due
to lack of significance of its total amount.

20. Contingent Liabilities
Contingent liabilities for guarantee of corporate bonds
included in “Securities,” which were issued by private
placement (Article 2, Paragraph 3 of the Financial Instruments
and Exchange Act of Japan) amounted to ¥4,247 million($35,341 thousand) and ¥7,879 million at 31st March, 2015
and 2014, respectively.

21. Shareholders’ Equity
Japanese banks, including the Company, are required tocomply with the Banking Act and the Act. The Act stipulates
that neither additional paid-in capital nor the legal reserve isavailable for dividends, but that both may be used to reduceor eliminate a deficit. Under the Banking Act, an amount which
is at least equal to 20% of the aggregate amount of cash
dividends and certain appropriations of retained earnings
associated with cash outlays applicable to each fiscal period
is to be appropriated to the legal reserve until the aggregate
amount of the legal reserve and the capital surplus accountequals 100% of the amount of share capital. The Act also
provides that if the aggregate amount of additional paid-in
capital and the legal reserve exceeds 100% of the amount ofshare capital, the excess may be distributed to theshareholders either as a return of capital or as dividends
subject to the approval of the shareholders.
The maximum amount which the Company can distribute as
dividends is calculated based on the non-consolidated
financial statements of the Company and in accordance with
the Act.

SENSHU IKEDA HOLDINGS,INC.

(1) Class and number of shares issued and treasury stock
Movements in common stock, first-class preferred stock,second-class preferred stock and treasury stock during
the years ended 31st March, 2015 and 2014 weresummarized as follows:
Number of shares (in thousands)
Year ended 31st
March, 2015

1st April,
31st March,2014 Increase Decrease 2015

Note

Outstanding shares:
Common stock

238,458––

238,458

Second-class preferred stock

23,125––23,125

Third-class preferred stock

7,500

–

–

7,500

269,083––

269,083

Common stock

1,269

203

1,034

438 1,2 and 3

Total

1,269

203

1,034

438

Total
Treasury stock:

Notes:
1.	The number of treasury stock as of 1st April, 2014 and as of
31st March, 2015 includes the Company’s shares owned by
the trust of 1,175 thousand shares and 196 thousand
shares, respectively.
2.	Increase in treasury stock of common stock (203 thousand
shares) was due to acquisition of shares based on
resolution of the Board of Directors (200 thousand shares)
and acquisition of shares from the shareholders who owned
fractional shares less than one unit (3 thousand shares).
3.	Decrease in treasury stock of common stock (1,034
thousand shares) consisted of disposal of shares following
the acquisition request from the shareholders who owned
fractional shares less than one voting right (0 thousand
shares), transfer due to exercise of stock option (54thousand shares) and transfer to the Senshu Ikeda Bank
Employees’ Shareholders Association (979 thousand
shares).
Number of shares (in thousands)
Year ended 31st
March, 2014

1st April,
31st March,2013 Increase Decrease 2014

Notes:
1.	Decrease in outstanding shares of first-class preferred stock(7,400 thousand shares) was due to retirement of treasury
stock.
2.	Increase in outstanding shares of third-class preferred stock(7,500 thousand shares) was due to issuance of new sharesthrough a third-party allotment.
3.	Increase in treasury stock of common stock (4 thousand
shares) was due to acquisition of shares from theshareholders who owned fractional shares less than one
unit.
4.	Decrease in treasury stock of common stock (1,088
thousand shares) consisted of disposal of shares following
the acquisition request from the shareholders who owned
fractional shares less than one voting right (0 thousand
shares), transfer due to exercise of stock option (45thousand shares) and transfer to the Senshu Ikeda Bank
Employees’ Shareholders Association (1,043 thousand
shares).
5.	Increase in treasury stock of first-class preferred stock(7,400 thousand shares) was due to purchase of treasury
stock based on resolution of the Board of Directors.
6.	Decrease in treasury stock of first-class preferred stock(7,400 thousand shares) was due to retirement of treasury
stock based on resolution of the Board of Directors.
(2) Stock subscription rights
The Company resolved to grant stock subscription rights(stock option) to certain directors and executive officers
of its subsidiaries at the Board of Directors’ meeting heldon, 30th July, 2014, 31st July, 2013, 31st August, 2012,
28th July, 2011 and 24th February, 2011.
The balance of stock subscription rights granted for stock
option program are ¥69 million ($574 thousand) and ¥68
million at 31st March, 2015 and 2014, respectively.
Stock option related expenses for the years ended 31st
March, 2015 and 2014 amounted to ¥26 million ($216
thousand) and ¥26 million, respectively.

Note

Outstanding shares:
Common stock

238,458––

First-class preferred stock

7,400

–

7,400

–

Second-class preferred stock

23,125––23,125

–

7,500

–

7,500

268,983

7,500

7,400

269,083

2,352

4

1,088

1,269

3 and 4

–

7,400

7,400

–

5 and 6

2,352

7,404

8,488

1,269

Third-class preferred stockTotal

238,458
1
2

Treasury stock:
Common stock
First-class preferred stock
Total

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2015

46

The stock option activity is as follows:

The stock option outstanding at 31st March, 2015 is asfollows:
Date of resolution
Persons granted

24th February, 2011
Directors of thesubsidiaries: 

22

Executive officers of
the subsidiaries: 19

28th July, 2011
Directors of thesubsidiaries: Date of resolution
16

Executive officers of
the subsidiaries:18

28th
July,
2011

31st
August,
2012

31st
July,
2013

30th
July,
2014

28,34030,40049,50053,800–55,900Non-vested:
31st March,
2014-Outstanding

Number of stock option
by type of shares (*)

Common stock:
Common stock:
84,78072,760Granted

–

–

–

–

Forfeited

–

–

–

–

–

Date of grant

15th March, 2011

31st August, 2011

Vested11,22011,70015,50014,6001,500

Vesting conditions

To exercise within 10
days after retirement

To exercise within 10
days after retirement

31st March,
2015-Outstanding

17,12018,70034,00039,20054,400Applicable service
periodFrom 15th March, 2011 to
the date of retirement

From 31st August, 2011 to
the date of retirement

Vested:Exercise period

From 16th March, 2011
to 31st July, 2041

From 1st September,2011 to 31st July, 2041

–

–

–

–

–

Vested11,22011,70015,50014,6001,500

Exercised

11,22011,70015,50014,6001,500

Forfeited

–

–

–

–

–

–

–

–

–

–

Date of resolution
Persons granted

31st August, 2012
Directors of thesubsidiaries: 

31st July, 2013

Directors of the
10 subsidiaries: 

Executive officers of
the subsidiaries: 16

10

Executive officers of
the subsidiaries: 16

31st March,
2014-Outstanding

31st March,
2015-Outstanding(*)	The number of stock options is converted into the numberof shares after the one-for-five reverse stock split ofcommon stock on 1st August, 2012.

Number of stock option
by type of shares (*)

Common stock:
Common stock:69,50053,800Date of grant

1st October, 2012

2nd September, 2013

Vesting conditions

To exercise within 10
days after retirement

To exercise within 10
days after retirement

Applicable service
periodFrom 1st October, 2012 to From 2nd September, 2013 to
the date of retirement
the date of retirement

Date of resolution

Exercise period

From 2nd October, 2012 From 3rd September,
to 31st July, 2042
2013 to 31st July, 2043

Exercise priceDate of resolution
Persons granted

30th July, 2014
Directors of thesubsidiaries: 

10Price information is as follows:

Average stock price at
exercise
Fair value price at grant
date

Executive officers of
the subsidiaries: 15
Number of stock option
by type of shares (*)

Common stock:55,900Date of grant

28th August, 2014

Vesting conditions

To exercise within 10
days after retirement

Applicable service
periodFrom 28th August, 2014 to
the date of retirement

Exercise period

From 29th August, 2014
to 31st July, 2044(*)	The number of stock options is converted into the numberof shares after the one-for-five reverse stock split ofcommon stock on 1st August, 2012.

47

24th
February,
2011

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2015

Date of resolution
Exercise price
Average stock price at
exercise
Fair value price at grant
date

24th
February,
2011

28th
July,
2011

31st
August,
2012

31st
July,
2013

30th
July,
2014

¥1 ¥1 ¥1 ¥1 ¥
518

518

518

518

¥490 ¥535 ¥449 ¥430 ¥24th
February,
2011

28th
July,
2011

31st
August,
2012

31st
July,
2013

1
529
497

30th
July,
2014

$0.00 $0.00 $0.00 $0.00 $ 0.00
4.31

4.31

4.31

4.31

$4.07 $4.45 $3.73 $3.57 $Note:
The impact of the one-for-five reverse stock split ofcommon stock on 1st August, 2012 is taken into
consideration.

