50p10/66p2

50p10/66p2

THE INDUSTRIAL BANK OF JAPAN, LIMITED

Financial Highlights(in millions of yen)

’98

1998

1997

1998

For the Years Ended March 31
Total Income
Total Expenses
Net Income (Loss)¥ 3,321,902
3,635,020(202,660)¥ 3,403,347
3,358,870
12,740$ 25,146,876
27,517,191(1,534,145)

At March 31
Total Assets
Loans and Bills Discounted
Investment Securities
Debentures
Deposits
Total Shareholders’ Equity

49,229,785
24,001,429
8,847,249
20,840,941
10,053,551
1,320,019

46,966,968
25,518,440
6,808,045
22,137,519
10,871,309
1,543,979

372,670,597
181,691,365
66,973,878
157,766,399
76,105,612
9,992,579

1998

1997

1998

At March 31
SharesAuthorized Shares
Outstanding Shares
Number of Shareholders

The Industrial Bank of Japan, Limited
Annual Report 1998

(in thousands of
U.S. dollars)**

4,000,000,000
2,539,579,392
27,3444,000,000,000
2,539,579,392
18,148Year ended March 31, 1998

C4

(in yen)¥(79.80)8.50(in yen)

¥

5.24
8.50

(in U.S. dollars)**$(0.604)0.064* All figures are on a consolidated basis, unless stated otherwise.
** U.S. dollar amounts are converted, for convenience only, at ¥132.10 per dollar (interbank rate in Tokyo at
March 31, 1998).

쏅

Major Initiatives
in Fiscal 1997

CONTENTSManagement’s Introduction

1

Message from the President

2Management’s Perspective

6

Review of Operations

13

Highlights of Operations

13

IBJ’s Presence Worldwide

14

Global Activities and Services

16

IBJ Group Companies

20

Corporate Banking

22

Investment Banking Services

24

Capital Market Activities

32

Asset Management

35

Trust Banking

37

Treasury Operations

38

Risk Management

43

Research and Information

46

Industrial Finance Seminar

49

IBJ and the Community

50

Financial Section

51

Corporate Data

97

ANNUAL REPORT 1998

Printed in JapanFor the Years Ended March 31
Per Share Amounts
Net Income (Loss)
Cash Dividends

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Page

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C2-1

50p10/66p2

50p10/66p2

쏅 New Credit Risk Management System

Financial Highlights

쏅 Innovative Project Finance Arrangement• To Be Used by 58 Regional and Second-Tier Regional Banks(in millions of yen)(in thousands of
U.S. dollars)**

1998

1997

1998

For the Years Ended March 31
Total Income
Total Expenses
Net Income (Loss)¥ 3,321,902
3,635,020(202,660)¥ 3,403,347
3,358,870
12,740$ 25,146,876
27,517,191(1,534,145)

At March 31
Total Assets
Loans and Bills Discounted
Investment Securities
Debentures
Deposits
Total Shareholders’ Equity

49,229,785
24,001,429
8,847,249
20,840,941
10,053,551
1,320,019

46,966,968
25,518,440
6,808,045
22,137,519
10,871,309
1,543,979

372,670,597
181,691,365
66,973,878
157,766,399
76,105,612
9,992,579

1998

1997

1998

At March 31
SharesAuthorized Shares
Outstanding Shares
Number of Shareholders
For the Years Ended March 31
Per Share Amounts
Net Income (Loss)
Cash Dividends

4,000,000,000
2,539,579,392
27,3444,000,000,000
2,539,579,392
18,148(in yen)¥(79.80)8.50(in yen)

¥

5.24
8.50

(in U.S. dollars)**$(0.604)0.064* All figures are on a consolidated basis, unless stated otherwise.
** U.S. dollar amounts are converted, for convenience only, at ¥132.10 per dollar (interbank rate in Tokyo at
March 31, 1998).

C2-2

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Page

쏅

Major Initiatives
in Fiscal 1997

CONTENTSManagement’s Introduction

1

Message from the President

2Management’s Perspective

6

Review of Operations

13

Highlights of Operations

13

IBJ’s Presence Worldwide

14

Global Activities and Services

16

IBJ Group Companies

20

Corporate Banking

22

Investment Banking Services

24

Capital Market Activities

32

Asset Management

35

Trust Banking

37

Treasury Operations

38

Risk Management

43

Research and Information

46

Industrial Finance Seminar

49

IBJ and the Community

50

Financial Section

51

Corporate Data

97

C2-3

• AES Barry Deal Wins “Power Deal of the Year 97”
Award

In April 1998, IBJ
established IBJ Financial
Technology Co., Ltd. (IBJ
FT), with the goals ofdeveloping and applying
leading-edge financial andinformation technology.
With IBJ FT as the focal
point, other members of the
IBJ Group and NTT Data
Corporation have jointly
developed a credit risk
management system.
In total, 58 regional andsecond-tier regional banks
have already decided to
introduce the system into
their operations.

IBJ showed its potential to be one of
the most innovative arranging banks in
London when it arranged a £112.5 million
debt facility that manages the risk of
exposure to power price fluctuations
for AES Barry Limited, an independent
power producer (IPP) in the United
Kingdom.
As a result of IBJ’s success in structuring and syndicating the financing,
the AES Barry deal received the “Power
Deal of the Year 97” award from Project
Finance magazine. Moreover, AES Barry
has become the model for all subsequent
merchant IPP transactions in the
United Kingdom.

Major Initiatives in Fiscal 1997
쏅 Seizing New Business Opportunities• US$1.3 Billion CLO Deal Successfully
Completed in the United States

CLO SCHEME DIAGRAMS
Outside Japan

IBJ is actively developing financial schemes for liquefying andClients
securitizing assets in Japan and overseas. For example, IBJ
Loansbecame one of the first Japanese banks to successfully
Loans
Offices in North America
arrange and place securities backed by collateralized
loan obligations (CLO) overseas. For this CLO
New York Branchdeal, IBJ completed all the arrangements, from
Sales proceeds
Participation
product planning to sales.
The securities were issued by a specialIBJ Asset Funding (SPC)
purpose company (SPC) establishedespecially for this project, and the loans
Sales proceeds
Participation
securitized were a portion of the loan
Prime Funding Ltd. (SPC)
portfolio of IBJ’s New York Branch
outstanding to blue-chipIssuance of CLO
Sales proceeds
Underwriter: IBJ International plc (London)
companies.
To carry out the issue
Investors in the U.S. and Europe
successfully, IBJ organizeda global team consisting ofprofessional staff in its New York, London, and Tokyo offices.

Japan
Clients
Loans

Transferof claims

IBJ

IBJ Trust & Banking
Co., Ltd.

Receipt oftrust beneficiaryrightsLILY CapitalCasualty Insurance Company
Partial credit supplement

LILY Funding

Underwriter:
IBJ International(London)Investors

C3

Management’s Introductionn
We are pleased to present IBJ’s annual report for the fiscal year ended March 31, 1998, and we hope
you will find it useful in deepening your understanding of the Bank’s activities. The Annual Report
1998 includes information on the Bank’s corporate strategies, services and activities, financial results,
and other items of interest to shareholders and business associates.
The implementation of Japan’s financial Big Bang has begun, and rapid progress is being madetoward deregulation in accord with the movement in Japan toward global standards. As a consequence, Japan’s financial system is undergoing major reforms and changes. Amid this environment, it
will be imperative for financial institutions to offer substantially more sophisticated and diverse financial products and services, and, as competition among financial institutions intensifies, the times will
demand that we have a clear visionof the future and capabilities toadapt quickly and flexibly. We
believe that the Big Bang will bring awhole new world of business opportunities. Accordingly, by moving
swiftly and steadily to implement a
Yoh Kurosawa
Chairmanof the Board of Directors

sharply focused strategy that takes
full advantage of our strengths as a

Masao Nishimura
President andChief Executive Officer

universal wholesale bank with a
global presence, we are aiming to strengthen our capabilities for delivering financial services, increase
our profitability, as well as broaden and deepen our operating base.
In recent years, in particular, we have expanded disclosure of our activities with the aim of enhancing the transparency of our operations and earning the strong trust of our shareholders and businessassociates. We intend to maintain this policy, and as the new era in Japan’s financial markets begins
along with the implementation of the Big Bang, we look forward to drawing on our full resources tooffer our customers the highest-quality services and create new value for our shareholders.

N

1

2

Message from the PresidentDuring fiscal 1997, ended March 31, 1998, The Industrial Bank of Japan,
Limited (“IBJ”), accelerated its efforts to deal with nonperforming loans,adopted aggressive measures to restructure its activities and lower operating costs, and undertook a number of new initiatives to enable the Bank tocompete successfully in the deregulated environment that will follow the
implementation of Japan’s financial Big Bang.

Economic and Financial Environment in Fiscal 1997
One of the most important developments in the operating environment
during fiscal 1997 was the increase in disparity in the economic performance between the United States and Europe on one hand and Japan andthe other countries of Asia on the other. The U.S. economy entered its seventh year of economic expansion with relatively little inflation, and its
unemployment rate fell below 5%. In Europe, the economies of Germany,
France, and other countries showed upward trends similar to the upturn
already in progress in the United Kingdom, suggesting that the conditions
for monetary union in 1999 would most likely be met.
In Japan, however, economic conditions took a turn for the worse as
fiscal policy was tightened under relatively weak demand conditions.
The increase in the national consumption tax rate from 3% to 5% on April
1, 1997, and the elimination of a previously enacted personal income tax
reduction early in fiscal 1997 led to stagnation in private consumption anda sharp decline in housing investment. Further cutbacks in public-sector
investment also dampened domestic economic prospects, and the unemployment rate rose to record postwar levels, standing at 3.9% at fiscal
year-end. The insolvency of several major domestic financial institutions
beginning in November 1997 shook confidence in the financial system,
leading the government to adopt measures in the last quarter of the fiscal
year to lower taxes and infuse public funds into the financial sector.
In Asia, currency and financial crises were triggered by the floating of
the Thai baht, which led to sharp devaluations in other Asian currencies
and a major downturn in regional economic conditions.

Progress in Dealing with Nonperforming Loans
To dispose of nonperforming loans at the earliest possible date, in linewith the introduction of requirements for Prompt Corrective Action based

Message from the President

Masao Nishimura
President and Chief
Executive Officer

on self-assessments of asset quality, the Bank recorded loan losses of¥633.8 billion, which include write-offs and a transfer to Reserves for Possible Loan Losses. As a consequence, the balance of nonperforming loans
declined to ¥1,037.4 billion. In addition, Reserves for Possible Loan Losses
rose substantially, to ¥899.8 billion at fiscal year-end, representing 86.7%
of nonperforming loans.
IBJ’s Core Business Profit rose by ¥26.0 billion, to ¥230.6 billion,
indicating the underlying strengths of the Bank’s banking operations,but because of the substantial loan losses recognized during the year, theBank was obliged to report a net loss of ¥341.9 billion. Detailed analysis of
the Bank’s financial results may be found in the Management’s Discussion
and Analysis section of this annual report.

Implementation of Third Medium-Term Management Plan
IBJ is implementing its Third Medium-Term Management Plan, whichbegan in April 1996 and will end in March 1999. The fundamental goal ofthis plan is to become a “universal wholesale bank with a global presence.”
To attain this objective, the Bank is strengthening relationships with its
corporate and institutional investor clients, further upgrading its risk management systems to be fully prepared to respond to market trends, andstriving to make full use of the IBJ Group’s experience in underwriting
and trading, asset management, and trust services.

3

4

Message from the President

Specific steps taken toward these objectives in the fiscal year underreview included• the establishment of IBJ Financial Technology Co., Ltd., which will
become the core of financial technology development and implementationin the IBJ Group,• the formation of IBJ Asset Management International Ltd., in London,
which will strengthen the asset management capabilities of the IBJ Groupand respond to the growing need for global investment management
services,• conclusion of an agreement with Nomura Securities Co., Ltd., toestablish two joint ventures, one which will offer new financial products
and methods incorporating derivatives and another which will provide
asset management services, including the management of investment trusts
and pensions, and• continued initiatives by IBJ and other Group members to stay inthe forefront of innovation in financial services and respond effectively
to client needs. These initiatives included the first collateralized loan
obligation (CLO) securitization arranged by a Japanese bank in the UnitedStates, the establishment of global futures brokerage capabilities by Aubrey
G. Lanston & Co. Inc., and the successful completion of financing arrangements for a U.K. independent power producer (IPP) incorporating a newrisk-minimization scheme developed by the Bank’s London Branch.

Restructuring Measures
As initiatives continue under IBJ’s management plan, the implementationof the Big Bang—which is bringing new opportunities along with more
intense competition among domestic and foreign financial institutions—therestructuring of Japan’s financial system, and other developments havecreated the need for more aggressive restructuring measures within IBJ
as well.
To enhance its financial position, IBJ also took steps to increase its BIS
capital adequacy ratio. The Bank completed a US$1 billion issue of preferred securities through an overseas subsidiary that increased Tier I capital and issued approximately ¥210 billion in subordinated debt that was
included in Tier II capital. Steps were also taken to reduce the Bank’s loan
assets through securitization. As part of the Japanese government’s financial stabilization measures aimed at restoring confidence in the financial
system in Japan, the Bank issued ¥100 billion in subordinated debt to thegovernment. As a result of these additions to capital, the Bank’s Tier I ratioMessage from the President

rose to 5.21% and Tier II ratio climbed to 5.05%, bringing the capital adequacy ratio to 10.26%.
Measures adopted to lower costs have included consolidating certain
domestic branches, tightening the operational focus of overseas offices,
streamlining the overseas network, conducting a thorough review followed
by a reduction of expenses, and making cuts in management salaries andbonuses. In total, the present target of annual cost reduction would range
from ¥12 billion to ¥15 billion.
As part of restructuring efforts, IBJ staff strictly observe rules that requirebusiness entertainment expenses to be within acceptable limits and thatappropriate relationships with government and central bank officials aremaintained as regards the use of information.

Prospects
Careful attention must be given to conditions in Japan and other Asian
countries. The Bank’s loans to Asian borrowers have been made primarily
to subsidiaries of Japanese companies operating in the region, governmental organizations, and leading local companies, and there is no significant
exposure to the finance or real estate sectors. Therefore, the Bank’s Asian
portfolio is relatively sound. Nevertheless, the Bank will continue to maintain a cautionary stance in the management of its loan portfolio.
In fiscal 1998, we will proceed with the implementation of policies ofcontinuing to review and improve our business procedures and practices
by eliminating nonperforming loans and reducing costs through restructuring, while aggressively strengthening capabilities in our core businesses,
pursuing alliances to ensure our ability to offer the best products and services, and making preparations for the establishment of a bank-holding
company.
In conclusion, I would like to thank our shareholders and business associates for their continued understanding and support. We look forward tobuilding a stronger IBJ that will expand and develop in the post-Big Bang
operating environment.

July 1998

Masao Nishimura
President and Chief Executive Officer

56Management’s Perspective

The implementation of Japan’s

The revised Foreign Exchange Law went into effect in April 1998 and wasversion of the Big Bang has

the first step in the implementation of Japan’s financial Big Bang, which isdrawn considerable attention.

scheduled to bring significant reforms in the financial system by the year

What effect will the Big Bang

2001. Some changes have already been made, including the granting of

have on IBJ’s activities?

permission to banks to establish subsidiaries that can engage in securities
and trust business as well as the lifting of the ban on holding companies.
Similarly, in the latter half of 1999 limitations on the lines of banking business for securities and trust subsidiaries are also scheduled to be abolished.
Further steps in this direction will include the scheduled removal of the banon the sale of investment trusts in bank branches in December 1998 and thepassage of legislation to permit equity derivatives business at bank branches. Also, to prepare for the aging of Japan’s population in the years ahead,
the government is reportedly considering the introduction of a defined
contribution pension plan.
First, IBJ plans to draw on its strengths—which include a broad clientbase among corporations without bias toward any particular industrial
group, the network it has developed over the years among institutional
investors through the issuance of the Bank’s debentures, and its experiencein the securities business both in Japan and overseas—and expand its operations in a number of areas in addition to its core wholesale banking business. These services include M&A, project finance, asset securitization,
underwriting and other investment banking, investment advisory, investment trusts, trust business, and other asset management and marketrelated activities, especially structuring and trading in derivatives.
Second, along with such developments as the introduction of bank-holding
companies, the expansion in the scope of consolidated subsidiaries, and theintroduction of requirements to manage bank groups from a consolidated
perspective, IBJ plans to reorganize its activities, including those of the restof the IBJ Group, from a global viewpoint to establish a more efficient andcompetitive organization. For example, IBJ is considering whether to position the asset management subsidiaries it established following the implementation of the Financial System Reform Law as subsidiaries of the Bankor as corporations under its holding company. In each financial services
area, the Bank will work to train professional staff capable of competingwith leading financial institutions based in Europe and the United States,
set management policies appropriate to each field, and maximize synergies
among Group companies.

Management’s Perspective

Could you please explain the

We announced an alliance with Nomura in May 1998. The objective will

objectives and the content of the

be to respond effectively to reforms that are being implemented as part ofalliance the Bank announced

Japan’s Big Bang. IBJ and Nomura are planning to meet the sophisticatedwith Nomura?

and diverse needs of their respective clients by providing the highest
quality financial services and products.
The alliance will result in the establishment of companies in two areas.
The first will be a 50-50 joint venture to offer global financial products, including services and products incorporating derivatives. The second will
provide comprehensive asset management and supervisory services forinvestment trusts, pensions, and other investment products. Specifically,
a 50-50 joint venture will first be established to make preparations forproviding supervisory services for investment products, including funds.
Next, the IBJ Group will take a 50% equity position in a U.S. subsidiary of
Nomura that is engaged in planning and developing top-quality invest-

Masao Nishimura
President

ment funds and set up a subsidiary of this company in Japan to provide
advisory services here.
Consideration is also being given to the possibility of business tie-ups
in other fields that will enhance our competitiveness.

What measures did the Bank

In principle, IBJ’s policy is to increase its capital adequacy ratio throughadopt during the year to maintainits own initiatives. The Bank issued ¥210.0 billion in subordinated bonds

its BIS capital adequacy ratio?

and US$1.0 billion in preferred shares through an overseas subsidiary.
Furthermore, in March 1998, from the point of view of financial systemstability, the Bank issued ¥100.0 billion in subordinated bonds that were
underwritten with public funds. In addition to these measures to increase
capital, the Bank is also working to increase the efficiency of its asset
portfolio through securitization.
The Bank will respond quickly and flexibly, taking all necessary
measures to meet capital adequacy requirements. Moreover, IBJ will work
to strengthen its operating position with the aim of maintaining a soundfinancial position and enhance the evaluation of the Bank among its shareholders, customers, and investors.

7

8

Management’s Perspective

With the implementation of mea-

As a result of write-offs, provisions, and other measures, the Bank hassures for dealing with nonper-

realized loan losses of ¥1,751.0 billion over the past three fiscal periods.

forming loans, IBJ showed a net

In particular, beginning in fiscal 1997 the Bank prepared new standards

loss for the fiscal year ended

for dealing with nonperforming loans based on self-assessments of loan

March 31, 1998. What progress

quality and criteria for making provisions against nonperforming loans.

has the Bank made in this area

To increase the soundness of IBJ’s asset portfolio, the Bank recognized

and what are the prospects?

substantial loan losses of ¥633.8 billion, based on these new standards.
As a consequence of these measures, the Bank’s nonperforming loans—쎲 Nonperforming Loans
and Reserve Coverage Ratios

defined as Loans to Legally Bankrupt Companies, Overdue Loans, and(¥ billion)(%)

Loans with Reduced or Suspended Interest—were reduced by ¥207.7 billion,

1,500

120

or approximately 20%, from ¥984.9 billion, as of March 31, 1996, to ¥777.2
billion as of March 31, 1998. If financial assistance loans outstanding to bor-

1,200

rowers that the Bank is assisting in restructuring their business operations

100

are also included, nonperforming loans amounted to ¥1,235.1 billion as of
900

March 31, 1996, and a substantially lower amount of ¥1,037.4 billion as of

80

March 31, 1998.
600

The ratio of reserves for possible loan losses to nonperforming loans,60

which measures the progress toward the resolution of the problem loan
300

issue, was 38.2% as of March 31, 1996, but, because of the substantial

40

increase in reserves mentioned above, the reserve coverage ratio rose to0

86.7% as of March 31, 1998, thus covering approximately 90% of the Bank’s

20
3/96 9/96 3/97 9/97 3/98

nonperforming loan exposure.

Reserve coverage ratio A(The ratio of total reserves for possible
loan losses to nonperforming loans (a))
Reserve coverage ratio B(The ratio of total reserves for possible
loan losses to nonperforming loans (b))
Nonperforming loans (a)(Including Loans to Legally Bankrupt
Companies, Overdue Loans, and Loans
with Reduced or Suspended Interest)
Nonperforming loans (b)(Including Loans to Legally Bankrupt
Companies, Overdue Loans, Loans
with Reduced or Suspended Interest,
and Financial Assistance Loans)

Furthermore, beginning with the financial statements for fiscal 1997,
the Bank disclosed loans three months or more overdue and loans withmodified terms. These, combined with the previously disclosed nonperforming assets, are now referred to as “Loans under Special Risk Review.”(See page 57.)

쎲 Nonperforming Loans(¥ billion)
March 31,1996

쎲 Measures to Deal with
Nonperforming Loans(¥ billion)
Total overthe past
three
Fiscal Fiscal Fiscal
fiscal1995 1996 1997
periods
Write-offs
605
Reserves
for Possible
Loan Losses 226
Other
24

10

61

676

203
47

506
66

935
138

Total

261

633

1,751

856

Loans to Legally Bankrupt
Companies
Overdue Loans
Loans with Reducedor Suspended Interest
Total (a)Financial Assistance Loans
Total Nonperforming
Loans (b)Total Loans (c)Ratio of Total (c)to Total Nonperforming
Loans (b)Total Reserves for Possible
Loan Losses (d)Coverage Ratio A: (d)/(a)Coverage Ratio B: (d)/(b)

¥

121
490

September 30,
1996
¥

426
510

March 31,
1997
¥

329
402

September 30,
1997
¥

285
373

March 31,
1998
¥

299
434

372

81

92

90

42

985
250

1,018
260

824
260

749
260

777
260

1,235
24,234

1,278
24,226

1,084
24,834

1,009
25,324

1,037
25,473

5.0%

5.2%

4.3%

3.9%

4.0%

472
47.9%
38.2%

535
52.5%
41.8%

557
67.6%
51.4%

534
71.3%
52.9%

899
115.7%
86.7%

Management’s Perspective

Japanese banks have substantial

The outstanding amount of loans and guarantees provided to companies

loans outstanding to borrowers inand organizations in Asia outside Japan by the IBJ Group as of March 31,

Asia outside Japan, and some of

1998, totaled ¥1,184.1 billion on a consolidated basis, of which IBJ alone

this exposure may become non-accounted for ¥962.7 billion. In fact, ¥481.4 billion, or about 40%, of theperforming. What are IBJ’s loans

aggregate of these loans and guarantees on a consolidated basis were toto this region, and what will be

subsidiaries of Japanese companies. (For a breakdown of the total into theyour policy toward businessamounts for each country in this area, please refer to the accompanying table.)
IBJ has lent selectively to Asian nations, and the borrowers there areoperations there?

mainly subsidiaries of Japanese companies, governmental organizations,or first-rate companies in those countries. For instance, there have been
only a few loans to finance companies in that region, and, in particular,
there have been no loans to finance companies in Thailand, where numerous companies have recently failed. Furthermore, IBJ’s policy is, in principle, not to become involved in any real estate development projects in thearea. All in all, therefore, the current economic and political turmoil in Asia
has done little to undermine the soundness of IBJ’s loan portfolio to theregion, and the amount of IBJ’s nonperforming loans in that area, as ofMarch 31, 1997, was insignificant.
With the situation as it stood as of the term-end, the Bank had madeprovisions for possible losses on loans to customers in Asia of around¥11.5 billion as of March 31, 1998—a figure that represents the sum of theSpecific Reserve for Possible Loan Losses and the General Reserve for
Possible Loan Losses—with a view toward coping with possible future
deterioration of the financial positions of customers.
Indeed, IBJ has the real interests of Asia in mind and is always willing toassist in the global activities of corporations in this regard, either directly,
indirectly, or in cooperation with international organizations. The Bank
intends to establish a system that will enable it to respond quickly to new
financial needs to support Asian currencies, revitalize the economic situation, and restore economic growth in the region.
쎲 Balance of Exposure in Asia(¥ billion)
Indonesia
Japanese Borrowers(IBJ’s non-consolidatedloans only)
Non-Japanese
Borrowers(IBJ’s non-consolidatedloans only)
Total(IBJ’s non-consolidatedloans only)

Thailand

Malaysia

Singapore

Philippines

Korea

China

Hong Kong

Subtotal

TaiwanIndia Others

64

94

18

112

0

0

129

65

481

0

0

0

Total
481

(54)

(85)

(6)

(42)

(0)

(0)

(99)

(54)

(339)

(0)

(0)

(0)

(339)

83

135

36

17

5

96

131

140

641

31

29

2

703

(44)

(122)

(33)

(15)

(5)

(95)

(119)

(136)

(567)

(27)

(28)

(2)

(623)

147

229

53

130

5

96

259

205

1,123

31

29

2

1,184

(97)

(207)

(39)

(57)

(5)

(95)

(218)

(189)

(906)

(27)

(28)

(2)

(963)

Notes: 1. Figures are on a consolidated basis.
2. Figures include loans, discounts, acceptances, and guarantees.
3. Japanese borrowers are companies in Asia that are 50% or more owned by Japanese companies (excluding companies for which the Bank has obtained
guarantees from the parent company).
4. Conversions have been made at the rate of ¥132.10 to the U.S. dollar, the rate prevailing at the end of March 1998.

9

10

Management’s Perspective

Risk management is a key factor

As deregulation has proceeded and the activities of financial institutions

determining bank financial per-have become more global in scope, the environment for banking activities

formance. What systems has IBJ

has changed dramatically, and the types of risks that must be managed

developed for the management of

have expanded. In particular, as implementation of Japan’s Big Bang—market and credit risk?

which is scheduled for completion in 2001—has begun, various regulations
are being relaxed, and it has become increasingly important for banks totake the responsibility for managing the risks inherent in their operations.
Based on this awareness, IBJ has strengthened its systems for managing
market and credit risk as well as operational, systemic, and legal risks.
While working to control these risks within appropriate limits, as the operating environment continues to evolve the Bank is constantly reviewing its
systems to assure their effectiveness.
To manage market risk, the Bank has separated the operations of its
front, middle, and back offices to provide for mutual checking functions
and established the Market Risk Management Division as an independent
unit to monitor and report on risk. As a further measure to ensure the quality of risk management activities, in June 1998 the Bank formed the Market
Risk Management Department and thus strengthened the supervisory
functions of its middle-office operations.
Similarly, in 1997 the Bank reorganized its credit-related units to provide
for unified and comprehensive credit risk management. Activities are also
under way to develop systems to manage the Bank’s loan assets from a
portfolio perspective, based on the quantitative measurement of riskvolumes.
In addition, for market risk and credit risk, which potentially have thegreatest impact on bank performance, activities are in progress to develop
a unified risk management system based on uniform quantitative measurement of both market and credit risk.

Management’s Perspective

Could you please describe the ser-The IBJ Group has developed a strong network among domestic financial

vices that IBJ provides for finan-

institutions and institutional investors and responds to their asset manage-

cial institutions, institutional
investors, and individuals?

ment needs by providing a broad range of services.
For example, IBJ, IBJ Securities Co., Ltd., and other members of the Group
respond to the highly professional and diverse requirements of financial
institutions and investors in asset management in their respective fields.
The IBJ Group is positioned to offer investment products that meet theneeds of individual institutions, sophisticated derivatives products in
response to risk management needs, securities investment trusts that
contribute to more efficient asset management, as well as custody services
to assist clients in processing and supervising their investment portfolios.
In addition, in pension fund management, a full range of assistanceis provided, including investment advisory services.
In view of the deregulatory measures that are scheduled for implementation, the IBJ Group is working to substantially expand the range of sophisticated services it can offer, drawing on its full resources.
In addition to offering asset management and related services, IBJ works
with financial institutions and investors in joint projects that are of mutualinterest. Examples include development work in cooperation with Japan’s
regional banks on advanced systems for the quantification of credit risk.
For individual clients, IBJ has a long record of providing advisory services to assist in asset management. As the Big Bang is implemented, IBJ
plans to continue offering individualized and increasingly sophisticatedservices to its private banking clients. Financial advisors in each of IBJ’s
domestic branches respond in detail to customer inquiries and make suggestions on asset management strategies and products that best meet theirfinancial requirements.

11

12

Management’s Perspective

What is IBJ doing about theyear 2000 computer problem?

