ANNUAL REPORT

2019

Year Ended March 31,2019

Sustained contribution to the regional communities
Management Principle

Strive to become a financial group that “endear ourselves to 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 communities 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
Top Message ……………………………………………… 2
Progress of the Fourth Medium-TermBusiness Plan ……………………………………………… 3
Revision of the branch management andpursuit of business operations on
customer-first basis ……………………………………… 5
For the Future ~Approach to ESG~ …………………… 7
FY2018 Financial Results ………………………………… 8
Corporate Governance …………………………………… 9Compliance Structure …………………………………… 16

1

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2019

Risk Management Structure …………………………… 18
Approach to Facilitation of Financing ………………… 22………………………………… 24
Business Description of the Group …………………… 26
Organization and Board of Directors ………………… 27

Corporate Information

Consolidated Financial Informationof Senshu Ikeda Holdings ……………………………… 30
Non-consolidated Financial Informationof The Senshu Ikeda Bank (Unaudited) ……………… 65

Top Message

I sincerely thank you for your continued

exceeding our goal for the initial year of

three years as originally planned, andsupport and patronage of Senshu Ikeda

the Medium-Term Business Plan.

achieved unrealized gains on theHoldings Group.

Meanwhile, challenges that must be

securities.

I hereby outline the performance ofresolved expeditiously are revealed, such

Furthermore, We intend to revise

Senshu Ikeda Holdings, Inc. and provide

as disposition of unrealized losses on

drastically our branch management, while

an update on the progress of our Fourth

securities and review of cost structure forstill recording temporary revising costs.

Medium-Term Business Plan.

constant earnings, under the uncertain

Our officers and employees will continue

In the last fiscal year, the businesseconomic outlook.

to respond swiftly to environmental

environment surrounding regional

Now that Osaka has been elected as thechanges while boldly engaging in

financial institutions continued to behost city of World Expo 2025 and thestructural innovations and diligently

harsh, but under the Fourth Medium-Termregional communities we serve is expectedworking towards greater growth. We

Business Plan that we formulated last year,

to undergo major changes, it is necessary

would like to express our gratitude to thewe left no stone unturned in cutting costs

for us to expeditiously overcome theshareholders for your understanding, andand began revising its earnings structure.

challenges facing us and further

we look forward to serving you with the

As a result, we recorded core businessstrengthen our business structure, in order

best services for many years to come.

profits earned from customers in theto continue serving the communities.

regional communities, compared with theAccordingly, we decided to expand thecore business loss in the fiscal year ended

goals of the Fourth Medium-Term Business

March 2018, and Senshu Ikeda Holdings,

Plan and to accelerate it.

Inc. posted profit attributable to owners

Specifically, we disposed of unrealizedof the parent of 6.1 billion yen, a figure

losses on securities in one year rather thanAtsushi Ukawa
Representative Director, President and CEO
June, 2019

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 20192

Progress of the Fourth MediumTerm Business Plan“Three Arrows” for resolving Challen g es

1st Arrow

Fun da m en ta l dis po sit io n o f u n real i z ed l o sses o n secu ri ti es

 et unrealized gain (loss) on available-forN
securities increased by ¥12.2 billion compared to the previous fiscal year

Net unrealized gain (loss) on available-for-securities
Mar 2017(Actual)Mar 2018(Actual)30• Achieved the Medium-Term Business Plan goal for the–20

disposition of foreign bonds ahead of schedule, andMar 2020(Planned)

Mar 2021(Planned)

Fourth Medium-Term Business Plan(¥ 100 million)

Results for FY2018

Mar 2019(Actual)–70

posted unrealized gains compared to the unrealized
losses in FY2017 (resolved B/S-related issues)• Controlled securities investment and strengthenedtransactions with customers in the regional communi-–120

Fourth Medium-Term Business Plan (initial)
Actual/Estimates

–170

–220

ties (our core business)
2nd Arrow

Revision of the branch management and pursuit of business operations on customer-first policy ore drastic revision to the branch manM
agement
 urther concentration of branch adminisF
tration to headquarters

Revising the branch management
Current Status

Ta r g e t

Staffed Branches(21 branches are inother branches)138

StaffedBranches

Initiatives in FY201933• Reduce branch costs while maintaining customer

117
117

Further reorganize all
branches into
areas andfull-banking service branches, etc.

29

service by procuring sales personnel

3rd Arrow

To become a financial institution that is useful to the regional communities by comprehensive solutions

Towards 2025

• Vision 25

Long-term vision towards World Expo 2015 in Osaka
Osaka and Kansai offers a favorable business environment
Many large projects are in progress		Adjust and execute our initiatives in preparation for2025, the year of growth for Osaka and Kansai• Establish an Expo Venture Fund (planned)

3rd arrow
Vision 25
2nd arrow
Resolving P/L-related issues

1st arrow
Resolving
B/S-related issues

Strengthening our business structure

Completed

Through FY2020
Fourth Medium-Term Business Plan

3

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2019

Ta k e o f f

towards greater growth
From FY2021
Post-Fourth Medium-Term Plan

Vision 25

To become a financial
institution that isuseful to the regional
communities bycomprehensive
solutions towards

World Expo 2015
FY2025SENSHU IKEDA HOLDINGS,INC.

We have positioned the Fourth Medium-Term Business Plan as a period for strengthening our business structure forthe future, and we will commence major revisions in the earnings structure during this plan period. In preparation for
the future, we will endeavor to make structural readjustments centered around core business profits and aim to be theselected bank in the region.

Progress of key measures in the first year and major points in our direction for the future

Resolving
B/S-related
IssuesDone e recorded core businessW
profits due to reductions in
employees and non-personnel expenses throughimprovements in efficiency, compared with the corebusiness loss in the fiscal
year ended March 2018
(greatly exceeding plans).
 ost the cost of strengthP
ening our business structure ahead of schedule bysales of stocks.

(¥ 100 million)

ResolvingP/L-related
IssuesThis
year, in order toensure strengthening ofour business structure forthe future, we will reduce
profit level and dividendlevel and further promote
structural innovations.
Takeoff starting next year

2017

PostFourth
Medium-TermBusiness Plan

2018

2019

2020

60

66

Over 70

61

40*

57*

9

12

28

39

26*

37*

(92)

(25)

–

–

(19)

(29)

(23)

–

Profit attributable toowners of the parent of
Senshu Ikeda Holdings
Initial plan
Actual (figures with anasterisk are forecasts.)

83(Approximately 80)

Core business profit of
The Senshu Ikeda Bank
Initial plan
Actual (figures with anasterisk are forecasts.)

Strengthening
Initiatives
Towards Vision 25(6)

Cost of strengthening
business structure
B/S-related issues(Disposition of unrealized loss
on securities)

P/L-related issues(Cost for improvements ofbranch management/credit cost)

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 20194

Branch Strategy

Revision of the branch manageoperations on customer-first basis
CLOSE-UP!

Revision of the branch management
Su b j e c t

1Expanding non-face-to-facechannels, such as internet
banking and mobile banking
QR codes,Support for cashless transactions

Expand2

Face to face customer contact asa regional financial institution(Visit customers in the regional
communities)

Continue

3

Revise the branch management
while maintaining out-of-branch
ATMs

ReviseDefinition of Area System
The area system is a system that distributes or concentrates functions to branches
within an area by deeming an area withmultiple branches to be a single branch(Further improve expertise and maintain/
improve service)

5

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2019

Introductionof the Area
SystemInitialMediumTerm
Business
Plan

Block System(Consolidate corporate
operations into supervising branches withinblocks)Branch-in-branchand downsizing
Policyafter
FY2019(Function-specificbranches)

Area System(Targeting areas larger
than the block systemdescribed above)

Rev is i o n s

Current Status

Staffed branches: 138

After Revisions

Staffed branches: 117[ Bre a k d own ]

29

areas
(84 branches)

32 full-banking

service branches

Reorganize branches into
29 areas and 33 full-banking service

branches , etc. according to each market(Planned for gradual implementation beginning July 2019)

SENSHU IKEDA HOLDINGS,INC.

ment and pursuit of business

Effect (Staff Surplus)(including 6 satellite
branches)B e n e fi t s

290 people

Reassign surplus

Branch diversification:
60 people

staff to sales

Central consolidation of branchadministration: 230 people

Maintain sales
force and custom(21 to become branchesin-branches)
29 supervising branches
40 retail branches
15 personal branches

1 satellite branch390 staff members

er convenience(100 more than the initial
Medium-Term Business Plan)

Effect from revision of the branchmanagement and improvements
in operational efficiency

Temporary expenses required for branch-in-branch conversion anddownsizing (losses on impairment and retirement) have been recorded in FY2018 (¥1.56 billion) (Branch-related expenses of ¥840
million have already been incorporated into the plan for FY2019)

A rea System B ran ch es

Revise the roles of each branch in the area,

B u si n ess Fu n ct i o n s

and procure sales personnel in order toSupervising Branches

Consolidate corporate services within
the areamaintain convenience

Retail Branches

Individual-oriented branches

and provide high quality financial services

Personal Branches

Counter service specialized branches(with lunch hour closures)

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 20196

For the Future ~Approach to ESG~•	Environmental preservation activities

Environment• Conduct seminars about environment for corporate customers• Fund / loan for supporting eco-friendly companies etc.

• Our efforts• Eco-friendly arrangement of branch premises• Promote paperlessSocialCoexistence andCo-prosperity withthe regional
communities•	Conduct business meetings about “revitalizationof regional communities” continuously• Overcome serious labor shortages• Paid job placement• Job fairs• Support for recruiting foreign applicants•	Increase the ratio of outside directors at the Board of Directors• 3 outside directors, accounting for 33% of the board (Since June 2019)

Governance• Strengthening information sharing with outside officers• Explain proposals in advance of the board meetings, sharing information and issues• Attendance at meetings within the company,such as management
committee and various committees

Participate in Kansai SDGs Platform• Participate in Kansai SDGs Platform from its establishment toachieve Sustainable Development Goals (SDGs)

7

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2019

SENSHU IKEDA HOLDINGS,INC.

FY2018 Financial Results

Business Performance

Senshu Ikeda Holdings Group
Profit attributable toowners of the parent

Individual total assets
under management¥6.1 billion¥4,672.3 billion(Holding company consolidated)(Bank non-consolidated + Securities subsidiary)(- ¥2.2 billion year on year)

17.5(+ ¥44.2 billion year on year)(¥ billion)(¥ billion)

4,513.3 4,502.1

16.4

61.3
23.7

72.6
17.7

12.2

4,588.7
93.4
12.8

508.0

489.8

501.0

194.3

183.8

3,744.0

3,726.7

End ofMarch 2015

End ofMarch 2016

4,628.1
104.9
10.9

512.7

4,672.3
102.7
10.2

539.0

Senshu Ikeda
Tokai Tokyo
Securities
Public bonds
Insurance
Investment trusts
Individual deposits

8.3
6.1

March 2015 March 2016 March 2017 March 2018 March 2019The Senshu Ikeda Bank

Loans and bills discounted¥3,926.3 billion(+ ¥18.3 billion year on year)

Deposits

4,772.5 4,777.6 4,848.2

3,752.0 3,811.1

End ofMarch 2016

177.4

3,783.8

3,825.3

3,842.7

End ofMarch 2017

End ofMarch 2018

End ofMarch 2019

Senshu Ikeda Tokai Tokyo Securities

Number of securities accounts

33,036 accounts
30,708(+ ¥36.5 billion year on year)(¥ billion)

End ofMarch 2015

174.1(+ 2,328 accounts year on year)(Accounts)¥4,990.4 billion

3,656.0

190.6

End ofMarch 2017

4,953.9 4,990.4

3,908.0 3,926.3

End ofMarch 2018

End ofMarch 201933,03627,098 oans and bills
L
discounted
Deposits

21,341
14,138End of
End of
End of
End of
End ofMarch 2015 March 2016 March 2017 March 2018 March 2019

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 20198

Corporate Governance

The Company is a holding company with subsidiaries suchas the Senshu Ikeda Bank, which upholds the Management
Principle of striving to become a financial group that“endear ourselves to the regional community” by providing
services tailored to customers’ needs, while valuing “broad
networks of relationships” and “an enterprising spirit.” Inorder to ensure sustainable growth and the medium- tolong-term enhancement of corporate value, the Company isengaged in initiatives to develop its corporate governancein line with the following basic principles.
(1) We respect the rights of our shareholders and strive
to ensure their equality.
(2) We consider the interests of stakeholders and strive toensure appropriate cooperation.
(3) We disclose corporate information in an appropriatemanner and strive to ensure the transparency of suchinformation.
(4) The Board of Directors and the Audit & Supervisory
Board strive to enhance the effectiveness of theirsupervision and audits of the execution of duties inline with their fiduciary responsibilities for ourshareholders.
(5) We strive to engage in constructive dialogue with ourshareholders in order to contribute to sustainablegrowth and the medium- to long-term enhancement ofcorporate value.

Outline of Corporate Governance Structure andReasons for Adopting the Structure
The Company has adopted a corporate governancestructure for sustainable enhancement of its corporate
value through reinforcing supervision of management byelecting the outside directors and cooperating with the
Audit & Supervisory Board.
Specifically, directors who are familiar with banking
business – involving complex and sophisticatedmanagement decisions – supervise business execution ofrepresentative directors, while audit & supervisory board
members audit business execution of directors throughattendance to important meetings and inspection of critical
documents. The Company reinforces its corporate
governance structure through outside directors and outside
audit & supervisory board members (hereinafter “outside
officers”) who possess well-seasoned characters andinsights presenting meetings including the Board of
Directors and expressing their opinions actively.
The Company has concluded a liability limitationagreement with outside officers 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 therelevant provisions of the Articles of Incorporation of theCompany, as long as they perform their duties in good faithand without gross negligence.

Corporate governance functions within the Company
l The Board of Directors
The Board of Directors is comprised of 9 directors
including 6 internal directors (Takayuki Ota, Atsushi
Ukawa, Hiroo Maeno, Yasuki Hosomi, Shinji Inoue andHiromasa Hirai) and 3 outside directors (Minoru
Furukawa, Takao Koyama and Tomokazu Yamazawa),
and Atsushi Ukawa, Director, President and CEO, serves
as Chairman of the Board of Directors. The Board of
Directors is held once a month in principle, attended also

9

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2019by audit & supervisory board members, to makedecisions on critical business execution including basic
management policies and management plans, and tosupervise the business execution of directors andexecutive officers under the rules of the Board of
Directors.
l Personnel Committee
The Personnel Committee has been established todeliberate matters including the selection of candidates
for directors. The Committee is comprised of 4 directors
including 1 internal director (Atsushi Ukawa) and 3
outside directors (Minoru Furukawa, Takao Koyama andTomokazu Yamazawa) and Atsushi Ukawa, Director,
President and CEO, serves as Chairman of theCommittee. The Personnel Committee, as a voluntary
advisory body to the Board of Directors, accepts theinvolvement and advice of independent outside directors(Minoru Furukawa, Takao Koyama and Tomokazu
Yamazawa), for the purpose of ensuring the objectivity
and transparency of board functions and strengthening
corporate governance.
l Remuneration Committee
The Remuneration Committee has been established todeliberate matters including compensations for directors.
The Committee is comprised of 4 directors including 1
internal director (Takayuki Ota) and 3 outside directors(Minoru Furukawa, Takao Koyama and Tomokazu
Yamazawa), and Minoru Furukawa, outside director,
serves as Chairman of the Committee. The Remuneration
Committee, as a voluntary advisory body to the Board of
Directors, accepts the involvement and advice ofindependent outside directors (Minoru Furukawa, Takao
Koyama and Tomokazu Yamazawa), for the purpose of
ensuring the objectivity and transparency of board
functions and strengthening corporate governance.
l The Audit & Supervisory Board
The Audit & Supervisory Board is comprised of 5 audit &supervisory board members including 2 internal audit &supervisory board members (Shigeru Aoyagi and
Susumu Kawakami) and 3 outside audit & supervisoryboard members (Toshiaki Sasaki, Seiji Morinobu andKohei Nakanishi), and Shigeru Aoyagi, audit &supervisory board member, serves as chairman of theBoard. Each audit & supervisory board member audits
business execution of directors through attendance toimportant meetings including the Board of Directors andthe 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 high degree of integrity alongwith superior insight and capability, as well as expertiseand hands-on experience in respective area of specialty,
providing advice on management from diversified pointsof view.
l Management Committee
With the purpose to make more prompt management
decisions, the Management Committee has been
established under the Board of Directors. The
Management Committee is comprised of internal
directors (Takayuki Ota, Atsushi Ukawa, Hiroo Maeno,
Yasuki Hosomi, Shinji Inoue and Hiromasa Hirai) andAtsushi Ukawa, Director, President and CEO, serves aschairman of the Committee. The Management Committee

SENSHU IKEDA HOLDINGS,INC.

is held once a week in principle, attended also byinternal audit & supervisory board members, to makedecisions on critical matters concerning the businessexecution as well as to discuss agenda items for the
Board of Directors based on the authorities delegated by
the Board of Directors. The Management Committee
accepts appropriate involvement and advice of outside
officers who attend the Committee as needed andexpress their opinions.