4.40
4.13

SENSHU IKEDA HOLDINGS,INC.

The method for estimating the fair value price of 2014 stock
option granted in the year ended 31st March, 2015 was asfollows:
Measurement method: Black-Scholes model
Major fundamental factors and assumptions used to measurefair value
Date of resolution

23. Other Income
Other income for the years ended 31st March, 2015 and 2014
consisted of the following:

29.03%

2014

2015

30th July, 2014

Volatility of stock price *1

Thousands of
U.S. dollars

Millions of yen

2015

Gain on sales of equity securities ¥3,907 ¥5,879 $32,512
Gain on money held in trust

1,707

384

14,204

Estimated dividend *3

2.708%

Other

9,439

9,370

78,547

Interest rate with risk free *40.122%

Total

Estimated remaining outstanding period *2

3.937years*1	Actual stock price during the period (from 20th September,2010 to 28th August, 2014) corresponding to the estimatedremaining outstanding period*2	For each director or executive officer in office, the difference
between “the average term of office of retired directors or
executive officers” and “the years in office of the director or
executive officer at the time stock options were granted”
was calculated, and if said difference was less than 0.8
years, the average of the estimated remaining outstanding
period was calculated using 0.8 years, by taking into
account the period remaining to the next annual
shareholders’ meeting.
*3	¥15 ($0.12) of latest annual dividend (including the effect ofreverse stock split) /¥554 ($4.61) of stock price on the basedate*4	Yield of Japanese government bonds approximating theestimated remaining outstanding period
In estimating the vested number of stock options, theCompany basically reflects only the actual forfeited number,since it is difficult to make a reasonable estimate on the future
forfeited number.

¥15,054 ¥15,633 $125,272

24. Other Operating Expenses
Other operating expenses for the years ended 31st March,2015 and 2014 consisted of the following:

2014

2015
Loss on redemption of debt securities––

Loss on devaluation of debt securities

–

3,367

–

2,027

275

16,867

Other
Total

Other operating income for the years ended 31st March, 2015
and 2014 consisted of the following:Thousands of
U.S. dollars

Millions of yen

Other
Total

–

¥14,350 ¥6,592 $119,414

25. Other Expenses
Other expenses for the years ended 31st March, 2015 and2014 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2014

2015

Provision for possible loan losses ¥– ¥745 $–

22. Other Operating Income

Gain on sales of securities andtrading account securities

2015

Loss on sales of debt securities ¥12,323 ¥2,948 $102,546

2015

2015

Thousands of
U.S. dollars

Millions of yen

2014

2015

Write-offs of loans and bills discounted

4,720

3,984

39,277

Loss on sales of equity securities

511

480

4,252

Loss on devaluation of equity securities

95

104

790

Loss on money held in trust

37

603

307

7,555

7,732

62,869

Other
Total

¥12,920 ¥13,650 $107,514¥10,074 ¥6,192 $83,831
962

740

8,005

¥11,036 ¥6,933 $91,836

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201548

26. Dividends
Cash dividends paid during the fiscal year ended 31st
March, 2015
Resolution by annual shareholders’ meeting on 30th June, 2014
Dividend amount Dividends per share
Type ofstock
Commonstock

Recorddate

Effective Millions Thousands ofdateof yen U.S. dollars

Yen

U.S.
dollars

31st March, 30th June,¥3,575 $29,749 ¥15 $0.12
2014
2014

Cash dividends with record dates falling in the fiscal year
ended 31st March, 2014 and effective dates coming after
the end of the fiscal year

Source ofTypes of stock dividends
Common stock

Recorddate

Dividend
amountDividends
per share

Millionsof yenYen

Effective
date

Retained 31st March, 30th June,earnings
¥
2014
2014

3,575 ¥15

Second-class
Retained 31st March, 30th June,
preferred stock earnings
¥
2014
2014

1,275

¥1,020 divided
by 18.5

Second-class
31st March, 30th June,¥1,020 divided $8.48 divided
preferred stock
2014
2014
¥1,275 $10,609
by 18.5by 18.5

Note:
The amount of cash dividends on common stock by resolutionof annual shareholders’ meeting on 27th June, 2014 includes
the ¥17 million ($141 thousand) in cash dividends on the
Company’s shares owned by the trust.

27. Cash and Cash Equivalents
A reconciliation of cash and due from banks in theaccompanying consolidated balance sheets to cash and cash
equivalents in the accompanying consolidated statements ofcash flows at 31st March, 2015 and 2014 was summarized asfollows:

Cash dividends with record dates falling in the fiscal year
ended 31st March, 2015 and effective dates coming after
the end of the fiscal year
Types of stock
Common stock

Record date

Effective date

Retained earnings 31st March, 2015 29th June, 2015

Second-class
Retained earnings 31st March, 2015 29th June, 2015
preferred stock
Third-class
Retained earnings 31st March, 2015 29th June, 2015
preferred stock
Dividend amountMillionsof yenTypes of stock
Common stock

Dividends per share

Thousands of
U.S. dollars

Yen

¥

3,573 $

29,732 ¥Second-classpreferred stock ¥

1,275 $

10,609

Third-classpreferred stock ¥

530 $

U.S. dollars

Cash and cash equivalentsa.

Resolution by annual shareholders’ meeting on 26th June,
2013
Dividend
amountDividends
per share

Millionsof yenYenType of stock

Record date Effective dateCommon stock

31st March, 2013 27th June, 2013 ¥

3,574 ¥15

First-class
31st March, 2013 27th June, 2013
preferred stock¥

392¥ 980 divided
by 18.5

Second-class
31st March, 2013 27th June, 2013¥
preferred stock

1,275¥1,020 divided
by 18.5

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2015

(12,028)(9,341)(100,091)¥532,484 ¥206,317 $4,431,089

Finance leases
As Lessee
Information on finance leases is omitted due to lack ofsignificance.

70.7 $0.58

Cash dividends paid during the fiscal year ended 31st
March, 20142015

¥544,513 ¥215,658 $4,531,189

28. Leases¥1,020 divided $ 8.48 divided
by 18.5by 18.5

Note:
The amount of cash dividends on common stock by resolutionof annual shareholders’ meeting on 26th June, 2015 includes
the ¥2 million ($16 thousand) in cash dividends on the
Company’s shares owned by the trust.

49

Deposits other than deposits
with the Bank of Japan

15 $0.12

4,410 ¥

2014

2015
Cash and due from banks

Source ofdividends

Thousands of
U.S. dollars

Millions of yenb.

Operating leases
As Lessee
Future minimum lease payments under non-cancellable
operating leases subsequent to 31st March, 2015 wereas follows:Year ending 31st MarchMillions of yen

Thousands of
U.S. dollars

2016

¥817

$6,798

2017 and thereafter
Total

5,190

43,188¥6,007$49,987

SENSHU IKEDA HOLDINGS,INC.

29. Income Taxes
Income taxes applicable to the Company and its domestic
subsidiaries comprise corporate tax, inhabitants’ taxes andenterprise tax which, in the aggregate, resulted in a statutory
tax rate of 35.5% and 37.9% for the years ended 31st March,2015 and 2014, respectively.
The tax effect of temporary differences which gave rise tosignificant portions of the deferred tax assets and liabilities at
31st March, 2015 and 2014 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2014

2015

2015

Deferred tax assets:
Reserve for possible loan losses ¥28,533 ¥31,867 $237,438
Provision for employees’ bonuses

558

599

Net defined benefit liability

47

1,791

391

Loss on devaluation of securities

4,765

6,747

39,652

Tax loss carryforwards

8,220

16,562

68,403

Depreciation

689

777

5,733

Net unrealized loss on availablefor-sale securities
Other

4,643

1

3,680

8

3,352

3,350

27,893Gross deferred tax assets

46,16765,377384,180

Valuation allowance(20,430)(35,831)(170,009)

Total deferred tax assets

25,73729,545

214,171

Non-taxable accrued dividend income

(264)

(324)

(2,196)

Net unrealized gain on availablefor-sale securities(6,922)(2,991)(57,601)

Net defined benefit asset(1,419)–(11,808)

(27)

(14)

(224)

(8,634)(3,330)(71,848)

Following the promulgation of “Act for Partial Amendment of
the Income Tax Act” (Act No. 9, 2015) on 31st March, 2015,
the corporate tax rates, etc. was lowered from the year
beginning on or after 1st April, 2015. Accordingly, the effective
statutory tax rate used to calculate deferred tax assets anddeferred tax liabilities was changed from 35.59% to 33.01%
with respect to the temporary differences expected to beeliminated in the year beginning on 1st April, 2015 or 32.21%
with respect to the temporary differences expected to beeliminated in the year beginning on 1st April, 2016. Due tosuch change in tax rate, deferred tax assets decreased by¥2,015 million ($16,767 thousand), while net unrealized gain
(loss) on available-for-sale securities increased by ¥719
million ($5,983 thousand), net unrealized gain (loss) on
deferred hedges increased by ¥0 million ($0 thousand), andincome taxes-deferred increased by ¥2,735 million ($22,759
thousand).
From the year beginning on or after 1st April, 2015, theamount of deductible losses carried forward is limited up to
the amount corresponding to 65/100 of income before
deduction of losses carried forward. The limitation will bechanged to the amount corresponding to 50/100 of income
before deduction of losses carried forward for the year
beginning on or after 1st April, 2017. Following the change,deferred tax assets decreased by ¥1,396 million ($11,616
thousand) and income taxes-deferred increased the sameamount.

