ANNUAL REPORT

2018

Year Ended March 31,2018

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

SENSHU IKEDA HOLDINGS,INC.

Non-consolidated Statements of Operations (Unaudited)
The Senshu Ikeda Bank, Ltd.
For the years ended 31st March, 2018 and 2017

Millions of yen
2018
2017

Sustained contribution to the regional communities
Management Principle

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

Management Policy

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

CONTENTS
Top Message ……………………………………………… 2

Approach to Facilitation of Financing ………………… 20

Start of the Fourth Medium-TermBusiness Plan ……………………………………………… 3
For the Future ~Approach to ESG~ …………………… 7

Corporate Information

FY2017 Financial Results ………………………………… 8
Corporate Governance …………………………………… 9Compliance Structure …………………………………… 14
Risk Management Structure …………………………… 16

1

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2018

Thousands of U.S.
dollars (Note 1)
2018

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

40,883
11,081503
15,385
4,472
1,965
543
80
1,710
1,243
19,39897,268¥42,094
14,034435
13,79910,760
–
535
–
–
–
6,319
87,979$384,817
104,301
4,734
144,813
42,093
18,495
5,111
753
16,095
11,699182,586
915,549

2,529
435
2,282
9,127
20,01546,26539
53
2,590
83,33913,928

3,226
616
3,796
8,812
3,879
47,230195
93
3,986
71,837
16,14223,804
4,094
21,47985,909188,394
435,476367
498
24,378784,440
131,099

(297)
6,318
6,021
7,906

1,556
4,074
5,630
¥10,511(2,795)59,46956,673$74,416

Expenses
Interest expenses:
Interest on deposits
Interest on borrowings and rediscounts
Other interest expenses
Fees and commissions
Other operating expenses
General and administrative expenses
Loss on sales or disposal of fixed assets
Loss on impairment of fixed assets
Other expenses
Total expenses
Income before income taxes
Income taxes
Current
Deferred
Total income taxes
Net income¥………………………………… 22

Business Description of the Group …………………… 24
Organization and Board of Directors ………………… 25
Consolidated Financial Informationof Senshu Ikeda Holdings ……………………………… 28
Non-consolidated Financial Informationof The Senshu Ikeda Bank (Unaudited) ……………… 63

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201864

Top Message

I sincerely thank you for your continued
support and patronage of Senshu Ikeda
Holdings Group.
Effective June 26, 2018, I, Atsushi Ukawa,assumed the position of President of both
Senshu Ikeda Holdings and the Senshu Ikeda
Bank.
I shall continue to endeavor to the best of
my ability to meet the expectations of suchoffice, and humbly ask for your support.
The business environment surrounding ourCompany is undergoing drastic changes suchas the structural issues of a depopulation
and unipolarization around the metropolitanarea, growing uncertainties towards theoverseas situation, the prolongation ofnegative interest rate policy in Japan, andthe rapid progress of ICT technology.
In order to respond to such changes inthe environment, we have finished theThird Medium-Term Business Plan aheadof schedule, and formulated the “Fourth
Medium-Term Business Plan” that positions
the next three years as a period forstrengthening our business structure for the
future.
Under the Fourth Medium-Term Business
Plan, we aim to make a leaner earnings
structure centered around core businessprofits through structural readjustments
toward the next generation. Our officers
and employees will make every effort toachieve this plan.
We will strive to become a financial groupthat endear ourselves to the regional
community through sustained efforts tocontribute to the regional communities.
We look forward to serving you with thebest services for many years to come.
Atsushi Ukawa
Representative Director, President and CEO
June, 2018

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 20182

Start of the Fourth Medium-Term Business Plan
Review of the Third Medium-Term Business Plan
• ‌Senshu Ikeda Holdings, Inc. had implemented structural
innovations in the seven areas of loans, deposits,
securities, non-interest income, customers, employees,
and expenses in the Third Medium-Term Business
Plan. However, there remain areas with challenges

Enhancement of Senshu
Ikeda’s contribution
to and influence onregional communities

due to drastic changes in the environment. We haveformulated the Fourth Medium-Term Business Plan topromptly resolve these challenges.

Expand growth
power of Senshu Ikeda
Holdings as a regional
financial group
Challenges

Prolongation ofnegative interest
rate policy(“NIRP”)

Delay in structural
innovations

Virtuous cycle of “Coexistence
and Co-prosperity” with
Contribute toregional communities
regional revitalization
Continuing this cycle isthe mission ofregional financial institutions

Expand“Regional Power andPotential”

Favorable areas

Areas with challenges

Customers

Amount of loans to SMEs (¥ billion)
Number of SME loan customers

15,725

16,772

1,102.9 1,167.7

18,122

19,855

1,261.2 1,350.0

Securities

Control the ratio of revenue fromsecurities
Deliberate disposition of unrealized losses

Non-interest income

Improvement in ratio of fees andcommissions
Increase ratio of fee revenue from assets
under management business

Employees

Personnel allocation through selection
and concentration
Improvements in efficiency of business
management structure

Expenses

Review of expenses aimed at shift to aleaner earnings structure
Reduction in OHR

Deposits

Loans
21,581

1,456.6

Time deposits (¥ billion)
Liquidity ratio

0.13%

0.12%

Liquid deposits (¥ billion)
Deposit yield

0.09%

0.06%

0.05%

4,617.3 4,772.5 4,777.7 4,848.3 4,954.0
50.4% 53.7%
44.1% 46.8% 48.1%
2,401.4 2,290.5
2,576.9 2,536.8 2,479.3
2,040.4 2,235.7 2,298.4 2,446.9 2,663.5

2014/3

3

2015/3

2016/32017/3

2018/3

2014/3

2015/3

Becoming established2016/3

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 20182017/3

2018/3SENSHU IKEDA HOLDINGS,INC.

 e position the Fourth Medium-Term Business Plan as a period for strengthening our business structure for the future, and•W
we will commence major revisions in the earnings structure during this plan period. We will endeavor to make structural
readjustments centered around core business profits in an aim to be the selected bank from the region in perpetuity.

Positioning of the Fourth Medium-Term Business Plan = Period forstrengthening our business structure for the future
Socialchanges

Selected bankfrom the region inperpetuity

Start of rise in the U.S. interest rates in October 2015
Introduction of NIRP in January 2016
Trump Shock in November 2016

Earnings
power

NIRP

Assumption of continuance of a difficult management environment

Recovery andstrengthening of corebusiness profits

Increase in securities-related risks
Compression of Japan Increase in foreign currency
government bonds
bond investments
Securing revenue from securities

Challenges

Disposition of negative legacy

Securities, noninterest income,
employees,
expensesNon-performing
loansFirst Medium-TermBusiness Plan

2009

2010

Business Bank merger
integration

Deferredtax assets

The Fourth Medium-Term Business Plan
Period for strengthening ourbusiness structure for the future

Net income of Shenshu Ikeda
Holdings group (consolidated):¥7 billion or above in FY2020(continuance of stable dividends)

Second Medium-TermBusiness Plan

2015

Technologicalevolution

Third Medium-TermBusiness Plan

2016

2017

2018

Basic policy

1: Sustained contribution to
the regional communities
2: Paradigm shift
Details onnext page ▶

Shift to a management structure capable of a certain level ofprofitability even under a difficult environment

2019

2020
10th anniversaryof the bank merger

2025

2030
20th anniversaryof the bank merger

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 20184

Outline of the Fourth Medium-Term Business Plan
Strengthen individual customers strategy(revision of assets under management promotion structure)
Establishment of sales structure Existing personnel
in line with customers attributes

400people +Reinforcement ofsales personnel

90people25%

improvement
in competitive
capabilities

Asset consultants (180 people) Customers for asset management group
Asset advisors (310 people) Customers for asset building group

Strengthening of corporate customers strategy(further pursuit of New Main Business Market)

New Main Business Areas
Core region in Kansai
for corporate customers
transactions
Concentration of corporate customers strategy
Reinforcement of +peoplesales personnel

40

Strengthen and newly establish corporate services revenue
Loan business as
introduction for profit

Loan customers grown through proposal capabilities
working as a base for generating non-interest
income, led by these proposal capabilities.

Utilize strategic subsidiaries(Securities, Lease, Capital, Credit Card)
Strengthening of cooperation +Individual customers | Enhancementof total assets under management

Corporate customers |Venture development

Senshu Ikeda Tokai
Tokyo Securities

Senshu Ikeda Capital(Investment enterprise partnerships)

Senshu Ikeda JCB
Senshu Ikeda VC
Senshu Ikeda DC

Senshu Ikeda Guarantee
Kinki Credit Guarantee
Senshu Ikeda Investment
Management

5

Senshu Ikeda
Holdings
・

The Senshu Ikeda
Bank

Improvements inmanagement efficiency

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2018

Sustained contribution to
the regional communities
Establishment of a virtuous cycle

1 Further strengthening of proposal capabilities
Approximately 90% of sales staff increaseduring the initial fiscal year
Full utilization of the Group’s functions

2 Strengthening of business to

support regional revitalization
Contribution to the resolution of regional issues
Win-win relationships with regional municipalities

3 P‌ roposals and consulting inaccordance with life stages
Corporate customers:
Proposals of products and services inaccordance with life stages of companies

20 people

Full utilization of our Group’s functions

Individual customers |Settlement and platforms

Basic policy 1

Corporate customers | Strengthening
proposal capabilities

Shizen Soken
Senshu Ikeda Lease
Senshu Ikeda Auto Lease

Senshu Ikeda Business Service
Senshu Ikeda Office Service
Senshu Ikeda System

Individual customers:
Focus on the older generation with discoveringneeds and making detailed proposals

SENSHU IKEDA HOLDINGS,INC.

Basic policy 2

1

1 Personnel allocation

2

Increase in sales personnel (150 people) through improvements
in operational efficiency and organizational streamlining

Establishment of diverse channels inaccordance with needs

3

3 Operation
4 Expenses (OHR)
5 Earnings structure

Further increase the

20% of total employees

ratio of sales personnel

Expansion of full-banking
service branches

Offer diverse channels
in accordance withcustomer needs

Prioritization andcontinuation of existingprocedures

Thorough utilization of
ICT in all operations

Practical deployment of ICT, implementation of FinTech andstrengthening of non-face-to-face channel
Improvements in operational efficiency through tablet devices, etc.
Establishment of next-generation branches with streamlined procedures

Utilization of ICT in all operations

Expense reductions to improve core business profits

Sales personnel: Approximately

Introduction of block system at staffed branches
Introduction of consulting plaza (tentative name)
Revitalization of business operation on holidays
Review of ATM network and establishment of monitor (TV) counter service
Strengthening of non-face-to-face channel

Increase in employees seconded to strategic subsidiaries

2 Channel strategy

Our vision

Acceleration of center concentration of sales branch administration (administration and loans)
Improvements in efficiency of headquarters employees and back-office
operations at branches, and reduction of staff for these operations
Increase sales personnel by 150 during the Medium-Term Management Plan

Paradigm shift
Structural readjustments aimed at the next generation

Up until now

4Strengthening of revenue through services for customers
Control securities investment

High-cost structure due toan urban regional bankExpense reductions toimprove core businessprofits

Cost reductions without exceptions Establishment of the Cost
Reduction Reform Committee directly supervised by the President
Establishment of dedicated officers and dedicated staff
Control hiring, utilize active seniors

5High ratio of revenue fromsecurities to revenue overall

Strengthening ofrevenue throughservices for customers

Control securities investment
Review risk appetite and increase capital allocation to SME credit risks

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 20186

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

Environment• Conduct seminars about environment such as “energy-saving” and“energy creation” for corporate customers• Fund / loan for supporting eco-friendly companies etc.

• Our efforts• Eco-friendly arrangement of branch premises• Promote paperlessSocialCoexistence andCo-prosperity withthe regional
communities•	Conduct business meetings about “revitalizationof regional communities” continuously•	Cooperate with promotion of Osaka/ Kansai’s bid
for the World Expo 2025
•	Promote diversity• Induct the first female executive officer• Efforts for work style reform• Establishment of “Work Style Reform Committee”•	Increase the ratio of outside directors at the Board of Directors

Governance• Ratio of outside directors
33.3%➔40%(June 2018~)•	Abolish Senior Advisor

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

7

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2018

SENSHU IKEDA HOLDINGS,INC.