Status of Auditsl Audits by audit & supervisory board members
The Audit & Supervisory Board is comprised of 2 internal
audit & supervisory board members and 3 outside audit& supervisory board members. The Company has
allocated several staff members who support audit &supervisory board members’ business execution. Each
audit & supervisory board member audits the businessexecution of directors through attendance to important
meetings such as the Board of Directors and theManagement 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 ofinternal control system,” generally subject to the auditing
guidelines and audit plan decided by the Audit &Supervisory Board, as an independent body mandatedby shareholders.
Audit & supervisory board members and accounting
auditors are performing their audit duties efficiently andeffectively through establishing close mutual cooperation
by exchanging opinions about various auditing issues. In
addition, working together with audit & supervisory board
members of banking subsidiary, audit & supervisoryboard members and internal audit division are also
performing their audit duties efficiently and effectively
through establishing close mutual cooperation by audit &supervisory board members’ attendance to internal
audits and exchanging opinions about various auditing
issues.
l Internal Audits
The Company has established the Internal Audit Divisionthat conducts internal audits based on the basic rules of
intra-group audits, set out to provide objectives andguidelines of internal audits. The Company’s Internal
Audit Division comprises 15 members of whom 11 serve
concurrently in the Internal Audit Division of the banking
subsidiary (as of March 31, 2019). The Internal Audit
Division conducts internal audits on each division of theCompany based on the internal audit plan approved by
the Board of Directors each year. The Internal Audit
Division also conducts internal audits on each Group
company, as necessary, on its own or by cooperating
and coordinating with internal audit divisions of thesubsidiaries, etc. and provides specific instructions andadvice on the improvement of operations, in addition to
managing and overseeing internal audit operations of theentire Group.
The Company develops effective internal audit
structure that has independence and expertise in orderto ensure soundness and adequacy of operation. The
Company also inspects and evaluates adequacy andeffectiveness of the risk management and internal control
practices, and makes recommendations as appropriate
to the senior management of the Company on ways toimprove and rectify questionable areas. Thus theCompany’s internal audit guidelines facilitate effective
achievement of management objectives including theimprovement of the Group’s internal management
structure and the enhancement of its enterprise value.
l Accounting Audits
Name of the auditing firm
Ernst & Young ShinNihon LLC
Certified public accountants who conducted the latest
accounting audit
Mr. Hirokazu Tanaka and Mr. Tetsuro Tone
Composition of assistants for the accounting audit
Assistants for the accounting audit of the Company are
10 certified public accountants and 19 others.
Policy and reasons for selecting the auditing firm
In accordance with the Practical Guidelines for
Cooperation with Accounting Auditors, released by theJapan Audit & Supervisory Board Members Association,
the Audit & Supervisory Board of the Company regularly
checks if the accounting auditors conform to auditing
standards, quality control standards, the practicalguidelines for auditing, internal regulations of the auditing
firm, to which they should conform as professional
specialists, and keeps itself updated on accounting
standards, through inquires and dialogues. The
Company has selected the aforementioned certified
public accountants and others as a team responsible forthe accounting audit, after comprehensively examining
their track record of auditing and execution of duties forthe previous fiscal year, which led the Company todetermine that the appropriateness and reliability ofaccounting audits can be ensured.
The Audit & Supervisory Board shall dismiss anaccounting auditor, subject to unanimous consent of theaudit & supervisory board members, if it determines thatthe accounting auditor satisfies one or more of theconditions described in the provisions of Article 340,
Paragraph 1 of the Companies Act.
If the Audit & Supervisory Board examines the status of
the execution of duties by the accounting auditors anddetermines that the appropriateness and reliability ofaccounting audits cannot be ensured, the Audit &Supervisory Board shall determine the content of a
proposal for a general meeting of shareholders on
dismissing or refusing to reappoint the accounting
auditors dismissal or non-reappointment of theaccounting auditors.
Content of the Audit & Supervisory Board’s evaluation of
the auditing firm
In accordance with the Practical Guidelines for Audit &Supervisory Board Members, etc. in developing theStandards for Evaluating and Selecting Accounting
Auditors, released by the Japan Audit & Supervisory
Board Members Association, the Audit & Supervisory
Board has established the Standards for Evaluating and
Selecting Accounting Auditors, based on which the Audit& Supervisory Board conducts evaluation.
As a result of the evaluation, it was found that theaccounting auditors satisfy none of the conditions
described in the provisions of Article 340, Paragraph 1 of
the Companies Act. The Company, therefore,
reappointed the accounting auditors, taking into accountthe results of the evaluation on the accounting auditors
by the Audit & Supervisory Board.
SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201910

Status of Outside Officers

The Company has 3 outside directors.
Outside Director Minoru Furukawa holds 5,000 shares ofcommon stock of the Company and has ordinary banking
transactions with The Senshu Ikeda Bank. He also
concurrently serves as an officer at Hitachi Zosen
Corporation, The Midori Kai Co., Ltd., Osaka International
Convention Center Corp. and OKK Corporation. The
Senshu Ikeda Bank has ordinary banking transactions with
Hitachi Zosen Corporation, The Midori Kai Co., Ltd. andOKK Corporation; and has concludes a temporary staff
dispatch contract with The Midori Kai Co., Ltd.; and theCompany has conference hall borrowing transaction with
Osaka International Convention Center Corp.
As an outside director of the Company, he performs his
duties of supervising the business execution based on his
extensive experience in corporate management as arepresentative director of a listed company. He also
concurrently serves as a non-executive director (non-fulltime) at The Senshu Ikeda Bank.
Outside Director Takao Koyama holds 5,000 shares ofcommon stock of the Company and has ordinary banking
transactions with The Senshu Ikeda Bank. He had served
as an officer at Hitachi, Ltd. and Hitachi Solutions, Ltd. inprevious time. The Senshu Ikeda Bank has ordinarybanking transactions and commissions of systemdevelopment and operation with Hitachi, Ltd. and Hitachi
Solutions, Ltd.; and the Company has a capital relationshipwith Hitachi, Ltd.
As an outside director of the Company, he performs his
duties of supervising the business execution based on his
extensive experience in corporate management as arepresentative director. He also concurrently serves as a
non-executive director (non-full-time) at The Senshu Ikeda
Bank.
Outside Director Tomokazu Yamazawa holds 5,740
shares of common stock of the Company and has ordinarybanking transactions with The Senshu Ikeda Bank. He hadserved as an officer at Hankyu Hanshin Holdings, Inc. He
also concurrently serves as an officer at Hankyu Hanshin
Hotels Co., Ltd, Hanshin Expressway Company Limited andCharm Care Corporation. The Senshu Ikeda Bank hasordinary banking transactions with Hankyu Hanshin
Holdings, Inc., Hankyu Hanshin Hotels Co., Ltd, Hanshin
Expressway Company Limited and Charm Care
Corporation. The Company has a capital relationship with
Hankyu Hanshin Holdings, Inc.
As an outside director of the Company, he performs his
duties of supervising the business execution based on his
extensive experience in corporate management as arepresentative director. He also concurrently serves as a
non-executive director (non-full-time) at The Senshu Ikeda
Bank.
The Company has 3 outside audit & supervisory board
members.
Outside Audit & Supervisory Board Member Toshiaki
Sasaki holds 35,660 shares of common stock of theCompany and has ordinary banking transactions with The
Senshu Ikeda Bank. He also concurrently serves as the
President of Senshu Gakuen. The Senshu Ikeda Bank hasordinary banking transactions with Senshu Gakuen.
He performs his duties as an audit & supervisory board
member based on his wealth of experience and broad
insight earned over the years as an audit & supervisoryboard member in financial institutions.

11

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2019

Outside Audit & Supervisory Board Member Seiji
Morinobu has ordinary banking transactions with The
Senshu Ikeda Bank. He also concurrently serves as an
officer at KITAKEI CO., LTD. The Senshu Ikeda Bank hasordinary banking transactions with KITAKEI CO., LTD.
He performs his duties as an outside audit & supervisoryboard member in auditing the legality of the management
execution from an objective and neutral position, based on
his experience as an outside director, wide range ofexperience and insights as an attorney, and sufficiently
high social credibility.
Outside Audit & Supervisory Board Member Kohei
Nakanishi holds 2,000 shares of common stock of theCompany and has ordinary banking transactions with The
Senshu Ikeda Bank. He had served as an officer at Japan
Bank for International Cooperation (“JBIC”) in previous
time. Although The Senshu Ikeda Bank has concluded amemorandum of understanding with JBIC for supporting
Japanese firms with expanding overseas, no considerationarises from transaction under the memorandum.
He performs his duties as an outside audit & supervisoryboard member independently from an objective and neutral
position, based on his wide range of experience andknowledge regarding international finance as well as
experience on corporate management and knowledge, andinsight into corporate governance through served as
director of a bank and outside director of corporations, andsufficiently high social credibility.
The Company has set forth the following standards forthe independence of outside directors and outside audit &supervisory board members (hereinafter “outside officers”)
in order to objectively determine their independence andelects outside officers on the basis of these standards. All 6
outside officers, namely outside directors, Minoru
Furukawa, Takao Koyama and Tomokazu Yamazawa, andoutside audit & supervisory board members, Toshiaki
Sasaki, Seiji Morinobu and Kohei Nakanishi, satisfy thestandards for the independence. They have been
designated and notified to the Tokyo Stock Exchange as
independent officers, as they satisfy the requirements of
independence stipulated by the relevant stock exchange
and pose no potential conflict of interests with generalshareholders.
<Standard for judging the independence>
At the Senshu Ikeda Group, as a general rule, Outside
Directors/Audit & Supervisory Board Members shall bethose who do not fall under any of the following
requirements, at present or recently.1
1. A person who deems the Group to be a major2 business
partner, or in the case of a company, an executing
person thereof.
2. A person who the Group deems to be a major business
partner, or in the case of a company, an executing
person thereof.
3. A business consultant, an accounting specialist or alegal specialist who has received a large sum3 of moneyand other properties other than Officers’ remunerationfrom the Group (or a quasi-executing person who has
belonged to the payee’s group).
4. A person who the Company deems to be a major
shareholder4 of the Company, or in the case of acompany, an executing person thereof.
5. A payee of a large sum of donation from the Group, or aquasi-executing person of the payee’s group, in the casewhere the receiver of the monies, etc., is an entity.

SENSHU IKEDA HOLDINGS,INC.

6. A former executing person of any of the Group
companies in the past.5
7. A relative6 of a person (excluding those who are notsignificant) mentioned below:
		A.	A person who is mentioned in the aforesaid items 1
through 6.
		B.	Directors, Audit & Supervisory Board Members,
Executive Officers and important employees of any of
the Group companies.
Notes:
1. Definition of “recently”: Refers to cases that might beregarded as almost “at present,” for example, including
the case where said person fell under any infringement
requirement item since the content of a proposal for theselection as Outside Director or Outside Audit &Supervisory Board Member was determined.
2. Definition of “major”: Refers to 2% or more of theconsolidated net sales per annum (Consolidated
ordinary income in case of the Company) for the nearest
fiscal year, as a benchmark for judgment.
3. Definition of “a large sum”: Refers to a three-year
average amount of ¥10 million or more per annum for the
past three years.
4. Definition of “major shareholder”: Refers to a shareholder
who held 10% or more of the total voting rights at the endof the nearest fiscal year.
5. Definition of “past”: Refers to “within 10 years up to thepresent.”
6. Definition of “relative”: Refers to “within the second
degree of kinship of a person.”Supervision or Audit by Outside Directors or Outside
Audit & Supervisory Board Members, Interconnection
with Internal Auditing, Audits by Audit & Supervisory
Board Members, and Accounting Auditing, andRelationship with the Internal Control Division

Outside directors receive reports about the status of audits
by audit & supervisory board members, internal audits andaccounting 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 & supervisoryboard members about the status of audits by audit &supervisory board members, internal audits andaccounting audits, as well as the status of internal control
from the internal control division. Both outside directors andoutside audit & supervisory board members give
recommendations and advice in return for these reports.

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201912

Corporate governance structure of the Group[Senshu Ikeda Holdings](As of the end of June, 2019)

General Meeting of
Shareholders
Appointment/Removal

Accounting Auditors
Accounting audit

Appointment/Removal
Joint coordination
Reporton Audit

Report on Audit
AdviceBoard of Directors

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

Bringing discussed
issues to meetings/
ReportingManagement Committee

Supervision

Reporton Audit

Personnel Affairs Division[The Senshu Ikeda Bank]Internal Audit DivisionInternal audit

General Risk Management Division[Senshu Ikeda Tokai Tokyo Securities]

General Meeting of
Shareholders

General Meeting of
Shareholders
Audit & Supervisory Board

Audit & Supervisory Board

Board of Directors

Personnel Committee
Remuneration Committee

Board of Directors

Management Committee

Risk Management Committee

Management Committee

Compliance Committee

Compliance Committee

ALM Committee
Efficiency Improvement Committee

Branches

13

Audit

Joint coordination

Directors/Executive Officers

Instruction/
Direction

Corporate Planning andGeneral Affairs Division

Audit & Supervisory Board

Personnel Committee
Remuneration Committee

Representative Directors
Risk Management Committee
Compliance Committee
ALM Committee

Appointment/Removal

Head Office

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2019

Branches

Head OfficeSENSHU IKEDA HOLDINGS,INC.

Basic approach to the internal control system and its
status of development

The Company and the Group companies are developinga structure necessary to ensure the adequacy ofoperation based on the following concepts; create a“most trusted by customers” financial group which
respects personal relationships and promotes honest
and approachable banking.
(1) Structure to ensure that directors and employees of theCompany and the Group companies execute businessin compliance with laws and regulations as well as with
the Articles of Incorporation
The Company and the Group companies focus oncompliance with laws and regulations (hereinafter“compliance”) as one of the most critical managementtask. The Company and the Group also set out the codeof ethics along with the code of conduct to ensure that
directors and employees behave in compliance with laws
and regulations as well as social norms, while setting out
basic rules of compliance under which overall
compliance policies and specific measures are
discussed at the Compliance Committee.
To ensure the above compliance implementation, theCompany and the Group companies appoint directors
who are responsible for compliance. In addition, theGeneral Risk Management Division coordinatescompliance arrangement across the Company and theGroup companies, while conducting education andtraining for directors and employees by developing
compliance program and compliance manual, andarranging compliance seminars.
Furthermore, the Group Compliance Hotline, awhistleblowing system has been set up and managed toallow directors and employees of the Company and theGroup companies to directly provide information about
questionable conduct in light of laws and regulations.
The hotline system is structured to guarantee that the
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 havetaken 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 considerationof 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 ourcustomers of their security and to promote theirconvenience in an effort to implement a thorough‘customer first policy.’(2) Structure for the preservation and management of
information concerning the directors’ businessexecution
The Company and the Group companies have preparedand kept documents such as minutes of important
meetings including the Board of Directors and theManagement Committee, as records of directors’
execution of duties.
The Company and the Group companies have also
prepared and kept documents and attachment
sanctioned by directors as appropriate.
(3) Arrangements including rules to manage the risk ofpotential losses of the Company and the Group
companies
With the purpose of ensuring the soundness ofmanagement and stable corporate earnings, theCompany 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, anddefined the department responsible for the managementof each category of risk, while establishing the Risk
Management Committee to monitor the status ofmanagement of each such category.
Meanwhile, the Company and the Group have set out
rules of risk management, with the purpose to minimize
the financial loss along with loss of confidence resulting
from the crisis event, and to ensure business continuity
through prompt restoration of normal operational
functions.
(4) Structure to ensure efficient business execution bydirectors of the Company and the Group companies
The Board of Directors sets out the management
objectives of the Company and the Group companies
with the purpose of enabling the directors andemployees of the Company and the Group companies toefficiently execute their business. The Board of Directors
also formulates the Group Management Plan and sets
forth operational plans on an annual basis to bring saidPlan into shape.
In addition, the Board of Directors establishes theManagement Committee with the purpose of enabling
directors to efficiently execute their business. The
Management Committee discusses beforehand theagenda of the Board of Directors to facilitate thedecision-making process at those meetings, while
discussing the critical issues for resolution in
implementing the basic management policies that havebeen resolved by the Board of Directors on the basis ofsuch policies.
The Management Committee also defines theheadquarters under the command of each director, alongwith the authority and responsibility involved, whiledeveloping and maintaining a structure for efficientbusiness execution by utilizing IT.
(5) Structure to ensure the adequacy of business operation
at the Group, which comprises the Company and theGroup companies
The Company regards the respective Group companies
as one group under the flag of Senshu Ikeda Holdings.
Thus each member company of the Group runs its
operation through developing an adequate internalmanagement structure according to its scale and natureof operation under the adequate guidance of, and incoordination with the Company.
The Company, as a responsible entity for theadministrative management of the entire Group, hasestablished administrative management rules targetingits subsidiaries. The Company has developed a structurein which it receives necessary reports concerning the
SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201914

business execution of directors and employees and otherrelevant matters from and consults on those issues withthe respective Group companies.
(6) Matters concerning employees who assist audit &supervisory board members in the performance of theirduties, the independence of those employees fromdirectors, and structure to ensure the effectiveness of
the instructions to such employees
In order to support audit & supervisory board members’
business execution, 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 therelevant audit & supervisory board members to ensure
the staff’s independence from directors. Thus theCompany and the Group companies ensure their
independence from directors.
(7) Structure to facilitate reporting from directors andemployees to audit & supervisory board members andother arrangements to ensure that audit & supervisoryboard members are adequately informed, as well as the
structure to ensure that no disadvantageous treatment isconducted 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 havesignificant impact on the Company and the Group
companies, or any other matters as necessary, in
addition to matters legally required to be reported.
In addition, the hotline system is structured toguarantee that the informants who provide the Group
Compliance Hotline with compliance-related information
are protected from being treated in a disadvantageousmanner. Moreover, to complement this arrangement, theCompany and the Group companies have established astructure whereby audit & supervisory board members
are permitted to attend important meetings such as thoseof 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 and accounting auditors.
Audit & supervisory board members attend important
meetings such as the Board of Directors, theManagement Committee, the Compliance Committee, theRisk Management Committee and the ALM Committee, inan effort to find out various problems they need toaddress in the execution of their duties.
Furthermore, audit & supervisory board members shallbe permitted to request posteriori for redemption of theexpenses that they deem necessary in executing theirduties if such expenses were previously budgeted bythem and have been disbursed for an emergency or
temporarily.