IBJ understands that dealing with the year 2000 issue and preventing
any adverse impact on transactions are part of the Bank’s responsibilities
to society at large and has assigned high priority to solving the problem.
Specifically, the Bank has appointed a Chief Information Officer (CIO).
The Bank has also organized a project team reporting to the CIO to formulate solutions to the problem centering around the Information Technology
Department and including members from the Corporate Planning
Department, the Administration Department, and the Operations
Supervisory Department. In addition, the Bank has formed a policy committee for the Americas centered on the Americas Division, a unit responsible for developing solutions in Europe centered on the London Branch, anda similar unit responsible for Japan, the rest of Asia, and Oceania within the
Information Technology Department. These units are responsible for managing the year 2000 project throughout the IBJ Group, securing sufficient
resources to resolve the problem, and monitoring and reporting on
progress to management. The Bank’s management has already agreed togive high priority to providing budgetary allocations sufficient to correct
the problem.
The Bank has prepared a Policy Statement regarding the year 2000
problem and is engaged in a Bankwide effort to implement standardized
measures. Steps have already been taken to determine the scope of the problem and confirm the ability of vendors supplying the Bank’s hardware andsoftware to take the necessary measures. A revised plan has been prepared,
and work is in progress. Completion of work on major systems is set for
December 1998 and work on all systems no later than June 1999.

Highlights of Operations

Highlights of Operations in Fiscal 1997 and 1998
쎲 July 1997
왘 IBJ convenes Global 24 Financial Conference쎲 October 1997
왘 Departmental system is introduced at New York Branch왘 Asian Currency Risk Seminar is held
왘 IBJ plans and coordinates IBJ USA Cares Day to commemorate 25th anniversary of the
New York Branch쎲 December 1997
왘 IBJ Investment Trust Management Co., Ltd., begins marketing investment trusts in the
Head Office and two branches쎲 February 1998
왘 IBJ successfully securitizes US$1.3 billion in loan assets in a collateralized loan obligation deal왘 IBJ issues US$1 billion in preferred securities through a subsidiary왘 Project finance deal in United Kingdom receives “Power Deal of the Year 97” award
쎲 March 1998
왘 IBJ Asset Management International Ltd. is established왘 Aubrey G. Lanston & Co. Inc. completes system for global futures brokerage쎲 April 1998
왘 IBJ Financial Technology Co., Ltd., is established왘 IBJ Schroder Bank & Trust Company acquires U.S. investment advisory company
왘 Securitization of loans to domestic companies begins
쎲 May 1998
왘 Agreement is reached on alliance with Nomura Securities Co., Ltd.

13

14

IBJ’s Presence Worldwide

Vancouver
CB

IB

CB

IB

Toronto

Chicago
CB

T

T

CB

IB

IB

New YorkCB
TB

San Francisco
Los Angeles
CB

T

IB

CM
T

AM
IB

F
L

Atlanta
Houston
CB

CB

IB

IB

NassauMexico City

Grand Cayman
PanamaSão Paulo

Key to IBJ Operations:
Corporate Banking
CB
CM Capital Markets
AM Asset Management
Trust Banking
TB
Treasury
T
Investment Banking
IB
Leasing
L

F
VC
S
FT

Futures
Venture Capital
Systems
Financial Technology

Branches, Agencies, Sub-branch, Loan Production Office,Marketing Office, Subsidiaries, and Affiliates
Representative Offices

As of July 1998

IBJ’s Presence Worldwide

Paris
CB

CM

T

IB

AM

T

LondonCB

CM

IB

Luxembourg
CB

CM

T

Düsseldorf
CB

IB

Seoul
ViennaFrankfurt
CB

CM

T

IB

IB

Dalian

Milan
CB

CB
T

IB

IB

Tokyo

Beijing

Madrid
CB
T

CB
TB

CB

Zurich
CM
T

Wuhan

AM
IB

Ayuthaya

T

VC
L

S
FT

Hong Kong
CB

CM

Bangkok
CB

AM
IB

CB

Hanoi

CB

T

Shanghai

Guangzhou

Manama

CM

AM

T

IB

VC

Chon Buri

L

LabuanKuala Lumpur

CB

CB

CB

Singapore
CB
TB

CM
T

AM
IB
F

Jakarta
CB

T

L

CB

CM

T

TB

SydneyMelbourne
CB

15

16

Global Activities and Services

IBJ’s overseas network covers 25 countries and comprises 22 branches andagencies, one sub-branch, one loan production office, one marketing office,10 representative offices, and 18 major subsidiaries and affiliates. The Bank
makes full use of this network to offer corporate banking, capital market,
asset management, trust, leasing, and other professional services to meet
the wide range of client needs around the globe.

On the Leading Edge in Financial Technology
The Americas include the most technologically
The Americas

advanced markets, and participants in the U.S. market,
in particular, excel in developing new solutions to satisfy financial requirements. The IBJ Group offers high-quality, full-banking services, making extensive use of leading-edge
financial technologies, to a broad international clientele in the region.

Investment Banking
In addition to conventional commercial banking, the IBJ Group is preparedto supply a wide range of services—such as securitization, leasing, andproject finance—to meet the increasingly diverse and sophisticated financial requirements of corporations based and conducting business operations in the Americas. Therefore, the Bank established its Investment
Banking Division (Americas) in October 1997 to provide sophisticatedtechnology to satisfy client needs. For example, IBJ closed a collateralized
loan obligation (CLO) deal for US$1.3 billion, thus becoming one of thefirst Japanese banks to arrange a CLO on its own.

Global Support for Clients
Drawing on its global network, IBJ is actively supporting the expansionof the business operations of U.S. companies in Japan and other markets
around the world. In particular, IBJ’s advisory services for corporations
entering the Chinese market are highly regarded, and, in this respect, theBank has received many requests for such assistance from U.S. corporations.
For Japanese corporations expanding their operations in the Americas,
IBJ provides not only the usual forms of banking assistance but also leadingedge services originating in the U.S. market, such as arranging securitization programs for refinancing, derivatives-based products, and otheradvanced financial services.

Global Activities and Services

Global Operations with a Strong Presence in the Americas
Besides providing support for the global development of client activities,
the IBJ Group, with its strong presence in the Americas, assists clients byproviding a broad range of financial services in the region. For example,
Aubrey G. Lanston & Co. Inc., a subsidiary of IBJ, is a primary dealer in
U.S. government securities, a clearing member of the world’s two largest
futures exchanges in Chicago, and a futures commission merchant in
futures and options.

Preparing for Monetary Union
The European Union (EU) is moving toward theEuropeintroduction of a single currency, the euro, and 11
member countries will be in the first wave, scheduled
for January 1999. As a result of the advent of the euro,

Europe is expected to experience momentous changes that are likely togenerate numerous business opportunities. IBJ will be able to link the baseof financial experience it has developed in Europe with the rest of its global
network and respond to an even greater range of client needs.

Project Finance
Along with deregulation in various industries and growth in cross-borderbusiness activities, the number of project finance arrangements and opportunities in Europe and the Middle East has burgeoned. Because IBJ has
maintained close contact with industries around the world, the Bank has
been able to respond actively to these developments and compile an impressive list of accomplishments. Some examples of projects where IBJ
has acted as lead arranger include the Ras Laffan LNG project in Qatar; thepetrochemical project of Saudi Basic Industries Corporation; and the project
finance facility for AES Barry in the United Kingdom, which received the“Power Deal of the Year 97” award.

Capital Markets
As the EU approaches monetary union, European capital markets will
undergo major changes. Mainly through its subsidiaries in the United
Kingdom, Germany, France, Switzerland, and Luxembourg, the IBJ Groupis positioned to offer structured finance arrangements, trading in highspread bonds as well as other products and services. In addition, in

17

18

Global Activities and Services

the investment management field, the IBJ Group makes use of its asset
management know-how to respond to the needs of investors and is steadilybuilding its position in this business area.

Europe Tomorrow and IBJ
Following monetary union, cross-border activities in Europe’s capital andmoney markets will continue to expand and develop. Amid this environment, the IBJ Group plans to take full advantage of its leading-edge investment banking products and market these instruments to clients to respondto their increasingly sophisticated financial needs. To this end, IBJ is working to expand the marketing capabilities of its regional operating base in
London as well as the efficiency and effectiveness of marketing in Europe
as a whole.

Preparing for Recovery and Resumptionof Economic GrowthAsia
andOceania

The IBJ Group has actively developed its presence inAsia and Oceania and is prepared to respond to an everbroadening range of financial needs in cooperation,
when appropriate, with supranational institutions.

Financing Industrial and Infrastructure Projects
Relying on its expertise in long-term financing, the IBJ Group is focusing on
the region’s prime development projects to assist in building the economic
foundation for the coming century. These include transportation projects,
such as the new Hong Kong airport and the development of the upstream
regions of the Yangtze River in China. Also, together with eight prominent
Asian banks engaged in financing industrial development, IBJ co-founded
the Association of Development and Industrial Banks in Asia (ADIBA) in
1995. ADIBA is jointly promoting industries and development projects in
the region and is exchanging personnel as well as information on financial
technologies. ADIBA is also conducting joint research on the economies
and investment climates in the region and actively promoting direct investment through the sponsorship of seminars and other activities.

Global Activities and Services

Support for Direct Investment
To assist ever-increasing direct investment in the region, the IBJ Group
provides not only advice on financing but also is actively engaged in finding
local partners and providing advisory services for negotiations and othermatters. The Bank’s expertise has been well recognized by many multinational companies, which have chosen IBJ as their adviser in China.

Services Tailored to the Region
While maintaining a high quality of services as in other regions aroundthe world, the IBJ Group is also focusing on providing regionally oriented
products. Following the commencement of full-banking services at IBJ’s
Bangkok Branch and offering renminbi transactions through its Shanghai
Branch, IBJ has begun to offer cash management services, and the IBJ Group
is well positioned to meet the needs of customers for transactions in a
broader range of Asian currencies. The IBJ Group is also gearing its focus
toward investment banking business in the region. Product managers
based in IBJ’s offices in Hong Kong and Singapore, two key business centers, offer services throughout the region. They are also in contact withproduct managers in Tokyo, New York, and London, and this networkof professionals is well positioned to offer global financial services.

Strong Relationships with China
For more than 20 years, IBJ has offered economic policy advice to China
with the objectives of cooperating in the country’s development and building its industrial base. At the same time, IBJ has arranged the financing formany projects in such fields as electric power, telecommunications, andnatural resource development. By entering cooperative agreements with 60of China’s governmental organizations, financial institutions, corporations,and other entities, to date IBJ has invited more than 1,000 individuals from
China to Japan as trainees and seminar participants. Reflecting the highregard for IBJ’s activities, IBJ established the Beijing Branch at an early dateas a foreign bank and became the first foreign bank allowed to conduct
renminbi transactions through its Shanghai Branch. Drawing on this experience, know-how, and network of relationships, IBJ is active in advising its
customers on direct investment in China.

19

20

IBJ Group Companies

The Industrial Bank of Japan, Limited

Futures쎲IBJ Lanston Futures Pte. Ltd.
<Singapore>

CapitalMarkets

쎲IBJ-CA Consult <Vienna>쎲Aubrey G. Lanston & Co. Inc.
<New York>쎲Banque IBJ (France) S.A.
<Paris>쎲IBJ Merchant Bank(Singapore) Limited<Singapore>쎲IBJ Securities Co., Ltd.
<Tokyo>쎲IBJ International plc<London>쎲IBJ Australia Bank Limited<Sydney>

Trust
Banking쎲The Industrial Bank of Japan(Luxembourg) S.A.
<Luxembourg>쎲IBJ Trust and Banking
Co., Ltd. <Tokyo>

쎲IBJ Schroder Bank & Trust
Company <New York>쎲IBJ NW Asset Management
Co., Ltd. <Tokyo>

쎲The Industrial Bank of Japan
Trust Company <New York>

Asset
Management

쎲IBJ Investment TrustManagement Co., Ltd. <Tokyo>
쎲IBJ Asset Management
International Ltd. <London>
쎲IBJ Leasing Co., Ltd. <Tokyo>
쎲P.T. Bumi Daya—IBJ Leasing<Jakarta>
쎲Krung Thai IBJ Leasing
Co., Ltd. <Bangkok>

Leasing쎲The Industrial Bank of Japan(Germany) <Frankfurt>

IBJ Group Companies

Investment
Banking쎲The Bridgeford Group<New York>Financial
Technology

쎲IBJ Financial Technology Co., Ltd.
<Tokyo>쎲CCIC Finance Limited<Hong Kong>

쎲The Industrial Bank of Japan(Canada) <Toronto>

쎲3iBJ Ltd. <Tokyo>
VentureCapitalTreasury

쎲The Industrial Bankof Japan—NJ (Switzerland)
Limited <Zurich>

쎲IBJ Asia Limited<Hong Kong>

Systems
쎲P.T. IBJ Indonesia Bank<Jakarta>

쎲IBJ Systems, Ltd. <Tokyo>
Corporate
Banking

As of July 1998

21

22

Corporate Banking

Always Anticipating and Responding to Emerging Needs
Leading Player in Corporate Finance
Since IBJ’s establishment, the Bank’s principal objective has been to growalong with industry, always focusing on corporate finance, the Bank’s corearea of business competence, anticipating emerging needs, as well as providing financial resources to finance capital investment and a broad rangeof other services to assist in promoting the growth and development ofindustries as well as companies. Two of IBJ’s special strengths are its policyof providing services to a broad range of corporations without being closely connected with any particular business group and the Bank’s concern
for the public interest. These strengths have enabled the Bank to earn thestrong confidence of its customers and a high evaluation for its capabilities
both in Japan and overseas. This confidence and high appraisal of its clientsare among the Bank’s most valuable assets. To further strengthen relationships with its clients, IBJ is constantly working to monitor and respondquickly and appropriately to their changing needs.
In recent years in particular, the needs of clients have changed dramatically and become much more diverse. In response to this expansion
in customer requirements, IBJ has improved its systems and broadened
its capabilities for offering a wide spectrum of new financial services.
Specifically, new service areas where IBJ has compiled a strong record ofaccomplishments in recent years have included offering balance sheet control services as typified by the securitization of assets, providing support tomultinationals for more efficient cash management in Japan and overseas,
providing comprehensive advice on entering overseas markets, and making arrangements for mergers and acquisitions. As deregulation proceeds
under Japan’s Big Bang, the range of services will continue to expand,bringing important new business opportunities for the Bank.

Focusing the Services of the IBJ GroupAs capital market financing has grown in importance, the financial
services and instruments required have become increasingly sophisticatedand diverse. In addition, in asset management, there has been a major trend
toward the relaxation of restrictions on pension fund management. Membersof the IBJ Group are, therefore, devoting their full resources to respond to
growth in demand for more sophisticated asset management services.

Corporate Banking

In fiscal 1997, for example, IBJ Securities Co., Ltd., secured the top position in the lead management of domestic publicly offered straight bonds.
IBJ Trust and Banking Co., Ltd., IBJ NW Asset Management Co., Ltd., IBJ

쎲 3iBJ
Established: 1990
Capital stock: ¥480 million
Shareholder: IBJ (5%)

Investment Trust Management Co., Ltd., and other members of the IBJ
Group also reported steady expansion in their results.

Financing Emerging Industries
One of IBJ’s most important missions is to anticipate changes in theindustrial structure and promote the healthy development of growth
sectors that will be key industries in the future. In June 1996, for example,
the Bank established the Corporate Banking Department (Media &Telecommunication), a new organizational unit specializing in offering
services to companies in those and related fields. Along with deregulation,
IBJ is engaged in securing new clients in the large corporate market, participating in infrastructure development projects, and undertaking otherfinancing activities. However, the Bank is also placing emphasis on offering
financing for small and medium-sized companies. Loans to those companies, for example, have already risen to about 40% of the Bank’s total loan
portfolio. To provide support for venture businesses, IBJ has formed a joint
venture, 3iBJ Ltd., with the largest venture capital company in the United
Kingdom. 3iBJ is the focus of the Bank’s venture business activities, which
include not only financing but also providing advice on a range of subjects
to a broad spectrum of smaller businesses, drawing on the Bank’s longexperience in corporate finance.

쎲 Loans Outstanding for Plant and Equipment Investment by Industry (¥ billion)
Electric Power

48.3%

Transportation and Communications

15.4%

Chemicals

17.3%

2,971
8,167
1,274

Electric Machinery

10.5%

Transportation Machinery and Equipment

11.3%

Petroleum Refining

19.7%

806

Iron and Steel

24.1%

763

ent

Ceramics

9.1%

Nonferrous Metals

31.8%

Manufacturing Total

10.0%

All Industries Total

4.8%
IBJ’s Share

1,168
993

588
376
13,310176,117All Japanese Banks(As of March 31, 1998)

23

24

Investment Banking Services

Structured Finance
IBJ has devoted itself to structuring new financing schemes that meet theneeds of individual clients and to creating new products and services thatare tailor-made for particular customers. In recent years, the business environment in Japan has changed dramatically, leading to greater diversity
in clients’ financial requirements. IBJ is closely attuned to these changing
needs and responds quickly by developing and proposing new financing
schemes. Using such schemes as asset securitization and lease financing,for example, the Bank provides clients with a greater variety of fund-raising
options while also helping them to improve their financial indicators,
including the equity ratio, as well as lower funding costs. In addition, assetbacked securities and lease products, including leveraged leases, provide
investors with new investment tools. Because of these various advantages,
IBJ is active in structuring and marketing such asset securitization schemes.
Besides these products, IBJ makes proposals to individual clients for leveraged leases, debt defeasance, and other financial schemes to meet their
specific needs with state-of-the-art financial techniques.
One of the recent trends among Japanese companies is the formulationof financial strategies for corporate groups as a whole. Behind this development has been the shift from nonconsolidated to consolidated financial
statement accounting. IBJ has kept abreast of these important trends and, aspart of its structured finance services, has devised new financial schemes,
taking into account these recent developments. In this connection, IBJ has
researched the issues facing various corporate groups and made proposals
that raise the overall financial efficiency and promote streamlining of thesegroups. For example, IBJ’s proposals have included the abolishment ofpromissory notes for payment within corporate groups and schemes to improve their various consolidated-basis financial ratios through the use of
securitization, leasing, trust arrangements, and other financial techniques.
IBJ has developed and marketed tailor-made structured finance schemes
not only in Japan, the United States, and Europe but also has recently begun
to introduce them into various regions around the world. While marketingthese services and making full use of the know-how gained in Japan, IBJ
has thoroughly researched and taken into consideration the special featuresof the legal, accounting, and tax frameworks in various countries and structures the optimal schemes for each nation.

Investment Banking Services

Consulting on Overseas Direct Investment and Financing
The environment for foreign direct investment varies widely from country
to country, just as it changes day by day due to the rapid movements in theinternational economy. In response to the requirements of clients expanding their operations globally, IBJ has become increasingly active in providing a comprehensive range of advice and services, which include assistancein the selection of countries and sites for investment, advice on the characteristics of various regions that merit attention, the introduction of joint
venture partners, support in negotiations, and help in raising funds.
Especially for those clients considering entry into emerging markets,
where the systems and requirements for investment may be unfamiliar,
IBJ concludes advisory contracts and provides such companies withspecialized, proprietary consulting services.

Finance Schemes for Overseas Investments
In managing enterprises in unfamiliar foreign environments, the ability toadopt finance schemes that reflect the characteristics of the client’s corporate plans and individual requirements is an important factor enhancing
the probability of success. IBJ draws on its experience and in-depth knowledge of international finance, including familiarity with the financial andtax systems of various countries, while making use of a broad array offinancing options to provide the best fund-raising schemes for its clients.

Acting as a Bridge to the World’s Markets
In addition to providing Japanese clients with information on overseas
markets obtained through its international network covering the world’s
principal financial and business centers, IBJ offers information to its nonJapanese clients on investment in Japan and other countries. IBJ plans tocontinue to upgrade and enhance its capabilities as a full-service, global
advisory financial institution, since these services are highly regarded
by clients and other parties, including international organizations andgovernment institutions.

25

26

Investment Banking Services

Mergers and Acquisitions
In recent years, M&A activities—including sales of assets, the establishment of joint ventures, and minority investments—have gained significant
momentum in Japan. Interest in this area has grown because M&A has
become one of the strategic alternatives for company managements inJapan who wish to expand or diversify their businesses or enter overseas
markets. A series of economic reforms and deregulatory measures now inprogress in certain industry segments in Japan and restructuring of noncore
businesses are additional reasons for the increased demand for M&A.
IBJ has continued to devote substantial resources to M&A advisory
services as part of its investment banking activities. Utilizing its capabilities
for industry research and corporate evaluation, its global information network, and the M&A expertise of the Bridgeford Group, a wholly owned
subsidiary located in New York, IBJ provides comprehensive M&A advisory services for transactions in the United States, Europe, Japan, and other
Asian countries. Since 1997, the alliance with the Beacon Group, a fundmanagement and M&A advisory firm based in the United States, has
contributed to further expansion in IBJ’s capabilities in cross-border
M&A transactions.
IBJ’s M&A professionals prepare the optimal M&A scheme for clients
based on extensive analyses of the profitability of proposed projects, thecompatibility with client strategies, as well as accounting, tax, and legal
considerations. IBJ also provides effective support in negotiations withcounterparties and a wide range of other advisory services to assist clientsin attaining their objectives.

Investment Banking Services

Project Finance
IBJ has been traditionally strong in arranging project financing for energy,
mining, and raw materials projects and now has gained the position of aleading bank globally in arranging financing for such private-sector infrastructure undertakings.

In-Depth Advisory Services
In the case of the Paiton Power Plant–Phase I Project in Indonesia, IBJ,
acting as co-financial advisor and coordinating bank, drew on its closeworking relationships with Export Credit Agencies (ECAs) in Japan andthe United States to propose a structure supported by government financefacilities. Through negotiations, the Bank structured arrangements providing for ECAs to share the project risk and was successful in securing theparticipation of more than 40 banks worldwide. The project was highly
acclaimed in the market and has become a model for private power projects
in Asia.

Creativity in Developing Finance Schemes
IBJ originally developed the “trustee borrowing” finance scheme, which
has subsequently come into wide use for Indonesian LNG projects. In addi-

쎲 Projects Receiving“Deal of the Year” Awards
IBJ Lead Arranged “Deal of the Year” Projects
1997

AES Barry Power Plant(Project Finance)*

1996

Ras Laffan LNG(Project Finance International)*

1995

Paiton Power Plant–Phase I(Project Finance International)** Industry journals

tion, the Bank made use of a “debt/equity swap” in successfully consummating the finance arrangements for a copper mine project in Chile, which
was undergoing a debt restructuring at the time. More recently, the Bank
developed the first “merchant” type private power project in the United
Kingdom whereby the price of electricity is subject to market conditions.
This arrangement was highly regarded, earning the “Power Deal of theYear 97”award by the journal Project Finance.

Continued Emphasis on Project FinanceWith the exception of the countries of Southeast Asia, which were affectedby currency crises during the fiscal year, demand for project financeremains strong in other parts of the world. Although the use of project
finance arrangements has been virtually nonexistent in Japan thus far, suchdevelopments as the shift toward more management emphasis on corporate bond ratings and the movement to permit private finance initiatives(PFIs) are creating a favorable environment for these arrangements.
IBJ has about 60 professionals in this field stationed in offices in Tokyo,
Hong Kong, New York, and London who stand ready to provide services
for projects around the world.

쎲 Recent Examples of Large-Scale
Development Projects with Major
Participation by IBJ
Energy & Mining
Gresik Copper Smelter (Indonesia)
Ras Laffan LNG (Qatar)
Oleoducto Central S.A. Pipeline (Colombia)
Petrochemicals & Manufactured Products
P.T. Amoco Mitsui PTA (Indonesia)
Saudi Chevron Petrochemical (Saudi Arabia)
SUS Cold Mill (Thailand)
Power Generation
Paiton Power Plant–Phase I (Indonesia)
KEGCO Power Plant (Thailand)
AES Barry Power Plant (U.K.)
Telecommunications & Other Infrastructure
FLAG (Fiberoptic Link Around the Globe)(U.K. to Japan)
Hong Kong Air Cargo Terminal(Hong Kong)
Autolink (A19) (U.K.)

27

28

Investment Banking Services

Derivatives
IBJ’s experienced team of professionals analyzes the individual requirements and objectives of clients, based on their financial control needs,
provides advice, and recommends the best hedging techniques. Several
examples drawn from recent experience include•analysis of the asset-liability structure of the client’s balance sheet
to determine maturity, interest rate, liquidity, and other potential risks.
Following simulation of the impact of future interest rate scenarios, recommendations were given on the most effective derivatives operations toachieve optimal risk management and•since the client was in an environment where market interest rates
were declining, arrangement of a combination of swaps, options, andother techniques to minimize financial costs, starting with higher-costborrowings.
As these examples suggest, IBJ provides tailor-made products that makepossible the realization of profits or losses based on the interest and currency rate scenarios of clients and their tolerance for risk.
The Asian currency crises, which were triggered by the devaluationof the Thai baht during the fiscal year under review, renewed awarenessof the importance of risk management. The Bank has derivatives specialists
in its Hong Kong and Singapore branches who offer proposals to clients
operating in Asia. In Japan, the Bank has also convened seminars on Asiancurrencies and provides timely information on currency trends.
Although derivatives are sometimes described as “difficult to understand and embodying unquantifiable levels of risk,” IBJ staff explain andsecure the understanding of clients regarding the effects and risks inherent
in derivatives products and provide advice to clients on structuring internal monitoring systems. In August 1997, the Bank prepared a Glossaryof Basic Derivatives Terminology and distributed it to clients who have aninterest in renewing their awareness of basic concepts or who are interested
in gaining a better understanding before initiating transactions. In addition,
the Bank has developed a Derivatives Transactions Monitoring Software
Package that is provided to clients and enables them to monitor a rangeof variables from the maturity dates of interest rate swaps and options
and interest rate calculations to market values of derivatives portfolios.

Investment Banking Services

Electronic Banking
Global Cash Management Services
Following the revision of the Foreign Exchange Law that took effectin April 1998, the financial activities of corporations are expected to takea major leap toward globalization. Specifically, companies are expected
to move quickly to engage in global cash management and other related
activities that were not permitted prior to deregulation.
In view of these substantial changes in the way Japanese companies
manage their cash and other assets, IBJ is responding to the needs of its
customers in this area and is scheduled to introduce a global cash management service (CMS) in the latter half of fiscal 1998.
IBJ’s next-generation global CMS will draw on the most advanced
Internet technologies and take the lead in making use of the Internet itself
to offer the first such services in the world. For this reason, the new system
will incorporate high-level security features.
In addition, IBJ has introduced its Integrated Treasury Support Services(ITSS), which provide settlement services for corporate groups to offer
more efficient support services.

Electronic Data Interchange Services
Along with the advancement of electronic technology, transactions
among companies as well as between companies and consumers are beingtransmitted electronically at a blinding pace. The exchange of data involvedin these transactions is usually referred to as electronic data interchange (EDI).
One of the important themes in EDI is offering trade finance electronically, and the principal objective of processing documents required for tradetransactions electronically is to reduce labor inputs. Ultimately, planscall for linking such trade document processing systems with global
CMS systems.

Electronic Money
IBJ is also actively engaged in projects related to the development ofelectronic money (e-money) since it is likely to become a powerful tool
for making cash settlements in the future.
The Bank is a core member of the Super Cash e-money experimental
project, which is scheduled to begin in 1999 with the participation of a groupof banks and Nippon Telegraph & Telephone Corporation and is thus making preparations for the advent of the e-money era.

쎲 Outline of IBJ’s Next-Generation
Global CMS
Services Offered
Information on accounts and balances
Information on various transaction balances(export/import, borrowings, guarantees,
forward foreign exchange contracts)
Funds transfers, opening and amendmentof letters of credit (L/Cs)
Netting (multilateral and bilateral)
Zero balancing
PoolingE-mail based electronic bulletinboard function
File transfer function
Technology Used
Internet virtual private network
JAVA-CORBA combination architecture
Three-layered model

29

30

Investment Banking Services

쎲 IBJ Financial Technology
Established: 1998
Capital stock: ¥100 million
Shareholder: IBJ (100%)

Financial Technology
The Big Bang as an Opportunity
IBJ Financial Technology Co., Ltd. (IBJ FT), founded on April 1, 1998,
specializes in R&D related with the application of advanced financial andinformation technologies. IBJ FT was founded by combining the Bank’s
Financial Engineering and Structured Finance departments and setting
them up as the core of the new company.
Specifically, IBJ FT’s fields of expertise are market and credit risk management, derivatives, investment technology, structured finance, and all
aspects of information technology that apply to financial services. Many of
the Bank’s professional staff with expertise in quantification, information
technology, and legal matters are concentrated in the new company.

Why IBJ FT and Why Now?
With the implementation of the Big Bang, “financial services” are becoming
vastly more diverse and sophisticated. Specialists, in particular, cannot isolate themselves but must look beyond their specialties and have intellectual
contact and actively cooperate with other specialists in different areas in
the pursuit of synergies among their specialties.
The range of issues that corporations should address includes a vastarray of subjects, such as controlling market and credit risks, conducting
global cash management and asset allocation services, and developing
Internet-based businesses. IBJ FT makes it possible to give consideration to
those issues comprehensively and efficiently from multifaceted and multilayered perspectives. IBJ FT will not only support the activities of IBJ andthe rest of the IBJ Group but also will work to respond to a broad range ofclient needs as an independent company.

