ANNUAL REPORT

2012

Year Ended March 31,2012

Profile(As of March 31, 2012)

Senshu Ikeda Holdings, Inc.
Establishment: October 1, 2009
Location:18-14 Chayamachi, Kita-ku, Osaka-City, Osaka
Share Capital:¥72.3 billion
Business Activities: Management and other related operations ofbanks and affiliates whose shares can be heldin accordance with the Banking Act and otherrelated operations.
Number of Employees: 122
Tokyo Stock Exchange, Osaka Securities Exchange
Stock Listing:

The Senshu Ikeda Bank, Ltd.
Establishment: September 1, 1951
Location:18-14 Chayamachi, Kita-ku, Osaka-City, Osaka
Share Capital:¥50.7 billion
Deposits:¥4.4077 trillion
Loans:¥3.5274 trillion
Number of Branches: 141
Number of Employees: 2,799

1

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2012

CONTENTS

Message from the President .............................................

3

To be the “No.1 Reliable Bankfor the Regional Communities and Customers” ................

5

Management Strategies of The Senshu Ikeda Bank .........

7

Raising Support Capability of the Asia
and China Business ...........................................................

9In Pursuit of Sustained Development for
Regional Communities .....................................................

9

Business Overview of Senshu Ikeda Holdings ................. 10
Business Overview of The Senshu Ikeda Bank ................ 11
Soundness of The Senshu Ikeda Bank’s Operation ......... 14
Corporate Governance ..................................................... 17
Compliance Structure ....................................................... 21
Risk Management Structure ............................................. 23
Approach to Facilitation of Financing ................................ 27
Approach to “Community-based Financing” ...................... 29
Business Description of the Group ................................... 30
Organization and Board of Directors ................................. 31
Consolidated Financial Informationof Senshu Ikeda Holdings ................................................. 33
Non-consolidated Financial Informationof The Senshu Ikeda Bank (Unaudited) ............................ 68
Corporate Data ................................................................. 70

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 20122

To be the “No.1 Reliable Bankfor the Regional Communities and Customers”
I sincerely thank you for your continued support and patronage of the Senshu Ikeda Bank.
Effective June 28, 2012, I, Hirohisa Fujita, assumed the position of President of both Senshu Ikeda Holdings andthe Senshu Ikeda Bank.
As a regional bank leading the Kansai region, we have been persistently aiming to be the “bank that serves allof the regional communities and customers.” Above all, we have actively promoted independent “growth strategies,” “collaborative networking” and other progressive initiatives.
I pledge to firmly carry on these “community-oriented” and “customer-oriented” initiatives, while raising the
speed necessary to achieve solid results. With a particular focus on the threeheadquarters of the “Asia and China Business,” “Advanced Technology Business Supporting” and the “Private Banking,” we will work hard to provide ourregional customers with greater service thorough further reinforcing our “capabilities to offer proposals.”“Kindness and Innovation”
Based on the unwavering commitment of our “founding spirit,” we will continue to make every effort to ensure our standing as the “No. 1 Reliable Bankfor the Regional Communities and Customers.”
We look forward to serving you with the best services for many years to come.
July 2012

Hirohisa Fujita
Senshu Ikeda Holdings Representative Director and President
Senshu Ikeda Bank Representative Director and President

3

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2012

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

Kyoto

Sanda

Ikeda
Takarazuka

Umeda
Namba
Kobe

Sakai

SuzhouShanghai

Kishiwada

IzumisanoManagement Principle

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

Management Policy

Wakayama

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, highquality services.
3. Pursue transparent operations and live up to the trust of theshareholders, while maintaining a competitive edge through strong
financial standing, high profitability and management efficiency.
4. Promote “coexistence with the region” by utilizing industrial,academic and management networks for business matching.
5. Focus on gaining the trust of the community through compliancewith laws and regulations and corporate activities that are considerate of the environment.
6. Provide a workplace for employees of the financial group which
encourages employees to exercise talents and develop skills, with
an emphasis on proactive self improvement, thereby contributing
to the development of upstanding citizens.
SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 20124

We aim to be the “No.1 Reliable Bank for the Regional
Communities and Customers” in Japan’s leading market area.
13.48

720

millionMetropolitan
Tokyo
12.66 million

Total Japanese
Population
126.23 million

thousandMetropolitan
Tokyo
770 thousand

Total Number ofBusinesses in Japan
6.36 million[Population and businesses of a high density equivalent to that in Metropolitan Tokyo]

Advanced Traffic Network(Data Source)“Population Summary of the Basic Resident Registers” by Local Administration Bureau,
the Ministry of Internal Affairs and Communications (2011)“Establishment and Enterprise Census of Japan” by Statistics Bureau,
the Ministry of Internal Affairs and Communications (2009)

Ports of Osaka and Kobe, and three airports
in the area
No. 1 in Japan for Asia trade
Osaka/Kobe Ports:
Export/Import
15.57%
Volume Share (with Asia)
Other:
53.43%(Data source)“Trade Statistics of Japan (2010)”
by the Ministry of Finance

Sanda
Kyoto

Nagoya Port:
8.93%

Ikeda

Tokyo Port:
11.69%
Yokohama Port:
8.90%
Moji Port: 1.48%

Kobe
Osaka

Beijing

Sakai
KishiwadahinaSuzhouShanghai G a t e w ay to A

sia

C
and

Four Government-Ordinance-Designated Cities
Wakayama

5

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2012

The business area we cover comprises an advanced traffic network and includes four government-ordinance-designated cities. The number of business offices within this area along with the population iscomparable with that of Metropolitan Tokyo, with the Ports of Osaka and Kobe and its three airports whichthemselves provide a gateway into Asia and China, regarded as Japan’s leading market area.
Furthermore, in addition to the existing well-balanced industrial structure, large-scale projects are underway,
including Umekita, Kintetsu Abenobashi Terminal Building. The area is expected to grow further and has
extremely high potential, so-called “Regional Power.”In this environment, we will use its signature strategies, “Three Survival Strategies” and “Three Challenging
Strategies,” to create a “new regional bank model,” to be the “No.1 Reliable Bank for the Regional Communities and Customers,” and becoming as Japan’s leading regional bank.

Strengths of the Senshu Ikeda Bank

Three Survival Strategies[What We can do]

Regional Bank

Independent Regional Bank

Community-oriented

Optimized proposals

Our mission is to offerthe “service for thecommunities and for the
local residents.”

By increasing our
independent brand power,
we will achieve “the highest
priority to communities.”

1. Exhaustive
Efficiency

2. Promotion ofBusiness
Alliance

3. Three Challenging Strategies

The Senshu Ikeda Bank

Urbane Regional Bank

Asia and China
Business
Headquarters

Differentiation from competitors
We will provide challenging
and competitive service,strengthen our “capabilities
to offer proposals” that canbeat competitors.

Advanced Technology
Business Supporting
Headquarters

Private Banking
Headquarters[As one and only Bank]SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 20126

Management Strategies of The Senshu Ikeda BankManagement Strategies of The Senshu Ikeda Bank
Three Challenging Strategies
Global logistics
NIPPON EXPRESS
CO., LTD.

1 Asia and China Business Headquarters
Reinforce “Asia and China businesses”
through utilizing the local benefits andadvantages of the region
In order to strengthen our functions in the “gateway to Asia
and China” utilizing the local benefits and advantages of theregion including the Kansai Bay Area, the Ports of Osakaand Kobe, and the region’s three airports, the network withclients with whom we have close ties will be utilized such as
the regional bank’s sole expatriate Suzhou Representative
Office. We will significantly strengthen our capability torespond and support Asia and China businesses.

Network inoverseascompanies

Tradingcompanies

Asia
Legal
firms andAccountancy
firms

Enthusiastic Support for New Advances
into Foreign Markets and BusinessSuzhou People’s
Government Suzhou
Representative
Incorporated
OfficeAdministrative Agency,
Nippon Export andInvestment Insurance
Tokio Marine& Nichido Fire
Insurance Co., Ltd.

● Providing information and mediation of business matching

between companies and governments● Supporting overseas visits● Making various proposals related to overseas business● Further expansion of our unique network capitalizing on

Megabanks
Industrial and Commercial
Bank of China Limited
Bank of China
Bank of Communications
Other Local banks

the strength of an independent financial institution● Capable to offer proposals at branches● Personnel training

2 Advanced Technology Business Supporting Headquarters“Promotion of industrial-academia-government collaboration”
and “support for advanced technologies”
Through the employment of hitherto established close-knit business-academia-government network with Kansai’s
leading universities and public organizations and so on, and support for the next generation of industry and technology,
the Advanced Technology Business Supporting Headquarters will work enthusiastically to utilize advanced technologies
to provide new products and services such as a new and more convenient multi-functional IC cash cards.

Advanced Technology BusinessSupporting Headquarters● Accumulation of information about the “companies with excellent

technologies and/or business models” that apply for our New Business
Grant Program or Consortium-based R&D Grant Program● Network of the appraisers including universities, institutions, municipalities,
trading companies, and media that evaluate the above applications

Our advanced
technology businessnetwork is made up of
more than 1000 companies.

● Supporting the growing companies

with advanced technologies● Mediation of businesses concerningadvanced technologies between
governments and companies, as wellas those between companies● Provision of new products andservices capitalizing on innovativetechnologies● Expansion of business-academiagovernment collaborative networks

3 Private Banking Headquarters
Promote “Private Banking Business” which meets various needs of our customers
The Private Banking Headquarters will provide advanced corporate and individual integrated
services, which in addition to the provision of asset management advice to individual customer,
comprise the utilization of our broad network of experts to extensively fulfill the diversity ofadvanced needs of company owners pertaining to, for example, business succession, inheritance measures, fund procurement associated therewith, and M&A (mergers and acquisitions).

7

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2012

SENSHU IKEDA HOLDINGS,INC.

Alliance Strategies
As an independent regional bank, we are building the “original business network that possesses great flexibility beyond
conglomerate groups,” and we offer our customers improved and superior products and services without any restriction. This
allows us to provide customer-oriented products and services meeting the various different needs of our customers.
Promotion of collaborations with local governments,
universities, financial institutions both at home and abroad
Networks newly added since 2011

Actively capitalizing on the friendly relationshipbetween Ikeda-city, the Bank’s hometown,
and Suzhou city

*Other friendly collaborations between local
municipalities and overseas municipalities
Sakai-city – Vietnam, Kishiwada-city – China (Shantou)(Ten local governments, two universities, four financial institutions both athome and abroad, two abroad insurers and one global logistics operator)

Lease and Credit
Life and Non-life Insurance

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

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

Product provision(Insurance)

Securities Companies andInvestment Companies
Securities companies
Investment companies:
Domestically and internationally

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

Japan-China business promotion
Economic and cultural exchange

Banks

Megabanks

Development Bank of Japan Inc.

Public Assistance Agencies
The Kansai Bureau of Economy, Trade and Industry
National Institute of Advanced Industrial Scienceand Technology
Organization for Small & Medium Enterprises
and Regional Innovation, JAPAN

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

Senshu Ikeda
Bank GroupManagement support,
technology
development support

Japan Bank for International
Cooperation
Other regional banks
Public financial institutions

Proposals to local government bodies

The business-academia collaboration

Responding to sophisticated needs

Universities
Kyoto University, Osaka University, Kobe University,
Wakayama University, Osaka Prefecture University, Osaka City
University, University of Hyogo, Kwansei Gakuin University,
Konan University, Doshisha University, Kansai University, Kinki
University and Ryukoku University, etc.

Experts

Collaboration for regional industrial promotion
Local governments

Lawyers
Accountants
Tax accountants

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

Sakai-city, Minoh-city, Itami-city,
Kishiwada-city, Toyonaka-city,
Kawanishi-city, Ikeda-city,
Suita-city, Settsu-city, Izumi-city

Improved Efficiency Strategies
Completion of the System Integration

The improved efficiency in business branch operations, together with the credit screening flow and the integration of other operations afforded by the system integration
completed in January 2012 will give rise to improved operational quality.
Moreover, the implementation of integrated operations processing and the centralization of outsourcing will ensure even further improvements in administration efficiency.
The (former) Bank of Ikeda

Completion of the
System Integration
January 2012
Regional Bank Integrated
Services Center

Unifying Administrative
Process

The (former) Senshu Bank

Improving the Quality of
Administration. Improving efficiency of

branch operations. Unification of verification
flow and other operations

Improving Administration
Efficiency. Concentrating operation
processes. Integration of theoutsourcing

The Senshu Ikeda Bank

Demonstration of Synergistic EffectA synergistic effect will be swiftly demonstrated and will be evidenced in low-cost operations.
We implement system integration to provide products and services on a common platform, and this will additionally reinforce the Bank’s operational strength.
SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 20128

Raising Support Capability of the “Asia and China Business”
Business Alliances with Two Major Chinese Banks
On September 2, 2011, we entered into alliances with two major
Chinese banks – Industrial and Commercial Bank of China
Limited (head office Beijing; offering China’s largest branch
network) and Bank of Communications (head office Shanghai;founded in 1908 and China’s oldest bank). To provide more
flexible responses to renminbi settlement needs, we have also
opened a renminbi settlement account at the Tokyo branch of the
Bank of China (head office Beijing; known for its long history in
trade and foreign exchange operations even among Chinese
financial institutions).

Industrial and Commercial Bankof China (Shanghai branch)

Bank of Communications(head office)Overseas Business Support Seminar with Nippon Export andInvestment Insurance
On December 1, 2011, we entered into a Business Cooperation
Agreement with Incorporated Administrative Agency, Nippon
Export and Investment Insurance (NEXI), which was the firstregional bank in the Kinki district, in order to support overseas
advances, expansion of sales channels and other efforts by local
companies.
On March 6, 2012, we held an overseas business support
seminar with NEXI cosponsored by the Kansai Bureau of Economy, Trade and Industry. We invited speakers from the Kansai
Bureau of Economy, Trade and Industry, as well as from Hong
Kong, Taiwan to give lectures, and over 200 corporate representatives attended the lectures. Our customers can receive various
benefits such as discounts on certain insurance product premiums through the cooperation with NEXI.
Support for Client Exhibits at the First “China International Import
Expo”
From March 29 to 31, 2012, the “China International Import Expo”
was held in Kunshan City, Jiangsu Province. The Expo was the
China’s first national level exhibition specialized in import product, and 677 companies from 46 countries exhibited articles. The
event was a large-scale expo drawing participation from a large
number of Chinese companies eager to import goods, with 72
thousand people visiting the venue during its 3-day run.
We supported the exhibition of our 13 client companies.

Promoting Collaboration with Local Governments and other
Partners in Pursuit of Sustained Regional Development
We are moving to conclude “Collaborative Agreements for
Regional Industrial Promotion” toward the sustained development of region communities.
We have concluded such agreements with 10 local cities andother partners, starting with Sakai City in March 2011.
Utilizing individual “Industrial Promotion Funds” formed on theoccasion of the signing of these agreements, we will respond to
the fund procurement needs of our regional businesses.
In addition to industrial promotion, we will also make every effort
to revitalize local shopping districts, support child raising, andbuild environmental-friendly communities through optimizing ourwide-area network and know-how.

Kawanishi-city

Sakai-city

Izumi-city

Minoh-city

The Izumi Chamber ofCommerce and Industry

Minoo the Chamber ofCommerce and Industry

Settsu-city

Itami-city

Settsu-City Society ofCommerce and Industry

The Itami Chamber ofCommerce and Industry

Suita-city

Kishiwada-city

The Suita Chamber ofCommerce & Industry

The Kishiwada Chamber ofCommerce & Industry

Ikeda-city

Toyonaka-city

Ikeda Chamber ofCommerce and Industry

Toyonaka Chamber ofCommerce and Industry

Senshu Ikeda Bank

Partners concluded with “Collaborative Agreements for Regional Industrial
Promotion” (as of the end of July 2012)

9

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2012

SENSHU IKEDA HOLDINGS,INC.

Business Overview of Senshu Ikeda Holdings
Consolidated

Non-consolidated

n Summary of Profit and Loss
Items(¥ million)

Fiscal year 2010

Fiscal year 2011

Ordinary revenue

117,255

115,952

Ordinary expenses

109,723

105,047

Ordinary income

7,532

10,905

Net income

7,690

3,810

Business Environment

Although the Japanese economy in the consolidated fiscal year 2011
slumped hugely in the aftermath of the Great East Japan Earthquake
in March last year, it showed gradual recovery thereafter, withbottoming out of capital expenditure and picking up of personal
consumption. Nonetheless future prospect have still remained
uncertain, and faced an unpredictable and tough situation becauseof the downside risks in the overseas economies including theEuropean debt crisis and soaring resource prices, as well as prolonged tight supply of electricity and adverse trend of exchange rate.
With respect to prices, consumer prices (excluding fresh food)showed almost zero change from the prices of the previous fiscal year.
In the financial markets, the unsecured overnight call rate
generally stayed at a level below 0.1% because the Bank of Japan
continued to provide sufficient funds to the market. Meanwhile,risk-hedging behavior of investors in fear of the European sovereign
debt crisis mildly dragged down the rate of return on 10-year Japanese government bonds, to the level largely around 1.0%.
Although overall stock prices sagged mostly through the fiscal
year due primarily to the impact of the flood disaster in Thailand anddeteriorating profitability of the exporting industries under the further
soaring yen, the monetary easing by the Bank of Japan in February
2012 triggered cheaper yen and bolstered stock market, and pushed
up the Nikkei Stock Average at March end above the 10,000 yen mark.

Business PerformanceWith regard to consolidated performance of Senshu Ikeda HoldingsGroup (“the Group”), consolidated ordinary revenue for the fiscal
year under review decreased ¥1.3 billion from the fiscal year 2010 to¥115.9 billion, as a result of an increase in other operating incomedue primarily to posting of gains on sales of securities, surpassed bya decrease in interest income due primarily to decline in yields onloans and gain on securities. On the other hand, consolidated
ordinary expenses decreased ¥4.7 billion from the fiscal year 2010 to¥105.0 billion, because of the combined effect of an increase in otheroperating expenses due primarily to posting of loss on redemption
and devaluation of debt securities, along with a decrease in interest
expenses resulting from lower yields on funding, primarily deposits
and negotiable certificates of deposit.
As a result of the preceding factors, consolidated ordinary
income for the fiscal year under review increased ¥3.4 billion fromthe fiscal year 2010 to ¥10.9 billion. However, net income for the
fiscal year decreased ¥3.8 billion from the fiscal year 2010 to ¥3.8
billion, due primarily to the ¥6.0 billion reversal of deferred tax assets,
as necessitated by the reduction of corporate tax rate applicablefrom the fiscal year starting on or after April 1, 2012.
On a non-consolidated basis, Senshu Ikeda Holdings (“theCompany”) posted operating revenue of ¥7,206 million, mainly due
to dividends from its subsidiary bank. At the same time, the Company recorded operating expenses, including selling, general andadministrative expenses of ¥808 million, resulting in operating
income of ¥6,397 million. Furthermore, non-operating expenses

n Summary of Profit and Loss
Items

Fiscal year 2010(¥ million)

Fiscal year 2011

Operating revenue

6,793

7,206

Operating expenses

881

808

Operating income

5,912

6,397

Ordinary income

5,806

6,340

Net income

5,802

6,334

reached ¥64 million mainly due to costs related to integration, consequently posting net income of ¥6,334 million for the fiscal year 2011.

Matters to Be Addressed

The Group’s operating bases called the Osaka Bay area are regarded as Japan’s leading market area, with the Ports of Osaka and Kobe
and three airports, and the population and businesses of a highdensity equivalent to that in Metropolitan Tokyo.
Our mission is to facilitate regional revitalization as a regional
financial institution group through fulfilling “Regional Power (economic potential)” and to that end, we have committed to pursuing our“business model (community-based financing)” through actively
taking the initiative in enhancing the “Regional Power,” and thereby
we will be able to grow up with the region.
In order to put this business model into practice, we set up theGroup’s management strategies; “Exhaustive Efficiency,” “Promotionof Business Alliances” and “the Three Challenging Strategies toEnhance Competitiveness (Growth Strategies).”
As for “Exhaustive Efficiency,” we intend to realize low-cost
operation by an integrated review of the administrative framework
and personnel strategy, along with operational streamlining including
elimination of duplicate process through reviewing the work process.
With regard to “Promotion of Business Alliance,” we will provide
high quality products and services meeting needs of our customers
through capitalizing on our original network that possesses great
flexibility beyond conglomerate groups, as an independent financial
institution.
In pursuit of “the Three Challenging Strategies to Enhance ourCompetitiveness (Growth Strategies),” we are committed to enhancing our customer services by focusing on our challenging strategies
of “community-oriented” and “capabilities to offer original proposals”
through the efforts of the three strategic headquarters (Asia andChina Business Headquarters, Private Banking Headquarters andAdvanced Technology Business Supporting Headquarters), underthe motto of “Kindness and Innovation.”

Dividend Policy

With a view to its highly public nature as a bank’s holding company,
the Company has a basic policy of positively returning profits to ourshareholders, whilst sustaining a sound financial standing throughthe enhancement of an adequate retained earnings base andkeeping up the policy of stable dividends.
In respect of the dividend of retained earnings for the fiscal year
under review, based on the basic policy and in consideration of its
overall business performance and the current management environment, the Company decided to pay dividend of ¥3.00 per common
stock. With regard to first-class preferred stock and second-classpreferred stock, the Company plans to pay the amount of ¥196.00
divided by 18.5 and ¥204.00 divided by 18.5 for each stock respectively, in accordance with the provisions of the Articles ofIncorporation.
Meanwhile, the Company intends to utilize its retained earnings
for future business developments or improve its financial strength.
SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201210

Business Overview of The Senshu Ikeda Bank
* Results for fiscal year 2009 and results at the end of March 2009 were the sum simply combining the figure for the former Bank of Ikeda and that for the former Senshu Bank.
Figures for the fiscal year 2010 include the former Senshu Bank’s single month results in April 2010.