15

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2019

SENSHU IKEDA HOLDINGS,INC.

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

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201916

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.

17

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2019

SENSHU IKEDA HOLDINGS,INC.

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 annually and reviewed continuallyin order to deal with the risks newly emerging as a resultof 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.

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 beallottedMarket 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
face. The Company evaluates the risks divided into

Credit Risk

Financialresource forallocation

Allocatablerisk capital

Risk capital
to beallocated

Operational
Risk
Risk amount

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201918

l Calculation method for capital ratio regulation
In respect to risk asset calculation for the purpose of
the capital ratio regulation, the Group applies theFoundation Internal Ratings-Based Approach 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 investigation divisionfrom the business promotion division. The Board of
Directors and other appropriate body review each loan
for large obligor as well as the credit policy. Thus theGroup has focused on the development and improvement of its credit analysis system. Meanwhile, Loan
Division 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
securities, foreign exchange rates and so on. Market
19

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2019liquidity risk is the risk of suffering losses arising from theinability 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, anddiscussed appropriate and timely measures to address
the risks in order to earn the stable and continuous profit
through managing its assets and liabilities in a comprehensive way.

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.

SENSHU IKEDA HOLDINGS,INC.

l Administrative risk management
Administrative risk, as identified by the Group, is therisk of suffering losses from administration, fraud,
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.

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.
l 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.

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.
SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201920

The risk management structure of the Group(As of the end of June, 2019)

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

Tangible Fixed
Asset Risk

Personnel
Risk

Legal Risk

Corporate Planning andGeneral Affairs Division

Personnel Division

General Risk
Corporate Planning andManagement Division General Affairs Division

Reputation
Risk

Internal Audit Division

Committee

Banking subsidiary and affiliates

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

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

Corporate Planning andGeneral Affairs Division

Personnel Affairs
Division

Risk
Management
Division

Corporate Planning andGeneral Affairs Division

Administrative
Risk

Each division of Headquarters, each branch, subsidiaries and affiliates

Senshu Ikeda Tokai Tokyo Securities

21

ALM Committee

Risk Management Committee

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2019

Shizen Soken

Internal Audit Division

Committee

SENSHU IKEDA HOLDINGS,INC.

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 Bank appoints the director in charge of the Loan
Division to the Facilitation of Financing Manager. The
Manager will engage in the development and reinforcement of the structure for Facilitation of Financing
Management through checking the progress inrespect of Facilitation of Financing Management.
(3)	The Facilitation of Financing Manager coordinates theoverall business in 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 offinancing, with the purpose to ensure adequacy,
sufficiency and effectiveness of Facilitation of Financing Management.
(4)	The Loan Division is responsible for Facilitation of
Financing Management. The Loan Division engages
in the adequate operation, examination and improvement 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

Coordination[Consultation Service over holidays]

Customers

Boardof
Directors

Divisions managing Facilitation of Financing

Over-the-counter Consultation Service

Over-the-counter Consultation Service

Reporting

Development and reinforcement of the supervising structure

Facilitation of Financing Officer

Sincere andadequate
respondence

Facilitation of Financing Manager

Support andinstruction

Toll-free Consultation Service

Divisions associated with Facilitation of Financing

Instructions

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[Consultation Service]Consultation, application and complaints

Toll-free Consultation Service
Repayment Consultation Approach

Sincere and adequate respondence

Coordination
Businesstransactions, etc.

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

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

Reporting

Audit &
Supervisory
Board

Disclosure

ReportingPublicAuthorities

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201922

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 institu23

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2019

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.

Corporate Information
Corporate Data (As of the end of March 2019)
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:
https://www.senshuikeda-hd.co.jp
Share Capital:¥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, and businesses which bank holding
company can operate in accordance with the Banking Act.
Number of Employees: 109
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:
https://www.sihd-bk.jp
Share Capital:¥61.3 billion
Deposits:¥4.9904 trillion
Loans:¥3.9263 trillion
Number of Branches: 142
Number of Employees: 2,498
Credit Ratings: A-(Japan Credit Rating Agency, Ltd.)International Network
Suzhou Representative Office:

Ho Chi Minh City Representative Office:399 East Baodai Road,
Wuzhong District, Suzhou,
Jiangsu, China

7th Floor, Sun Wah Tower,
115 Nguyen Hue Boulevard,
District 1, Ho Chi Minh City,
VietnamPhone:
84-(0)28-3821-3295
Facsimile :84-(0)28-3821-3298

Phone:
Facsimile :86-(0)512-6585-1791
86-(0)512-6585-2312

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:
https://www.sittsec.co.jp
Share Capital:¥1.25 billion
Assets Under Management: ¥119.7 billion
Number of Branches: 4
Number of Employees: 118

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201924

Major Shareholders (As of March 31, 2019)
1. Common stock
Name

Number of Shares Owned (Thousands)

Japan Trustee Services Bank, Ltd. (Trust Account)

Proportion of Total Shares (%)

48,42317.25*112,455

4.43

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

9,766

3.47

*1

The Master Trust Bank of Japan, Ltd. (Trust Account)*1

The Senshu Ikeda Bank Employees’ Shareholders Association

8,142

2.90

MUFG Bank, Ltd.
DFA INTL SMALL CAP VALUE PORTOFOLIO(Standing proxy: Citibank, N.A., Tokyo Branch)

7,121

2.53

4,728

1.68

GOVERNMENT OF NORWAY (Standing proxy: Citibank, N.A., Tokyo Branch)
JP MORGAN CHASE BANK 385151(Standing proxy: Settlement & Clearing Service Division, Mizuho Bank, Ltd.)

4,554

1.62

4,540

1.61

Japan Trustee Services Bank, Ltd.(Trust Account 5G)

4,096

1.45

3,692

1.31

ITAMI SANGYO CO., LTD.

*1

*1: These shares do not disclose the names of beneficiaries.

2. First series of seventh-class preferred stock
Name

25

Number of Shares Owned (Thousands)

Proportion of Total Shares (%)

OC FINANCE CORPORATION

5,000

20.00

Daikin Industries, Ltd.

5,000

20.00

Aozora Bank, Ltd.

3,000

12.00

ITAMI SANGYO CO., LTD.

2,000

8.00

NICHIA STEEL WORKS, LTD.

2,000

8.00

Non-Destructive Inspection Company Limited.

2,000

8.00

NEC Capital Solutions Limited

1,000

4.00

IBJ Leasing Company, Limited

1,000

4.00

SHIMA SEIKI MFG., LTD.

1,000

4.00

Hankyu Hanshin Holdings, Inc.

1,000

4.00

ROHTO Pharmaceutical Co., Ltd.

1,000

4.00

Shionogi & Co., Ltd.

500

2.00

Nippon Paper Core Industrial Co., Ltd.

500

2.00

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2019

SENSHU IKEDA HOLDINGS,INC.

Business Description of the Groupn Organizational Chart of the Group (As of the end of June, 2019)The Senshu Ikeda Bank, Ltd.

Sub-branches: 5

Banking services

Representative offices: 3● Senshu Ikeda Corporate Partners Co., Ltd.
● Senshu Ikeda Lease Co., Ltd.

Leasing services● Senshu Ikeda Auto Lease Co., Ltd.
● Senshu Ikeda Guarantee Co., Ltd.

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

Senshu Ikeda Tokai Tokyo ●Securities Co.,Ltd.

Senshu Ikeda Holdings, Inc.

Head office and branches: 136

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 System Co., Ltd.

Other services● Senshu Ikeda Investment Management Co., Ltd.

Shizen Soken Co.,Ltd. ●Station Network Kansai Co., Ltd.
● Investment enterprise partnerships: 8
Head office and branches: 5

Securities services

Representative offices: 2
Head office

Other services(Note:● indicates consolidated subsidiaries and○ indicates equity-method affiliates)n Subsidiaries and Affiliates (As of the end of June, 2019)

Affiliates

Subsidiaries

Name

Address

Date ofestablishment

Major Business

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

The Senshu Ikeda Bank, Ltd.

18-14, Chayamachi, Kita-ku, Osaka-city Banking services

September 1, 1951

61,385100.00–Senshu Ikeda Tokai Tokyo
Securities Co.,Ltd.

18-14, Chayamachi, Kita-ku, Osaka-city Securities services

January 30, 2013

1,250

60.00

–

Senshu Ikeda Corporate Partners
Co., Ltd.

18-14, Chayamachi, Kita-ku, Osaka-city Banking services(Business rehabilitation services)

January 4, 2013100–

100.00100.00Senshu Ikeda Lease Co., Ltd.

3-1-22, Toyosaki, Kita-ku, Osaka-city

Leasing services

April 1, 1986

50–

Senshu Ikeda Auto Lease Co.,Ltd.

4-5-36, Miyahara, Yodogawa-ku, Osaka-city Leasing services

July 10, 1996

80

–

95.00

Senshu Ikeda Guarantee Co., Ltd.

2-1-11, Jonan, Ikeda-city

Credit guarantee services

July 20, 1973180–

100.00Kinki Credit Guarantee Company
Limited

2-1-1, Nishiki, Kaizuka-city

Credit guarantee services

April 1, 1975100–

100.00Senshu Ikeda JCB Co., Ltd.

3-2-1, Toyosaki, Kita-ku, Osaka-city

Credit card services

February 1, 1983

60–

100.00Senshu Ikeda DC Co., Ltd.

3-2-1, Toyosaki, Kita-ku, Osaka-city

Credit card services

September 5, 199030–

100.00Senshu Ikeda VC Co., Ltd.

3-2-1, Toyosaki, Kita-ku, Osaka-city

Credit card services

November 2, 199040–

100.00Senshu Ikeda Capital Co., Ltd.

18-14, Chayamachi, Kita-ku, Osaka-city Venture capital services

March 6, 198990–

100.00Senshu Ikeda Business Service
Company Limited

18-14, Chayamachi, Kita-ku, Osaka-city Back-office administration

April 1, 198330–

100.00Senshu Ikeda System Co., Ltd.

18-14, Chayamachi, Kita-ku, Osaka-city Computer software development
and sale services

June 10, 1985

50

–

98.00

Senshu Ikeda Investment Management Co., Ltd.

3-1-22, Toyosaki, Kita-ku, Osaka-city

Investment advisory and discretionary investment services

April 1, 1987

120–

100.00November 1, 1996

80

17.50

100

–

Shizen Soken Co., Ltd.

2-1-11, Jonan, Ikeda-city

Information offering services

Station Network Kansai Co., Ltd.

1-4-8, Shibata, Kita-ku, Osaka-city

Planning and operation of ATM at station June 29, 2000

–
40.00

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201926

Organization and Board of Directors
SenshuSenshu Ikeda
Ikeda Holdings
Holdings
n Organization (As of the end of June, 2019)

Management
ManagementCommittee
Committee

ALM
ALMCommittee
Committee

Personnel
Personnel Affairs
Affairs Division
Division

Compliance
ComplianceCommittee
Committee

Risk
RiskManagement
ManagementCommittee
Committee

Remuneration
RemunerationCommittee
Committee

PersonnelCommittee
Committee
Personnel

Audit
Audit&&Supervisory
SupervisoryBoard
BoardMembers
MembersOffice
OfficeAudit
Audit&&Supervisory
SupervisoryBoard
BoardMembers
Members Audit
Audit&&Supervisory
SupervisoryBoard
Board

Board
BoardofofDirectors
Directors

GeneralGeneralMeeting
MeetingofofShareholders
Shareholders

Corporate
Corporate Planning
Planning andand General
General Affairs
Affairs Division
Division

General Risk
Risk Management
Management Division
Division
GeneralInternal Audit
Audit Division
DivisionInternal

n Board of Directors (As of June 25, 2019)
Representative Director
and Chairman
Representative Director,
President and CEO

Takayuki Ota
Atsushi Ukawa

Director
Director
Director
Director

Hiroo Maeno

Director(Outside)

Minoru Furukawa

Audit & Supervisory
Board Member(Full-time)

Susumu Kawakami

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

Toshiaki Sasaki

Executive
Officer

Takayoshi Fujiwara

Yasuki Hosomi

Director(Outside)

Takao Koyama

Shinji Inoue

Director(Outside)

Tomokazu Yamazawa

Hiromasa Hirai

Audit & Supervisory
Board Member(Full-time)

Shigeru Aoyagi

Tsutomu Irie

Executive
Officer

Osamu Tsukagoshi

Seiji Morinobu
Kouhei Nakanishi

n Executive Officers (As of June 25, 2019)
Executive
Officer27

Toshiyuki Wada

Executive
Officer

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2019

SENSHU IKEDA HOLDINGS,INC.

TheThe Senshu
Senshu Ikeda
Ikeda BankBankn Organization (As of the end of June, 2019)
Personnel
PersonnelCommittee
Committee

Remuneration
RemunerationCommittee
Committee

Corporate
Corporate Planning
Planning andand General
General Affairs
Affairs Division
Division
Personnel
Personnel Affairs
Affairs Division
Division
Risk
Risk Management
Management Division
Division
Compliance
Compliance Management
Management Office
OfficeOperations
Operations Management
Management Division
Division
OperatingOperating Center
CenterInternational
International Division
DivisionManagement
ManagementCommittee
Committee

Business
Business Management
Management Division
Division
Securi
Securittiieess andand Insurance
Insurance Busi
Businness
ess Promoti
Promotioonn Offi
Officcee

Customer
Customer Center
CenterRegional
Headquarters
Regional HeadquartersCS
CS Headquarters
Headquarters

Personal
Personal Loan
Loan Promotion
Promotion Office
OfficeRelationship
Relationship Promotion
Promotion Division
Division

Relationship
RelationshipUnit
Unit

ALM
ALMCommittee
Committee

Efficiency
EfficiencyImprovement
ImprovementCommittee
Committee

Business
BusinessManagement
ManagementUnit
Unit

Branches
Branches (including(including sub-branches):
sub-branches): 141
141

Compliance
ComplianceCommittee
Committee

Risk
RiskManagement
ManagementCommittee
Committee

Audit
Audit& &Supervisory
SupervisoryBoard
BoardMembers
Members Audit
Audit&&Supervisory
SupervisoryBoard
Board

Audit
Audit& &Supervisory
SupervisoryBoard
BoardMembers
MembersOffice
OfficeBoard
BoardofofDirectors
Directors

GeneralGeneralMeeting
MeetingofofShareholders
Shareholders

Risk
Risk Products
Products Operations
Operations Office
OfficeOverseas
Overseas Representative
Representative Office
OfficeFinancial
Financial Advisory
Advisory Division
Division
M&A
M&A Advisory
Advisory Office
OfficePrivatePrivate Banking
Banking Office
OfficeFinancial
Financial Market
Market Division
Division
Market Operations
Operations Office
OfficeMarketLoan
Loan Division
Division
Business
Business Rehabilitation
Rehabilitation Supporting
Supporting Office
OfficeInternal
Internal Audit
Audit Division
Divisionn Board of Directors (As of June 25, 2019)
Representative Director
and Chairman
Representative Director,
President and CEO

Takayuki Ota

Director & Senior Managing
Executive Officer

Atsushi Ukawa

Director & Senior Managing
Executive Officer

Hiroo Maeno

Non-executive Director(Non-full-time)

Minoru Furukawa

Audit & Supervisory
Board Member (Full-time)

Osamu Horiuchi
Ken-ichi Yoshimoto
Kenji Fukuda

Yasuki Hosomi

Non-executive Director(Non-full-time)

Takao Koyama

Audit & Supervisory
Board Member (Outside)

Director & Managing
Executive Officer

Shinji Inoue

Non-executive Director(Non-full-time)

Tomokazu Yamazawa

Audit & Supervisory
Board Member (Outside)

Director &Executive Officer

Hiromasa Hirai

Audit & Supervisory
Board Member (Full-time)Masahiro Saiton Executive Officers (As of June 25, 2019)
Senior Managing
Executive Officer

Koji Miyata

Managing
Executive Officer

Akihito Okumura

Managing
Executive Officer

Muneharu Kurita

Managing
Executive Officer

Kou Tanaka

Managing
Executive Officer
Executive
Officer
Executive
Officer
Executive
Officer
Executive
Officer

Toshiyuki Wada

Executive
Officer

Susumu Yamagata

Executive
Officer

Tadashi Ichikawa

Executive
Officer

Kouichi Nakanishi

Osamu Tsukagoshi

Executive
Officer

Tsutomu Irie

Executive
Officer

Kyoko Matsushita

Yoshimasa Nishikawa

Executive
Officer

Hirohito Sakaguchi

Executive
Officer

Keisuke Misaki

Tokikazu Hihara

Executive
Officer

Jun Matsumura

Executive
Officer

Hideya Arimoto

Takayoshi Fujiwara

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201928

Representative
Director andPresident

Motoshi Inoue

Audit & Supervisory
Board Member(Full-time)

Yoshiyuki Goto

Representative
Director andVice PresidentManaging
Director

Toshifumi Takai

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

Satoshi Kitagawa

n Executive Officers (As of June 25, 2019)29

Executive Officer

Toshiyuki Inoue

Executive Officer

Shigeki Kawamura

Deputy General Manager, Business Headquarters

General Manager, Business Headquarters

Branches

Business Management Division
Collaboration Promotion Office
Product Management Division

Planning and General Affairs Division

Business Compliance DivisionInternal Audit Divisionn Board of Directors (As of June 25, 2019)

Mamoru Kudo

General Manager, Management 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 June, 2019)

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2019

Sakae Fujishiro

SENSHU IKEDA HOLDINGS,INC.