Deferred tax liabilities:

Other
Total deferred tax liabilities
Net deferred tax assets¥17,103 ¥26,215 $142,323

A reconciliation of the statutory tax rate to the effective tax rate
for the years ended 31st March, 2015 and 2014 was asfollows:
2015

2014

Statutory tax rate

35.5%

37.9%

Permanently non–taxable income

(1.3)

(0.0)

Permanently non–deductible expenses

0.3

0.3

(50.2)(26.6)Per capita portion of inhabitants’ taxes

0.5

0.5

Unused tax loss carryforwards that
had expired

18.3

–

Deduction limit of tax loss
carryforwards

6.1–

Decrease in deferred tax assets due
to changes in tax rate

12.0

1.7

Other

(2.5)

(1.0)

Effective tax rate

18.7%

12.8%

Valuation allowance

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201550

30. Comprehensive Income
Reclassification adjustments and tax effect amounts of othercomprehensive income for the year ended 31st March, 2015
and 2014 were as follows:

2014

Thousands of U.S. dollars
Lending

2015

(595)

(3,823)(4,951)

Amount before tax effect25,315(6,931)

210,659

Tax effect amount(4,056)(999)(33,752)

Net unrealized gain (loss) on
available-for-sale securities

21,258(7,931)

176,899

Amount for the year

96

(43)

798

Reclassification adjustment

(91)

42

(757)

Amount before tax effect

4

(0)

33

Tax effect amount

(0)

0

(0)

Net unrealized gain on
deferred hedges

4

0

33

Remeasurements of defined
benefit plans

7,057

–

58,725

524

–

4,360

(ii) Tangible fixed assets
Information about tangible fixed assets has notbeen presented as tangible fixed assets inside
Japan accounts for more than 90% of theconsolidated tangible fixed assets at 31st March,2015 and 2014.

Amount for the year
Amount before tax effect

7,581

–

63,085

Tax effect amount(2,388)–(19,871)

Remeasurements ofdefined benefit plans

5,193

–

43,213c. Information about main customers
Information about main customers has not beenpresented as there is no income from particularcustomer which accounts for more than 10% of theconsolidated income for the years ended 31st March,2015 and 2014.

Total other comprehensive income ¥(26,456) ¥(7,930) $(220,154)(2) Other information about reportable segments
Other information about reportable segments has notbeen presented as the Group is engaged only in banking
business for the years ended 31st March, 2015 and 2014.

31.	Segment Information and RelatedInformation
Segment information
Reportable segment information is omitted because the Groupis engaged only in banking business and “other” in ouroperating results, including leasing business was immaterial
for the years ended 31st March, 2015 and 2014.
(1) Related informationa. Information about services
For the year ended 31st March, 2015
Securities trading
and investment

Other

Total

Income from external¥48,164 ¥31,153 ¥35,007 ¥114,324
customers

For the year ended 31st March, 2014
Millions of yen
Securities trading
and investment

Other

Total

Income from external¥51,103 ¥22,831 ¥30,920 ¥104,855
customers

51

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201532.	Related Party Transactions
There were no transactions between a consolidated subsidiaryand related parties for the years ended 31st March, 2015 and2014.

33.	Financial Instruments and Related
Disclosures

Millions of yen

Lending

Total

b. Information about geographical areas(i) Income
Information about income has not been presented
as income from external customers inside Japanaccounts for more than 90% of the consolidated
income for the years ended 31st March, 2015 and2014.

Unrealized gain (loss) on deferred hedges:

LendingOther¥25,911 ¥(3,107) $215,619

Reclassification adjustment

Reclassification adjustment

Securities trading
and investment

Income from external$400,798 $259,241 $291,312 $951,352
customers

Unrealized gain (loss) on
available-for-sale securities:
Amount for the year

For the year ended 31st March, 2015

Thousands of
U.S. dollars

Millions of yen
2015

Note:
“Income” is presented in lieu of net sales presented by
non-financial companies.

1.

General Information(1) Policy for financial instruments
The Group, whose core operation is The Senshu Ikeda
Bank, Ltd. (the “Bank”), is engaged in the various
financial services as a regional financial institution. The
Group holds financial assets and liabilities which are
subject to fluctuations in the interest rates and market
prices in the principal businesses such as deposit-taking

SENSHU IKEDA HOLDINGS,INC.

and lending services and market activities including
securities investment. In order to serve for setting up
strategic targets in response to the changes in market
environments, the Group conducts integrated asset andliability management (“ALM”) and utilizes derivative
contracts as a part of ALM.
(2) Contents of financial instruments and their risks
Financial assets held by the Group mainly consist of loans
to domestic corporate and individual customers, which
are exposed to credit risk arising from customers’
nonperformance of contractual obligations and interest
rate movement risk. Securities held by the Groupprincipally consist of equity securities, debt securities andinvestment trusts, which are held for pure investment
purpose and strategic investment purpose as availablefor-sale securities and partially, for holding to maturity andtrading purposes. These financial assets are exposed tocredit risk of issuers and market risk associated withinterest rates, stock prices and foreign exchanges.
Deposits which are major financial liabilities are exposed
to liquidity risk that unexpected cash flow might arise. In
addition, other fund raising sources are exposed to theliquidity risk that necessary fund might not be secured
when the Group fails to utilize the market under certain
circumstances, or that the Group might be obliged tofund at more unfavorable interest rates than normal. In
addition, these financial liabilities are exposed to the riskof fluctuations in interest rates as well as financial assets.
The Group uses derivative contracts to meet thecustomers’ needs and principally as a means of risk
control over the assets and liabilities. In addition, as apart of trading activities (to earn short-term trading gains),
futures instruments including equity and debt securities
are utilized. These derivatives are exposed to the credit
risk (counterparty risk) arising from customers’
nonperformance of contractual obligations and market
risk arising from the fluctuations in interest rates, stock
prices, foreign exchanges, etc.
(3) Risk management system for financial instruments
The Group has established the risk control department
independent from front offices and defines basic risk
management policies. Specifically, the risk management
system and various rules including the basic policy onrisk control are determined by the Board of Directors, andthe responsible functions by risk categories and theintegrated risk control function are clearly defined. In
addition, the “Risk Management Committee” and the“ALM Committee” have been established to monitor therisk profiles of the Group and discuss management issues
as well as risk control measures. And such matters arereported to the Board of Directors and accordingly,
effective risk management system at the managementlevel is structured.

a. Integrated risk management
The Group conducts integrated risk management inaccordance with the basic policy on risk control andvarious integrated risk control rules. Specifically, theGroup conducts integrated control by identifying therisks assessed by risk categories such as credit risk,
market risk and others including credit concentration
risk not considered in the computation process of thecapital ratio and interest rate risk of banking accounts
and compares them with management capacity(capital).
b. Credit risk management
The Group analyzes and controls the credit portfolio in
accordance with the Company’s policy on credit risk
control and various credit risk control rules. The Group
maintains and operates a system of investigation,internal rating, asset self-assessment in monitoring
individual transactions.
These credit control procedures are performed byeach operating office, credit investigation department
and risk control departments of the Bank. With respect
to credit risk of issuers of securities and counterparty
risk of derivative transactions, the risk control
departments of the Bank monitor the identification of
credit information and fair values. In addition, the risk
control department of the Company reports on aregular basis to the Board of Directors of the Company.
Furthermore the internal audit departments audit thestatus of credit control.
c. Market risk management(i) Market risk management
The Group controls market risk arising fromfluctuations in interest rates, stock prices, foreignexchanges, etc. in accordance with the Company’s
policy on market risk control and various market risk
control rules. Specifically, the risk control
department of the Company identifies the volume ofmarket risk using the Value-at-Risk (VaR) method
and monitors compliance with the risk limits
resolved by the Board of Directors throughcontinuous monitoring system. For securities, inaddition to above risk limit control policy, the Grouphas established and managed loss cut rules. The
relevant information is periodically reported by therisk control department to the Risk Management
Committee and the Board of Directors.
The ALM Committee identifies and confirms the
make-up of assets and liabilities and interest raterisk and discusses future measures. Specifically,
the responsible department of the Company for
ALM identifies comprehensively interest rates andperiods of financial assets and liabilities andmonitors using gap analysis and interest ratesensitivity analysis to secure stable and continuous
earnings.
SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2015