Consolidated

n Summary of Profit and Loss
Items(¥ million)

Fiscal year 2010

Fiscal year 2011

Ordinary revenue

117,308

116,007

Ordinary expenses

109,827

105,214n Net income (loss)(¥ million)

7,652

8,000

6,000

3,770

4,000

Ordinary income

7,481

10,7922,000

Net credit costs

15,937

12,1890

Net income

7,652(2,648)3,770(5,000)March 2010

March 2011

March 2012

Non-consolidated

n Summary of Profit and Loss
Items(¥ million)

Fiscal year 2010

Fiscal year 2011

Gross profit

76,80974,051

Net interest income

63,24060,143

Net fees and commissions income

3,377

2,911

Net other operation income

10,191

10,995

Expenses

51,27650,759Personnel expenses

24,597

24,760Non-personnel expenses

24,07023,252

Core banking profit

16,477

14,031Banking profit

22,113

20,881

Ordinary income

5,748

7,716

Net credit costs

13,194

9,379

Net income (loss)

6,321

2,050

n Core banking profit(¥ million)n Banking profit(¥ million)

25,00022,113

20,881

20,00016,582
15,00010,0005,000

0March 2010

March 2011

March 2012

n Net income (loss)(¥ million)

6,321
6,000

20,00016,477
15,00014,002

14,031

0

5,000

11

2,050

2,000

10,0000

4,000(4,636)(5,000)March 2010

March 2011

March 2012

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2012

March 2010

March 2011

March 2012

SENSHU IKEDA HOLDINGS,INC.

Non-consolidated

n Deposits(¥ billion)

4,500

4,266.8

4,357.0

n Deposits held by individuals

4,000

4,407.7

4,000

3,500

3,500

3,000

0

End of March 2010 End of March 2011 End of March 2012n Loans and bills discounted
3,512.3
3,500(¥ billion)(¥ billion)

03,508.8

3,562.6

3,566.8

End of March 2010 End of March 2011 End of March 2012n Housing loans(¥ billion)

3,527.4

3,463.5

1,800

1,748.5

1,753.8
1,720.2

3,400

1,700

3,300

1,600

3,200

1,500

0

End of March 2010 End of March 2011 End of March 20120

End of March 2010 End of March 2011 End of March 2012

Business Performance(Summary of Profit and Loss)
With regard to consolidated performance of the Senshu
Ikeda Bank Group (“the Bank Group”), ordinary revenue
for the consolidated fiscal year under review was¥116,007 million, including interest income of ¥70,910
million, fees and commissions of ¥16,277 million, otheroperating income of ¥18,132 million, and other ordinary
revenue of ¥10,687 million. Ordinary expenses were¥105,214 million, including interest expenses of ¥10,764
million, fees and commissions expenses of ¥6,192
million, other operating expenses of ¥6,977 million,
general and administrative expenses of ¥55,567 million,
and other ordinary expenses of ¥25,713 million.

As a result of the factors above, the Bank Group
posted ordinary income of ¥10,792 million, and income
before income taxes and minority interests was ¥10,606
million after recording extraordinary income or loss. Net
income for the fiscal year was ¥3,770 million after
allocated total income taxes of ¥6,686 million andminority interests in income of ¥148 million.
On a non-consolidated basis, gross profit was¥74,051 million. After deducting personnel expenses
and non-personnel expenses, as well as provision forgeneral reserve for possible loan losses, banking profit
was ¥20,881 million.
SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201212

n Assets in custody sales
Investment trusts sales(¥ billion)

Public bonds sales

80

169.6

153.6

66.4

13.9

14.0

41.5

43.2

7.4

7.4

40

100

12.8

4.6
11.2

37.6
20

90.0

90.8

7.7

0

75.9

End of March 2010

End of March 2011

End of March 2012

2.02%

1.76%

1.81%

NPLs ratio

March 2010

Substandard credit

64.7

63.0

26.2

March 2011

March 2012(¥ billion)

Coverage of credits (End of March 2012)
Amount of loansn Balance of Securities
1,250(¥ billion)

66.7

73.5

0

Doubtful credit

71.6

60

150

50

Bankruptcy and quasi-bankrupt credit

Pension benefit insurance sales

200

169.0

n Disclosure under the Financial Revitalization Law

1,243.4(¥ billion)

1,203.7
1,081.5

Coverage ratio

Bankruptcy andquasi-bankrupt credit

14.0

14.0

100.00%

Doubtful credit

43.2

38.7

89.74%

7.4

4.1

56.34%

64.7

57.0

88.12%

Substandard credit
Total
Normal credit

1,000

Secured amount

3,508.2

Coverage amount: Amount of coverage by collaterals, etc.
+ Reserve for possible loan losses

Bankruptcy and quasi-bankrupt credit

Bankruptcy and quasi-bankrupt credits represent the credits held by borrowers who
have been declared insolvent, on the grounds of the commencement of bankruptcy or
rehabilitation proceedings, filing for the proceedings of rehabilitation or other similar
legal proceedings.

750

Doubtful credit

500

Doubtful credits represent the credits held by borrowers who have not yet failed but
their financial conditions and business performances have deteriorated, with a highpossibility that the principal and interest on these credits are not received as per
agreement.

250

0

Substandard credit

End of March 2010 End of March 2011 End of March 2012

The Bank posted ordinary income of ¥7,716 million
after moderated NPL write-offs and nonrecurring income
or loss, such as gains or losses on stock to banking
profit. After allocating extraordinary income or loss andincome taxes, net income for the fiscal year under review
was ¥2,050 million.

(Assets and Liabilities)
The balance of deposits at the end of the consolidated
fiscal year under review was ¥4,395.6 billion.

13

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2012

Substandard credits represent the credits that are past due three months or more, andconsidered as restructured loans among the credits requiring special caution.
(Borrowers requiring special caution: Borrowers who have concerns in lending
conditions, exercising their obligations and financial situation, requiring special caution
on their future situations.)
Normal credit
Normal credits represent the credits held by borrowers who show no particular
problems regarding financial conditions and business performances; therefore they areclassified other than the aforementioned credits.

The balance of loans and bills discounted at the endof the consolidated fiscal year under review was¥3,516.1 billion.
The balance of securities at the end of theconsolidated fiscal year under review was ¥1,199.9
billion.
On a non-consolidated basis, the balance of deposits
increased ¥50.7 billion from the end of the previous fiscal
year to ¥4,407.7 billion. The balance of loans and bills
discounted increased ¥15.1 billion from the end of theprevious fiscal year to ¥3,527.4 billion, and the balanceof securities increased ¥122.2 billion to ¥1,203.7 billion.

SENSHU IKEDA HOLDINGS,INC.

Soundness of The Senshu Ikeda Bank’s Operationn Self-assessment results, and categories and coverage by disclosure standard(1) Self-assessment
In order to ensure soundness of the operation, the Bank
classifies its claims according to its in-house rule based on
the “Financial Inspection Manual” prepared by the Financial
Services Agency. This process is called “self-assessment”.
At first part of the self-assessment, the Bank classifies
borrowers into five classifications of “bankrupt borrowers,”“effectively bankrupt borrowers,” “potentially bankrupt
borrowers,” “borrowers requiring caution (including
borrowers requiring special caution and others)” and“normal borrowers” (See Table 1) according to theirfinancial standing and management condition. Then theclaims held by the Bank are classified into four categories
of “No asset classification,” “Category II,” “Category III” and“Category IV,” in reference to the above five classificationsof borrowers but also based on the probability of recovery
through security and/or guarantee (See Table 2).
The Bank can grasp the value of its claims by suchclassification/category of claims according to its own
standards.

l Five classifications of borrowers (Table 1)
Classification

Description

Bankrupt

Borrowers who are in bankrupt legally and formally.

Effectively
bankrupt

Borrowers who are not yet in bankrupt legally or formally, but are recognized that they have no prospect ofreconstruction or rehabilitation of their business.

Potentiallybankrupt

Borrowers who are not yet in bankrupt, but are in financial difficulties and the progress of management improvement plans is not good so that the future bankruptcy possibility is highly concerned.

Watch list

Borrowers whose lending conditions is concerned, and repayment of principal or payment for interest is notaccording to the schedule as contracted, or financial situation is not prosperous that their situation requires tobe addressed and managed.

Requiring
special caution

Loans past due three months or more, or restructured loans.

OthersOther borrowers requiring caution.

NormalBorrowers whose business is prosperous and their financial situation has no particular concerns.

l Four categories of assets (Table 2)
Category

Definition

Description
Claims provided to “normal borrowers,” orNo assetclassification

Assets with no risk of becoming irrecoverable or of its
asset value impaired

Category II

Assets such as claims with higher than normal perceived
risk of becoming irrecoverable due primarily to thereasons such as the conditions for ensuring the recovery
of claim not fully met, or quality of credit being questionable

Category III

Assets with high risk of involving loan loss because ofserious concerns about its eventual collectability or
value, and that such loss is not reasonably estimable

Category IV

Assets determined as irrecoverable or of no value

Claims provided to borrowers other than “normal
borrowers” that are backed up by superior security
or guarantee including deposits as collateral
Claims provided to “watch list borrowers” classified
as other than No asset classification, orClaims provided to “potentially bankrupt
borrowers,” “effectively bankrupt borrowers” and“bankrupt borrowers” secured by general collateralor guarantee such as mortgage collateral
Claims provided to “potentially bankrupt borrowers”
that fall into neither of No asset classification nor
Category II, or
Difference between estimated collateral value andestimated disposable value, of the claims provided
to “effectively bankrupt borrowers” and “bankrupt
borrowers”
Claims provided to “effectively bankrupt borrowers”
and “bankrupt borrowers” that fall into neither of No
asset classification, Category II nor Category III
SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201214

l Relationship between borrower classification and asset category
Classification

Category
No asset classification

Bankrupt
Effectively
bankrupt
Potentiallybankrupt
Watch list

Requiring
special caution

Claims provided to borrowers other than “normal
borrowers” that arebacked up by superior
security or guarantee
including deposits as
collateral

Category III

Category IV

Claims provided to “bankrupt borrowers,”“effectively bankrupt
borrowers” and “potentiallybankrupt borrowers”
secured by generalcollateral or guaranteesuch as mortgage collateral

Difference between estimatedcollateral value and estimateddisposable value, of theclaims provided to “bankrupt
borrowers” and “effectively
bankrupt borrowers”

Claims provided to “bankrupt borrowers” and“effectively bankrupt borrowers” that fall into neitherof No asset classification,
Category II nor Category III

Claims that fall into neitherof No asset classification
nor Category II

Claims classified as otherthan No asset classification

Other borrowers
requiring caution

NormalCategory II

Claims provided to “normal borrowers”(2) Reserves and write-offs based on the results of self-assessment
Reserves are set aside based on the results of the selfassessment (reserves for possible loan losses are set aside in
the event the loan goes irrecoverable).
“Specific reserves for possible loan losses” are provided
for bankrupt borrowers, effectively bankrupt borrowers andpotentially bankrupt borrowers, while “general reserves forpossible loan losses” are provided to watch list borrowers andnormal borrowers.

Meanwhile, the Bank may need write-off (reduction ofbalance sheet assets which is posted as loss). Results of selfassessments as well as reserves and write-offs, are subject tointernal audit by the independent Internal Audit Division as well
as external audit by the audit corporation, in order to ensure
objectivity.

l Standard for reserves and write-offs
Classification

Category
No asset classification

Category II

Bankrupt

Secured by collateral and/or guarantee
Potentiallybankrupt

Watch list

15

Category IV

Amount equivalent to the expected loss which isassumed by the size of whole claim for each borrower,
can be set aside as specific reserves for possible loan
losses, or can be directly written off.

Effectively
bankrupt

Estimating expected loss for the next three years, or the
average remaining outstanding period based on the informaRequiring
special caution tion including the historical loan-loss ratio, amount equivalent
to which is posted as general reserves for possible loan losses.
Estimating expected loss for the next one year, or the average
Other borrowers remaining outstanding period based on the information
requiring caution including the historical loan-loss ratio, amount equivalent towhich is posted as general reserves for possible loan losses.

NormalCategory III

Estimating expected loss forthe next one year based on
the information including thehistorical loan-loss ratio,
amount equivalent to which isposted as general reserves
for possible loan losses.

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2012

Estimating expected loss forthe next three years for eachborrower, based on theinformation including thehistorical loan-loss ratio,
amount equivalent to which isposted as specific reserves
for possible loan losses.

SENSHU IKEDA HOLDINGS,INC.

(3) Relationship between self-assessment and the disclosed claims
Claims disclosed under the Financial Revitalization Law (claims
disclosed according to Financial Revitalization Law), riskmonitored loans (claims disclosed under the Banking Law) andthe claim corresponding to the borrower classification underthe Bank’s self-assessment, are different from one another intheir scopes of claims and classification methods. Theirtrilateral relationship is as follows.

l Relationships between self-assessment, claims disclosed under the Financial Revitalization Law andRisk-Monitored Loans (End of March 2012)(¥ billion)

Borrower classification under self-assessment
guidelines (Credit exposures)
Category
Classification
No
asset
Category
Category Category
Outstanding loansclassification
II
III
IV
Bankrupt

5.4

Effectively
bankrupt8.6

0.5

2.3

4.8

—
(0.1)

—
(—)

6.3

—
(1.1)

—
(0)

18.5

20.1

Requiring special
caution20.6

1.1

19.4

Other borrowers
requiring caution
283.1

100.3

Watch list

Potentiallybankrupt43.2

NormalTotal

3,211.9

3,573.0

4.4(11.5)

Claims disclosed under the Financial
Revitalization Law(Credit exposures)Classification
Secured or
Coverage
Reserve
Outstanding loans guaranteed
ratio
Bankruptcy andquasi-bankrupt

Doubtful

Subtotal

Normal—(0)100.00%Loans tobankrupt
borrowers

5.4

Delinquent
loans

51.5

11.5

89.74%

7.4

2.2

1.9

56.34%

Loans past due three months or more

Restructured loans

0
7.4

64.7

42.1

14.8

88.12%

Total

64.3

3,508.2

3,211.9
4.4(12.8)

1.3

Outstandingbalance of loans

27.2

43.2

182.7

233.5

12.7

Classification

14.0

Substandard

3,335.0

Risk monitored loans
under the Banking Law

Total

3,573.0

Notes: 1.	Credits include: Corporate Bonds (when financial institutions holding thebonds guarantee all or part of the repayment of principal and payments
of interest, when such bonds are issued through private placement inaccordance with the Article 2, paragraph 3 of the Financial Instruments
and Exchange Act (No.25 in 1948)); Loans and bills discounted; Foreignexchanges; Accrued income and Suspense payment account under
Other assets; and Customers’ liabilities for acceptances and guarantees
in the Balance Sheet; as well as the lended securities (limited for use
agreements or lease contracts,) which are required to be stated in a noteto the Balance Sheet.
2.	The figures in the parentheses under Borrower classification under selfassessment guidelines represent reserved amounts for classified loans.
All amounts for Categories III and IV for borrowers in bankrupt and effectively bankruptcy are reserved.

n Capital ratio
Capital ratio -calculated as the ratio of capital (common
stock, etc.) against the risk assets (assets includingloans)- is one of the important measures indicating thereliability and soundness of a bank’s management.
The Bank’s capital ratio was 10.66% as of March 31,
2011,which is beyond 8% required under the uniform
international standard, let alone the 4% required under
the domestic standard.

l Capital ratio (domestic standard, non-consolidated)
The former Bank of Ikeda

12.00

10.42

(%)

The former Senshu BankThe Senshu Ikeda Bank

10.54

10.66

9.33
8.00

4.00

0.00

End of March 2010 End of March 2011 End of March 2012
SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201216

Corporate GovernanceIn light of the public nature of our operation as a regional financial
institutions group, the Group is focused on an adequate development
and maintenance of corporate governance structure, which is one of
the crucial management tasks.
Under the policy, the Company aims to be the trustworthy andindispensable institution for all of our stakeholders including customers and employees, as well as shareholders and investors. To thisend, the Company adopts the basic management policies focused oncompliance (with laws and regulations,) risk management and management transparency through emphasizing contribution to theregional communities, and sustaining management soundness andindependence.

Outline of Corporate Governance Structure
The Company has adopted a corporate governance structure forsustainable enhancement of its corporate value through reinforcing
supervision of management by electing the outside directors andcooperating with the Board of Corporate Auditors.
Specifically, directors who are familiar with banking business- involving complex and sophisticated management decisions - supervise business execution of representative directors, while corporate
auditors audit business execution of directors through attendance toimportant meetings and inspection of critical documents. The Company reinforces its corporate governance structure through outside
directors and outside corporate auditors who possess well-seasoned
characters and insights presenting meetings including the Board of
Directors and expressing their opinions actively.
Furthermore, with the purpose to enhance transparency andobjectivity of management, the Company has established an Advisory
Board as consultative body to the Management Committee, for advice
from outside experts on the issues including critical management
strategies and agenda, latest issues in the financial industry and othermatters concerning general management of the Company.
The Company has concluded liability limitation agreement withoutside directors and outside corporate auditors. Under this agreement, their liabilities to the Company are restricted to the minimum
level as required by the applicable laws and regulations.
Corporate governance functions within the Company
The Board of Directors
The Board of Directors that comprises twelve directors (including
two outside director) is responsible for making decisions on criticalmanagement issues while receiving relevant reports from within thecompany, and supervising the business execution of directors andexecutive officers under the rules of the Board of Directors. The
Board of Directors is held once a month in principle, attended also
by corporate auditors, to make decisions in due consideration ofcompliance and risk management.
The Board of Corporate Auditors
The Company has adopted a corporate auditor system. Under thissystem, the Company ensures transparency through appointing two
outside corporate auditors of the four corporate auditors in all. Eachcorporate auditor audits business execution of directors throughattendance to important meetings including the Board of Directors
and the Management Committee, inspection of critical documents
and other means, according to the auditing guidelines and audit
schedule decided by the Board of Corporate Auditors. Outside
corporate auditors are qualified with high degree of integrity alongwith superior insight and capability, as well as expertise andhands-on experience in respective area of specialty, providing
advice on management from diversified points of view.