Consolidated Financial Information of Senshu Ikeda Holdings
Consolidated Balance Sheets
Senshu Ikeda Holdings, Inc. and Consolidated Subsidiaries
As of 31st March, 2019 and 2018

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, 19, 33 and 34)
Loans and bills discounted (Notes 8, 32, 33 and 34)
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 17)
Deferred tax assets (Note 29)
Customers’ liabilities for acceptances and guarantees
Reserve for possible loan losses
Total assets

Millions of yen
2019
2018

Thousands of U.S.
dollars (Note 1)
2019¥743,563
7,127
100
112
27,003
612,741
3,913,086
5,514
79,93940,093
5,152
13,512
8,403
8,492(13,965)¥5,450,878¥713,371
3,783
100
176
26,987736,415
3,897,405
5,448
82,965
41,1485,209
11,114
7,427
9,322(14,873)¥5,526,003$6,699,369
64,212
900
1,009
243,292
5,520,686
35,256,203
49,680720,236361,230
46,418
121,740
75,70976,511(125,822)$49,111,433¥4,945,548–
87,321
123,077
408–
45,960
1,225
146
8
611
254
371
799
4
184
8,492
5,214,416¥4,902,103
900
165,002132,133
562
20,00043,314
1,876
151
33
512
246
–
770
2
135
9,322
5,277,067$44,558,500–
786,746
1,108,901
3,676–
414,091
11,037
1,315
72
5,505
2,288
3,342
7,198
36
1,657
76,511
46,980,953

102,999
42,10378,804(831)
223,074

102,999
57,381
78,153(1,476)
237,057

928,002379,340
710,009(7,487)2,009,856

9,285
(136)
2,197
11,346
71
1,969
236,462¥5,450,878

6,981
(115)
1,355
8,222
122
3,533
248,935¥5,526,003

83,656(1,225)
19,794102,225639
17,7402,130,480$49,111,433

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 and 34)
Foreign exchange liabilities (Notes 15 and 33)
Corporate bonds and notes (Note 33)
Other liabilities (Notes 12 and 16)
Provision for employees’ bonuses
Net defined benefit liability (Note 17)
Accrued retirement benefits for directors and corporate auditors
Reserve for reimbursement of deposits
Reserve for point services
Reserve for losses on guarantees
Reserve for contingent losses
Reserve under special laws
Deferred tax liabilities (Note 29)
Acceptances and guarantees (Note 20)
Total liabilities

Net assets
Shareholders’ equity (Note 20):
Capital 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 (loss) on deferred hedges (Note 34)

Remeasurements of defined benefit plans

Total accumulated other comprehensive income
Stock subscription rights (Note 20)
Non-controlling interests
Total net assets
Total liabilities and net assets
See accompanying notes to consolidated financial statements

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201930

Consolidated Statements of Operations
Senshu Ikeda Holdings, Inc. and Consolidated Subsidiaries
For the years ended 31st March, 2019 and 2018

IncomeInterest income:Interest on loans and bills discounted (Note 32)
Interest and dividends on securities
Other interest income
Fees and commissions
Other operating income (Note 21)
Reversal of provision for possible loan losses
Recoveries of written-off claims
Gain on sales or disposal of fixed assets
Gain on return of retirement benefit trust
Other income (Note 22)
Total income

Millions of yen
2019
2018

Thousands of U.S.
dollars (Note 1)2019¥40,381
7,758
533
21,087
4,933
289
1,292
10
–
21,026
97,313¥41,062
9,640
519
20,695
5,618
2,254
1,375
80
1,710
30,444
113,403$363,825
69,8984,802
189,990
44,445
2,603
11,64090–
189,440876,772

Interest expenses:
Interest on deposits
Interest on borrowings and rediscounts
Other interest expenses
Fees and commissions
Other operating expenses (Note 23)
General and administrative expenses
Loss on sales or disposal of fixed assets
Loss on impairment of fixed assets (Note 24)
Other expenses (Note 25)
Total expenses
Income before income taxes

1,752
383
2,978
6,783
11,752
48,657
118
2,101
15,29989,826
7,487

2,528
480
2,285
6,945
20,01551,45346
56
13,69997,51015,892

15,7853,450
26,831
61,113
105,883
438,390
1,063
18,929137,841809,316
67,456

Income taxes (Note 29)
Current
Deferred
Total income taxes
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of the parent

1,313
(19)
1,294
6,192
52
¥6,139

966
6,235
7,201
8,691
295
¥8,395

11,829(171)
11,65855,788468$55,311

Millions of yen
2019
2018
¥6,192¥8,691

Thousands of U.S.
dollars (Note 1)2019$55,788

2,303
(20)
841
3,123
¥9,316(813)
23(1,829)(2,618)¥6,072

20,749(180)
7,577
28,137$83,935

9,263
52

5,779
293

83,457
468

Expenses

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, 2019 and 2018

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

31

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2019

SENSHU IKEDA HOLDINGS,INC.

Consolidated Statement of Changes in Net Assets
Senshu Ikeda Holdings, Inc. and Consolidated Subsidiaries
Year Ended 31st March, 2019

BALANCE, 1st April, 2017
Purchase of shares of
consolidated subsidiaries
Cash dividends
Profit attributable to ownersof the parent
Acquisition of treasury stock
Disposal of treasury stock
Net changes in items otherthan shareholders’ equity
Total changes during the period
BALANCE, 31st March, 2018
Change in subsidiaries' equity
Cash dividends
Profit attributable to ownersof the parent
Acquisition of treasury stock
Disposal of treasury stock
Retirement of treasury stock
Net changes in items otherthan shareholders’ equity
Total changes during the period
BALANCE, 31st March, 2019

BALANCE, 1st April, 2018
Change in subsidiaries' equity
Cash dividends
Profit attributable to ownersof the parent
Acquisition of treasury stock
Disposal of treasury stock
Retirement of treasury stock
Net changes in items otherthan shareholders’ equity
Total changes during the period
BALANCE, 31st March, 2019

Capitalstock
102,999

Capitalsurplus57,365Retainedearnings
75,244

Millions of Yen
Accumulated othercomprehensive incomeNetNet
unrealized
gain (loss) on unrealized RemeasureTotal
available- gain (loss) ments of
Stock
NonTreasury shareholder’s for-sale on deferred defined subscription controlling
hedges benefit plans rights
stock
securities
equityinterests(2,097) 233,512
7,793
(139)
3,184
105
4,760

20
(5,487)
8,395
(0)
621

(4)
–
102,999

15
57,381
1

2,908
78,153–102,999

Capitalstock
928,002(15,278)
42,103

Capitalsurplus516,992
9(5,487)(5,487)

8,395

8,395

(0)
617

(0)
617
(811)

23

(1,829)16(1,227)(3,827)

(811)
6,981

23
(115)

(1,829)
1,355

16
122

(1,227)
3,533

(282)
248,935
1(5,488)

6,139

6,139

6,139

(15,359)746
15,256(15,359)723–(15,359)
723
–

644
(831)

(13,982)
223,074

650
78,804

2,303

(20)

841

(50)

(1,563)

1,509

2,303
9,285

(20)
(136)

841
2,197

(50)
71

(1,563)
1,969(12,473)
236,462

Thousands of U.S. Dollars (Note 1)
Accumulated othercomprehensive incomeNetNet
unrealized
gain (loss) on unrealized RemeasureTotal
available- gain (loss) ments of
Stock
NonRetained Treasury shareholder’s for-sale on deferred defined subscription controlling Total net
hedges benefit plans rights
earnings
stock
securities
equityinterests
assets704,144(13,298) 2,135,841
62,897(1,036)
12,2081,099
31,831 2,242,859
9
9(49,445)(49,445)(49,445)(198)(137,453)(137,652)
379,340

20(5,488)55,311–
928,00220

3,545
237,057
1(5,488)(22)(15,256)621(1,476)

Total net
assets249,2175,856
710,00955,311

55,311(138,381) (138,381)
6,721
6,514
137,453–(138,381)
6,514–

5,802 (125,975)(7,487) 2,009,856

20,749

(180)

7,577

(450)

(14,082)

13,59520,74983,656(180)(1,225)

7,577
19,794(450)
639(14,082) (112,379)
17,740 2,130,480

See notes to consolidated financial statements

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201932

Consolidated Statements of Cash Flows
Senshu Ikeda Holdings, Inc. and Consolidated Subsidiaries
For the years ended 31st March, 2019 and 2018

Millions of yen
2019
2018
Cash flows from operating activities
Income before income taxes
Depreciation
Loss on impairment of fixed assets
Amortization of goodwill(Earnings) losses from investments under the equity method
Increase (decrease) in reserve for possible loan losses
Increase (decrease) in accrued bonuses
Gain on return of retirement benefit trust
Decrease (increase) in net defined benefit asset
Increase (decrease) in net defined benefit liability¥7,487
5,320
2,101
122
(27)
(908)
(650)
–
(1,608)5¥15,892
5,267
56
217
(27)
(7,012)72(1,710)(974)
6$67,456
47,932
18,9291,099(243)(8,180)(5,856)–(14,487)
45

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 losses on guarantees
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

(24)
99
8
371
29
(48,673)
5,114
336
215
(1,929)43(15,681)
43,444
(900)

–
25
19
–
419
(51,223)
5,294(4,793)864
94(49)(88,078)
102,676
900

(216)
891
72
3,342
261
(438,535)
46,076
3,027
1,937(17,379)387(141,282)
391,422(8,108)Net increase (decrease) in borrowed money (excluding subordinated borrowings)(9,056)(22,603)(81,592)

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 and others
Net (increase) decrease in call money and bills sold and others

587
63(3,344)
–

(679)
141
(3,680)5,288
567(30,128)(24,716)–

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

(77,681)(65)(153)
50,055(5,583)(1,746)(84,759)892(21)
52,360(5,730)(22,963)(699,891)(585)(1,378)450,986(50,301)(15,731)(52,629)(883)¥(53,512)(133,823)(2,592)¥(136,416)(474,177)(7,955)$(482,133)

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

33

Thousands of U.S.
dollars (Note 1)
2019

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2019

SENSHU IKEDA HOLDINGS,INC.

Consolidated Statements of Cash Flows
Senshu Ikeda Holdings, Inc. and Consolidated Subsidiaries
For the years ended 31st March, 2019 and 2018

Thousands of U.S.
dollars (Note 1)
2019

Millions of yen
2019
2018
Cash flows from investing activities
Purchases of securities
Proceeds from sales of securities
Proceeds from maturity of securities
Purchases of tangible fixed assets
Purchases of intangible fixed assets
Proceeds from sales of tangible fixed assets
Proceeds from sales of intangible fixed assets
Purchase of shares of subsidiaries resulting in change in scope of consolidation
Net cash provided by (used in) investing activities
Cash flows from financing activities
Decrease in subordinated borrowings
Decrease in subordinated bonds and bonds with stock subscription rights
Cash dividends paid
Cash dividends paid for non-controlling 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)¥(133,388)
166,240
97,792(4,841)(1,658)218¥(413,251)
399,351
203,189(3,010)(1,518)520$(1,201,801)
1,497,792
881,088(43,616)(14,938)1,964

0–124,364–(75)
185,2040–
1,120,497–(20,000)(5,488)(39)(15,359)723(40,163)(7,000)–(5,487)
(116)
(0)
617
(11,986)–(180,196)(49,445)(351)(138,381)
6,514(361,861)

90

0

810

30,778706,045¥736,824

36,801
669,243¥706,045

277,304
6,361,338$6,638,652

See accompanying notes to consolidated financial statements

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201934

Notes to Consolidated Financial Statements
Senshu Ikeda Holdings, Inc. and Consolidated Subsidiaries
For the Years Ended 31st March, 2019 and 2018

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 ¥110.99 = U.S.$1.00, the exchange
rate prevailing on 31st March, 2019. 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 24 (27 in 2018)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.
Change in the scope of consolidation
Senshu Ikeda Turnaround Partners Co.,Ltd., Senshu Ikeda
Office Service Co.,Ltd. and Ikegin Capital Yumejikomi FundK.I Investment Enterprise Limited Partnership, all of whichwere consolidated subsidiaries of the Company in theprevious 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 investments
in 2 affiliates for the years ended 31st March, 2019 and 2018,
respectively.

35

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2019

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 5 years.
The balance sheet date of 8 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.
(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.

SENSHU IKEDA HOLDINGS,INC.

(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.
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 ¥32,351 million($291,476 thousand) and ¥31,347 million for the years
ended 31st March, 2019 and 2018, 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 losses on guarantees
Reserve for losses on guarantees is provided at theamount of an estimated loss to cover losses fromguarantees for the Senshu Ikeda Bank Employees’
Shareholders Association Exclusive Trust Account.
(13) 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.
(14) Reserve under special laws
Reserve under special laws consist of the financial
instruments transaction liability reserve of ¥4 million($36 thousand) as of 31st March, 2019, posted by
Senshu Ikeda Tokai Tokyo Securities Co., Ltd., which were
calculated according to the specifications of Article 46-5of the Financial Instruments and Exchange Act and Article
175 of the Cabinet Office Ordinace Related to the
Financial Instruments Business, to prepare for losses
originating from incidents relating to the purchase andsale of securities or other transactions.

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201936

(15) 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 years, which is within the average
estimated remaining years of service of the eligible
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.
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.
(16) 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.
(17) 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.
(18) 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 or fair value hedge accounting, under whichgains or losses on derivatives are deferred until maturity

37

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2019of the hedged transactions, as stipulated in the JapaneseInstitute of Certified Public Accountants (JICPA) Industry
Audit Committee Report No. 24, 13th February, 2002.
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, 29th July, 2002. The Group assesses theeffectiveness of its currency swaps and foreign exchange
swaps transactions, etc. entered into in order to hedge
the risk of fluctuation in foreign exchange rates bycomparing the foreign-currency amount of eachunderlying hedged item with the corresponding foreigncurrency amount of the respective hedging instruments.
(19) 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.
(20) Consumption taxes
Transactions are principally stated exclusive of nationaland municipal consumption taxes.
(21) 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).
(22) Additional Information
The Company conducts transactions in which it delivers
Company shares to the Employees Shareholders
Association through a trust.
The Trust-type Employees Shareholding Incentive Plan
introduced in December 2015
(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 toSENSHU IKEDA HOLDINGS,INC.

purchase 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 Employees’
Shareholder Trust, the Company is to repay suchremaining debt pursuant to the guarantee
agreement.
(2)	The Company’s own shares held in trust	The Company’s own shares held in trust are recorded
as treasury stock under the category of Net assets attheir book value in the Employees’ Shareholder Trust(excluding the amount of ancillary expenses). The
book value and number of shares of such treasury
stock for the fiscal year ended 31st March, 2019 and2018 were ¥730 million ($6,577 thousand) and
1,546 thousand shares, and ¥1,380 million and
2,924 thousand shares, respectively.
(3)	Book value of borrowings recorded from applicationof the gross method	¥825 million ($7,433 thousand) for the fiscal year
ended 31st March, 2019, and ¥1,341 million for the
fiscal year ended 31st March, 2018, respectively.
(4) Reserve for losses on guarantees	As the Employees’ Shareholder Trust is expected toterminate within a year with remaining debt, which
the Trust is unable to repay and the Company is likely
to repay, reserve for losses on guarantees is provided
at the amount of an estimated loss.