52

The Bank executes foreign exchange transactions
and foreign currency bond investments, which areexposed to foreign exchange risk, but thesubsidiary strives to minimize foreign exchange risk
by balancing the foreign exchange positions where
possible.
(ii) Derivative transactions
With respect to derivative transactions, theCompany has established an internal control
system including segregation of duties of thedepartments responsible for execution oftransactions, risk control and operation
administration and complies with the various market
risk control rules.
(iii)Quantitative information of market risk
The Group monitors the value at market risk offinancial instruments, such as deposits, loans andbills discounted and securities, using VaR everyday
as the change in market risk is larger than otherrisks.
The Group calculates the value at market risk
according to the variance-covariance approach(holding period–120 business days, confidence
interval–99.0%, and observation period–240
business days).
The value of market risk on financial instrumentswas ¥23.3 billion ($193.8 million) for interest rateand ¥22.8 billion ($189.7 million) for stocks at 31st
March, 2015. The value of market risk as a wholewith correlation in consideration was ¥51.9 billion($431.8 million).
The Group carries out back-testing to compare themodel-calculating VaR of securities on the banking
activities which influenced by market fluctuation(holding period–one business day) with real gain
and loss in order to verify their accuracy. As real
loss did not exceed the model-calculating VaR evenonce for the year ended 31st March, 2015, theGroup considers that the model calculates thevalue of market risk with sufficient confidence level.
However, VaR, which calculates the value of market
risk based on past fluctuations in the market,
sometimes cannot calculate the value of market risk
accurately under the condition that market
environment changes abruptly.

53

d. Liquidity risk management associated with fund raising
The Group conducts liquidity risk control for funding
activities in accordance with the Company’s policy on
liquidity risk control and various liquidity risk control
rules. Specifically, the department responsible for ALM
and the treasury department of the Bank identify theinvestment and funding status of the whole Group on atimely basis and control liquidity risk by securingliquidity of the assets, diversifying the funding
instruments and adjusting the short-term and longterm funding balances considering the market
environments to secure stable fund management.
SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2015

The risk control department identifies its response
capability if liquidity risk is revealed through monitoring
periodically the amount of liquid reserve assets thatcan be readily converted into cash, monitors theappropriateness of its fund management and reports itto the Risk Management Committee and the Board of
Directors.
(4)	Supplementary explanation about fair value of financial
instruments
The fair value of financial instruments include, in addition
to the value determined based on the market price, avaluation calculated on a reasonable basis if no market
price is available. Since certain assumptions are used in
calculating the value, the result of such calculation mayvary if different assumptions are used.
2.

Fair value of financial instruments

The carrying value, the fair value and the difference as of 31st
March, 2015 and 2014 are summarized in the following tables:
Note that securities such as unlisted equity securities forwhich fair value is extremely difficult to determine were notincluded in the following tables (See (Note 2) below):
Millions of yen
31st March, 2015
Cash and due from banks

Carrying
value

Fair value Difference¥544,513 ¥544,513 ¥–Call loans and bills bought

616

616

–

Monetary claims bought (*1)

80

80

–

Trading account securities:
Trading securities
Money held in trust

177

177

–

27,00027,000–

Securities:
Held-to-maturity debt securities

83,30583,895590

Available-for-sale securities

1,048,590

1,048,590–

3,642,033

3,654,870

12,837

6,320

6,321

0

Loans and bills discounted
Reserve for possible loan losses (*1)
Foreign exchange assets (*1)

3,672,521(30,488)

Total assets¥5,352,637 ¥5,366,065 ¥13,428

Deposits¥4,737,122 ¥4,737,336 ¥213

Negotiable certificates of deposit

1,543

1,543

Payables under securities
lending transactions–

251,176

251,176–

Borrowed money

159,198

159,638439

Foreign exchange liabilities

538

538

–

Corporate bonds and notes

70,00071,336

1,336

Total liabilities¥5,219,580 ¥5,221,570 ¥1,989

Derivative transactions (*2)
To which hedge accounting is
not applied
To which hedge accounting is applied
Total derivative transactions¥(1,121) ¥(1,121) ¥–
1,098

1,098

–

¥(22) ¥(22) ¥–SENSHU IKEDA HOLDINGS,INC.

Millions of yen
31st March, 2014
Cash and due from banks

Carrying
value

Thousands of U.S. dollars

Fair value Difference

31st March, 2015

¥215,658 ¥215,658 ¥–Cash and due from banks

Carrying
value

Fair value Difference$4,531,189 $4,531,189 $–Call loans and bills bought

775

775

–

Call loans and bills bought

5,126

5,126

–

Monetary claims bought (*1)

1,121

1,121

–

Monetary claims bought (*1)

665

665

–

122

122

–

1,472

1,472

–

27,00027,000–224,681

224,681–

Trading account securities:
Trading securities
Money held in trust

Trading account securities:

Securities:

Trading securities
Money held in trust
Securities:

Held-to-maturity debt securities

88,403

88,946542

Held-to-maturity debt securities

693,226

698,135

4,909

Available-for-sale securities

1,280,018

1,280,018–

Available-for-sale securities

8,725,888

8,725,888–

30,307,339

30,414,163

106,823

52,59252,6000Loans and bills discounted
Reserve for possible loan losses (*1)
Foreign exchange assets (*1)

3,602,329

Loans and bills discounted(37,082)

Reserve for possible loan losses (*1)

3,565,246

3,583,502

18,256

5,528

5,529

1

Foreign exchange assets (*1)

30,561,046(253,707)

Total assets¥5,183,875 ¥5,202,675 ¥18,800

Total assets$44,542,206 $44,653,948 $111,741

Deposits¥4,580,769 ¥4,581,200 ¥431

Deposits$39,420,171 $39,421,952 $1,772

Payables under securities
lending transactions

315,691

315,691–

Borrowed money

118,517

119,132

614

366

366

–

70,00071,5291,529

Foreign exchange liabilities

4,476

4,476

–

¥5,085,345 ¥5,087,921 ¥2,575

Corporate bonds and notes

582,508

593,625

11,117

Foreign exchange liabilities
Corporate bonds and notes
Total liabilities
Derivative transactions (*2)
To which hedge accounting is
not applied
To which hedge accounting is applied
Total derivative transactions

Negotiable certificates of deposit

12,84012,840

Payables under securities
lending transactions

2,090,172

2,090,172–

Borrowed money

1,324,773

1,328,434

3,653

Total liabilities¥(336) ¥(336) ¥–$43,434,967 $43,451,527 $16,551

Derivative transactions (*2)–

To which hedge accounting is
not applied¥22 ¥22 ¥–To which hedge accounting is applied

358

358

–

Total derivative transactions$(9,328) $(9,328) $–
9,137

9,137

–

$(183) $(183) $–(*1)	General and specific reserves for loan losses
corresponding to loans are deducted. With respect toreserve for loan losses related to monetary claims bought
and foreign exchange assets, carrying value is shown,net of reserve, since the amount is insignificant.
(*2)	Derivative transactions include all derivatives recorded inother assets and other liabilities. Assets and liabilities
arising from derivative transactions are shown on a net
basis.
(Note 1)	Valuation method for the fair value of financial
instruments
Assets:Cash and due from banks
The carrying value of due from banks without maturities ispresented as the fair value since the fair value approximatesthe carrying value. The carrying value of due from banks withmaturities is presented as the fair value since the fair value
approximates the carrying value due to remaining maturitiesof less than one year.