17

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2012Management Committee
With the purpose to make more adequate and prompt management
decisions in the execution of company business, the Management
Committee has been established under the Board of Directors,
which makes decisions on critical management matters based on
the authorities delegated from the Board of Directors while receiving
relevant reports from within the company. The Management Committee is held once a week in principle inviting corporate auditors, tomake decisions in due consideration of compliance and risk
management.
Internal control, management and auditing functions
For the purpose of internal control, management and auditing
functions, the Company has established Corporate Planning
Division, General Risk Management Division and Internal Audit
Division.
The Corporate Planning Division is the department responsible
for the coordination of internal control, for the purpose of Companies
Act and Financial Instruments and Exchange Act. The General Risk
Management Division is responsible for compliance managementthat serves as a linchpin for internal management. Measures forcompliance are planned and their implementation status is managed under the compliance program approved by the Board of
Directors. Furthermore, the General Risk Management Division, as
an overall supervisory function of risk management, is responsible
for regular review and reform of the risk management structure,referring to the financial inspection rating system by the Financial
Services Agency.
On the other hand, the Internal Audit Division is responsible forcoordinated management of the overall internal audit work acrossthe Group according to the annual audit plan approved by the
Board of Directors, while it audits subsidiaries on its own or on a
joint basis with the internal audit department of each subsidiary as
appropriate, and provides specific instruction and advice to improvebusiness operation at concerned subsidiary.
Accounting auditors
Mr. Tamon Tsuda, Mr. Hisashi Tsurumori and Ms. Mayumi Ikai are thecertified public accountants that conducted the latest accounting
audit of the Company, while accounting auditors that conduct auditsof the Company for the purpose of Companies Act as well as for the
purpose of Financial Instruments and Exchange Act, belong to Ernst& Young ShinNihon LLC. None of them have been engaged in theaudit of the Company for longer than seven years on continuous
basis, hence no statement in respect of the number of continuous
years of service engaged in the audit of the Company.
Assistants for the accounting audit of the Company are thirteen
certified public accountants and four others.
(Certified public accountant Kenichiro Arai replaced Tamon Tsuda
on July 2.)
Basic approach to the internal control system and its status ofdevelopment
The Company as well as the Group is developing a structure necessary to ensure the adequacy of operation based on the following
concepts through aiming to be a financial group which respects
personal relationship, sincerity and friendliness and become the most“trustworthy” for customers.
(1)	Structure to ensure that directors and employees execute businessin compliance with laws and regulations as well as the articles ofincorporation
The Company and the Group focus on compliance with laws andregulations (hereinafter “compliance”) as one of the most critical

SENSHU IKEDA HOLDINGS,INC.

management task. The Company and the Group also set out thecode of ethics along with the code of conduct to ensure that directors and employees behave in compliance with laws andregulations as well as the articles of incorporation and othercompany rules, while setting out basic rules of compliance underwhich overall compliance policies and specific measures are
discussed at the Compliance Committee.
To ensure the above compliance implementation, the Company and the Group appoint directors who are responsible forcompliance. In addition, the General Risk Management Division
coordinates compliance arrangement across the Company and
the Group, while conducting education and training for directors
and employees by developing compliance program and compliance manual, and arranging compliance seminars.
Furthermore, a hot line has been set up and managed inorder to allow employees to directly provide information about anyquestionable conducts in light of laws and regulations.
Basic rules that directors and employees must abide by are
set out for the prevention of insider trading.
Besides, the Company and the Group have taken uncompromising stance against anti-social forces and organizations thatthreaten the order and safety of the community, while making
every effort to eliminate their involvement in any trading activities.
The Company and the Group have also taken every measure toeliminate money laundering in consideration of the possibility thatfunds transferred via financial institutions could be used for
criminal purposes including terrorism.
Moreover, the Company and the Group provide effective
customer management including customer protection, with the
purpose to reassure our customers of their security and topromote their convenience in an effort to implement a thorough‘customer first policy.’(2)	Structure for the preservation and management of information
concerning the directors’ business execution
The Company and the Group have prepared and kept documents
such as minutes of important meetings including the Board of
Directors and the Management Committee, as records of directors’ execution of duties.
The Company and the Group have also prepared and kept
documents and attachment sanctioned by directors as appropriate.
(3)	Arrangement including the rules to manage risk of potential loss
With the purpose to ensure soundness of management and stablecorporate earnings, the Company and the Group has set out
basic rules of risk management. The Company and the Group
have also classified risks into credit risk, market risk, funding
liquidity risk and operational risk, and defined the department
responsible for the management of each category of risk, while
establishing the Risk Management Committee to monitor the
status of management of each such category.
Meanwhile, the Company and the Group have set out rules ofrisk management, with the purpose to minimize the financial loss
along with loss of confidence resulting from the crisis event, andto ensure business continuity through prompt restoration of normal
operational functions.
(4)	Structure to ensure efficient business execution of directors
The Board of Directors establishes the Management Committeewith the purpose to enable directors to efficiently execute theirbusiness, while setting out management objectives and developing management plans.
The Management Committee discusses beforehand the agenda of the Board of Directors, to facilitate decision-making process

at the board meeting, while discussing the critical issues in
implementing the basic management policies decided by the
Board of Directors on the basis of such policies.
The Management Committee also defines the headquarters
under the command of each director, along with the authority andresponsibility involved, while developing and maintaining a
structure for efficient business execution by utilizing IT.
(5)	Structure to ensure adequacy of operation at the Group thatcomprises the Company and the Group companies
The Company regards all subsidiaries and affiliated companies as
one group under the flag of Senshu Ikeda Holdings. Thus eachmember company of the Group runs its operation through developing an adequate internal management structure according to
its scale and nature of operation under the adequate guidance of,and in coordination with the Company.
The Company, as a responsible party for the management of
the Group, develops a structure in which it receives necessary
reports from, and consults business with its subsidiaries andaffiliates.
(6)	Arrangement for employing staff at the request of corporate
auditors as their assistants, as well as the arrangement to ensure
such assistants’ independence from directors
In order to support corporate auditors’ business execution, theCompany and the Group employ corporate auditors’ staffs as
secretariat for the Board of Corporate Auditors. Such corporate
auditors’ staffs receive instructions from the Board of Corporate
Auditors for their business execution, while their personnel change
and evaluation duly reflect the opinions of the Board of Corporate
Auditors.
Thus the Company and the Group ensure their independence
from directors.
(7)	Structure to facilitate reporting from directors and employees tocorporate auditors and other arrangement to ensure that corporate
auditors are adequately informed
Directors and employees shall immediately report to corporate
auditors on matters that could have significant impact on the
Company as well as the Group, or any other matters as necessary, in addition to matters legally required to be reported.
To reinforce this arrangement, the Company and the Groupdevelop a structure that corporate auditors are allowed to attend
important meetings such as the Board of Directors, the Management Committee, the Compliance Committee, the Risk
Management Committee and the ALM Committee.
(8)	Other structure to ensure that corporate auditors conduct effective
auditsCorporate auditors hold meetings to exchange opinions withrepresentative directors, internal audit division and accounting
auditors.
Corporate auditors attend important meetings such as theBoard of Directors, the Management Committee, the Compliance
Committee, the Risk Management Committee and the ALM
Committee, in an effort to find out various problems they need toaddress in the execution of their duties.

Status of Internal Audits and Audits by Corporate Auditors
Internal audits
The Company has established the Internal Audit Division that
conducts internal audits based on the basic rules of intra-groupaudits, set out to provide objectives and guidelines of internal
audits. The Company develops effective internal audit structure that
has independence and expertise in order to ensure soundness and
SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201218

adequacy of operation. The Company also inspects and evaluates
adequacy and effectiveness of the risk management and internal
control practices, and makes recommendations as appropriate to
the senior management of the Company on ways to improve andrectify questionable areas. Thus the Company’s internal audit
guidelines facilitate effective achievement of management objectives including the improvement of the Group’s internal management
structure and the enhancement of its enterprise value.
The Internal Audit Division of the Company conducts internal
audits of all departments within the Company according to the audit
plan approved by the Board of Directors, as well as internal auditsof banking subsidiary as appropriate under the relevant auditing
contracts. Results of these audits are regularly reported to the Boardof Directors and so on.
Audits by corporate auditors
Each corporate auditor audits the business execution of directors
through attendance to important meetings such as the Board of
Directors and the Management Committee, as well as inspection ofcritical documents, according to guidelines such as the “guidelines
for audits by corporate auditors” and the “guidelines for implementing audits of internal control system,” generally subject to theauditing guidelines and audit plan decided by the Board of Corporate Auditors, as an independent body mandated by shareholders.
Corporate auditors and accounting auditors are performing theiraudit duties efficiently and effectively through establishing closemutual cooperation by exchanging opinions about various auditing
issues. In addition, working together with corporate auditors ofbanking subsidiary, corporate auditors and internal audit division
are also performing their audit duties efficiently and effectively
through establishing close mutual cooperation by corporate auditors’ attendance to internal audits and exchanging opinions about
various auditing issues.
The Company has made every effort for efficient and effective
implementation of all audits including internal divisions, corporate
auditors, and accounting auditors through close cooperation andcommunication between the departments and functions concerned.
The Company has also made effort to audit efficiently and effectively
through receiving various reports from the internal control division.

Outside directors and outside corporate auditors
The Company has two outside directors and two outside corporate
auditors. Although we have no specific appointment criteria or policies
to evaluate the independence of outside directors and outside
corporate auditors, appointment is made in reference to each candidate’s business relationship with the Company or its subsidiaries,
along with the assessment criteria of the independence of independent officers provided by exchanges.
Outside director, Takashi Nagaoka, is from major shareholder of
the Company, Mitsubishi UFJ Financial Group, Inc. and The Bank ofTokyo-Mitsubishi UFJ, Ltd., and is currently serving as Director and
Deputy President of the latter. Though he has no interest in the
Company or the Group in terms of personnel, capital, trading or otherrelationship, The Bank of Tokyo-Mitsubishi UFJ, Ltd. and the Company’s wholly owned subsidiary, The Senshu Ikeda Bank, Ltd. hascollaborative relationship, including ordinary banking transactions andjoint operation of courier service, as well as contractual relationshipincluding bond management agreement. He is expected to perform
his duties by supervising the business execution as a director of theCompany, which is based on his wealth of experience over the years
as senior management of financial institutions. He serves concurrently

19

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2012as an outside director of the Company’s wholly-owned subsidiary, The
Senshu Ikeda Bank.
Outside director, Kazuo Hiramatsu, serves as a trustee of Kwansei
Gakuin.
Between he or Kwansei Gakuin, and the Company or the Group,
there is no interest in terms of personnel, capital or other relationship,
except ordinary banking transactions with the Senshu Ikeda Bank,
Ltd. Also, the Bank made a donation to Kwansei Gakuin in fiscal year
2011. He also concurrently serves as an officer at ShinMaywa Industries, Ltd. as well as DAIDO LIFE INSURANCE COMPANY. The Senshu
Ikeda Bank has ordinary banking transactions with the former, while
capital relationship and insurance agency relationship on top of
ordinary banking transactions with the latter. As a director of theCompany, he performs his duties by supervising the execution of business, based on his extensive experience in educational corporations
and in business. He serves concurrently as an outside director of theCompany’s wholly-owned subsidiary, The Senshu Ikeda Bank.
Outside corporate auditor, Toshiaki Imanaka, is an independent
officer without any potential conflict of interest with general shareholders, as required to be designated by Tokyo Stock Exchange andOsaka Securities Exchange, and has no interest in the Company or
the Group in terms of personnel, capital or other relationship, except
ordinary banking transactions with the Senshu Ikeda Bank, Ltd. He
also concurrently serves as a farm member of Kansai Law and Patent
Office, which is in contractual relationship with the Senshu Ikeda Bankas the bank’s legal advisor.
Qualified as an attorney, he has good deal of knowledge infinance and accounting as has been earned through his hands-on
experience in corporate accounting as reorganization trustee, and is
performing his duties as a corporate auditor from his professional
standpoint.
Outside director, Toshiaki Sasaki, serves as a president of Senshu
Gakuen.
Between he or Senshu Gakuen, and the Company or the Group,
there is no interest in terms of personnel or other relationship, except
ordinary banking transactions with the Senshu Ikeda Bank, Ltd. Also,
he holds 115,300 shares of the common stock of the Company.
He performs his duties as a corporate auditor based on his wealthof experience and broad insight earned over the years as a corporate
auditor in financial institutions.
The Company has appointed two outside directors out of twelve
directors while two outside corporate auditors out of four. Thus theCompany has developed a structure sufficient to continuously enhance its enterprise value through such appointment of outside
directors and outside corporate auditors.
Outside directors receive reports about the status of audits bycorporate auditors, internal audits and accounting audits, as well as
the status of internal control from the internal control division throughBoard of Directors. On the other hand, outside corporate auditors
receive reports from full-time corporate auditors about the status ofaudits by corporate auditors, internal audits and accounting audits, aswell as the status of internal control from the internal control division.
Both outside directors and outside corporate auditors give recommendations and advice in return for these reports.

SENSHU IKEDA HOLDINGS,INC.

Corporate governance structure of the Group[Senshu Ikeda Holdings](As of the end of July, 2012)

General Meeting of
Shareholders
Appointment/Removal
Joint coordination

Appointment/Removal

Accounting Auditors
Accounting audit

Reporton Audit

Reporton Audit

Board of Directors

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

Supervision

Appointment/Removal

Board of Corporate Auditors
Audit

Joint
coordination<Organizations in business execution>
Representative Directors

Advisory Board

Reporton AuditInternal Audit Division

AdviceCommittees(Risk Management Committee)(Compliance Committee)(ALM Committee)

Bringing discussed
issues to meetings/
ReportingManagement Committee

Directors/Executive Officers
Internal audit

Instruction/
Direction

Corporate Planning Division[The Senshu Ikeda Bank]

Personnel andGeneral Affairs Division

General Risk Management Division

General Meeting of
Shareholders

Appointment/Removal

Accounting Auditors
Accounting audit

Appointment/Removal
Joint coordination

Appointment/Removal

ReportReportBoard of Directors
Board of Corporate Auditors
on Auditon Audit
Bringing important
issues to meetings/
Audit
Joint
Reporting on business Appointment/ Supervision
coordination
execution
Supervision<Organizations in business execution>
Committees(Risk Management Committee)(Compliance Committee)(ALM Committee)(Facilitation of Financing Promotion Committee)

Representative Directors
Bringing
discussed
issues to meetings/
ReportingManagement Committee

Reporton AuditInternal Audit Division

Directors/Executive Officers
Instruction/
Direction

Internal audit

7 Headquarters, 14 Divisions, 1 Regional Headquarters, 2 Representative Offices, 1 Center, 1 Office
134 Head Office and Branches, 6 Sub-branches

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201220

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 group compliance. We have also formed the General Risk
Management Division under the director in charge ofcompliance 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
Subsidiaries and affiliates of The Senshu Ikeda Bank

21

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2012

SENSHU IKEDA HOLDINGS,INC.

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

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

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201222

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 banks tomonitor, assess and manage risks properly, and torespond to the changes quickly in the environment inorder to earn the stable and continuous profits, whileserving various needs of customers. Under such circumstances, 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 the banking subsidiary, and to discuss the relevant agenda and countermeasures which shallsubsequently be reported and further discussed at theBoard of Directors. Thus the Group ensures effective risk
management structure at management level.
Meanwhile, as action plans for risk management
based on the Group strategies, basic risk management
principles are set out semi-annually and reviewed continually in order to deal with the risks newly emerging asa result of changes in environment for timely and adequate way.
With the purpose to objectively examine the adequacy and effectiveness of the risk management structure,
the internal audit division which independents from theaudited departments conducts an audit. Thus the Group
ensures appropriate administrative processing andsound business operations through finding out andimproving the matters on risk management.

face. The Company evaluates the risks divided into
categories of credit risk, credit concentration risk
outside the calculation of capital ratio, interest rate risk
in banking accounts, market risk and operational risk,
and compares them with its management strength(capital ratio).
The Group regards development and reinforcement of risk management structure as its crucial
management task. Furthermore, the Group has developed an integrated risk management structure that therisk management division manages all risks in order tocomprehensively identify and appreciate various risks
associated with the Company’s operations by asuniform as possible measurement, and to earn thestable revenue, realize appropriate capital composition and allot management resources properly.
l Risk capital management system
The Group is running its operation based on the risk
capital management system that controls all risks
within certain proportion of capital base, under the
integrated risk management structure.
Specifically, the Company allocates risk capital thatsourced from Tier I 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.

Tier II
Deduction item

Deduction item: Net exceeded amount of unrealized
loss on available-for-sale securities
Risk buffer: Provisions against unpredictablerisks and risks associated withaffiliated companies

Risk buffer
Credit Risk
Tier I

Risk
capitalto beallotted

Credit Risk
Market Risk
Market Risk
Operational
Risk

n Integrated Risk Managementl Integrated risk management
Integrated risk management refers to the process toadequately manage the risks that financial institutions
23

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2012

Capital ratio

Financialresource forallocation

Risk capital
to beallocated

Operational
Risk
Risk amountSENSHU IKEDA HOLDINGS,INC.

l Dealing with Basel II
In respect of capital ratio calculation for the purpose of
the new capital ratio regulation (Basel II) enforced inJapan from the end of March 2007, the Group’s current
status is as follows:
Credit Risk

Operational Risk

Standard method

Gross profit allocation method

Senshu Ikeda Holdings

Senshu Ikeda Holdings

The Senshu Ikeda BankThe Senshu Ikeda Bankn Credit Risk Management
Credit risk, as identified by the Group, is the risk that theinterest and principal of loans and other amounts payable by the borrower may not be able to be collected,
due to deterioration of the financial condition of theborrower.
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 Loan Planning Division atbanking subsidiary, in accordance with the management
methods stipulated in the Credit Management Regulations, administers finely-tuned responses to risks for the
purpose of building up an optimum portfolio. Specifically,
the division analyzes and manages the credit portfolio
from various aspects including credit concentration risk,
type of business, borrower classification and credit
ratings.
As for the credit analysis and management of eachloan at the banking subsidiary, the Group makes efforts
to ensure the independence of the audit division (Loan
Division and Loan Business Division) from the businesspromotion division. The Board of Directors and otherappropriate body review each loan for large obligor aswell as the credit policy. Thus the Group has focused on
the development and improvement of its credit analysis
system. Meanwhile, Loan Business Division establishedwithin the Loan Headquarters, is managing housing
loans receivable.
The banking subsidiary has also established theInternal Audit Division, to manage auditing of the selfassessment of assets, in order to maintain and enhance
the soundness of its asset base.

n Market Risk Management
Market risk, as identified by the Group, points to “marketrisk” and “market liquidity risk.” Market risk is the risk of
suffering losses through changes in the prices of assets
and liabilities held by the Group due to the fluctuations ofmarket risk factors, such as interest rates, foreign exchange rates, stock prices and so on. Market liquidity
risk is the risk of suffering losses arising from the inability
to execute sufficient transactions under appropriate
conditions, due to market confusion or an insufficient
trading base. The Group has established the Risk Management Committee and the ALM Committee, consisting
principally of management personnel, and discussed appropriate and timely measures to address the risks inorder to earn the stable and continuous profit throughmanaging its assets and liabilities in a comprehensiveway.

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

n Operational Risk Management
Operational risk, as identified by the Group, is the risk of
suffering losses from the inappropriate business activityof the Group - including its employees-, systems, orexternal premises.
The Group has set a rule for operational risk management and classified the risks into the six categories asfollows; (1) administrative risk, (2) information asset(system) risk, (3) tangible fixed asset risk, (4) personnel
risk, (5) legal risk, and (6) reputation risk.
Furthermore, the Group identifies and evaluates all
risks associated with new products and services before
they are actually developed and provided, for the purpose of adequate risk management. Besides, the Groupmanages customer information sufficiently and ensures
SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201224

management soundness when outsources certain business operation.
l Administrative risk management
Administrative risk, as identified by the Group, is therisk of suffering losses from administration, fraud,
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.

25

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2012l Personnel risk
Personnel risk, as identified by the Group, is the risk of
suffering losses associated with the delay of failing insuccession of expertise within the Group, as a result ofdrain or loss of key staff, or degradation of morale.
The Group is striving to develop working environment to enable each employee to fully exert ability,
while helping him or her to improve their skills.
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.

SENSHU IKEDA HOLDINGS,INC.

The risk management structure of the Group(As of the end of July, 2012)

Senshu Ikeda Holdings

Board of Directors

Board of Corporate Auditors
Crisis Management Headquarters

Management Committee

Supervising
division

Type of risks

ALM Committee

Risk Management Committee

General Risk Management Division

Credit Risk Market Risk

Responsible
divisions

Funding
Liquidity
Risk

Operational Risk
Administrative
Risk

Information
Asset(system) Risk

General Risk Management Division

Divisions in chargeof operating
and managing

Personnel
Risk

Legal Risk

Reputation
Risk

Personnel and General
Affairs Division

General Risk
Management DivisionCorporate Planning
Division

Tangible Fixed
Asset Risk

Internal Audit Division

Committee

Banking subsidiary and outsiders

Direction of basic policies, etc.

Administration and management

Reporting on status of risk management

Consultation on risk management

The Senshu Ikeda Bank

Board of Corporate Auditors

Board of Directors

Crisis Management Headquarters
Management Committee

Supervising
division

Risk Management Division

Type of risks

Credit Risk Market Risk

Responsible
divisions

Loan Planning
Division

Divisions in chargeof operating
and managing

ALM Committee

Risk Management Committee

Funding
Liquidity
Risk

Risk Management
Division

Operational Risk
Information
Asset(system) Risk

Tangible Fixed
Asset Risk

Personnel
Risk

Legal Risk

Reputation
Risk

Operations Management
Division

General Affairs
Division

Personnel Affairs
Division

Risk
Management
Division

Corporate
Planning Division

Administrative
Risk

Internal Audit Division

Committee

Each division of Headquarters, each branch, affiliates and outsiders

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201226

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 establishes the Facilitation of Financing Promotion Committee along with the Facilitation of
Financing Manager to check whether Facilitation of
Financing Management is effectively working.
(2)	The Facilitation of Financing Promotion Committee will
engage in the development and reinforcement of thestructure for Facilitation of Financing Management
through checking the progress in respect of Facilitation of Financing Management.
(3)	The Bank appoints the director in charge of the Risk
Management Division to the Facilitation of Financing
Manager. Under the Facilitation of Financing Promotion Committee, the Manager coordinates the overallbusiness in respect of Facilitation of Financing Management such as instructions to the division

System for accepting consultation of facilitation of financing

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

Reporting andconsultation

Facilitation of Financing
Promotion Committee
Boardof
Directors

Deliberation

Facilitation of Financing Officer
Facilitation of Financing Manager

Over-the-counter Consultation Service
Coordination

Reporting

Divisions managing Facilitation of Financing
Divisions associated with Facilitation of Financing

Sincere andadequate
respondence[Consultation Service over holidays]

Customers

Over-the-counter Consultation Service

Support andinstruction

Toll-free Consultation Service

Consultation, application and complaints

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]
Toll-free Consultation Service

Sincere and adequate respondence

Instructions

Repayment Consultation Approach

ReportingBoard ofCorporate
Auditors

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

Coordination

Businesstransactions, etc.

27

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

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2012

Disclosure

ReportingPublicAuthorities

SENSHU IKEDA HOLDINGS,INC.

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.

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)	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’ knowl-edge, 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.
(3)	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.
(4)	The Bank intends to respond to any comments,
requests, consultations and complaints from customers in respect of facilitation of financing promptly andsincerely.

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 26 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 changes in housing loan
terms from housing loan customers, the Bank intends
to accommodate such application and offer adequatechanges in terms adequately as far as possible,
taking into consideration of circumstances including
customers’ assets and income and transactions withother financial institutions.