5. Securities
Securities at 31st March, 2019 and 2018 consisted of thefollowing:Thousands of
U.S. dollars

Millions of yen
2018

2019
Stocks¥

201934,273 ¥52,544 $ 308,793

Bonds:
Government bonds

64,115

72,135

Local government bonds

60,11839,462541,652

Corporate bonds

256,732

245,237

2,313,109

197,500

327,034

1,779,439

Other
Total

577,664¥ 612,741 ¥736,415 $ 5,520,686

Stocks in the above table include investments in affiliates of¥112 million ($1,009 thousand) and ¥82 million at 31st March,2019 and 2018, respectively.
The securities loaned under unsecured securities lendingtransactions are included in Government bonds under“Securities” in the amount of ¥18,855 million ($169,880
thousand) at 31st March, 2019.
Held-to-maturity debt securities with fair value at 31st March,2019 and 2018 were as follows:
Millions of yen
31st March, 2019
Government bonds

Carrying value

Fair value

¥–

¥–

Corporate bonds

–

–

Other

1,000

1,005

Total

¥1,000¥1,005

Millions of yen
31st March, 2019
Government bonds

Difference

Unrealized Unrealized
gain
loss

¥– ¥– ¥–

Corporate bonds

–

–

–

Other

5

5

–

Total

¥5 ¥5 ¥–

4. Trading account securities
Valuation gain or loss on trading account securities included
in income before income taxes and non-controlling interests
were ¥(0) million ($(0) thousand) and ¥(0) million for the years
ended 31st March, 2019 and 2018, respectively.

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201938

Millions of yen
31st March, 2018
Government bonds

Millions of yen

Carrying value

Fair value

¥–

¥–

–

–

Corporate bonds

31st March, 2019

Other

11,00011,068

Total¥11,000¥11,068

Millions of yen
31st March, 2018
Government bonds

Unrealized Unrealized
Difference
gain
loss
¥– ¥– ¥–

Corporate bonds

–

–

–

Other

68

68

–

Total

Equity securities

31st March, 2019
Government bonds¥28,097¥16,933
63,958Government bonds

64,115

Local government bonds

60,11860,068

Corporate bonds

256,732

255,864

Subtotal

380,966

379,892

Other

191,789

191,904Total¥600,853¥588,730

Millions of yen
31st March, 2019
Equity securities

Difference

Unrealized Unrealized
gain
loss

¥11,163 ¥12,059 ¥(896)Bonds:

Carrying value

Fair value

$–

$–

–

–

Corporate bonds

Acquisition
cost

Bonds:¥68 ¥68 ¥–Thousands of U.S. dollars

Carrying value

Other

9,009

9,054

Total

$9,009$9,054

Government bonds

156

156

–

Local government bonds

50

83

(33)

Corporate bonds

867

907

(40)

Subtotal

1,073

1,147

(74)

(114)

5,134

(5,249)

Other
Total

¥12,122 ¥18,342 ¥(6,219)

Thousands of U.S. dollars
31st March, 2019
Government bonds
Corporate bonds
Other
Total

Difference

Millions of yen

Unrealized Unrealized
gain
loss
31st March, 2018

$– $– $–
–
45

–
45

–

Equity securities–

Bonds:$45 $45 $–There were no held-to-maturity debt securities sold during theyears ended 31st March, 2019 and 2018.
Available-for-sale securities with fair value at 31st March, 2019and 2018 were as follows:

Carrying value

Acquisitioncost¥46,071¥23,485
71,990Government bonds

72,135

Local government bonds

39,46239,407

Corporate bonds

245,237

245,112Subtotal

356,836

356,510

Other

312,991

324,814Total¥715,899¥704,810

Millions of yen
31st March, 2018
Equity securities

Difference

Unrealized Unrealized
gain
loss

¥22,585 ¥22,998 ¥(412)

Bonds:
Government bonds

145

145

–

Local government bonds

55

100

(45)

Corporate bonds

124

265

(141)

Subtotal

325

512

(186)

(11,823)

2,036(13,860)

Other
Total

39

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2019¥11,088 ¥25,547 ¥(14,458)

SENSHU IKEDA HOLDINGS,INC.

Thousands of U.S. dollars

Thousands of U.S. dollars

Carrying value

Acquisitioncost$253,148$152,563

Government bonds

577,664

576,250Government bonds––

Local government bonds

541,652

541,201

Local government bonds

–

–

–

Corporate bonds

2,313,109

2,305,288

Corporate bonds

11,7039(0)Subtotal

31st March, 2019
Equity securities

2019

Bonds:

Equity securities

Subtotal

3,432,435

3,422,758

1,727,984

1,729,020

Other

Total

$5,413,577$5,304,351

Total

Thousands of U.S. dollars
31st March, 2019
Equity securities

Difference

Unrealized Unrealized
gain
loss

$100,576 $108,649 $(8,072)

Bonds:
Government bonds

1,405

1,405

–

Local government bonds

450

747

(297)

Corporate bonds

7,811

8,171

(360)

Subtotal
Other
Total

9,667

10,334(666)(1,027)

46,256(47,292)

Loss

11,7039(0)1,363,339

5,216(83,881)$1,514,325 $89,062 $(83,881)

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, 2019 was ¥405 million ($3,648 thousand), which
consisted of ¥405 million ($3,648 thousand) on equity
securities for the year ended 31st March, 2019.
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.

Millions of yen
2019
Equity securities

Proceeds
from sales

Gain

Loss

¥15,458 ¥9,304 ¥–

Bonds:
Government bonds

–

–

–

Local government bonds

–

–

–

Corporate bonds

1,299

1

(0)

Subtotal

1,299

1

(0)

151,317579(9,310)

Other
Total

6. Money Held in Trust
Money held in trust at 31st March, 2019 and 2018 consistedof the following:
Money held in trust for trading purposes

2019¥168,075 ¥9,885 ¥(9,310)
Millions of yen
2018

Equity securities

Proceeds
from sales

Gain

¥

Valuation gain (loss) included in consolidated
statements of income

2018

2019

27,003 ¥26,987 $ 243,292
(80)

1

(720)

Loss

¥28,824 ¥18,436 ¥–Bonds:
Government bonds––

Local government bonds

–

–

–

40,797507(26)

Corporate bonds

Thousands of
U.S. dollars

Millions of yen
Carrying value

Subtotal–$109,217 $165,258 $(56,032)

Available-for-sale securities sold during the years ended 31st
March, 2019 and 2018 were as follows:

Total

Gain

$139,273 $83,827 $–Bonds:

Other

Other

Proceeds
from sales

There were no money held in trust owned for other purposes
at 31st March, 2019 and 2018.

–

40,797507(26)331,737

1,230(14,683)¥401,358 ¥20,173 ¥(14,709)

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201940

7.	Net Unrealized Gain (Loss) on Availablefor-Sale Securities
Net unrealized gain (loss) on available-for-sale securities at
31st March, 2019 and 2018 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2018

2019

2019

Differences between acquisition costand fair value:
Available-for-sale securities
Deferred tax liabilities
Differences between acquisition costand fair value, net of taxes¥12,122 ¥11,088 $109,217(2,837)(4,106)(25,560)

9,285

6,981

83,656

(0)

(0)

(0)

Amounts corresponding to
non-controlling interests

Net unrealized gain (loss) on availablefor-sale securities, net of taxes¥9,285 ¥6,981 $83,656

8.	Loans and Bills Discounted and Risk
Monitored Loans
Loans and bills discounted:
Loans and bills discounted at 31st March, 2019 and 2018consisted of the following:
Millions of yen
2019
Bills discounted

2018

Thousands of
U.S. dollars
2019¥19,122 ¥19,725 $172,285

Loans on bills

53,79453,909484,674

Loans on deeds

3,594,664

3,583,104

32,387,278

Overdrafts

245,505240,666

2,211,956

Total

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 ¥742,625 million ($6,690,918
thousand) and ¥754,050 million at 31st March, 2019 and2018, respectively, including the contracts whose contractual
periods were either less than one year or revocable at any
time, in the amount of ¥727,407 million ($6,553,806 thousand)and ¥740,863 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.
Risk monitored loans:
Risk monitored loans which were included in loans and bills
discounted at 31st March, 2019 and 2018 consisted of thefollowing:2019¥3,913,086 ¥3,897,405 $35,256,203
Loans to bankrupt borrowers

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, 2019 and 2018 totaled ¥19,347 million($174,313 thousand) and ¥20,109 million, respectively.
At 31st March, 2019 and 2018, 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, 28th November,
2014, in the amount of ¥11,570 million ($104,243 thousand)and ¥17,970 million, respectively.

41

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2019

Thousands of
U.S. dollars

Millions of yen

Delinquent loans

2018

2019

¥1,387 ¥1,380 $12,496
29,29532,715Loans past due for 3 months or more

111

–

1,000

Restructured loans

4,875

7,209

43,922

Total

263,942¥35,670 ¥41,306 $321,380

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).
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.

SENSHU IKEDA HOLDINGS,INC.

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.

2019
Securities

Thousands of
U.S. dollars

Millions of yen
2018

2019

¥4,451 ¥4,335 $40,102

Foreign bills of exchange bought

207

366

1,865

Foreign bills of exchange receivable

855

747

7,703

Total

12. Assets Pledged

Other assets

Other assets at 31st March, 2019 and 2018 consisted of thefollowing:Thousands of
U.S. dollars

2019
Investment in leased assets

2018

2019

¥18,118 ¥16,804 $163,239

Other receivables

20,566

20,681

185,295

Accrued income

5,164

5,399

46,526

Prepaid expenses

647

640

5,829

35,44239,439319,326

Other
Total

¥79,939 ¥82,965 $720,236

992

826

2019
7,442

The liabilities secured by the above pledged assets at 31st
March, 2019 and 2018 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2019
Deposits

10. Other Assets

2018¥269,454 ¥341,539 $2,427,732¥5,514 ¥5,448 $49,680

Millions of yen

Thousands of
U.S. dollars

Millions of yen

Foreign exchange assets at 31st March, 2019 and 2018consisted of the following:2019

At 31st March, 2019 and 2018, accumulated depreciation of
tangible fixed assets were ¥53,725 million ($484,052 thousand)and ¥51,994 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, 2019 and 2018
were ¥374 million ($3,369 thousand) and ¥375 million,
respectively.

Assets pledged as collateral at 31st March, 2019 and 2018consisted of the following:

9. Foreign Exchange Assets

Due from foreign correspondent banks

11. Tangible Fixed Assets

2018

2019

¥3,592 ¥3,786 $32,363

Payables under securities
lending transactions

87,321

165,002786,746

Borrowed money

100,832

100,795

908,478

245

682

2,207

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 ¥1,003 million ($9,036 thousand) and ¥9,030
million at 31st March, 2019 and 2018, respectively.
At 31st March, 2019 and 2018, margins on futures contracts inthe amounts of ¥2,013 million ($18,136 thousand) and ¥3,867
million, guarantee deposits of ¥4,562 million ($41,102 thousand)and ¥4,667 million, deposits for futures transactions of ¥503
million ($4,531 thousand) and ¥503 million, collateral money
deposited for financial instruments of ¥964 million ($8,685
thousand) and ¥515 million and margins for Central Counter
Party of ¥20,000 million ($180,196 thousand) and ¥19,555
million were included in “Other assets”, respectively.

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201942

13. Deposits

16. Other Liabilities

Deposits at 31st March, 2019 and 2018 consisted of thefollowing:

Other liabilities at 31st March, 2019 and 2018 consisted of thefollowing:Thousands of
U.S. dollars

Millions of yen
2018

2019
Current deposits

Thousands of
U.S. dollars

Millions of yen

2019

2019

¥206,172 ¥193,672 $1,857,572

Accrued expenses

2018

2019

¥2,709 ¥3,270 $24,407

Ordinary deposits

2,494,879

2,356,699

22,478,412

Unearned income

16,11915,818

Savings deposits

23,60823,869212,703

Accrued income taxes

1,199

1,024

10,802

Deposits at notice

13,225

9,433

119,154

Other

25,932

23,200233,642

Time deposits

2,175,904

2,281,109

19,604,504

Total

Other deposits

31,75737,319286,124

Total¥4,945,548 ¥4,902,103 $44,558,500

14. Borrowed Money
Borrowed money at 31st March, 2019 and 2018 consisted ofborrowings from the Bank of Japan and certain other financial
institutions.

145,229¥45,960 ¥43,314 $414,091

The amounts of lease obligations included in “Other” were
¥8 million ($72 thousand) and ¥6 million at 31st March, 2019and 2018, respectively. The average interest rates on leaseobligations at 31st March, 2019 with maturity dates on or
before and subsequent to 31st March, 2020 were 3.00%. The
average interest rates on lease obligations at 31st March,2018 with maturity dates on or before and subsequent to 31st
March, 2019 were 3.00%.

The average interest rate applicable to borrowed money at
31st March, 2019 and 2018 were 0.29% and 0.34%,
respectively.

The aggregate annual maturities of lease obligations
subsequent to 31st March, 2019 were summarized as follows:Year ending 31st March,Millions of yen

Thousands of
U.S. dollars

The aggregate annual maturities of borrowed money
subsequent to 31st March, 2019 were summarized as follows:

2020

¥2

$18

2021

2

18

2022

1

9

2023

1

9

2024

0

0

0

0

¥8

$72

Year ending 31st March,Millions of yen

Thousands of
U.S. dollars

2020¥22,653$204,099

2021

98,290885,575

2022

2025 and thereafter

1,213

10,928

2023

Total

624

5,622

2024

295

2,657

Total

¥123,077$1,108,901

17. Retirement Benefit Plans
Outline of the retirement benefit plan adopted by the Company

15. Foreign Exchange Liabilities

The consolidated subsidiaries have adopted funded defined
benefit plans to cover the payment of retirement benefits toemployees.

Foreign exchange liabilities at 31st March, 2019 and 2018consisted of the following:Thousands of
U.S. dollars

Millions of yen
2018

2019
Foreign bills sold
Foreign bills of exchange payable
Total

43

2019

¥326 ¥538 $2,937
81

23

729

¥408 ¥562 $3,676

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2019

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

2018

2019

2019

Retirement benefit obligation at¥38,534 ¥35,723 $347,184
beginning of the year
Service cost

1,289

1,086

11,613

Interest cost

155

140

1,396

Actuarial gain or loss incurred
during the year

(226)

3,077

(2,036)

Payment of retirement benefits(1,806)(1,508)(16,271)

15

14

135

Other

Retirement benefit obligation at¥37,963 ¥38,534 $342,039
end of the year

Thousands of
U.S. dollars

2018

2019
Pension plan assets at
beginning of the year
Expected return on plan assets

2019

975

9,406

Actuarial gain or loss incurred
during the year

562

1,585

5,063

Contributions from employer

1,742

872

15,695

Payment of retirement benefits(1,518)(1,149)(13,676)–(2,702)–Return of retirement benefit
trust
Pension plan assets at end of
the year

Unfunded retirement benefit
obligation
Net amount of liability andasset on consolidatedbalance sheets2018(51,329)(49,497)(462,465)(13,512)(11,114)(121,740)

146

151

1,315

¥(13,365) ¥(10,962) $(120,416)

2019
Net defined benefit liability
Net defined benefit asset

2019¥37,816 ¥38,382 $340,715

Thousands of
U.S. dollars

Millions of yen
2018

2019

¥146 ¥151 $1,315(13,512)(11,114)(121,740)

Net amount of liability and asset
on consolidated balance¥(13,365) ¥(10,962) $(120,416)
sheetsThousands of
U.S. dollars

Millions of yen
2019Service cost

2018

2019

¥1,289 ¥1,086 $11,613

Interest cost¥49,497 ¥49,915 $445,959
1,044

2019
Funded retirement benefit
obligation(4) Retirement benefit expenses consisted of the following:(2)	Reconciliation of the beginning balance to the endingbalance of pension plan assets
Millions of yen

Thousands of
U.S. dollars

Millions of yen

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

Expected return on plan
assets

155

140

1,396

(1,044)(975)(9,406)

Amortization of actuarial loss

684

156

6,162

Amortization of prior service
cost

(262)

(262)

(2,360)Net periodic retirement
benefit expenses fordefined benefit pension
plans¥823 ¥146 $7,415¥51,329 ¥49,497 $462,465

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201944

(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:
Millions of yen
2018

2019
Prior service cost
Actuarial gain or loss
Total

Thousands of
U.S. dollars(2,372)

13,280¥1,212 ¥(2,634) $10,919(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:
Millions of yen
2018

2019
Unrecognized prior service
cost
Unrecognized actuarial gain or
loss
Total

Thousands of
U.S. dollars
2019¥(917) ¥(1,179) $(8,262)(773)(2,247)(20,245)¥(3,165) ¥(1,952) $(28,516)(7) Matters related to pension plan assets1)	Ratio of the main components in the total pension plan
assets are as follows:
2018

2019
Bonds

17%

17%

Stocks54%

56%

Short-term investment fundincluding cash and deposits

6%7%Life insurance company
general accounts

4%4%

Others

19%

16%

Total

100%

100%

Note:
Total pension plan assets include retirement benefit trust ofwhich securities are contributed for the pension plan, which
accounts for 32% and 30% of the total at 31st March, 2019and 2018, respectively.
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 2019

Discount rate

2019

2018

0.00%-0.65%

0.00%-0.65%

Expected rate of return on plan
assets2.5%

2.5%

Expected rate of salary increase

1.75%-4.02%

1.64%-3.42%

2019¥(262) ¥(262) $(2,360)
1,474(8) The assumptions used for actuarial calculations

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

19. 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 ¥16,274 million($146,625 thousand) and ¥5,146 million at 31st March, 2019and 2018, respectively.