FY2017 Financial Results

Business Performance

Senshu Ikeda Holdings Group
Profit attributable toowners of the parent

Individual total assets
under management¥8.3 billion¥4,628.1 billion(Holding company consolidated)(Bank non-consolidated + Securities subsidiary)(- ¥3.9 billion year on year)

16.6

17.5

(+ ¥39.4 billion year on year)(¥ billion)(¥ billion)

4,513.3 4,502.1

16.4

4,404.2
40.5
35.4

12.2

61.3
23.7

72.6
17.7

489.8

501.0

194.3

183.8

3,744.0

3,726.7

End ofMarch 2015

End ofMarch 2016

4,588.7
93.4
12.8

508.0

4,628.1
104.9
10.9

512.7

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

484.4

8.3

190.6

174.1

3,783.8

3,825.3

End ofMarch 2017

End ofMarch 2018

181.0
3,662.8
End ofMarch 2014

March 2014 March 2015 March 2016 March 2017 March 2018

The Senshu Ikeda Bank

Loans and bills discounted¥3,908.0 billion(+ ¥96.9 billion year on year)

Deposits

Senshu Ikeda Tokai Tokyo Securities

Number of securities accounts

30,708 accounts¥4,953.9 billion

30,708(+ ¥105.7 billion year on year)

27,098(¥ billion)

4,617.3

4,772.5 4,777.6 4,848.2

4,953.9

 oans and bills
L
discounted
Deposits

21,341
Establishmentof business in
September 2013

3,584.8 3,656.0

End ofMarch 2014(+3,610 accounts year on year)(Accounts)

End ofMarch 2015

3,752.0 3,811.1

14,1383,908.0
8,058

End ofMarch 2016

End ofMarch 2017

End ofMarch 2018

End of
End of
End of
End of
End ofMarch 2014 March 2015 March 2016 March 2017 March 2018

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 20188

Corporate Governance

The Company is a holding company with subsidiaries such as the Senshu
Ikeda Bank, which upholds the Management Principle of striving to becomea financial group that “endear ourselves to the regional community” byproviding services tailored to customers’ needs, while valuing “broad
networks of relationships” and “an enterprising spirit.” In order to ensuresustainable growth and the medium- to long-term enhancement of corporate
value, the Company is engaged in initiatives to develop its corporate
governance in line with the following basic principles.
(1)	We respect the rights of our shareholders and strive to ensure theirequality.
(2)	We consider the interests of stakeholders and strive to ensure appropriate cooperation.
(3)	We disclose corporate information in an appropriate manner and strive
to ensure the transparency of such information.
(4)	The Board of Directors and the Audit & Supervisory Board strive toenhance the effectiveness of their supervision and audits of the execution of duties in line with their fiduciary responsibilities for our shareholders.
(5)	We strive to engage in constructive dialogue with our shareholders inorder to contribute to sustainable growth and the medium- to long-term
enhancement of corporate value.

Outline of Corporate Governance Structure
The Company has adopted a corporate governance structure for sustainable enhancement of its corporate value through reinforcing supervision ofmanagement by electing the outside directors and cooperating with the
Audit & Supervisory Board.
Specifically, directors who are familiar with banking business - involving
complex and sophisticated management decisions - supervise businessexecution of representative directors, while audit & supervisory board
members audit business execution of directors through attendance to important meetings and inspection of critical documents. The Company reinforces
its corporate governance structure through outside directors and outside
audit & supervisory board members who possess well-seasoned charactersand insights presenting meetings including the Board of Directors andexpressing their opinions actively.
The Company has concluded a liability limitation agreement withoutside directors and outside audit & supervisory board members to theeffect that their liability for damages set forth in Article 423, Paragraph 1, of
the Companies Act shall be the amount prescribed by Article 425, Paragraph 1 of said Act, in accordance with the relevant provisions of the Articles
of Incorporation of the Company, as long as they perform their duties ingood faith and without gross negligence.
Corporate governance functions within the Company
The Board of Directors
The Board of Directors that comprises 10 directors (including 4 outside
directors) is responsible for making decisions on critical management
issues while receiving relevant reports from within the company, andsupervising the business execution of directors and executive officers
under the rules of the Board of Directors. The Board of Directors is held
once a month in principle, attended also by audit & supervisory board
members, to make decisions in due consideration of compliance and risk
management.
Personnel Committee
The Personnel Committee has been established to deliberate matters
including the selection of candidates for directors. The Committee
comprises 5 directors including 1 internal director who serves as chairman and 4 outside directors. The Committee, as a voluntary advisory
body to the Board of Directors, accepts the involvement and advice ofindependent outside directors, for the purpose of ensuring the objectivity
and transparency of board functions and strengthening corporate
governance.
Remuneration Committee
The Remuneration Committee has been established to deliberate matters
including compensations for directors. The Committee comprises 5
directors including 1 internal director and 4 outside directors, one of whom
is elected as chairman. The Committee, as a voluntary advisory body to
the Board of Directors, accepts the involvement and advice of independent outside directors, for the purpose of ensuring the objectivity andtransparency of board functions and strengthening corporate governance.
The Audit & Supervisory Board
The Company has adopted a audit & supervisory board member system.
Under this system, the Company ensures transparency through appointing 3 outside audit & supervisory board members of the 5 audit &9

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2018supervisory board members in all. Each audit & supervisory board
member audits business execution of directors through attendance toimportant meetings including the Board of Directors and the Management
Committee, inspection of critical documents and other means, according
to the auditing guidelines and audit schedule decided by the Audit &Supervisory Board. Outside audit & supervisory board members are
qualified with high degree of integrity along with superior insight andcapability, as well as expertise and hands-on experience in respective
area of specialty, providing advice on management from diversified pointsof view.
Management Committee
With the purpose to make more adequate and prompt management
decisions in the execution of company business, the Management
Committee has been established under the Board of Directors, whichmakes decisions on critical management matters based on the authorities
delegated from the Board of Directors while receiving relevant reports
from within the company. The Management Committee is held once aweek in principle inviting audit & supervisory board members, to makedecisions in due consideration of compliance and risk management.
Internal control, management and auditing functions
For the purpose of internal control, management and auditing functions,the Company has established Corporate Planning and General Affairs
Division, General Risk Management Division and Internal Audit Division.
The Corporate Planning and General Affairs Division is the department responsible for the coordination of internal control, for the purpose ofCompanies Act and Financial Instruments and Exchange Act. The General
Risk Management Division is responsible for compliance managementthat serves as a linchpin for internal management. Measures for compliance are planned and their implementation status is managed under thecompliance program approved by the Board of Directors. Furthermore,
the General Risk Management Division, as an overall supervisory functionof risk management, is responsible for regular review and reform of therisk management structure, referring to the financial inspection rating
system by the Financial Services Agency.
On the other hand, the Internal Audit Division is responsible forinternal audits of all departments within the Company, according to theannual audit plan approved by the Board of Directors every fiscal year,
and for the integrated management of the overall internal audit work
across the Group. The Internal Audit Division also audits the respective
subsidiaries on its own or on a joint basis with the internal audit department of each subsidiary as appropriate, and provides specific instructions
and advice to improve business operation at each subsidiary.
Accounting auditors
Mr. Hirokazu Tanaka and Mr. Tetsuro Tone are the certified public accountants that conducted the latest accounting audit of the Company, whileaccounting auditors that conduct audits of the Company for the purposeof Companies Act as well as for the purpose of Financial Instruments andExchange Act, belong to Ernst & Young ShinNihon LLC. None of them
have been engaged in the audit of the Company for longer than sevenyears on continuous basis, hence no statement in respect of the numberof continuous years of service engaged in the audit of the Company.
Assistants for the accounting audit of the Company are 10 certified
public accountants and 19 others.
Basic approach to the internal control system and its status of development
The Company and the Group companies are developing a structurenecessary to ensure the adequacy of operation based on the following
concepts; create a “most trusted by customers” financial group which
respects personal relationships and promotes honest and approachablebanking.
(1)	Structure to ensure that directors and employees of the Company and
the Group companies execute business in compliance with laws andregulations as well as with the Articles of Incorporation
The Company and the Group companies focus on compliance with laws
and regulations (hereinafter “compliance”) as one of the most criticalmanagement task. The Company and the Group also set out the codeof ethics along with the code of conduct to ensure that directors andemployees behave in compliance with laws and regulations as well associal norms, while setting out basic rules of compliance under which
overall compliance policies and specific measures are discussed at theCompliance Committee.
To ensure the above compliance implementation, the Company
and the Group companies appoint directors who are responsible forcompliance. In addition, the General Risk Management Division
coordinates compliance arrangement across the Company and the

SENSHU IKEDA HOLDINGS,INC.

Group companies, while conducting education and training for directors
and employees by developing compliance program and compliancemanual, and arranging compliance seminars.
Furthermore, the Group Compliance Hotline, a whistleblowing
system has been set up and managed to allow directors and employees of the Company and the Group companies to directly provide
information about questionable conduct in light of laws and regulations.
The hotline system is structured to guarantee that the informants who
provide such compliance-related information are protected from being
treated in a disadvantageous manner.
Basic rules that directors and employees must abide by are set out
for the prevention of insider trading.
Besides, the Company and the Group companies have taken
uncompromising stance against anti-social forces and organizations
that threaten the order and safety of the community, while making every
effort to eliminate their involvement in any trading activities. The
Company and the Group companies have also taken every measure toeliminate money laundering in consideration of the possibility that funds
transferred via financial institutions could be used for criminal purposes
including terrorism.
Moreover, the Company and the Group companies provide
effective customer management including customer protection, with the
purpose to reassure our customers of their security and to promote theirconvenience in an effort to implement a thorough ‘customer first policy.’(2)	Structure for the preservation and management of information concerning the directors’ business execution
The Company and the Group companies have prepared and kept documents such as minutes of important meetings including the Board of
Directors and the Management Committee, as records of directors’
execution of duties.
The Company and the Group companies have also prepared andkept documents and attachment sanctioned by directors as appropriate.
(3)	Arrangements including rules to manage the risk of potential losses of
the Company and the Group companies
With the purpose of ensuring the soundness of management and stablecorporate earnings, the Company and the Group companies have set
out basic rules of risk management. The Company and the Group
companies have classified risks into credit risk, market risk, funding
liquidity risk and operational risk, and defined the department responsible for the management of each category of risk, while establishing
the Risk Management Committee to monitor the status of managementof each such category.
Meanwhile, the Company and the Group have set out rules of risk
management, with the purpose to minimize the financial loss along withloss of confidence resulting from the crisis event, and to ensurebusiness continuity through prompt restoration of normal operational
functions.
(4)	Structure to ensure efficient business execution by directors of theCompany and the Group companies
The Board of Directors sets out the management objectives of theCompany and the Group companies with the purpose of enabling thedirectors and employees of the Company and the Group companies toefficiently execute their business. The Board of Directors also formulates
the Group Management Plan and sets forth operational plans on anannual basis to bring said Plan into shape.
In addition, the Board of Directors establishes the Management
Committee with the purpose of enabling directors to efficiently execute
their business. The Management Committee discusses beforehand theagenda of the Board of Directors to facilitate the decision-making
process at those meetings, while discussing the critical issues forresolution in implementing the basic management policies that havebeen resolved by the Board of Directors on the basis of such policies.
The Management Committee also defines the headquarters under
the command of each director, along with the authority and responsibility involved, while developing and maintaining a structure for efficientbusiness execution by utilizing IT.
(5)	Structure to ensure the adequacy of business operation at the Group,
which comprises the Company and the Group companies
The Company regards the respective Group companies as one group
under the flag of Senshu Ikeda Holdings. Thus each member companyof the Group runs its operation through developing an adequate internalmanagement structure according to its scale and nature of operation
under the adequate guidance of, and in coordination with the Company.
The Company, as a responsible entity for the administrative
management of the entire Group, has established administrative

management rules targeting its subsidiaries. The Company has
developed a structure in which it receives necessary reports concerning the business execution of directors and employees and otherrelevant matters from and consults on those issues with the respective
Group companies.
(6)	Matters concerning employees who assist audit & supervisory board
members in the performance of their duties, the independence of those
employees from directors, and structure to ensure the effectiveness of
the instructions to such employees
In order to support audit & supervisory board members’ businessexecution, the Company and the Group employ audit & supervisoryboard members’ staffs as secretariat for the Audit & Supervisory Board.
Such audit & supervisory board members’ staff shall receive instructions
from the audit & supervisory board members for their business execution, while their personnel changes and evaluations shall require anaccord of the relevant audit & supervisory board members to ensure thestaff’s independence from directors.
Thus the Company and the Group companies ensure their independence from directors.
(7)	Structure to facilitate reporting from directors and employees to audit &supervisory board members and other arrangements to ensure that audit& supervisory board members are adequately informed, as well as the
structure to ensure that no disadvantageous treatment is conductedbecause of having reported to audit & supervisory board members
Directors and employees of the Company and the Group companies
shall immediately report to audit & supervisory board members on
matters that could have significant impact on the Company and theGroup companies, or any other matters as necessary, in addition tomatters legally required to be reported.
In addition, the hotline system is structured to guarantee that the
informants who provide the Group Compliance Hotline with compliancerelated information are protected from being treated in a
disadvantageous manner. Moreover, to complement this arrangement,
the Company and the Group companies have established a structure
whereby audit & supervisory board members are permitted to attend
important meetings such as those of the Board of Directors, theManagement Committee, the Compliance Committee, the Risk Management Committee and the ALM Committee.
(8)	Other structure to ensure that audit & supervisory board members
conduct effective audits
Audit & supervisory board members hold meetings to exchange
opinions with representative directors, internal audit division andaccounting auditors.
Audit & supervisory board members attend important meetings
such as the Board of Directors, the Management Committee, theCompliance Committee, the Risk Management Committee and the ALM
Committee, in an effort to find out various problems they need toaddress in the execution of their duties.
Furthermore, audit & supervisory board members shall be permitted to request posteriori for redemption of the expenses that they deem
necessary in executing their duties if such expenses were previously
budgeted by them and have been disbursed for an emergency or
temporarily.