Maintaining IBJ FT’s Professional Quality
The main sources of strength for IBJ FT as a group of professionals are
the abilities of the individual members of the company. Each must respondto the needs of clients and work to win their satisfaction. In fall 1998,
Professor Takeaki Kariya, of Hitotsubashi University, an authority on
financial engineering, is scheduled to join IBJ FT. In personnel recruitment
policies, IBJ FT will search for highly qualified staff and develop numerous
approaches to enable them to contribute to its activities.

Investment Banking Services

Leasing
Lease financing for the purchase of aircraft, transportation equipment,
industrial machinery, and other types of equipment is effective in reducing

쎲 Industrial Bank of Japan
Trust Company
Established: 1974
Capital stock: US$140.4 million
Shareholder: IBJ (100%)funding costs and assisting clients in restructuring their balance sheets.
Capabilities indispensable for the structuring of leasing arrangements
include an in-depth knowledge of the asset value of the items leased andknowledge of detailed information on legal, accounting, and tax matters.
The Bank has developed a strong global position in lease financing by

쎲 IBJ Schroder Bank
& Trust Company
Established: 1923
Total stockholders’ equity: US$239.7 million
Shareholders: IBJ (97.7%),
Schroder US Holdings Inc. (2.3%)

drawing on the wide-ranging capabilities of the IBJ Group companies.
In particular, for aircraft, IBJ has experts stationed in Tokyo, Hong Kong,
London, New York, and Los Angeles who offer lease products to respondto the finance needs of the world’s major airlines and aircraft manufacturers.
In the United States, IBJ also offers the full range of lease financing services through its subsidiaries Industrial Bank of Japan Trust Company and
IBJ Schroder Bank & Trust Company to support the capital investment programs of its clients. The Bank has considerable experience in structuring
tax leases for semiconductor and automobile manufacturing equipment.
IBJ has also been active in recent years in providing nontax leases, suchas synthetic leases.
IBJ works closely with its affiliate IBJ Leasing Co., Ltd., which is one of쎲 IBJ Leasing
Established: 1969
Capital stock: ¥3,399.85 million
Shareholder: IBJ (4.84%)

the leading Japanese companies in this field, to structure various types oflease financing arrangements for major companies in Japan and overseas.

쎲 P.T. Bumi Daya–IBJ Leasing

IBJ Leasing has a subsidiary in the United Kingdom that is especially

Established: 1984
Capital stock: Rp40 billion
Shareholders: IBJ (52%),
Bank Bumi Daya (40%)
IBJ Leasing (8%)

active in providing lease arrangements. In Asia, the Bank offers leasing services through P.T. Bumi Daya—IBJ Leasing, located in Jakarta, and Krung
Thai IBJ Leasing Co., Ltd., based in Bangkok. These companies respondto investment demand by offering lease financing suited to the needs ofthe local markets. Also, under its tie-up with leading U.S. lease packager
D’Accord Incorporated, the Bank has cooperated in the arrangementof many cross-border leases and U.S. tax leases.

쎲 Krung Thai IBJ Leasing
Established: 1992
Capital stock: —B 100 million
Shareholders: IBJ (30%),
IBJ Leasing (10%)

31

32

Capital Market Activities

Meeting Diverse and Sophisticated Client Needs
IBJ has a long tradition and extensive experience in the securities business,and the IBJ Group has further developed its capabilities to provide highly
professional securities related services. The IBJ Group is committed tomeeting diverse and sophisticated client needs worldwide through IBJ
Securities Co., Ltd., overseas securities subsidiaries, and the IBJ Head Office.

IBJ Securities Co., Ltd.
IBJ Securities, IBJ’s wholly owned securities subsidiary in Japan, hasentered its sixth year of operations. Engaged principally in the underwritingof bonds and in the sales and trading of a wide range of securities products,
IBJ Securities recorded further major gains in its activities in fiscal 1997.
Underwriting

With its capabilities for analyzing market information

as well as its expertise in offering high-value-added proposals to meetclient needs, IBJ Securities underwrites corporate and Samurai bonds in thedomestic market. IBJ Securities works in close cooperation with IBJ’s global
network to meet the broad range of funding needs of IBJ clients worldwide,
while offering access to the Japanese market for IBJ’s foreign clients. In
addition, IBJ Securities uses its expertise in structured finance, for example,
in the issuance of asset-backed securities.
Sales and Trading

To meet the various investment needs of IBJ clients,

IBJ Securities deals in public-sector bonds, bank debentures, corporate
bonds, Samurai bonds, foreign bonds, investment trusts, commodity funds,
securitized products, and other instruments. IBJ Securities continues to bea leading and active player in the cash-secured repo market, which waslaunched in fiscal 1996.
Moreover, in close teamwork with IBJ’s overseas subsidiaries, IBJ
Securities is actively engaged in developing and marketing products
and services that best match the specific needs of individual clients. Such
activities include (1) the arrangement of medium-term note programs,(2) futures brokerage operations, and (3) the development of bond products
incorporating swaps, options, and other derivatives products.
Strengths

IBJ Securities has continued to strengthen its syndication

capabilities to propose appropriate terms and conditions for new issues
based on its analytical and creative capacities. Utilizing the IBJ Group’s
extensive capabilities for research into economic fundamentals, IBJ
Securities has established an Investment Strategy Department dedicatedto market analysis and research on investment strategy.

Capital Market Activities

To provide liquidity in the secondary market, IBJ Securities actively
makes markets in government-guaranteed and regional government bonds
and bank debentures as well as in various corporate and Samurai bonds.

쎲 Summary of the Performanceof IBJ Securities
Established: 1993
Shareholder: IBJ (100%)(¥ million)

In preparation for the full engagement in equity-related activities, which
Operating income
Recurring income
Net income

the government is scheduled to authorize for securities subsidiaries ofJapanese banks during the latter half of fiscal 1999, IBJ Securities started

Paid-in capital
Net worth
Total assets

the sales and trading of convertible bonds, warrants, as well as Japaneseequity index futures and options from the end of 1997.
Performance

During fiscal 1997, IBJ Securities lead-managed 60

Number of personnel

domestic straight corporate bond issues and acted as bookrunner for two
Samurai bond issues. In the ranking of bookrunners, both its 15.1%
bookrunner share and its 6.2% underwriting share of domestic straight
corporate bond issues placed it in the top position among all securities
companies for the first time in its history.
In sales and trading activities, IBJ Securities continued to build its
presence in the secondary market, with public- and private-sector bondturnover totaling ¥51.5 trillion. Moreover, IBJ Securities underwrote ¥502.0
billion in long-term Japanese government bonds, which was the second
largest underwriting position of all Japanese securities companies.

Overseas Securities Subsidiaries
To provide international securities related services, IBJ has established its
presence in the world’s principal capital markets. IBJ meets the underwriting needs of its clients through overseas subsidiaries, including those in
London, New York, Frankfurt, Zurich, Paris, Hong Kong, Singapore, andSydney. The IBJ Group occupies the leading position as the bookrunner forboth public and private issuers among Japanese bank affiliated securities
groups. IBJ’s overseas subsidiaries and IBJ Securities work closely together
to arrange structured bonds to meet the needs of clients worldwide.

쎲 Lead Manager League Table for Fiscal 1997
Ranking

Name of Company

Number Lead
ManagedAmount(¥ billion)

Bookrunner
Share (%)

1

IBJ Securities

60

1,325

15.1

2

Nomura Securities

49

1,114

12.7

3

Daiwa Securities

61

818

9.3

4

Nikko Securities

39

804

9.1

5

Sakura Securities

39

749

8.5

6

Yamaichi Securities

40

708

8.1

7

DKB Securities

51

474

5.4

8

Tokyo-Mitsubishi Securities

34

443

5.0

9

Fuji Securities

36

425

4.8

10

Sumitomo Capital Securities

32

367

4.2

Source: THOMSON DealWatch League Tables

Fiscal 1996

Fiscal 1997

11,7482,916
1,150

20,202
3,066
204

25,00036,428
1,548,659

25,00036,632
3,308,249

200

248

33

34

Capital Market Activities

쎲 Aubrey G. Lanston

IBJ’s subsidiary Aubrey G. Lanston & Co. Inc., based in New York, plays

Established: 1949
Total stockholders’ equity: US$102.5 million
Shareholder: IBJ (100%)

the role of primary dealer in U.S. government and federal agency bonds aswell as that of a futures commission merchant for futures and options. In
March 1998, Aubrey G. Lanston acquired the European futures brokerage

쎲 IBJ International

unit of IBJ International plc through subsidiary IBJ Lanston Futures Pte.

Established: 1975
Capital stock: £185.08 million + ¥10 billion
Shareholder: IBJ (100%)

쎲 IBJ Lanston Futures
Established: 1985
Capital stock: S$5,010.05 thousand
Shareholders: Aubrey G. Lanston (84.2%),
IBJ (7.9%)
The New Japan
Securities Co., Ltd. (7.9%)

Ltd. in order to form a new global futures brokerage division, which will
cover the major futures markets in the United States, Europe, and Asia.

IBJ Head Office
Bond Underwriting and Commissioned Bank/Fiscal Agent Services
Drawing on its long tradition and extensive experience in underwriting
public-sector bonds and in providing commissioned bank/fiscal agent services for corporate and Samurai bond issues, IBJ has been playing a leadingrole in the development of the Japanese bond market.
For public-sector bonds, IBJ is a member of the Conference on
Government Bond Issuance. In addition, IBJ acts as a lead manager of theunderwriting syndicates and as a lead commissioned bank for almost all
government-guaranteed bond issues as well as for the issues of the Tokyo
metropolitan government, the leading issuer of municipal bonds. Throughthese activities, IBJ plays an important role in facilitating smooth and stablefund-raising by the public sector.
In the private-sector bond market, IBJ acts as a lead commissioned bankas well as a fiscal agent for Japan’s major corporations. In these capacities,
IBJ makes available its extensive know-how regarding the bond market andprovides a broad range of services, thereby facilitating the fund-raising
activities of its clients.
For Samurai bond issues, IBJ has compiled an impressive record acting
as lead commissioned bank and fiscal agent for international organizations
as well as many foreign governments and government agencies.

쎲 Commissioned Bank/Fiscal Agent Activities of IBJ Head Office in Fiscal 1997 (¥ billion)
Lead CommissionedBank

Government-guaranteed Bonds

98.6%

Municipal Bonds

29.1%

2,870
1,851
0

Lead Commissioned
Bank/Fiscal Agent

Electric Power Utility Bonds

49.6%

Other Corporate Bonds

13.5%

Convertible Bonds

32.9%

Samurai Bonds

6.8%
IBJ’s
Share

1,000

2,000

3,000

4,000

5,000

6,000

7,000

1,945
6,855
228
1,582

Asset Management

The IBJ Group ranks high among the leading companies in Japan in thevolume of assets under management. The Group is well positioned to provide its clients with highly professional global asset management services
through IBJ NW Asset Management Co., Ltd., IBJ Investment TrustManagement Co., Ltd., and overseas subsidiaries.

IBJ NW Asset Management Co., Ltd.
IBJ NW Asset Management has continued to expand the scope of its asset
management business, making the best use of the asset management expertise that the IBJ Group has accumulated over the years.
Since the deregulation of pension fund management in 1990, investment
advisory companies have been permitted to provide pension fund management services. The volume of pension funds under the management of IBJ
NW Asset Management has been expanding rapidly. Assets under management are over ¥2 trillion, placing the subsidiary among the leading
investment advisory companies in Japan.
Strengths

Special features of the investment management activities쎲 Summary of the Performanceof IBJ NW Asset Management
Established: 1985
Shareholder: IBJ (2.5%)(¥ million)
Fiscal 1996

Fiscal 1997

2,521
357
150

2,900
442
231

Operating income
Recurring income
Net incomeof the IBJ Group include (1) full access to the highly regarded know-how
in economic research and company analysis of the IBJ Group, (2) asset

Paid-in capital
Assets undermanagement (¥ billion)

400

400

1,932

2,085

Number of personnel

93

112

allocation based on research on economic fundamentals and stock selection
based on the analysis of individual companies, and (3) a sophisticated risk
control system for managed assets.
The IBJ Group has a powerful global asset management network with
operations worldwide, including subsidiaries in London, New York, andHong Kong. Working closely with these IBJ Group subsidiaries, IBJ NWAsset Management has developed a full lineup of services for global asset
management. IBJ Asset Management International Ltd. (IBJ AMI) wasestablished and commenced activities in March 1998, aiming at the further
improvement of the global asset management capabilities of the IBJ Group.

IBJ Investment Trust Management Co., Ltd.
IBJ Investment Trust Management (IBJ ITM) provides a wide range ofinvestment trusts, making full use of the expertise of the IBJ Group in suchfields as sophisticated global asset management, research, and state-of-theart investment technology.

쎲 IBJ Asset Management International
Established: 1998
Capital stock: £400 million
Shareholders: IBJ (90%),
IBJ NW Asset Management (10%)

35

36

Asset Management

쎲 Summary of the Performanceof IBJ Investment Trust Management

As of March 31, 1998, IBJ ITM’s net assets amounted to ¥274 billion.
This was the second largest volume of assets among the investment trust

Established: 1994
Shareholder: IBJ (5%)

management companies affiliated with financial institutions in Japan,(¥ million)

and the company ranked 14th among the 42 investment trust companies

Fiscal 1996

Fiscal 1997

Operating income
Recurring income
Net income/loss

1,940
138
109

1,958
17
(5)

in Japan.

Paid-in capital
Net assets(¥ billion)

1,500

1,500

menced sales activities for its investment trust products in office space rent-

354

274

ed in the branches of IBJ in December 1997. Further deregulation of the35

46

investment trust business is being discussed as part of Japan’s proposed

Number of personnel

Following implementation of deregulatory measures, IBJ ITM com-

Big Bang. Additional measures are scheduled to include granting permission for the sale of investment trust products through banks, beginning in
December 1998, and consideration is being given to introducing privately
placed investment trusts. These deregulatory measures are expected tostimulate further significant growth in the investment trust market. Consequently, IBJ ITM will continue to expand its operations, enhancing its capabilities for the development of new products and improving its performance.

Custody Services
For investors interested in global asset diversification, IBJ makes full use of
the know-how it has accumulated in the securities field to provide custody
services. To offer quality services globally, IBJ has built an international
network of subsidiaries as well as close working relationships with theleading banks in overseas markets. Also, for those institutional investors
seeking to diversify their investments across a range of currencies, IBJ has
developed its Newton investment support system, which allows for thecentralized supervision of global, multicurrency portfolios and which hasearned a superior reputation among its clients.

Trust Banking

The IBJ Group has distinguished itself by its unsurpassed delivery of trust
and agency services through IBJ Trust and Banking Co., Ltd., in Japan andthrough its overseas subsidiaries.

쎲 Summary of the Performanceof IBJ Trust and Banking
Established: 1995
Shareholder: IBJ (100%)(¥ million)

IBJ Trust and Banking Co., Ltd.
Services and Activities

In response to growing interest among clientsin financial products utilizing trust structures, IBJ established IBJ Trustand Banking as a wholly owned subsidiary in October 1995. In addition to
the acceptance and administration of monetary claims—such as lease andloan receivables, investment trust assets, government bonds, and bankdebentures—IBJ Trust and Banking provides administrative services related to securitization, including services in connection with the issuance ofasset-backed securities, asset-backed CP, and other securities.
IBJ Trust and Banking plans to continue to take full advantage of its
capabilities, assisting clients in trimming their balance sheets as well as
developing and offering high-value-added products attuned to specificcustomer needs.
Performance

The balance of assets entrusted with IBJ Trust andBanking has grown steadily since the company’s founding and stood at¥4,175 billion as of March 31, 1998. In particular, IBJ Trust and Banking
has identified the Japanese government bond repo market as a promising
growth area and remains in the top position in terms of assets among trustand banking companies that offer repo trust services. Moreover, IBJ Trustand Banking has expanded the scope of its business operations, following
deregulation. Consequently, IBJ Trust and Banking reported more thandouble its net income in fiscal 1997, compared with that of fiscal 1996.

Fiscal 1996

Fiscal 1997

948
(328)
116
115

1,643
(707)
272
265

Paid-in capital
15,000Assets in trust (¥ billion) 2,516

15,0004,175

Operating income(Trust fees)
Recurring income
Net income

Number of personnel

53

82

37

38

Treasury Operations

ALM Operations
Features of IBJ’s ALM Methodology
As a long-term credit bank, IBJ continuously provides fixed-rate, long-termloans to its customers by funding through monthly issuances of five-year
debentures. Due to the long-term nature of the Bank’s assets and liabilities,
the Bank has developed an ALM methodology specifically tailored to control the sensitivity risk associated with long-term interest rates. The ALM
methodology is represented by two important concepts. The first one is theelaborate matching operations of customer-related assets with liabilities toensure that sufficient spreads are gained in the future. The other importantconcept is the dynamic control of the interest rate sensitivity gap by utilizing flexible instruments, such as interest rate swaps and government
bonds. The interest rate sensitivity gap arises from the difference in volume
and timing between the Bank’s lending and the Bank’s debenture offerings.
All these integrated operations, combining both on-balance-sheet and offbalance-sheet items, enable the Bank to enhance long-term economic value,
which is the source of a stable revenue stream for each fiscal year.
To facilitate the risk control methodology described above, the Bank
has developed a uniquely designed ALM system. It measures the fair valueof all assets and liabilities, which include financial assets, such as loans andsecurities; financial liabilities, such as discount debentures, coupon debentures, and deposits; and off-balance-sheet items, such as interest rate swaps
and options. Fair value is derived by discounting future cash flow to present value, utilizing the relevant market yield of government bonds andinterest rate swaps. In addition to the fair value measurement, the system

Table A쎲 Delta Value as of Fiscal 1996 and 1997 Year-Ends(¥ million)
Total

Within 1 year

Over 1 year andwithin 5 years

Fiscal 1996 year-end
Lending & Debenture Block
Risk Management Block

(800)
(700)
(100)

100
0
100

(400)
(100)
(300)

(500)
(600)
100

Fiscal 1997 year-end
Lending & Debenture Block
Risk Management Block(1,500)
(600)
(900)

0
100
(100)

(500)
0
(500)

(1,000)
(700)
(300)

Over 5 years

Table B
쎲 VAR as of Fiscal 1996 and 1997 Year-Ends(¥ billion)
VAR

Fiscal 1996 year-end

Fiscal 1997 year-end

41.9

61.6

*Holding period one month, 99% confidence level*Both delta and VAR exclude real estate, equipment, and equity holdings, which are funded by capital.

Treasury Operations

39

provides various risk parameters, namely, delta, gamma, vega, and Valueat Risk (VAR). Table A shows the breakdown of the delta value of theBank’s ALM book at fiscal 1996 and 1997 year-ends. Delta represents themarginal value change of all assets and liabilities marked to market witha one basis point interest rate movement. Under the Bank’s ALM system,
each risk parameter corresponds to the respective gap period accounting
for the remaining contractual maturity or repricing period. This allows the
Bank to estimate the yield curve risk. VAR is a statistical approach to capture the maximum potential loss from adverse market movements. Table
B shows the VAR of the Bank’s portfolio at fiscal 1996 and 1997 year-ends.
Such detailed analysis of various risk parameters and fair value enables
the Bank to adequately adjust its asset and liability profile by executing
effective risk management operations.

Performance of IBJ’s ALM Operations
During fiscal 1997, the Bank generated a Core Business Profit in excess of¥230 billion. Furthermore, the net fair value of assets and liabilities amounted
to ¥380 billion as of March 31, 1998. (See page 38 for the definition of “fairvalue;” this amount excludes the present value of real estate and equity
holdings funded by capital, evaluation of credit risk premiums, and various fee revenues.) This strong performance is attributable to the Bank’s쎲 Quarterly VAR and 5-Year Swap Rates

ability to execute effective and prospective risk control operations based(¥ billion)
7.00%

on its distinctive ALM methodology. The graph at right shows the transi-

5-year US$
swap ratetion process in quarterly VAR in conjunction with both yen and U.S. dollar
interest rate movements. During fiscal 1997, yen long-term interest rates

6.50%

picked up from April to June. However, along with the release of several
economic indicators suggesting stagnation in Japan’s economy, interest

6.00%

rates started to decline. Thereafter, in 1998 interest rates resumed the declining trend, with the exception of a temporary correctional phase, reflecting
5.50%

expectations of an extensive economic stimulus plan. In the meantime, a5-year ¥ swap rate

benign price index and flight to quality movements triggered by the Asian

2.50%

currency turmoil caused a massive capital influx into the U.S. bond market,
leading to the decline in U.S. interest rates throughout the year under

2.00%

200

review. The graph verifies that the Bank succeeded in adjusting its risk
exposure during this turbulent period.

Liquidity Risk Management
Liquidity risk management is an important aspect of ALM that ensures thatsufficient cash flow is available at any time to meet the various financial
needs of IBJ’s customers. The Bank’s primary source of funding is coupon

1.50%

150

1.00%

100

0.50%

50
VAR
0

0
4~6/97 7~9/97 10~12/97 1~3/98

40

Treasury Operations

and discount debentures, which are issued every month. The Bank’s strong
distribution network, based on close contact with various institutional
investors, provides the Bank with a competitive edge in managing its liquidity. In addition, the Bank has wide access to various funding instruments, investors, and money markets around the globe. This ensures thatthe Bank has alternative funding sources to maintain sufficient liquidity
even if a liquidity crisis occurs in a specific market. The Bank continuously
attempts to maintain and expand the investor network for its debentures
and works to enhance its presence in the short-term money markets aroundthe globe.
In managing liquidity, the Bank places limits on the amount of its
overnight money position (the necessary amount of overnight funding forthe balance sheet equilibrium) as well as on the amount of positions in certain financial instruments. The overnight money position is measured on adaily basis by projecting the cash flow of current assets and liabilities andthat of anticipated future transactions. This limit is monitored on a global
basis by aggregating the cash position of both the Bank’s foreign offices
and subsidiaries, thus allowing the centralized assessment and control of
the Bank’s liquidity profile. Also, the Bank holds a certain amount of highlymarketable assets, such as government bonds that can be easily liquidated
when necessary. In addition to this conservative process as adopted innormal market situations, various contingency plans exist to cope withsevere liquidity problems.

Trading Operations
Operations and Policies
The Bank’s trading activity involves client-related activities and proprietaryactivities. The Bank develops and provides customized products at competitive prices to help its clients’ risk management, utilizing various financial
instruments, such as swaps, options, government bonds, and CP. In proprietary activities, the Bank puts emphasis on a relative value approach,capturing arbitrage opportunities in related markets as well as distortions
between the theoretical and actual market price of certain instruments. Dueto the introduction of mark-to-market accounting in Japan, chances to gainfrom this relative value approach have substantially increased. The Bank
believes such changes in the market infrastructure are likely to result inTreasury Operations

business opportunities, and as the Big Bang proceeds at a faster pace, theBank will continue making efforts to upgrade its capabilities and earn thetrust of customers for its sales and trading operations.

Risk Analysis Methodology
The market risk exposure of the Bank’s trading activities is measured by
the VAR approach utilizing the Bank’s internal model. The Bank’s VAR
is defined as the 99th percentile greatest loss that may be expected on theportfolio. The Bank’s VAR is measured daily on a global basis, including
all of the Bank’s foreign offices and subsidiaries that engage in trading
activities. We daily test the accuracy of our internal model by comparing
the daily profit/loss (P/L) statement of our trading operations with theestimated VAR. Graph 1 shows the results of back testing conducted in fiscal 1997. The points above the slanted line show that the losses were within
the estimated daily VAR. Cases where the losses exceeded the estimated
VAR happened only twice in fiscal 1997 (260 business days), which verifies
the accuracy of the Bank’s internal model.
The Bank also employs stress testing to estimate the impact of unusual
market movement on the Bank’s trading P/L statement that cannot bemeasured by VAR. Under the Bank’s stress testing, which is called the“Steepest Descent Model,” maximum loss is derived by estimating the worst
market scenario based on the characteristics of the Bank’s trading portfolio,

쎲 Graph 1: Fiscal 1997 Results of Back Testing (All Trading Offices)(¥ billion)

5

Assumptions for VAR calculations
Holding period: One day
Confidence interval: 99%

4
3
2
1

Market Value

Profit/Loss (¥ billion)

쎲 Graph 2: Image of the Results of a Stress Scenario
with Two Risk Factors

0
-1
-2

Occurrence of Stress

-3

Fact

-4
-5

-5

-4

-3
-2
-1
VAR after Sign Change (¥ billion)
Note: The two cases where losses exceeded VAR were both triggered by the Asianmarket turmoil.

0

or 1
Facto

r2

Notes: 1. The Bank’s method corresponds to the stress test cited in the
Amendment to the Capital Accord to Incorporate Market Risk, prepared by
the Basle Committee on Banking Supervision (January 1996) as the“Scenarios developed by the bank itself to capture the specific characteristics of its portfolio.”
2. The Bank’s stress tests measure the maximum loss that may
occur with a holding period of one day.

41

42

Treasury Operations

쎲 Graph 4: Contribution of Risk
Factors to VAR (March 31, 1998)

taking into account the volatility and correlation of approximately 200 risk
factors, such as the yen interest rate and dollar/yen exchange rates. Graph

Equity related2%

2 is an image of our stress testing in cases where there are only two risk factors.
In addition to the aforementioned methods, the Bank establishes liquidity risk limits for each financial instrument and loss-cut rules to ensure
conservative risk management.

Foreigncurrency related
45%Interest
rate related
53%

Profit and Risk Profile for Fiscal 1997
The overall net profit of the Bank’s trading operations for fiscal 1997 was¥13.1 billion. This figure includes the net loss of ¥14.6 billion that was
realized at the Bank’s London Branch triggered by the introduction of themark-to-market accounting rule as is described in IBJ’s 1997 annual report.
During fiscal 1997, average VAR for the Bank’s trading activities amounted
to ¥2.2 billion and ranged from ¥1.2 billion to ¥5.0 billion. Maximum VARof ¥5.0 billion occurred on December 17, 1997, when abrupt movements incurrency rates boosted the risk parameters that the Bank recalculates on adaily basis. The change of daily VAR is shown in Graph 3. Graph 4 shows
the contribution of risk factors to VAR as of March 31, 1998. Also, the resultof stress testing as of March 31, 1998, was ¥3.6 billion.

쎲 Graph 3: Trends in VAR for All Trading Offices in Fiscal 1997(¥ billion)

5.0

97/12/17

4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0
97/4

5

6

7

8

9

10

11

12

98/1

2

Note: On December 17, 1997, as a result of major fluctuations in foreign currency markets, the risk
parameters that are recalculated daily increased substantially.

3

Risk Management

Credit Risk Management
IBJ has continually upgraded its credit risk management systems bycombining the expertise it has developed over many years of lending to thecorporate sector with risk management methods that meet global standards,
including a quantitative method for credit risk measurement.
To achieve its goals, as mentioned previously, in June 1997 the Bank
reorganized its credit-related units for greater effectiveness. Specifically, thesections responsible for evaluating and making approval of credit proposals for domestic and overseas activities were combined, and an integrated
Credit Risk Management Department was created. This department’s
responsibilities will include the corporate credit analysis functions previously within the former Credit Department. The Bank is concentrating all
credit risk management functions within this department, carryingout detailed credit evaluations, and enhancing the sophistication of risk
management systems, with the aim of assuring the soundness of thecredit approval and management processes.
To further upgrade its credit risk management capabilities, in July 1997
a new, uniform 10-rank rating system for domestic and overseas lending
activities was introduced. This new system entails both detailed quantitative and extensive qualitative analysis on corporate customers, and the
Bank believes that, with the new system, the quality and accuracy of thecredit approval process have been significantly improved.
Also, the Bank is in the process of upgrading its portfolio management
systems by enhancing a method for quantitative analysis of credit risks
and is introducing state-of-the-art systems that meet global standards.
In addition, as mentioned previously, in 1998 the monetary authorities
introduced the principle of Prompt Corrective Action with the objectives ofenhancing the transparency of the management of domestic financial institutions and encouraging self-restraint based on market discipline. To makethese measures effective, the accurate computation of the capital adequacy
ratio, which is a key criterion, is essential. For this purpose, financial institutions must undertake internal audits to accurately assess the quality of
their assets. The Bank has taken the intent of this system fully into accountand has enhanced its systems for conducting thorough examinations,
including the establishment of the Credit Risk Management Department.

43

44

Risk Management

Market Risk Management
As the trends toward deregulation and the implementation of market
principles accelerate in Japan, risk management and control proceduresthat meet global standards have become an indispensable condition for
financial institutions. To ensure that proper risk management and control
procedures are in place, the Bank has established a rigorous process wheremanagement has direct responsibility with respect to the Bank’s overallrisk exposure. Moreover, to assure that proper risk management procedures are in place, the rules and guidelines related to risk management
are set forth in the form of “Policy & Procedure,” in accordance with thevarious directives and guidelines issued by the banking regulators andsupervisors in Japan as well as by the Bank for International Settlements (BIS).
From the perspective of reinforcing the Bank’s risk management procedures, the Bank completely separates the back-office operations from thoseof each front office. In addition, the Market Risk Management Department,
which is independent from each office, has the responsibility for the daily
monitoring of risk exposure and reporting to management. This department
measures the Bank’s overall risk exposure, combining both banking andtrading activities. Overall risk exposure is measured by the VAR method,which enables the integrated monitoring of risk throughout the Bank.