20. 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, third-class preferred stock,
first series of seventh-class preferred stock and treasury
stock during the years ended 31st March, 2019 and 2018
were summarized as follows:
Number of shares (in thousands)
Year ended 31st
March, 2019

1st April,
31st March,2018 Increase Decrease 2019

Note

Outstanding shares:
Common stock

281,008––

Third-class preferred stock

7,500

–

7,500

First series of seventh-class preferred stock

25,000––25,000

Total

313,508–

7,500

306,008

3,089

302

1,545

281,008– 1

Treasury stock:
Common stock
Third-class preferred stock
Total

–

7,500

7,500

3,089

7,802

9,045

1,845 2,3 and 4– 5 and 6
1,845

Notes:
1.	Decrease in outstanding shares of Third-class preferredstock (7,500 thousand shares) was due to retirement oftreasury stock.
2.	The number of treasury stock as of 1st April, 2018 and as of
31st March, 2019 includes the Company’s shares owned by
the Employees’ Shareholder Trust of 2,924 thousand sharesand 1,546 thousand shares, respectively.
3.	Increase in treasury stock of common stock (302 thousand
shares) was due to purchase based on resolution of theBoard of Directors (300 thousand shares) and acquisition ofshares from the shareholders who owned fractional sharesless than one unit (2 thousand shares).
4.	Decrease in treasury stock of common stock (1,545 thousand
shares) consisted of disposal of shares following the acquisition
request from the shareholders who owned fractional sharesless than one voting right (0 thousand shares),transfer due
to exercise of stock option (167 thousand shares) andtransfer to the Shareholders Association (1,378 thousand
shares).
5.	Increase in treasury stock of Third-class preferred stock(7,500 thousand shares) was due to purchase of treasury
stock based on resolution of the Board of Directors.
6.	Decrease in treasury stock of Third-class preferred stock(7,500 thousand shares) was due to retirement of treasury
stock based on resolution of the Board of Directors.
Number of shares (in thousands)
Year ended 31st
March, 2018

1st April,
31st March,2017 Increase Decrease 2018(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, 31st July, 2018, 31st July, 2017, 27th July, 2016, 29th
July, 2015, 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 ¥71 million ($639 thousand) and ¥122
million at 31st March, 2019 and 2018, respectively.
Stock option related expenses for the years ended 31st
March, 2019 and 2018 amounted to ¥22 million ($198
thousand) and ¥32 million, respectively.
The stock option outstanding at 31st March, 2019 is as follows:
Date of resolution
Persons granted

Number of stock option
by type of shares (*)
Date of grantVesting conditions
Applicable service
periodExercise period

Date of resolution
Persons granted

Note

Outstanding shares:
Common stock

Notes:
1.	The number of treasury stock as of 1st April, 2017 and as of
31st March, 2018 includes the Company’s shares owned by
the Employees’ Shareholder Trust of 4,198 thousand sharesand 2,924 thousand shares, respectively.
2.	Increase in treasury stock of common stock (1 thousand
shares) was due to acquisition of shares from theshareholders who owned fractional shares less than one
unit.
3.	Decrease in treasury stock of common stock (1,309
thousand shares) consisted of transfer due to exercise ofstock option (34 thousand shares) and transfer to the
Shareholders Association (1,274 thousand shares).

281,008––

Third-class preferred stock

7,500

–

–

7,500

First series of seventh-class preferred stock

25,000––25,000

Total

313,508––

313,508

Common stock

4,397

1

1,309

3,089 1,2 and 3

Total

4,397

1

1,309

3,089

281,008

Treasury stock:

Number of stock option
by type of shares (*)
Date of grantVesting conditions
Applicable service
periodExercise period

24th February, 2011
Directors of thesubsidiaries:  22
Executive officers of
the subsidiaries: 19
Common stock:
84,78015th March, 2011
To exercise within 10
days after retirement
From 15th March, 2011 to
the date of retirement
From 16th March, 2011
to 31st July, 2041

28th July, 2011
Directors of thesubsidiaries:  16
Executive officers of
the subsidiaries:18
Common stock:
72,76031st August, 2011
To exercise within 10
days after retirement
From 31st August, 2011 to
the date of retirement
From 1st September,2011 to 31st July, 2041

31st August, 2012
Directors of thesubsidiaries:  10
Executive officers of
the subsidiaries: 16
Common stock:69,500
1st October, 2012
To exercise within 10
days after retirement
From 1st October, 2012 to
the date of retirement
From 2nd October, 2012
to 31st July, 2042

31st July, 2013
Directors of thesubsidiaries:  10
Executive officers of
the subsidiaries: 16
Common stock:53,800
2nd September, 2013
To exercise within 10
days after retirement
From 2nd September, 2013 to
the date of retirement
From 3rd September,2013 to 31st July, 2043

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201946

Date of resolution
Persons granted

Number of stock option
by type of shares (*)
Date of grantVesting conditions
Applicable service
periodExercise period

Date of resolution
Persons granted

Number of stock option
by type of shares (*)
Date of grantVesting conditions
Applicable service
periodExercise period

Date of resolution
Persons granted

Number of stock option
by type of shares (*)
Date of grantVesting conditions
Applicable service
periodExercise period

30th July, 2014
Directors of thesubsidiaries:  10
Executive officers of
the subsidiaries: 15
Common stock:55,90028th August, 2014
To exercise within 10
days after retirement
From 28th August, 2014 to
the date of retirement
From 29th August, 2014
to 31st July, 2044

29th July, 2015
Directors of thesubsidiaries:  10
Executive officers of
the subsidiaries: 14
Common stock:51,800
1st September, 2015
To exercise within 10
days after retirement
From 1st September, 2015 to
the date of retirement
From 2nd September, 2015
to 31st July, 2045(*)	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.

27th July, 2016
Directors of thesubsidiaries:8
Executive officers of
the subsidiaries:17
Common stock:94,800
30th August, 2016
To exercise within 10
days after retirement
From 30th August, 2016 to
the date of retirement
From 31st August, 2016
to 31st July, 2046

31st July, 2017
Directors of thesubsidiaries:8
Executive officers of
the subsidiaries: 20
Common stock:83,100
31st August, 2017
To exercise within 10
days after retirement
From 31st August, 2017 to
the date of retirement
From 1st September,2017 to 31st July, 2047

31st July, 2018
Directors of thesubsidiaries:6
Executive officers of
the subsidiaries:18
Common stock:58,500
30th August, 2018
To exercise within 10
days after retirement
From 30th August, 2018 to
the date of retirement
From 31st August, 2018
to 31st July, 2048

The stock option activity is as follows:
Date ofresolution

24th 28th 31st 31st 30th 29th 27th 31st 31st
February, July, August, July, July, July, July, July, July,
2011 2011 2012 2013 2014 2015 2016 2017 2018

Non-vested:
31st March, 201810,020 10,760
Outstanding

23,000 26,600 36,400 36,200 82,600 83,100

Granted

–

–

–

–

–

–

–

– 58,500

Forfeited

–

–

–

–

–

–

–

–

–

Vested

7,820

8,460

19,900 19,000 21,600 21,100 37,700 32,100–

31st March, 20192,200
Outstanding

2,300

3,100

–

7,600 14,800 15,100 44,900 51,000 58,500

Vested:31st March, 2018Outstanding––

Vested7,820

Exercised

7,820

Forfeited

–

–

–

–

–

–

–

–

–

31st March, 2019Outstanding

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

8,460

19,900 19,000 21,600 21,100 37,700 32,100

–

8,460

19,900 19,000 21,600 21,100 37,700 32,100

Price information is as follows:
Date ofresolution

24th 28th 31st 31st 30th 29th 27th 31st 31st
February, July, August, July, July, July, July, July, July,
2011 2011 2012 2013 2014 2015 2016 2017 2018

Exerciseprice¥1 ¥1 ¥1 ¥1 ¥1 ¥1 ¥1 ¥1 ¥1Average stock¥374 ¥374 ¥374 ¥374 ¥374 ¥374 ¥374 ¥374 ¥–
price at
exercise
Fair value
price atgrant date¥490 ¥535 ¥449 ¥430 ¥497 ¥474 ¥410 ¥353 ¥325

Date ofresolution

24th 28th 31st 31st 30th 29th 27th 31st 31st
February, July, August, July, July, July, July, July, July,
2011 2011 2012 2013 2014 2015 2016 2017 2018

Exerciseprice$0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00

Fair value
price atgrant date–$4.41 $4.82 $4.04 $3.87 $4.47 $4.27 $3.69 $3.18 $2.92

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

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2019–(*)	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.

Average stock$3.36 $3.36 $3.36 $3.36 $3.36 $3.36 $3.36 $3.36 $
price at
exercise

47–

SENSHU IKEDA HOLDINGS,INC.

The method for estimating the fair value price of 2018 stock
option granted in the year ended 31st March, 2019 were as
follows:
Measurement method: Black-Scholes model
Major fundamental factors and assumptions used to measurefair value
Date of resolution

22. Other Income
Other income for the years ended 31st March, 2019 and 2018consisted of the following:

23.49%

Estimated remaining outstanding period *2

4.807 years

Gain on money held in trust

3.827%

Other

Interest rate with risk free *4(0.076)%Total

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.

2019

Gain on sales of equity securities ¥9,445 ¥18,539 $85,097

Estimated dividend *3*1	Actual stock price during the period (from 8th November,2013 to 30th August, 2018) 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 ($0.13) of latest annual dividend (including the effect ofreverse stock split) /¥392 ($3.53) of stock price on the basedate*4	Yield of Japanese government bonds approximating theestimated remaining outstanding period

2018

2019

31st July,2018

Volatility of stock price *1

Thousands of
U.S. dollars

Millions of yen

108

188

973

11,472

11,716

103,360¥21,026 ¥30,444 $189,440

23. Other Operating Expenses
Other operating expenses for the years ended 31st March,2019 and 2018 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2018

2019

2019

Loss on sales of debt securities ¥11,752 ¥17,169 $105,883
Other

–

Total

2,845

–

¥11,752 ¥20,015 $105,883

24. Loss on impairment of fixed assets
With regard to the following assets, the Company determinedthat the investments could no longer be recovered inconjunction with the change in the use, and reduced theirbook value to their recoverable value, and recorded therelevant reduction as impairment loss for the year ended 31st
March, 2019.
Major use

Impairment loss Thousands ofType of asset (Millions of yen) U.S. dollars

21. Other Operating Income

Osaka 21 business branches

Land / Buildings, etc. ¥1,393 $12,550

Other operating income for the years ended 31st March, 2019and 2018 consisted of the following:

Osaka 3 employee welfare facilities Land / Buildings, etc.

337

3,036

Hyogo 5 business branches

365

3,288

4

36

RegionThousands of
U.S. dollars

Millions of yen
2019Gain on sales of securities andtrading account securities
Other
Total

2018

2019

¥3,648 ¥4,643 $32,867
1,284

975

11,568¥4,933 ¥5,618 $44,445

Buildings, etc.

Hyogo 1 employee welfare facility Building
Total

–

–

¥2,101 $18,929

As a general rule, The Senshu Ikeda Bank, Ltd., theCompany’s banking subsidiary, groups fixed assets bybusiness branch which is the minimum unit based on
management accounting and over which control andmonitoring of revenue are consistently maintained. Assets that
do not generate cash flows independently of other assets,
including the head office, training facilities, centralized centersand employee welfare facilities are considered as common
assets.
Recoverable value used in the calculation of impairment loss
is the higher of net realizable value and value in use. Net
realizable value is calculated based on the real estateappraisal value, net of estimated cost of disposal. The value in
use has not been discounted due to the short period of use.

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201948

25. Other Expenses

Cash dividends with record dates falling in the fiscal year
ended 31st March, 2019 and effective dates coming after
the end of the fiscal year

Other expenses for the years ended 31st March, 2019 and2018 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2018

2019

2019

Write-offs of loans and bills discounted ¥4,202 ¥2,145 $37,859
Loss on sales of equity securities

1

52

9

Loss on devaluation of equity securities

412

35

3,712

Loss on money held in trust

324

1,052

2,919

Provision for contingent losses
Other
Total

29

419

261

10,3299,993

93,062

Resolution by annual shareholders’ meeting on 26th June, 2018
Dividend amount Dividends per share
Recorddate

Effective Millions Thousands ofdateof yen U.S. dollars

Yen

U.S.
dollars

Effective date

First series of seventh- Retained earnings 31st March, 2019 26th June, 2019class preferred stock
Dividend amountMillionsof yenTypes of stock
Common stockThousands of
U.S. dollars

Dividends per share
Yen

U.S. dollars¥2,105 $

18,965 ¥

7.50 $0.06

First series of seventhclass preferred stock ¥

375 $

3,378 ¥

15.00 $0.13

Cash dividends paid during the fiscal year ended 31st
March, 2018
Resolution by annual shareholders’ meeting on 28th June, 2017
Dividend amount Dividends per share

31st March, 27th June,¥2,106 $18,974 ¥7.50 $0.06
2018
2018

Type ofstock

Third-class
31st March, 27th June,
preferred stock
2018
2018
¥262 $ 2,360 ¥35.00 $0.31

CommonstockFirst series of seventh- 31st March, 27th June,¥375 $ 3,378 ¥15.00 $0.13
class preferred stock
2018
2018

Third-class
31st March, 29th June,¥262 $ 2,466 ¥35.00 $0.32
preferred stock
2017
2017

Note:
The amount of cash dividends on common stock by resolutionof annual shareholders’ meeting on 26th June, 2018 includes
the ¥21 million ($189 thousand) in cash dividends on the
Company’s shares owned by the Employees’ Shareholder Trust.
Resolution by Board of Directors on 13th November, 2018
Dividend amount Dividends per share
Type ofstock
Commonstock

Recorddate

Effective Millions Thousands ofdateof yen U.S. dollars

Yen

U.S.
dollars

Recorddate

Effective Millions Thousands ofdateof yen U.S. dollars

Yen

U.S.
dollars

31st March, 29th June,
2017
2017
¥2,106 $19,823 ¥7.50 $0.07

First series of seventh- 31st March, 29th June,¥375 $ 3,529 ¥15.00 $0.14
class preferred stock
2017
2017

Note:
The amount of cash dividends on common stock by resolutionof annual shareholders’ meeting on 28th June, 2017 includes
the ¥31 million ($291 thousand) in cash dividends on the
Company’s shares owned by the Employees’ Shareholder Trust.
Resolution by Board of Directors on 13th November, 2017
Dividend amount Dividends per share

30th September, 3rd December,¥2,107 $18,983 ¥7.50 $
2018
2018

0.06

Type ofstock

Third-class
30th September, 3rd December,preferred stock
2018
2018
¥262 $ 2,360 ¥35.00 $

0.31

Commonstock

30th September, 4th December,¥2,106 $19,823 ¥7.50 $
2017
2017

0.07

0.13

Third-class
30th September, 4th December,preferred stock
2017
2017
¥262 $ 2,466 ¥35.00 $

0.32

First series of seventh- 30th September, 4th December,¥375 $ 3,529 ¥15.00 $
class preferred stock
2017
2017

0.14

First series of seventh- 30th September, 3rd December,¥375 $ 3,378 ¥15.00 $
class preferred stock
2018
2018

Note:
The amount of cash dividends on common stock by resolutionof Board of Directors on 13th November, 2018 includes the¥17 million ($153 thousand) in cash dividends on the
Company’s shares owned by the Employees’ Shareholder Trust.