Status of Internal Audits and Audits by Audit & Supervisory Board Members
Internal audits
The Company has established the Internal Audit Division that conducts
internal audits based on the basic rules of intra-group audits, set out toprovide objectives and guidelines of internal audits. The Company
develops effective internal audit structure that has independence andexpertise in order to ensure soundness and adequacy of operation. The
Company also inspects and evaluates adequacy and effectiveness of therisk management and internal control practices, and makes recommendations as appropriate to the senior management of the Company on ways
to improve and rectify questionable areas. Thus the Company’s internal
audit guidelines facilitate effective achievement of management objectives
including the improvement of the Group’s internal management structure
and the enhancement of its enterprise value.
The Company’s Internal Audit Division comprises 15 members ofwhom 12 serve concurrently in the Internal Audit Division of the banking
subsidiary (as of March 31, 2018). The Internal Audit Division conducts
internal audits on each division of the Company based on the internal
audit plan approved by the Board of Directors each year. The Internal
Audit Division also conducts internal audits on each Group company, as
necessary, on its own or by cooperating and coordinating with internal
SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201810

audit divisions of the subsidiaries, etc. and provides specific instructions
and advice on the improvement of operations, in addition to managing
and overseeing internal audit operations of the entire Group.
Audits by audit & supervisory board members
Each audit & supervisory board member audits the business execution of
directors through attendance to important meetings such as the Board of
Directors and the Management Committee, as well as inspection of critical
documents, according to guidelines such as the “guidelines for audits byaudit & supervisory board members” and the “guidelines for implementing
audits of internal control system,” generally subject to the auditing
guidelines and audit plan decided by the Audit & Supervisory Board, as
an independent body mandated by shareholders.
Audit & supervisory board members and accounting auditors are performing their audit duties efficiently and effectively through establishingclose mutual cooperation by exchanging opinions about various auditing
issues. In addition, working together with audit & supervisory board
members of banking subsidiary, audit & supervisory board members andinternal audit division are also performing their audit duties efficiently andeffectively through establishing close mutual cooperation by audit &supervisory board members’ attendance to internal audits and exchanging opinions about various auditing issues.
The Company has made every effort for efficient and effective
implementation of all audits including internal divisions, audit & supervisory board members, and accounting auditors through close cooperationand communication between the departments and functions concerned.
The Company has also made effort to audit efficiently and effectively
through receiving various reports from the internal control division.

Outside Directors and Outside Audit & Supervisory Board Members
The Company has 4 outside directors and 3 outside audit & supervisoryboard members. The Company has set forth the following standards for the
independence of outside directors and outside audit & supervisory board
members (hereinafter “outside officers”) in order to objectively determine
their independence and elects outside officers on the basis of thesestandards. All 7 outside officers, namely outside directors, Kazuo Hiramatsu,
Minoru Furukawa, Takao Koyama and Tomokazu Yamazawa, and outside
audit & supervisory board members, Toshiaki Sasaki, Seiji Morinobu andKohei Nakanishi, satisfy the standards for the independence. They havebeen designated and notified to the Tokyo Stock Exchange as independent
officers, as they satisfy the requirements of independence stipulated by therelevant stock exchange and pose no potential conflict of interests withgeneral shareholders.
<Standard for judging the independence>
At the Senshu Ikeda Group, as a general rule, Outside Directors/Audit &Supervisory Board Members shall be those who do not fall under any of thefollowing requirements, at present or recently.1
1.	A person who deems the Group to be a major2 business partner, or in thecase of a company, an executing person thereof.
2.	A person who the Group deems to be a major business partner, or in thecase of a company, an executing person thereof.
3.	A business consultant, an accounting specialist or a legal specialist who
has received a large sum3 of money and other properties other than
Officers’ remuneration from the Group (or a quasi-executing person who
has belonged to the payee’s group).
4.	A person who the Company deems to be a major shareholder4 of theCompany, or in the case of a company, an executing person thereof.
5.	A payee of a large sum of donation from the Group, or a quasi-executing
person of the payee’s group, in the case where the receiver of the monies,
etc., is an entity.
6.	A former executing person of any of the Group companies in the past.5
7.	A relative6 of a person (excluding those who are not significant) mentioned below:
A. A person who is mentioned in the aforesaid items 1 through 6.
B. Directors, Audit & Supervisory Board Members, Executive Officers andimportant employees of any of the Group companies.

11

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2018

Notes:
1.	Definition of “recently”: Refers to cases that might be regarded as almost“at present,” for example, including the case where said person fell under
any infringement requirement item since the content of a proposal for theselection as Outside Director or Outside Audit & Supervisory Board
Member was determined.
2.	Definition of “major”: Refers to 2% or more of the consolidated net sales
per annum (Consolidated ordinary income in case of the Company) for
the nearest fiscal year, as a benchmark for judgment.
3.	Definition of “a large sum”: Refers to a three-year average amount of ¥10
million or more per annum for the past three years.
4.	Definition of “major shareholder”: Refers to a shareholder who held 10%
or more of the total voting rights at the end of the nearest fiscal year.
5. Definition of “past”: Refers to “within 10 years up to the present.”
6.	Definition of “relative”: Refers to “within the second degree of kinship of aperson.”There are ordinary banking transactions between the outside director
Kazuo Hiramatsu and The Senshu Ikeda Bank. He also concurrently serves
as a standing trustee of Kwansei Gakuin. The Senshu Ikeda Bank hasordinary banking transactions with Kwansei Gakuin. He also concurrently
serves as an officer at ShinMaywa Industries, Ltd., The Senshu Ikeda Bank
has ordinary banking transactions with ShinMaywa Industries, Ltd.
As an outside director of the Company, he performs his duties ofsupervising the business execution based on his extensive experience ineducational corporations and in business.
There are ordinary banking transactions between the outside director
Minoru Furukawa and The Senshu Ikeda Bank. He also concurrently serves
as an officer at Hitachi Zosen Corporation, The Midori Kai Co., Ltd., Osaka
International Convention Center Corp. and OKK Corporation. The Senshu
Ikeda Bank has ordinary banking transactions with Hitachi Zosen Corporation, The Midori Kai Co., Ltd. and OKK Corporation; and has concludes atemporary staff dispatch contract with The Midori Kai Co., Ltd. ; and theCompany has conference hall borrowing transaction with Osaka International Convention Center Corp.
As an outside director of the Company, he performs his duties ofsupervising the business execution based on his extensive experience incorporate management as a representative director of a listed company. He
also concurrently serves as a non-executive director (non-full-time) at The
Senshu Ikeda Bank.
There are ordinary banking transactions between the outside director
Takao Koyama and The Senshu Ikeda Bank. He had served as an officer at
Hitachi, Ltd. and Hitachi Solutions, Ltd. in previous time. The Senshu Ikeda
Bank has ordinary banking transactions and commissions of systemdevelopment and operation with Hitachi, Ltd. and Hitachi Solutions, Ltd.;and the Company has a capital relationship with Hitachi, Ltd.
As an outside director of the Company, he performs his duties ofsupervising the business execution based on his extensive experience incorporate management as a representative director. He also concurrently
serves as a non-executive director (non-full-time) at The Senshu Ikeda Bank.
There are ordinary banking transactions between the outside director
Tomokazu Yamazawa and The Senshu Ikeda Bank. He had served as an
officer at Hankyu Hanshin Holdings, Inc. He also concurrently serves as an
officer at Hankyu Hanshin Hotels Co., Ltd, Hanshin Expressway Company
Limited and Charm Care Corporation. The Senshu Ikeda Bank has ordinarybanking transactions with Hankyu Hanshin Holdings, Inc., Hankyu Hanshin
Hotels Co., Ltd, Hanshin Expressway Company Limited and Charm Care
Corporation. The Company has a capital relationship with Hankyu Hanshin
Holdings, Inc.
As he has experience in corporate management as a representative
director as well as his sufficiently high social credibility, the Company
believes that he will be able to fulfill the role of outside director. He also
concurrently serves as a non-executive director (non-full-time) at The Senshu
Ikeda Bank.
There are ordinary banking transactions between the outside audit &supervisory board member Toshiaki Sasaki and The Senshu Ikeda Bank,and he holds 33,260 shares of common stock of the Company (as of March
31, 2018). He also concurrently serves as the President of Senshu Gakuen.
The Senshu Ikeda Bank has ordinary banking transactions with Senshu
Gakuen.
He performs his duties as an audit & supervisory board member basedon his wealth of experience and broad insight earned over the years as anaudit & supervisory board member in financial institutions.
There are ordinary banking transactions between the outside audit &supervisory board member Seiji Morinobu and The Senshu Ikeda Bank. He

SENSHU IKEDA HOLDINGS,INC.

also concurrently serves as an officer at KITAKEI CO., LTD. The Senshu
Ikeda Bank has ordinary banking transactions with KITAKEI CO., LTD.
He performs his duties as an outside audit & supervisory board
member in auditing the legality of the management execution from an
objective and neutral position, based on his experience as an outside
director, wide range of experience and insights as an attorney, and sufficiently high social credibility.
There are ordinary banking transactions between the outside audit &supervisory board member Kohei Nakanishi and The Senshu Ikeda Bank.
He had served as an officer at Japan Bank for International Cooperation(“JBIC”) in previous time. Although The Senshu Ikeda Bank has concluded amemorandum of understanding with JBIC for supporting Japanese firms
with expanding overseas, no consideration arises from transaction under the
memorandum.
He performs his duties as an outside audit & supervisory board
member independently from an objective and neutral position, based on his
wide range of experience and knowledge regarding international finance aswell as experience on corporate management and knowledge, and insight
into corporate governance through served as director of a bank and outside
director of corporations, and sufficiently high social credibility.
The Company has appointed 4 outside directors out of 10 directors
while 3 outside audit & supervisory board members out of 5. Thus theCompany has developed a structure sufficient to continuously enhance its
enterprise value through such appointment of outside directors and outside
audit & supervisory board members.
Outside directors receive reports about the status of audits by audit &supervisory board members, internal audits and accounting audits, as wellas the status of internal control from the internal control division throughBoard of Directors. On the other hand, outside audit & supervisory board
members receive reports from full-time audit & supervisory board members
about the status of audits by audit & supervisory board members, internal
audits and accounting audits, as well as the status of internal control fromthe internal control division. Both outside directors and outside audit &supervisory board members give recommendations and advice in return forthese reports.

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201812

Corporate governance structure of the Group[Senshu Ikeda Holdings](As of the end of June, 2018)

General Meeting of
Shareholders
Appointment/Removal

Accounting Auditors
Accounting audit

Appointment/Removal
Joint coordination
Reporton Audit

Report on Audit
AdviceBoard of Directors

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

Bringing discussed
issues to meetings/
ReportingManagement Committee

Supervision

Reporton Audit

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

General Risk Management Division[Senshu Ikeda Tokai Tokyo Securities]

General Meeting of
Shareholders

General Meeting of
Shareholders
Audit & Supervisory Board

Audit & Supervisory Board

Board of Directors

Personnel Committee
Remuneration Committee

Board of Directors

Management Committee

Risk Management Committee

Management Committee

Compliance Committee

Compliance Committee

ALM Committee
SMEs Supporting Committee
Work Style Reform Committee
Cost Reduction Reform Committee

Branches

13

Audit

Joint coordination

Directors/Executive Officers

Instruction/
Direction

Corporate Planning andGeneral Affairs Division

Audit & Supervisory Board

Personnel Committee
Remuneration Committee

Representative Directors
Risk Management Committee
Compliance Committee
ALM Committee

Appointment/Removal

Head Office

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2018

Branches

Head OfficeSENSHU IKEDA HOLDINGS,INC.

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

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

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

Instruction

Compliance Committee(Administrative Office: General Risk Management Division)

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

Instruction

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

Consultation /Reporting

Instruction

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

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201814

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

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

15

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2018

SENSHU IKEDA HOLDINGS,INC.

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

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

Risk buffer: Provisions against unpredictablerisks and risks associated withaffiliated companies

Risk buffer
Credit Risk
Core
capital baseRisk
capitalto beallottedMarket Risk
Market Risk
Operational
Risk

n Integrated Risk Managementl Integrated risk management
Integrated risk management refers to the process toadequately manage the risks that financial institutions
face. The Company evaluates the risks divided into

Credit Risk

Financialresource forallocation

Allocatablerisk capital

Risk capital
to beallocated

Operational
Risk
Risk amount

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201816

l Calculation method for capital ratio regulation
In respect to risk asset calculation for the purpose of
the capital ratio regulation, the Group applies theFoundation Internal Ratings-Based Approach for credit
risk and the gross profit allocation method for operational risk.

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

n Market Risk Management
Market risk, as identified by the Group, points to “marketrisk” and “market liquidity risk.” Market risk is the risk of
suffering losses through changes in the prices of assets
and liabilities held by the Group due to the fluctuations ofmarket risk factors, such as interest rates, prices of17

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2018securities, foreign exchange rates and so on. Market
liquidity risk is the risk of suffering losses arising from theinability to execute sufficient transactions under appropriate conditions, due to market confusion or an
insufficient trading base. The Group has established the
Risk Management Committee and the ALM Committee,
consisting principally of management personnel, anddiscussed appropriate and timely measures to address
the risks in order to earn the stable and continuous profit
through managing its assets and liabilities in a comprehensive way.

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

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

SENSHU IKEDA HOLDINGS,INC.

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

The Group is striving to develop working environment to enable each employee to fully exert ability,
while helping him or her to improve their skills.
l Legal risk management
Legal risk, as identified by the Group, is the risk of
suffering losses from violations of laws and regulations,as well as inappropriate responses to changes invarious systems.
The Group strives to prevent the occurrence oflegal risk and to reduce the risk itself. To this end, theGroup has established the General Risk Management
Division to collect information concerning legal matters, and to manage legal risk identified from suchinformation, as well as appropriately responds to thelegal risk.
l Reputation risk management
Reputation risk, as identified by the Group, is the riskof suffering losses arising from deterioration of theGroup’s reputation due to circulation of unfounded
rumors or due to inadequate responses of the Group
concerning the facts.
The Group works to avoid reputation risk by disclosing information proactively thorough increases thetransparency of its management, taking into consideration the crucial influence on the management of theGroup.