(2)	In the cases that customers have transaction withother financial institutions as well as the Bank or withJapan Housing Finance Agency, we will, upon customers’ approval, strive to make arrangements incoordination with the other financial institutions inorder to help to reduce the burden of repayment.
SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201228

Approach to “Community-based Financing”
We place a high priority on “living together with the regional communities,” and therefore intend to further
promote the community-based financing more positively through dealing with the following three fields:
1. Enhancing support for corporate customers based on their life cycle
2.	Developing appropriate methods to provide funds to small and medium enterprises, including financing methods to grasp business value
3. Contribute to a sustainable regional economy by utilizing collected information about the region
Specific measures include:[Business-Academia-Government Collaboration]
We held a “Business Encourage Fair 2011 ~ Rebuilding from the Great East Japan Earthquake throughCombining the Strength of Japan” in December last year. Addressing the theme of recovery from theGreat East Japan Earthquake, participation at this gathering also included representatives of the business
communities and regional banks from the Tohoku region. 115 groups from our customers, related
agencies and others participated in the Fair, and we had a social gathering attended by some 6,200
persons.
We have established the “New Business Grant Program” in order to support outstanding businessplans, while the “Consortium-based Research & Development Grant Program” to help small and medium
enterprises diversify their businesses or launch second stage development through collaborating with thebusiness-academia--government. The total number of plans submitted since the establishment of bothprograms has been approximately 1,700 applications, of which a total of grant awarded has been morethan ¥300 million.

[Collaboration with the Local Governments]
We have concluded “Collaborative Agreements for Regional Industrial Promotion” with 10 cities to date.
Starting with Sakai City in March of last year, we have concluded with the cities of Itami, Minoh, Kishiwada, Toyonaka, Kawanishi, Ikeda, Suita, Settsu and Izumi. We have established the “Industrial Promotion
Fund” as well. We have also promoted collaboration with regional chambers of commerce and industry,in order to invigorate the local communities and further improve our customer service.

[Collaboration with Kansai’s Leading Universities]
We concluded the “Basic Agreements for Business-Academia Collaboration” with Wakayama University in
May of last year, and with the University of Hyogo in August. We have been concluded such agreementswith 11 universities to date. The purpose of such agreements are to mutually exchange and energize
human and intellectual resources in industry, academic studies, personnel training, community planningand other key fields, using implementation of business activities recognized as being beneficial for allparties to contribute to the enlightened development of regional societies.

New Business Grant Program awards ceremony[Collaboration with Domestic and Overseas Financial Institutions]
In July of last year, we concluded a “Business Cooperation Agreement” with the Japan Bank for International Cooperation. On the basis of the agreement, we have exchanged information on the overseas
investment environment and co-hosted joint seminars and other collaborative efforts. We also concluded
a “Business Cooperation Agreement” with NIPPON EXPRESS CO., LTD., a major player in Japan’scommodity distribution field. We have supported the mail-order business operations of our customers in
China, provided valuable know-how on the distribution business and related fields, and provided otherservices through utilizing the agreement.
In September, we strengthened collaboration with each of China’s three biggest banks (the Industrial
and Commercial Bank of China, the Bank of China and the Bank of Communications). We have lived up to
dealing with local fund procurement needs using standby letters of credit, expansion of renminbi
settlement operations services and other services through utilizing the collaboration.
In December, we formed business alliance with the Incorporated Administrative Agency, Nippon
Export and Investment Insurance and Tokio Marine & Nichido Fire Insurance Co., Ltd., in order to enhance
our capabilities of overseas information provision and of addressing the diversifying needs of ourcustomers (export insurance and risk consulting).

Signing ceremony for Collaborative Agreement for Regional Industrial
Promotion with Ikeda City (promotion mascots also attended)[New Products and Services]
Under the Financing Employing Environmental Ratings System, we evaluate new capital investment plans,
in-house cost cutting measures and other eco-friendly initiatives to reduce CO2 emissions adopted by awide range of customers – from small and medium enterprises to major middle-ranking and large
companies. As a result of our evaluation, we finance under preferential interest rates according to theenvironmental ratings.

Signing ceremony for business alliance with
Nippon Export and Investment Insurance

We will work hard in order to stimulate the regional power, and to be able to contribute to revitalizationof the regional communities, bearing in mind our commitment to being the “bank that serves all of theregional communities and customers.” To that end, our directors and employees will make every effort
to ensure our standing as the “No.1 Reliable Bank for the Regional Communities and Customers.”

29

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2012

SENSHU IKEDA HOLDINGS,INC.

Business Description of the Group
Non-consolidated
nConsolidated
Organizational Chart of the Group (As of the end of July, 2012)
Head office and branches: 134
Banking services

Sub-branches: 6

T he Sen sh u I k eda B an k , L t d.

Senshu Ikeda Holdings, Inc.

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

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

Credit guarantee services● Kinki Credit Guarantee Company Limited● J. I. Co., Ltd.
● D. I. Co., Ltd.

Credit card services● Vui I Co., Ltd.
● The Senshu Card Company Limited● Senshu Ikeda Capital Co., Ltd.
● Senshu Ikeda Business Service Company Limited● Senshu Ikeda Office Service Co., Ltd.

●● S.I.M.S. Co., Ltd.
(Note:● indicates consolidated
subsidiaries and○ indicates equity-method
affiliates)● Hitachi & Ikeda Brains, Co., Ltd.
● S.I. Soft CO., LTD

Other services● Senshu Ikeda Investment Management Co., Ltd.
Shizen Soken Co., Ltd.
Bank Computer Service Corporation
Station Network Kansai Co., Ltd.
● Investment enterprise partnerships: 11
Ikeda Preferred Capital Cayman Limitedn Subsidiaries and Affiliates (As of the end of July, 2012)

Subsidiaries

Name

Address

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

100.0

–

Senshu Ikeda Lease Co., Ltd.

3-3-6, Kyutaromachi, Chuo-ku, Osaka-city Leasing services

April 1, 1986

50

–

81.0

Sengin General Leasing Company Limited

27-1, Miyamotocho, Kishiwada-city

Leasing services

October 23, 1985

120

–

95.6

Senshu Ikeda Guarantee Co., Ltd. 2-1-11, Jonan, Ikeda-city

Credit guarantee services

July 20, 1973

180

–

58.7

Kinki Credit Guarantee Company 2-1-1, Nishiki, Kaizuka-city
LimitedCredit guarantee services

April 1, 1975

6,400

–

100.0
90.0

50,710J. I. Co., Ltd.

8-10, Kurehacho, Ikeda-city

Credit card services

February 1, 1983

30–

D. I. Co., Ltd.

8-10, Kurehacho, Ikeda-city

Credit card services

September 5, 1990

30

–

90.0

Vui I Co., Ltd.

8-10, Kurehacho, Ikeda-city

Credit card services

November 2, 1990

40

–

100.0

The Senshu Card Company
Limited27-1, Miyamotocho, Kishiwada-city

Credit card services

August 28, 1987

30

–

85.0

Senshu Ikeda Capital Co., Ltd.

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

March 6, 1989

426

–

65.9

Senshu Ikeda Business Service
Company Limited

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

April 1, 1983

30

–

100.0

Personnel services

July 11, 1988

20

–

100.0

Appraisal of real-estate collateraland real-estate research services

October 28, 1991

20

–

100.0

Senshu Ikeda Office Service Co., 2-1-11, Jonan, Ikeda-city
Ltd.

Affiliates

Date ofestablishment

Major Business

S.I.M.S. Co., Ltd.

6-2-5-301, Minoh, Minoh-city

Hitachi & Ikeda Brains, Co., Ltd.
S.I. Soft Company Limited

2-1-11, Jonan, Ikeda-city

Development of computer software June 10, 1985

50

–

63.1

1-5, Rinku Oraikita, Izumisano-city

Computer software development
and sale

October 6, 1986

30

–

85.0

Senshu Ikeda Investment
Management Co., Ltd.

3-3-6, Kyutaromachi, Chuo-ku, Osaka-city Investment advisory and discretionary investment services

April 1, 1987

120

–

100.0

Shizen Soken Co., Ltd.

2-1-11, Jonan, Ikeda-city

Information offering services

November 1, 1996

80

–

15.0

Bank Computer Service Corpora- 1-5, Rinku Oraikita, Izumisano-city
tion

Development and sale of computer programs used for
operations at financial institutions

December 27, 2000

400

–

45.0

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

Planning and operation of ATM at
stationJune 29, 2000

100

–

40.0

Station Network Kansai Co., Ltd.

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201230

Organization and Board of Directors
Senshu Ikeda Holdingsn Organization (As of the end of July, 2012)

Accounting Office

PR & IR Office

ALM Committee

Compliance Committee

Corporate Auditors Office

Risk Management Committee

Related Business Management Office

Board of Corporate Auditors
Corporate Auditors(Note)

Corporate Planning Division

Management Committee

Board of Directors

General Meeting of Shareholders

Advisory Board

Personnel and General Affairs Division

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

General Risk Management DivisionInternal Audit Division

Members: (In the order of the Japanese syllabary)·Noriyuki Inoue(Chairman of the Board and CEO of Daikin Industries, Ltd.)·Masahiro Shima(President of SHIMA SEIKI Mfg., Ltd.)·Motohiro Sugai(Former president of Hankyu Corporation)·Hidenobu Hiraoka(Chairman of the Board of Trustee of Seifu Gakuen Junior and Senior High School)·Makoto Yamanaka(Chairman and CEO of Nankai Electric Railway Co., Ltd.)n Board of Directors (As of June 28, 2012)
Representative Director
and President

Hirohisa Fujita

Director

Takashi Nishi

Director

Masahiro Saito

Corporate Auditor(Full-time)

Kazuhiro Masao

Representative Director
and Chairman

Kazuyuki Kataoka

Director

Hiroshi Kubota

Director

Nobuaki Nanchi

Corporate Auditor(Full-time)

Motoyasu Tsuji

Takashi Nagaoka

Corporate Auditor(Outside)

Toshiaki Imanaka

Corporate Auditor(Outside)

Toshiaki Sasaki

Representative
Director
Representative
Director

31

Naoya Fukuchi
Shigeru Aoyagi

Director
Director

Akira Tahara
Atsushi Ukawa

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2012

Director(Outside)
Director(Outside)(Deputy President of The Bank ofTokyo-Mitsubishi UFJ, Ltd.)

Kazuo Hiramatsu(Professor, School of Business Administration, Kwansei
Gakuin University Trustee of Kwansei Gakuin)

SENSHU IKEDA HOLDINGS,INC.

The Senshu Ikeda Bankn Organization (As of the end of July, 2012)
Corporate Planning Division
Personnel Affairs Division
Career Development Supporting Office
General Affairs Division
Secretary OfficeSuzhou Representative Office

Management Committee

Board of Directors

General Meeting of Shareholders

Tokyo Office

Risk Management Division
Compliance Management Office
Operations and System Headquarters

Operations Management Division
Operating Center

ALM Committee

Regional Headquarters

Facilitation of Financing Promotion Committee

Compliance Committee

Risk Management Committee

Corporate Auditors

Branches (including Sub-branches): 140

Corporate Auditors Office

Board of Corporate Auditors

Risk Products Operations Office

CS Headquarters

Business Planning Division
Business Promotion Division
Securities and Insurance Business Promotion Office
Personal Loan Promotion Office
Proposal Offering Promotion Office
Customer Center

Asia and China Business Headquarters

Asia and China Business Promotion DivisionInternational Division

Advanced Technology Business Supporting Headquarters

Advanced Technology Business Supporting Division

Private Banking Headquarters

Private Banking Division

Financial Market Headquarters

Financial Market Division

Loan Headquarters

Loan Planning DivisionMarket Operations Office

Loan Division
Solution Supporting Office
Loan Business DivisionInternal Audit Divisionn Board of Directors (As of June 28, 2012)
Representative Director
and President

Hirohisa Fujita

Managing
Director

Takashi Nishi

Director

Masahiro Saito

Corporate Auditor(Full-time)

Hironobu Sugita

Representative Director
and Chairman

Kazuyuki Kataoka

Managing
Director

Hiroshi Kubota

Director

Nobuaki Nanchi

Corporate Auditor(Full-time)

Masanori Ueki

Naoya Fukuchi

Managing
Director

Takashi Nagaoka

Corporate Auditor(Outside)

Taro Ohashi

Corporate Auditor(Outside)

Jiro Yoshida

Representative Senior
Managing Director
Representative Senior
Managing Director

Shigeru Aoyagi

Director

Akira Tahara
Atsushi Ukawa

Director(Outside)
Director(Outside)(Deputy President of The Bank ofTokyo-Mitsubishi UFJ, Ltd.)

Kazuo Hiramatsu(Professor, School of Business Administration, Kwansei
Gakuin University Trustee of Kwansei Gakuin)

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201232

Consolidated Balance Sheets
Senshu Ikeda Holdings, Inc. and Consolidated Subsidiaries
As of 31st March, 2012 and 2011

Millions of yen
2012
2011

AssetsCash and due from banks (Notes 27 and 33)
Call loans and bills bought (Note 33)
Monetary claims bought (Note 33)
Trading account securities (Notes 4 and 33)
Money held in trust (Notes 6 and 33)
Securities (Notes 5, 7, 12, 20 and 33)
Loans and bills discounted (Notes 8, 12, 32 and 33)
Foreign exchange assets (Notes 9 and 33)
Other assets (Notes 10 and 12)
Tangible fixed assets (Notes 11 and 12)
Intangible fixed assets (Note 12)
Deferred tax assets (Note 29)
Customers’ liabilities for acceptances and guarantees
Reserve for possible loan losses
Total assets

Thousands of U.S.
dollars (Note 1)
2012¥134,000
698
1,494
69
19,0001,199,965
3,516,142
4,328
58,831
38,4399,039
32,844
26,114(48,304)¥4,992,667¥144,348
–
1,311
36
19,0001,077,342
3,501,016
6,210
62,42638,142
5,606
38,99929,459(42,748)¥4,881,152$1,630,368
8,492
18,177839
231,171
14,599,890
42,780,654
52,658715,792
467,684
109,976
399,610
317,727(587,711)$60,745,431¥4,390,453
237,307
69,764431
53,00044,800
1,749
4,515
335
258
141
473
–
2
7
26,114
4,829,355¥4,348,871
172,725
44,417480
48,00050,184
1,778
6,525
386
309
135
465
717
0
10
29,4594,704,468$53,418,335
2,887,297
848,8135,243
644,847
545,078
21,27954,933
4,075
3,139
1,715
5,754
–
24
85
317,727
58,758,425

72,311
72,67530,910(1,944)
173,952

72,311
83,06333,125(116)
188,383

879,802884,231
376,079(23,652)
2,116,461(11,878)(2)(11,880)
62
1,177
163,311¥4,992,667(12,884)(19)(12,904)
6
1,197
176,684¥4,881,152(144,518)(24)(144,543)
754
14,3201,986,993$60,745,431

Liabilities and net assets
Liabilities
Deposits (Notes 12, 13 and 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 (Notes 16 and 33)
Other liabilities (Note 17)
Provision for employees’ bonuses
Accrued retirement benefits for employees (Note 18)
Accrued retirement benefits for directors and corporate auditors
Reserve for reimbursement of deposits
Reserve for point services
Reserve for contingent losses
Reserve for loss on integration
Deferred tax liabilities (Note 29)
Negative goodwill
Acceptances and guarantees (Note 20)
Total liabilities
Net assets
Shareholders’ equity (Note 21):
Common stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity
Accumulated other comprehensive income:Net unrealized loss on available-for-sale securities (Note 7)
Net unrealized loss on deferred hedges (Note 34)
Total accumulated other comprehensive income
Stock subscription rights (Note 21)
Minority interests
Total net assets
Total liabilities and net assets
See accompanying notes to consolidated financial statements

33

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2012

SENSHU IKEDA HOLDINGS,INC.

Consolidated Statements of Operations
Senshu Ikeda Holdings, Inc. and Consolidated Subsidiaries
For the years ended 31st March, 2012 and 2011

Millions of yen
2012
2011

Thousands of U.S.
dollars (Note 1)
2012

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 22)
Recoveries of written-off claims
Other income (Note 23)
Total income¥58,450
12,290172
16,265
18,132
1,321
9,506
116,139¥59,699
16,463122
17,42912,556
1,863
11,002
119,136$711,157
149,531
2,092
197,895
220,610
16,072
115,658
1,413,055

7,937
857
1,981
5,284
6,977
56,243269
166
25,764105,483
10,656

10,681
752
1,563
5,269
2,070
57,089155
189
32,371
110,144
8,991

96,568
10,427
24,10264,29084,888684,304
3,272
2,019
313,468
1,283,404
129,650

616
6,082
6,698
3,958
147
¥3,810

347
874
1,222
7,769
78
¥7,690

7,494
73,99981,494
48,156
1,788$46,356

Millions of yen
2012
2011
¥3,958¥7,769

Thousands of U.S.
dollars (Note 1)2012$48,156

1,018
17
1,036
¥4,995

227
(19)
208
¥7,977

12,385206
12,604$60,773

4,833
161

7,898
79

58,802
1,958

Expenses

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

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

Consolidated Statements of Comprehensive Income
Senshu Ikeda Holdings, Inc. and Consolidated Subsidiaries
For the years ended 31st March, 2012 and 2011

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

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201234

Consolidated Statements of Changes in Net Assets
Senshu Ikeda Holdings, Inc. and Consolidated Subsidiaries
For the years ended 31st March, 2012 and 2011

Thousands of U.S.
dollars (Note 1)
2012

Millions of yen
2012
2011
Shareholders’ equity
Common stock
Balance at beginning of the year¥72,311¥72,311$879,802–––

72,311

72,311

879,802

83,06383,063

1,010,621

Disposition of treasury stock

1

–

12

Retirement of treasury stock(10,389)–(126,402)

Total changes during the year

(10,388)–(126,390)

Balance at end of the year

72,67583,063884,231

33,125

31,107403,029

Cash dividends(6,024)(5,673)(73,293)

Net income

3,810

7,690

46,356

Total changes during the year
Balance at end of the year
Capital surplus
Balance at beginning of the year
Changes during the year:

Retained earnings
Balance at beginning of the year
Changes during the year:

Total changes during the year

(2,214)

2,017(26,937)

Balance at end of the year

30,91033,125376,079

(116)

(1)

(1,411)(12,488)(114)(151,940)

Treasury stock
Balance at beginning of the year
Changes during the year:
Acquisition of treasury stock
Disposition of treasury stock

270

–

3,285

Retirement of treasury stock

10,389–126,402

Total changes during the year

(1,828)(114)(22,241)

Balance at end of the year

(1,944)(116)(23,652)

188,383

186,480

2,292,042

Cash dividends(6,024)(5,673)(73,293)

Net income

3,810

7,690

46,356

Acquisition of treasury stock(12,488)(114)(151,940)

Disposition of treasury stock

272

–

3,309

Total shareholders’ equity
Balance at beginning of the year
Changes during the year:

Retirement of treasury stock

–

–

–

Total changes during the year

(14,431)

1,902(175,580)¥173,952¥188,383$2,116,461

Balance at end of the year

35

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2012

SENSHU IKEDA HOLDINGS,INC.

Consolidated Statements of Changes in Net Assets
Senshu Ikeda Holdings, Inc. and Consolidated Subsidiaries
For the years ended 31st March, 2012 and 2011

Thousands of U.S.
dollars (Note 1)
2012

Millions of yen
2012
2011
Accumulated other comprehensive income
Net unrealized loss on available-for-sale securities
Balance at beginning of the year
Net changes in items other than shareholders’ equity
Balance at end of the year¥(12,884)¥(13,110)$(156,758)

1,005

226

12,227(11,878)(12,884)(144,518)

Net unrealized loss on deferred hedges
Balance at beginning of the year

(19)

(0)

(231)

Net changes in items other than shareholders’ equity

17

(19)

206

Balance at end of the year

(2)

(19)

(24)

(12,904)(13,111)(157,002)

1,023

207

12,446(11,880)(12,904)(144,543)

Balance at beginning of the year

6

–

73

Net changes in items other than shareholders’ equity

55

6

669

Balance at end of the year

62

6

754

1,197

907

14,563

Total accumulated other comprehensive income
Balance at beginning of the year
Net changes in items other than shareholders’ equity
Balance at end of the year
Stock subscription rights

Minority interests
Balance at beginning of the year
Net changes in items other than shareholders’ equity

(20)

290

(243)

1,177

1,197

14,320176,684

174,276

2,149,701

Cash dividends(6,024)(5,673)(73,293)

Net income

3,810

7,690

46,356

Acquisition of treasury stock(12,488)(114)(151,940)

Disposition of treasury stock

272

–

3,309

Balance at end of the year
Total net assets
Balance at beginning of the year
Changes during the year:

Net changes in items other than shareholders’ equity
Total changes during the year
Balance at end of the year

1,058

505

12,872(13,372)

2,407(162,696)¥163,311¥176,684$1,986,993

See accompanying notes to consolidated financial statements

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201236

Consolidated Statements of Cash Flows
Senshu Ikeda Holdings, Inc. and Consolidated Subsidiaries
For the years ended 31st March, 2012 and 2011

Millions of yen
2012
2011
Cash flows from operating activities
Income before income taxes and minority interests
Depreciation
Loss on impairment of fixed assets
Amortization of goodwill
Amortization of negative goodwill
Gains on negative goodwill incurred
Increase (decrease) in reserve for possible loan losses
Decrease in accrued bonuses
Loss (earnings) from investments under the equity method(Decrease) increase in accrued retirement benefits for employees¥10,656
4,391
166
5
(2)
(187)
5,555
(28)
38
(2,010)¥8,991
4,172
189
111
(2)
(4)
(2,603)
(13)
(155)
452

$129,650
53,424
2,019
60
(24)
(2,275)67,587(340)
462(24,455)

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

(51)
(50)
5
7
(717)
(70,913)
10,776(8,812)
285
2,592
269

(59)
(12)
36
(83)
473
(76,285)
12,998(7,659)25
21,428
155

(620)
(608)
60
85
(8,723)(862,793)
131,110(107,214)
3,467
31,536
3,272

Effect of applying the accounting standard for asset retirement obligation
Net increase in loans and bills discounted
Net increase in deposits
Net decrease in negotiable certificates of deposits–(15,125)
41,582–

74(52,435)
96,855(12,500)–(184,024)
505,925–

Net increase (decrease) in borrowed money (excluding subordinated borrowings)

15,347(57,470)

186,725

Net decrease in due from banks (excluding due from the Bank of Japan)
Net increase in trading account securities
Net (increase) decrease in call loans and bills bought
Net decrease in call money and bills sold

8
(32)
(881)
–

2,906
(27)
9,939
(45,000)

97(389)(10,719)–

Net increase (decrease) in payables under securities lending transactions
Net decrease (increase) in foreign exchange (assets)
Net (decrease) increase in foreign exchange (liabilities)
Decrease in bonds
Interest received
Interest paid
Other64,581
1,882(49)–
71,137(13,372)313(82,598)(1,146)85(300)
77,243(13,998)
3,210

785,752
22,898(596)–
865,518(162,696)
3,808

117,368(369)¥116,999(113,004)(1,063)¥(114,068)

1,428,008(4,489)$1,423,518

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

37

Thousands of U.S.
dollars (Note 1)
2012

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2012

SENSHU IKEDA HOLDINGS,INC.