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201554

Call loans and bills bought
The carrying amount is presented as the fair value since thefair value approximates the carrying amount because thecontractual term is short (less than one year).
Monetary claims bought
Receivables related to factoring business are computed in thesame manner as loans.
Trading account securities
The fair value of securities such as debt securities held for
trading is determined using the quoted market price or the
price provided by counterparty financial institutions.
Money held in trust
For securities that are invested as part of trust assets in an
independently managed money trust with securities
management as the primary purpose, the fair value of equity
securities is determined using quoted market prices and thefair value of debt securities is determined using quoted market
prices or the prices provided by counterparty financial
institutions. Note that information on money held in trust byholding purpose is disclosed in Note 6.
Securities
The fair value of equity securities is determined using thequoted market prices and the fair value of debt securities isdetermined using the quoted market prices or the prices
provided by counterparty financial institutions. The fair valueof investment trusts is determined based on the published net
assets value. The fair value of privately placed guaranteedbonds issued by the Bank is determined in the same manner
as loans. Note that information on securities by holding
purposes is disclosed in Note 5.
Loans and bills discounted
The carrying value of the loans with floating interest rates,
which reflect short-term market interest rates, is presented as
the fair value since the fair value approximates the carrying
value as long as the creditworthiness of the borrower has notchanged significantly since the loan origination. The fair valueof the loans with fixed interest rates is determined based on
the aggregated value of principal and interest by categories
of types of loans, internal ratings and maturities discounted
using the interest rate assumed if the same loans were newly
originated. The carrying value of the loans with shortcontractual terms (less than one year) is presented as the fairvalue since the fair value approximates the carrying value.
Loan losses on receivables from bankrupt, effectively bankrupt
or likely to become bankrupt borrowers are estimated basedon factors such as the present value of expected future cash
flows or the expected amount to be collected from collateraland guarantees. Since the fair value of these items
approximates the carrying value, net of the currently expectedloan losses, such carrying value is presented as the fair value.
The carrying value of the loans which do not have defined
repayment due dates because the loans are limited to within
the amount of pledged assets is presented as the fair value

55

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2015

since the fair value approximates the carrying value
considering the expected repayment schedule and interest
rate conditions.
Foreign exchange assets
Foreign exchange assets consist of foreign currency deposits
with other banks (due from other foreign banks), export bills
and traveler’s checks, etc., (purchased foreign bills) and loans
on notes using import bills (foreign bills receivables). The
carrying value of these items is presented as the fair value,
since the fair value approximates the carrying value due tobeing deposits without maturity or having short contract terms(less than one year).
Liabilities:
Deposits and Negotiable certificates of deposit
The amount payable on demand as of the balance sheet date(i.e., the carrying value) is considered to be the fair value ofthe demand deposit. The fair value of time deposits isdetermined using the discounted present value of future cash
flows, grouped by certain maturity lengths. The discount rateused is the interest rate that would be applied to newly
accepted deposits. The carrying value of deposits whose
remaining maturity is within the short-term period (less than
one year) is presented as the fair value since the fair value
approximates the carrying value.
Payables under securities lending transactions
The carrying value is presented as the fair value since the fairvalue approximates the carrying value due to remaining
maturities of less than one year.
Borrowed money
The carrying value of floating rate borrowed money ispresented as fair value. This is because it reflects the market
interest rate in the short-term period, also the creditworthinessof the Company and the consolidated subsidiaries have notsignificantly changed since the borrowed money was
originated and accordingly fair value approximates the
carrying value. The fair value of fixed rate borrowed money iscalculated as the present value of expected future cash flows
from the aggregated value of principal and interest (theaggregated value of principal and interest using the interest
rate swap rate, in case of borrowings subject to special
treatment of hedge accounting for interest rate swaps) on
these borrowings grouped by certain maturity lengths, which
is discounted at an interest rate applicable to similarborrowings. The carrying value of borrowed money whose
remaining maturity is due within the short-term period (lessthan one year) is presented as the fair value since the fairvalue approximates the carrying value.
Foreign exchange liabilities
Foreign exchange liabilities consist of foreign bills sold andforeign bills payable. The carrying value is presented as thefair value since the fair value approximates the carrying value
due to remaining maturities of less than one year.

SENSHU IKEDA HOLDINGS,INC.

Corporate bonds and notes
The fair value of bonds and notes issued by the consolidated
subsidiary is determined using the market price.

(Note 3)	Repayment schedule of monetary receivables andsecurities with contractual maturities
Millions of yen

Derivative transactions:
31st March, 2015

See Note 34.

Due from banks(Note 2)	Financial instruments whose fair value is extremely
difficult to determine at 31st March, 2015 and 2014
were as follows: These securities are not included in“Securities” under “Assets” as part of the fair value
information of financial instruments.
Thousands of
U.S. dollars

Millions of yen
2014

2015

2015

Unlisted equity securities (*1) (*2) ¥5,759 ¥5,763 $47,923
Investments in partnerships (*3)
Other
Total

1,316

1,068

10,951

6

5

49¥7,082 ¥6,837 $58,933(*1)	No market price is available for unlisted equity securities
and the fair value is not disclosed since it is extremely
difficult to determine the fair value.
(*2)	The Company recognized impairment losses on unlisted
equity securities in the amount of ¥94 million ($782
thousand) and ¥96 million for the years ended 31st
March, 2015 and 2014, respectively.
(*3)	The fair value of investments in partnerships, whose
assets consist of securities such as unlisted equity
securities for which fair value is extremely difficult todetermine, is not disclosed.

Due inone yearor less

Due after Due after
one year three years
throughthroughthree years five years¥495,689 ¥– ¥–Call loans and bills bought

616

–

–

Monetary claims bought (*1)

80

–

–

235,797

253,585

86,3557,600

64,70011,000

Securities:
Held-to maturity debt securities:
Government bonds
Corporate bonds
Other
Available-for-sale securities
with maturities:–

25,000–7,600

23,700––16,00011,00075,355228,197

188,885

Government bonds

125,000

14,100–Local government bonds

17,773

26,212

3,940

Corporate bonds

70,372

104,680

24,025Other

15,05243,89247,390741,513607,975

450,681

6,321

–

–

Loans and bills discounted (*1, 2)
Foreign exchanges assets
Total¥1,480,020 ¥861,561 ¥537,037
Millions of yen

31st March, 2015
Due from banks

Due after
Due after
five years seven years
Due after
throughthroughseven years ten years ten years¥– ¥– ¥–Call loans and bills bought––

Monetary claims bought (*1)

–

–

–

189,919

14,25599,010

Securities:
Held-to maturity debt securities:

–

–

–

–

Government bonds

–

–

–

Corporate bonds

–

–

–

Other

–

–

–

189,919

14,25599,010

–

–

–

1,050

2,000

–
41,352Available-for-sale securities
with maturities:
Government bonds
Local government bonds
Corporate bonds
Other
Loans and bills discounted (*1, 2)
Foreign exchanges assets
Total

372

304

188,497

11,951

57,657306,197

314,915

1,189,918–––¥496,117 ¥329,170 ¥1,288,928

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2015

56

Millions of yen

31st March, 2014
Due from banks

Due inone yearor less

Thousands of U.S. dollars

Due after Due after
one year three years
throughthroughthree years five years¥163,565 ¥– ¥–

31st March, 2015
Due from banks

Due inone yearor less

Due after Due after
one year three years
throughthroughthree years five years$4,124,898 $– $–Call loans and bills bought

775

–

–

Call loans and bills bought

5,126

–

Monetary claims bought (*1)

1,121

–

–

Monetary claims bought (*1)

665

–

–

187,889

389,430

382,957

1,962,195

2,110,218

718,606

14,10033,50040,80063,243

538,403

91,536––25,000Government bonds–

208,038–

14,10028,5002,800

Corporate bonds

63,243

197,220

–

–

5,000

13,000

Other–133,144

91,536

173,789355,930

342,157

1,898,951

1,571,814

627,069

Government bonds

105,000

134,100

15,000Government bonds

1,040,193

117,333–

Local government bonds

25,04923,453

1,350

Local government bonds

147,898

218,124

32,786

Corporate bonds

42,914

114,038

50,932

Corporate bonds

585,603

871,099

199,925

826

84,338274,875

Other

125,255

365,249394,357

684,986

613,908

436,033

6,170,533

5,059,291

3,750,361

5,529

–

–

52,600––

Securities:
Held-to maturity debt securities:
Government bonds
Corporate bonds
Other
Available-for-sale securities
with maturities:

Other
Loans and bills discounted (*1, 2)
Foreign exchanges assets
Total¥1,043,868 ¥1,003,339 ¥818,991

31st March, 2014
Due from banks

Securities:
Held-to maturity debt securities:

Available-for-sale securities
with maturities:

Loans and bills discounted (*1, 2)
Foreign exchanges assets
Total

–

$12,316,052 $7,169,518 $4,468,977

Millions of yen

Thousands of U.S. dollars

Due after
Due after
five years seven years
Due after
throughthroughseven years ten years ten years

Due after
Due after
five years seven years
Due after
throughthroughseven years ten years ten years¥– ¥– ¥–

31st March, 2015
Due from banks$– $– $–Call loans and bills bought

–

–

–

Call loans and bills bought––

Monetary claims bought (*1)

–

–

–

Monetary claims bought (*1)

–

–

–

73,402

52,910105,555

1,580,419

118,623

823,916

Securities:
Held-to maturity debt securities:

Securities:

–

–

–

–

–

–

Government bonds

–

–

–

Government bonds

–

–

–

Corporate bonds

–

–

–

Corporate bonds

–

–

–

Other

–

–

–

Other

–

–

–

1,580,419

118,623

823,916–––

Available-for-sale securities
with maturities:

Held-to maturity debt securities:–

Available-for-sale securities
with maturities:

73,402

52,910105,555

35,5002,500–

Government bonds

Local government bonds

950

2,580

–

Local government bonds

8,737

16,643–

Corporate bonds

2,463

304

57,405

Corporate bonds

3,095

2,529

344,112Government bonds

Other
Loans and bills discounted (*1, 2)
Foreign exchanges assets
Total

34,48847,52648,149288,451

324,227

1,184,523–––¥361,853 ¥377,138 ¥1,290,079

Other
Loans and bills discounted (*1, 2)
Foreign exchanges assets
Total

1,568,586

99,450479,795

2,548,031

2,620,579

9,901,955–––$4,128,459 $2,739,202 $10,725,871(*1)	Loans and bills discounted and monetary claims bought
do not include ¥61,324 million ($510,310 thousand) and¥70,204 million of receivables such as those due frombankrupt, effectively bankrupt or likely to becomebankrupt borrowers at 31st March, 2015 and 2014,
respectively, since it is not certain when they can becollected or redeemed.
(*2)	Overdraft accounts of loans are shown under “Due in one
year or less.”

57

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2015

SENSHU IKEDA HOLDINGS,INC.

(Note 4)	Repayment schedule of bonds, borrowed money andother interest bearing liabilities.

Thousands of U.S. dollars

Millions of yen

31st March, 2015
Deposits (*1)
Negotiable certificates of deposit

Due after Due after
Due in one one year three years
year orthroughthroughlessthree years five years¥4,424,904 ¥250,152 ¥32,268
1,543

–

–

Payables under securities
lending transactions

251,176––

Borrowed money

67,372

15,19359,560–––

Corporate bonds
Total

31st March, 2015
Deposits (*1)
Negotiable certificates of deposit
Payables under securities
lending transactions¥721 ¥963 ¥–
–
–

–

–

¥60,793 ¥27,963 ¥–Millions of yen
Due after Due after
Due in one one year three years
year orthroughthroughlessthree years five years¥4,239,778 ¥272,112 ¥39,004

Payables under securities
lending transactions

315,691––

Borrowed money(*2)

85,07515,007

1,247

–

–

–

¥4,640,544 ¥287,120 ¥40,251
Millions of yen

Borrowed money(*2)
Corporate bonds
Total

495,631–––

Corporate bonds
Total$39,485,703 $2,208,080 $764,150

31st March, 2015
Deposits (*1)

$5,999 $8,013 $–Negotiable certificates of deposit
Payables under securities
lending transactions

Due after
Due after
five years seven years
Due after
throughthroughseven years ten years ten years¥883 ¥623 ¥–
–

–

–

154

17,032–

15,00055,000

–

–

–

–
–

–

–

Borrowed money

83,81458,250–416,077

166,430

–

Total

–

Payables under securities
lending transactions–

126,429

Corporate bonds–

31st March, 2014–

560,639–7,000

Deposits (*1)

2,090,172

Borrowed money–
20,000

Total–

Millions of yen
Due after
Due after
five years seven years
Due after
throughthroughseven years ten years ten years

50,000

Corporate bonds–

Thousands of U.S. dollars

10,07231st March, 2014

12,840

Payables under securities
lending transactions

Due after
Due after
five years seven years
Due after
throughthroughseven years ten years ten years

Corporate bonds

Deposits (*1)$36,822,035 $2,081,650 $268,519

Negotiable certificates of deposit¥4,744,997 ¥265,345 ¥91,828

Borrowed money
Total

31st March, 2015
Deposits (*1)

Due after Due after
Due in one one year three years
year orthroughthroughlessthree years five years$505,891 $232,695 $–(*1)	Demand deposits are disclosed under “Due in one year
or less” of deposits.
(*2)	As described in “Significant subsequent events” of notes
to consolidated financial statements, borrowed money of
The Senshu Ikeda Bank, Ltd., one of the Company’s
subsidiaries, whose borrowing of ¥8,000 million ($66,572
thousand) were repaid before maturity on 9th June, 2014,is disclosed under “Due in one year or less” of borrowed
money.

34. Derivatives
1.	Derivative transactions to which hedge accounting is notappliedWith respect to derivatives to which hedge accounting is
not applied, contract amount or notional principal, fair value
and related valuation gain or loss and computation methodof fair value are as follows: Note that contract amounts do
not represent the market risk exposure of derivativetransactions.

¥16,038 ¥72,656 ¥–

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201558

(2)	Bond related derivatives at 31st March, 2015(1)	Currency related derivatives at 31st March, 2015 and2014
Millions of yen
Contract amount/notional principal
31st March, 2015

Total

Over
one year

Fair
value

Valuation
gain (loss)

Over-the-counter transactions:
Currency swaps¥35,529 ¥26,239 ¥95 ¥95

Forward foreignexchange contracts:
Selling¥47,617

6(1,409)(1,409)Buying¥12,983

–

188

188

Selling¥17,382 ¥11,243

(528)

260

Buying¥17,382 ¥11,243

528

(94)

Currency options:Total¥(1,124) ¥(959)
Millions of yen
Contract amount/notional principal
31st March, 2014

Total

Over
one year

Fair
value

Valuation
gain (loss)

Over-the-counter transactions:
Currency swaps¥34,606 ¥22,934 ¥72 ¥72

Forward foreignexchange contracts:
Selling¥44,331

12

(478)

(478)

Buying¥9,463–

69

69

Selling¥10,507 ¥6,591

(400)

291

Buying¥10,507 ¥6,591

400

(167)

Currency options:Total¥(336) ¥(212)Thousands of U.S. dollars
Contract amount/notional principal
31st March, 2015

Total

Over
one year

Fair
value

Valuation
gain (loss)

Over-the-counter transactions:
Currency swaps$295,656 $218,349 $790 $790

Forward foreignexchange contracts:
Selling$396,246

49(11,725)(11,725)

Buying$108,038

–

1,564

1,564

Selling$144,645 $93,559(4,393)

2,163

Buying$144,645 $93,559

4,393

(782)

Currency options:Total$(9,353) $(7,980)

Notes:
1.	Transactions in the table above are stated at the fairvalue and the related valuation gain (loss) is reported in
the consolidated statement of operations.
2.	The fair value is determined by using the discounted
cash flow method or others.

59

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2015

Millions of yen
Contract amount/notional principal
Over
Fair
Total one year value

31st March, 2015
Financial instruments exchanges:
Bond futures:
Selling–
Buying–Bond futures options:
Selling–
Buying ¥30,000
Total

–
–

–
–

Valuation
gain (loss)

–
–

–
–
–
– ¥6 ¥3
¥6 ¥3

Thousands of U.S. dollars
Contract amount/notional principal
Over
Fair
Valuation
Total one year value gain (loss)

31st March, 2015
Financial instruments exchanges:
Bond futures:
Selling–
Buying–Bond futures options:
Selling–
Buying $249,646
Total

–
–

–
–

–
–

–
–
–
– $49 $24
$49 $24

Notes:
1.	Transactions in the table above are stated at the fairvalue and the related valuation gain (loss) is reported in
the consolidated statement of operations.
2.	Calculation method for fair value	The fair value of transactions listed on exchanges isdetermined using the last quoted market price at the
Osaka Exchange, Inc., etc.
	There were no bond related derivatives at 31st March,
2014.

SENSHU IKEDA HOLDINGS,INC.