쎲 Work Flow of Market Risk Management
Managing Directors' Committee

ALM Committee

Market Risk
Management
Department

International ALM Committee

Front Office
Banking Operations

Trading Operations

Back Office

Dealing with Other Risks
Legal Risk
To cope with the changing banking environment and the associatedpotential for legal disputes and risks, management has identified legal
compliance as a top priority. The Legal Department and legal professionals

Risk Management

assigned to regional offices, with the additional support of outside counsel,
work closely with IBJ’s business units and other departments and offices toassess and manage legal risk. The Bank has instituted legal and regulatorycompliance training programs for its employees to provide a basic understanding of the legal requirements and issues of which they need to be mindful to successfully meet the business challenges of a highly dynamic domestic
and international banking environment.

Operational and Systemic Risks
To prevent operational risks related with processing operations, the Bank
conducts such operations according to strict rules and standards and has
expanded its training courses for operational personnel.
Systemic risk is another key area, and, accordingly, the Bank has established a backup center, with the objective of assuring the stable operationof computer systems, even when major disasters occur over a large geographic area. The Bank, thus, has two computer centers working in tandem, and these have duplicate hardware and telecommunications links
to assure reliable operation at all times.

Internal Control
IBJ’s Auditing Department has the responsibility for assuring strict
adherence to operating procedures, proper conduct of activities, as wellas the prevention of errors and, accordingly, conducts inspections of theoperations of the Head Office and branches.
Reflecting revisions in Japan’s Banking Law and other legal provisions,which are intended to improve the soundness of banking institutions, theBank established the Credit Examination Department to monitor selfassessments of asset quality prepared by other sections of the Bank. In
addition, in February 1998 the Bank substantially strengthened its internal
controls through the establishment of a new office within the Administration Department. This office is responsible for assuring strict compliancewith legal regulations and internal rules.
In the United States, IBJ has set up the Americas Division as a unit independent from the Bank’s U.S. offices. In cooperation with the Auditing
Department and Credit Examination Department in Japan, this division
provides support for internal examinations of the U.S. offices and auditingof assets. The Americas Division also is responsible for providing advice
regarding compliance with legal regulations in the United States.

45

46

Research and Information

In-Depth Research Capabilities
As the leading long-term credit bank in Japan, IBJ must continually lookwell into the future, view developments from an international perspective,
and have a dynamic and realistic outlook on trends in industry and theeconomy. IBJ’s research activities, which set the Bank apart from otherfinancial institutions, have a long tradition and are based on an accumulation of diverse types of expertise and on seasoned foresight.
The accurate information generated by IBJ’s research team is held in highregard by clients, and the Bank’s research activities were ranked number
one among banks and securities companies for “information and analyses”
in a survey conducted by the Nihon Keizai Shimbun, Japan’s leading
economic daily.

Economic Research in Close Contact
with Today’s Business Environment
IBJ’s Research Department analyzes economic conditions and developments regarding finance, capital markets, financial institutions, and othertopics from a global and primarily macroeconomic perspective, while
also conducting long-term research on selected themes. The department’s
activities include the interpretation of the wealth of information gathered
through IBJ’s global network of offices in major financial and commercial
centers and the conduct of research and analyses that extend to the microeconomic and industrial levels. In this way, a distinct sense of being inclose contact with today’s business environment is maintained.
The department’s semiannual survey of capital investment plans, forexample, has the widest coverage of any such survey carried out by privatesector research organizations in Japan. The results of the survey provide
data important for forecasting economic trends.

Securities Research for Investment Banking
The Investment Research Department was established in June 1997 toenhance the Bank’s research efforts in supporting the expansion of investment banking operations with related market and securities research. This
department was created by substantially expanding the Securities Business
Department, which conducted research on the stock and bond markets aspart of its activities. The Investment Research Department is concentrating
on two areas: research on interest rates, foreign exchange, and domestic
and overseas stock markets as well as fundamental analysis of individualcompanies.

Research and Information

The department’s market research is based on macroeconomic analysis
and other fundamental analysis, including investor sentiment. Research
efforts also provide forecasts of long- and short-term interest rates both inJapan and in overseas markets, the yen-dollar and other foreign exchange
rates, and macrotrends of domestic stocks. On the other hand, fundamental
analysis of individual companies provides stock price forecasts based on
corporate profit trends, stock valuations, analysis of undervalued andovervalued stocks, overall market trends, and investor perspectives.

Monitoring Industry Trends and Implementing Projects
IBJ monitors trends not only in the macroeconomy but also developments
in various industrial sectors and is engaged in the planning as well as
implementation of many projects in Japan.
IBJ’s Industrial Research Department always views the condition ofindustries, their problems and strategies, as well as their prospects froma long-term and global perspective, while also drawing conclusions about
the future structure of industries. The department conducts research froman unbiased perspective that is suited to the needs of the times, such as the
management strategies and overseas expansion of leading corporations,new developments linked to progress in information and telecommunications technologies, and issues related with the development of new industrial sectors. Results of these research activities are presented to the Bank’sclients in periodic publications and reports. At the same time, when providing various financial services that answer client needs, the Bank draws
on the information generated by the department as a unique resource of
the IBJ Group.
As the Japanese economy undergoes major changes, the department
participates actively from the early stages of projects that are recognized
to have significance for the national economy, such as urban and regional
development and the information and telecommunications infrastructure.
The department also uses its know-how to act as coordinator and assist in
the implementation of these projects.

In October 1996, IBJ’s New York Branch
accepted the 1996 Mayor’s Volunteer
Service Award from New York City
Mayor Rudolph Giuliani.

47

48

Research and Information

Systems Development
IBJ’s systems development departments are focusing, in particular, on providing support for the smooth conduct of operations, offering accurate andup-to-date management information on profitability and risk management,
and providing quick and timely access to important management and otherinformation. The Bank introduced comprehensive on-line systems at an
early date and responds flexibly to provide convenient services for clientsand offer a substantially broader range of functions for management. In
addition, IBJ has developed its own financial theories and technologies
and is working to complete development as quickly as possible on client
server systems that will allow a more flexible response to changes infinancial markets.

Providing Access to Management Information
The IBJ Group is working to respond to the rapid expansion and diversification of its activities, as previously mentioned, by developing systems thatmeasure the profitability of the Group and provide risk management andother information important for the conduct of the Group’s activities. To
this end, the Bank is working to develop systems that accumulate information generated in operational support systems and other business information, processing and analyzing it from a variety of perspectives and thenmaking it available for use by management. For example, systems havealready gone into operation that measure the credit and market risk of theGroup as a whole for purposes of risk management.

Quick Transmission and Sharing of Information
To expand business operations globally, the Bank has set up systems
centers in Tokyo, New York, and London, and information is handled
efficiently on a centralized basis. The Bank prepared an IBJ Group systems
strategy in June 1997. This calls for the establishment of an Information
Technology Department that will be responsible for planning and applying
the latest systems technologies to the Bank’s activities. In addition, taking
into account business strategies and profitability, systems development will
be accelerated by setting up systems planning and supervisory units withuser departments, thus providing for flexible and appropriate procedures
and systems at all times.

Industrial Finance Seminar

The Industrial Finance Seminar (IFS), an international seminar activity, hasa history of 36 years. Over that period, the IFS Division has held seminars
for more than 2,200 participants from about 80 countries around the world.
Most of the participants now hold important posts in their native countries.
The principal objectives of the IFS are to introduce Japan’s economy,
finance, industry, politics, and culture to participants and strengthen therelationship between IBJ and participating institutions.
Lecturers for the subjects discussed are drawn from the staff of the IBJ
Group and from university professors and business executives. In addition,
the seminar’s activities include visits to many types of industrial plants andintroductions to Japan’s historical heritage.
Seminars are held more than 10 times each year. The types of IFS seminars currently held include those for top and middle management levels.
Seminars are also arranged according to the needs of IBJ’s clients, whenever requested.
The network IBJ has built over the years through the sponsorship of the
IFS is one of the Bank’s most valuable assets. As the rest of the world looks
toward and comes to expect more from Japan, and mutual understanding
becomes increasingly essential, IBJ’s seminars will play an even more
important role for Japan and international society.

49

50

IBJ and the Community

Since its establishment in 1902, IBJ has upheld its tradition of commitment
to promoting the industrial and economic development of Japan and theother countries in which it conducts business. This commitment has led IBJ
to undertake a range of activities that contribute to the well-being of society
in Japan and overseas.
In Japan, IBJ established the Kawakami Memorial Foundation in 1957 tosupport projects that contribute to the educational development of young people. The Foundation’s activities include providing financial aid for engineeringand legal research projects, sponsoring essay contests on legal and economic
themes, and making available scholarships for foreign students in Japan.
In addition, IBJ encourages its branches to take an active part in improving their surrounding communities. For example, the Hiroshima Branchcontributed to the preservation of the A-Bomb Dome in Hiroshima, a historic memorial site of international importance. The Kobe Branch supported the creation of illuminated artwork (Luminarias) in memory of thevictims of the Great Hanshin-Awaji Earthquake and contributed to therestoration of earthquake-damaged buildings. The Fukushima Branch
participated in the cleanup of local communities.
Overseas, with the establishment of the IBJ Foundation in 1989, IBJ
became the first Japanese bank to establish a philanthropic foundation in
the United States. Currently endowed with $11.5 million, the Foundation
makes grants for innovative programs that promote the “Education of
Global Citizens” and the “Strengthening of Urban Communities.” These
IBJ staff members help build new homes
for needy families as part of the firstannual IBJ USA Cares Day.
above: New York
below: Atlanta

grant-making themes reflect the Bank’s identity as a global financial institution, its history of helping to build society’s infrastructure, and its desire toaddress important needs in U.S. communities. In 1997, the Foundation made18 grants totaling US$1,055,000 million to U.S.-based nonprofit organizations.
The Foundation also funds a matching gifts program that enables IBJ
employees in the United States to apply for donations to match their personal contributions to nonprofit organizations. Eligible organizations include universities, hospitals, art institutes, and social service organizations.
IBJ staff members in the United States actively contribute to the welfareof their local communities by volunteering for community service organizations. In fall 1997, IBJ celebrated 25 years of doing business in the UnitedStates with a day of volunteerism in the six U.S. cities where the Bank has
offices. Partnering with Habitat for Humanity International, the renowned
nonprofit housing developer, more than 140 IBJ employees, family members, and friends participated in “IBJ USA Cares Day,” helping to build
homes for disadvantaged families.

Financial Section

CONTENTS
Six-Year Summary

52

Management’s Discussion and Analysis

53

Consolidated Balance Sheets

60

Consolidated Statements of Income

61

Consolidated Statements of Retained Earnings

62

Consolidated Statements of Cash Flows

63

Notes to Consolidated Financial Statements

64

Report of Independent Certified Public Accountants

91

Non-Consolidated Balance Sheets

92

Non-Consolidated Statements of Income

93

Non-Consolidated Statements of Retained Earnings

94

Notes to Non-Consolidated Financial Statements

95

Report of Independent Certified Public Accountants

96

51

52

Six-Year Summary(in millions of yen)

Balance Sheets (at March 31)

1998

1997

1996

1995

1994

1993

553,2033,466,255—
8,847,249
24,001,429
373,592
9,963,718¥ 2,318,157—
943,457
6,808,045
25,518,440
436,174
8,433,234¥ 2,987,739—
537,932
6,686,872
24,267,385
332,713
3,593,935¥ 3,951,856—
726,995
6,351,897
23,808,552
307,397
3,567,067¥ 4,549,916—
977,715
6,382,275
24,023,625
318,561
3,658,268¥ 4,061,432—
480,014
6,528,915
24,663,364
319,750
3,067,216

2,024,337

2,382,608

2,331,153

2,144,478

2,578,011

3,099,322

Total Assets¥49,229,785¥46,966,968¥40,737,733¥40,858,245¥42,488,374¥42,220,016

Liabilities and Shareholders’ Equity
Debentures
Deposits
Trading Liabilities
Reserves
Other Liabilities
Acceptances and Guarantees¥20,840,941
10,053,551
2,286,959
993,292
11,710,683
2,024,337¥22,137,519
10,871,309—
649,985
9,381,564
2,382,608¥21,470,815
8,960,767—
556,791
6,093,094
2,331,153¥21,658,109
9,273,126—
383,999
5,989,671
2,144,478¥22,790,004
9,421,241—
328,339
5,972,090
2,578,011¥23,099,500
9,163,407—
272,337
5,188,373
3,099,322

Total Liabilities
Total Shareholders’ Equity

47,909,766
1,320,019

45,422,988
1,543,979

39,412,622
1,325,110

39,449,385
1,408,860

41,089,687
1,398,686

40,822,941
1,397,074

Total Liabilities and Shareholders’ Equity ¥49,229,785¥46,966,968¥40,737,733¥40,858,245¥42,488,374¥42,220,016

1998

1997

1996

1995

1994

1993

¥ 3,321,902
3,635,020¥ 3,403,347
3,358,870¥ 3,731,847
3,838,173¥ 3,087,404
3,032,577¥ 3,063,399
3,017,877¥ 2,907,022
2,824,519(313,118)(202,660)

44,477
12,740(106,325)(63,551)

54,826
29,68545,521
21,89782,50240,937

AssetsCash and Due from Banks
Trading Assets
Trading Account Securities
Investment Securities
Loans and Bills Discounted
Foreign Exchanges
Other Assets
Customers’ Liabilities
for Acceptances and Guarantees¥

Statements of Income(for the years ended March 31)

Total Income
Total Expenses
Income (Loss) before Income Taxes
and Others
Net Income (Loss)
All figures are on a consolidated basis.

Management’s Discussion and Analysis

Summary
For fiscal 1997, ended March 31, 1998, IBJ reported a non-consolidated net loss of ¥341.9 billion. The principal
factors accounting for this loss were Written-Off Claims and a transfer to the Reserve for Possible Loan Losses(RPLL) amounting to ¥633.8 billion, which were taken in the interest of strengthening IBJ’s financial position
and improving the quality of the Bank’s assets.
Core Business Profit (gyomu jun-eki) rose by ¥26.0 billion, to ¥230.6 billion, exceeding the ¥200 billion level forthe third consecutive year.
In accordance with the principle of Prompt Corrective Action, which will become effective in fiscal 1998, andto substantially enhance the quality of its asset portfolio, IBJ established Standards for Self-Assessments of Assets
and Standards for Write-Offs and Provisions, the new standards for dealing with possible loan losses. The above
Written-Off Claims and RPLL recorded in the 1997 financial statements were determined based on these newstandards.
In the evaluation of its portfolio of listed securities, IBJ continued to use the lower of cost or market value
method. As a result, devaluation losses of ¥266.9 billion were recorded for fiscal 1997. In addition, under theLand Properties Revaluation Act, IBJ revalued its land used for business operations and recorded the difference
between the cost and market value in Surplus from Land Revaluation on the liabilities side of the balance sheets.
Principal financial data for the past six years are shown in the accompanying table.
(All figures are on a non-consolidated basis, unless stated otherwise.)

Income Analysis
Core Business Profit (gyomu jun-eki) for fiscal 1997 rose significantly, as mentioned above.
The following is the analysis of Gross Core Business Profit by its principal components. Net Interest Income
declined because a portion of interest income is now included in Trading Income and Trading Expenses due tothe introduction of mark-to-market accounting for the Trading Accounts. Net Interest Income also declined
because the decrease in interest income exceeded the drop in funding costs.
Profit from Bond Operations, however, rose to ¥34.3 billion, a substantial increase of ¥39.5 billion from fiscal
1996, reflecting active and timely treasury operations during volatile interest rate situations. Fees and Commissions also increased, mainly because of higher loan-related fees. As a result, Gross Core Business Profit
increased by ¥24.5 billion, to ¥418.2 billion, the highest level ever achieved.
General and administrative expenses—which are the sum of personnel and nonpersonnel expenses and taxes,
as shown in the Summary Income Statement on page 54—rose by ¥8.2 billion, to ¥165.4 billion. Although efforts
continued throughout the fiscal year to reduce expenses, expenses rose to this level because of higher investments in systems necessary to prepare for Japan’s Big Bang financial reforms, the increase in the national consumption tax rate, and higher costs of foreign currency denominated expenses due to the decline in the valueof the yen.
Until March 31, 1997, the transfer to the General Reserve for Possible Loan Losses had been calculated by multiplying the outstanding amount of loans by rates specified in the Accounting Standards for Banks. On the basisof IBJ’s new standards for write-offs and a transfer, mentioned previously, however, the reserve at March 31,
1998, was calculated based on the ratio of actual loan losses, formulated from loss experiences over a certain
period of time in the past. As a result of this new approach, the net increase in the General Reserve for Possible
Loan Losses amounted to ¥14.0 billion.
In view of the introduction of the principle of Prompt Corrective Action and with the objective of substantially enhancing the soundness of IBJ’s assets, IBJ recorded appropriate write-offs and transfers to RPLL for thoseassets for which the recovery appeared difficult. As mentioned earlier, such write-offs and transfers, together
with losses on loan sales, amounted to ¥633.8 billion for fiscal 1997, the second largest amount since fiscal
1995 when write-offs of loans to insolvent housing loan companies (jusen) and other nonperforming loans
were recorded.

53

54

Management’s Discussion and Analysis

The majority of the previously mentioned losses represents a transfer to Specific Reserve for Possible Loan
Losses of ¥506.2 billion. Other losses include Written-Off Claims of ¥61.1 billion, losses on sales of loans to
restructuring countries and other loans of ¥28.8 billion, losses on sales of loans to the Cooperative Credit Purchasing Company, Limited (CCPC), of ¥21.7 billion, and provisions of ¥15.8 billion to the Reserve for Contingent
Losses relating to Loans Sold to cover possible “secondary losses” on loans that had already been sold to the
CCPC.
IBJ also recognized devaluation losses of ¥266.9 billion on its stock portfolio, due largely to the weakness inJapan’s stock markets. (IBJ continues to use the lower of cost or market method in evaluating its stock portfolio.)
Net profit on the sales of stocks amounted to ¥334.9 billion. This was gained from outright sales of stocks from
IBJ’s portfolio and stock-index futures operations. As a consequence, profits of these stock accounts (net profitson the sales of stocks and devaluation losses on stocks) amounted to ¥67.9 billion.
As a result of all these factors mentioned above, IBJ reported an annual loss for the first time since fiscal 1995,
when it recorded the loss from jusen loans.

Summary Income Statement(in billions of yen)
Fiscal 1997

Fiscal 1996

Fiscal 1995

Change from Fiscal 1996
to Fiscal 1997

Gross Core Business Profit¥418.2¥393.7¥413.0¥ 24.5Net Interest Income
Domestic Operations
International Operations
Profit (Loss) from Bond Operations
Fees and Commissions
Trading Profit
Profit from Foreign Exchange Operations
Other Core Business Profit

297.8
240.6
57.1
34.3
76.9
(6.2)
11.7
3.7

336.4
248.8
87.6
(5.2)
36.9
—
16.2
9.2

250.6
205.9
44.7
86.7
46.9
—
13.1
15.5

(38.6)(8.2)(30.5)
39.5
40.0
(6.2)
(4.5)
(5.5)

Transfer to General Reserve for Possible Loan Losses
General and Administrative Expenses
Debenture Cost

14.0
165.4
8.0

21.1
157.2
10.6

0.4
157.3
6.7

(7.1)
8.2
(2.6)

Core Business Profit

230.6

204.6

248.5

26.0

Funding Cost of Money Trusts(20.5)(32.9)(35.6)

12.4

Other Profit (Loss)
Net Profit from Stock Transactions
Loan Losses(567.9)67.9(633.8)(128.0)103.1(261.2)(379.9)450.6(856.0)(439.9)(35.2)(372.6)

Income (Loss) before Income Taxes(341.7)41.2(130.3)(382.9)Net Income (Loss)(341.9)41.1(132.5)(383.0)Management’s Discussion and Analysis

Loan Loss Experiences(in billions of yen)
Fiscal 1997

Fiscal 1996

Fiscal 1995

Change from Fiscal 1996
to Fiscal 1997

Loan Write-Offs
Transfer to Specific Reserve for Possible Loan Losses
Losses on Sales of Loans to the CCPC
Losses on Sales of Loans to Restructuring Countries
and Other Loans
Transfer to Reserve for Contingent Losses relating
to Loans Sold to the CCPC

¥ 61.1506.2
21.7¥ 10.4203.2
10.1¥605.1226.3
16.9¥ 50.7
303.0
11.6

28.8

26.2

7.5

2.6

15.8

11.1

—

4.7

Total

¥633.8¥261.2¥856.0¥372.6

Balance Sheet Analysis
Assets

IBJ’s total assets rose by ¥1,690.8 billion, or 3.8%, to ¥45,140.8 billion. Loans and Bills Discounted fell by¥1,472.0 billion from the previous fiscal year-end, while IBJ responded positively to the financing needs of its
clients during the years; the principal reasons for the decline were the securitization of certain loan assets andactive efforts to write off and recover nonperforming exposure in the interest of improving the efficiency andsoundness of IBJ’s loan portfolio. According to the industrial categories defined by the Bank of Japan, IBJ had¥3,651.9 billion in loans outstanding to the “finance and insurance” industry, which accounted for 18.4% of allloans from domestic offices (excluding the Special Account for Japan Offshore Market Transactions). A highpercentage of these loans, however, was outstanding to sales finance subsidiaries of IBJ’s principal clients inthe electric machinery, automobile, steel, and trading industries.
IBJ’s investment securities portfolio rose by ¥1,872.0 billion, to ¥8,699.6 billion. Unrealized gains on listed
securities declined to ¥477.5 billion, as a result of the sharp deterioration in stock market conditions.
Beginning with fiscal 1997, IBJ introduced mark-to-market accounting methods for trading operations.
Those operations are designated as “Trading Transactions,” which include derivatives to meet a diverse rangeof customer needs and short-term, own-account trading. Assets held for Trading Transactions amounted to¥2,119.6 billion as of March 31, 1998, and are shown in Trading Assets.
Liabilities As a result of continued efforts in marketing IBJ’s debentures giving due regard to the financial
environment, the balance of coupon debentures rose by ¥346.2 billion. The balance of discount debentures, however, declined by ¥1,666.1 billion. Total debentures outstanding as of March 31, 1998, amounted to ¥20,239.7 billion.
Deposits, including certificates of deposit, declined by ¥576.2 billion, mainly at IBJ’s domestic offices, andstood at ¥10,139.9 billion as of March 31, 1998. Trading Liabilities—which, in the same way as Trading Assets,
include specified transactions—amounted to ¥1,738.7 billion.
As a result of the passage of the Land Properties Revaluation Act (promulgated March 31, 1998, Law No. 34),
IBJ revalued its land that is used in its business operations. The Surplus from Land Revaluation account shows
the results of this revaluation, amounting to ¥180.6 billion.
Shareholders’ Equity As noted in the income analysis section, IBJ recognized loan losses of ¥633.8 billion
for fiscal 1997 and reported a net loss of ¥341.9 billion. As a consequence, Shareholders’ Equity declined by¥363.6 billion, to ¥1,066.9 billion.

55

56

Management’s Discussion and Analysis

Balance Sheet Summary(in billions of yen)
Fiscal 1997

Fiscal 1996

Fiscal 1995

Change from fiscal 1996
to fiscal 1997

AssetsLoans and Bills Discounted
Securities
Trading Assets
Other Assets
Securities in Custody
Cash Placed as Collateral on Securities Borrowed¥45,140.8
23,241.5
8,699.6
2,119.6
4,673.7
1,834.0
1,773.9¥43,450.0
24,713.5
6,827.6—
4,179.1
1,532.6
1,426.8¥38,365.7
23,600.3
6,747.7—
1,181.6
345.9—¥1,690.8(1,472.0)
1,872.0
2,119.6
494.6
301.4
347.1

Liabilities
Debentures
Deposits
CDs
Trading Liabilities

44,073.9
20,239.7
6,786.9
3,352.9
1,738.7

42,019.5
21,559.6
8,180.9
2,535.3—

37,182.5
21,211.4
7,312.1
1,347.5—

2,054.4(1,319.9)(1,394.0)
817.6
1,738.7

Shareholders’ Equity

1,066.9

1,430.5

1,183.1(363.6)¥45,140.8¥43,450.0¥38,365.7¥1,690.8

Total Liabilities and Shareholders’ Equity

Nonperforming Loans
Nonperforming Loans are defined in accordance with the previous categorization adopted by the Federationof Bankers Associations (the Association), i.e., Loans to Legally Bankrupt Companies, Overdue Loans, Loans
with Reduced or Suspended Interest, and Financial Assistance Loans. The nonperforming loans declined from
¥1,235.1 billion at fiscal 1995 year-end to ¥1,084.4 billion at fiscal 1996 year-end and then to ¥1,037.4 billion
at fiscal 1997 year-end. In addition, the ratio of the nonperforming loans to the average balance of total loans
outstanding fell from 5.0% in fiscal 1995 to 4.3% in fiscal 1996 and then to 4.0% in fiscal 1997.
Fiscal 1997 experienced major corporate bankruptcies due to the prolonged stagnation of the Japanese economy. Despite this, IBJ continued its efforts in improving its asset quality by substantially upgrading the credit
management process, including the adoption of stricter risk management procedures. IBJ also made progressin removing nonperforming assets from its balance sheets through recoveries, write-offs, and sales of such loans.
With these efforts, the ratio of nonperforming loans to total loans declined as mentioned in the preceding
paragraph.
Thus, in fiscal 1997, IBJ actively wrote off loans and also made additions to RPLL based on the strict andobjective self-assessments of loan quality. As a consequence, the total value of RPLL increased sharply, from¥557.5 billion as of March 31, 1997, to ¥899.8 billion as of March 31, 1998. Accordingly, the ratio of RPLL to nonperforming loans increased substantially, from 51.4% to 86.7%, over the same period. It should be noted, however, that the nonperforming loans include those secured by appropriate value of collateral and, therefore, without
serious problems in recovering principal and interest. Taking these factors into account, the above covering ratio
is considered sufficient.

Management’s Discussion and Analysis

Balance of Nonperforming Loans(in billions of yen)
Fiscal 1997

Fiscal 1996

Fiscal 1995

Loans to Legally Bankrupt Companies
Overdue Loans
Loans with Reduced or Suspended Interest
Financial Assistance Loans¥ 299.6
434.6
42.9
260.2

¥ 329.4
402.6
92.1
260.2

¥ 121.8
490.2
372.8
250.2

Total (A)
Ratio to Average Balance of Loans Outstanding¥1,037.4
4.0%¥1,084.4
4.3%¥1,235.1
5.0%

Fiscal 1997

Fiscal 1996

Fiscal 1995

General Reserve for Possible Loan Losses
Specific Reserve for Possible Loan Losses
Reserve for Loans to Restructuring Countries¥106.2793.3
0.2¥ 92.2464.4
0.8¥ 71.0392.4
8.7

Total (B)Coverage Ratio (B/A)¥899.886.7%¥557.551.4%¥472.3
38.2%

Reserve for Possible Loan Losses and Coverage Ratios(in billions of yen)

Loans under Special Risk Review
Apart from the nonperforming loans discussed above, IBJ has voluntarily disclosed “Loans under Special Risk
Review“ in line with new standards defined by the Association. These new standards were similar to those
accepted by U.S. accounting standards. The balance of such loans at fiscal 1997 year-end was ¥1,569.4 billion.
This figure consists of Loans to Legally Bankrupt Companies and Overdue Loans under the previous standards
as well as loans past due three months or more and Restructured Loans. These are defined as follows:
Loans to Legally Bankrupt Companies and Overdue Loans: Exposure on which, under the AccountingStandards for Banks in Japan, unpaid interest may be treated as nonaccrual.
Loans past due three months or more: Exposure on which principal or interest is more than three months
past due. This category excludes Loans to Legally Bankrupt Companies and Overdue Loans.
Restructured Loans: Exposure for which IBJ has made certain modifications of terms for borrowers infinancial difficulty with the objectives of rehabilitation and assistance and thus promote the recovery of such
exposure. Such modifications may include reducing or suspending interest payments, granting grace periods
for payments of interest or principal, waiving claims, providing cash, accepting payment in nonmonetaryform, and other types of concessions. This category excludes Loans to Legally Bankrupt Companies, Overdue
Loans, and loans past due three months or more but includes Loans with Reduced or Suspended Interest and
Financial Assistance Loans under the previous standards by the Association.
This disclosure under the new standards includes loans that require a certain degree of special risk review
but that do not cause concern regarding the recovery of the principal. Accordingly, not all of the loans in thiscategory of problem loans are nonperforming.