Consolidated Statements of Cash Flows
Senshu Ikeda Holdings, Inc. and Consolidated Subsidiaries
For the years ended 31st March, 2012 and 2011

Thousands of U.S.
dollars (Note 1)
2012

Millions of yen
2012
2011
Cash flows from investing activities
Purchases of securities
Proceeds from sales of securities
Proceeds from maturity of securities
Increase in money held in trust
Decrease in money held in trust
Purchases of tangible fixed assets
Purchases of intangible fixed assets
Proceeds from sales of tangible fixed assets
Net cash (used in) provided by investing activities¥(1,650,619)
1,333,067
201,719(339)
39(2,904)(5,279)51(124,263)¥(1,111,068)
949,870
308,731––(4,069)(3,324)17
140,156$(20,082,966)
16,219,333
2,454,301(4,124)474(35,332)(64,229)620(1,511,899)

Cash flows from financing activities
Increase in subordinated borrowings
Increase in subordinated bonds and bonds with stock subscription rights

10,00035,000–15,000121,669
425,842

Decrease in subordinated bonds and bonds with stock subscription rights
Cash dividends paid
Payment for minority shareholders
Purchases of treasury stock
Proceeds from disposal of treasury stock
Net cash (used in) provided by financing activities(30,000)(6,024)–(12,488)270(3,243)–(5,673)
(0)
(114)
–
9,212

(365,007)(73,293)–(151,940)
3,285(39,457)

Effect of exchange rate changes on cash and cash equivalents
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year (Note 27)

168

138

2,044

(10,339)
141,335¥130,996

35,438105,897¥141,335(125,793)
1,719,613$1,593,819

See accompanying notes to consolidated financial statements

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201238

Notes to Consolidated Financial Statements
Senshu Ikeda Holdings, Inc. and Consolidated Subsidiaries
For the Years Ended 31st March, 2012 and 2011

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 Corporation Law of Japan(the “Law”) 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 ¥82.19 = U.S.$1.00, the exchange rate
prevailing on 30th March, 2012. This translation should not be
construed as a representation that yen can be converted 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 26 (28 in 2011)
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.
Sengin Business Service Company Limited and Ikeda
Business Service Co., Ltd., both of which were wholly owned
subsidiaries of the Company, were merged effective 1st July,
2011 in accordance with the resolution approving the merger
agreement between Sengin Business Service Company
Limited and Ikeda Business Service Co., Ltd. at the Board of
Directors’ meeting of the Company held on 27th April, 2011.
As a result, Sengin Business Service Company Limited, which
is a surviving company, changed its name to “Senshu Ikeda
Business Service Company Limited” and took over all theassets, liabilities, rights and obligations of Ikeda Business
Service Co., Ltd.

39

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2012

Ikegin Capital Yumejikomi Fund No. 1 Investment EnterprisePartnership, which was a wholly owned subsidiary of theCompany, completed its liquidation on 15th March, 2012. As aresult, it was excluded from the scope of consolidation on 31st
March, 2012.
The Company has applied the equity method to its investmentin three affiliates for the years ended 31st March, 2012 and2011, respectively. The consolidated financial statements do
not include the accounts of Ikeda Preferred Capital Cayman
Limited, since its total assets, operating income, ownership
percentage of net profits and losses, retained earnings andnet unrealized gain or loss on deferred hedges do not have amaterial impact on the consolidated financial statements of
the Company.
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”, and is amortized by thestraight-line method over a period of five years. However,goodwill recognized in the years ended 31st March, 2012 and2011 is amortized over a year.
The balance sheet date of 10 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-for

SENSHU IKEDA HOLDINGS,INC.

sale 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.
(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, except for leased assets, areamortized by the straight-line method. Amortization of thecost of software intended for internal use is calculated by
the straight-line method based on a useful life (5 years)
determined by the Company and its consolidated
subsidiaries.
(7) Reserve for possible loan losses
A reserve for possible loan losses is provided byconsolidated subsidiary engaged in the banking business(the “banking subsidiary”) in accordance with theprescribed standards. For claims on borrowers who havedeclared 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
subsidiary, 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 ¥61,781 million($751,685 thousand) and ¥61,041 million for the years
ended 31st March, 2012 and 2011, 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 employees
Accrued retirement benefits for employees are provided
at an estimated amount based on an actuarial calculationof the retirement benefit obligation and the pension plan
assets at the balance sheet date. Certain consolidated
subsidiaries estimate the retirement benefit obligation
using the simplified method whereby the amount thatwould be payable if the eligible employees terminate at
the balance sheet date.
Prior service cost is amortized by the straight-line method
over a period of 11 to 12 years, which is within the
average estimated remaining years of service of theeligible employees.
Actuarial gain or loss is amortized commencing the year
following the year in which the gain or loss is recognizedby the straight-line method principally over a period of 11
to 12 years, which is within the average estimatedremaining years of service of the eligible employees.
Unrecognized transitional obligation incurred at the timeof the accounting change in the amount of ¥9,894 million($120,379 thousand) is amortized over a period of 15
years.
During the fiscal year ended 31st March, 2012, theretirement benefit plans of consolidated subsidiaries wererevised and the plans were integrated on 1st October,2011. Consequently, prepaid pension cost and accrued
retirement benefits for employees have been offset andSENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201240

presented in net amount. Prepaid pension cost andaccrued retirement benefits for employees havedecreased by ¥2,220 million ($27,010 thousand),
respectively, compared to the amounts prior to offsetting.
(10)	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.
(11) 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.
(12) 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.
(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) 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.
(15) 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.

41

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2012(16) 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
subsidiary, the Group applies deferral hedge accounting,under which gains or losses on derivatives are deferred
until maturity of the hedged transactions, as stipulated in
the Japanese Institute of Certified Public Accountants(JICPA) Industry Audit Committee Report No. 24. Interest
rate swap contracts entered into by certain consolidated
subsidiaries which qualify for hedge accounting are
accounted for as if the interest rate for the swap contract
is applied to the underlying debt.
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 subsidiary, the Group applies deferral hedge
accounting, under which gains or losses on derivatives
are deferred until maturity of the hedged transactions, as
stipulated in the JICPA Industry Audit Committee Report
No. 25. The Group assesses the effectiveness of its
currency swaps and foreign exchange swaps enteredinto in order to hedge the risk of fluctuation in foreignexchange rates by comparing the foreign-currency
amount of each underlying hedged item with thecorresponding foreign-currency amount of the respective
hedging instruments.
(17) 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.
(18) Consumption taxes
Transactions are principally stated exclusive of nationaland municipal consumption taxes.
(19) Accounting changes and error corrections
On 4th December, 2009, the Accounting Standards Boardof Japan (“ASBJ”) issued ASBJ Statement No. 24“Accounting Standard for Accounting Changes and Error
Corrections” and ASBJ Guidance No. 24 “Guidance on
Accounting Standard for Accounting Changes and Error
Corrections” for the accounting changes and correctionsof prior period errors which are made on and after the
beginning of the year ended 31st March, 2012. Thesestandards require the entities to apply accountingchanges and corrections of prior period errors
retroactively. Accordingly, adjustments must be made to
all comparative amounts presented in the financial
statements as though accounting changes and error
corrections had been applied from the beginning of theprior period presented.
In accordance with JICPA Accounting Committee Report
No. 14 “Practical Guidelines on Accounting for Financial
Instruments,” “Gain on reversal of reserve forreimbursement of deposits” and “Gain on bad debts

SENSHU IKEDA HOLDINGS,INC.

recovered” are recorded in “Other operating income” forthe year ended 31st March, 2012. However, amounts forthe year ended 31st March, 2011 are not retroactively
restated.

Millions of yen
Carrying value

Fair value

Corporate bonds

31st March, 2011

¥49,198¥49,793

Total¥49,198¥49,793

4. Trading account securities

Millions of yen

Valuation gain or loss on trading account securities included
in income before income taxes and minority interests was ¥(0)
million ($ (0) thousand) and ¥(0) million for the years ended
31st March, 2012 and 2011, respectively.

31st March, 2011

Difference

Unrealized Unrealized
gain
loss

Corporate bonds¥594 ¥612 ¥(17)Total¥594 ¥612 ¥(17)Thousands of U.S. dollars

5. Securities

31st March, 2012

Securities at 31st March, 2012 and 2011 consisted of thefollowing:Thousands of
U.S. dollars

Millions of yen
2011

2012
StocksCorporate bonds

Fair value$589,366

Other

24,33324,175Total$607,774$613,553

Thousands of U.S. dollars

2012¥62,283 ¥63,105 $757,792

Bonds:

Carrying value$583,440

31st March, 2012
Corporate bonds

Difference

Unrealized Unrealized
gain
loss

$5,925 $6,107 $(170)Government bonds

398,381

347,558

4,847,073

Local government bonds

77,972

84,323

948,679

Corporate bonds

229,198

210,792

2,788,636

Total

432,129

371,561

5,257,683

There were no held-to-maturity debt securities sold during theyears ended 31st March, 2012 and 2011.

Other
Total

¥1,199,965 ¥1,077,342 $14,599,890

Stocks in the above table include investments in affiliates of¥234 million ($2,847 thousand) and ¥272 million at 31st
March, 2012 and 2011, respectively.
Held-to-maturity debt securities with fair value at 31st March,2012 and 2011 were as follows:
Millions of yen
31st March, 2012
Corporate bonds

Carrying value

Fair value¥47,953¥48,440

Other

2,000

1,987

Total

¥49,953¥50,428

Other

(146)

–

(146)

$5,767 $6,107 $(328)Available-for-sale securities with fair value at 31st March, 2012
and 2011 were as follows:
Millions of yen
31st March, 2012
Equity securities

Carrying value

Acquisitioncost¥56,292¥62,134
398,334

Bonds:
Government bonds

398,381

Local government bonds

77,972

77,404

Corporate bonds

181,245

179,282

Subtotal

657,599

655,021

Other

428,823437,229

Total¥1,142,714¥1,154,385

Millions of yen
31st March, 2012
Corporate bonds
Other
Total

Difference

Millions of yen

Unrealized Unrealized
gain
loss
31st March, 2012

¥487 ¥502 ¥(14)
(12)

–

(12)

¥474 ¥502 ¥(27)Equity securities

Difference

Unrealized Unrealized
gain
loss

¥(5,841) ¥4,836 ¥(10,678)

Bonds:
Government bonds

47

349

Local government bonds

567

573

(6)

Corporate bonds

1,962

2,064

(102)

Subtotal
Other
Total

(301)

2,577

2,987

(410)

(8,406)2,888(11,294)¥(11,670) ¥10,712 ¥(22,383)

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201242

Millions of yen
31st March, 2011
Equity securities

Carrying value

Acquisitioncost¥56,970¥63,580

Available-for-sale securities sold during the years ended 31st
March, 2012 and 2011 were as follows:
Millions of yen
2012

Bonds:Gain

Loss

Government bonds

347,558

338,404

Equity securities

Local government bonds

84,323

83,696

Bonds:

Corporate bonds

161,594

160,518

Government bonds

661,250

6,892

Subtotal

593,476582,619

Municipal bonds

1,011

14

–

Other

370,154

387,165

Corporate bonds

33,346

403

(69)

Total

¥1,020,601¥1,033,365

Subtotal

695,608

7,310

(226)

637,226

9,085(1,497)

Other
Millions of yen
31st March, 2011
Equity securities

Total¥995 ¥305 ¥(440)(156)¥1,333,830 ¥16,700 ¥(2,164)

Unrealized Unrealized
Difference
gain
loss

Millions of yen¥(6,609) ¥3,699 ¥(10,309)
2011

Bonds:

Proceeds
from sales

Gain

Loss

¥2,862 ¥504 ¥(675)

Government bonds

9,154

9,352

(198)

Equity securities

Local government bonds

626

638

(12)

Bonds:

Corporate bonds

1,075

1,440

(364)

Government bonds

329,692

3,842

Subtotal

10,856

11,432(575)

Corporate bonds

7,698

64

(1)

(17,010)2,286(19,296)337,390

3,906

(133)

604,470

6,936(2,352)

Other
Total

¥(12,763) ¥17,418 ¥(30,182)

Subtotal
Other
Total

Carrying
amountAcquisitioncost$684,900$755,980

Government bonds

4,847,073

4,846,502

Local government bonds

948,679

941,769

Corporate bonds

2,205,195

2,181,311

Subtotal

31st March, 2012
Equity securities
Bonds:

8,000,961

7,969,594

Other

5,217,459

5,319,734

Total$13,903,321$14,045,321

Thousands of U.S. dollars
31st March, 2012
Equity securities

Differences

Unrealized Unrealized
gain
loss

$(71,067) $58,839 $(129,918)

Bonds:
Government bonds

571

4,246

Local government bonds

6,898

6,971

(73)

Corporate bonds

23,871

25,112(1,241)

Subtotal
Other
Total

(3,662)

31,35436,342(4,988)(102,275)

35,138(137,413)$(141,988) $130,332 $(272,332)

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2012(132)

¥944,723 ¥11,347 ¥(3,162)

Thousands of U.S. dollars

43

Proceeds
from sales

Thousands of U.S. dollars
2012
Equity securities

Proceeds
from sales

Gain

Loss

$12,106 $3,710 $(5,353)

Bonds:
Government bonds

8,045,382

83,854

Municipal bonds

12,300170–

Corporate bonds

405,718

4,903

(839)

Subtotal

8,463,414

88,940(2,749)7,753,084

110,536(18,213)

Other
Total

(1,898)$16,228,616 $203,187 $(26,329)

Securities for which the holding purpose were changed during
the year ended 31st March, 2012
¥1,500 million ($18,250 thousand) of securities werereclassified from “held-to-maturity securities” to “available-forsale securities” during the year ended 31st March, 2012, as
credit condition of the issuer of the securities deteriorated
significantly. This change had no effect on income before
income taxes and minority interests and net income for theyear ended 31st March, 2012.
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.

SENSHU IKEDA HOLDINGS,INC.

Losses on devaluation of securities for the years ended 31st
March, 2012 and 2011 were ¥3,283 million ($39,944 thousand)and ¥725 million, which consisted of ¥315 million ($3,832
thousand) and ¥716 million on equity securities, respectively,and ¥2,967 million ($36,099 thousand) on investment trusts forthe year ended 31st March, 2012 and ¥8 million on corporate
bonds for the year ended 31st March, 2011.
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.

8.	Loans and Bills Discounted and Risk
Monitored Loans
Loans and bills discounted:
Loans and bills discounted at 31st March, 2012 and 2011
consisted of the following:Thousands of
U.S. dollars

Millions of yen
2012
Bills discounted

2011

2012

¥21,580 ¥20,696 $262,562

Loans on bills

104,638

113,170

1,273,123

Loans on deeds

3,192,410

3,146,883

38,841,829

Overdrafts

196,769

219,3432,394,074

743

922

9,040

Other

6. Money Held in Trust

Total

Money held in trust at 31st March, 2012 and 2011 consistedof the following:
Money held in trust for trading purposes

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, 2012 and 2011 totaled ¥21,947 million($267,027 thousand) and ¥21,118 million, respectively.
At 31st March, 2012 and 2011, loans and bills discounted
included the portion of loans extended to original borrowers
based on loan participation agreements, as permitted by the
JICPA Accounting Committee Report No. 3, in the amount of¥16,500 million ($200,754 thousand) and ¥21,700 million,
respectively.

Thousands of
U.S. dollars

Millions of yen
2012
Carrying value

2011

2012

¥19,000 ¥19,000 $231,171

Valuation (loss) gain included in consolidated¥(0) ¥20 $(0)statements of income

There were no money held in trust owned for other purposes
at 31st March, 2012 and 2011.

7.	Net Unrealized Loss on Available-for-Sale
Securities
Net unrealized loss on available-for-sale securities at 31st
March, 2012 and 2011 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2012

2011

2012

Differences between acquisition costand fair value:
Available-for-sale securities
Deferred tax liabilities¥(11,670) ¥(12,763) $(141,988)
(167)

(92)

(2,031)

Differences between acquisition costand fair value, net of taxes(11,838)(12,856)(144,032)

Amounts corresponding to minority interests

(40)

(27)

(486)

Net unrealized loss on available-for-salesecurities, net of taxes¥(11,878) ¥(12,884) $(144,518)¥3,516,142 ¥3,501,016 $42,780,654

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 ¥656,430 million ($7,986,738
thousand) and ¥603,581 million at 31st March, 2012 and2011, respectively, including the contracts whose contractual
periods were either less than one year or revocable at any
time, in the amount of ¥649,505 million ($7,902,482 thousand)and ¥603,224 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 as
SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201244

10. Other Assets

reconsidering 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, 2012 and 2011 consisted of thefollowing:Thousands of
U.S. dollars

Millions of yen
2011

2012
Loans to bankrupt borrowers
Delinquent loans¥6,364 ¥4,733 $77,430
53,016Loans past due for 3 months or more
Restructured loans
Total

2012

53,653645,041

51

–

620

7,401

7,460

90,047

Other assets at 31st March, 2012 and 2011 consisted of thefollowing:

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.
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.

12,83811,001

156,199

Accrued income

8,288

7,982

100,839

Prepaid expenses

231

253

2,810

21,78627,251

265,068

Other
Total

¥58,831 ¥62,426 $715,792

11. Tangible Fixed Assets
At 31st March, 2012 and 2011, accumulated depreciation of
tangible fixed assets was ¥40,971 million ($498,491 thousand)and ¥41,382 million, respectively.
Under the Tax Law, 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, 2012 and 2011was ¥517 million ($6,290 thousand) and ¥517 million,
respectively.

12. Assets Pledged
Assets pledged as collateral at 31st March, 2012 and 2011
consisted of the following:

2011

2012
Securities
Other assets

2011

2,573

3,339

31,305–178–

Software which is included
in intangible fixed assets

–

349

–

The liabilities secured by the above pledged assets at 31st
March, 2012 and 2011 consisted of the following:

2012

2012

¥3,209 ¥5,061 $39,043

Foreign bills of exchange bought

210

248

2,555

Foreign bills of exchange receivable

908

900

11,047¥4,328 ¥6,210 $52,658

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 20122012¥363,766 ¥257,709 $4,425,915

Tangible fixed assets

DepositsThousands of
U.S. dollars

Millions of yen
2012

Thousands of
U.S. dollars

Millions of yen

Millions of yen

Foreign exchange assets at 31st March, 2012 and 2011
consisted of the following:

45

2012

¥15,686 ¥15,937 $190,850

Other receivables

9. Foreign Exchange Assets

Total

2011

2012
Investment in leased assets¥66,833 ¥65,847 $813,152

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 Corporation Tax Law Enforcement
Regulations (Article 97 of the 1965 Cabinet Order).

Due from foreign correspondent banks

Thousands of
U.S. dollars

Millions of yen

2011

Thousands of
U.S. dollars
2012¥2,833 ¥15,586 $34,468

Payables under securities
lending transactions

237,307

172,725

2,887,297

Borrowed money

30,101

17,965366,236SENSHU IKEDA HOLDINGS,INC.

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 ¥74,602 million ($907,677 thousand) and¥76,639 million at 31st March, 2012 and 2011, respectively.
At 31st March, 2012 and 2011, margins on futures contracts inthe amounts of ¥2,330 million ($28,348 thousand) and ¥2,017
million, guarantee deposits of ¥5,243 million ($63,791
thousand) and ¥5,515 million, deposits for futures transactionsof ¥503 million ($6,119 thousand) and ¥503 million andguarantee deposits pledged for derivative transactions of¥500 million ($6,083 thousand) and ¥500 million were included
in “Other assets”, respectively.