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

l Personnel risk
Personnel risk, as identified by the Group, is the risk of
suffering losses associated with the delay of failing insuccession of expertise within the Group, as a result ofdrain or loss of key staff, or degradation of morale.
SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201818

The risk management structure of the Group(As of the end of June, 2018)

Senshu Ikeda Holdings
Board of Directors

Audit & Supervisory Board
Crisis Management Headquarters

Management Committee

Supervising
division

Type of risks

Responsible
divisions

ALM Committee

Risk Management Committee

General Risk Management Division

Credit Risk Market Risk

Funding
Liquidity
Risk

Operational Risk
Administrative
Risk

Information
Asset(system) Risk

General Risk Management Division

Divisions in chargeof operating
and managing

Tangible Fixed
Asset Risk

Personnel
Risk

Legal Risk

Corporate Planning andGeneral Affairs Division

Personnel Division

General Risk
Corporate Planning andManagement Division General Affairs Division

Reputation
Risk

Internal Audit Division

Committee

Banking subsidiary and affiliates

Direction of basic policies, etc.

Administration and management

Reporting on status of risk management

Consultation on risk management

The Senshu Ikeda Bank
Audit & Supervisory Board

Board of Directors

Crisis Management Headquarters
Management Committee

Supervising
division

Type of risks

Responsible
divisions
Divisions in chargeof operating
and managing

Risk Management Division

Credit Risk Market Risk

Funding
Liquidity
Risk

Risk Management Division

Operational Risk
Information
Asset(system) Risk

Tangible Fixed
Asset Risk

Personnel
Risk

Legal Risk

Reputation
Risk

Operations Management
Division

General Affairs
Division

Personnel Affairs
Division

Risk
Management
Division

Corporate
Planning Division

Administrative
Risk

Each division of Headquarters, each branch, subsidiaries and affiliates

Senshu Ikeda Tokai Tokyo Securities

19

ALM Committee

Risk Management Committee

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2018

Shizen Soken

Internal Audit Division

Committee

SENSHU IKEDA HOLDINGS,INC.

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

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

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

System for accepting consultation of facilitation of financing

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

Reporting andconsultation

Development and reinforcement of the supervising structure

Facilitation of Financing Officer

Divisions managing Facilitation of Financing

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

Sincere andadequate
respondence

Customers

Over-the-counter Consultation Service

Board
of
Directors

Facilitation of Financing Manager

Support andinstruction

Toll-free Consultation Service

Reporting

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

Toll-free Consultation Service
Repayment Consultation Approach

Sincere and adequate respondence

Coordination
Businesstransactions, etc.

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

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

Reporting

Audit &
Supervisory
Board

Disclosure

ReportingPublicAuthorities

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201820

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

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

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

l Policies for handling of application for housing loan(1)	On receiving applications for new loans or changes inhousing loan terms from housing loan customers, theBank intends to accommodate such application andoffer adequate new loans or changes in terms adequately as far as possible, taking into considerationof circumstances including customers’ assets andincome and transactions with other financial institu21

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2018

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

SENSHU IKEDA HOLDINGS,INC.

Corporate Information
Corporate Data (As of the end of March 2018)
Senshu Ikeda Holdings, Inc.
Establishment: October 1, 2009
Location:18-14 Chayamachi, Kita-ku, Osaka-City, Osaka 530-0013, Japan
Phone:
81-(0)6-4802-0181
URL:
http://www.senshuikeda-hd.co.jp
Share Capital:¥102.9 billion
Business Activities: Management and other related operations of banks and affiliates
whose shares can be held in accordance with the Banking Act
and other related operations, and businesses which bank holding
company can operate in accordance with the Banking Act.
Number of Employees: 116
Stock Listing:Tokyo Stock Exchange

The Senshu Ikeda Bank, Ltd.
Establishment: September 1, 1951
18-14 Chayamachi, Kita-ku, Osaka-City, Osaka 530-0013, Japan
Location:
Phone:
81-(0)6-6375-1005
URL:
http://www.sihd-bk.jp
Share Capital:¥61.3 billion
Deposits:¥4.9539 trillion
Loans:¥3.9080 trillion
Number of Branches: 141
Number of Employees: 2,537
Credit Ratings: A-(Rating and Investment Information,Inc.)
A-(Japan Credit Rating Agency, Ltd.)

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

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

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

Senshu Ikeda Tokai Tokyo Securities Co.,Ltd.
Establishment: January 30, 2013
Location:18-14 Chayamachi, Kita-ku, Osaka-City, Osaka 530-0013, Japan
Phone:
81-(0)6-6485-0031
URL:
http://www.sittsec.co.jp
Share Capital:¥1.25 billion
Assets Under Management: ¥119.9 billion
Number of Branches: 4
Number of Employees: 109

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201822

Major Shareholders (As of March 31, 2018)
1. Common stock
Name

Number of Shares Owned (Thousands)

Japan Trustee Services Bank, Ltd. (Trust Account)

Proportion of Total Shares (%)

53,491

19.04

8,781

3.12

The Senshu Ikeda Bank Employees’ Shareholders Association

7,433

2.64

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

7,335

2.61

7,121

2.53

4,666

1.66

GOVERNMENT OF NORWAY (Standing proxy: Citibank, N.A., Tokyo Branch)

4,029

1.43

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

*1

4,001

1.42

Japan Trustee Services Bank, Ltd.(Trust Account 4G)

*1

3,842

1.36

3,692

1.31

*1

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

The Bank of Tokyo-Mitsubishi UFJ, Ltd.*2
DFA INTL SMALL CAP VALUE PORTOFOLIO(Standing proxy: Citibank, N.A., Tokyo Branch)

ITAMI SANGYO CO., LTD.

*1: These shares do not disclose the names of beneficiaries.
*2: The Bank of Tokyo-Mitsubishi UFJ, Ltd., has changed its name to MUFG Bank, Ltd., as of April 1, 2018.

2. Third-class preferred stock
Name

Number of Shares Owned (Thousands)

Proportion of Total Shares (%)

Development Bank of Japan Inc.

1,500

20.00

Aozora Bank, Ltd.

1,500

20.00

DAIDO LIFE INSURANCE COMPANY

1,500

20.00

ITAMI SANGYO CO., LTD.

500

6.67

NEC Capital Solutions Limited

500

6.67

IBJ Leasing Company, Limited

500

6.67

SHIMA SEIKI MFG., LTD.

500

6.67

Sky Co., LTD.

250

3.33

Nankai Electric Railway Co.,Ltd.

250

3.33

Nihon Kolmar Co.,Ltd.

250

3.33

Fuyo General Lease Co.,Ltd.

250

3.33

Number of Shares Owned (Thousands)

Proportion of Total Shares (%)

3. First series of seventh-class preferred stock
Name

23

OC FINANCE CORPORATION

5,000

20.00

Daikin Industries, Ltd.

5,000

20.00

Aozora Bank, Ltd.

3,000

12.00

ITAMI SANGYO CO., LTD.

2,000

8.00

NICHIA STEEL WORKS, LTD.

2,000

8.00

Non-Destructive Inspection Company Limited.

2,000

8.00

NEC Capital Solutions Limited

1,000

4.00

IBJ Leasing Company, Limited

1,000

4.00

SHIMA SEIKI MFG., LTD.

1,000

4.00

Hankyu Hanshin Holdings, Inc.

1,000

4.00

ROHTO Pharmaceutical Co., Ltd.

1,000

4.00

Shionogi & Co., Ltd.

500

2.00

Nippon Paper Core Industrial Co., Ltd.

500

2.00

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2018

SENSHU IKEDA HOLDINGS,INC.

Business Description of the Groupn Organizational Chart of the Group (As of the end of June, 2018)
The Senshu Ikeda Bank, Ltd.
Senshu Ikeda Tokai Tokyo ●Securities Co.,Ltd.
Shizen Soken Co.,Ltd. ●Senshu Ikeda Holdings, Inc.

Head office and branches: 136
Sub-branches: 6
Banking services

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

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

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

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

Other services● Senshu Ikeda System Co., Ltd.
● Senshu Ikeda Investment Management Co., Ltd.
Station Network Kansai Co., Ltd.
● Investment enterprise partnerships: 10
Head office and branches: 4

Securities services

Representative offices: 3
Head office

Other services(Note:● indicates consolidated subsidiaries and○ indicates equity-method affiliates)n Subsidiaries and Affiliates (As of the end of June, 2018)

Affiliates

Subsidiaries

Name

Address

Date ofestablishment

Major Business

The Senshu Ikeda Bank, Ltd.
18-14, Chayamachi, Kita-ku, Osaka-city Banking services
18-14, Chayamachi, Kita-ku, Osaka-city Securities services
Senshu Ikeda Tokai Tokyo
Securities Co.,Ltd.
Senshu Ikeda Turnaround Partners 18-14, Chayamachi, Kita-ku, Osaka-city Banking services
Co., Ltd.
(Business rehabilitation services)
Senshu Ikeda Corporate Partners
18-14, Chayamachi, Kita-ku, Osaka-city Banking services
Co., Ltd.
(Business rehabilitation services)
Senshu Ikeda Lease Co., Ltd.
3-1-22, Toyosaki, Kita-ku, Osaka-city Leasing services
4-5-36, Miyahara, Yodogawa-ku, Osaka-city Leasing services
Senshu Ikeda Auto Lease Co.,Ltd.
Senshu Ikeda Guarantee Co., Ltd.
2-1-11, Jonan, Ikeda-city
Credit guarantee services
Kinki Credit Guarantee Company
2-1-1, Nishiki, Kaizuka-city
Credit guarantee services
LimitedSenshu Ikeda JCB Co., Ltd.
3-2-1, Toyosaki, Kita-ku, Osaka-city Credit card services
Senshu Ikeda DC Co., Ltd.
3-2-1, Toyosaki, Kita-ku, Osaka-city Credit card services
Senshu Ikeda VC Co., Ltd.
3-2-1, Toyosaki, Kita-ku, Osaka-city Credit card services
Senshu Ikeda Capital Co., Ltd.
18-14, Chayamachi, Kita-ku, Osaka-city Venture capital services
18-14, Chayamachi, Kita-ku, Osaka-city Back-office administration
Senshu Ikeda Business Service
Company Limited
Senshu Ikeda Office Service Co., Ltd. 2-1-11, Jonan, Ikeda-city
Entrusted business
S.I.M.S. Co., Ltd.
2-6-1, Jonan, Ikeda-city
Appraisal of real-estate collateraland real-estate research services
Senshu Ikeda System Co., Ltd.
18-14, Chayamachi, Kita-ku, Osaka-city Computer software development
and sale services
Senshu Ikeda Investment Manage- 3-1-22, Toyosaki, Kita-ku, Osaka-city Investment advisory and discrement Co., Ltd.
tionary investment services
Shizen Soken Co., Ltd.
2-1-11, Jonan, Ikeda-city
Information offering services
Station Network Kansai Co., Ltd.
1-4-8, Shibata, Kita-ku, Osaka-city
Planning and operation of ATM at station

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

September 1, 1951
January 30, 2013

61,3851,250

100.0060.00––

January 4, 2013100–

100.00January 4, 2013100–

100.00April 1, 1986
July 10, 1996
July 20, 1973
April 1, 1975

50
80
180
100

–
–
–
–

100.0095.00
100.00100.00February 1, 1983
September 5, 1990
November 2, 1990
March 6, 1989
April 1, 1983

60
30
40
90
30

–
–
–
–
–

100.00100.00100.00100.00100.00July 11, 1988
October 28, 1991

20
20

–
–

100.00100.00June 10, 1985

50

–

98.00

April 1, 1987

120–

100.00November 1, 1996
June 29, 2000

80
100

15.00
–

–
40.00

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201824

Organization and Board of Directors
SenshuSenshu Ikeda
Ikeda Holdings
Holdings
n Organization (As of the end of June, 2018)

Accounting
Accounting Office
OfficeManagement
ManagementCommittee
Committee

PR
PR &
& IR
IR Office
OfficeGroup Strategy
Strategy Office
OfficeGroup

Personnel Affairs
Affairs Division
Division
Personnel
ALM
ALMCommittee
Committee

Compliance
ComplianceCommittee
Committee

Risk
RiskManagement
ManagementCommittee
Committee

Remuneration
RemunerationCommittee
Committee

PersonnelCommittee
Committee
Personnel

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

Board
BoardofofDirectors
Directors

GeneralGeneralMeeting
MeetingofofShareholders
Shareholders

Corporate
Corporate Planning
Planning andand General
General Affairs
Affairs Division
Division

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

Secretary Office
OfficeSecretaryn Board of Directors (As of June 26, 2018)
Representative Director
and Chairman

Takayuki Ota

Director

Motoshi Inoue

Director(Outside)Kazuo Hiramatsu

Audit & Supervisory
Board Member(Full-time)

Shigeru Aoyagi

Representative Director,
President and CEO

Atsushi Ukawa

Director

Hiroo Maeno

Director(Outside)

Minoru Furukawa

Susumu Kawakami

Director

Yasuki Hosomi

Director(Outside)

Takao Koyama

Director

Shinji Inoue

Director(Outside)

Tomokazu Yamazawa

Audit & Supervisory
Board Member(Full-time)
Audit & Supervisory
Board Member(Outside)
Audit & Supervisory
Board Member(Outside)
Audit & Supervisory
Board Member(Outside)n Executive Officers (As of June 26, 2018)
Executive
Officer25

Kou Tanaka

Executive
Officer

Tsutomu Irie

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2018

Executive
Officer

Takayoshi Fujiwara

Toshiaki Sasaki
Seiji Morinobu
Kouhei Nakanishi

SENSHU IKEDA HOLDINGS,INC.