49

Record date

Retained earnings 31st March, 2019 26th June, 2019

Note:
The amount of cash dividends on common stock by resolutionof annual shareholders’ meeting on 25th June, 2019 includes
the ¥11 million ($99 thousand) in cash dividends on the
Company’s shares owned by the Employees’ Shareholder Trust.

Cash dividends paid during the fiscal year ended 31st
March, 2019

Commonstock

Common stock¥15,299 ¥13,699 $137,841

26. Dividends

Type ofstock

Source ofdividends

Types of stock

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2019

Recorddate

Effective Millions Thousands ofdateof yen U.S. dollars

Yen

U.S.
dollars

Note:
The amount of cash dividends on common stock by resolutionof Board of Directors on 13th November, 2017 includes the¥26 million ($244 thousand) in cash dividends on the
Company’s shares owned by the Employees’ Shareholder Trust.

SENSHU IKEDA HOLDINGS,INC.

Cash dividends with record dates falling in the fiscal year
ended 31st March, 2018 and effective dates coming after
the end of the fiscal year
Source ofdividends

Types of stock
Common stock

Record dateb.

As Lessee
Future minimum lease payments under non-cancellable
operating leases subsequent to 31st March, 2019 wereas follows:

Effective date

Retained earnings 31st March, 2018 27th June, 2018

Third-class
Retained earnings 31st March, 2018 27th June, 2018preferred stock
First series of seventh- Retained earnings 31st March, 2018 27th June, 2018class preferred stock
Dividend amountMillionsof yenTypes of stock
Common stock

Dividends per share

Thousands of
U.S. dollars

Yen

U.S. dollars

Operating leases

Year ending 31st MarchMillions of yen

Thousands of
U.S. dollars

2020¥1,025$9,2352021 and thereafter
Total

6,297

56,734¥7,323$65,978¥

2,106 $

19,823 ¥

7.50 $0.07

Third-classpreferred stock ¥

262 $

2,466 ¥

35.00 $0.32

First series of seventhclass preferred stock ¥

29. Income Taxes

375 $

3,529 ¥

15.00 $0.14

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 30.5% and 30.8% for the years ended 31st March,2019 and 2018, respectively.

Note:
The amount of cash dividends on common stock by resolutionof annual shareholders’ meeting on 26th June, 2018 includes
the ¥21 million ($197 thousand) in cash dividends on the
Company’s shares owned by the Employees’ Shareholder Trust.

The tax effect of temporary differences which gave rise tosignificant portions of the deferred tax assets and liabilities at
31st March, 2019 and 2018 consisted of the following:

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, 2019 and 2018 were summarized
as follows:
Millions of yen
2019
Cash and due from banks
Deposits other than deposits
with the Bank of Japan
Cash and cash equivalents

2018

Thousands of
U.S. dollars
2019¥743,563 ¥713,371 $6,699,369(6,738)(7,326)(60,708)¥736,824 ¥706,045 $6,638,652

28. Leasesa.

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

Deferred tax assets:
Reserve for possible loan losses ¥Tax loss carryforwards
Loss on devaluation of securities
Depreciation
Provision for employees’ bonuses
Impairment loss
Reserve for losses on guarantees
Net defined benefit liability
Net unrealized loss on availablefor-sale securities
Other
Gross deferred tax assets
Valuation allowance for tax loss
carryforwards (Note 2)
Valuation allowance for total
deductible temporary differences
Valuation allowance subtotal (Note 1)
Total deferred tax assets
Deferred tax liabilities:
Net unrealized gain on availablefor-sale securities
Net defined benefit asset
Stocks returned of retirement
benefit trust
Non-taxable accrued dividend income
Other
Total deferred tax liabilities
Net deferred tax assets¥Thousands of
U.S. dollars
2019

Millions of yen
2019
2018
11,285 ¥
7,846
2,640
760
377
201
110
50

11,204 $ 101,675
10,157
70,691
3,007
23,785
669
6,847
578
3,396
61
1,810
–
991
51
450

8
3,201
26,482

1,380
2,659
29,771

72
28,840238,598(6,575)–(59,239)(6,551)(13,127)
13,355–(16,745)
13,025(59,023)(118,271)
120,326(2,885)(1,364)(4,155)(719)(25,993)(12,289)

(647)
(130)
(107)
(5,136)
8,218 ¥

(647)
(179)
(32)
(5,733)
7,291 $

(5,829)(1,171)(964)(46,274)
74,042SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201950

Notes:1.	Valuation allowance decreased by ¥3,618 million ($32,597
thousand), mainly due to a decline in valuation allowancefor tax loss carryforward of Senshu Ikeda Turnaround
Partners Co., Ltd. because of its liquidation, and a decline
in valuation allowance for net unrealized loss on availablefor-sale securities of The Senshu Ikeda Bank, Ltd.
2.	Tax loss carryforwards and deferred tax assets by expirationof carryforward are as follows:
Fiscal year ended 31st March, 2019

Tax losscarryforwards(*1)
Valuation
allowance
Deferred tax
assetsTax losscarryforwards(*1)
Valuation
allowance
Deferred tax
assetsMillions of yen
After one After two After three After four
One
After
year
years
years
years
year orfive
Total
through through through through
less
years
two years three years four years five years
–

–

0

180

–

–

△0

△ 180

–

–

–

–

112

7,552

7,846

△ 107 △ 6,287 △ 6,575
5

1,265 (*2)1,270

Thousands of U.S. dollars
After one After two After three After four
One
After
year
years
years
years
year orfive
Total
through through through through
less
years
two years three years four years five years
–

–

0

1,621

1,009

–

–

(0)

(1,621)(964) (56,644) (59,239)

–

–

–

–

45

68,042

11,397 (*2)11,442

A reconciliation of the statutory tax rate to the effective tax rate
for the years ended 31st March, 2019 and 2018 were as
follows:

51

2019
30.5%
(0.1)
0.7
1.3
(50.1)

2018
30.8%
(0.0)
0.3
0.7
(9.0)

27.5
0.5

21.6
0.4

5.7
1.9
(0.6)
17.3%

0.0
0.7
(0.2)
45.3%

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201930. Comprehensive Income
Reclassification adjustments and tax effect amounts of othercomprehensive income for the year ended 31st March, 2019and 2018 were as follows:

70,691(*1)	Amounts of tax loss carryforwards are multiplied by thestatutory tax rate.
(*2)	Deferred tax assets of ¥1,270 million ($11,442 thousand)are recorded for tax loss carryforward of ¥7,846 million($70,691 thousand). This tax loss carryforward is deemed
to be recoverable as it is expected that there will betaxable income in the future.

Statutory tax rate
Permanently non–taxable income
Permanently non–deductible expenses
Per capita portion of inhabitants’ taxes
Valuation allowance
Deduction limit of tax loss
carryforwards
Amortization of goodwill
Consolidation adjustment to gain on salesof shares of consolidated subsidiaries
Tax rate difference with consolidated subsidiaries
Other
Effective tax rate

(Changes in presentation)(Changes associated with the application of “Partial
Amendments to Accounting Standard for Tax EffectAccounting”)
The “Partial Amendments to Accounting Standard for Tax
Effect Accounting” (ASBJ Statement No. 28, 16th February,2018) has been applied since the fiscal year ended 31st
March, 2019, and changes have been made to the notes ontax effect accounting.
In the notes on tax effect accounting, details as described in
the explanatory note (Note 8) (excluding total amount ofvaluation allowance) and the explanatory note (Note 9) of the“Accounting Standard for Tax Effect Accounting,” which areprescribed in Paragraph 3 through Paragraph 5 of the Partial
Amendments to Accounting Standard for Tax EffectAccounting, have been added. However, details as describedin these explanatory notes for the previous fiscal year are notprovided in accordance with the transitional treatmentprescribed in Paragraph 7 of the Partial Amendments to
Accounting Standard for Tax Effect Accounting.

Thousands of
U.S. dollars

Millions of yen
2018

2019

2019

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

1,339 ¥2,544$

12,064

Reclassification adjustment(304)(6,596)

Amount before tax effect1,034(4,051)

9,316

Tax effect amount

1,269

3,238

11,433Net unrealized gain (loss) on
available-for-sale securities

2,303

(813)

20,749Amount for the year

(568)

(421)

(5,117)

Reclassification adjustment

538

456

4,847

Amount before tax effect

(29)

34

(261)

9

(10)

81

(20)

23

(180)

7,108

(2,738)

Unrealized gain (loss) on deferred hedges:

Tax effect amountNet unrealized gain on
deferred hedges
Remeasurements of defined
benefit plans:
Amount for the year789

(1,491)

Reclassification adjustment422(1,143)

3,802

Amount before tax effect

1,212(2,634)

10,919Tax effect amount

(370)

805

(3,333)841(1,829)Remeasurements ofdefined benefit plans
Total other comprehensive income ¥

3,123 ¥(2,618) $

7,577
28,137SENSHU IKEDA HOLDINGS,INC.

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, 2019 and 2018.

Millions of yen
Lending32.	Related Party Transactions
Transactions between a consolidated subsidiary and relatedparties:(1) Related informationa. Information about services
For the year ended 31st March, 2019
Securities trading
and investment(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, 2019 and 2018.

Other

Total

Income from external¥40,381 ¥19,857 ¥37,064 ¥97,303
customers

For the year ended 31st March, 2018

SHIBUHICHI CO., LTD.
A director of the Company, Yasuki Hosomi and his relatives
directly own 100% shares in SHIBUHICHI Co., Ltd.
(“SHIBUHICHI”). SHIBUHICHI is located in Ikeda-city, Osaka,records share capital of ¥3 million ($27 thousand) and isengaged in the property leasing business. Transactions andbalances with SHIBUHICHI as of 31st March, 2019 and 2018
were summarized as follows.
2019

Millions of yen
Lending

Securities trading
and investment

Other

Transactions
Total

Income from external¥41,062 ¥31,879 ¥38,669 ¥111,612
customers

Balances

Type oftransaction

Millionsof yenThousands of
U.S. dollars

Account
nameMillionsof yenThousands of
U.S. dollars

Loan

¥–

$–

Loans on
deeds

¥316

$2,847

Accruedincome¥0$0Unearned
income

¥0

$0

Note:
“Income” is presented in lieu of net sales presented by
non-financial companies.
For the year ended 31st March, 20192018

Thousands of U.S. dollars
Lending

Securities trading
and investment

Other

Transactions
Total

Income from external$363,825 $178,908 $333,939 $876,682
customersb. 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, 2019 and2018.

Balances

Type oftransaction

Millionsof yenThousands of
U.S. dollars

Account
nameMillionsof yenThousands of
U.S. dollars

Loan

¥–

$–

Loans on
deeds

¥328

$3,087

Accruedincome¥0$0Unearned
income¥0$0The conditions of the loan transactions are determined basedon the general conditions of similar transactions with third
parties.

(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,2019 and 2018.
c. 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,2019 and 2018.
SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201952

33.	Financial Instruments and Related
Disclosures
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
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.

53

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2019(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.

SENSHU IKEDA HOLDINGS,INC.

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.
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 ¥11.1 billion ($100.0 million) for interest rateand ¥11.1 billion ($100.0 million) for stocks at 31st
March, 2019. The value of market risk as a wholewith correlation in consideration was ¥21.6 billion($194.6 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.
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.
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.
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.

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2019

54

2.

Fair value of financial instruments

Millions of yen

The carrying value, the fair value and the difference as of 31st
March, 2019 and 2018 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):

Reserve for possible loan losses (*1)
Foreign exchange assets (*1)
Total assets
Deposits
Payables under securities
lending transactions
Borrowed money
Foreign exchange liabilities
Total liabilities
Derivative transactions (*2)
To which hedge accounting is
not applied
To which hedge accounting is applied
Total derivative transactions

55

Carrying
value
Fair value Difference¥743,563 ¥743,563 ¥–
7,127
7,127
–
100
100
–

3,783

3,783

–

Monetary claims bought (*1)

100

100

–

Trading account securities:
Money held in trust

1,000
600,853
3,913,086

112
27,003
1,005
600,853––5–(12,627)3,900,459
3,909,209
8,750
5,514
5,514
0
¥5,285,733 ¥5,294,489 ¥8,756¥4,945,548 ¥4,945,535 ¥(12)87,321
87,321–
123,077
123,0781
408
408–¥5,156,355 ¥5,156,345 ¥(10)¥194 ¥194 ¥–
(692)
(692)
–
¥(498) ¥(498) ¥–

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2019

176

176

–

26,987

26,987–

Securities:
Held-to-maturity debt securities

11,00011,06868

Available-for-sale securities

715,899

715,899–

3,883,729

3,887,430

3,701

5,448

5,448

0

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

112
27,003

Fair value Difference¥713,371 ¥713,371 ¥–Call loans and bills bought

Trading securities

Millions of yen
31st March, 2019
Cash and due from banks
Call loans and bills bought
Monetary claims bought (*1)
Trading account securities
Trading securities
Money held in trust
Securities
Held-to-maturity debt securities
Available-for-sale securities
Loans and bills discounted

31st March, 2018
Cash and due from banks

Carrying
value

Foreign exchange assets (*1)

3,897,405(13,676)

Total assets¥5,360,495 ¥5,364,266 ¥3,770

Deposits¥4,902,103 ¥4,902,121 ¥18

Negotiable certificates of deposit

–

900

900

Payables under securities
lending transactions

165,002

165,002–

Borrowed money

132,133

132,107(25)

Foreign exchange liabilities

562

562

–

Corporate bonds and notes

20,00020,08080

Total liabilities¥5,220,701 ¥5,220,775 ¥73

Derivative transactions (*2)
To which hedge accounting is
not applied
To which hedge accounting is applied
Total derivative transactions¥(63) ¥(63) ¥–
2,897

2,897

–

¥2,833 ¥2,833 ¥–SENSHU IKEDA HOLDINGS,INC.

Thousands of U.S. dollars
31st March, 2019
Cash and due from banks

Carrying
value

Fair value Difference$6,699,369 $6,699,369 $–Call loans and bills bought

64,21264,212–

Monetary claims bought (*1)

900

900

–

1,009

1,009

–

243,292

243,292

–

9,009

9,054

45

5,413,577

5,413,577–

Trading account securities:
Trading securities
Money held in trust
Securities:
Held-to-maturity debt securities
Available-for-sale securities
Loans and bills discounted
Reserve for possible loan losses (*1)
Foreign exchange assets (*1)

35,256,203(113,767)
35,142,436

35,221,272

78,83549,68049,6800Total assets$47,623,506 $47,702,396 $78,889

Deposits$44,558,500 $44,558,383 $(108)

Payables under securities
lending transactions

786,746786,746

Borrowed money

1,108,901

1,108,910

9

3,676

3,676

–

Foreign exchange liabilities
Total liabilities–$46,457,834 $46,457,743 $(90)Derivative transactions (*2)
To which hedge accounting is
not applied
To which hedge accounting is applied
Total derivative transactions$1,747 $1,747 $–(6,234)(6,234)–$(4,486) $(4,486) $–(*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.

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
SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201956

since the fair value approximates the carrying value
considering the expected repayment schedule and interest
rate conditions.

Derivative transactions:

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).

(Note 2)	Financial instruments whose fair value is extremely
difficult to determine at 31st March, 2019 and 2018
were as follows: These securities are not included in“Securities” under “Assets” as part of the fair value
information of financial instruments.

Liabilities:

Investments in partnerships (*3)

See Note 34.

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.

57

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2019

2018

2019

2019

Unlisted equity securities (*1) (*2) ¥6,064 ¥6,390 $54,635
Other

Deposits
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.

Thousands of
U.S. dollars

Millions of yen

Total

4,705

3,037

42,3915

5

45¥10,775 ¥9,433 $97,080(*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 ¥7 million ($63
thousand) and ¥35 million for the years ended 31st
March, 2019 and 2018, 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.

SENSHU IKEDA HOLDINGS,INC.