The aggregate annual maturities of borrowed money
subsequent to 31st March, 2012 were summarized as follows:Year ending 31st March,Millions of yen

Thousands of
U.S. dollars

2013¥34,247$416,680

2014

998

12,142

2015

533

6,484

2016

415

5,049

2017

2,068

25,1612018 and thereafter
Total

31,500383,258¥69,764$848,813

15. Foreign Exchange Liabilities
13. Deposits
Deposits at 31st March, 2012 and 2011 consisted of thefollowing:
Millions of yen
2012
Current deposits

2011

Thousands of
U.S. dollars
2012¥155,145 ¥154,345 $1,887,638

Ordinary deposits

1,593,588

1,499,858

19,389,074

Savings deposits

29,87930,311

363,535

Deposits at notice

13,567

13,232

165,0682,549,420

2,600,084

31,018,615

48,85351,038594,391

Time deposits
Other deposits
Total¥4,390,453 ¥4,348,871 $53,418,335

Foreign exchange liabilities at 31st March, 2012 and 2011
consisted of the following:Thousands of
U.S. dollars

Millions of yen
2011

2012
Foreign bills sold2012

¥431 ¥428 $5,243

Foreign bills of exchange payable

52

0

Total

0

¥431 ¥480 $5,243

16. Corporate Bonds and Notes
Short-term and long-term bonds payable at 31st March, 2012
and 2011 consisted of the following:
Millionsof yen14. Borrowed Money
Borrowed money at 31st March, 2012 and 2011 consisted ofborrowings from the Bank of Japan and certain other financial
institutions.

IssuerDescription

Issued2012

The Senshu Ikeda
Bank, Ltd.

7th subordinated bonds

29th Sep., 2006

¥–

Subordinated borrowings of ¥31,500 million ($383,258
thousand) and ¥21,500 million were included in borrowed
money at 31st March, 2012 and 2011, respectively.
The average interest rate applicable to borrowed money at
31st March, 2012 and 2011 was 1.38% and 1.65%,
respectively.

8th subordinated bonds

20th Mar., 2007–

9th subordinated bonds

28th Dec., 2007

3,000

2nd subordinated bonds

27th Feb., 2007–

1st subordinated bonds

17th Dec., 2010

15,00010,000

2nd subordinated bonds

21st Sep., 2011

3rd subordinated bonds

16th Dec., 2011

5,000

4th subordinated bonds

23rd Mar., 2012

20,000

Total

Issuer¥53,000Millions Thousands ofof yenU.S. dollars Interest
2011

2012

rates (%)

The Senshu Ikeda ¥15,000 $–Bank, Ltd.
5,000
–

1.78

Total

Secured/unsecured

Due

Unsecured 29th Sep., 2016

1.79

Unsecured 17th Mar., 2017

3,000

36,5003.06

Unsecured

10,000–1.97

Unsecured 27th Feb., 2017–

15,000

182,503

1.67

Unsecured 17th Dec., 2020–

121,669

2.01

Unsecured 21st Sep., 2021–

60,8342.06

Unsecured 16th Dec., 2021–

243,338

2.23

Unsecured 23rd Mar., 2022

¥48,000 $644,847

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2012

46

The aggregate annual maturities of short-term and long-termbonds payable subsequent to 31st March, 2012 weresummarized as follows:Year ending 31st March,Millions of yen

Thousands of
U.S. dollars

2013

¥–

$–

2014

–

–

2015

–

–

2016

–

–

2017

–

–

53,000644,847¥53,000$644,847

2018 and thereafter
Total

18. Retirement Benefit Plans
Although certain consolidated subsidiaries had defined
benefit pension plans consisting of corporate pension plans,
tax-qualified pension plans and lump-sum payment plans, inconjunction with the revisions to the retirement benefit planson 1st October, 2011, the tax-qualified pension plan has beenabolished and has been integrated into the defined benefit
corporate pension plan. In addition, increased retirement
benefits are paid for retirement, etc. of employees in certain
circumstances.
Certain consolidated subsidiaries have lump-sum payment
plans as defined benefit pension plans.
(1)	The assets and liabilities of the employees’ retirement
benefit plans at 31st March 2012 and 2011 consisted of thefollowing:

17. Other Liabilities
Other liabilities at 31st March, 2012 and 2011 consisted of thefollowing:
Millions of yen
2012
Accrued expenses
Unearned income
Accrued income taxes
Other
Total

2011

2011

2012

Retirement benefit obligation2012

Pension plan assets at fair value

24,655

24,115299,975

Unfunded benefit obligation(5,669)(9,038)(68,974)

1,978

2,638

24,066¥9,992 ¥11,993 $121,571¥(30,324) ¥(33,154) $(368,949)

12,506

14,199152,159

729

456

8,869

Unrecognized net retirement benefit
obligation at transition

21,572

23,535

262,465

Unrecognized actuarial loss

8,344

9,041

101,520

Unrecognized prior service cost

(3,214)(687)(39,104)

Net retirement benefit obligation

1,440

1,953

17,520Prepaid pension cost

5,955

8,478

72,454¥44,800 ¥50,184 $545,078

The aggregate annual maturities of lease obligations
subsequent to 31st March, 2012 were summarized as follows:

47

2012

Thousands of
U.S. dollars

Thousands of
U.S. dollars

The amounts of lease obligations included in “Other” were ¥19
million ($231 thousand) and ¥26 million at 31st March, 2012
and 2011, respectively. The average interest rates on leaseobligations at 31st March, 2012 with maturity dates on or
before and subsequent to 31st March, 2013 were 3.31% and3.08%, respectively. The average interest rates on leaseobligations at 31st March, 2011 with maturity dates on or
before and subsequent to 31st March, 2012 were 3.30% and3.16%, respectively.

Year ending 31st March,Millions of yen

Thousands of
U.S. dollars

2013

¥6

$73

2014

6

73

2015

3

36

2016

2

24

2017

0

0

2018 and thereafter

–

–

¥19

$231

Total

Millions of yen

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2012

Accrued retirement benefits for employees ¥(4,515) ¥(6,525) $(54,933)

Notes:
1.	Increased retirement benefits paid on a temporary
basis are not included.
2.	Certain consolidated subsidiaries apply the simplified
method in calculating retirement benefit obligation.
3.	During the fiscal year ended 31st March, 2012, theretirement benefit plans of consolidated subsidiaries
were revised and the plans were integrated on 1st
October, 2011. Consequently, prepaid pension costand accrued retirement benefits for employees havebeen offset and presented in net amount. Prepaid
pension cost and accrued retirement benefits for
employees have decreased by ¥2,220 million ($27,010
thousand), respectively, compared to the amounts
before offsetting.

SENSHU IKEDA HOLDINGS,INC.

(2)	Retirement benefit expenses for the years ended 31st
March, 2012 and 2011 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2011

2012
Service cost

641

576

7,799

Expected return on plan assets

(542)

(542)

(6,594)

Amortization of prior service cost

(356)

(225)

(4,331)

Amortization of actuarial loss

1,408

1,201

17,131

Amortization of transitional obligation

659

659

8,018

Net periodic retirement benefit expenses ¥2,886 ¥2,837 $35,113

Note:
Retirement benefit expenses of consolidated subsidiaries
which apply the simplified method are included in“service cost” collectively.
(3)	The assumptions used in accounting for the above plans
for the years ended 31st March, 2012 and 2011 were as
follows:

Expected rates of return onplan assets

2012

2011

1.7%-2.1%

1.4%-2.1%

2.5%

2.1%-3.0%

19. Asset Retirement Obligations(1) Outline of asset retirement obligation
The Group recognizes asset retirement obligations
associated with leasehold contracts of certain
subsidiaries’ branches and offices and removal costs ofcertain branches for hazardous substances such as
asbestos.
(2)	Method of determining the amount of asset retirement
obligation
The Group recognizes asset retirement obligations using
a discount rate of 2.3% with the useful life estimated to be
37 years after acquisition.

Thousands of
U.S. dollars

Millions of yen

2012¥1,076 ¥1,168 $13,091

Interest cost

Discount rates(3)	Changes in asset retirement obligations for the years
ended 31st March, 2012 and 2011 were as follows:

2011

2012

2012

Balance at beginning of the year (Note) ¥192 ¥104 $2,336
Additional provisions associated with theacquisition of tangible fixed assets

17

96

206

Adjustment due to passage of time

3

–

36

Decrease due to fulfillment ofasset retirement obligations

(43)

–

(523)

(3)

(9)

(36)

Other
Balance at end of the year¥165 ¥192 $2,007

Note:
Balance at beginning of the year ended 31st March, 2011is recognized based on the adoption of “AccountingStandards for Asset Retirement Obligations” (ASBJ
Statement No. 18 issued on 31st March, 2008) and“Guidance on Accounting Standards for Asset Retirement
Obligations” (ASBJ Guidance No. 21 issued on 31st
March, 2008).

20. Contingent Liabilities
Contingent liabilities for guarantee of corporate bonds
included in “Securities,” which were issued by private
placement (Article 2, Paragraph 3 of the Financial Instruments
and Exchange Law) amounted to ¥19,723 million ($239,968
thousand) and ¥27,054 million at 31st March, 2012 and 2011,
respectively.

21. Shareholders’ Equity
Japanese banks, including the Company, are required tocomply with the Banking Law and the Law. The Law 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 Law, an amountwhich is at least equal to 20% of the aggregate amount ofcash dividends and certain appropriations of retained
earnings associated with cash outlays applicable to eachfiscal period is to be appropriated to the legal reserve until theaggregate amount of the legal reserve and the capital surplus
account equals 100% of the amount of share capital. The Law
also provides that if the aggregate amount of additional
paid-in capital and the legal reserve exceeds 100% of theamount of share 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 Law.

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201248

(1) Class and number of shares issued and treasury stock
Movements in common stock, first-class preferred stock,second-class preferred stock and treasury stock during
the years ended 31st March, 2012 and 2011 weresummarized as follows:
Number of shares (in thousands)
Year ended 31st
March, 2012

1st April,
31st March,2011 Increase Decrease 2012

Note

Outstanding shares:
Common stock

1,192,293–

First-class preferred stock

111,000–

37,00074,000

Second-class preferred stock

115,625––

115,625

Total

1,418,918

–

1,008

18,2742,353

16,9291 and 2–37,00037,000–3 and 4

1,008

55,27439,353

16,929– 1,192,293
4

37,000 1,381,918

Treasury stock:
Common stock
First-class preferred stock
Total

Notes:
1.	Increase in treasury stock of common stock (18,274
thousand shares) consisted of acquisition of shares from theshareholders who owned fractional shares less than one
voting right (1 thousand shares) and acquisition by the
Senshu Ikeda Bank Employees’ Shareholders Association
special trust (18,273 thousand shares).
2.	Decrease in treasury stock of common stock (2,353
thousand shares) consisted of issuance request from theshareholders who owned fractional shares less than one
voting right (0 thousand shares), transfer due to exercise ofstock option (69 thousand shares) and transfer from theSenshu Ikeda Bank Employees’ Shareholders Association
special trust to the Senshu Ikeda Bank Employees’
Shareholders Association (2,283 thousand shares).
3.	Increase in treasury stock of first-class preferred stock(37,000 thousand shares) was due to purchase of treasury
stock based on resolution of annual shareholders’ meeting.
4.	Decrease in outstanding shares of first-class preferred stockand treasury stock (37,000 thousand shares) was due todisposition of treasury stock based on resolution of theBoard of Directors.
Number of shares (in thousands)
Year ended 31st
March, 2011

1st April,
31st March,2010 Increase Decrease 2011
1,192,293–– 1,192,293

First-class preferred stock

111,000––

111,000
115,625

Second-class preferred stock

115,625

–

–

Total

1,418,918–– 1,418,918

Common stock

5

1,002

–

1,008

Total

5

1,002

–

1,008

(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 28th July, 2011 and 24th February, 2011.
The balance of stock subscription rights granted for stock
option program are ¥62 million ($754 thousand) and ¥6
million at 31st March, 2012 and 2011, respectively.
Stock option related expenses for the years ended 31st
March, 2012 and 2011 amounted to ¥62 million ($754
thousand) and ¥6 million, respectively.
The stock option outstanding at 31st March, 2012 is asfollows:
Date of resolution
Persons granted

24th February, 2011
Directors of thesubsidiaries: 

16

Executive officers of
the subsidiaries: 18

Number of stock option
by type of shares (*)

Common stock:
Common stock:423,900
363,800

Date of grant

15th March, 2011

31st August, 2011

Vesting conditions

To exercise within 10
days after retirement

To exercise within 10
days after retirement

Applicable service
periodFrom 15th March, 2011 to
the date of retirement

From 31st August, 2011 to
the date of retirement

Exercise period

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

From 1st September,2011 to 31st July, 2041(*)	The number of stock option is converted into the number ofshares.
The stock option activity is as follows:

Note

31st March, 2011-Outstanding
GrantedForfeited
Vested31st March, 2012-Outstanding

24th February, 2011

28th July, 2011

423,900––

363,800––

69,400–354,500

363,800

Vested:1

31st March, 2011-Outstanding––

Vested69,400–Exercised

69,400–Forfeited

–

–

–

–

31st March, 2012-Outstanding

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2012

28th July, 2011
Directors of thesubsidiaries: 

Non-vested:

Treasury stock:49

22

Executive officers of
the subsidiaries: 19

Date of resolution

Outstanding shares:
Common stock

Note:
1.	Increase in treasury stock of common stock (1,002 thousand
shares) consisted of purchase of treasury stock based on
resolution of the Board of Directors (1,000 thousand shares)
and acquisition of shares from the shareholders who owned
fractional shares less than one voting right (2 thousand
shares).

SENSHU IKEDA HOLDINGS,INC.

23. Other Income

Price information is as follows:
Date of resolution

24th February, 2011

28th July, 2011

Exercise price

¥1

¥1

Average stock price at exercise
Fair value price at grant date

117

–

¥98

¥107

The method for estimating the fair value price of 2011 stock
option granted in the year ended 31st March, 2012 was asfollows:
Measurement method: Black-Scholes model
Major fundamental factors and assumptions used to measurefair value
Date of resolution

28th July, 2011

Volatility of stock price *1

39.88%

Estimated remaining outstanding period *2

1.7 years

Estimated dividend *3

2.6%

Interest rate with risk free *40.128%*1	Actual stock price during the period (from 11th December,2009 to 31st August, 2011) 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	¥3 of latest annual dividend/¥113 of stock price on the basedate*4	Yield of Japanese government bonds approximating theestimated remaining outstanding period
In estimating the vested number of stock options, theCompany basically reflects only the actual forfeited number,since it is difficult to make a reasonable estimate on the future
forfeited number.

Other income for the years ended 31st March, 2012 and 2011
consisted of the following:

2011

2012

2012

Gain on sales of equity securities ¥305 ¥506 $3,710
Gain on money held in trust
Other
Total

41

220

498

9,159

10,274111,436¥9,506 ¥11,002 $115,658

24. Other Operating Expenses
Other operating expenses for the years ended 31st March,2012 and 2011 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2011

2012

2012

Loss on sales of debt securities ¥1,724 ¥2,011 $20,975
Loss on redemption of debt securities

2,281

–

27,752

Loss on devaluation of debt securities

2,967

8

36,099

4

49

48

Other
Total

¥6,977 ¥2,070 $84,888

25. Other Expenses
Other expenses for the years ended 31st March, 2012 and2011 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2012

2011

2012

Provision for possible loan losses ¥6,679 ¥4,126 $81,262
Write-offs of loans and bills discounted

5,504

11,952

66,966

Loss on sales of equity securities

454

1,168

5,523

Loss on devaluation of equity securities

462

1,079

5,621

Loss on money held in trust

326

246

3,966

12,337

13,798150,103

Other

22. Other Operating Income

Thousands of
U.S. dollars

Millions of yen

Total¥25,764 ¥32,371 $313,468

Other operating income for the years ended 31st March, 2012
and 2011 consisted of the following:
Millions of yen
2012
Gain on sales of securities andtrading account securities
Other
Total

2011

Thousands of
U.S. dollars
2012¥16,399 ¥10,857 $199,525
1,732

1,698

21,073¥18,132 ¥12,556 $220,610

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201250

26. Dividends
Cash dividends paid during the fiscal year ended 31st
March, 2012
Resolution by annual shareholders’ meeting on 28th June,
2011
Dividend amount Dividends per share
Type ofstock
Commonstock

Recorddate

Effective Millions Thousands ofdateof yen U.S. dollars

Yen

U.S.
dollars

31st March, 30th June,
2011
2011
¥3,573 $43,472 ¥3 $0.03

First-class
31st March, 30th June,¥196 divided $2.38 divided
preferred stock
2011
2011
by 18.5by 18.5¥1,176 $14,308
Second-class
31st March, 30th June,¥204 divided $2.48 divided
preferred stock
2011
2011
by 18.5by 18.5¥1,275 $15,512

Cash dividends with record dates falling in the fiscal year
ended 31st March, 2012 and effective dates coming after
the end of the fiscal year
Types of stock
Common stock

Source ofdividends

Record date

Effective dateCash dividends with record dates falling in the fiscal year
ended 31st March, 2011 and effective dates coming after
the end of the fiscal year

Source of Record
Types of stock dividends
dateCommon stock

Types of stock
Common stock

Millionsof yenThousands of
U.S. dollars

Dividends per share
Yen

U.S. dollars¥3,574 $43,484 ¥3 $0.03¥196 divided $2.38 divided
First-classpreferred stock ¥784 $9,538
by 18.5by 18.5¥204 divided $2.48 divided
Second-classpreferred stock ¥1,275 $15,512
by 18.5by 18.5

Cash dividends paid during the fiscal year ended 31st
March, 2011
Resolution by annual shareholders’ meeting on 29th June,
2010

Type of stock
Common stock

Record date Effective date

Dividend
amountDividends
per share

Millions of
yen

Yen

31st March, 2010 30th June, 2010 ¥3,219 ¥2.70

First-class
31st March, 2010 30th June, 2010¥ 196 divided
preferred stock¥1,176by 18.5
Second-class
31st March, 2010 30th June, 2010
¥204.5 divided¥1,278
preferred stockby 18.5

51

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2012

Millions of
yen

Yen

First-class
Retained 31st March, 30th June,¥ 196 divided¥1,176
preferred stockearnings
2011
2011
by 18.5
Second-class
Retained 31st March, 30th June,¥204.5 divided¥1,275
preferred stockearnings
2011
2011
by 18.5

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, 2012 and 2011 is summarized asfollows:
Millions of yen

First-class
Retained earnings 31st March, 2012 29th June, 2012preferred stock

Dividend amount

Dividends
per share

Retained 31st March, 30th June,earnings¥3,573 ¥3
2011
2011

Retained earnings 31st March, 2012 29th June, 2012

Second-class
Retained earnings 31st March, 2012 29th June, 2012preferred stock

Effective
date

Dividend
amount2012
Cash and due from banks
Deposits other than deposits
with the Bank of Japan
Cash and cash equivalents

2011

Thousands of
U.S. dollars
2012¥134,000 ¥144,348 $1,630,368(3,004)(3,013)(36,549)¥130,996 ¥141,335 $1,593,819

SENSHU IKEDA HOLDINGS,INC.

28. Leasesa.

Total lease payments related to finance leases accounted
for as operating leases and depreciation expense, whichhave not been reflected in the accompanying
consolidated statement of operations for the years ended
31st March, 2012 and 2011, are summarized as follows:

Finance leases
As Lessee
The Group leases vehicles under finance leasearrangements, which do not transfer ownership of thelease assets to the lessee.
The Group accounts for finance leases commencing prior
to 1st April, 2008 that do not transfer ownership of theleased assets to the lessee as operating leasetransactions as permitted by the accounting standard.
The following pro forma amounts represent the acquisition
costs, accumulated depreciation and net book value ofthe leased tangible fixed assets as of 31st March, 2012
and 2011, which would have been reflected in theaccompanying consolidated balance sheet if financelease accounting had been applied to the finance leases
for which the Group is a lessee and which are currently
accounted for in a manner similar to the accounting
treatment for operating lease transactions:Thousands of
U.S. dollars

Millions of yen
2011

2012
Acquisition costs
Accumulated depreciation
Net book value

Depreciation expense

9

6

73

There was no loss on impairment of fixed assets allocatedto leased assets or reversal of the reserve for impairmentof tangible fixed assets under finance leases for the years
ended 31st March, 2012 and 2011.
b.

Operating leases
As Lessee
Future minimum lease payments under non-cancellable
operating leases subsequent to 31st March, 2012 wereas follows:425¥3 ¥7 $36

The above acquisition costs include amounts
corresponding to interest expense not presented
separately because the total balance of the future
minimum lease payments was immaterial to the net bookvalue of tangible fixed assets.

2012¥6 ¥9 $73

Depreciation expense has been computed by thestraight-line method assuming the lease periods to be theuseful lives of the respective assets and a nil residual
value.

2012
41

2011

2012
Total lease payments¥38 ¥49 $462
35

Thousands of
U.S. dollars

Millions of yen

Year ending 31st MarchMillions of yen

Thousands of
U.S. dollars

2013

¥619

$7,5312014 and thereafter
Total

4,867

59,216¥5,486$66,747

Future minimum lease payments subsequent to 31st
March, 2012 for finance leases accounted for in a manner
similar to the accounting treatment for operating leasetransactions are summarized as follows:Year ending 31st MarchMillions of yen

Thousands of
U.S. dollars

2013

¥2

$24

2014 and thereafter
Total

0

0

¥3

$36

The above future minimum lease payments include
amounts corresponding to interest expense not presented
separately because the total balance of the future
minimum lease payments was immaterial to the net bookvalue of tangible fixed assets.