TheThe Senshu
Senshu Ikeda
Ikeda Bank
Bank
Corporate
Corporate Planning
Planning Division
Division
Personnel
Personnel Affairs
Affairs Division
Division

Remuneration
RemunerationCommittee
Committee

Personnel
PersonnelCommittee
Committee

n Organization (As of the end of June, 2018)
Career
Career Development
Development Supporting
Supporting Office
OfficeDiversity
Promotion
Diversity Promotion Office
OfficeHealthHealth Promotion
Promotion Office
OfficeGeneralGeneral Affairs
Affairs Division
Division
Tokyo
Tokyo Office
OfficeSuzhouSuzhou Representative
Representative Office
OfficeRisk Management
Risk
Management Division
DivisionManagement
ManagementCommittee
Committee

Operations
Operations Management
Management Division
Division

Business
BusinessManagement
ManagementUnit
Unit

Business
Business Management
Management Division
Division
Branches
Branches Supporting
Supporting Office
OfficeSecuri
Securittiieess andand Insurance
Insurance Busi
Businness
ess Promoti
Promotioonn Offi
Officcee
Personal
Personal Loan
Loan Promotion
Promotion Office
OfficeCustomer Center
CenterCustomer
Regional
Headquarters
Regional Headquarters

Cost
CostReduction
ReductionReform
ReformCommittee
Committee

Relationship
Relationship Promotion
Promotion Division
Division

Relationship
RelationshipUnit
Unit

Work
WorkStyle
StyleReform
ReformCommittee
Committee

ALM
ALMCommittee
Committee

SMEs
SMEsSupporting
SupportingCommittee
Committee

OperatingOperating Center
CenterRisk
Risk Products
Products Operations
Operations Office
OfficeBranches
Branches (including(including sub-branches):
sub-branches): 142
142

Compliance
ComplianceCommittee
Committee

Risk
RiskManagement
ManagementCommittee
Committee

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

Audit
Audit& &Supervisory
SupervisoryBoard
BoardMembers
MembersOffice
OfficeBoard
BoardofofDirectors
Directors

GeneralGeneralMeeting
MeetingofofShareholders
Shareholders

Compliance
Compliance Management
Management Office
OfficeOperations
Operations andand System
System Headquarters
HeadquartersCS
CS Headquarters
Headquarters

Regional
Regional Revitalization
Revitalization Promotion
Promotion Office
OfficeAsia
Asia andand China
China BusinessBusiness Promotion
Promotion Division
DivisionInternational
International Division
Division
Advanced
Advanced Technology
Technology BusinessBusiness Supporting
Supporting Division
Division
Financial
Advisory
Division
Financial Advisory Division
M&A
M&A Advisory
Advisory Office
OfficePrivatePrivate Banking
Banking Office
OfficeFinancial
Financial Market
Market Headquarters
Headquarters

ICT
ICT Planning
Planning Office
OfficeFinancial Market
Market Division
Division
Financial

Loan
Loan Headquarters
Headquarters

Loan
Loan Division
Division

Market Operations
Operations Office
OfficeMarketLoan
Loan BusinessBusiness Division
DivisionInternal Audit
Audit Division
DivisionInternal

Business
Business Rehabilitation
Rehabilitation Supporting
Supporting Office
OfficeSecretary
Secretary Office
Officen Board of Directors (As of June 26, 2018)
Representative Director
and Chairman
Representative Director,
President and CEO
Director & Senior Managing
Executive Officer

Takayuki Ota

Director & Managing
Executive Officer

Atsushi Ukawa

Director & Managing
Executive Officer

Motoshi Inoue

Director & Managing
Executive Officer

Hiroo Maeno

Non-executive Director(Non-full-time)

Yasuki Hosomi

Non-executive Director(Non-full-time)

Shinji Inoue

Non-executive Director(Non-full-time)

Minoru Furukawa

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

Takao Koyama

Audit & Supervisory
Board Member (Full-time)

Osamu Horiuchi

Tomokazu Yamazawa

Audit & Supervisory
Board Member (Outside)

Ken-ichi Yoshimoto

Audit & Supervisory
Board Member (Outside)

Kenji Fukuda

n Executive Officers (As of June 26, 2018)
Managing
Executive Officer

Koji Miyata

Managing
Executive Officer

Muneharu Kurita

Managing
Executive Officer

Akihito Okumura

Managing
Executive Officer

Kou Tanaka

Managing
Executive Officer
Executive
Officer
Executive
Officer
Executive
Officer
Executive
Officer

Toshiyuki Wada

Executive
Officer

Tsutomu Irie

Executive
Officer

Tadashi Ichikawa

Executive
Officer

Tokikazu Hihara

Susumu Yamagata

Executive
Officer

Jun Matsumura

Executive
Officer

Kouichi Nakanishi

Yoshimasa Nishikawa

Executive
Officer

Hiromasa Hirai

Executive
Officer

Keisuke Misaki

Osamu Tsukagoshi

Executive
Officer

Hirohito Sakaguchi

Executive
Officer

Kyoko Matsushita

Takayoshi Fujiwara

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201826

Representative
Director andPresident

Yasuo Kitamura

Audit & Supervisory
Board Member(Full-time)

Yoshiyuki Goto

Representative
Director andVice PresidentManaging
Director

Toshifumi Takai

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

Satoshi Kitagawa

n Executive Officers (As of June 26, 2018)27

Executive Officer

Toshiyuki Inoue

Executive Officer

Wataru Kondo

Deputy General Manager, Business Headquarters

General Manager, Business Headquarters

Branches

Business Management Division
Collaboration Promotion Office
Product Management Division

Planning and General Affairs Division

Business Compliance DivisionInternal Audit Divisionn Board of Directors (As of June 26, 2018)

Mamoru Kudo

General Manager, Management Headquarters

Representative Director and Vice President

Representative Director and President
Compliance Committee

Audit & Supervisory Board Members Audit & Supervisory Board

Management Committee

Board of Directors

General Meeting of Shareholders

Senshu Ikeda Tokai Tokyo Securitiesn Organization (As of the end of June, 2018)

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2018

Kosuke Furukawa

SENSHU IKEDA HOLDINGS,INC.

Consolidated Financial Information of Senshu Ikeda Holdings
Consolidated Balance Sheets
Senshu Ikeda Holdings, Inc. and Consolidated Subsidiaries
As of 31st March, 2018 and 2017

AssetsCash and due from banks (Notes 27 and 33)
Call loans and bills bought (Note 33)
Monetary claims bought (Note 33)
Trading account securities (Notes 4 and 33)
Money held in trust (Notes 6 and 33)
Securities (Notes 5, 7, 12, 20, 33 and 34)
Loans and bills discounted (Notes 8, 12, 32, 33 and 34)
Foreign exchange assets (Notes 9 and 33)
Other assets (Notes 10 and 12)
Tangible fixed assets (Note 11)
Intangible fixed assets
Net defined benefit assets (Note 18)
Deferred tax assets (Note 29)
Customers’ liabilities for acceptances and guarantees
Reserve for possible loan losses
Total assets

Millions of yen
2018
2017

Thousands of U.S.
dollars (Note 1)
2018¥713,371
3,783
100
176
26,987736,415
3,897,405
5,448
82,965
41,1485,209
11,114
7,427
9,322(14,873)¥5,526,003¥675,966
172
31
317
26,979929,505
3,813,333
6,340
61,55038,508
5,216
14,334
9,526
13,006(21,883)¥5,572,906$6,714,711
35,608941
1,656
254,019
6,931,617
36,684,911
51,280780,920
387,31149,030104,61269,90787,744(139,994)$52,014,335¥4,902,103
900––
165,002132,133
562
20,00043,314
1,876
151
33
512
246
770
2
135
9,322
5,277,067¥4,799,493–
14,8099,907
249,762
160,997583
20,00051,996
1,798
142
33
486
226
350
1
92
13,006
5,323,688$46,141,782
8,471
–
–
1,553,106
1,243,721
5,289
188,253
407,699
17,658
1,421
310
4,819
2,315
7,247
18
1,270
87,744
49,671,187

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

102,999
57,36575,244(2,097)
233,512

969,493
540,107735,626(13,893)2,231,334

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

7,793
(139)
3,184
10,838105
4,760
249,217¥5,572,906

65,709(1,082)
12,754
77,3901,148
33,254
2,343,138$52,014,335

Liabilities and net assets

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

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

Remeasurements of defined benefit plans

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

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201828

Consolidated Statements of Operations
Senshu Ikeda Holdings, Inc. and Consolidated Subsidiaries
For the years ended 31st March, 2018 and 2017

IncomeInterest income:Interest on loans and bills discounted (Note 32)
Interest and dividends on securities
Other interest income
Fees and commissions
Other operating income (Note 22)
Reversal of provision for possible loan losses
Recoveries of written-off claims
Gain on sales or disposal of fixed assets
Gain on return of retirement benefit trust
Other income (Note 23)
Total income

Millions of yen
2018
2017

Thousands of U.S.
dollars (Note 1)2018¥41,062
9,640
519
20,695
5,618
2,254
1,375
80
1,710
30,444
113,403¥42,414
14,015447
18,893
11,466–
1,522––
14,305103,065$386,502
90,737
4,885
194,794
52,88021,216
12,942753
16,095286,558
1,067,422

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

3,226
673
3,797
6,461
3,879
51,955202
93
12,40382,693
20,371

23,795
4,518
21,50765,370188,394
484,309432
527
128,943
917,827
149,585

966
6,235
7,201
8,691
295
¥8,395

2,458
4,043
6,502
13,8691,658¥12,210

9,092
58,68767,78081,8052,776$79,019

Millions of yen
2018
2017
¥8,691¥13,869

Thousands of U.S.
dollars (Note 1)2018$81,805(813)
23(1,829)(2,618)¥6,072(13,960)
5
1,257(12,698)¥1,170(7,652)
216(17,215)(24,642)$57,153

5,779
293

(487)
1,657

54,395
2,757

Expenses

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

Income taxes (Note 29)
Current
Deferred
Total income taxes
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of the parent
See accompanying notes to consolidated financial statements

Consolidated Statements of Comprehensive Income
Senshu Ikeda Holdings, Inc. and Consolidated Subsidiaries
For the years ended 31st March, 2018 and 2017

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

29

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2018

SENSHU IKEDA HOLDINGS,INC.

Consolidated Statement of Changes in Net Assets
Senshu Ikeda Holdings, Inc. and Consolidated Subsidiaries
Year Ended March 31, 2018

BALANCE, APRIL 1, 2016
Increase by merger
Cash dividends
Profit attributable to ownersof the parent
Acquisition of treasury stock
Disposal of treasury stock
Net changes in items otherthan shareholders’ equity
Total changes during the period
BALANCE, MARCH 31, 2017
Purchase of shares of
consolidated subsidiaries
Cash dividends
Profit attributable to ownersof the parent
Acquisition of treasury stock
Disposal of treasury stock
Net changes in items otherthan shareholders’ equity
Total changes during the period
BALANCE, MARCH 31, 2018

BALANCE, APRIL 1, 2017
Purchase of shares of
consolidated subsidiaries
Cash dividends
Profit attributable to ownersof the parent
Acquisition of treasury stock
Disposal of treasury stock
Net changes in items otherthan shareholders’ equity
Total changes during the period
BALANCE, MARCH 31, 2018

Capitalstock
102,999

Capitalsurplus57,361
8

Millions of Yen
Accumulated othercomprehensive incomeNetNet
unrealized
gain (loss) on unrealized RemeasureTotal
available- gain (loss) ments of
Stock
NonRetained Treasury shareholder’s for-sale on deferred defined subscription controlling
hedges benefit plans rights
earnings
stock
securities
equityinterests
68,521(2,678) 226,203
21,753
(144)
1,927
91
8,172
8
(5,486)(5,486)

Total net
assets258,0058(5,486)

12,21012,21012,210

(1)
577

(1)
577

(1)
581

(4)
–
102,999

4
57,365

6,723
75,244580(2,097)20

Capitalstock
969,49315
57,381

Capitalsurplus539,956

13(3,412)(16,095)(13,959)
7,793

5
(139)

1,257
3,184

13
105

(3,412)
4,760(8,787)249,21720

20(5,487)

8,395

8,395

8,395

(0)
621

(0)
617

(0)
617

621
(1,476)

3,545
237,057

2,908
78,153Retainedearnings
708,245(811)

23(1,829)16(1,227)(3,827)

(811)
6,981

23
(115)

(1,829)
1,355

16
122

(1,227)
3,533

(282)
248,935

Thousands of U.S. Dollars (Note 1)
Accumulated othercomprehensive incomeNetNet
unrealized
gain (loss) on unrealized RemeasureTotal
available- gain (loss) ments of
Stock
NonTreasury shareholder’s for-sale on deferred defined subscription controlling Total net
hedges benefit plans rights
stock
securities
equityinterests
assets(19,738) 2,197,966
73,352(1,308)29,969988
44,804 2,345,792
188