Balance of Loans under Special Risk Review(in billions of yen)
Fiscal 1997

Loans to Legally Bankrupt Companies and Overdue Loans
Loans Past Due Three Months or More up to Six Months
Restructured Loans¥ 734.2
14.5
820.6

Total
Ratio to Average Balance of Loans Outstanding¥1,569.4
6.1%

57

58

Management’s Discussion and Analysis

BIS Capital Adequacy Ratio (Consolidated Basis)
IBJ’s capital adequacy ratio rose by 122 basis points, to 10.26%, as a result of the following policy initiatives.
During fiscal 1997, ¥210.0 billion in subordinated debentures and US$1.0 billion in preferred securities were
issued through overseas subsidiaries. In addition, ¥100.0 billion in subordinated debentures was issued to the
Resolution and Recovery Trust Company in Japan. With these efforts, despite a decline in shareholders’ equity
due to the net loss and a drop in unrealized gains on securities, IBJ’s Tier I capital amounted to ¥1,444.4 billion(5.21% of risk assets) and Tier II capital rose to ¥1,399.7 billion (5.05% of risk assets).
The volume of risk-adjusted assets was reduced by ¥4,113.8 billion, to ¥27,716.8 billion. This reduction wasachieved through active measures to liquidate and securitize assets, making use, for example, of collateralized
loan obligations overseas and other means.

Capital Adequacy Ratios (Uniform International Standards)(in billions of yen)

Capital Ratio
CapitalTier I
Tier II
Unrealized Gains on Securities (45%)
Surplus from Land Revaluation (45%)
Subordinated Debt
Reserve for Possible Loan Losses, excluding Specific Reserves
Tier III
Risk-Adjusted Assets
On-Balance-Sheet Exposure
Off-Balance-Sheet Exposure
Market Risk Related Exposure

Fiscal 1997

Fiscal 1996

Fiscal 1995

10.26%¥ 2,844.1
1,444.4
1,399.7
183.4
81.2
1,018.5
116.4—
27,716.8
24,121.1
3,385.3
210.2

9.04%
¥ 2,878.6
1,536.3
1,342.2
384.4

8.59%
¥ 2,656.4
1,328.2
1,622.1
473.0

853.6
104.2

784.1
71.0

31,830.6
28,107.1
3,723.5

30,906.3
27,224.3
3,681.9

Management’s Discussion and Analysis

Financial Derivatives and Forward Foreign Exchange (Consolidated Basis)(in billions of yen)March 31, 1997

March 31, 1998
Notional
principal

CreditequivalentamountNotional
principal

Interest Rate Swaps
Currency Swaps
Forward Foreign ExchangeInterest Rate Options (Purchased)
Currency Options (Purchased)
Other Derivative Instruments
Impact of Master Netting Instruments¥ 77,978.2
6,177.5
31,712.6
4,904.0
717.5
5,392.3—¥1,763.1736.7
1,777.7
46.7
30.1
39.1
(948.1)

Total¥126,882.3¥3,445.4

CreditequivalentamountMarch 31, 1996
Notional
principal

Creditequivalentamount¥ 67,955.4
6,140.8
40,375.3
4,298.5
1,620.1
2,515.7—¥1,269.2 ¥ 61,996.3
647.8
6,284.7
1,887.1
40,318.6
33.6
408.7
90.1
511.5
4.9
6,776.8——¥1,459.0
1,089.6
2,066.1
8.3
12.7
85.7
—

¥122,906.1¥3,932.8 ¥116,296.9¥4,721.7

Notes: 1. Figures listed above are on a consolidated basis and are calculated in accordance with the BIS guidelines.
2. In computing the credit equivalent amount, the current exposure method was used (By March 31, 1997, the original exposure method was used in some cases.).
3. The impact of netting agreements was taken into account by March 31, 1997, and was separately disclosed from March 31, 1998.
4. The amounts of transactions that are excluded for capital adequacy guidelines are public exchange transactions and foreign exchange related transactions for which the original contract has a duration of 14 days or less and are shown below.
(in billions of yen)March 31, 1998

March 31, 1997

March 31, 1996

Notional principal
amountNotional principal
amountNotional principal
amountForward Foreign ExchangeInterest Rate Options (Written)
Interest Rate Options (Purchased)
Currency Options (Written)
Currency Options (Purchased)
Other Derivative Instruments

¥

Total

¥105,382.8

5,560.2
9,898.0
5,647.1887.0
1.6
83,388.6¥

2,342.9
14,233.9
8,765.2
1,107.1
16.3
73,956.3¥100,421.9¥

6,535.7
4,414.8
3,199.8
565.0
27.6
91,029.7¥105,773.0

59

60

Consolidated Balance Sheets(in millions of yen)(in thousands of
U.S. dollars)

March 31, 1997

March 31, 1998¥

553,2033,646,837
14,491
3,466,255—
171,157
8,847,249
24,001,429
373,592
5,533,487
295,762
15,994285,9872,024,337¥ 2,318,157
2,846,960
5,152—
943,457
674,927
6,808,045
25,518,440
436,174
4,759,124
120,537
26,531
126,849
2,382,608$¥49,229,785¥46,966,968$372,670,597(in millions of yen)(in thousands of
U.S. dollars)

March 31, 1998

March 31, 1997

March 31, 1998

Liabilities and Shareholders’ Equity
Liabilities
Debentures (Note 12)
Deposits (Note 13)
Call Money
Borrowed Money (Note 14)
Trading Liabilities (Notes 2 (c) and 4)
Foreign Exchanges (Note 8)
Other Liabilities (Note 15)
Reserve for Possible Loan Losses (Note 2 (i))
Reserve for Retirement Allowances
Reserve for Contingent Losses relating to Loans Sold
Other Reserves (Note 16)
Minority Interest in Consolidated Subsidiaries (Note 17)
Acceptances and Guarantees (Note 18)
Surplus from Land Revaluation (Note 10)¥20,840,941
10,053,551
4,251,988
1,804,335
2,286,959
12,953
5,325,539
922,235
50,802
19,776478
135,218
2,024,337
180,648¥22,137,519
10,871,309
3,403,862
1,386,132—
11,1784,577,189
576,950
49,23011,115
12,6883,202
2,382,608—$157,766,399
76,105,612
32,187,647
13,658,858
17,312,338
98,05640,314,457
6,981,345
384,573
149,706
3,624
1,023,608
15,324,282
1,367,513

Total Liabilities

47,909,766

45,422,988

362,678,018

Shareholders’ Equity
Common Stock (Note 19)
Capital Surplus
Legal Reserve (Note 20)
Retained Earnings
Treasury Stock465,105
361,632
76,431
416,856(5)

465,105
361,632
72,112645,141(12)

3,520,857
2,737,564
578,587
3,155,610(39)

Total Shareholders’ Equity

1,320,019

1,543,979

9,992,579¥49,229,785¥46,966,968$372,670,597

March 31, 1998

AssetsCash and Due from Banks (Note 3)
Call Loans
Commercial Paper and Other Debt Purchased
Trading Assets (Notes 2 (c) and 4)
Trading Account Securities (Notes 2 (c), 2 (d), 5 and 29)
Money Held in Trust (Note 30)
Investment Securities (Notes 6 and 29)
Loans and Bills Discounted (Note 7)
Foreign Exchanges (Note 8)
Other Assets (Note 9)
Premises and Equipment (Note 10)
Deferred Debenture Charges (Note 11)
Deferred Income Taxes
Customers’ Liabilities for Acceptances and Guarantees (Note 18)
Total Assets

Total Liabilities and Shareholders’ Equity

See accompanying “Notes to Consolidated Financial Statements" which are an integral part of these statements.

4,187,761
27,606,645
109,698
26,239,635—
1,295,668
66,973,878
181,691,365
2,828,105
41,888,624
2,238,929
121,078
2,164,929
15,324,282

Consolidated Statements of Income(in millions of yen)(in thousands of
U.S. dollars)

Fiscal 1997*

Fiscal 1996*

Fiscal 1995*

Fiscal 1997*

IncomeInterest Income on:
Loans and Discounts
Securities
OthersFees and Commissions
Trading Income (Note 21)
Other Operating Income (Note 22)
Other Income (Note 23)
Transfer from Other Reserves¥ 859,112
243,380
1,203,505
122,8499,467
473,434
397,938
12,213¥1,044,701
212,443
1,260,933
75,276—563,997245,9970¥1,109,931
241,148
1,281,777
79,636—
460,541
558,8064$ 6,503,500
1,842,395
9,110,564
929,977
71,6703,583,910
3,012,403
92,457

Total Income

3,321,902

3,403,347

3,731,847

25,146,876

Expenses
Interest Expenses on:
Debentures
Deposits
Borrowings and Rediscounts
OthersAmortization of Debenture Discounts
Fees and Commissions
Trading Expenses (Note 21)
Other Operating Expenses (Note 24)
General and Administrative Expenses
Other Expenses (Note 25)
Transfer to Other Reserves

374,840
352,186
53,153
1,200,828
34,952
19,7388,452
431,913217,453
941,4973

430,254
382,598
243,139
1,086,322
52,401
18,068—539,661
202,847
402,544
1,031

666,380
433,818
156,797
1,030,601
110,366
17,028—342,068
198,204
880,729
2,178

2,837,553
2,666,059
402,371
9,090,301
264,595
149,418
63,9883,269,596
1,646,124
7,127,158
28

Total Expenses

3,635,020

3,358,870

3,838,173

27,517,191

Income (Loss) before Income Taxes and Others
Provision for Income Taxes:
Current
Deferred
Minority Interest in Net Income
Amortization of Consolidation Difference(313,118)

44,477(106,325)(2,370,315)

3,935(114,695)
169
131

5,628
25,049
1,137
(76)

6,207
(49,825)843—

29,794(868,248)
1,287
997

¥ (63,551)$ (1,534,145)(in yen)(in U.S. dollars)

Net Income (Loss)¥ (202,660)¥

12,740Per Share Amounts (Note 26)
Net Income (Loss)
Cash Dividends

¥

¥

5.24
8.50

(79.80)8.50

See accompanying “Notes to Consolidated Financial Statements" which are an integral part of these statements.
* Fiscal 1997, 1996 and 1995 represent the fiscal years ended March 31, 1998, 1997 and 1996, respectively.

¥(27.02)8.50$(0.604)
0.064

61

62

Consolidated Statements of Retained Earnings(in millions of yen)(in thousands of
U.S. dollars)

Fiscal 1997*

Fiscal 1996*

Fiscal 1995*

Fiscal 1997*

Balance at the Beginning of Year
Additions:
Increase due to Consolidation of a Subsidiary
Not Consolidated in the Previous Year
Deductions:
Transfer to Legal Reserve
Cash Dividends
Bonuses for Directors and Statutory Auditors
Net Income (Loss)
Translation Adjustments¥645,141¥656,387¥744,169$4,883,736

280

—

—

2,120

4,318
21,586—(202,660)—

3,998
19,987—
12,740—

4,033
19,987
180(63,551)(30)

32,692
163,409—(1,534,145)—

Balance at the End of Year

¥416,856¥645,141¥656,387$3,155,610

See accompanying “Notes to Consolidated Financial Statements" which are an integral part of these statements.
* Fiscal 1997, 1996 and 1995 represent the fiscal years ended March 31, 1998, 1997 and 1996, respectively.

Consolidated Statements of Cash Flows(in millions of yen)
Fiscal 1996*

Fiscal 1997*

Cash Flows from Operating Activities:
Net Income (Loss)
Adjustments to Reconcile Net Cash Providedby (Used in) Operating Activities:
Depreciation and Amortization
Net Transfer to Reserve for Possible Loan Losses
Written-Off Claims
Losses on Sales of Loans
Investment Securities Gains, Net
Deferred Income Taxes
Minority Interest in Net Income
Net Change in Trading Account Securities (Note 2 (c))
Net Change in Trading Assets/Liabilities (Note 2 (c))
Net Change in Accruals and Others, Net¥ (202,660)¥

Fiscal 1997*(63,551)$ (1,534,145)

51,992
214,377
11,90436,721(99,142)
25,0491,137(405,525)—(1,187,020)

10,875
221,508606,811
24,646(548,336)(49,825)843
189,063—(43,833)

264,319
3,954,268
89,976
382,914(2,791,634)(868,243)
1,279—(1,785,306)
4,919,787

347,847(1,337,766)

348,201

2,633,215(799,877)(9,339)503,770
1,275,023
1,123,981
72,073(3,527,041)(9,833)62,582(1,454,534)
17,846(199,945)(1,435,402)
783,468
75,843(815,150)(29,500)(87,719)(606,871)(10,110)
301,648(1,145,887)
1,570,152
44,886(1,629,834)
33,332(25,316)(6,055,087)(70,696)
3,813,550
9,651,954
8,508,563
545,594(26,699,784)(74,441)
473,747(1,308,661)(3,145,092)(1,467,998)(9,906,600)(817,758)
848,126

1,910,542
867,884(312,359)
675,657(6,190,446)
6,420,333

418,203—
10,392,563(11,776,972)—
131,847(21,586)
1,775

92,065
10,00013,796,654(13,112,910)
226,120—(19,987)(4,047)(239,211)
220,000
13,935,017(14,127,386)——(19,987)
9,557

3,165,806—
78,671,942(89,151,949)—
998,084(163,406)
13,437(823,801)

3,766,320

141,288(6,236,199)

19,662

46,956

14,391

148,843(1,764,954)
2,318,157(669,582)
2,987,739(964,117)
3,951,856(13,360,741)
17,548,502

553,203¥ 2,318,157¥ 2,987,739$ 4,187,761

Cash Flows from Investing Activities:
Net Change in Call Loans
Net Change in Commercial Paper and Other Debt Purchased
Net Change in Money Held in Trust
Net Change in Loans and Bills Discounted
Proceeds from Sales of Investment Securities
Proceeds from Maturities of Investment Securities
Purchase of Investment Securities
Capital Expenditure of Premises and Equipment, Net
Others, Net
Net Cash Used in Investing Activities

Net Cash Used in (Provided by) Financing Activities
Effect of Exchange Rate Changes on Cash and Cash Equivalents
Net Change in Cash and Cash Equivalents
Cash and Cash Equivalents at the Beginning of Year
Cash and Cash Equivalents at the End of Year

12,740Fiscal 1995*

34,916522,358
11,88550,583(368,774)(114,695)
169—(235,839)
649,903

Net Cash Provided by (Used in) Operating Activities

Cash Flows from Financing Activities:
Net Change in Deposits
Net Change in Call Money
Net Change in Borrowed Money, Other
than Subordinated Borrowed Money
Net Change in Subordinated Borrowed Money
Proceeds from Issuance of Debentures
Repayment of Debentures
Proceeds from Issuance of New Shares
Issuance of Preferred Stocks by a Consolidated Subsidiary
Dividends Paid
Others, Net¥(in thousands of
U.S. dollars)¥

See accompanying “Notes to Consolidated Financial Statements” which are an integral part of these statements.
* Fiscal 1997, 1996 and 1995 represent the fiscal years ended March 31, 1998, 1997 and 1996, respectively.

63

64

Notes to Consolidated Financial Statements

1. Basis of Presentation
The accompanying consolidated financial statements have been prepared from the consolidated financial statements filed with the Ministry of Finance of Japan as required by the Securities and Exchange Law of Japan, in
conformity with the accounting principles and practices generally accepted in Japan.
The Consolidated Statements of Cash Flows for each of the three years in the period ended March 31, 1998,
have been prepared for the purpose of inclusion in this document, as such statements are not customarily
prepared by banks in Japan and are not required to be filed with the Ministry of Finance.
The amounts indicated in millions of yen are rounded down by dropping the figures below one million.
Totals may not add up exactly because of such rounding down.
The amounts as of March 31, 1998 expressed in U.S. dollars have been translated, for convenience only, at¥132.10 per dollar, the market exchange rate prevailing on the Tokyo Foreign Exchange Market at March 31, 1998.
For the convenience of readers, certain items on the domestically issued financial statements have been
reclassified and rearranged.

2. Basic Accounting Policy(a) Principles of Consolidation: The consolidated financial statements include the accounts of The Industrial Bank ofJapan, Limited (“IBJ”) and 42 of its subsidiaries, together referred to as the “IBJ Group,” including The Industrial
Bank of Japan Trust Company (a U.S. corporation), IBJ International plc (a U.K. corporation), IBJ Schroder Bank
& Trust Company (a U.S. corporation), IBJ Securities Co., Ltd. (a domestic corporation) and IBJ Preferred CapitalCompany L.L.C. (a U.S. corporation).
Investments in unconsolidated subsidiaries (majority owned) and affiliates (20% to 50% owned), which are
not significant in the consolidated financial statements, are carried at cost.
Any difference between the cost of an investment in a subsidiary and the amount of underlying equity in net
assets of the subsidiary is allocated to the applicable accounts, where identifiable, and the remaining portion ischarged or credited to income, as the case may be, in the year in which it occurs.
All material intercompany transactions, account balances and unrealized profits have been eliminated on
consolidation.
The majority of subsidiaries are consolidated on the basis of their December 31 fiscal year-end.

(b) Cash Flows: For the purpose of the Consolidated Statements of Cash Flows, Cash and Cash Equivalents consistsof Cash and Due from Banks on the Consolidated Balance Sheets.

(c) Trading Assets and Liabilities: Starting fiscal 1997, trading transactions that seek gains on short-term fluctuations
and arbitrage in interest rates, currency prices, market prices of securities and related indices (“Trading
Transactions”) have been recognized at the transaction date. These have been recorded in Trading Assets or
Trading Liabilities on the Consolidated Balance Sheets at March 31, 1998. Gains or losses on these transactions
have been recorded in “Trading Income” or “Trading Expenses” in the Consolidated Statements of Income for fiscal 1997.
Marketable securities, marketable securities oversold and commercial paper included in Trading Assets andTrading Liabilities are stated at fair value at the balance sheet date. Derivative financial products such as swaps,
forward contracts and options transactions are stated at their hypothetical settlement values at the balance sheet
date on the assumption that settlement took place then.
For fiscal 1997, Trading Income and Trading Expenses are recorded as interest income or expenses actually
paid or received plus:
Marketable securities and commercial paper
The difference in valuation gains or losses between the beginning balance and the ending balance; orNotes to Consolidated Financial Statements

Derivative financial products
The difference in hypothetical settlement gains or losses between the beginning balance and the ending balance
In fiscal 1997, IBJ modified the format for its consolidated financial statements in accordance with the revisionof the Enforcement Regulation of the Long-Term Credit Banking Law.
The format for the Consolidated Balance Sheets at March 31, 1998 was modified as follows:(1) “Trading Account Securities” in prior years and trading account bonds oversold formerly included in“Other Liabilities” were included in “Trading Assets” and “Trading Liabilities”, respectively. Balances of underwriting agreements of bonds for which the offering continued through the balance sheet date are also included
in “Trading Assets”.
(2) Derivative financial products that relate to trading securities were included in “Trading Assets” or“Trading Liabilities”. Option premiums therefrom were included in “Other Assets” or “Other Liabilities” inprior years.
(3) Those securities included in “Investment Securities” and bonds oversold included in “Other Liabilities” inprior years that relate to Trading Transactions were included in “Trading Assets” and “Trading Liabilities”,
respectively.
(4) Derivative financial products that relate to securities and bonds oversold mentioned in (3) above were
included in “Trading Assets” or “Trading Liabilities” at March 31, 1998. Option premiums therefrom were
included in “Other Assets” or “Other Liabilities” in prior years.
(5) Other derivative financial products that relate to Trading Transactions were included in “Trading Assets”
or “Trading Liabilities” at March 31, 1998. Option premiums therefrom were included in “Other Assets”
or “Other Liabilities” in prior years.
(6) Due from banks and commercial paper that relate to Trading Transactions were included in “Trading
Assets” at March 31, 1998. These were included in “Cash and Due from Banks” or “Commercial Paper andOther Debt Purchased” in prior years.
The format for the Consolidated Statements of Income for fiscal 1997 was modified as follows:(1) “Trading Income” and “Trading Expenses” included the following income or expenses from Trading
Securities:(i) Gains or losses on sales and losses on devaluation of Trading Securities, previously included in “Other
Operating Income” or “Other Operating Expenses”(ii) Interest and dividends received from Trading Securities, previously included in “Interest Income on
Securities”(iii) Interest expenses on Trading Securities, previously included in “Interest Expenses on Others”(iv) Exchange taxes on transacting Trading Securities, previously included in “General and Administrative
Expenses”(v) Commission income from underwriting agreements, previously included in “Fees and Commissions”(2) “Trading Income” and “Trading Expenses” included the following income or expenses from Securities
Held to Hedge Trading Transactions:(i) Gains or losses on sales, redemption or devaluation of bonds held for Trading Transactions, previously
included in “Other Operating Income” or “Other Operating Expenses”(ii) Interest and dividends received from bonds held to hedge Trading Transactions, previously included in“Other Operating Income “ or ” Other Operating Expenses”(iii) Exchange taxes on transacting Securities Held to Hedge Trading Transactions, previously included in“General and Administrative Expenses”

65

66

Notes to Consolidated Financial Statements(3) “Trading Income” and “Trading Expenses” included the following income or expenses from derivative
financial products for Trading Transactions:(i) Interest income, interest expenses or valuation gains or losses from derivative financial products for
Trading Transactions, previously included in “Interest Income on Others” and “Interest Expenses on
Others”(ii) Exchange taxes on transacting derivative financial products for Trading Transactions, previously included in “General and Administrative Expenses”(4) “Trading Income” and “Trading Expenses” included the following income or expenses from other Trading
Transactions:(i) Interest income, interest expenses or valuation gains or losses on certificates of deposit and commercial
paper held for Trading Transactions, previously included in “Interest Income on Others” or “Interest
Expenses on Others”.
Establishing trading accounts in accordance with the Banking Law, Article 17-2, referred by the Long-Term
Credit Banking Law, Article 17 had the following effect on the consolidated financial statements of IBJ for fiscal 1997:(in millions of yen)

Increase in Total Assets
Increase in Total Liabilities
Net Decrease in Total Income:Decrease in Interest Income
Increase in Trading Income
Net Decrease in Total Expenses:
Decrease in Interest Expenses
Increase in Trading Expenses
Decrease in Loss before Income Taxes and Others¥1,458,807
1,435,923
97,372
121,926
24,553
115,525
117,194
1,669
18,152

Some elements in Trading Income and Trading Expenses were offset in presentation of the Consolidated
Statements of Income.
The consolidated subsidiaries record Trading Transactions and other similar transactions in a same manneras IBJ.

(d) Trading Account Securities: At March 31, 1997, Trading Account Securities held by IBJ listed on stock exchanges
were valued at the lower of cost or market, cost being determined by the moving-average method. Trading
Account Securities held by IBJ not listed on stock exchanges were valued at the moving-average cost.
Trading Account Securities held by the consolidated subsidiaries were principally valued at market.

(e) Investment Securities: Investment Securities held by IBJ listed on stock exchanges, except for Japanese national
and local government bonds which are valued at the moving-average cost, are valued at the lower of cost or market, cost being determined by the moving-average method. Investment Securities held by IBJ not listed on stock
exchanges are valued at the moving-average cost.
In accordance with the Accounting Standards for Banks, securities held under the fund trusts established by
IBJ and managed by the trustees for short-term investments in designated securities are valued by the same
methods applicable to securities held by IBJ.
Investment Securities held by the consolidated subsidiaries are principally valued at cost as determined by the
specific identification method.

(f) Translation of Foreign Currencies: (1) Foreign currency assets and liabilities at domestic offices of IBJ are primarily translated into yen at the exchange rates in effect at the balance sheet date. Certain assets and liabilities,
denominated in foreign currencies, approved for special treatment by the Ministry of Finance of Japan, arevalued at the historical exchange rates prevailing at the transaction dates.
Premiums or discounts on spot and forward exchange swaps related to funding transactions are recognizedas part of interest income or expenses over the life of the contract. Non-swap forward foreign exchange contracts

Notes to Consolidated Financial Statements

are valued at the forward rates prevailing at the balance sheet date for the remaining maturity of the contract.
Gains and losses on these forward foreign exchange contracts are recognized in the Consolidated Statementsof Income.
The financial statements of overseas offices of IBJ, which are maintained in the respective local currencies,
have been converted into yen at the exchange rates in effect at the balance sheet date.
(2) Foreign currency accounts of the consolidated overseas subsidiaries are translated into their home currencies
at the respective exchange rates in effect at the balance sheet date.
The financial statements of the consolidated overseas subsidiaries are translated into yen at the exchange rates
in effect at the balance sheet date, except for the beginning balances of their Retained Earnings, which are translated at the historical rates. This is in accordance with the Revised Accounting Standard for Foreign Currency
Transactions issued on June 7, 1995 which IBJ has applied since fiscal 1996. This change did not have any impact
on Net Income.
Until fiscal 1995, the difference arising from the application of the different exchange rates to the beginningbalances of their Retained Earnings had been stated as “Translation Adjustments” in the Consolidated Statements of Retained Earnings.

(g) Premises and Equipment: Premises and Equipment is stated at cost less accumulated depreciation.
In accordance with the Accounting Standards for Banks, depreciation of buildings and equipment of IBJ
has been computed by the declining balance method at the rates permitted for taxation purposes.
Until fiscal 1996, depreciation expenses for buildings were calculated under the declining balance method at
160% of rates under the Japanese Tax Law. IBJ changed the depreciation rates for buildings in fiscal 1997 reflecting the revision in the Accounting Standards for Banks. This change resulted in the decrease in Loss before
Income Taxes and Others of ¥2,306 million.
Premises and Equipment of the consolidated subsidiaries are depreciated principally by the straight-line
method over the estimated useful lives.

(h) Deferred Debenture Charges: Deferred Debenture Charges represents discounts and issuance costs of debentures
which have been deferred and amortized over the term of the debenture using the straight-line method.

(i) Reserve for Possible Loan Losses: Effective on March 31, 1998, IBJ has established Reserve for Possible Loan
Losses based on its internal standard that is in accordance with the Accounting Standards for Banks. The criteria
for establishing reserves are as follows:— For claims to borrowers that are, in fact or in effect, bankrupt, IBJ reserves 100% of the claims less recoverable amounts from collateral and from guarantees.
— For claims to borrowers that are in danger of going bankrupt, IBJ reserves amounts deemed necessary
based on overall solvency analyses in conjunction with the recoverable amounts from collateral and fromguarantees.
— For other claims, IBJ provides for reserves at rates formulated from past credit histories of the debtors.
— For foreign claims, IBJ provides for reserves to cover potential losses on loans to certain less developed
countries based on analyses on the political and economical climate in accordance with the AccountingStandards for Banks.
The Credit Risk Management Department has conducted self-assessments of all claims with the operating
sections based on its internal standard as to their collectibility. The Credit Examination Department, whichis independent from these sections, has reviewed self-assessments. Reserve for Possible Loan Losses has been
established based on these examination results.
At March 31, 1997, IBJ provided for reserves as follows:(i) a general reserve calculated by multiplying the outstanding amount of loans by rates specified in the
Accounting Standards for Banks

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68

Notes to Consolidated Financial Statements(ii) a further reserve based on the consideration of the possibility of specific loan losses(iii) a reserve to cover potential losses on loans to certain restructuring countries in accordance with the
Accounting Standards for Banks
The consolidated subsidiaries provide their reserves for possible loan losses at the amount considered necessary based on the management’s risk assessment of the loan portfolio.

(j) Reserve for Contingent Losses relating to Loans Sold: Reserve for Contingent Losses relating to Loans Sold isestablished to cover contingent losses on loans sold to the Cooperative Credit Purchasing Company, Limited,taking account of the value of collateral pledged. This reserve is in accordance with Article 287-2 of the JapaneseCommercial Code.

(k) Reserve for Retirement Allowances and Pension Plan: Reserve for Retirement Allowances of IBJ is set aside forpayments to employees who retire. In accordance with the Accounting Standards for Banks, the provision isbased on the amount which would have been required if all bank employees had voluntarily retired at the balance sheet date. In addition, IBJ has a non-contributory funded pension plan for eligible employees. IBJ’s policy
for the plan is to fund and charge to income normal costs as accrued on the basis of an actuarial method acceptedin Japan.
The consolidated subsidiaries principally have funded pension plans for their employees.

(l) Income Taxes: IBJ is subject to Japanese corporation tax, enterprise taxes and inhabitants’ taxes based on income.
The aggregate tax rate was approximately 47.9% for fiscal 1997 and 51.6% for fiscal 1996 and 1995. The enterprise
tax is included in “Other Expenses” in the accompanying consolidated financial statements.
Deferred income taxes are recognized in the consolidated financial statements for timing differences between
financial accounting and tax reporting purposes.

(m) Lease Transactions: Finance leases of IBJ and domestic subsidiaries where ownership does not transfer to thelessees are accounted for under the accounting principles applicable to operating leases.