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201252

29. Income Taxes
Income taxes applicable to the Company and its domestic
subsidiaries comprise corporate tax, inhabitants’ taxes andenterprise tax which, in the aggregate, resulted in a statutory
tax rate of 40.6% for the years ended 31st March, 2012 and2011.
The tax effect of temporary differences which gave rise tosignificant portions of the deferred tax assets and liabilities at
31st March, 2012 and 2011 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2011

2012

2012

Deferred tax assets:
Reserve for possible loan losses ¥32,572 ¥35,495 $396,301
Provision for employees’ bonuses

664

724

8,078

Accrued retirement benefits for employees

3,127

3,254

38,045

Loss on devaluation of securities

12,516

14,204

152,281Tax loss carryforwards

19,28526,364

234,639

Depreciation

574

702

6,983

Net unrealized loss on availablefor-sale securities

4,743

5,429

57,707

Other

4,333

5,121

52,719Gross deferred tax assets

77,817

91,294

946,794

Valuation allowance(43,986)(51,669)(535,174)

Total deferred tax assets

33,831

39,625

411,619

Non-taxable accrued dividend income

(394)

(345)

(4,793)Net unrealized gain on availablefor-sale securities

(569)

(244)

(6,922)

Deferred tax liabilities:

Other
Total deferred tax liabilities
Net deferred tax assets

(24)

(36)

(292)

(989)

(626)

(12,033)¥32,842 ¥38,999 $399,586

A reconciliation of the statutory tax rate to the effective tax rate
for the years ended 31st March, 2012 and 2011 was asfollows:
2011

2012
Statutory tax rate

40.6%

Permanently non-deductible expenses

0.6

1.2

(34.0)(50.2)

Valuation allowance
Per capita portion of inhabitants’ taxes

53

40.6%

0.9

1.1

Unused tax loss carryforwards that
had expired

–

18.9

Deduction limit of tax loss carryforwards

30.3

–

Decrease in deferred tax assets due
to changes in tax rate

32.0

–

Effect of consolidated tax payment

(8.9)

–

Other

1.3

2.0

Effective tax rate

62.8%

13.6%

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2012

Following the promulgation of the “Law for Partial Amendmentof the Income Tax Law, etc. for the Purpose of Creating a
Taxation System Responding to Changes in Economic andSocial Structures” (Law No. 114 of 2011) and the “Law on
Special Measures for Securing Financial Resources
Necessary to Implement Measures for Reconstruction
following the Great East Japan Earthquake” (Law No. 117 of
2011) on 2nd December, 2011, the corporate income tax rate
will be lowered and special restoration corporation tax will be
imposed from the fiscal years beginning on and after 1st April,2012. In conjunction with these changes, the effective
statutory tax rate used to measure deferred tax assets anddeferred tax liabilities will change for the temporary
differences expected to be resolved from the fiscal year
beginning on 1st April, 2012 to the fiscal year beginning on
1st April, 2014, and for the temporary differences expected tobe resolved from the fiscal year beginning on 1st April, 2015,
from the former 40.6% to 37.9% and 35.5%, respectively. As aresult of this change, deferred tax assets has decreased by¥3,356 million ($40,832 thousand), and net unrealized loss onavailable-for-sale securities, net unrealized loss on deferredhedges and income taxes-deferred have increased by ¥50
million ($608 thousand), ¥0 million ($0 thousand) and ¥3,406
million ($41,440 thousand), respectively.
Additionally, from the fiscal year beginning on or after 1st
April, 2012, amount of deduction of tax loss carryforwards will
be limited to 80% of taxable income before deduction of tax
loss carryforwards. As a result, deferred tax assets decreasedby ¥3,227 million ($39,262 thousand) and income taxesdeferred increased by the same amount.
From the fiscal year beginning on 1st April, 2012, theCompany and certain of its consolidated subsidiaries have
filed to adopt the consolidated tax payment system, as
provided for in the Corporation Tax Law (Law No. 34 of 1965),
and pursuant to the provision of the Corporation Tax Law, haveobtained deemed approval for consolidated tax payment on
1st April, 2012.
As a result, the Group, effective from the fiscal year beginningon 1st April, 2012, adopted the “Practical Solution on Tentative
Treatment of Tax Effect Accounting Under Consolidated
Taxation System (Part 1)” (Practical Issues Task Force (“PITF”)
No. 5 issued on 18th March, 2011) and the “Practical Solution
on Tentative Treatment of Tax Effect Accounting Under
Consolidated Taxation System (Part 2)” (PITF No. 7 issued on
30th June, 2010), and reported deferred tax assets andincome taxes-deferred on the premise of adopting theconsolidated tax payment system.
Due to this change, deferred tax assets has increased by¥948 million ($11,534 thousand) and income taxes-deferredhas decreased by the same amount.

SENSHU IKEDA HOLDINGS,INC.

30. Comprehensive Income

For the year ended 31st March, 2012

Reclassification adjustments and tax effect amounts of othercomprehensive income for the year ended 31st March, 2012were as follows:
Thousands of
U.S. dollars

Millions of yen
Unrealized gain (loss) on
available-for-sale securities:
Amount for the year¥7,277$88,538

Reclassification adjustment(6,183)(75,228)

Amount before tax effect

1,093

13,298

(74)

(900)

1,018

12,385

Tax effect amountNet unrealized gain on availablefor-sale securities

Thousands of U.S. dollars

(79)

(961)

Reclassification adjustment

97

1,180

Amount before tax effect

17

206

Tax effect amount

(0)

(0)

Net unrealized gain on
deferred hedges

17

206

Total other comprehensive income ¥1,036$12,604

31.	Segment Information and RelatedInformation

Other

Total

Income from external$711,157 $363,560 $336,050 $1,410,779
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, 2012 and2011.
(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,2012 and 2011.

Unrealized gain (loss) on deferred hedges:
Amount for the year

Securities trading
and investment

Lendingc. 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,2012 and 2011.

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, 2012 and 2011.

(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, 2012 and 2011.

(1) Related informationa. Information about services
For the year ended 31st March, 2012

32. Related Party Transactions
Transactions between a consolidated subsidiary andrelated parties:

Millions of yen
Lending

Securities trading
and investment

Other

Total

Income from external¥58,450 ¥29,881 ¥27,620 ¥115,952
customers

For the year ended 31st March, 2011
Millions of yen
Lending

Securities trading
and investment

Other

Total

Income from external¥59,699 ¥29,561 ¥27,995 ¥117,255
customers

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

Setsuko Sasaki
Transaction and balances with Setsuko Sasaki who was a
relative of a director and engaged in the property leasing
business, Transactions and balances with Setsuko Sasaki asof 31st March, 2012 and 2011 and for the years then ended
were summarized as follows:
2012
Transactions
Type of
Millions Thousands oftransaction of yen U.S. dollars

Balances
Account
nameMillions Thousands ofof yenU.S. dollars

Loans and bills¥67 $815
discounted

Loan¥– $–Interest
income¥1 $12 Other assets ¥0 $0
Otherliabilities¥0 $0

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 20125433.	Financial Instruments and Related
Disclosures

2011
Transactions
Type oftransaction

Balances
Account
nameMillions of yen

Millions of yen

Loan

¥–

Loans and bills
discounted¥73Interest
income¥2 Other assets

¥0

Other
liabilities¥0

The conditions of the loan transactions are determined basedon the general conditions of similar transactions with third
parties.
HIMENO GIKEN CO., LTD.
An executive officer of the Company, Yutaka Himeno directly
owns 5% shares and his relatives directly own 95% shares in
HIMENO GIKEN Co., Ltd. (“HIMENO GIKEN”). HIMENO
GIKEN is located in Higashiyodogawa-ku, Osaka, records
share capital of ¥20 million and is engaged in the construction
business.
Transactions and balances with HIMENO GIKEN as of 31st
March, 2011 and for the year then ended were summarized asfollows.
2011
Transactions
Type oftransaction

Balances

Millions of yen

Account
nameMillions of yen

Loan

Loans and bills¥–
discounted¥–Interest
income¥0 Other assets

¥–

Other
liabilities¥–

Yutaka Himeno had been a director of the Company’s
subsidiary until 30th April, 2010, and accordingly, above table
presents the transaction between the consolidated subsidiaryand HIMENO GIKEN during the period from 1st April, 2010 to30th April, 2010 and the balance at 31st March, 2011 is notpresented since the company does not meet the definition of
the related party of the Company at 31st March, 2011.

1.

General Information(1) Policy for financial instruments
The Group, whose core operation is The Senshu Ikeda
Bank, Ltd., is engaged in the various financial services asa 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 responseto the changes in market environments, the Group
conducts integrated asset and liability management(“ALM”) and utilizes derivative contracts as a part of ALM.
(2) Contents of financial instruments and their risks
Financial assets held by the Group mainly consist of loans
to domestic corporate and individual customers, which
are exposed to credit risk arising from customers’
nonperformance of contractual obligations and interest
rate movement risk. Securities held by the Groupprincipally consist of equity securities, debt securities andinvestment trusts, which are held for pure investment
purpose and strategic investment purpose as availablefor-sale securities and partially, for holding to maturity andtrading purposes. These financial assets are exposed tocredit risk of issuers and market risk associated withinterest rates, stock prices and foreign exchanges.
Deposits which are major financial liabilities are exposed
to liquidity risk that unexpected cash flow might arise. In
addition, other fund raising sources are exposed to theliquidity risk that necessary fund might not be secured
when the Group fails to utilize the market under certain
circumstances, or that the Group might be obliged tofund at more unfavorable interest rates than normal. In
addition, these financial liabilities are exposed to the riskof fluctuations in interest rates as well as financial assets.
The Group uses derivative contracts to meet thecustomers’ needs and principally as a means of risk
control over the assets and liabilities. In addition, as apart of trading activities (to earn short-term trading gains),
futures instruments including equity and debt securities
are utilized. These derivatives are exposed to the credit
risk (counterparty risk) arising from customers’
nonperformance of contractual obligations and market
risk arising from the fluctuations in interest rates, stock
prices, foreign exchanges, etc.
(3) Risk management system for financial instruments
The Group has established the risk control department
independent from front offices and defines basic risk
management policies. Specifically, the risk management
system and various rules including the basic policy onrisk control are determined by the Board of Directors, andthe responsible functions by risk categories and the55

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2012

SENSHU IKEDA HOLDINGS,INC.

integrated 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 consolidatedbanking subsidiary. With respect to credit risk ofissuers of securities and counterparty risk of derivativetransactions, the risk control departments of thebanking subsidiary monitor the identification of credit
information and fair values. In addition, the risk control
department of the Company reports on a regular basis
to the Board of Directors of the Company. Furthermore
the internal audit departments audit the status of credit
control.
c. Market risk management(i) Market risk management
The Group controls market risk arising fromfluctuations in interest rates, stock prices, foreignexchanges, etc. in accordance with the Company’s
policy on market risk control and various market risk
control rules. Specifically, the risk control
department of the Company identifies the volume ofmarket risk using the Value-at-Risk (VaR) method
and monitors compliance with the risk limits
resolved by the Board of Directors throughcontinuous monitoring system. For securities, inaddition to above risk limit control policy, the Grouphas established and managed loss cut rules. The
relevant information is periodically reported by therisk control department to the Risk Management
Committee and the Board of Directors.

The ALM Committee identifies and confirms the
make-up of assets and liabilities and interest raterisk and discusses future measures. Specifically,
the responsible department of the Company for
ALM identifies comprehensively interest rates andperiods of financial assets and liabilities andmonitors using gap analysis and interest ratesensitivity analysis to secure stable and continuous
earnings.
The banking subsidiary executes foreign exchangetransactions and foreign currency bondinvestments, which are exposed to foreignexchange risk, but the subsidiary strives to minimize
foreign exchange risk by balancing the foreignexchange 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%, and observation period–240 businessdays).
The value of market risk on financial instrumentswas ¥25,100 million ($305,389 thousand) for interest
rate and ¥10,100 million ($122,885 thousand) for
stocks at 31st March, 2012. The value of market risk
as a whole with correlation in consideration was¥22,700 million ($276,189 thousand).
The Group carries out back-testing to compare themodel-calculating VaR of securities on the banking
activities which influenced by market fluctuation(holding period–one business day) with real gain
and loss in order to verify their accuracy. As real
loss did not exceed the model-calculating VaR for
the year ended 31st March, 2012, the Groupconsiders that the model calculates the value ofmarket risk with sufficient confidence level.
However, VaR, which calculates the value of market
risk based on past fluctuations in the market,
sometimes cannot calculate the value of market risk
accurately under the condition that market
environment changes abruptly.

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201256

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 banking subsidiary
identify the investment and funding status of the wholeGroup on a timely basis and control liquidity risk by
securing liquidity 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.

2.

Fair value of financial instruments

The carrying value, the fair value and the difference as of 31st
March, 2012 and 2011 are summarized in the following tables:
Note that securities such as unlisted equity securities forwhich fair value is extremely difficult to determine were notincluded in the following tables (See (Note 2) below):
Millions of yen
31st March, 2012
Cash and due from banks

Carrying
value

Fair value Difference¥134,000 ¥134,000 ¥–Call loans and bills bought

698

698

–

Monetary claims bought (*1)

1,473

1,473

–

69

69

–

19,00019,000–

Trading account securities:
Trading securities
Money held in trust
Securities:
Held-to-maturity debt securities

49,95350,428474

Available-for-sale securities

1,142,714

1,142,714–

3,470,571

3,495,031

24,460

4,323

4,328

4

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

3,516,142(45,571)

Total assets¥4,822,805 ¥4,847,744 ¥24,939

Deposits¥4,390,453 ¥4,392,564 ¥2,111

Payables under securities
lending transactions

237,307237,307–

Borrowed money

69,76469,78015Foreign exchange liabilities

431

431

–

Corporate bonds and notes

53,00052,666(333)

Total liabilities¥4,750,957 ¥4,752,751 ¥1,793

Derivative transactions (*2)
To which hedge accounting is
not applied
To which hedge accounting is applied
Total derivative transactions

57

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2012¥145 ¥145 ¥–
(2)

(2)

–

¥143 ¥143 ¥–SENSHU IKEDA HOLDINGS,INC.

Millions of yen
31st March, 2011
Cash and due from banks
Monetary claims bought (*1)

Carrying
value

Thousands of U.S. dollars

Fair value Difference

31st March, 2012

¥144,348 ¥144,348 ¥–Cash and due from banks

1,271

1,271

–

Trading account securities:
Trading securities
Money held in trust

36

36

–

19,00019,000–

Securities:
49,19849,793594

Available-for-sale securities

1,020,601

1,020,601–

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

3,501,016(40,991)

8,492

8,492

–

Monetary claims bought (*1)

17,921

17,921

–

839

839

–

231,171

231,171–

Trading account securities:
Trading securities
Securities:
Held-to-maturity debt securities

607,774

613,553

5,767

Available-for-sale securities

13,903,321

13,903,321–

42,226,195

42,523,798

297,60352,59752,65848

Loans and bills discounted

3,460,024

3,487,598

27,573

6,203

6,210

7

Fair value Difference$1,630,368 $1,630,368 $–Call loans and bills bought

Money held in trust

Held-to-maturity debt securities

Carrying
value

Reserve for possible loan losses (*1)

42,780,654(554,459)

Total assets¥4,700,685 ¥4,728,861 ¥28,176

Foreign exchange assets (*1)

Deposits¥4,348,871 ¥4,353,519 ¥4,647

Total assets$58,678,732$58,982,163 $303,431

Deposits$53,418,335$53,444,019 $25,684

Payables under securities
lending transactions

172,725

172,725–

Borrowed money

44,41744,277

(139)

480

480

–

48,00047,548(451)

Foreign exchange liabilities

5,243

5,243

–

¥4,614,495 ¥4,618,551 ¥4,056

Corporate bonds and notes

644,847

640,783(4,051)

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

Payables under securities
lending transactions

2,887,297

2,887,297–

Borrowed money

848,813849,008

182

Total liabilities¥26 ¥26 ¥–$57,804,562 $57,826,390 $21,815

Derivative transactions (*2)–

To which hedge accounting is
not applied¥(1,103) ¥(1,103) ¥–

To which hedge accounting is applied(1,129)(1,129)Total derivative transactions$1,764 $1,764 $–
(24)

(24)

–

$1,739 $1,739 $–(*1)	General and specific reserves for loan losses
corresponding to loans are deducted. With respect toreserve for loan losses related to monetary claims bought
and foreign exchange assets, carrying value is shown,net of reserve, since the amount is insignificant.
(*2)	Derivative transactions include all derivatives recorded inother assets and other liabilities. Assets and liabilities
arising from derivative transactions are shown on a net
basis.
(Note 1)	Valuation method for the fair value of financial
instruments
Assets:Cash and due from banks
The carrying value of due from banks without maturities ispresented as the fair value since the fair value approximatesthe carrying value. The carrying value of due from banks withmaturities is presented as the fair value since the fair value
approximates the carrying value due to remaining maturitiesof less than one year.

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201258

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).

the amount of pledged assets is presented as the fair value
since the fair value approximates the carrying value
considering the expected repayment schedule and interest
rate conditions.

Monetary claims bought
Receivables related to factoring business are computed in thesame manner as loans.

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).

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 banking subsidiary is determined in thesame manner as loans. Note that information on securities byholding 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

59

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2012

Liabilities:
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.
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 subsidiary which isengaged in banking business has not significantly changed
since the borrowed money was originated and accordingly
fair value approximates the carrying value. The fair value of
fixed rate borrowed money is calculated as the present valueof expected future cash flows from the aggregated value ofprincipal and interest (the aggregated value of principal andinterest 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 tosimilar borrowings. The carrying value of borrowed money
whose remaining maturity is due within the short-term period(less than one year) is presented as the fair value since thefair value approximates the carrying value.

SENSHU IKEDA HOLDINGS,INC.

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.
Corporate bonds and notes
The fair value of bonds and notes issued by the consolidated
subsidiary is determined using the market price.
Derivative transactions:Thousands of
U.S. dollars

Millions of yen
2011

2012

Unlisted equity securities (*1) (*2) ¥5,756 ¥5,862 $70,032
1,302

1,406

15,8414

0

48

Due after Due after
one year three years
throughthroughthree years five years¥76,520 ¥– ¥–
698

–

–

Monetary claims bought (*1)

1,473

–

–

130,922356,758

236,190

14,60021,10014,30014,60021,10012,300

–

–

2,000

Other
Available-for-sale securities
with maturities:

116,322335,658

221,890

Government bonds

30,000221,500

87,000Local government bonds

25,26437,596

12,593

Corporate bonds

52,07635,74235,881

Other

8,982

40,81986,416638,106

520,613451,224

4,328

–

–

Loans and bills discounted (*1, 2)
Foreign exchanges assets
Total¥852,049 ¥877,372 ¥687,414
Millions of yen¥7,063 ¥7,269 $85,935(*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 ¥146 million ($1,776
thousand) and ¥362 million for the years ended 31st
March, 2012 and 2011, respectively.
(*3)	The fair value of investments in partnerships, whose
assets consist of securities such as unlisted equity
securities for which fair value is extremely difficult todetermine, is not disclosed.

Due inone yearor less

Call loans and bills bought

Corporate bonds

2012

Total

31st March, 2012
Due from banks

Held-to maturity debt securities:(Note 2)	Financial instruments whose fair value is extremely
difficult to determine at 31st March, 2012 and 2011
are as follows: These securities are not included in“Securities” under “Assets” as part of the fair value
information of financial instruments.

Other

Millions of yen

Securities:

See Note 34.

Investments in partnerships (*3)(Note 3)	Repayment schedule of monetary receivables andsecurities with contractual maturities

31st March, 2012
Due from banks

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

Monetary claims bought (*1)

–

–

–

158,382

34,704

137,395

Securities:
Held-to maturity debt securities:

–

–

–

–

Corporate bonds

–

–

–

Other

–

–

–

158,382

34,704

137,395

40,00017,000

–

350

1,530

–
51,114

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

1,908

2,404

116,123

13,77086,280266,155

325,6311,226,163–––¥424,537 ¥360,336 ¥1,363,558

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201260

Millions of yen

31st March, 2011
Due from banks

Due inone yearor less

Thousands of U.S. dollars

Due after Due after
one year three years
throughthroughthree years five years¥93,053 ¥– ¥–

Monetary claims bought (*1)

1,270

–

–

Securities:

68,796

153,294

3,200
3,200

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

31st March, 2012
Due from banks$931,013 $– $–Call loans and bills bought

8,492

–

382,067

Monetary claims bought (*1)

17,921––

21,60024,500

Securities:

1,592,918

4,340,649

2,873,707

21,60024,500177,637

256,722

173,987

177,637

256,722

149,653––

24,333

Held-to maturity debt securities:
Corporate bonds–

65,596

131,694

357,567

Government bonds

30,01218,000108,000

Local government bonds

12,72837,582

31,292

1,415,281

4,083,927

2,699,720

Corporate bonds

22,68350,422

31,450Government bonds

365,0072,694,975

1,058,522
153,218

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

31st March, 2011
Monetary claims bought (*1)
Securities:
Held-to maturity debt securities:
Corporate bonds
Available-for-sale securities
with maturities:

25,690186,824

Local government bonds

307,385

457,427

489,372

411,520

Corporate bonds

633,605

434,870

436,561

6,210

–

–

Other

109,283

496,641

1,051,417

7,763,791

6,334,262

5,490,010

52,658––Due after
Due after
five years seven years
Due after
throughthroughseven years ten years ten years––

99,304140,360–––

Call loans and bills bought

–

–

–

–

–

Monetary claims bought (*1)

–

–

–

1,927,022

422,241

1,671,675

140,360
39,500Local government bonds

770

1,210

–

Corporate bonds

6,206

3,004

46,738

Total

Thousands of U.S. dollars
Due after
Due after
five years seven years
Due after
throughthroughseven years ten years ten years–

86,000Foreign exchanges assets$10,366,820 $10,674,923 $8,363,718

81,59099,304

Other

Total

¥– ¥– ¥–59,700Loans and bills discounted (*1, 2)

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

81,590Government bonds

Available-for-sale securities
with maturities:

172¥864,993 ¥642,666 ¥793,588

Due from banks

Other695,662

Millions of yen

14,914

9,090

54,121

247,521

325,491

1,273,030–––¥329,111 ¥424,795 ¥1,413,390

31st March, 2012
Due from banks

Securities:
Held-to maturity debt securities:(*1)	Loans and bills discounted and monetary claims bought
do not include ¥58,459 million of receivables such as
those due from bankrupt, effectively bankrupt or likely to
become bankrupt borrowers, since it is not certain when
they can be collected or redeemed.
(*2)	Overdraft accounts of loans are shown under “Due in one
year or less.”