188

(51,647)(51,647)(51,647)

79,01979,01979,019

(0)
5,807

(0)
5,807

(0)
5,845

(37)
141
540,107

1,257(5,487)

188–
969,4935(5,487)(4)–
102,999

7,308
233,512(13,959)

27,371
735,626

5,845
33,367(13,893) 2,231,334(7,633)

216(17,215)150(11,549)(7,633)65,709216(1,082)(17,215)
12,754150
1,148(11,549)(2,654)33,254 2,343,138(36,022)

See notes to consolidated financial statements

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201830

Consolidated Statements of Cash Flows
Senshu Ikeda Holdings, Inc. and Consolidated Subsidiaries
For the years ended 31st March, 2018 and 2017

Thousands of U.S.
dollars (Note 1)
2018

Millions of yen
2018
2017
Cash flows from operating activities
Income before income taxes
Depreciation
Loss on impairment of fixed assets
Amortization of goodwill(Earnings) losses from investments under the equity method
Increase (decrease) in reserve for possible loan losses
Increase (decrease) in accrued bonuses
Gain on return of retirement benefit trust
Decrease (increase) in net defined benefit asset
Increase (decrease) in net defined benefit liability¥15,892
5,267
56
217
(27)
(7,012)72(1,710)(974)
6¥20,371
5,179
93
190
(34)
(8,600)
10
–
147
(4)

$149,585
49,576
527
2,042
(254)
(66,001)
677(16,095)(9,167)
56

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

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

(5)
29
3
7
(56,876)
7,697(10,542)
(190)
2,731
178
(48,151)
69,417(3,800)

–
235
178
3,943
(482,144)
49,830(45,114)
8,132
884
(461)
(829,047)
966,453
8,471

Net increase (decrease) in borrowed money (excluding subordinated borrowings)(22,603)84,780(212,754)

Net (increase) decrease in due from banks (excluding due from the Bank of Japan)
Net (increase) decrease in trading account securities

(679)
141

(397)
(95)

(6,391)
1,327

Net (increase) decrease in call loans and bills bought
Net (increase) decrease in call money and bills sold and others(3,680)(24,716)750(34,638)

24,716(232,643)

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

(84,759)892(21)
52,360(5,730)(22,963)

38,253110
153
56,890(7,940)(3,580)(797,806)
8,396
(197)
492,846(53,934)(216,142)(133,823)(2,592)¥(136,416)

171,49341¥171,535(1,259,629)(24,397)$(1,284,036)

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

31

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2018

SENSHU IKEDA HOLDINGS,INC.

Consolidated Statements of Cash Flows
Senshu Ikeda Holdings, Inc. and Consolidated Subsidiaries
For the years ended 31st March, 2018 and 2017

Millions of yen
2018
2017
Cash flows from investing activities
Purchases of securities
Proceeds from sales of securities
Proceeds from maturity of securities
Increase in money held in trust
Decrease in money held in trust
Purchases of tangible fixed assets
Purchases of intangible fixed assets
Proceeds from sales of tangible fixed assets
Purchase of shares of subsidiaries resulting in change in scope of consolidation (Note 27)
Net cash provided by (used in) investing activities
Cash flows from financing activities
Decrease in subordinated borrowings
Decrease in subordinated bonds and bonds with stock subscription rights
Cash dividends paid
Cash dividends paid for non-controlling shareholders
Purchases of treasury stock
Proceeds from disposition of treasury stock
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period (Note 27)

Thousands of U.S.
dollars (Note 1)2018¥(413,251)
399,351
203,189––(3,010)(1,518)520(75)
185,204¥(713,962)
604,194
207,951(228)
420(2,762)(1,452)
0–
94,160$(3,889,787)
3,758,951
1,912,547––(28,332)(14,288)
4,894
(705)
1,743,260(7,000)–(5,487)
(116)
(0)
617
(11,986)(10,000)(35,000)(5,486)
(312)
(1)
577
(50,222)(65,888)–(51,647)(1,091)(0)
5,807(112,820)

0

(197)

0

36,801
669,243¥706,045

215,274
453,968¥669,243

346,394
6,299,350$6,645,754

See accompanying notes to consolidated financial statements

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201832

Notes to Consolidated Financial Statements
Senshu Ikeda Holdings, Inc. and Consolidated Subsidiaries
For the Years Ended 31st March, 2018 and 2017

1. Basis of Presentation
Senshu Ikeda Holdings, Inc. (the “Company”) is a holding
company and conducts its operations through its subsidiaries
and affiliates. The Company and its subsidiaries (collectively,
the “Group”) maintain their books of account in accordancewith the provisions set forth in the Companies Act of Japan(the “Act”) and in conformity with accounting principles andpractices generally accepted in Japan, which are different incertain respects as to the application and disclosure
requirements of International Financial Reporting Standards.
The accompanying consolidated financial statements havebeen compiled from the consolidated financial statements
prepared by the Company as required by the Financial
Instruments and Exchange Act of Japan. Certain accounts
have been reclassified for the convenience of readers outside
Japan.
In preparing the accompanying consolidated financial
statements, Japanese yen amounts are presented in millionsof yen by rounding down figures below one million. As a result,
the totals in yen in the accompanying consolidated financial
statements do not necessarily agree with the sums of theindividual amounts.
The translation of yen amounts into U.S. dollar amounts is
included solely for the convenience of readers outside Japanand has been made at ¥106.24 = U.S.$1.00, the exchange
rate prevailing on 31st March, 2018. This translation should
not be construed as a representation that yen can beconverted into U.S. dollars at the above or any other rate.

2. Principles of Consolidation
The accompanying consolidated financial statements include
the accounts of the Company and the 27 (28 in 2017)
significant subsidiaries which it controls directly or indirectly.
Affiliates over which the Company exercises significant
influence in terms of their operating and financial policies
have been included in the accompanying consolidated
financial statements on an equity basis.
Change in the scope of consolidation
Senshu Ikeda Auto Lease Co., Ltd. has been included in thescope of consolidation from the fiscal year ended 31st March,
2018, as a result of purchase of shares.
Ikegin Capital Yumejikomi Fund PCI Investment Enterprise
Limited Partnership and Ikegin Capital Yumejikomi Fund No.3
Investment Enterprise Limited Partnership, both of which wereconsolidated subsidiaries of the Company in the previous
fiscal year, were excluded from the scope of consolidation
due to completion of their liquidation procedures.

33

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2018

The company has applied the equity method to its investments
in 2 affiliates for the years ended 31th March, 2018 and 2017,
respectively.
All significant intercompany accounts and transactions havebeen eliminated in consolidation. All material unrealized profit
included in assets resulting from transactions within the Groupis eliminated.
The difference between the cost and the underlying equity inthe net assets of the consolidated subsidiaries measured atfair value at their respective dates of acquisition is presented
as “goodwill” or “negative goodwill”. Goodwill is amortized by
the straight-line method over a period of 5 years.
The balance sheet date of 9 subsidiaries is 31st December.
Appropriate adjustments have been made for significant
intervening transactions occurring during the period from 31st
December to 31st March.

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

SENSHU IKEDA HOLDINGS,INC.

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

For collateralized or guaranteed claims on bankrupt
borrowers and effectively bankrupt borrowers, the amountof the claims exceeding the estimated value of collateraland guarantees is deemed to be uncollectible and iswritten off against the total amount of the outstanding
claims. These write-offs amounted to ¥31,347 million($295,058 thousand) and ¥37,285 million for the years
ended 31st March, 2018 and 2017, respectively.
(8) Provision for employees’ bonuses
Provision for employees’ bonuses is calculated based onan estimated payment amount, which is attributable to thefiscal year.
(9)	Accrued retirement benefits for directors and corporate
auditors
Accrued retirement benefits for directors and corporate
auditors are provided at an amount that would be
required if all directors and corporate auditors retired at
the balance sheet date.
(10) Reserve for reimbursements of deposits
Reserve for reimbursements of deposits is provided at an
estimate of the future payments to be made forreimbursement claims on deposits which were
derecognized and credited from liability to income basedon the Group’s historical experience.
(11) Reserve for point services
Reserve for point services, which is provided to meet
future use of credits granted to customers, is recorded in
the amount deemed necessary based on the estimatedfuture use of unused credits.
(12) Reserve for contingent losses
Reserve for contingent losses is provided at an estimateof the future loss on contingencies other than those
covered by other reserves or provisions.
(13) Reserve under special laws
Reserve under special laws consist of the financial
instruments transaction liability reserve of ¥2 million ($18
thousand) as of March 31, 2018, posted by Senshu Ikeda
Tokai Tokyo Securities Co., Ltd., which were calculated
according to the specifications of Article 46-5 of the
Financial Instruments and Exchange Act and Article 175of the Cabinet Office Ordinace Related to the Financial
Instruments Business, to prepare for losses originatingfrom incidents relating to the purchase and sale ofsecurities or other transactions.
(14) Accounting treatment for retirement benefits
In the calculation of retirement benefit obligation, theCompany applies the benefit formula basis in attributing
expected retirement benefits to periods until the end of
the fiscal year under review.
Prior service cost is amortized by the straight-line method
over a period of 11 years, which is within the average

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201834

estimated remaining years of service of the eligible
employees.
Actuarial gain or loss is amortized commencing the year
following the year in which the gain or loss is recognizedby the straight-line method principally over a period of 11
to 12 years, which is within the average estimatedremaining years of service of the eligible employees.
Some of the consolidated subsidiaries calculate their net
defined benefit liability and retirement benefit expenses
by adopting the simplified method, assuming the amountof year-end retirement benefit payable due to voluntaryterminations as retirement benefit obligation.
(15) Foreign currency transactions
Assets and liabilities of consolidated subsidiaries
denominated in foreign currencies are translated into
Japanese yen at the exchange rates in effect at thebalance sheet date.
(16) Leases
Leased assets under finance lease arrangements which
do not transfer ownership of the leased assets to thelessee are depreciated over the respective lease contract
periods using the straight-line method with residual
values defined in the lease contracts, otherwise theresidual values is zero.
As lessee:
Finance leases which commenced prior to 1st April, 2008,
except for those substantially requiring the transfer ofownership of the leased assets to the lessee, areaccounted for as operating leases.
As lessor:
Finance lease income and related cost are recognizedwhen lease payment is received. Finance leases which
do not transfer ownership of the leased assets to thelessee and commenced prior to 1st April, 2008 aredeemed to have been entered into contracts at theamount of the cost less accumulated depreciation at 31st
March, 2008.
(17) Hedge accounting
Interest rate risk hedging
With respect to hedge accounting for the interest rate risk
arising from financial assets and liabilities of the banking
subsidiaries, the Group applies deferral hedge
accounting or fair value hedge accounting, under whichgains or losses on derivatives are deferred until maturityof the hedged transactions, as stipulated in the JapaneseInstitute of Certified Public Accountants (JICPA) Industry
Audit Committee Report No. 24, 13th February, 2002.

35

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2018

Foreign exchange rate risk hedging
With respect to hedge accounting for derivativetransactions used to hedge the risk of financial assets
and liabilities denominated in foreign currencies of thebanking subsidiaries, the Group applies deferral hedge
accounting, under which gains or losses on derivatives
are deferred until maturity of the hedged transactions, as
stipulated in the JICPA Industry Audit Committee Report
No. 25, 29th July, 2002. The Group assesses theeffectiveness of its currency swaps and foreign exchange
swaps transactions, etc. entered into in order to hedge
the risk of fluctuation in foreign exchange rates bycomparing the foreign-currency amount of eachunderlying hedged item with the corresponding foreigncurrency amount of the respective hedging instruments.
(18) Cash flows
In preparing the consolidated statement of cash flows,
cash and deposits with the Bank of Japan are considered
to be cash and cash equivalents.
(19) Consumption taxes
Transactions are principally stated exclusive of nationaland municipal consumption taxes.
(20) Consolidated tax payment system
The Company and certain of its consolidated subsidiaries
have adopted the consolidated tax payment system inaccordance with the Corporation Tax Act (Act No. 34,
1965).
(21) Additional Information
The consolidated subsidiary has established a retirement
benefit trust to ensure the soundness of financing thepension plans. However, the subsidiary has received apartial return of the retirement benefit trust, because
pension assets were funded in excess of the retirement
benefit obligations, and such conditions are expected tocontinue.
Accordingly, the subsidiary recorded gain on return ofretirement benefit trust in an amount of ¥1,710 million($16,095) under “Income” for the year ended March 31,
2018.
The Company conducts transactions in which it delivers
Company shares to the Employees Shareholders
Association through a trust.
The Trust-type Employees Shareholding Incentive Plan
introduced in December 2015
(1) Overview of the transaction
The Company has introduced the “Trust-type
Employees’ Shareholding Incentive Plan (hereinafter“the Plan”)” in order to provide incentive to increase
the medium- to long-term corporate value of theCompany for the employees of the Senshu Ikeda
Bank.
The Plan is an incentive plan in which all employees
enrolled in the “Senshu Ikeda Bank Employees’SENSHU IKEDA HOLDINGS,INC.