3. Cash and Due from Banks
Cash and Due from Banks included certificates of deposit outstanding.

4. Trading Assets and Liabilities
Trading Assets and Liabilities at March 31, 1998 consisted of the following:(in millions of yen)(in thousands of
U.S. dollars)

March 31, 1998

March 31, 1998

Trading Assets:
Trading Securities
Derivatives for Trading Securities
Securities Held to Hedge Trading Transactions
Derivatives for Securities Held to Hedge Trading Transactions
Derivatives for Trading Transactions
Other Trading Assets¥1,620,929
34
40,21364
1,637,121
167,892$12,270,470
265
304,419486
12,393,044
1,270,951

Total¥3,466,255$26,239,635

Trading Liabilities:
Trading Securities Oversold
Derivatives for Trading Securities
Securities Oversold to Hedge Trading Transactions
Derivatives for Securities Held to Hedge Trading Transactions
Derivatives for Trading Transactions¥ 786,972
17
3,567
127
1,496,275$ 5,957,396
135
27,004962
11,326,841

Total¥2,286,959$17,312,338

Refer to Note 2. Basic Accounting Policy (c).

Notes to Consolidated Financial Statements

5. Trading Account Securities
Trading Account Securities at March 31, 1997 consisted of the following:(in millions of yen)March 31, 1997

Japanese National Government Bonds
Japanese Local Government Bonds
Government-Guaranteed Bonds
Others¥246,705
17,10018,876
660,774

Total¥943,457

Refer to Note 2. Basic Accounting Policy (c) and (d).

6. Investment Securities
Investment Securities at March 31, 1998 and 1997 consisted of the following:(in millions of yen)(in thousands of
U.S. dollars)

March 31, 1998

March 31, 1997

March 31, 1998

Japanese National Government Bonds
Japanese Local Government Bonds
Corporate Bonds
Stocks and Shares (1)Other Securities¥3,513,430
131,430
348,382
2,428,820
2,425,185¥2,189,457
110,846407,279
2,653,415
1,447,044$26,596,747
994,934
2,637,260
18,386,228
18,358,709

Total¥8,847,249¥6,808,045$66,973,878(1) Stocks and Shares included investments in unconsolidated subsidiaries and affiliates of ¥6,363 million and¥18,948 million at March 31, 1998 and 1997, respectively.

7. Loans and Bills Discounted
Loans and Bills Discounted at March 31, 1998 and 1997 consisted of the following:

March 31, 1998

(in millions of yen)(in thousands of
U.S. dollars)

March 31, 1997

March 31, 1998

Bills Discounted
Loans on Notes
Loans on Deeds
Overdrafts¥

166,932
4,673,142
16,868,577
2,292,776¥

188,549
5,226,302
17,638,559
2,465,028

$

Total

¥24,001,429¥25,518,440$181,691,365

1,263,685

35,375,795
127,695,515
17,356,370

Loans and Bills Discounted at March 31, 1998 and 1997 includes the following IBJ’s loans.

Loans to Legally Bankrupt Companies
Overdue Loans
Loans with Reduced or Suspended Interest (1)Financial Assistance Loans (2)(in millions of yen)(in thousands of
U.S. dollars)

March 31, 1998

March 31, 1997

March 31, 1998

¥299,645
434,604
42,963
260,200¥329,406
402,666
92,161
260,200$2,268,324
3,289,966
325,235
1,969,720(1) Loans with Reduced or Suspended Interest represents those loans whereby, in order to assist or facilitate
the restructuring of the borrower, (i) the terms and conditions have been renegotiated such that the interest rateis less than the official discount rate; (ii) ‘spread loans’ where the achieved spread is zero or negative; or (iii) theinterest has been deferred and the interest income is not accrued.

69

70

Notes to Consolidated Financial Statements(2) Financial Assistance Loans represents those loans whereby, for the purpose of assisting or facilitating theborrower, part of the debt has been abandoned with approval for tax deduction by the tax authorities, but theassistance to the borrower continues.

8. Foreign Exchange Assets and Liabilities
Foreign Exchange Assets and Liabilities at March 31, 1998 and 1997 consisted of the following:(in millions of yen)(in thousands of
U.S. dollars)

March 31, 1998

March 31, 1997

March 31, 1998

Foreign Exchange Assets:
Foreign Bills Bought
Foreign Bills Receivable
Advance to Foreign Banks
Due from Banks (Foreign)¥167,250
138,264
10,78957,287¥178,404
183,372
3,208
71,189$1,266,094
1,046,665
81,679433,667

Total¥373,592¥436,174$2,828,105

¥

¥

84
271
7,280
3,541

$

44
5,990
13,791
78,231¥ 11,178$

98,056

Foreign Exchange Liabilities:
Foreign Bills Sold
Foreign Bills Payable
Advance from Foreign Banks
Due to Banks (Foreign)
Total

5
791
1,821
10,334¥ 12,953

9. Other Assets
Other Assets at March 31, 1998 and 1997 consisted of the following:(in millions of yen)(in thousands of
U.S. dollars)

March 31, 1998

March 31, 1997

March 31, 1998

Accrued Income
Prepaid Expenses
Cash Placed as Collateral on Securities Borrowed
Securities in Custody and Other (1)Others (2)¥ 577,388
10,5782,205,802
2,111,931
627,785¥ 629,706
40,082
1,594,428
1,852,264
642,642$ 4,370,846
80,081
16,697,978
15,987,367
4,752,352

Total¥5,533,487¥4,759,124$41,888,624(1) Securities in Custody and Other represents securities borrowed from financial institutions under contracts
which allow IBJ to use these securities for the settlement of securities sold and securities deposited by customers
as collateral for margin.
(2) Others at March 31, 1998 and 1997 included temporary tax payments of ¥222,682 million. IBJ made thesepayments as a consequence of the receipt of the Correction Notice from the Tokyo Regional Tax Bureau on
August 23, 1996 in connection with the written-off claims due from Japan Housing Loan, Inc., amounting to¥376,055 million recorded in the fiscal year ended March 31, 1996. IBJ believes it has meritorious defense andfiled a response protesting the proposed adjustments with the National Tax Tribunal for administrative appeal.
The National Tax Tribunal dismissed the appeal on October 28, 1997, and IBJ filed a lawsuit on October 30, 1997
at Tokyo District Court and is contesting assessments.

Notes to Consolidated Financial Statements

10. Premises and Equipment
Premises and Equipment at March 31, 1998 and 1997 consisted of the following:(in millions of yen)(in thousands of
U.S. dollars)

March 31, 1998

March 31, 1997

March 31, 1998

Land
Buildings
Equipment
Others
Accumulated Depreciation¥206,077
114,81153,99934,634(113,759)¥ 25,486
107,039
55,444
41,429(108,862)$1,560,011
869,123
408,774
262,181(861,160)

Total¥295,762¥120,537$2,238,929

In accordance with the Land Properties Revaluation Act, IBJ revaluated the land used for business operation.
The difference between cost and market value in such land is included in Surplus from Land Revaluation.
(in millions of yen)

The date of revaluation
The book value of the land used for business operation:
before revaluation
after revaluation
Surplus from Land Revaluation

March 31, 1998
¥ 24,694
205,343
180,648

Under the Article 3-3 of the Land Properties Revaluation Act, the land used for business operation was revaluated at March 31, 1998 taking into consideration factors such as the shape of the land and its accessibility.

11. Deferred Debenture Charges
Deferred Debenture Charges at March 31, 1998 and 1997 consisted of the following:(in millions of yen)(in thousands of
U.S. dollars)

March 31, 1998

March 31, 1997

March 31, 1998

Deferred Debenture Discounts
Deferred Debenture Issuance Costs¥13,920
2,074¥21,916
4,614$105,376
15,702

Total¥15,994¥26,531$121,078(in millions of yen)(in thousands of
U.S. dollars)

March 31, 1998

March 31, 1997

March 31, 1998

One-year Discount Debentures (1)Long-term Coupon Debentures (1)Others (Principally Overseas) (2)¥ 6,467,524
13,617,861
755,555¥ 8,133,654
13,339,954
663,911$ 48,959,308
103,087,518
5,719,573

Total¥20,840,941¥22,137,519$157,766,399

12. Debentures
Debentures at March 31, 1998 and 1997 consisted of the following:(1) One-year Discount Debentures and Long-term Coupon Debentures are yen-denominated and issued inJapan by IBJ on a regular and continuing basis.
(2) Others included subordinated debentures of ¥383,598 million and ¥72,399 million at March 31, 1998 and1997, respectively.

71

72

Notes to Consolidated Financial Statements

13. Deposits
Deposits at March 31, 1998 and 1997 consisted of the following:

March 31, 1998

Current Deposits
Ordinary Deposits
Deposits at NoticeTime Deposits
Certificates of Deposit
Other Deposits

¥

Total

¥10,053,551

401,769
599,307247,158
3,749,662
3,408,696
1,646,957(in millions of yen)(in thousands of
U.S. dollars)

March 31, 1997

March 31, 1998¥

375,546
522,023
321,313
5,048,797
2,617,469
1,986,159$ 3,041,401
4,536,768
1,870,997
28,385,033
25,803,909
12,467,504¥10,871,309$76,105,612

14. Borrowed Money
Borrowed Money included subordinated debt of ¥892,000 million at March 31, 1998 and 1997.

15. Other Liabilities
Other Liabilities at March 31, 1998 and 1997 consisted of the following:(in millions of yen)(in thousands of
U.S. dollars)

March 31, 1998

March 31, 1997

March 31, 1998

Accrued Expenses
Unearned Income
Income Taxes Payable
Cash Received as Collateral on Securities Lent
Securities Borrowed
Others¥ 501,332
32,391
15,433
1,147,884
561,600
3,066,898¥ 560,142
47,783
9,057
387,470
1,800,537
1,772,197$ 3,795,097
245,203
116,833
8,689,508
4,251,325
23,216,491

Total¥5,325,539¥4,577,189$40,314,457(in millions of yen)(in thousands of
U.S. dollars)

16. Other Reserves
Other Reserves at March 31, 1998 and 1997 consisted of the following:

March 31, 1998

March 31, 1997

March 31, 1998

Reserve for Losses on Sales of Trading Account Securities (1)Reserve for Contingent Liabilities from Futures Transactions
Reserve for Contingent Liabilities from Securities Transactions

¥450
12
16

¥12,65913
14$3,408
91
125

Total

¥478

¥12,688$3,624(1) IBJ maintained Reserve for Losses on Sales of Trading Account Securities in accordance with the
Accounting Standards for Banks. The standards were revised in fiscal 1997, and IBJ reversed the reserve accordingly. The remaining balance represented the reserve provided by a consolidated subsidiary in accordance with
the Securities and Exchange Law in Japan.

17. Minority Interest in Consolidated Subsidiaries
Minority Interest in Consolidated Subsidiaries at March 31, 1998 included preferred stocks issued for $1,000 million by IBJ Preferred Capital Company L.L.C. (the “Capital Company”) in February 1998. These stocks are preferred as to distribution at liquidation of the Capital Company at $1,000 per stock. The Capital Company is awholly owned consolidated subsidiary of IBJ, and its assets consist largely of perpetual obligations issued by IBJ.

Notes to Consolidated Financial Statements

18. Acceptances and Guarantees
All commitments and contingent liabilities of a material nature resulting from guarantees or otherwise areincluded in the contra-accounts “Acceptances and Guarantees” and “Customers’ Liabilities for Acceptancesand Guarantees”.
Outstanding commitments and contingent liabilities at March 31, 1998 and 1997 consisted of the following:(in millions of yen)(in thousands of
U.S. dollars)

March 31, 1997

March 31, 1998

March 31, 1998

Acceptances
Letters of Credit
Guarantees¥

11,859161,901
1,850,577¥

91,142125,017
2,166,449

$

Total

¥2,024,337¥2,382,608$15,324,282

89,7751,225,595
14,008,912

19. Common Stock
The number of authorized shares of common stock was 4,000,000 thousand shares, with a par value of ¥50 eachat March 31, 1998 and 1997. The number of issued and outstanding shares of common stock was 2,539,579,392
shares at March 31, 1998 and 1997.

20. Legal Reserve
In accordance with the Long-Term Credit Banking Law, IBJ is required to appropriate as a legal reserve an amountequivalent to at least 20% of the amount of cash disbursements until such reserve equals 100% of its common stock.
This legal reserve is not available for dividends but may be used to reduce a deficit by approval at the shareholders’ meeting or may be capitalized by resolution of the Board of Directors.

21. Trading Income and Expenses
Trading Income and Expenses for fiscal 1997 consisted of the following:(in millions of yen)(in thousands of
U.S. dollars)

Fiscal 1997

Fiscal 1997

Trading Income:Net Gains on Trading Securities and Derivatives
Other Trading Income¥8,630837$65,332
6,338

Total

¥9,467$71,670

Trading Expenses:
Net Losses on Securities Held to Hedge Trading Transactions
Net Losses on Derivatives for Trading Transactions

¥ 401
8,051

$ 3,036
60,952

Total¥8,452$63,988

Refer to Note 2. Basic Accounting Policy (c).

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74

Notes to Consolidated Financial Statements

22. Other Operating Income
Other Operating Income for fiscal 1997, 1996 and 1995 consisted of the following:(in millions of yen)(in thousands of
U.S. dollars)

Fiscal 1997

Fiscal 1996

Fiscal 1995

Fiscal 1997

Gains on Foreign Exchange Transactions
Gains on Trading Account Securities Transactions (1)Gains on Sales of Bonds
Gains on Redemption of Bonds
Others¥ 12,066—
444,595
11,372
5,400¥ 16,731
19,918503,017
6,317
18,013¥ 13,482
18,969415,262
6,574
6,252

$

Total

¥473,434¥563,997¥460,541$3,583,910(in millions of yen)(in thousands of
U.S. dollars)

91,345—3,365,595
86,08940,881(1) Refer to Note 2. Basic Accounting Policy (c).

23. Other Income
Other Income for fiscal 1997, 1996 and 1995 consisted of the following:

Fiscal 1997

Fiscal 1996

Fiscal 1995

Fiscal 1997

Gains on Sales of Stocks and Other Securities
Gains on Money Held in Trust
Others (1)¥373,162
8,751
16,024¥212,482
17,08916,424¥483,029
12,13163,645$2,824,848
66,250121,305

Total¥397,938¥245,997¥558,806$3,012,403(1) Others for fiscal 1995 included an amount of ¥16,372 million representing the difference between the original capital contribution and the loans, received back as a result of the anonymous partnership contract with a
special-purpose company coming to an end. This special-purpose company was originally established for liquidating restructured loans.

24. Other Operating Expenses
Other Operating Expenses for fiscal 1997, 1996 and 1995 consisted of the following:(in millions of yen)(in thousands of
U.S. dollars)

Fiscal 1997

Fiscal 1996

Fiscal 1995

Fiscal 1997

Amortization of Debenture Issuance Costs
Losses on Sales of Bonds
Losses on Redemption of Bonds
Losses on Devaluation of Bonds
Others¥ 6,849
418,194
2,234
2,058
2,577

¥ 9,450
508,168
2,664
2,563
16,814¥ 5,335
329,652
2,488
337
4,254

$ 51,848
3,165,738
16,917
15,585
19,508

Total¥431,913¥539,661¥342,068$3,269,596

Notes to Consolidated Financial Statements

25. Other Expenses
Other Expenses for fiscal 1997, 1996 and 1995 consisted of the following:(in millions of yen)(in thousands of
U.S. dollars)

Fiscal 1997

Fiscal 1996

Fiscal 1995

Fiscal 1997

Transfer to Reserve for Possible Loan Losses (1)Written-off Claims (2)Losses on Sales of Stocks and Other Securities
Losses on Devaluation of Stocks and Other Securities
Losses on Money Held in TrustEnterprise Taxes (3)Losses on Dispositions of Premises and Equipment
Others (4)¥522,358
62,46835,297267,247
1,187(34,416)
1,585
85,768¥214,379
11,904
5,158
104,118
1,167
7,018
2,004
56,793¥221,508
606,81115,302
8,748
503(14,384)
3,631
38,607$3,954,268
472,891
267,2032,023,069
8,990(260,532)
12,003649,266

Total¥941,497¥402,544¥880,729$7,127,158(1) Transfer to Reserve for Possible Loan Losses for fiscal 1995 included a transfer to the reserve for Japan’s
housing loan companies, known as jusen, except for Japan Housing Loan, Inc., amounting to ¥121,014 million.
(2) Written-Off Claims for fiscal 1995 included the losses on debts waived by IBJ of Japan Housing Loan, Inc.
and IBJ Finance Co., Ltd., amounting to ¥376,055 million and ¥18,042 million, respectively. Loan losses for the
purpose of assisting or facilitating the restructuring of the borrowers of ¥188,760 million were also included inthis account.
(3) Enterprise Taxes for fiscal 1997 and 1995 had credit balances due to recognition of deferred income taxes
for the respective periods.
(4) Others included the following IBJ losses:(in millions of yen)

Losses on Sales of Loans Collateralized
by Real Estate to Cooperative Credit
Purchasing Company, Limited
Losses on Sales of Loans to Restructuring Countries
and Other Loans
Transfer to Reserve for Contingent
Losses relating to Loans Sold(in thousands of
U.S. dollars)

Fiscal 1997

Fiscal 1996

Fiscal 1995

Fiscal 1997

¥21,701¥10,190¥16,966$164,280

28,882

26,216

7,507

218,642

15,805

11,115—

119,651

26. Net Loss (Income) and Cash Dividends per Share
Net Loss (Income) per Share of common stock is based upon the weighted average number of shares of common
stock outstanding during each year. Cash Dividends per Share shown for each year in the Consolidated
Statements of Income represents dividends declared as applicable to the respective periods.

27. Subsequent Events
The following appropriation of Retained Earnings of IBJ was approved on the shareholders’ meeting held on
June 26, 1998:(in millions of yen)(in thousands of
U.S. dollars)

Transfer to Legal Reserve
Cash Dividends¥ 2,160
10,793$16,351
81,705

Total¥12,953$98,056

75

76

Notes to Consolidated Financial Statements

28. Segment Information(a) Segment Information by Type of Business: The IBJ Group is engaged in securities, trust, leasing and otheractivities. Such segment information, however, has not been presented, as the percentages of those activities
are insignificant.

(b) Segment Information by Geographic Area: Analyses of the IBJ Group’s operations for fiscal 1997 have been presented by geographic area based on the degrees of geographic contiguity, similarities in economic activities andrelation of business operations under the new disclosure requirement. For fiscal 1995 and 1996, the analyses were
presented based on the classification as Japan or Overseas.
Figures relating to the overseas branches of IBJ were included in the Overseas category for fiscal 1995 and1996, and those were classified by geographic area for fiscal 1997. The presented financial data are Operating
Income and Operating Expenses in lieu of sales, cost of sales and operating expenses as is the case for a nonfinancial services company.
(in millions of yen)
Fiscal 1997
Operating Income from
Outside Customers

Inter-segment
Operating Income

Operating
IncomeOperatingExpenses

Operating
Profit (Loss)

AssetsJapan
North America
EuropeAsia/Oceania
excluding Japan¥2,150,983
512,243
337,136¥37,772
20,27830,609¥2,188,755
532,522367,745¥2,488,417
514,477
403,542¥(299,661)
18,045(35,797)¥36,334,490
7,064,997
5,367,504

303,890617

304,507

312,820(8,313)2,856,405

Total
Elimination and General
Corporate Assets

3,304,253

89,277

3,393,530

3,719,258(325,727)

51,623,398—(89,277)(89,277)(85,826)(3,450)(2,393,612)

Consolidated Results¥3,304,253¥3,304,253¥3,633,431¥(329,178)¥49,229,785

Geographic Area¥—(in millions of yen)
Fiscal 1996
Operating Income from
Outside Customers

Inter-segment
Operating Income

Operating
IncomeOperatingExpenses

Operating
ProfitAssetsJapan
Overseas¥2,104,761
1,297,773¥60,446
17,829¥2,165,208
1,315,602¥2,138,553
1,293,269¥26,654
22,333¥37,115,320
11,929,435

Total
Elimination and General
Corporate Assets

3,402,534

78,276

3,480,810

3,431,823

48,98749,044,755—(78,276)(78,276)(75,989)(2,287)(2,077,787)

Consolidated Results¥3,402,534¥3,402,534¥3,355,833¥46,700¥46,966,968

Location¥—(in millions of yen)
Fiscal 1995
Operating Income from
Outside Customers

Inter-segment
Operating Income

Operating
IncomeOperatingExpenses

Operating
Profit (Loss)

AssetsJapan
Overseas¥2,510,580
1,179,255¥30,245
15,450¥2,540,825
1,194,706¥2,711,825
1,172,659¥(171,000)
22,046¥32,644,723
9,873,744

Total
Elimination and General

3,689,836

45,696

3,735,532

3,884,485(148,953)

42,518,468—(45,696)(45,696)(52,122)(6,426)(1,780,734)¥3,689,836¥3,832,362¥(142,526)¥40,737,733

Location

Corporate Assets
Consolidated Results¥3,689,836¥—

Notes to Consolidated Financial Statements(in thousands of U.S. dollars)
Fiscal 1997
Operating Income from
Outside Customers

Inter-segment
Operating Income

Operating
IncomeOperatingExpenses

Operating
Profit (Loss)

AssetsJapan
North America
EuropeAsia/Oceania
excluding Japan$16,282,991
3,877,697
2,552,130$285,938
153,512
231,712$16,568,929
4,031,209
2,783,842$18,837,376
3,894,607
3,054,830$(2,268,447)
136,602(270,988)$275,052,919
53,482,194
40,632,132

2,300,454

4,673

2,305,127

2,368,060(62,933)

21,623,053

Total
Elimination and General
Corporate Assets

25,013,272

675,835

25,689,107

28,154,873(2,465,766)

390,790,298—(675,835)(675,835)(649,712)(26,123)(18,119,701)

Consolidated Results$25,013,272$25,013,272$27,505,161$(2,491,889)$372,670,597

Geographic Area$—

(1) Operating Income represents Total Income less certain special income. Operating Expenses represents
Total Expenses less certain special expenses.
(2) Operating Profit represents Operating Income less Operating Expenses.
(3) North America includes the United States of America and Canada, etc., Europe includes the United
Kingdom and Republic of France, etc., and Asia/Oceania excluding Japan includes the People’s Republic ofChina (including Hong Kong) and the Republic of Singapore, etc.

(c) Operating Income from International Operations: Operating Income of the IBJ Group from International
Operations was analyzed as follows:(in millions of yen)

Operating Income from International Operations (1)Total Operating Income
International Operations’ Ratio (2)(in thousands of
U.S. dollars)

Fiscal 1997

Fiscal 1996

Fiscal 1995

Fiscal 1997

¥1,555,875
3,304,253¥1,752,396
3,402,534¥1,591,433
3,689,836$11,778,015
25,013,272

47.0%

51.5%

43.1%

47.0%

(1) Operating Income from International Operations (Net of intercompany transactions) consists of that of IBJ,
consolidated domestic subsidiaries and overseas consolidated subsidiaries.
(2) International Operations’ Ratio = Operating Income from International Operations/Total Operating
Income.

77

78

Notes to Consolidated Financial Statements

29. Market Values of Securities
The following tables represent the Market Values of Securities held by IBJ at March 31, 1998 and 1997.
Trading Securities and Securities Held to Hedge Trading Transactions at March 31, 1998 were included in
Trading Assets and excluded from the following tables as they were marked to market and the valuation gains
or losses were recognized in the Consolidated Statements of Income.
(in millions of yen)March 31, 1997

March 31, 1998
Book Value

Market ValueBook ValueNet Unrealized Gain

Listed Securities:

Market Value

Unrealized
Gain

Unrealized Gain Unrealized Loss

Trading Account Securities:
Bonds¥ 154,988¥ 159,054

¥

4,066

Investment Securities:
Bonds¥1,452,837
Stocks2,548,056
Others581,060
Sub-total
4,581,955¥1,525,716
2,935,618
598,205
5,059,540¥ 72,878
387,561
17,145477,584¥ 73,324
387,974
17,375
478,674

¥ 446
412
230
1,089

1,553,129
2,731,124
508,070
4,792,324

1,620,945
3,506,625
519,0315,646,601

67,815775,500
10,960854,276

Total¥5,059,540¥477,584¥478,674¥1,089¥4,947,313¥5,805,656¥858,342¥4,581,955(in thousands of U.S. dollars)
March 31, 1998
Book Value

Market ValueNet Unrealized Gain

Listed Securities:

Unrealized Gain Unrealized Loss

Investment Securities:
Bonds$10,998,016
Stocks
19,288,849
Others4,398,641$11,549,707
22,222,696
4,528,432$ 551,691
2,933,847
129,791$ 555,070
2,936,972
131,534$3,379
3,125
1,743

Total

$38,300,835$3,615,329$3,623,576$8,247$34,685,506(1) Bonds included Japanese National Government Bonds, Japanese Local Government Bonds and Corporate
Bonds.
(2) The market values of listed securities are primarily calculated by using the closing prices on the Tokyo
Stock Exchange.
(3) Others consisted mainly of foreign securities.
(4) Effective on March 31, 1998, the gross unrealized gain or loss were newly presented under the new
disclosure requirement.

Notes to Consolidated Financial Statements(5) The tables below represent the estimated market values of not-listed securities held by IBJ for which it ispossible to evaluate market values:(in millions of yen)March 31, 1997

March 31, 1998
Not-Listed

Book Value

Market ValueBook ValueNet Unrealized Gain

Securities:

Market Value

Trading Account Securities:
Bonds

Unrealized
Gain (Loss)

Unrealized Gain Unrealized Loss

¥

212

¥

227

¥

15

Investment Securities:
Bonds¥141,253
Stocks33,393
Others77,652Sub-total
252,299¥144,722
33,36875,978254,069¥3,468(25)(1,673)
1,769¥ 3,553
8,978
378
12,911

¥

85
9,004
2,051
11,141

179,361
38,49054,790272,642

183,60245,35852,620281,580

4,240
6,867
(2,170)
8,937

Total

¥254,069¥1,769¥12,911¥11,141¥272,854¥281,808¥8,953¥252,299(in thousands of U.S. dollars)
March 31, 1998
Not-Listed

Book Value

Market ValueNet Unrealized Gain

Securities:

Unrealized Gain Unrealized Loss

Investment Securities:
Bonds$1,069,294
Stocks252,790
Others587,828$1,095,550
252,598
575,160$26,256(192)(12,668)$26,904
67,970
2,864

$

Total

$1,923,308$13,396$97,738$84,342$1,909,912

648
68,162
15,532(6) The market values of not-listed securities are calculated mainly by the following:(i) Over-the-counter securities
Trading price table published by the Japan Securities Dealers Association(ii) Publicly offered not-listed securities
Securities bid-offer table published by the Japan Securities Dealers Association(iii) Beneficiary certificates of securities investment trusts
Market prices announced by authorized fund management companies(7) The book values of securities excluded from above tables were mainly as follows:

March 31, 1998

Trading Account Securities:
Publicly offered not-listed bonds with maturities
within 1 year or less
Investment Securities:
Publicly offered not-listed bonds with maturities
within 1 year or lessDomestic not-listed bonds, excluding publicly offered bonds
Not-listed bonds, excluding domestic bonds
Not-listed stocks of subsidiaries and affiliates(in millions of yen)(in thousands of
U.S. dollars)

March 31, 1997

March 31, 1998

¥ 69,450¥1,951,401
288,907
1,085,118
336,044560,352
286,727
382,828
293,604$14,772,156
2,187,037
8,214,369
2,543,862

79

80

Notes to Consolidated Financial Statements

30. Market Values of Money Held in Trust
The Market Values of Money Held in Trust held by IBJ at March 31, 1998 were presented as follows under the
new disclosure requirement:(in millions of yen)March 31, 1998

Money Held in TrustBook Value

Market Value¥172,502¥171,334

Net Unrealized Gain
Unrealized Gain

Unrealized Loss

¥637

¥1,805¥(1,167)(in thousands of U.S. dollars)
March 31, 1998
Book Value

Money Held in Trust$1,305,847

Market Value$1,297,006

Net Unrealized Gain$(8,841)

Unrealized Gain

Unrealized Loss

$4,828$13,669(1) The market values are calculated by the trustee of the money held in trust according to the following:(i) The market values of listed securities are primarily calculated by using the closing prices on the Tokyo
Stock Exchange.
(ii) The market values of over-the-counter securities are calculated by using the trading price table published by the Japan Securities Dealers Association.

31. Market Values of Derivatives
The following tables represent the Market Values of Derivatives held by IBJ at March 31, 1998 and 1997.
Effective on March 31, 1998, the market values and unrealized gains or losses for over-the-counter contracts
were presented under the new requirement.
In the following tables:(i) Contract Value represents notional amounts for swap transactions and contract amounts for other transactions.
(ii) Amounts shown in italic characters represent book values of option premium assets/liabilities on the
Balance Sheets.
(iii) Market values of standardized contracts are primarily calculated by using the closing prices of the Tokyo
Stock Exchange and the Tokyo International Financial Futures Exchange and others. Market values of over-thecounter contracts are primarily based on the discounted values of future cash flows or option pricing models.