35. Business Combination

2.	Derivative transactions to which hedge accounting isappliedTransactions under common control
With respect to derivatives to which hedge accounting isapplied, contract amount or notional principal and fairvalue at the balance sheet date by transaction type andhedge accounting method and computation method of thefair value are as follows. Note that contract amount or
notional principal does not represent the market risk
exposure of derivative transactions.
(1)	Currency related derivatives at 31st March, 2015 and2014
31st March, 2015

Millions of yen
Contract amount/notional principal

Hedge accounting Transaction
methodtype
DeferralCurrency
hedge
swaps
accounting

Major hedged
item

Total

Over
one year

Fair
value

Deposits
denominated inforeign currencies ¥–

¥–

¥–

Forwardforeignexchange
contracts–

25,172

–

Total

1,098
¥1,098

31st March, 2014

Millions of yen
Contract amount/notional principal

Hedge accounting Transaction
methodtype
DeferralCurrency
hedge
swaps
accounting

Major hedged
item

Fair
value

Securities
denominated inforeign currencies ¥5,664(2)	Date of business combination
Deemed acquisition date: 31st March, 2015

¥–

¥(0)

(3)	Legal form of the business combinations
Acquisition of shares from minority shareholders

–

359

–

29,768¥358
31st March, 2015

Thousands of U.S. dollars
Contract amount/notional principal

Forwardforeignexchange
contracts
Total(1)	Names and descriptions of businesses of combined
companies• Senshu Ikeda Lease Co., Ltd. (leasing services)• ‌Sengin General Leasing Company Limited (leasing
services)• ‌Senshu Ikeda Guarantee Co., Ltd. (credit guarantee
services)• Senshu Ikeda JCB Co., Ltd. (credit card services)• Senshu Ikeda DC Co., Ltd. (credit card services)• Senshu Ikeda VC Co., Ltd. (credit card services)• ‌Senshu Ikeda Capital Co., Ltd. (venture capital services)• ‌Senshu Ikeda System Co., Ltd. (computer softwaredevelopment and sales services)• ‌Senshu Ikeda Investment Management Co., Ltd.
(investment advisory and discretionary investment
services)• 9 Investment enterprise partnershipsOver
one year

Total

DeferralCurrency
hedge
swaps
accounting

1.	Overview of the transactions

Total

Forwardforeignexchange
contracts

Hedge accounting Transaction
methodtype

The Senshu Ikeda Bank, Ltd. and Senshu Ikeda Lease Co.,
Ltd., both of which are subsidiaries of the Company, haveacquired shares of consolidated subsidiaries from minority
shareholders.

Major hedged
item

Total

Over
one year

Fair
value

Deposits
denominated inforeign currencies $–

$–

$–

(4)	Name of the acquired companies
The names remain unchanged after the businesscombination(5)	Other overview of the transactions
In view of enhancing integrated management of theGroup and its corporate governance, some of common
stock of consolidated subsidiaries have been acquired
from minority shareholders. As a result, the ratio of equity
interests, including indirect holding, has increased.
2.	Overview of accounting treatment applied–

209,469–9,137$9,137

Derivatives in the table above are mainly accounted for hedge
accounting (deferral hedge accounting) in accordance withJICPA Industry Audit Committee Report No.25 “Accounting
and Auditing Treatment Relating to the Adoption of the
Accounting Standard for Foreign Currency Transactions for
Banks.” The fair value is determined by using the discounted
cash flow method.

In accordance with “Revised Accounting Standard forBusiness Combinations” (ASBJ Statement No. 21, 26th
December, 2008) and “Revised Guidance on AccountingStandard for Business Combinations and AccountingStandard for Business Divestitures” (ASBJ Guidance
No.10, 26th December, 2008), the transactions have beentreated as transactions with minority shareholders among
common control transactions.

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201560

3.	Additional acquisition of shares of subsidiaries(1) Acquisition cost and its components
Consideration for the acquisition Cash and due from banks ¥657 million ($5,467 thousand)Acquisition cost¥657 million ($5,467 thousand)(2)	The amount of amortization of goodwill incurred, amountof gains on negative goodwill incurred and the basis forrecognition
1) Amortization of goodwill incurred¥18 million ($149 thousand)
Gains on negative goodwill incurred ¥1,596 million ($13,281 thousand)2) The basis for recognition
Due to differences between costs of shares ofsubsidiaries acquired from minority shareholders andthe amount of decrease in minority interests.

36. Amounts per Share
Amounts per share at 31st March, 2015 and 2014 and for theyears then ended were summarized as follows:
Yen
U.S. dollars
2015
2014
2015
¥774.83 ¥610.84 $6.44

Net assets
Net income:
66.38
64.77
0.55
Basic
Diluted
66.34
64.73
0.55
Cash dividends¥15 ¥15 $0.12
Common stock
Second-class preferred stock ¥1,020 divided ¥1,020 divided $ 8.48 divided
by 18.5by 18.5by 18.5
Third-class preferred stock¥70.7– $0.58

Net assets per share as of 31st March, 2015 and 2014 werecomputed based on the following information:
Thousands ofMillions of yen
U.S. dollars
2015
2014
2015
¥234,788 ¥196,397 $ 1,953,798

Total net assets
Payment for second-class preferred(25,000)(25,000)(208,038)
stock
Dividends for second-class(1,275)(1,275)(10,609)
preferred stock
payment for third-class preferred stock(15,000)(15,000)(124,823)
Dividends for third-class(530)–(4,410)preferred stock
Stock subscription rights
(69)
(68)
(574)
Minority interests(8,485)(10,168)(70,608)
Amounts to be deducted from total net assets(50,360)(51,512)(419,072)
Net assets attributable to common stock¥184,427 ¥144,884 $ 1,534,717
as of 31st March, 2015 and 2014
Number of shares of common stock as of 31st
March, 2015 and 2014 used to compute net
238,020
237,189
asset per share (Unit: thousand shares)

61

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2015

Net income per share for the years ended 31st March, 2015
and 2014 are computed based on the following information:
Thousands ofMillions of yen
U.S. dollars
2015
2014
2015
¥17,584 ¥16,604 $146,326

Net income for the year
Dividends for second-class preferredstock based on the resolution at the(1,275)(1,275)(10,609)
regular general shareholders’ meeting
Dividends for third-class preferred stock
based on the resolution at the regular(530)–(4,410)
general shareholders’ meeting
Amounts not attributed to(1,805)(1,275)(15,020)common stock shareholders
Net income attributable to¥15,778 ¥15,329 $131,297
common stock
Average outstanding numberof shares of common stock
237,686
236,671(Unit: thousand shares)
Diluted net income per shareafter adjusting potential shares
Adjustment to net income¥– ¥– $–
Number of increased common
146
138
stock (Unit: thousand shares)
Of which, stock subscription rights
146
138

Note:
Cash dividends per share represent the cash dividends
proposed by the Board of Directors as applicable to thefiscal year.
(Change in accounting policy)
As per described in “Change in Accounting Policy,” theCompany has applied the provisions specified in the mainclause of Paragraph 35 of “Accounting Standard for
Retirement Benefits” (ASBJ Statement No. 26, 17th May,
2012; hereinafter “Accounting Standard Retirement
Benefits”) and in the main clause of Paragraph 67 of the“Guidance on Accounting Standard for Retirement
Benefits” (ASBJ Guidance No. 25, 26th March, 2015;
hereinafter “Retirement Benefits Guidance”) from thefiscal year under review, while in conformity to transitional
handling provided for in Paragraph 37 of AccountingStandard Retirement Benefits.
As a result, net assets per share increased by ¥1.96($0.01), net income per share and diluted net income pershare increased by ¥0.41 ($0.00), in the fiscal year underreview.
 or the purpose of calculation of net income per shareFand diluted net income per share after adjusting potential
shares, own shares held in trust recorded as treasury
stock under the category of shareholders’ equity were
included in treasury stock to be subtracted from theaverage outstanding number of shares. Likewise, for the
purpose of calculation of net assets per share, these own
shares held in trust were included in treasury stock to be
subtracted from the total number of outstanding shares atthe end of the fiscal year.

SENSHU IKEDA HOLDINGS,INC.