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

Millions of yen

Millions of yen

31st March, 2019
Due from banks
Call loans and bills bought
Monetary claims bought (*1)
Securities:
Held-to maturity debt securities:
Other
Available-for-sale securities
with maturities:

Due inone yearor less

Due after Due after
one year three years
throughthroughthree years five years¥680,997 ¥– ¥–
7,127

–

–

100

–

–

106,018

158,604

59,709

1,000

–

–

1,000

–

–

Call loans and bills bought

3,783

–

Monetary claims bought (*1)

100

–

–

93,282

169,819

78,62810,0001,000–

10,0001,000–
78,628

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

83,282

168,819

8,000

63,942–

Local government bonds

6,880

11,395

20,792

Corporate bonds

64,16584,42554,316

Other

4,237

9,057

3,520

777,014

678,595

483,244

5,448

–

–

Government bonds

47,642

16,300–Local government bonds

6,450

31,047

19,464

Corporate bonds

50,066

108,860

34,852Loans and bills discounted (*1, 2)
Foreign exchanges assets

Foreign exchanges assets
Total

31st March, 2019
Due from banks
Call loans and bills bought
Monetary claims bought (*1)
Securities:
Held-to maturity debt securities:
Other
Available-for-sale securities
with maturities:
Government bonds

860

2,397

5,391

750,619

681,267

463,454

5,514

–

–

Total

¥1,538,542 ¥848,415 ¥561,872¥1,550,378 ¥839,872 ¥523,163

Millions of yen

Millions of yen

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

Due from banks
Call loans and bills bought––¥– ¥– ¥–

Monetary claims bought (*1)

–

–

–

4,655

154,487

51,943

–

–

–

–

–

–

–

–

–

–

–

–

8,953

120,468

64,326

–

–

–

–

–

–

8,953

120,468

64,326–––

31st March, 2018

¥– ¥– ¥–Securities:
Held-to maturity debt securities:
Other
Available-for-sale securities
with maturities:

4,655

154,487

51,943–––

Local government bonds

–

–

–

2,104

2,459

37,340

Corporate bonds

2,570

–

–

Corporate bonds

3,307

4,759

53,755Loans and bills discounted (*1, 2)
Foreign exchanges assets

Other
Foreign exchanges assets
Total

3,076

115,709

10,571

324,319392,069

1,268,508

–

–

–

–

Government bonds

Local government bonds

Loans and bills discounted (*1, 2)–

Government bonds
158,604

Other

Due after Due after
one year three years
throughthroughthree years five years¥658,913 ¥– ¥–

Due from banks

105,018

Loans and bills discounted (*1, 2)

59,70931st March, 2018

Due inone yearor less

Other

Total

2,551

152,028

14,603

302,344

390,967

1,232,722–––¥306,999 ¥545,455 ¥1,284,666¥333,273 ¥512,538 ¥1,332,834

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201958

Thousands of U.S. dollars

31st March, 2019
Due from banks

Due inone yearor less

Due after Due after
one year three years
throughthroughthree years five years

64,212––

Monetary claims bought (*1)

900

–

–

955,203

1,428,993

537,967

9,009

–

–

9,009

–

–

946,193

1,428,993

537,967

429,245

146,860–

Local government bonds

58,113279,727

175,367

Corporate bonds

451,085

980,809

314,010

7,748

21,596

48,571

6,762,942

6,138,093

4,175,637

49,680––

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

Other
Loans and bills discounted (*1, 2)
Foreign exchanges assets
Total$13,968,627 $7,567,096 $4,713,604
Thousands of U.S. dollars

31st March, 2019
Due from banks

–

–

–

–

–

80,664

1,085,395

579,565

–

–

–

–

–

–

Other
Available-for-sale securities
with maturities:
Government bonds

80,664

1,085,395

579,565–––

87,321––

22,65399,504919

Total¥4,794,172 ¥311,810 ¥22,580
Millions of yen

31st March, 2019
Deposits (*1)

Due after
Due after
five years seven years
Due after
throughthroughseven years ten years ten years¥656 ¥272 ¥–Payables under securities
lending transactions

–

–

–

Borrowed money

–

–

–

¥656 ¥272 ¥–Millions of yen

31st March, 2018
Deposits (*1)
Negotiable certificates of deposit

Due after Due after
Due in one one year three years
year orthroughthroughlessthree years five years¥4,624,352 ¥226,348 ¥21,589
900

–

–

Payables under securities
lending transactions

165,002––

Borrowed money

26,476

104,620

1,036

–

–

–

Corporate bonds and notes
Total¥4,816,730 ¥330,969 ¥22,625

Local government bonds

23,155––

Corporate bonds

29,79542,877484,322

Millions of yen

Other27,714

1,042,517

95,2422,922,056

3,532,471

11,429,029

–

–

–

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

Loans and bills discounted (*1, 2)
Foreign exchanges assets
Total$3,002,729 $4,617,875 $12,008,595(*1)	Loans and bills discounted and monetary claims bought
do not include ¥32,847 million ($295,945 thousand) and¥32,515 million of receivables such as those due frombankrupt, effectively bankrupt or likely to becomebankrupt borrowers at 31st March, 2019 and 2018,
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.”59¥4,684,197 ¥212,306 ¥21,661

Borrowed money$– $– $––

Due after Due after
Due in one one year three years
year orthroughthroughlessthree years five years

Payables under securities
lending transactions

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

Monetary claims bought (*1)
Held-to maturity debt securities:

31st March, 2019
Deposits (*1)

Total

Call loans and bills bought
Securities:

Millions of yen$6,135,660 $– $–Call loans and bills bought
Securities:(Note 4)	Repayment schedule of bonds, borrowed money andother interest bearing liabilities.

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2019

31st March, 2018
Deposits (*1)¥608 ¥360 ¥–

Negotiable certificates of deposit

–

–

–

Payables under securities
lending transactions

–

–

–

Borrowed money

–

–

–

20,000––

Corporate bonds and notes
Total¥20,608 ¥360 ¥–SENSHU IKEDA HOLDINGS,INC.

Thousands of U.S. dollars

31st March, 2019
Deposits (*1)

Due after Due after
Due in one one year three years
year orthroughthroughlessthree years five years

786,746––

Borrowed money

204,099

896,5138,280$43,194,630 $2,809,352 $203,441
Thousands of U.S. dollars

31st March, 2019
Deposits (*1)

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

31st March, 2019
Currency swaps––

Borrowed money

–

–

–

34. Derivatives

Selling

7,514

51

(26)

(26)

Buying

3,255

51

35

35

Selling

37,792

21,732(1,090)735

Buying

37,792

21,732

1,090

(374)

Currency options:–– ¥194 ¥555
Millions of yen

Contract amount/notional principal
31st March, 2018Over
one year

Total

Fair
value

Valuation
gain (loss)

Over-the-counter transactions:
Currency swaps¥50,173 ¥35,557 ¥263 ¥263

Forward foreignexchange contracts:
Selling

13,910

137

150

150

Buying

7,384

137

(84)

(84)

Selling

34,00920,460(1,374)305

Buying34,00920,4601,374

0Currency options:

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.

Valuation
gain (loss)¥47,944 ¥42,420 ¥185 ¥185$5,910 $2,450 $–(*1)	Demand deposits are disclosed under “Due in one year
or less” of deposits.
	Deposits do not include ¥26,454 million ($238,345
thousand) and ¥28,844 million of time deposits beyond
maturity at 31st March, 2019 and 2018, respectively.

Fair
value

Forward foreignexchange contracts:

Total
–

Over
one year

Total

Over-the-counter transactions:$5,910 $2,450 $–Payables under securities
lending transactions
Total

Millions of yen
Contract amount/notional principal$42,203,775 $1,912,838 $195,161

Payables under securities
lending transactions
Total(1)	Currency related derivatives at 31st March, 2019 and
2018

Total

–

– ¥328 ¥634

Thousands of U.S. dollars
Contract amount/notional principal
31st March, 2019Over
one year

Total

Fair
value

Valuation
gain (loss)

Over-the-counter transactions:
Currency swaps$431,966 $382,196 $1,666 $1,666

Forward foreignexchange contracts:
Selling

67,699

459

(234)

(234)

Buying29,326

459

315

315

Selling

340,499

195,801(9,820)6,622

Buying340,499

195,801

9,820(3,369)Currency options:

Total

–

– $1,747 $5,000

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.
SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201960

(2)	Bond related derivatives at 31st March, 2019 and 2018
There were no bond related derivatives at 31st March,
2019.
Millions of yen
Contract amount/notional principal
Over
Fair
Total one year value

31st March, 2018
Financial instruments exchanges:
Bond futures:
Selling ¥30,495
Buying–Bond futures options:
Selling–
Buying–
Total–

Valuation
gain (loss)– ¥(392) ¥(392)
–
–
–
–
–
–
–
–
–
– ¥(392) ¥(392)

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.

2.	Derivative transactions to which hedge accounting isappliedWith 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)	Interest related derivatives at 31st March, 2019 and2018
31st March, 2019

Millions of yen
Contract amount/notional principal

Hedge accounting Transaction
methodtype

Major hedged
item

Fair value
Interest rate Securities
hedge
swaps:
denominatedaccounting Receivablein foreign
floating rate/ currencies
Payablefixed rate
Total

Total

Over
one year

Fair
value

¥49,945¥49,945¥(817)––¥(817)

31st March, 2018

Millions of yen
Contract amount/notional principal

Hedge accounting Transaction
methodtype

Major hedged
item

Fair value
Interest rate Securities
hedge
swaps:
denominatedaccounting Receivablein foreign
floating rate/ currencies
Payablefixed rate
Total
31st March, 2019

Total

Over
one year

Fair
value

¥84,992¥84,992¥1,008––¥1,008

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

Hedge accounting Transaction
methodtype

Major hedged
item

Fair value
Interest rate Securities
hedge
swaps:
denominatedaccounting Receivablein foreign
floating rate/ currencies
Payablefixed rate
Total

Total

Over
one year

Fair
value

$449,995$449,995$(7,361)––$(7,361)

Note:
The fair value is determined by using the discounted cash
flow method or others.

61

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2019

SENSHU IKEDA HOLDINGS,INC.

35. Amounts per Share(2)	Currency related derivatives at 31st March, 2019 and2018
31st March, 2019

Amounts per share at 31st March, 2019 and 2018 and for theyears then ended were summarized as follows:

Millions of yen
Contract amount/notional principal

Hedge accounting Transaction
methodtype
DeferralCurrency
hedge
swaps
accounting

Major hedged
item

Total

Over
one year

Fair
value

Loans
denominated inforeign currencies ¥13,440¥9,778¥125

Forwardforeignexchange
contracts

–

Total

–

–

–

–

–

¥125

31st March, 2018

Millions of yen

DeferralCurrency
hedge
swaps
accounting

Major hedged
item

Total

Over
one year

Fair
value

Loans
denominated inforeign currencies ¥20,833¥11,803¥1,888

Forwardforeignexchange
contracts–

Total
31st March, 2019

–

–

–

–

–

¥1,888

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

Hedge accounting Transaction
methodtype
DeferralCurrency
hedge
swaps
accounting
Forwardforeignexchange
contracts
Total

Major hedged
item

Total

Over
one year

Fair
value

Loans
denominated inforeign currencies $121,091$88,098$1,126–

Net assets
Net income:
18.40
25.68
0.16
Basic
Diluted
17.66
24.13
0.15
Cash dividends¥15 ¥15 $0.13
Common stock
Third-class preferred stock¥35 ¥70 $0.31
First series of seventh-class preferred stock ¥30 ¥30 $0.27

Net assets per share as of 31st March, 2019 and 2018 werecomputed based on the following information:

Contract amount/notional principal
Hedge accounting Transaction
methodtype

Yen
U.S. dollars
2019
2018
2019
¥748.83 ¥736.33 $6.74

–

–

–

–

–

$1,126

Thousands ofMillions of yen
U.S. dollars
2019
2018
2019
¥236,462 ¥248,935 $ 2,130,480
Total net assets
Payment for third-class preferred stock–(15,000)–
Dividends for third-class
–
(262)
–
preferred stock
Payment for first series of(25,000)(25,000)(225,245)
seventh-class preferred stock
Dividends for first series of
(375)
(375)
(3,378)seventh-class preferred stock
Stock subscription rights
(71)
(122)
(639)
Non-controlling interests(1,969)(3,533)(17,740)
Amounts to be deducted from total net assets(27,416)(44,293)(247,013)
Net assets attributable to common stock¥209,046 ¥204,642 $ 1,883,466
as of 31st March, 2019 and 2018
Number of shares of common stock as of 31st
March, 2019 and 2018 used to compute net
279,163
277,919
asset per share (Unit: thousand shares)

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.

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2019

62

Net income per share for the years ended 31st March, 2019and 2018 are computed based on the following information:
Millions of yen
2019
2018

Thousands of
U.S. dollars
2019

Net income attributable toowners of the parent for the year ¥6,139 ¥8,395 $55,311
Dividends for third-class preferred stock based
(262)
(262)
(2,360)on the resolution by Board of Directors
Dividends for third-class preferred stock
based on the resolution at the regular
–
(262)
–
general shareholders’ meeting
Dividends for first series of seventh-classpreferred stock based on the resolution
(375)
(375)
(3,378)by Board of Directors
Dividends for first series of seventh-classpreferred stock based on the resolution at
(375)
(375)
(3,378)the regular general shareholders’ meeting
Amounts not attributed to(1,012)(1,275)(9,117)common stock shareholders
Net income attributable to owners of theparent attributable to common stock ¥5,127 ¥7,120 $46,193
Average outstanding numberof shares of common stock
278,580
277,260(Unit: thousand shares)
Diluted net income per shareafter adjusting potential shares
Dividends for first series ofseventh-class preferred stock
based on the resolution by Board
375
375
3,378
of Directors
Dividends for first series ofseventh-class preferred stock
based on the resolution at theregular general shareholders’
375
375
3,378
meeting
Adjustment to net income attributableto owners of the parent¥750 ¥750 $6,757
Number of increased common
54,09048,814stock (Unit: thousand shares)
Of which, stock subscription rights
211
270
Of which, for first series of seventh53,879
48,543class preferred stock

Note:
Cash dividends per share represent the cash dividends
proposed by the Board of Directors as applicable to thefiscal year.
 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.

63

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2019

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 is 3,575 thousand shares for the year
ended 31st March, 2018 and 2,282 thousand shares forthe year ended 31st March, 2019. The number of treasury
stock at the end of the fiscal year subtracted for the
calculation of net assets per share is 2,924 thousand
shares for the year ended 31st March, 2018 and 1,546
thousand shares for the year ended 31st March, 2019.

SENSHU IKEDA HOLDINGS,INC.

Report of Independent Auditor
Senshu Ikeda Holdings, Inc.

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201964

Non-consolidated Financial Information of The Senshu Ikeda Bank (Unaudited)
Non-consolidated Balance Sheets (Unaudited)
The Senshu Ikeda Bank, Ltd.
As of 31st March, 2019 and 2018

Millions of yen
2019
2018

Thousands of U.S.
dollars (Note 1)
2019

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¥740,142
7,127
100
112
27,003629,846
3,926,357
5,514
41,43934,864
5,195
10,347
8,123
8,492(8,587)(1,874)¥ 5,434,204¥709,597
3,783
100
176
26,987760,428
3,908,034
5,448
47,44836,490
5,180
9,468
6,895
9,322
(9,308)(1,768)¥5,518,286$ 6,668,546
64,212
900
1,009
243,292
5,674,799
35,375,772
49,680373,357
314,118
46,806
93,22473,18676,511(77,367)(16,884)$48,961,203

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¥ 4,990,415–
87,321
112,276
408–
18,829
1,035
–
7
611
141
799
8,492
5,220,340¥4,953,983
900
165,002
121,685562
20,00016,566
1,610
306
29
512
145
770
9,322
5,291,397$44,962,744–
786,746
1,011,586
3,676–
169,645
9,325
–
63
5,505
1,270
7,198
76,51147,034,327

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

61,38588,862
54,862
205,110
8,889
(136)
8,753
213,864¥ 5,434,204

61,385
104,185
54,749220,320
6,684
(115)
6,568
226,889¥5,518,286

553,067
800,630
494,296
1,848,004
80,088(1,225)78,862
1,926,876$48,961,203

Liabilities and net assets

65

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2019

SENSHU IKEDA HOLDINGS,INC.

Non-consolidated Statements of Operations (Unaudited)
The Senshu Ikeda Bank, Ltd.
For the years ended 31st March, 2019 and 2018

Millions of yen
2019
2018

Thousands of U.S.
dollars (Note 1)
2019

IncomeInterest income:Interest on loans and bills discounted
Interest and dividends on securities
Other interest income
Fees and commissions
Other operating income
Reversal of provision for possible loan losses
Recoveries of written-off claims
Gain on sales or disposal of fixed assets
Gain on return of retirement benefit trust
Reversal of provision for possible investment losses
Other income
Total income¥40,348
8,937
514
16,455
3,642
501
501
10
–
–
10,436
81,348¥40,883
11,081503
15,385
4,472
1,965
543
80
1,710
1,243
19,39897,268$363,528
80,5204,631
148,256
32,813
4,513
4,513
90
–
–
94,026732,930

1,752
345
2,975
8,800
11,71743,179
114
2,101
4,587
75,574
5,774

2,529
435
2,282
9,127
20,01546,26539
53
2,590
83,33913,92815,7853,108
26,80479,286
105,568
389,035
1,027
18,92941,328680,908
52,022(40)
100
60¥5,713

(297)
6,318
6,021
¥7,906

(360)
900
540
$51,473

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 201966

https://www.senshuikeda-hd.co.jp/

https://www.sihd-bk.jp/

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