Notes to Consolidated Financial Statements(a) Interest Rate Related Transactions(in millions of yen)March 31, 1997

March 31, 1998
Contract Value

Market Value UnrealizedOver 1 Year

Standardized Contracts
FuturesSold¥26,817,323
BoughtOptionsSold

Call

7,130,200

5,158,515

—

2,446
Put

4,286,676

Bought Call

3,214,257

Put

2,255,226

Over-the-Counter Contracts
FRAs
Sold
1,567,823

—

419

235

992

1,275

(332)

350

(1,272)

1,558

449

1,228
8,727,518

1,492

893

2,463

66

—

943
3,131,407—

1,623
5,467,979

(615)

1,108

—

635

635

1,144,956—(1,011)

1,299,120—

Rec: Fix 28,408,864
Pay: Flt

16,151,446

899,974

617,91240,223,830

25,207,831

Rec: Flt 20,841,319
Pay: Fix

12,189,007(783,963) (641,304)

33,513,329

22,299,177

Rec: Flt
Pay: Flt

469,838

302,424

(789)

(899)

833,376

628,991

Rec: Fix
Pay: Fix

185,931

140,629

3,501

1,559

—

—

42,60418,044

523,927

247,160

577

337

Bought Call

33,38910,389Put

92,496490,406

467

656

3,144

(57)

(1,775)

264

(170)

872

341
¥ (43,189)

583,144

9,761
1,310,773

97,390881,504

13,293700,014

24,7692,112,767

28,1401,569,850

154,209454,739

14,2202,781,797(1,394)

303,672

7,919
669,559(1,769)160,395

4,432
390,426

329,231120
153,620

735

218

1,876
41,769(1,595)60,936

3,513
196,939

2,304
8,389

1,987

7,557
349,318

13,389115

Total

5,080,389
2,027(1,011)

709

Bought(57,733)

11,053

Put

FloorsSold

30,285,120

1,369

915

Bought¥48,399

7,245,264

35,818

Swaptions
Sold
Call

Caps
Sold

¥7,038,918 ¥31,955,423

30,342,854

1,623,624

BoughtSwaps¥32,003,822

45,075—

1,985

Gain (Loss)¥ (65,091)

—

2,396

Unrealized

26,088,726

—

2,385

Market Value
Over 1 Year

Gain (Loss)¥6,787,093 ¥26,882,415

26,043,650

Contract Value

713,995

5,212¥(9,497)

81

82

Notes to Consolidated Financial Statements(in thousands of U.S. dollars)
March 31, 1998
Contract Value

Standardized Contracts
Futures
Sold$203,007,747
BoughtOptions
Sold

Call

Market Value

Gain (Loss)$51,378,453$203,500,492 $ (492,745)

197,151,029

53,975,779

197,492,251

341,22239,050,080—
15,345

3,175

11,295

6,765

18,647503

10,367(4,660)83,675

4,812

4,812

18,520Put

32,450,240—

18,060Bought Call

24,332,000—

18,144Put

17,072,113—

15,027Over-the-Counter Contracts
FRAs
Sold
11,868,461
BoughtSwaps

12,290,873

271,145(7,660)(7,660)

Rec: Fix
Pay: Flt

215,055,753

122,266,817

6,812,826

4,677,614

Rec: Flt
Pay: Fix

157,769,263

92,271,064(5,934,618) (4,854,687)

Rec: Flt
Pay: Flt

3,556,687

2,289,359(5,973)(6,810)

Rec: Fix
Pay: Fix

1,407,504

1,064,567

26,506

11,805322,521

136,597
4,375

2,558

17,444(12,077)

5,570

4,967

1,655

(13,393)(10,554)

23,807(438)(13,444)

1,999(1,288)

Swaptions
Sold
Call

6,933
Put

252,760

Bought Call

78,650Put

700,202101,360

5,367
63,510872
461,287

15,048Caps
Sold

3,712,385

2,492,293

26,598
Bought1,490,836

1,167,366

14,207
FloorsSold

316,199

187,509914
Bought1,162,914
3,542

Total

UnrealizedOver 1 Year

737,251
6,608

2,588
$ (326,948)

Notes to Consolidated Financial Statements(1) Derivatives held by IBJ included in Trading Transactions at March 31, 1998 are excluded from abovetables, as they were marked to market and the valuation gains or losses were recognized in the Consolidated
Statements of Income. The contract values and market values of derivatives held by IBJ included in Trading
Transactions at March 31, 1998 were as follows:(im millions of yen)Standardized Contracts
Futures
Sold
BoughtOptions
Sold

Call

Contract Value

Market Value(in thousands of U.S. dollars)
March 31, 1998
Contract Value
Market Value¥9,098,772¥9,147,044$68,877,913$69,243,337

8,747,833

8,799,915

66,221,295

66,615,564

10,0002

Put

125,000
23

Bought Call

—

—

—

—
—

442,051(115)

3,346,341(873)

213,007(13)

1,612,474(99)

Rec: Fix
Pay: Flt

33,157,397

1,207,777

251,002,255

9,142,903

Rec: Flt
Pay: Fix

31,409,699(1,179,401)

237,772,137(8,928,094)

Rec: Flt
Pay: Flt

1,242,206(970)

9,403,531(7,344)

Rec: Fix
Pay: Fix

339,742530

2,571,855

4,014

Put

579,059

10,646

6,297
Bought CallPut

5,607,018
3,365

13,0563,700

144,335

92,53228,014

212,227

75,481

164,377

96,812

6,186,531
11,174

1,127,603
6,845

65,48916,655,473
12,788817,240
8,678

98,834

22,370,972
9,971

2,200,188
21,71447,671

5,849,556

2,955,205
28,03525,477

4,247,405
19,066

772,726
12,22380,596
4,383,490

561,082
8,651

Bought118—

740,687

Floors
Sold

176
—

—

Swaptions
Sold
Call

Bought15—

Bought

Caps
Sold

21

—
Over-the-Counter Contracts
FRAs
Sold

Swaps

21
946,253——

Put

75,7002

65,69384,5928,535,986
10,01651,81875,82383

84

Notes to Consolidated Financial Statements(b) Currency-Related Transactions(in millions of yen)March 31, 1997

March 31, 1998
Contract Value

Market Value

Currency

UnrealizedOver 1 Year

Over-the-Counter Contracts
Currency Swaps
USD
GBP
DEM
CHF
FRF
AUD
Others¥5,230,761
111,447
276,829
367,991
220,710
205,614
119,708¥4,463,793
108,295
245,431224,076
67,202
185,778
97,055

Total¥6,533,063¥5,391,634

Contract Value
Over 1 Year

Gain (Loss)¥(196,489)(3,445)
3,858
(512)
6,572
(2,281)
5,925¥41,828(1,768)(3,609)(2,751)(383)(3,186)(1,449)¥4,976,087
224,200
381,451
298,351
331,818
440,864
348,761¥3,837,009
208,759
297,277
218,547
213,775
325,008
287,109¥(186,372)¥28,679¥7,001,536¥5,387,487(in thousands of U.S. dollars)
March 31, 1998
Contract Value

Market Value

Currency

UnrealizedOver 1 Year

Gain (Loss)

Over-the-Counter Contracts
Currency Swaps
USD
GBP
DEM
CHF
FRF
AUD
Others$39,596,980
843,660
2,095,603
2,785,701
1,670,786
1,556,509
906,198$33,791,021
819,801
1,857,925
1,696,262
508,726
1,406,346
743,713$(1,487,432)(26,080)
29,209(3,876)49,751(17,277)
44,860$316,642(13,388)(27,322)(20,831)(2,902)(24,124)(10,974)

Total$49,455,437$40,814,794$(1,410,845)$217,101(1) The differences between market values and unrealized gains or losses for over-the-counter contracts weretranslation differences between contract date and year-end rates on the currency swaps recorded on the balance
sheets and the accrued interest.
(2) Derivatives held by IBJ included in Trading Transactions at March 31, 1998 are excluded from abovetables, as they were marked to market and the valuation gains or losses were recognized in the Consolidated
Statements of Income. The contract values and market values of derivatives held by IBJ included in Trading
Transactions at March 31, 1998 were as follows:(in millions of yen)(in thousands of U.S. dollars)

March 31, 1998
Currency

March 31, 1998

Contract Value

Market ValueContract Value

Market Value

Over-the-Counter Contracts
Currency Swaps
USD
GBP
DEM
CAD
CHF
FRF
AUD
Others¥ 8,732,055
322,171564,850
235,699
800,178
253,457
168,726
186,392¥ 8,130(16,464)(6,037)(1,523)
3,557(7,351)
1,377
7,985

$66,101,861
2,438,846
4,275,930
1,784,247
6,057,372
1,918,682
1,277,264
1,410,995$ 61,545(124,635)(45,704)(11,537)
26,930(55,651)
10,42960,451

Total¥11,263,532¥(10,326)$85,265,197$ (78,172)

Notes to Consolidated Financial Statements(3) The contract values of foreign exchange forward contracts and currency options at March 31, 1997 and 1998
were as follows:(in millions of yen)(in thousand of U.S. dollars)

March 31, 1998

March 31, 1997

March 31, 1998

Contract ValueContract ValueContract Value

Standardized Contracts
Futures
Sold¥

BoughtOptions
Sold

Call

Put

Bought Call

Put

Over-the-Counter Contracts
Forwards
Sold
BoughtOptions
Sold

Call

Put

Bought Call

Put

—

¥

—

$

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

23,776,709

30,607,044

179,990,234

12,290,454

15,612,806

93,039,020

497,189

783,472

3,763,733

16,50642,256125,366

389,896762,225

2,951,527

2,861

4,501

21,665556,985

750,693

4,216,391

17,57938,842133,078

240,903

683,178

1,823,643

1,683

4,376

12,743

The forward contracts to exchange foreign currencies for other foreign currencies are included in the “Sold” column only in the above table.

85

86

Notes to Consolidated Financial Statements(c) Stock-Related Transactions(in millions of yen)March 31, 1997

March 31, 1998
Contract Value

Market Value UnrealizedOver 1 Year

Standardized Contracts
Index Futures
Sold¥111,074
BoughtIndex Options
Sold
Call

¥107,255¥3,818¥95,476—¥91,275¥4,20054,605(1,876)

4,384

—

4,284

(100)

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—
—

Total

—

—

—

—

—
—

—

—

—

—

28,61930,417

—

—
—

—

—

—

—

—

—

—

—
Put

—

—

—
Bought Call

—

—

—
Put

—
—

—
Over-the-Counter Contracts
Options
Sold
Call
—

—

—

—

—
—

—
¥1,941¥

Unrealized
Gain (Loss)

—

—
Put

Over 1 Year

Gain (Loss)—¥—
Bought Call

Market Value

56,481—
Put

Contract Value

—

—

—

—

—

—

—

—
¥4,100Notes to Consolidated Financial Statements(in thousands of U.S. dollars)
March 31, 1998
Contract Value

Market Value UnrealizedOver 1 Year

Standardized Contracts
Index Futures
Sold$840,837
BoughtIndex Options
Sold
Call

$

—

$811,929$28,908

427,568—

413,361(14,207)

—

—
—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—
Put

—

—

—
Bought Call

—

—

—
Put

—

—

—
Over-the-Counter Contracts
Options
Sold
Call
—

—

—
Put

—

—

—
Bought Call

—

—

—
Put

—
—

Total

Gain (Loss)—$14,701

87

88

Notes to Consolidated Financial Statements(d) Bond-Related Transactions(in millions of yen)March 31, 1997

March 31, 1998
Contract Value

Market Value UnrealizedOver 1 Year

Standardized Contracts
FuturesSold¥5,790,664
BoughtFutures Options
Sold
Call

¥5,825,521¥(34,857)¥5,809,805

3,952,109—

3,944,707(7,402)211,055—

45,564661

66,345

178

101,709148

Over-the-Counter Contracts
Options
Sold
Call
—

—

Bought Call

—

—
—

Total

4,238,133—

4,233,866(4,267)98,755

—
252

369

615

(196)

57

(405)

1,507

224

622

—

—

—

—

—

—

—
¥(42,488)

—

141
—

60
—

47
150,000

—

—

1,282

15,000——463

15,000——419

70,000
—

—
Put

(276)

—

—

¥(31,033)

224,688
213

—
Put

(95)

—

490

¥5,840,838

59,629

—

244
Put

(19)

¥

Unrealized
Gain (Loss)—

125,964—

159
Bought Call

163

Market Value
Over 1 Year

Gain (Loss)

—

¥

825
Put

Contract Value

—

1,096
¥(35,308)

Notes to Consolidated Financial Statements(in thousands of U.S. dollars)
March 31, 1998
Contract Value

Market Value UnrealizedOver 1 Year

Standardized Contracts
FuturesSold$43,835,463
BoughtFutures Options
Sold
Call

$

— $44,099,333 $(263,870)

29,917,561—

1,597,692

—

6,246
Put

344,924502,240

769,940

—

—

—

—
—

Total

(144)

1,122

(726)

1,617

(2,094)

—

—

—

—

—

—

—

—

—

—
Put

1,349

—

—
Bought Call

1,236

—

—
Put

5,010

—

3,711
Over-the-Counter Contracts
OptionsSold
Call(56,039)

—

1,848
Put

29,861,522

—

1,205
Bought Call

Gain (Loss)—$(321,637)

89

90

(1) Derivatives held by IBJ included in Trading Transactions at March 31, 1998 are excluded from abovetables, as they were marked to market and the valuation gains or losses were recognized in the Consolidated
Statements of Income. The contract values and market values of derivatives held by IBJ included in Trading
Transactions at March 31, 1998 were as follows.
(im millions of yen)Standardized Contracts
Futures
Sold
BoughtFutures Options
Sold
Call

Contract Value

Market Value¥113,038¥112,711$855,704$853,228

123,292

123,045933,324

931,458

15,10086

Put

25,000Bought Call

4,200

102

7
Put

61

Bought Call

—

Put

—

—

—

635

777

462

31,794
3

55

—

—

—

—

—

—

29

—
—

—

—
—

654
189,251——

Put

114,30783——

Over-the-Counter Contracts
Options
Sold
Call(in thousands of U.S. dollars)
March 31, 1998
Contract Value
Market Value

—

—
—

—
—

—

—

—
—

—

—

Report of Independent Certified Public Accountants

To the Board of Directors
The Industrial Bank of Japan, Limited:
We have audited the accompanying consolidated balance sheets of The Industrial Bank of Japan, Limited (“IBJ”) and its consolidated subsidiaries as of March 31, 1998 and 1997, and the related consolidated statements of income, retained earnings and cash
flows for each of the three years in the period ended March 31, 1998. These financial statements are the responsibility of theCompany’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in Japan. Those standards require that weplan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in material respects, the financial position of
IBJ and its consolidated subsidiaries at March 31, 1998 and 1997, and the results of their operations and their cash flows for each of
the three years in the period ended March 31, 1998, in conformity with accounting principles generally accepted in Japan applied
on a consistent basis.

Tokyo, Japan
June 26, 1998

Chuo Audit Corporation
Independent Certified Public Accountants

91

92

Non-Consolidated Balance Sheets(in millions of yen)(in thousands of
U.S. dollars)

March 31, 1998

March 31, 1997

March 31, 1998

AssetsCash and Due from Banks
Call Loans
Commercial Paper and Other Debt Purchased
Trading Assets
Trading Account Securities
Money Held in Trust
Investment Securities
Loans and Bills Discounted
Foreign Exchanges
Other Assets
Premises and Equipment
Deferred Debenture Charges
Customers’ Liabilities for Acceptances and Guarantees¥ 1,367,328
1,860,262
8,895
2,119,627—
172,5028,699,667
23,241,545
310,724
4,673,773
283,748
16,7292,386,058¥ 2,683,489
838,176
1,232—
224,651
674,927
6,827,613
24,713,569
359,790
4,179,170
106,717
26,5312,814,202$ 10,350,708
14,082,226
67,343
16,045,625—
1,305,847
65,856,680
175,939,031
2,352,191
35,380,569
2,147,986
126,643
18,062,516

Total Assets¥45,140,863¥43,450,071$341,717,365(in millions of yen)(in thousands of
U.S. dollars)

March 31, 1998

March 31, 1997

March 31, 1998

Liabilities and Shareholders’ Equity
Liabilities
Debentures
Deposits
Call Money
Borrowed Money
Trading Liabilities
Foreign Exchanges
Other Liabilities
Reserve for Possible Loan Losses
Reserve for Retirement Allowances
Reserve for Contingent Losses relating to Loans Sold
Other Reserves
Acceptances and Guarantees
Surplus from Land Revaluation¥20,239,792
10,139,950
2,322,905
1,917,824
1,738,742
11,2984,166,228
899,892
50,794
19,776
72,386,058
180,648¥21,559,693
10,716,228
1,272,245
1,364,057—
8,990
3,653,780
557,556
49,227
11,115
12,4752,814,202—$153,215,691
76,759,656
17,584,447
14,517,974
13,162,322
85,52931,538,442
6,812,205
384,513
149,70660
18,062,516
1,367,513

Total Liabilities

44,073,919

42,019,571

333,640,574

465,105
361,632
76,431
163,775

465,105
361,632
72,112531,649

3,520,857
2,737,564
578,587
1,239,783

1,066,944

1,430,500

8,076,791¥45,140,863¥43,450,071$341,717,365

Shareholders’ Equity
Common Stock
Capital Surplus
Legal Reserve
Retained Earnings
Total Shareholders’ Equity
Total Liabilities and Shareholders’ Equity

See accompanying "Notes to Non-Consolidated Financial Statements" which are an integral part of these statements.

Non-Consolidated Statements of Income(in millions of yen)(in thousands of
U.S. dollars)

Fiscal 1997*

Fiscal 1996*

Fiscal 1995*

Fiscal 1997*

IncomeInterest Income on:
Loans and Discounts
Securities
OthersFees and Commissions
Trading Income
Other Operating Income
Other Income
Transfer from Other Reserves¥ 847,821
212,073
1,021,222
94,774
2,788
470,977
390,874
12,467¥ 872,767
187,3031,250,950
52,599—532,904
244,2483¥1,014,634
218,955
1,261,037
62,664—447,928
556,7098$ 6,418,029
1,605,404
7,730,678
717,443
21,1093,565,313
2,958,931
94,378

Total Income

3,053,000

3,140,778

3,561,938

23,111,285

350,756
356,871
162,210899,028
34,952
18,744
9,077
428,075
166,498
968,564
0422,415
358,204
110,4311,064,091
52,39916,656—
521,914
157,991
394,544833

659,462
392,002
99,114
1,018,615
110,359
16,848—337,706
158,834
897,894
1,493

2,655,237
2,701,528
1,227,935
6,805,663
264,595
141,893
68,7153,240,538
1,260,400
7,332,055
0

Total Expenses

3,394,779

3,099,482

3,692,332

25,698,559

Income (Loss) before Income Taxes
Provision for Income Taxes(341,778)
190

41,295
123(130,394)
2,167(2,587,274)
1,444

Expenses
Interest Expenses on:
Debentures
Deposits
Borrowings and Rediscounts
OthersAmortization of Debenture Discounts
Fees and Commissions
Trading Expenses
Other Operating Expenses
General and Administrative Expenses
Other Expenses
Transfer to Other Reserves

Net Income (Loss)¥ (341,969)¥

41,172¥ (132,561)$ (2,588,718)

Per Share Amounts
Net Income (Loss)
Cash Dividends(in yen)(in U.S. dollars)

¥

¥

16.94
8.50

¥

(134.65)
8.50

See accompanying “Notes to Non-Consolidated Financial Statements” which are an integral part of these statements.
*Fiscal 1997, 1996 and 1995 represent the fiscal years ended March 31, 1998, 1997 and 1996, respectively.

(56.37)8.50$(1.019)
0.064

93

94

Non-Consolidated Statements of Retained Earnings(in millions of yen)(in thousands of
U.S. dollars)

Fiscal 1997*

Fiscal 1996*

Fiscal 1995*

Fiscal 1997*

Balance at the Beginning of Year
Deductions:
Transfer to Legal Reserve
Cash Dividends
Bonuses for Directors and Statutory Auditors
Net Income (Loss)¥531,649¥514,463¥671,226$4,024,602

4,318
21,586—(341,969)

3,998
19,987—
41,172

4,033
19,987
180(132,561)

32,692
163,409—(2,588,718)

Balance at the End of Year

¥163,775¥531,649¥514,463$1,239,783

See accompanying "Notes to Non-Consolidated Financial Statements" which are an integral part of these statements.
* Fiscal 1997, 1996 and 1995 represent the fiscal years ended March 31, 1998, 1997 and 1996, respectively.

Notes to Non-Consolidated Financial Statements

1. Basis of Presentation
The accompanying non-consolidated financial statements of The Industrial Bank of Japan, Limited have been
prepared from the non-consolidated financial statements filed with the Ministry of Finance of Japan as requiredby the Securities and Exchange Law of Japan, in conformity with the accounting principles and practices generally accepted in Japan.
The amounts indicated in millions of yen are rounded down by dropping the figures below one million.
Totals may not add up exactly because of such rounding down.
The amounts as of March 31, 1998 expressed in U.S. dollars have been translated, for convenience only, at¥132.10 per dollar, the market exchange rate prevailing on the Tokyo Foreign Exchange Market at March 31,
1998.
For the convenience of readers, certain items on the domestically issued financial statements have been
reclassified and rearranged.

2. Significant Accounting Policies
Refer to Notes to Consolidated Financial Statements.

3. Subsequent Events
Refer to Notes to Consolidated Financial Statements.

95

96

Report of Independent Certified Public Accountants

To the Board of Directors
The Industrial Bank of Japan, Limited:
We have audited the accompanying non-consolidated balance sheets of The Industrial Bank of Japan, Limited (“IBJ”) as of March
31, 1998 and 1997, and the related statements of income and retained earnings for each of the three years in the period ended
March 31, 1998. These financial statements are the responsibility of the Company’s management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the auditing standards generally accepted in Japan. Those standards require that weplan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the non-consolidated financial statements referred to above present fairly, in material respects, the financial
position of IBJ at March 31, 1998 and 1997, and the results of its operations for the three years in the period ended March 31, 1998,
in conformity with accounting principles generally accepted in Japan applied on a consistent basis.
Tokyo, Japan
June 26, 1998

Chuo Audit Corporation
Independent Certified Public Accountants

Corporate Data

CONTENTS
Board of Directors

98

Global Network

99

Investor Information 1 0 6

97

98

Board of Directors

쐽 Chairman of the Boardof Directors
Yoh Kurosawa

쐽 Managing Directors
Sadayoshi Nakamura
Yozo Okumoto
Fumio Kikuchi
Kimizo Shimamura
Jun Itoigawa
Yuji Igarashi
Yuji Suzuki
Hiroshi Saito
Kisaburo Ikeda
Mitsunori Kanesaka
Shinji Kubo
Hiroshi Suzuki
Shoji Noguchi
Yuji Watanabe
Takashi Okamoto
Masayuki Yasuoka

쐽 President and Chief
Executive Officer쐽 Deputy President
Yoshiyuki Fujisawa쐽 Deputy President
Yoshiomi Matsumoto

Masao Nishimura쐽 Directors
Toshiaki Ohuchi
Minoru Nakai
Fumio Nishiwaki
Takeo Sekihara
Tsutomu Abe
Ikuo Kaminishi
Takao Suzuki
Hiroki Yamada
Yukio Shimizu
Makoto Kikkawa
Shizuhiro Yamauchi쐽 Auditors
Standing Auditors
Masatake Yashiro
Naoyuki Hori
Yoshitada Shiratori

Auditors
Fumio Takagi
Junpei YamashitaGlobal Network

THE AMERICAS쐽 New York Branch
Shoji Noguchi
Managing Director and General Manager
1251 Avenue of The Americas,
New York, NY 10020, U.S.A.
Phone: 1-(212) 282-3000
Telex: 420802 (420802 KOGI UI),
170998 (170998 IBJBR UT)
Cable: KOGYOGINKO NEWYORK
Fax: 1-(212) 282-4250

쐽 Los Angeles Agency
Shusai Nagai
General Manager
350 South Grand Avenue, Suite 1500,
Los Angeles, CA 90071, U.S.A.
Phone: 1-(213) 628-7241
Telex: 6831123 (KOGIN LSA)
Fax: 1-(213) 488-9840
URL: http://www.ibjla.com
e-mail: postmaster@ibjla.com

쐽 Chicago Branch
Masashi Sakai
General Manager
227 West Monroe Street, Suite 2600,
Chicago, IL 60606, U.S.A.
Phone: 1-(312) 855-1111
Telex: 6974816 (IBJ CGO)
Fax: 1-(312) 855-8200
e-mail: ibjcbd@ibjusa.com

쐽 Atlanta Agency
Kazuo Iida
General Manager
One Ninety One Peachtree Tower,
Suite 3600,
191 Peachtree Street, N.E.,
Atlanta, GA 30303, U.S.A.
Phone: 1-(404) 524-8770
Fax: 1-(404) 524-8509

쐽 San Francisco Agency
Takahide Akiyama
General Manager
555 California Street, Suite 3110,
San Francisco, CA 94104, U.S.A.
Phone: 1-(415) 981-3131
Fax: 1-(415) 982-1917

왔 Houston Office쐽 Grand Cayman Branch

Kazutoshi Kuwahara
Executive Vice President

Shoji Noguchi
Managing Director
and General Manager

Three Allen Center, Suite 4850,
333 Clay Street,
Houston, TX 77002, U.S.A.
Phone: 1-(713) 651-9444
Fax: 1-(713) 651-9209

쎲 Mexico Representative Office
Hiroyuki Murashima
Chief Representative
Edificio Omega,
Campos Eliseos No. 345-11,
Col. Chapultepec Polanco,
Deleg. Miguel Hidalgo,
11560 México, D.F., México
Phone: 52-(5) 281-5037,
52-(5) 281-3206,
52-(5) 281-5291,
52-(5) 281-5162
Fax: 52-(5) 281-5374
e-mail: yeibjmex@mpsnet.com.mx

쎲 Panama Representative OfficeShuhei Sakuma
Chief Representative(Mailing Address) P.O. Box 55-1587,
Paitilla, Republic of Panama(Address) Swiss Bank Tower, 13th Floor,
53rd Street East, Urbanizacion Obarrio,
Panama City, Republic of Panama
Phone: 507-263-8233
Fax: 507-263-8614[For Contact in New York](Mailing Address)
P.O. Box 1959,
Rockefeller Center Station,
New York, NY 10185, U.S.A.
Phone: 1-(212) 282-3200
Fax: 1-(212) 354-7202

쎲 São Paulo Representative Office
Hideo Yamaura
Chief Representative
Avenida Paulista, 1842-22-ºAndar, Cj. 228,
01310-200 São Paulo-SP, Brazil
Phone: 55-(11) 289-2666
Fax: 55-(11) 251-4241
e-mail: ibjbrsp@nethall.com.br

P.O. Box 1040, West Wind Building,
George Town, Grand Cayman,
Cayman Islands, B.W.I.

쐽 Nassau Branch
Shoji Noguchi
Managing Director
and General Manager
NatWest Building, West Bay Street,
Nassau, Bahamas

왖 The Industrial Bank of Japan
Trust Company
Chiharu Baba
President and Chief Executive Officer
Head Office:1251 Avenue of The Americas,
New York, NY 10020, U.S.A.
Phone: 1-(212) 282-3030
Telex: 425754 (425754 IBTC UI),
175598 (175598 IBJTC UT)Cable: KOGINTRUST NEWYORK
Fax: 1-(212) 282-4252
Branch: Nassau, Bahamas
Representative Office: Atlanta, GA,
U.S.A.

왖 IBJ Schroder Bank
& Trust Company
Dennis G. Buchert
President and Chief Executive Officer
Head Office:One State Street,
New York, NY 10004, U.S.A.
Phone: 1-(212) 858-2000
Telex: 62820, 177754
Fax: 1-(212) 425-0542
Branch: Grand Cayman,
Cayman Islands, B.W.I.