Shareholders Association (hereinafter “Shareholders
Association”)” are eligible. Under the Plan, theCompany establishes a “Senshu Ikeda Bank
Employees’ Shareholders Association Exclusive Trust
Account (hereinafter “Employees’ Shareholder Trust”)
at a trust bank, and the Employees’ Shareholder Trustpurchases in advance a certain number of theCompany’s shares equivalent to the number ofshares the Shareholders Association is expected topurchase over the next five years.
Subsequently, the Employees’ Shareholder Trust is tocontinuously sell the Company’s shares to the
Shareholders Association, and if any gains on sale ofshares have accumulated within the Employees’
Shareholder Trust at the termination of the trust, theamount equivalent to such gains on sale of sharesare to be distributed to those who meet therequirements for eligible beneficiaries as residual
assets.
Meanwhile, as the Company is to provide aguarantee on the loan for the Employees’
Shareholder Trust to acquire the Company’s shares,
should the price of the Company’s shares falls andshould losses on sale of shares accumulate within
the Employees’ Shareholder Trust, and if remaining
debt exists equivalent to the losses on sale of sharesat the time of termination of the Employees’
Shareholder Trust, the Company is to repay suchremaining debt pursuant to the guarantee
agreement.
(2)	The Company’s own shares held in trust	The Company’s own shares held in trust are recorded
as treasury stock under the category of Net assets attheir book value in the Employees’ Shareholder Trust(excluding the amount of ancillary expenses). The
book value and number of shares of such treasury
stock for the fiscal year ended 31st March, 2018 and2017 were ¥1,380 million ($12,989 thousand) and
2,924 thousand shares, and ¥1,931 million and 4,198
thousand shares, respectively.
(3)	Book value of borrowings recorded from applicationof the gross method	¥1,341 million ($12,622 thousand) for the fiscal year
ended 31st March, 2018, and ¥1,942 million for the
fiscal year ended 31st March, 2017, respectively.

4. Trading account securities
Valuation gain or loss on trading account securities included
in income before income taxes and non-controlling interests
were ¥(0) million ($(0) thousand) and ¥0 million for the years
ended 31st March, 2018 and 2017, respectively.

5. Securities
Securities at 31st March, 2018 and 2017 consisted of thefollowing:Thousands of
U.S. dollars

Millions of yen
2017

2018
Stocks2018¥52,544 ¥72,932 $494,578

Bonds:
Government bonds

72,13562,050Local government bonds

39,46232,269371,442

Corporate bonds

245,237

237,678

2,308,330

327,034

524,574

3,078,256

Other
Total

678,981¥736,415 ¥929,505 $6,931,617

Stocks in the above table include investments in affiliates of¥82 million ($771 thousand) and ¥55 million at 31st March,2018 and 2017, respectively.
Held-to-maturity debt securities with fair value at 31st March,2018 and 2017 were as follows:
Millions of yen
31st March, 2018
Government bonds

Carrying value

Fair value

¥–

¥–

Corporate bonds

–

–

Other

11,00011,068

Total¥11,000¥11,068

Millions of yen
31st March, 2018
Government bonds

Difference

Unrealized Unrealized
gain
loss

¥– ¥– ¥–

Corporate bonds

–

–

–

Other

68

68

–

Total

¥68 ¥68 ¥–Millions of yen
31st March, 2017

Government bonds

Carrying value

Fair value¥24,998¥25,062

Corporate bonds

2,800

2,801

Other

22,00022,206

Total¥49,799¥50,070

Millions of yen
31st March, 2017
Government bonds
Corporate bonds
Other
Total

Difference

Unrealized Unrealized
gain
loss

¥63 ¥63 ¥–
0

0

–

206

206

–

¥271 ¥271 ¥–

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201836

Thousands of U.S. dollars
31st March, 2018
Government bonds

Millions of yen

Carrying value

Fair value

$–

$–

–

–

Corporate bonds

31st March, 2017

Other

103,539

104,179

Total$103,539$104,179

Thousands of U.S. dollars
31st March, 2018
Government bonds
Corporate bonds
Other
Total

Unrealized Unrealized
Difference
gain
loss
$– $– $–
–

–

–

640

640

–

Equity securities

Available-for-sale securities with fair value at 31st March, 2018and 2017 were as follows:
Millions of yen
Carrying value

Acquisitioncost¥46,071¥23,485

Government bonds

72,13571,990Local government bonds

39,46239,407

Corporate bonds

245,237

245,112Subtotal

356,836

356,51031st March, 2018
Equity securities

312,991

324,814¥715,899¥704,810

Millions of yen
31st March, 2018
Equity securities

Unrealized Unrealized
Difference
gain
loss
¥22,585 ¥22,998 ¥(412)
145

145

–

Local government bonds

55

100

(45)

Corporate bonds

124

265

(141)

Subtotal

325

512

(186)

(11,823)

2,036(13,860)

Other
Total

¥11,088 ¥25,547 ¥(14,458)

37,01337,051
32,26932,128

Corporate bonds

234,877

234,313

Subtotal

304,198

303,454

Other

498,930

520,735

Total¥869,826¥854,685

Millions of yen
31st March, 2017
Equity securities

Difference

Unrealized Unrealized
gain
loss

¥36,201 ¥36,374 ¥(172)Bonds:
Government bonds

38

38

–

Local government bonds

140

151

(10)

Corporate bonds

564

769

(205)

Subtotal

743

960

(216)

(21,804)

3,283(25,088)

Total¥15,140 ¥40,618 ¥(25,477)
Thousands of U.S. dollars
31st March, 2018

Equity securities

Carrying value

Acquisitioncost$433,650$221,056
677,616

Bonds:
Government bonds

678,981

Local government bonds

371,442

370,924

Corporate bonds

2,308,330

2,307,153

Subtotal

3,358,772

3,355,704

Other

2,946,074

3,057,360

Total$6,738,507$6,634,130

Bonds:
Government bonds¥30,496

Government bonds

Bonds:

Total¥66,697

Local government bonds

Other

Other

Acquisition
cost

Bonds:$640 $640 $–There were no held-to-maturity debt securities sold during theyears ended 31st March, 2018 and 2017.

Carrying value

Thousands of U.S. dollars
31st March, 2018
Equity securities

Difference

Unrealized Unrealized
gain
loss

$212,584 $216,472 $(3,878)

Bonds:
Government bonds

1,364

1,364

–

Local government bonds

517

941

(423)

Corporate bonds

1,167

2,494

(1,327)

Subtotal

3,059

4,819

(1,750)(111,285)

19,164(130,459)

Other
Total

$104,367 $240,464 $(136,088)

Available-for-sale securities sold during the years ended 31st
March, 2018 and 2017 were as follows:

37

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2018

SENSHU IKEDA HOLDINGS,INC.

6. Money Held in Trust

Millions of yen
2018
Equity securities

Proceeds
from sales

Gain

Loss

¥28,824 ¥18,436 ¥–Bonds:
Government bonds
Local government bonds
Corporate bonds
Subtotal
Other
Total

–

–

–

–

–

–

40,797507(26)40,797507(26)331,737

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

Equity securities

Proceeds
from sales

Gain

Government bonds––

Local government bonds

–

–

–

26,601840(0)Subtotal
Other
Total

–

26,601840(0)556,656

5,386(2,699)Equity securities

Gain

Government bonds$271,310 $173,531 $–Local government bonds
Corporate bonds
Subtotal
Total

–

20

1

9

7.	Net Unrealized Gain (Loss) on Availablefor-Sale Securities
Net unrealized gain (loss) on available-for-sale securities at
31st March, 2018 and 2017 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2017

2018

Available-for-sale securities

Loss

Bonds:

Other

Valuation gain (loss) included in consolidated
statements of income

2018

Differences between acquisition costand fair value:

Thousands of U.S. dollars
2018

2018

¥26,987 ¥26,979 $254,019¥592,916 ¥11,636 ¥(2,719)

Proceeds
from sales

2017

2018
Carrying valueLoss¥9,658 ¥5,409 ¥(20)Bonds:

Corporate bonds

Thousands of
U.S. dollars

Millions of yen

There were no money held in trust owned for other purposes
at 31st March, 2018 and 2017.

Millions of yen
2017

Money held in trust at 31st March, 2018 and 2017 consistedof the following:
Money held in trust for trading purposes

–

–

–

–

–

384,007

4,772

(244)

384,007

4,772

(244)

3,122,524

11,577(138,205)$3,777,842 $189,881 $(138,450)

Impairment losses on securities
Available-for-sale securities whose fair value significantly
declined from the acquisition cost are valued at fair value andlosses on devaluation of those securities are recognized in the
consolidated statement of operations unless the value isconsidered recoverable.
Losses on devaluation of securities for the years ended 31st
March, 2017 was ¥7 million, which consisted of ¥7 million onequity securities for the year ended 31st March, 2017.
Determining whether the fair value is “significantly declined” isbased on the fair value declining by more than 50% or thecriteria considering the trend of the fair value during a certain
past period and credit risks of the issuers when the fair value
declined between 30% and 50% of the acquisition cost.

Deferred tax liabilities
Differences between acquisition costand fair value, net of taxes¥11,088 ¥15,140 $104,367(4,106)(7,344)(38,648)

6,981

7,795

65,709

(0)

(2)

(0)

Amounts corresponding to
non-controlling interests

Net unrealized gain (loss) on availablefor-sale securities, net of taxes¥6,981 ¥7,793 $65,709

8.	Loans and Bills Discounted and Risk
Monitored Loans
Loans and bills discounted:
Loans and bills discounted at 31st March, 2018 and 2017consisted of the following:
Millions of yen
2018
Bills discounted

2017

Thousands of
U.S. dollars
2018¥19,725 ¥18,557 $185,664

Loans on bills

53,90964,653

507,426

Loans on deeds

3,583,104

3,491,176

33,726,506

240,666

238,945

2,265,304

Overdrafts
Total¥3,897,405 ¥3,813,333 $36,684,911

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201838

Discounting of bills is accounted for as finance transactions
rather than as purchasing of bills in accordance with the
JICPA Industry Audit Committee Report No. 24. The Group
has the right to sell or pledge such bills without any
restrictions. These include bankers acceptances bought,
commercial bills discounted, documentary bills and foreignexchange bills. The total face value of such outstanding bills
at 31st March, 2018 and 2017 totaled ¥20,109 million($189,278 thousand) and ¥18,837 million, respectively.
At 31st March, 2018 and 2017, loans and bills discounted
included the portion of loans extended to original borrowers
based on loan participation agreements, as permitted by the
JICPA Accounting Committee Report No. 3, 28th November,
2014, in the amount of ¥17,970 million ($169,145 thousand)and ¥17,175 million, respectively.
Contracts for overdraft facilities and loan commitments arecontracts under which the Group lends money to customers
up to their prescribed limits at the customers’ request as longas there are no violations of any of the conditions in thecontracts. The aggregate unutilized balances within the limitsof these contracts totaled ¥754,050 million ($7,097,609
thousand) and ¥732,992 million at 31st March, 2018 and2017, respectively, including the contracts whose contractual
periods were either less than one year or revocable at any
time, in the amount of ¥740,863 million ($6,973,484 thousand)and ¥719,805 million, respectively.
Since many of these commitments expire without being fully
utilized, the unutilized amounts do not necessarily represent
future cash commitments. Most of these contracts include
provisions which stipulate that the consolidated subsidiaries
can reject customers’ requests or decrease the contract limits
for an appropriate reason, (for example, a change in financial
situation or a deterioration in customers’ creditworthiness).
At the inception of the contracts, the Group obtains collateralin the form of real estate, securities, and so forth, if deemednecessary. Subsequently, the Group, based on its internal
rules, performs periodic reviews of the customers’ businessresults and may take necessary measures such asreconsidering the terms of the contracts and/or requiring
additional collateral or guarantees.

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

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

9. Foreign Exchange Assets
Foreign exchange assets at 31st March, 2018 and 2017consisted of the following:

2017

2018
Due from foreign correspondent banks

2017

2018

¥4,335 ¥5,419 $40,803

Foreign bills of exchange bought

366

262

3,445

Foreign bills of exchange receivable

747

658

7,031

Total

¥5,448 ¥6,340 $51,280

Other assets at 31st March, 2018 and 2017 consisted of thefollowing:

2018

2018

¥1,380 ¥1,621 $12,989

Thousands of
U.S. dollars

Millions of yen
Investment in leased assets

2017

2018

¥16,804 ¥15,293 $158,170

32,71543,099307,934

Other receivables

20,681

15,421

194,663–––

Accrued income

5,399

6,183

50,8187,209

10,75567,855Prepaid expenses

640

485

6,024

39,43924,166371,225¥41,306 ¥55,476 $388,798

Other
Total

39

Thousands of
U.S. dollars

Millions of yen

Thousands of
U.S. dollars

Millions of yen

Delinquent loans

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

10. Other Assets

Risk monitored loans:
Risk monitored loans which were included in loans and bills
discounted at 31st March, 2018 and 2017 consisted of thefollowing:

2018

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

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2018

¥82,965 ¥61,550 $780,920

SENSHU IKEDA HOLDINGS,INC.

11. Tangible Fixed Assets

13. Deposits

At 31st March, 2018 and 2017, accumulated depreciation of
tangible fixed assets were ¥51,994 million ($489,401 thousand)and ¥45,498 million, respectively.
Under the Tax Act, capital gains arising from the exchange orreplacement of assets under certain conditions are permitted
to be deducted from the cost of tangible fixed assets in orderto obtain certain tax benefits. The amount deducted from thecost of tangible fixed assets at 31st March, 2018 and 2017
were ¥375 million ($3,529 thousand) and ¥375 million,
respectively.