The average outstanding number of shares of treasury
stock subtracted for the calculation of net income pershare and diluted net income per share after adjusting
potential shares.
2014
1,684 thousand shares2015
644 thousand shares

The number of treasury stock at the end of the fiscal year
subtracted for the calculation of net assets per share.
2014
1,175 thousand shares2015
196 thousand shares

2. 	Acquisition and retirement of treasury stock
In accordance with Article 17, Paragraph 1 of the Articles
of Incorporation of the Company, the Company purchased
treasury stock pursuant to the resolution at the Board of
Directors’ meeting held on 23rd February, 2015, asdetailed below.
The above stocks were retired on 7th April, 2015.
(1) Class of shares subject Senshu Ikeda Holdings, Inc.
to Acquisition
Second-class preferred stock(2) Total number of sharessubject to Acquisition(3) Amount of Acquisition

37. Subsequent events
1.	Issuance of preferred stock
The Company issued the first series of seventh-classpreferred stock through a third-party allotment pursuant to
the resolution at the Board of Directors’ meeting held on
23rd February, 2015, as detailed below.
(1) Class of shares issued(2) Number of shares newly
issued(3) Paid-in amount(4) Total paid-in amount(5) Increased amount incapital and legal capitalsurplus(6) Allottee(7) Payment due date(8) Use of Funds

Amount derived by dividing ¥20,000($166.43) by 18.5 and then adding¥0.90 ($0.00) per second-class preferred stock(4) Total amount of Acquisition ¥25,020,812,500 ($208,211 thousand)(5) Entities from which theCompany acquired thesharesSenshu Ikeda Holdings, Inc.
First series of seventh-class preferredstock (preferred stock with mandatory
convertible conditions)

OC FINANCECORPORATION

Daikin Industries,
Ltd.

Fukoku MutualLife Insurance
Company

ITAMI SANGYO
CO., LTD.

NICHIA STEELWORKS, LTD.

ROHTO
PharmaceuticalCo., Ltd.

DAINIHON
Hankyu Hanshin
JOCHUGIKU CO., Holdings, Inc.
LTD.

25,000,000¥1,000 ($8.32) per share¥25,000,000,000 ($208,038 thousand)¥12,500,000,000 ($104,019 thousand)for each(¥500 ($4.16) per share)
Daikin Industries,
OC FINANCELtd.
CORPORATION
Aozora Bank, Ltd. ITAMI SANGYO
CO., LTD.
NICHIA STEEL
Non-Destructive
WORKS, LTD.
Inspection
Company Limited
NEC Capital
IBJ Leasing
Solutions Limited Company, Limited
SHIMA SEIKI
Hankyu Hanshin
MFG., LTD.
Holdings, Inc.
Shionogi & Co.,
ROHTO
Ltd.
PharmaceuticalCo., Ltd.
Nippon Paper
Core IndustrialCo., Ltd.
Tuesday, 7th April, 2015
Acquisition of second-class preferredstock

23,125,000(6) Acquisition date

T.T CO., LTD.

Non-Destructive
Inspection
Company Limited

Shionogi & Co.,
Ltd.

Nippon Paper
Core IndustrialCo., Ltd.

Tuesday, 7th April, 2015

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201562

3. 	Issuance of common stock
The Company issued its common stock through a public
offering pursuant to the resolution at the Board of Directors’
meeting held on 10th April, 2015, as detailed below.
(1) Class of shares issued

Senshu Ikeda Holdings, Inc. Commonstock(2) Number of shares newly
37,000,000
issued(3) Paid-in amount¥502.36 per share ($4.18)(4) Total paid-in amount¥18,587,320,000 ($154,675 thousand)¥9,293,660,000 ($77,337 thousand)(5) Increased amount incommon stock and legal for each
capital surplus(¥251.18 ($2.09) per share)(6) Payment due date

Tuesday, 28th April, 2015

(7) Use of Funds

Used for investment in The Senshu
Ikeda Bank, Ltd.

In addition, it was resolved at the Board of Directors’
meeting on 10th April, 2015, that the Company issued
common stocks through a third-party allotment, as detailed
below.
(1) Class of shares issued

Senshu Ikeda Holdings, Inc. Commonstock(2) Number of shares newly
5,550,000
issued(3) Paid-in amount¥502.36 ($4.18) per share(4) Total paid-in amount¥2,788,098,000 ($23,201 thousand)¥1,394,049,000 ($11,600 thousand)(5) Increased amount incommon stock and legal each
capital surplus(¥251.18 ($2.09) per share)

63(6) Allottee

Nomura Securities Co., Ltd.

(7) Payment due date

Tuesday, 26th May, 2015(8) Use of Funds

Used for investment in The Senshu
Ikeda Bank, Ltd.

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2015

SENSHU IKEDA HOLDINGS,INC.

Report of Independent Auditors
Senshu Ikeda Holdings, Inc.

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201564

Non-consolidated Financial Information of The Senshu Ikeda Bank (Unaudited)
Non-consolidated Balance Sheets (Unaudited)
The Senshu Ikeda Bank, Ltd.
As of 31st March, 2015 and 2014

Millions of yen
2015
2014

Thousands of U.S.
dollars (Note 1)
2015

AssetsCash and due from banks
Call loans and bills bought
Monetary claims bought
Trading account securities
Money held in trust
Securities
Loans and bills discounted
Foreign exchange assets
Other assets
Tangible fixed assets
Intangible fixed assets
Prepaid pension cost
Deferred tax assets
Customers’ liabilities for acceptances and guarantees
Reserve for possible loan losses
Reserve for possible investment losses
Total assets¥540,935
616
80
177
27,0001,163,549
3,656,051
6,321
36,95436,581
7,386
8,421
18,947
16,078(16,198)(1,830)¥5,501,072¥213,940
775
1,121
122
27,0001,399,377
3,584,827
5,529
30,55537,905
7,798
5,683
25,536
18,220(18,188)(1,599)¥5,338,605$4,501,414
5,126
665
1,472
224,681
9,682,524
30,423,991
52,600307,514304,410
61,46270,075
157,668
133,793(134,792)(15,228)$45,777,415

Liabilities
Deposits
Negotiable certificates of deposit
Payables under securities lending transactions
Borrowed money
Foreign exchange liabilities
Corporate bonds and notes
Other liabilities
Provision for employees’ bonuses
Accrued retirement benefits for employees
Accrued retirement benefits for directors and corporate auditors
Reserve for reimbursement of deposits
Reserve for point services
Reserve for contingent losses
Acceptances and guarantees
Total liabilities¥4,772,536
12,443
251,176
147,469538
70,00022,677
1,455
1,574
35
409
112
351
16,0785,296,860¥4,617,334
11,100315,691
107,383366
70,00022,483
1,444
772
57
328
86
379
18,2205,165,649$39,714,870
103,5442,090,172
1,227,169
4,476
582,508
188,707
12,107
13,098
291
3,403
932
2,920
133,79344,078,056

Net assets
Shareholders’ equity:
Common stock
Capital surplus
Retained earnings
Total shareholders’ equity
Net unrealized gain (loss) on available-for-sale securities
Net unrealized gain on deferred hedges
Total valuation and translation adjustments
Total net assets
Total liabilities and net assets

50,71093,93238,608183,252
20,955
3
20,959204,212¥5,501,072

50,71093,93228,513
173,156
(201)
1
(200)
172,956¥5,338,605

421,985
781,659
321,278
1,524,939
174,37724
174,411
1,699,359$45,777,415

Liabilities and net assets

65

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2015

SENSHU IKEDA HOLDINGS,INC.

Non-consolidated Statements of Operations (Unaudited)
The Senshu Ikeda Bank, Ltd.
For the years ended 31st March, 2015 and 2014

Millions of yen
2015
2014

Thousands of U.S.
dollars (Note 1)
2015

IncomeInterest income:Interest on loans and bills discounted
Interest and dividends on securities
Other interest income
Fees and commissions
Other operating income
Recoveries of written-off claims

Gain on contribution of securities to retirement benefit
Other income
Total income¥47,605
16,949421
16,460
10,574477–
7,357
99,847¥50,538
11,017272
15,441
6,839
685
2,291
8,117
95,202$396,147
141,041
3,503
136,972
87,992
3,969–
61,221
830,881

5,629
620
1,897
8,710
14,35047,79987
36
3,028
82,15917,687

6,231
752
1,761
9,443
6,592
49,22652
22
5,358
79,442
15,76046,841
5,159
15,78572,480
119,414397,761
723
299
25,197
683,689
147,183

451
2,201
2,652
¥15,034

(130)
1,144
1,013
¥14,746

3,753
18,31522,068$125,106

Expenses
Interest expenses:
Interest on deposits
Interest on borrowings and rediscounts
Other interest expenses
Fees and commissions
Other operating expenses
General and administrative expenses
Loss on sales or disposal of fixed assets
Loss on impairment of fixed assets
Other expenses
Total expenses
Income before income taxes
Income taxes
Current
Deferred
Total income taxes
Net income

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2015

66

SENSHU IKEDA TOKAI TOKYOSECURITIES CO.,LTD.
18-14,Chayamachi,Kita-ku,Osaka 530-0013,Japan
Phone:81-(0)6-6485-0031
http://www.sittsec.co.jp/