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2012

$– $– $–
–

–

–

–

Corporate bonds

–

–

–

Other

–

–

–

1,927,022

422,241

1,671,675

486,677

206,837–

4,258

18,615–

Available-for-sale securities
with maturities:
Government bonds
Local government bonds
Corporate bonds
Other

61

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

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

23,21429,249621,900

1,412,860

167,538

1,049,762

3,238,289

3,961,929

14,918,639

–

–

–

$5,165,312 $4,384,182 $16,590,315(*1)	Loans and bills discounted and monetary claims bought
do not include ¥88,269 million ($1,073,962 thousand) ofreceivables such as those due from bankrupt, effectively
bankrupt or likely to become bankrupt borrowers, since it
is not certain when they can be collected or redeemed.
(*2)	Overdraft accounts of loans are shown under “Due in one
year or less.”

SENSHU IKEDA HOLDINGS,INC.

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

Thousands of U.S. dollars

Millions of yen

31st March, 2012
Deposits (*1)

Due after Due after
Due in one one year three years
year orthroughthroughlessthree years five years¥4,021,132 ¥331,424 ¥36,258

Payables under securities
lending transactions

237,307––

Borrowed money (*2)

34,247

1,532

2,484

–

–

–

Corporate bonds (*3)
Total

31st March, 2012
Deposits (*1)
Payables under securities
lending transactions––$7,458 $12,458 $–Payables under securities
lending transactions––

Corporate bonds (*3)–

608,346–

Total

Millions of yen
Due after Due after
Due in one one year three years
year orthroughthroughlessthree years five years¥3,965,277 ¥328,742 ¥52,748

Payables under securities
lending transactions

172,725––

Borrowed money (*2)

21,3491,337

230

Corporate bonds (*3)

–

–

–

¥4,159,352 ¥330,080 ¥52,978Millions of yen

Total

31st March, 2012
Deposits (*1)–¥2,113 ¥69,024 ¥–Corporate bonds (*3)–$52,228,835 $4,051,052 $471,383

219,004–

Borrowed money (*2)

–

Total

–

–

Payables under securities
lending transactions–

Corporate bonds (*3)

18,25018,00031st March, 2011

30,222

Borrowed money (*2)¥613 ¥1,024 ¥–

50,000

Deposits (*1)–

18,639Millions of yen
Due after
Due after
five years seven years
Due after
throughthroughseven years ten years ten years

–

Total

–

416,680

Thousands of U.S. dollars

1,500

31st March, 2011

2,887,297

Borrowed money (*2)

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

Corporate bonds (*3)

Deposits (*1)$48,924,832 $4,032,412 $441,148

Payables under securities
lending transactions¥4,292,688 ¥332,956 ¥38,743

Borrowed money (*2)
Total

31st March, 2012
Deposits (*1)

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

Due after
Due after
five years seven years
Due after
throughthroughseven years ten years ten years¥788 ¥1,314 ¥–
–

–

–

1,500

8,000

–

30,00015,000––$25,708 $839,810 $–(*1)	Demand deposits are disclosed under “Due in one year
or less” of deposits.
(*2)	Borrowed money whose repayment schedule is notdetermined in the amount of ¥12,000 million ($146,003
thousand) is not included.
(*3)	Corporate bonds whose repayment schedule is notdetermined in the amount of ¥3,000 million ($ 36,500
thousand) are not included.

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

¥32,288 ¥24,314 ¥–(*1)	Demand deposits are disclosed under “Due in one year
or less” of deposits.
(*2)	Borrowed money whose repayment schedule is notdetermined in the amount of ¥12,000 million is notincluded.
(*3)	Corporate bonds whose repayment schedule is notdetermined in the amount of ¥3,000 million are notincluded.
SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201262

(1)	Currency related derivatives at 31st March, 2012 and2011
Millions of yen
Contract amount/notional principal
31st March, 2012

Total

Over
one year

Fair
value

Valuation
gain (loss)

Over-the-counter transactions:
Currency swaps¥74,353 ¥44,764 ¥116 ¥116

Forward foreignexchange contracts:
Selling¥2,431

–

(26)

(26)

Buying¥2,330–

55

55

Selling¥10,686 ¥6,768

(988)

(84)

Buying¥10,686 ¥6,768

988

217

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.
(2) Equity related derivatives at 31st March, 2012 and 2011
31st March, 2012
There were no equity related derivatives at 31st March,
2012.
Millions of yen
Contract amount/notional principal

Currency options:Total¥145 ¥278

Contract amount/notional principal
Total

Over
one year

Fair
value

Valuation
gain (loss)

Over-the-counter transactions:
Currency swaps¥98,138 ¥75,626 ¥159 ¥159

Forward foreignexchange contracts:
Selling¥3,573

–

(28)

(28)

Buying¥2,632–

34

34

Selling¥15,254 ¥10,531(1,653)(440)

Buying¥15,254 ¥10,531

1,641

621

Currency options:Total¥153 ¥345

Contract amount/notional principal
31st March, 2012

Total

Fair
value

Valuation
gain (loss)

Over-the-counter transactions:
Currency swaps$904,647 $544,640 $1,411 $1,411

Forward foreignexchange contracts:
Selling$29,577

–

(316)

(316)

Buying$28,348

–

669

669

Selling$130,015 $82,345(12,020)(1,022)

Buying$130,015 $82,345

12,0202,640

Currency options:Total$1,764 $3,382

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2012

Fair
value

Valuation
gain (loss)

Transactions listed on the exchange:
Selling¥2,801 ¥– ¥(127) ¥(127)

Buying

¥–

–

–

Total

–

¥(127) ¥(127)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 of transactions listed on exchanges isdetermined using the last quoted market price at theTokyo Stock Exchange, Inc. or others. The fair value ofover-the-counter transactions is determined by using
the discounted cash flow method, option pricing
models or others.

With respect to derivatives to which hedge accounting isapplied, contract amount or notional principal and fairvalue at the balance sheet date by transaction type andhedge accounting method and computation method of thefair value are as follows. Note that contract amount or
notional principal does not represent the market risk
exposure of derivative transactions.
(1)	Interest related derivatives at 31st March, 2012 and2011
31st March, 2012

Millions of yen
Contract amount/notional principal

Hedge accounting
methodSwap rateapplied tounderlying
debt

63

Over
one year

2.	Derivative transactions to which hedge accounting isappliedThousands of U.S. dollars

Over
one year

Total

Equity index futures:

Millions of yen

31st March, 2011

31st March, 2011

Transaction
type

Major hedged
item

Total

Over one
Fair
year
value (*1)

Interest rate swaps:
Receivable floating
rate/
Borrowed
Payable fixed rate
money

¥450

¥100

*2

SENSHU IKEDA HOLDINGS,INC.

31st March, 2011

Millions of yen

31st March, 2012

Thousands of U.S. dollars

Contract amount/notional principal
Hedge accounting
methodSwap rateapplied tounderlying
debt

Transaction
type

Major hedged
item

Contract amount/notional principal

Over one
Fair
year
value (*1)

TotalInterest rate swaps:

DeferralCurrency
hedge
swaps
accounting

Receivable floating
rate/
Borrowed
Payable fixed rate money¥1,050

31st March, 2012

Thousands of U.S. dollars¥450

Swap rateapplied tounderlying
debt

Transaction
type

Major hedged
item

Fair
Over
one year value (*1)

TotalInterest rate swaps:
Receivable floating
rate/
Borrowed
Payable fixed ratemoney

$5,475*2$1,216*1	The fair value of transactions listed on exchanges isdetermined using the last quoted market price at theTokyo Financial Exchange, Inc. or others. The fair value ofover-the-counter transactions is determined by using thediscounted cash flow method, option pricing models orothers.
*2	The interest rate swaps which qualify for hedge
accounting and meet specific matching criteria are notvalued at the fair value, but the differential paid or
received under the swap agreements is recognized andincluded in interest expenses or income on the borrowed
money as hedged items. Accordingly, the fair value ofinterest rate swaps is considered to be included in the fairvalue of the borrowed money disclosed in Note 33.
(2)	Currency related derivatives at 31st March, 2012 and2011
31st March, 2012

Millions of yen
Contract amount/notional principal

Hedge accounting Transaction
methodtype
DeferralCurrency
hedge
swaps
accounting

Major hedged
item

Over
one year

Total

Securities
denominated inforeign currencies ¥21,783

31st March, 2011

DeferralCurrency
hedge
swaps
accounting

Major hedged
item

Total

Over
one year

Fair
value

Securities
denominated inforeign currencies $265,032$–$(24)

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.

35. Amounts per Share
Amounts per share at 31st March, 2012 and 2011 and for theyears then ended are summarized as follows:
Yen
2012
Net assets

¥–

¥(2)

Over
one year

¥–

Fair
value

¥(1,129)

U.S. dollars
2011

2012

¥97.85 ¥99.07 $1.19

Net income:
Basic

1.48

4.39

0.01

Diluted

1.48

4.39

0.01

Cash dividends
Common stock¥3 ¥3 $0.03

First-class preferred stock¥196 divided ¥ 196 divided $2.38 divided
by 18.5by 18.5by 18.5

Second-class preferred stock ¥204 divided ¥ 204 divided
by 18.5by 18.5$2.48 divided
by 18.5

Net assets per share as of 31st March, 2012 and 2011 arecomputed based on the following information:
Thousands of
U.S. dollars

Millions of yen
2012
Total net assets

Millions of yen

Securities
denominated inforeign currencies ¥23,683

Total

Fair
value

Contract amount/notional principal
Hedge accounting Transaction
methodtype

Major hedged
item

*2

Contract amount/notional principal
Hedge accounting
methodHedge accounting Transaction
method
type

2011

2012

¥163,311 ¥176,684 $1,986,993

Payment for first-class preferred stock(20,000)(30,000)(243,338)

Dividends for first-classpreferred stock(784)(1,176)(9,538)

Payment for second-classpreferred stock(25,000)(25,000)(304,173)

Dividends for second-classpreferred stock(1,275)(1,275)(15,512)Stock subscription rights

(62)

(6)

(754)

(1,177)(1,197)(14,320)(48,298)(58,655)(587,638)

Minority interests
Amounts to be deducted from total net assets

Net assets attributable to common stock¥115,013 ¥118,028 $1,399,355
as of 31st March, 2012 and 2011
Number of shares of common stock as of 31st
March, 2012 and 2011 used to compute net
asset per share (Unit: thousand shares)

1,175,363

1,191,285

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2012

64

Net income per share for the years ended 31st March, 2012
and 2011 are computed based on the following information:
Thousands of
U.S. dollars

Millions of yen
2012
Net income for the year

2011

2012

¥3,810 ¥7,690 $46,356

Dividends for first-class preferred stock
based on the resolution at the regular
general shareholders’ meeting(784)(1,176)(9,538)Dividends for second-classpreferred stock based on the
resolution at the regular generalshareholders’ meeting(1,275)(1,275)(15,512)(2,059)(2,451)(25,051)

Amounts not attributed tocommon stock shareholders
Net income attributable tocommon stock
Average outstanding numberof shares of common stock(Unit: thousand shares)¥1,751 ¥5,239 $21,304

1,178,121

1,192,267

Diluted net income per shareafter adjusting potential shares
Adjustment to net income¥– ¥– $–

Number of increased common
stock (Unit: thousand shares)

521

19

Of which, stock subscription rights

521

19

Cash dividends per share represent the cash dividends
proposed by the Board of Directors as applicable to the fiscal
year.

36. Subsequent Events
The Company at its Board of Directors’ meeting held on 31st
May, 2012, resolved to submit the matter of consolidating
shares to the 3rd annual shareholders’ meeting and the classshareholders’ meeting of common shareholders to be held on
28th June, 2012.
(1) Purpose of the consolidation of shares
When the Company was established through a joint sharetransfer by The Bank of Ikeda and The Senshu Bank on
1st October, 2009, 18.5 shares of the Company’s common
stock per 1 share of common stock of Ikeda, and 1 shareof the Company’s common stock per 1 share of common
stock of Senshu were allotted to the shareholders ofcommon stock of Ikeda and Senshu. As a result, the total
number of outstanding shares of the Company’s common
stock (1,192,293,163 shares) as of 31st March, 2012 has
become relatively larger than those of neighboring banks
and other banks of similar size.
Moreover, while Rule 445 of the Securities Listing
Regulations of the Tokyo Stock Exchange stipulates thatan investment unit of between ¥50,000 and ¥500,000 is
desirable, currently the Company’s investment unit falls
below this level.
In light of the above, the Company has decided to
execute the consolidation of shares of its common stock
for the purpose of adjusting the investment unit to properlevels.
Additionally, as the consolidation of shares will result inthe total number of outstanding shares of common stock
to decrease, consolidation of shares will also be executedfor the first-class preferred stock and second-classpreferred stock at the same consolidation ratio ascommon stock, in order to adjust the percentage ofpotential voting rights relating to preferred stock to thetotal number of voting rights.
(2) Details of the consolidation of shares
1) Type of stock subject to consolidation:
		 Common stock		 First-class preferred stock
		 Second-class preferred stock2)	Consolidation ratio:	1 share for 5 shares for each typeof stock3) Number of shares to be decreased:
Total number of outstanding Common stock
1,192,293,163 sharesshares before consolidation First-class preferred stock
74,000,000 shares(As of 31st March, 2012) Second-class preferred stock 115,625,000 shares

65

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2012

Number of shares to be
Common stock
decreased by consolidation First-class preferred stock
Second-class preferred stock

953,834,531 shares
59,200,000 shares
92,500,000 shares

Total number of outstanding Common stock
First-class preferred stock
shares after consolidation
Second-class preferred stock

238,458,632 shares
14,800,000 shares
23,125,000 shares

SENSHU IKEDA HOLDINGS,INC.

(3) Treatment of fractional lots of less than 1 share, if any
If, as a result of the consolidation of shares, fractional lotsof less than 1 share should occur, such fractional lots
shall be disposed in its entirety and the proceeds of thedisposal shall be distributed to the shareholders with thefractional lots on a pro rata basis in accordance with the
Law No. 235.
(4) Effective date of the consolidation of shares
1st August, 2012 (tentative)(5)	Effects of the consolidation of shares on per share
information
Per share information for the year ended 31st March,2012 assuming that this consolidation of shares had takenplace at the beginning of the year ended 31st March,2011 would be as follows.
Yen
2012
Net assets per share

U.S. dollars
2011

2012

¥489.26 ¥495.38 $5.95

Net income per share:
Basic

7.43

21.97

0.09

Diluted

7.43

21.97

0.09

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201266

Report of Independent Auditors
Senshu Ikeda Holdings, Inc.

67

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2012

SENSHU IKEDA HOLDINGS,INC.

Non-consolidated Balance Sheets (Unaudited)
The Senshu Ikeda Bank, Ltd.
As of 31st March, 2012 and 2011

Millions of yen
2012
2011

Thousands of U.S.
dollars (Note 1)
2012

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
Deferred tax assets
Customers’ liabilities for acceptances and guarantees
Reserve for possible loan losses
Total assets¥133,027
698
1,473
69
19,0001,203,706
3,527,485
4,328
30,42137,977
9,592
30,653
21,482(37,681)¥4,982,234¥143,728
–
1,270
36
19,0001,081,565
3,512,391
6,210
34,32137,452
5,629
36,01723,487(32,088)¥4,869,023$1,618,530
8,492
17,921
839
231,171
14,645,406
42,918,664
52,658370,130
462,063
116,705
372,952
261,369(458,462)$60,618,493

4,407,710
17,200237,30760,130431
53,00023,739
1,585
4,416
313
258
53
–
473
21,482
4,828,103

4,357,005
24,300172,725
36,352480
48,00028,948
1,593
6,440
372
309
41
717
465
23,4874,701,241

53,628,300
209,2712,887,297
731,597
5,243
644,847
288,830
19,28453,729
3,808
3,139
644
–
5,754
261,369
58,743,192

50,71093,932
21,381
166,025(11,892)(2)(11,894)
154,130¥4,982,234

50,710104,361
25,625
180,698(12,895)(19)(12,915)
167,782¥4,869,023

616,985
1,142,864
260,1412,020,014(144,689)(24)(144,713)
1,875,288$60,618,493

Liabilities and net assets
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 loss on integration
Reserve for contingent losses
Acceptances and guarantees
Total liabilities
Net assets
Shareholders’ equity:
Common stock
Capital surplus
Retained earnings
Total shareholders’ equity
Net unrealized loss on available-for-sale securities
Net unrealized loss on deferred hedges
Total valuation and translation adjustments
Total net assets
Total liabilities and net assets

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201268

Non-consolidated Statements of Operations (Unaudited)
The Senshu Ikeda Bank, Ltd.
For the years ended 31st March, 2012 and 2011

Millions of yen
2012
2011

Thousands of U.S.
dollars (Note 1)
2012

IncomeInterest income:Interest on loans and bills discounted
Interest and dividends on securities
Other interest income
Fees and commissions
Other operating income
Recoveries of written-off claims
Other income
Total income¥58,391
12,280144
12,712
18,132
631
1,843
104,137¥56,861
16,08490
12,866
12,465
1,169
2,635
102,173$710,439
149,409
1,752
154,666
220,610
7,677
22,423
1,267,027

7,939
732
2,041
9,801
7,136
53,048176
166
15,65896,7007,436

10,056
582
1,624
9,351
2,364
50,536143
189
20,75595,605
6,568

96,593
8,906
24,832
119,248
86,823645,4312,141
2,019
190,509
1,176,542
90,473

86
5,299
5,385
¥2,05082
141224¥6,343

1,046
64,47265,518$24,942

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 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

69

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2012

SENSHU IKEDA HOLDINGS,INC.

Corporate Data (As of July 1, 2012)
Senshu Ikeda Holdings,Inc
18-14, Chayamachi, Kita-ku,
Osaka 530-0013, Japan
Phone: 81-(0)6-4802-0181
URL: http://www.senshuikeda-hd.co.jp
The Senshu Ikeda Bank, Ltd.
Head Office:18-14, Chayamachi, Kita-ku,
Osaka 530-0013, Japan
Phone: 81-(0)6-6375-1005
URL: http://www.sihd-bk.jp

Asia and China Business
Financial Market Division: Suzhou Representative Office:Promotion Division
18-14, Chayamachi, Kita-ku, 110 North Dongwu Road,(International Division)
Wuzhong District, Suzhou,
Osaka 530-0013, Japan
18-14, Chayamachi, Kita-ku, Phone : 81-(0)6-6375-3879
Jiangsu, China
Facsimile : 81-(0)6-6375-3998 Phone : 86-(0)512-6585-1791
Osaka 530-0013, Japan
Facsimile : 86-(0)512-6585-2312
Phone : 81-(0)6-6375-3484
Facsimile : 81-(0)6-6375-3492
SWIFT Address : BIKEJPJS

Major Shareholders (As of March 31, 2012)
1. Common stock
Name

Number of Shares Owned (Thousands)

Proportion of Total Shares (%)

Japan Trustee Services Bank, Ltd. (Trust Account)

167,220

14.03

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

143,444

12.04

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

59,5975.00*1

Mitsubishi UFJ Financial Group, Inc.

29,7992.50

Mitsubishi UFJ Trust and Banking Corporation

28,607

2.40

ITAMI SANGYO CO., LTD.

18,463

1.54

Mizuho Corporate Bank, Ltd.

17,282

1.45

The Senshu Ikeda Bank Employees’ Shareholders Association

16,914

1.41

OBAYASHI CORPORATIONThe Nomura Trust and Banking Co., Ltd.
Trust Account of The Senshu Ikeda Bank Employees’ Shareholders Association

16,594

1.39

15,989

1.34*1: These shares do not disclose the names of beneficiaries.

2. First-class preferred stockName

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

Number of Shares Owned (Thousands)

74,000

Proportion of Total Shares (%)

100.003. Second-class preferred stock
Name

Number of Shares Owned (Thousands)

Proportion of Total Shares (%)

OC FINANCE CORPORATION

32,37528.00

Daikin Industries, Ltd.

23,12520.00

Fukoku Mutual Life Insurance Company

9,250

8.00

ITAMI SANGYO CO., LTD.

9,250

8.00

NICHIA STEEL WORKS, LTD.

9,250

8.00

ROHTO Pharmaceutical Co., Ltd.

9,250

8.00

DAINIHON JOCHUGIKU CO., LTD.

4,625

4.00

Hankyu Hanshin Holdings, Inc.

4,625

4.00

T.T CO., LTD.

4,625

4.00

Non-Destructive Inspection Company Limited.

4,625

4.00

Shionogi & Co., Ltd.

2,312

2.00

Nippon Paper Core Industrial Co., Ltd.

2,312

2.00

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201270