왖 Aubrey G. Lanston & Co. Inc.
William D. Shaw, Jr.
President and Chief Executive Officer
One Chase Manhattan Plaza,
Fifty-Third Floor,
New York, NY 10005, U.S.A.
Phone: 1-(212) 612-1600,
1-(800) 221-5750
Telex: 233746, 971272
Fax: 1-(212) 363-3423
URL: http://www.lanston.com
e-mail: aubrey@lanston.com

99

100

Global Network

왖 The Bridgeford Group
Seiichiro Inouye
President and Chief Executive Officer
399 Park Avenue, 18th Floor,
New York, NY 10022, U.S.A.
Phone: 1-(212) 705-0880
Fax: 1-(212) 755-8900

왖 The Industrial Bank of Japan(Canada)Mitsuo Iwamoto
President and Chief Executive Officer
Head Office:Box 29, Suite 1102, 100 Yonge Street,Toronto, Ontario, Canada M5C 2W1
Phone: 1-(416) 365-9550
Telex: 06-219881 (IBJCDA TOR)
Fax: 1-(416) 367-3452

Vancouver Branch
Shunichiro Miyanaga
Executive Vice President
and General Manager
Suite 1220, 666 Burrard Street,
Vancouver, B.C., Canada V6C 2X8
Phone: 1-(604) 682-4511
Fax: 1-(604) 688-7079
e-mail: ibjcdav@direct.ca

EUROPE AND THE MIDDLE EAST

쐽 London Branch
Hiroki Yamada
Director and General Manager
Bracken House, One Friday Street,
London EC4M 9JA, United Kingdom
Phone: 44-(171) 248-1111
Telex: 886939 (886939 KOGINL G)
Cable: KOGYOGINKO LONDON EC4
Fax: 44-(171) 248-1114

쐽 Frankfurt Branch
Shigeru Nakano
General Manager
Taunustor 2,
60311 Frankfurt am Main,
F.R. Germany
Phone: 49-(69) 27282-100
Telex: 414939 (414939 KOGIN D)
Fax: 49-(69) 27282-511
e-mail: info@ibjg.de쎲 Bahrain Representative Office쐽 Paris BranchToshihiro Kodama
Chief Representative

Takashi Watanabe
General Manager

Manama Centre (Entrance 4, 4th Floor),
P.O. Box 5759, Manama, Bahrain
Phone: 973-228868
Telex: 9775 (9775 IBJBAH BN)
Fax: 973-224828
e-mail: ibjbahcr@batelco.com.bh

Washington Plaza,40, rue Washington,
75408 Paris Cedex 08, France
Phone: 33-(1) 53-83-40-00
Telex: 642105 (KOGPA 642105F)
Fax: 33-(1) 53-83-40-99

왖 IBJ International plc

쐽 Madrid Branch

Nobuo Oya
Chief Executive and Managing Director

Yasuo Nakamura
General Manager

Bracken House, One Friday Street,
London EC4M 9JA, United Kingdom
Phone: 44-(171) 236-1090
Telex: 925621 (925621 IBJITA G),
266582 (266582 IBJITA G)
Cable: IBJINTL LONDON EC4
Fax: 44-(171) 236-0484

Torre Picasso Planta 9,
Plaza Pablo Ruiz Picasso, s/n. AZCA,
28020 Madrid, Spain
Phone: 34-(91) 597-2612
Telex: 44066 (44066 KGN E)
Fax: 34-(91) 597-4697
e-mail: ibj@sarenet.es

쐽 Milan Branch
Shunsuke Imaoka
General Manager
Via Senato 14/16, 20121 Milan, Italy
Phone: 39-2-760861
Telex: 331541 (331541 IBJMIL)
Fax: 39-2-76015311
e-mail: ibjmilano@tin.it쐽 Zurich Branch
Keiichiro Okuda
General Manager
Bahnhofstrasse 82a,CH-8023 Zurich, Switzerland
Phone: 41-(1) 218-9878
Fax: 41-(1) 218-9860

왖 IBJ Asset Management
International Ltd.
Toyohide Tanaka
Chief Executive
Bracken House, One Friday Street,
London EC4M 9JA, United Kingdom
Phone: 44-(171) 329-3777
Fax: 44-(171) 489-6932
e-mail: ibjami@ibj.co.uk

Global Network

왖 Industriebank von Japan(Deutschland) Aktiengesellschaft— The Industrial Bank of Japan(Germany) —왖 The Industrial Bank of Japan-NJ(Switzerland) Limited

ASIA AND OCEANIA

Yusuke Sakaue
President

쐽 Singapore Branch

Tetsuo Narukawa
Chairman of the Boardof Managing Directors

Bahnhofstrasse 82a,CH-8023 Zurich, Switzerland
Phone: 41-(1) 218-9595
Telex: 812298 (812298 IBJCH)
Fax: 41-(1) 218-9945

Head Office:Taunustor 2,
60311 Frankfurt am Main,
F.R. Germany
Phone: 49-(69) 27282-0
Telex: 414939 (414939 KOGIN D)
Fax: 49-(69) 27282-512
e-mail: info@ibjg.de

Düsseldorf BranchToshihiro Kitamura
General Manager
Immermannstr. 45,
40210 Düsseldorf,
F.R. Germany
Phone: 49-(211) 16830
Telex: 8582442
Fax: 49-(211) 365602
e-mail: info@ibjg.de왖 The Industrial Bank of Japan(Luxembourg) S.A.
Akira ImaiManaging Director(Mailing Address)
P.O. Box 68, L-2010 Luxembourg,
GD de Luxembourg(Address) 6, rue Jean Monnet,
L-2180 Luxembourg,
GD de Luxembourg
Phone: 352-4216171
Telex: 1289 (1289 IBJLX LU)
Fax: 352-421617-489

왖 Banque IBJ (France) S.A.
Takashi Watanabe
President
Washington Plaza,42, rue Washington,
75408 Paris Cedex 08, France
Phone: 33-(1) 53-83-41-00
Telex: 642247 (IBJFSA 642247F)
Fax: 33-(1) 53-83-41-69

Yasunori Nagai
General Manager
16 Collyer Quay,#14-00, Hitachi Tower,
Singapore 049318, Republic of Singapore
Phone: 65-5387366
Telex: RS21880 (KOGINPO RS21880)
Cable: KOGYOGINKO SINGAPORE
Fax: 65-5387779

쐽 Hong Kong Branch
Shinichi Watanabe
General Manager

왖 “IBJ-CA Consult” Handels– undInvestitionsberatungsgesellschaft
m.b.H. — IBJ-CA Consult —17th Floor, Two Pacific Place,
88 Queensway, Hong Kong,
S.A.R., The People’s Republic of China
Phone: 852-21033000
Telex: 63035 IBJBR HX
Cable: KOGYOGINKO HONG KONG
Fax: 852-28459187

Yasuji Tajima
Managing Director

쐽 Shanghai Branch

Landhausgasse 4/7,
1010 Vienna, Austria
Phone: 43-(1) 5355868
Fax: 43-(1) 5355519
e-mail: ibj_cavie@aon.at

Kiyoshige Akamatsu
General Manager
Room 401, Marine Tower,
No. 1 Pudong Avenue,
Pudong New Area,
Shanghai 200120,
The People’s Republic of China
Phone: 86-(21) 5879-0611
Telex: 33144 (33144 IBJSH CN)
Fax: 86-(21) 5879-0600

쐽 Shanghai Branch Puxi Sub-branch
Takehito Miyaguchi
General Manager
Room 1601,
Shanghai International Trade Center,
2200 Yan-an Road (West),
Shanghai 200336,
The People’s Republic of China
Phone: 86-(21) 6275-1111
Fax: 86-(21) 6275-1769

101

102

Global Network

쐽 Dalian Branch
Atsushi Endo
General Manager
8th Floor, Senmao Building,
147 Zhong Shan Lu,
Xi Gang Qu, Dalian 116011,
The People’s Republic of China
Phone: 86-(411) 3692712
Telex: 86212 (86212 IBJDL CN)
Fax: 86-(411) 3603581

쐽 Beijing Branch
Masahiro Hirano
General Representative in China
and General Manager
8th Floor,
Chang-Fu-Gong Office Building,Jia 26, Jianguomenwai Street,
Chaoyang District, Beijing 100022,
The People’s Republic of China
Phone: 86-(10) 6513-9026
Telex: 22457 (22457 IBJPK CN)
Fax: 86-(10) 6512-7126

쐽 Bangkok Branch
Masatsugu Nagato
General Manager
15th Floor, Thai Obayashi Building,
161 Rajdamri Road,
Lumpini, Pathumwan,
Bangkok 10330, Thailand
Phone: 66-(2) 255-5991
Telex: 20544 (20544 IBJBKK TH)
Fax: 66-(2) 255-5990

쐽 Provincial International Banking
Facility, Chon Buri Branch
Masatsugu Nagato
General Manager
6th Floor,
Bangkok Bank Sriracha Branch Building,
98 Sukhumvit Road, Sriracha,
Chon Buri 20110, Thailand
Phone: 66-(38) 770570~3
Fax: 66-(38) 770574

쐽 Provincial International Banking
Facility, Phra Nakhon Sri
Ayuthaya Branch
Masatsugu Nagato
General Manager

쎲 Kuala Lumpur Representative
OfficeTakahiko Matsushita
Representative

3rd Floor, Krungsri River Hotel,
27/2 Moo 11, Rojana Road, Kamang,
Phra Nakhon Sri Ayuthaya 13000,
ThailandPhone: 66-(35) 244485, 212200~2
Fax: 66-(35) 244486

Suite No. 1403, 14th Floor,
Pernas International,
Jalan Sultan Ismail,50250 Kuala Lumpur, Malaysia
Phone: 60-(3) 2615111
Telex: 32298 (IBJKL MA32298)
Fax: 60-(3) 2615620

쐽 Labuan Branch쎲 Guangzhou Representative Office

Hiroshi Kitagawa
General Manager

Katsuyoshi Nomura
Chief Representative

Level 11 (A), Main Office Tower,
Financial Park Labuan,
Jalan Merdeka, 87000
Federal Territory of Labuan, Malaysia
Phone: 60-(87) 419115
Telex: 85061 (IBJLB MA85061)
Fax: 60-(87) 419121

Room 1252, Garden Tower,
368 Huanshi Dong Lu,
Guangzhou 510064,
The People’s Republic of China
Phone: 86-(20) 83342017
Telex: 44263 (44263 IBJGZ CN)
Fax: 86-(20) 83355847

Labuan Branch, Kuala Lumpur
Marketing Office
Suite No. 1403, 14th Floor,
Pernas International,
Jalan Sultan Ismail,50250 Kuala Lumpur, Malaysia
Phone: 60-(3) 2636970
Fax: 60-(3) 2636837

쎲 Jakarta Representative Office
Toru Sumiyoshi
Chief Representative
BNI Building, 23rd Floor,
Jl. Jenderal Sudirman Kav. 1,
Jakarta 10220, Indonesia
Phone: 62-(21) 251-2024~5,
62-(21) 570-1010
Telex: 65263 (65263 IBJIND IA),65495 (65495 IBJIND IA)
Fax: 62-(21) 570-1225~6,
62-(21) 574-3581 (direct)

쎲 Wuhan Representative Office
Kotaro Nakazawa
Chief Representative
Room 305,
Holiday Inn Tian-an Wuhan,
868 Jiefang Dadao,
Wuhan 430022,
The People’s Republic of China
Phone: 86-(27) 8582-1155
Fax: 86-(27) 8582-1177
e-mail: ibjwuhan@public.wh.hb.cn

쎲 Seoul Representative Office
Takafumi Yoshida
Chief Representative
Press Center Building, 10th Floor, 25,
Taepyung-Ro 1-Ga, Chung-Ku,
Seoul 100-101, Korea
Phone: 82-(2) 736-2684~5
Fax: 82-(2) 736-2686

Global Network

쎲 Hanoi Representative Office

IBJ Lanston Futures Pte. Ltd.

왖 IBJ Australia Bank Limited

Izumi Hara
Chief Representative(A subsidiary of Aubrey G. Lanston)Keiichi Tsuji
Managing Director and Chief Executive

503 Metropole Centre,
56 Ly Thai To Street,
Hanoi, Vietnam
Phone: 84-(4) 8249333
Fax: 84-(4) 8249334

왖 IBJ Asia Limited

John T. Lane
Chief Executive Officer
16 Collyer Quay,#14-00, Hitachi Tower,
Singapore 049318,
Republic of Singapore
Phone: 65-5383400
Fax: 65-5384100

Naoki Izawa
Managing Director and Chief Executive

왖 P.T. IBJ Indonesia Bank

17th Floor, Two Pacific Place,
88 Queensway, Hong Kong,
S.A.R., The People’s Republic of China
Phone: 852-2103-3838
Telex: 75203 IBJAS HX
Cable: IBJASIA HONGKONG
Fax: 852-2103-3703

Hiroo Harada
President Director

쏆 CCIC Finance Limited
Paul S. Muther
Managing Director
38th Floor A, Bank of China Tower,
1 Garden Road, Central, Hong Kong,
S.A.R., The People’s Republic of China
Phone: 852-28200888
Telex: 61931 (61931 CCICX HX)
Fax: 852-28772105

왖 IBJ Merchant Bank (Singapore)
LimitedYasunori Nagai
Chairman
16 Collyer Quay,#14-00, Hitachi Tower,
Singapore 049318, Republic of Singapore
Phone: 65-5387366
Telex: RS21880 (KOGINPO RS21880)
Cable: KOGYOGINKO SINGAPORE
Fax: 65-5387779

BNI Building, 23rd Floor,
Jl. Jenderal Sudirman Kav. 1,
Jakarta 10220, Indonesia
Phone: 62-(21) 570-1010
Telex: 65263 (65263 IBJIND IA),65495 (65495 IBJIND IA)
Fax: 62-(21) 570-1225~6e-mail: ibjjktsy@dnet.net.id

Head Office:Level 21, Colonial Centre,
52 Martin Place,
Sydney, N.S.W. 2000, Australia
Phone: 61-(2) 9377-8888
Telex: 25454 (IBJASA AA25454)
Fax: 61-(2) 9377-8884
e-mail: ibja@ibj.com.au

Melbourne Branch
Naoki Morishige
Deputy Chief Executive
and Chief General Manager
16th Floor, 333 Collins Street,
Melbourne, Vic. 3000, Australia
Phone: 61-(3) 9613-0777
Telex: 35400 (IBJMEL AA35400)
Fax: 61-(3) 9613-0789

왖 P.T. Bumi Daya—IBJ Leasing
Hiyoshi Kozaki
President Director
BNI Building, 21st Floor,
Jl. Jenderal Sudirman Kav. 1,
Jakarta 10220, Indonesia
Phone: 62-(21) 570-2588
Telex: 65191 (65191 BDIBJL IA)
Cable: BDIBJL IA
Fax: 62-(21) 570-1218

쏆 Krung Thai IBJ Leasing Co., Ltd.
Phinyavat Chantrakantanond
President
18th Floor, Thai Obayashi Building,
161 Rajdamri Road,
Lumpini, Pathumwan,
Bangkok 10330, Thailand
Phone: 66-(2) 651-8120
Fax: 66-(2) 254-6119

Branches and Agencies 쏋Loan Production Office 왔Representative Offices 쏹Overseas Subsidiaries 왖
Major Affiliates 쏆
All telephone numbers given are fortelephone calls placed from outside the country.
(As of July 6, 1998)

103

104

IBJ’s Presence in Japan앲 Head Office쐽 Shinjuku Branch쐽 Nagoya Branch

3-3, Marunouchi 1-chome, Chiyoda-ku,
Tokyo 100-8210, Japan
Phone: 81-(3) 3214-1111
Telex: J22325 (KOGIN J22325),
J23215 (KOGIN J23215)
Cable: KOGIN TOKYO
Fax: 81-(3) 3201-7643
SWIFT: IBJT JP JT

17-1, Nishi-Shinjuku 1-chome,
Shinjuku-ku, Tokyo 160-0023
Phone: 81-(3) 3344-6111

11-18, Nishiki 1-chome,
Naka-ku, Nagoya 460-0003
Phone: 81-(52) 201-7151

쐽 Shibuya Branch쐽 Kyoto Branch

24-10, Shibuya 1-chome,
Shibuya-ku, Tokyo 150-0002
Phone: 81-(3) 3498-3111

630 Shichikannon-cho, Rokkaku-sagaru,
Karasuma-dori, Nakagyo-ku,
Kyoto 604-8162
Phone: 81-(75) 223-1123

쐽 Sapporo Branch
2, Kita 1-joh Nishi 5-chome,
Chuo-ku, Sapporo 060-0001
Phone: 81-(11) 231-0101

쐽 Sendai Branch
4-1, Ichibancho 2-chome,
Aoba-ku, Sendai 980-0811
Phone: 81-(22) 266-3111

쐽 Fukushima Branch
6-5, Motomachi, Fukushima 960-8035
Phone: 81-(24) 523-1111

쐽 Chiba Branch1000 Shinmachi, Chuo-ku,
Chiba 260-0028
Phone: 81-(43) 238-6111

쐽 Tokyo Corporate Banking
Department
2-16, Yaesu 1-chome,
Chuo-ku, Tokyo 103-8677
Phone: 81-(3) 3272-1311

쐽 Kanda Branch
3-1, Kanda-Ogawamachi 1-chome,
Chiyoda-ku, Tokyo 101-0052
Phone: 81-(3) 3296-0111

쐽 Hibiya Branch
2-9, Nishi-Shinbashi 1-chome,
Minato-ku, Tokyo 105-0003
Phone: 81-(3) 3507-0888

쐽 Ikebukuro Branch
12-1, Higashi-Ikebukuro 1-chome,
Toshima-ku, Tokyo 170-0013
Phone: 81-(3) 3982-0111

쐽 Kichijoji Branch
14-5, Kichijoji-Honcho 1-chome,
Musashino, Tokyo 180-0004
Phone: 81-(422) 21-0211

쐽 Machida Branch
13-15, Morino 1-chome,
Machida, Tokyo 194-0022
Phone: 81-(427) 23-2111

쐽 Yokohama Branch
4-1, Kitasaiwai 1-chome,
Nishi-ku, Yokohama 220-0004
Phone: 81-(45) 319-3320

쐽 Fujisawa Branch
20-10-101, Minami-Fujisawa,
Fujisawa 251-0055
Phone: 81-(466) 22-7111

쐽 Niigata Branch5942 Rokubancho, Nishibori-dori,Niigata 951-8061
Phone: 81-(25) 229-2331

쐽 Toyama Branch
5-13, Sakurabashi-dori,
Toyama 930-0004
Phone: 81-(764) 41-1111

쐽 Shizuoka Branch
5-6, Miyukicho, Shizuoka 420-8715
Phone: 81-(54) 251-2111

쐽 Osaka Branch
1-1, Koraibashi 4-chome,
Chuo-ku, Osaka 541-0043
Phone: 81-(6) 202-2351

쐽 Umeda Branch
8-17, Umeda 1-chome,
Kita-ku, Osaka 530-0001
Phone: 81-(6) 341-2111

쐽 Nanba Branch
4-14, Nanba 3-chome,
Chuo-ku, Osaka 542-0076
Phone: 81-(6) 644-1123

쐽 Kobe Branch
1-1, Onoe-dori 7-chome,
Chuo-ku, Kobe 651-0088
Phone: 81-(78) 222-1101

쐽 Hiroshima Branch
1-1, Kamiyacho 2-chome,
Naka-ku, Hiroshima 730-8710
Phone: 81-(82) 247-7111

쐽 Takamatsu Branch
6-8, Bancho 1-chome,
Takamatsu 760-8677
Phone: 81-(878) 21-5051

쐽 Fukuoka Branch
13-1, Tenjin 1-chome,
Chuo-ku, Fukuoka 810-0001
Phone: 81-(92) 711-1234

IBJ’s Presence in Japan쏆 IBJ Leasing Co., Ltd.

쏆 IBJ Card Service Co., Ltd.

11-1, Marunouchi 1-chome,
Chiyoda-ku, Tokyo 100-8288, Japan
Tel: 81-(3) 3283-0111
Fax: 81-(3) 3212-2676

4-1, Yaesu 2-chome, Chuo-ku,
Tokyo 104-0028, Japan
Tel: 81-(3) 3275-3051
Fax: 81-(3) 3275-3223

쏆 Japan Management Systems Inc.

쏆 3iBJ Ltd.

4-1, Yaesu 2-chome, Chuo-ku,
Tokyo 104-0028, Japan
Tel: 81-(3) 3274-1391
Fax: 81-(3) 3275-0514
e-mail: KYY00742@nifty.ne.jp

12-2, Gobancho, Chiyoda-ku,
Tokyo 102-0076, Japan
Tel: 81-(3) 3239-5670
e-mail: tky-3ibj@po.iijnet.or.jp

쏆 IBJ Systems, Ltd.
4-1, Kojimachi 2-chome,
Chiyoda-ku, Tokyo 102-0083, Japan
Tel: 81-(3) 3264-3115

쏆 Kyodo Computer Service Co., Ltd.
28-24, Shinkawa 1-chome,
Chiyoda-ku, Tokyo 104-0033, Japan
Tel: 81-(3) 3552-1231

쏆 IBJ-Nikko Information
Systems, Ltd.
7-1, Kanda-Nishikicho 3-chome,
Chiyoda-ku, Tokyo 101-0054, Japan
Tel: 81-(3) 5281-1100

쏆 IBJ NW Asset Management
Co., Ltd.
6-1, Marunouchi 1-chome,
Chiyoda-ku, Tokyo 100-0005, Japan
Tel: 81-(3) 5221-7700
Fax: 81-(3) 3215-3736
Telex: J33125

왖 IBJ Securities Co., Ltd.
5-1, Otemachi 1-chome, Chiyoda-ku,
Tokyo 100-0004, Japan
Tel: 81-(3) 5252-3111
URL: http://www.ibjs.co.jp
e-mail: webmaster@ibjs.co.jp

쏆 IBJ Investment TrustManagement Co., Ltd.
6-1, Marunouchi 1-chome,
Chiyoda-ku, Tokyo 100-0005, Japan
Tel: 81-(3) 3287-3111
Fax: 81-(3) 3287-1601
URL: http://ibjitm.co.jp
e-mail: webmaster@ibjitm.co.jp

왖 IBJ Trust and Banking Co., Ltd.
11-19, Nibancho, Chiyoda-ku,
Tokyo 102-0084, Japan
Tel: 81-(3) 3262-2011

왖 IBJ Financial Technology Co., Ltd.
3-3, Marunouchi 1-chome,
Chiyoda-ku, Tokyo 100-8210, Japan
Tel: 81-(3) 5252-6621

Head Office 앲
Branches 쏋
Subsidiaries 왖Affiliates 쏆

105

106

Investor Information

THE INDUSTRIAL BANK OF JAPAN, LIMITED■ Head Office■ Stock Exchange Listings

3-3, Marunouchi 1-chome, Chiyoda-ku,
Tokyo 100-8210, Japan
Phone: 81-(3) 3214-1111
Telex: J22325 (KOGIN J22325),
J23215 (KOGIN J23215)
Cable: KOGIN TOKYO
Fax: 81-(3) 3201-7643
SWIFT: IBJT JP JT

Tokyo Stock Exchange
Osaka Securities Exchange■ Established

26 Branches

1902■ Overseas Network■ Capital

4,000,000,000

22 Branches and Agencies
1 Loan Production Office
1 Marketing Office
1 Sub-branch
10 Representative Offices
18 Major Overseas Subsidiaries■ Outstanding Shares■ Number of Employees

2,539,579,392

4,971 (Excluding part-time, temporary,
and foreign employees: 1,800)¥465,105 million■ Authorized Shares■ Number of Shareholders■ Independent Certified Public
Accountants
Chuo Audit Corporation■ Branches in Japan

27,344 (Number of shareholders holding
one or more full units of 1,000 shares)

URL: http://www. ibjbank. co. jp
Copyright© 1997 Netscape Communications
Corporation. All rights reserved. Netscape is a trademarkof Netscape Communications Corporation, which is registered in the United States and other jurisdictions. The
Netscape Communications Corporation logo and all
Netscape product names are trademarks of NetscapeCommunications Corporation, which may be registeredin some jurisdictions. All other products or brand names
are trademarks or registered trademarks of their respective owners.

■ Principal Shareholders
Name of Shareholder
Meiji Life Insurance Company
Nippon Life Insurance Company
The Dai-ichi Mutual Life Insurance Company
Nippon Steel Corporation
The Mitsui Trust and Banking Company, Limited
The Sumitomo Trust and Banking Company, Limited
The Daiwa Bank, Limited
Nissan Motor Co., Ltd.
The Toyo Trust and Banking Company, Limited
Hitachi, Ltd.

Number of Shares Held(thousands)

Percentage of Total
Shares Outstanding (%)

115,831
98,83064,14948,05346,93142,34541,00539,59729,75328,540

4.56
3.89
2.52
1.89
1.84
1.66
1.61
1.55
1.17
1.12

■ Changes in Paid-in Capital
Date
February 1, 1972
February 1, 1975
February 1, 1978
August 1, 1981
October 1, 1987
October 1, 1988
November 1, 1996

Amount of
Capital Increase

Paid-in Capital
after Increase¥ 16,000
16,00022,40017,280108,898
139,466
113,059¥ 48,000
64,00086,400103,680
212,578
352,045465,105

Type of Issue(¥ million)

Allotment (Par value, 0.5 share for 1 share held)
Allotment (Par value, 1/3 share for 1 share held)
Allotment (Par value, 0.35 share for 1 share held)
Allotment (Par value, 0.2 share for 1 share held)
Allotment (Price between par and market, 0.05 share for 1 share held)
Allotment (Price between par and market, 0.08 share for 1 share held)
Allotment (Price between par and market, 0.08 share for 1 share held)

For further information, please contact the Public Relations Department.
(As of July 6, 1998)
This annual report is printed on 100% recycled paper.

50p10/66p2

50p10/66p2

쏅 New Credit Risk Management System

쏅 Innovative Project Finance Arrangement• To Be Used by 58 Regional and Second-Tier Regional Banks• AES Barry Deal Wins “Power Deal of the Year 97”
Award

In April 1998, IBJ
established IBJ Financial
Technology Co., Ltd. (IBJ
FT), with the goals ofdeveloping and applying
leading-edge financial andinformation technology.
With IBJ FT as the focal
point, other members of the
IBJ Group and NTT Data
Corporation have jointly
developed a credit risk
management system.
In total, 58 regional andsecond-tier regional banks
have already decided to
introduce the system into
their operations.

IBJ showed its potential to be one of
the most innovative arranging banks in
London when it arranged a £112.5 million
debt facility that manages the risk of
exposure to power price fluctuations
for AES Barry Limited, an independent
power producer (IPP) in the United
Kingdom.
As a result of IBJ’s success in structuring and syndicating the financing,
the AES Barry deal received the “Power
Deal of the Year 97” award from Project
Finance magazine. Moreover, AES Barry
has become the model for all subsequent
merchant IPP transactions in the
United Kingdom.

Major Initiatives in Fiscal 1997
쏅 Seizing New Business Opportunities• US$1.3 Billion CLO Deal Successfully
Completed in the United States

CLO SCHEME DIAGRAMS
Outside JapanJapan

IBJ is actively developing financial schemes for liquefying andClients
securitizing assets in Japan and overseas. For example, IBJ
Loansbecame one of the first Japanese banks to successfully
Loans
Offices in North America
arrange and place securities backed by collateralized
loan obligations (CLO) overseas. For this CLO
New York Branchdeal, IBJ completed all the arrangements, from
Sales proceeds
Participation
product planning to sales.
The securities were issued by a specialIBJ Asset Funding (SPC)
purpose company (SPC) establishedespecially for this project, and the loans
Sales proceeds
Participation
securitized were a portion of the loan
Prime Funding Ltd. (SPC)
portfolio of IBJ’s New York Branch
outstanding to blue-chipIssuance of CLO
Sales proceeds
Underwriter: IBJ International plc (London)
companies.
To carry out the issue
Investors in the U.S. and Europe
successfully, IBJ organizeda global team consisting ofprofessional staff in its New York, London, and Tokyo offices.

C2-2

C2-3

Clients
Loans

Transferof claims

IBJ

IBJ Trust & Banking
Co., Ltd.

Receipt oftrust beneficiaryrightsLILY CapitalCasualty Insurance Company
Partial credit supplement

LILY Funding

Underwriter:
IBJ International(London)Investors

C3

50p10/66p2

50p10/66p2

THE INDUSTRIAL BANK OF JAPAN, LIMITED

Financial Highlights(in millions of yen)

’98

1998

1997

1998

For the Years Ended March 31
Total Income
Total Expenses
Net Income (Loss)¥ 3,321,902
3,635,020(202,660)¥ 3,403,347
3,358,870
12,740$ 25,146,876
27,517,191(1,534,145)

At March 31
Total Assets
Loans and Bills Discounted
Investment Securities
Debentures
Deposits
Total Shareholders’ Equity

49,229,785
24,001,429
8,847,249
20,840,941
10,053,551
1,320,019

46,966,968
25,518,440
6,808,045
22,137,519
10,871,309
1,543,979

372,670,597
181,691,365
66,973,878
157,766,399
76,105,612
9,992,579

1998

1997

1998

At March 31
SharesAuthorized Shares
Outstanding Shares
Number of Shareholders

The Industrial Bank of Japan, Limited
Annual Report 1998

(in thousands of
U.S. dollars)**

4,000,000,000
2,539,579,392
27,3444,000,000,000
2,539,579,392
18,148Year ended March 31, 1998

C4

(in yen)¥(79.80)8.50(in yen)

¥

5.24
8.50

(in U.S. dollars)**$(0.604)0.064* All figures are on a consolidated basis, unless stated otherwise.
** U.S. dollar amounts are converted, for convenience only, at ¥132.10 per dollar (interbank rate in Tokyo at
March 31, 1998).

쏅

Major Initiatives
in Fiscal 1997

CONTENTSManagement’s Introduction

1

Message from the President

2Management’s Perspective

6

Review of Operations

13

Highlights of Operations

13

IBJ’s Presence Worldwide

14

Global Activities and Services

16

IBJ Group Companies

20

Corporate Banking

22

Investment Banking Services

24

Capital Market Activities

32

Asset Management

35

Trust Banking

37

Treasury Operations

38

Risk Management

43

Research and Information

46

Industrial Finance Seminar

49

IBJ and the Community

50

Financial Section

51

Corporate Data

97

ANNUAL REPORT 1998

Printed in JapanFor the Years Ended March 31
Per Share Amounts
Net Income (Loss)
Cash Dividends

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