Deposits at 31st March, 2018 and 2017 consisted of thefollowing:Thousands of
U.S. dollars

Millions of yen
2017

2018
Securities¥341,539 ¥423,257 $3,214,787

Loans and bills discounted
Other assets

2018

–

61,764

–

992

875

9,337

The liabilities secured by the above pledged assets at 31st
March, 2018 and 2017 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2017

2018
Deposits
Payables under repurchaseagreements

2018¥3,786 ¥13,401 $35,636
–

9,907

–

Payables under securities
lending transactions

165,002249,762

1,553,106

Borrowed money

100,795

114,148

948,748

682

232

6,419

Other liabilities

In addition to the pledged assets listed above, certain othersecurities were pledged as collateral for domestic exchangetransactions or as margins on futures contracts. Theseamounted to ¥9,030 million ($84,996 thousand) and ¥20,503
million at 31st March, 2018 and 2017, respectively.
At 31st March, 2018 and 2017, margins on futures contracts inthe amounts of ¥3,867 million ($36,398 thousand) and ¥4,130
million, guarantee deposits of ¥4,667 million ($43,928
thousand) and ¥4,811 million, deposits for futures transactionsof ¥503 million ($4,734 thousand) and ¥503 million, collateralmoney deposited for financial instruments of ¥515 million($4,847 thousand) and ¥10 million and margins for Central
Counter Party of ¥19,555 million ($184,064 thousand) and¥4,797 million were included in “Other assets”, respectively.

2018¥193,672 ¥180,211 $1,822,966

Ordinary deposits

2,356,699

2,148,341

22,182,784

Savings deposits

23,86924,340224,670

Deposits at notice

9,433

8,863

88,7892,281,109

2,394,347

21,471,282

37,31943,388351,270

Time deposits
Total

Assets pledged as collateral at 31st March, 2018 and 2017consisted of the following:

2017

2018
Current deposits

Other deposits

12. Assets Pledged

Thousands of
U.S. dollars

Millions of yen¥4,902,103 ¥4,799,493 $46,141,782

14. Borrowed Money
Borrowed money at 31st March, 2018 and 2017 consisted ofborrowings from the Bank of Japan and certain other financial
institutions.
Subordinated borrowings of ¥7,000 million were included inborrowed money at 31st March, 2017.
The average interest rate applicable to borrowed money at
31st March, 2018 and 2017 were 0.34% and 0.36%,
respectively.
The aggregate annual maturities of borrowed money
subsequent to 31st March, 2018 were summarized as follows:Year ending 31st March,Millions of yen

Thousands of
U.S. dollars

2019¥26,476$249,209

2020

5,439

51,1952021

99,181

933,556

2022

761

7,163

2023

274

2,579

Total

¥132,133$1,243,721

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201840

15. Foreign Exchange Liabilities

17. Other Liabilities

Foreign exchange liabilities at 31st March, 2018 and 2017consisted of the following:

Other liabilities at 31st March, 2018 and 2017 consisted of thefollowing:Thousands of
U.S. dollars

Millions of yen
2017

2018
Foreign bills sold

2018

2018

¥538 ¥545 $5,064

Foreign bills of exchange payable
Total

38

23

216

¥562 ¥583 $5,289

Thousands of
U.S. dollars

Millions of yen
Accrued expenses

2017

2018

¥3,270 ¥3,735 $30,779

Unearned income

15,81815,929Accrued income taxes

1,024

1,760

9,638

Other

23,20030,570218,373

Total

148,889¥43,314 ¥51,996 $407,699

16. Corporate Bonds and Notes
Short-term and long-term bonds payable at 31st March, 2018and 2017 consisted of the following:
Millionsof yenIssuerDescription

Issued2018

The Senshu Ikeda
Bank, Ltd.

5th subordinated bonds

25th Sep., 2013¥10,000

6th subordinated bonds

27th Dec., 2013

Total

IssuerMillions Thousands ofof yenU.S. dollars Interest
2017

2018

rates (%)

The Senshu Ikeda ¥10,000 $94,126
Bank, Ltd.
10,00094,126

1.40
1.35

Total

10,000¥20,000

The amounts of lease obligations included in “Other” were ¥6
million ($56 thousand) and ¥19 million at 31st March, 2018and 2017, respectively. The average interest rates on leaseobligations at 31st March, 2018 with maturity dates on or
before and subsequent to 31st March, 2019 were 3.00%. The
average interest rates on lease obligations at 31st March,2017 with maturity dates on or before and subsequent to 31st
March, 2018 were 1.96% and 2.01%, respectively.
The aggregate annual maturities of lease obligations
subsequent to 31st March, 2018 were summarized as follows:Year ending 31st March,Millions of yen

Thousands of
U.S. dollars

Unsecured 25th Sep., 2023

2019

¥0

$0

Unsecured 27th Dec., 2023

2020

1

9

2021

1

9

2022

0

0

2023

1

9

2024 and thereafter

1

9

¥6

$56

Secured/unsecuredDue¥20,000 $188,253

The aggregate annual maturities of short-term and long-termbonds payable subsequent to 31st March, 2018 weresummarized as follows:

Total

Year ending 31st March,Millions of yen

Thousands of
U.S. dollars

2019

¥–

$–

2020

–

–

18. Retirement Benefit Plans

2021

–

–

2022

–

–

Outline of the retirement benefit plan adopted by the Company

2023
2024 and thereafter
Total

–

–

20,000188,253¥20,000$188,253

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

41

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2018

SENSHU IKEDA HOLDINGS,INC.

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

Thousands of
U.S. dollars

2017

2018

2018

Retirement benefit obligation at¥35,723 ¥34,517 $336,248
beginning of the year
Service cost

1,086

1,015

10,222

Interest cost

140

129

1,317

Actuarial gain or loss incurred
during the year

3,077

1,393

28,962

Payment of retirement benefits(1,508)(1,344)(14,194)

14

12

131

Other

Retirement benefit obligation at¥38,534 ¥35,723 $362,707
end of the year

2018
Pension plan assets at
beginning of the year

Thousands of
U.S. dollars

Expected return on plan assets

2017

2018

¥49,915 ¥46,795 $469,832
975

904

9,177

Actuarial gain or loss incurred
during the year

1,585

3,459

14,919Contributions from employer

872

–

8,207

Payment of retirement benefits(1,149)(1,243)(10,815)

Return of retirement benefit
trust(2,702)–(25,432)

Pension plan assets at end of
the year

2018
Funded retirement benefit
obligation

Unfunded retirement benefit
obligation
Net amount of liability andasset on consolidatedbalance sheets

2017

2018

¥38,382 ¥35,580 $361,276(49,497)(49,915)(465,897)(11,114)(14,334)(104,612)

151

142

1,421

¥(10,962) ¥(14,192) $(103,181)
Thousands of
U.S. dollars

Millions of yen
2018
Net defined benefit liability
Net defined benefit asset

2017

2018

¥151 ¥142 $1,421(11,114)(14,334)(104,612)

Net amount of liability and asset
on consolidated balance¥(10,962) ¥(14,192) $(103,181)
sheets(4) Retirement benefit expenses consisted of the following:(2)	Reconciliation of the beginning balance to the endingbalance of pension plan assets
Millions of yen

Thousands of
U.S. dollars

Millions of yen

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

Thousands of
U.S. dollars

Millions of yen
2018
Service cost

2017

2018

¥1,086 ¥1,015 $10,222

Interest cost

140

129

1,317

Expected return on plan
assets

(975)

(904)

(9,177)

Amortization of actuarial loss

156

81

1,468

Amortization of prior service
cost

(262)

(336)

(2,466)

Net periodic retirement
benefit expenses fordefined benefit pensionplans¥146 ¥(14) $1,374¥49,497 ¥49,915 $465,897

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201842

(5)	Remeasurements of defined benefit plans included inother comprehensive income	Remeasurements of defined benefit plans included inother comprehensive income (before related tax effects)
consisted of the following:
Millions of yen
2017

2018
Prior service cost
Actuarial gain or loss
Total

Thousands of
U.S. dollars

2,147(22,326)¥(2,634) ¥1,810 $(24,792)(6)	Remeasurements of defined benefit plans included inaccumulated other comprehensive income
Remeasurements of defined benefit plans included inaccumulated other comprehensive income (before related
tax effects) consisted of the following:
Millions of yen
2017

2018
Unrecognized prior service
cost
Unrecognized actuarial gain or
loss
Total

Thousands of
U.S. dollars
2018¥(1,179) ¥(1,441) $(11,097)(3,146)(773)(7,275)¥(1,952) ¥(4,587) $(18,373)(7) Matters related to pension plan assets1)	Ratio of the main components in the total pension plan
assets are as follows:
2017

2018
Bonds

17%

10%

Stocks56%

63%

Short-term investment fundincluding cash and deposits

7%

12%

Life insurance company
general accounts

4%4%

Others

16%

11%

Total

100%

100%

Note:
Total pension plan assets include retirement benefit trust ofwhich securities are contributed for the pension plan, which
accounts for 30% and 35% of the total at 31st March, 2018and 2017, respectively.
2)	Setting of long-term expected rates of return on plan
assetsFor the purpose of determining the long-term expected
return on plan assets, the present and anticipatedallocation of plan assets and the present and expectedlong-term rates of return on various assets composing
the plan assets are taken into account.

43

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2018

Discount rate

2018

2017

0.00%-0.65%

0.00%-1.01%

Expected rate of return on plan
assets2.5%

2.5%

Expected rate of salary increase

1.64%-3.42%

1.68%-3.60%

2018¥(262) ¥(336) $(2,466)(2,372)(8) The assumptions used for actuarial calculations

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

20. Contingent Liabilities
Contingent liabilities for guarantee of corporate bonds
included in “Securities,” which were issued by private
placement (Article 2, Paragraph 3 of the Financial Instruments
and Exchange Act of Japan) amounted to ¥5,146 million($48,437 thousand) and ¥3,886 million at 31st March, 2018and 2017, respectively.

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

SENSHU IKEDA HOLDINGS,INC.

(1) Class and number of shares issued and treasury stock
Movements in common stock, third-class preferred stock,
first series of seventh-class preferred stock and treasury
stock during the years ended 31st March, 2018 and 2017
were summarized as follows:
Number of shares (in thousands)
Year ended 31st
March, 2018

1st April,
31st March,2017 Increase Decrease 2018

Note

Outstanding shares:
Common stock

281,008––

Third-class preferred stock

7,500

–

–

7,500

First series of seventh-class preferred stock

25,000––25,000

Total

313,508––

313,508

Common stock

4,397

1

1,309

3,089 1,2 and 3

Total

4,397

1

1,309

3,089

281,008(2) Stock subscription rights
The Company resolved to grant stock subscription rights(stock option) to certain directors and executive officers
of its subsidiaries at the Board of Directors’ meeting heldon, 31st July, 2017, 27th July, 2016, 29th July, 2015, 30th
July, 2014, 31st July, 2013, 31st August, 2012, 28th July,
2011 and 24th February, 2011.
The balance of stock subscription rights granted for stock
option program are ¥122 million ($1,148 thousand) and¥105 million at 31st March, 2018 and 2017, respectively.
Stock option related expenses for the years ended 31st
March, 2018 and 2017 amounted to ¥32 million ($301
thousand) and ¥34 million, respectively.

Treasury stock:

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

1st April,
31st March,2016 Increase Decrease 2017

Note

Outstanding shares:
Common stock

281,008––

Third-class preferred stock

7,500

–

–

7,500

First series of seventh-class preferred stock

25,000––25,000

Total

313,508––

313,508

Common stock

5,616

2

1,222

4,397 1,2 and 3

Total

5,616

2

1,222

4,397

281,008

Treasury stock:

Notes:
1.	The number of treasury stock as of 1st April, 2016 and as of
31st March, 2017 includes the Company’s shares owned by
the Employees’ Shareholder Trust of 5,377 thousand sharesand 4,198 thousand shares, respectively.
2.	Increase in treasury stock of common stock (2 thousand
shares) was due to acquisition of shares from theshareholders who owned fractional shares less than one
unit.
3.	Decrease in treasury stock of common stock (1,222
thousand shares) consisted of transfer due to exercise ofstock option (43 thousand shares) and transfer to the
Shareholders Association (1,178 thousand shares).

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2018

44

The stock option outstanding at 31st March, 2018 is as follows:
Date of resolution
Persons granted

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

Date of resolution
Persons granted

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

Date of resolution
Persons granted

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

Date of resolution
Persons granted

Number of stock option
by type of shares (*)
Date of grantVesting conditions
Applicable service
periodExercise period45(*)	The number of stock options is converted into the numberof shares after the one-for-five reverse stock split ofcommon stock on 1st August, 2012.

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

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

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

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

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

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

Date ofresolution

24th 28th
February, July,
2011 2011

Exerciseprice¥1 ¥1 ¥1 ¥1 ¥1 ¥1 ¥1 ¥127th July, 2016
Directors of thesubsidiaries:8
Executive officers of
the subsidiaries:17
Common stock:94,800
30th August, 2016
To exercise within 10
days after retirement
From 30th August, 2016 to
the date of retirement
From 31st August, 2016
to 31st July, 2046

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

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2018

The stock option activity is as follows:
27th
July,
2016

31st
July,
2017

31st March, 201712,360 13,200 26,300 30,600 41,700 41,200 94,800
Outstanding–

Date ofresolution

24th 28th
February, July,
2011 2011

31st 31st
August, July,2012 2013

30th
July,
2014

29th
July,
2015

Non-vested:

Granted

–

–

–

–

–

–

– 83,100

Forfeited

–

–

–

–

–

–

–

–

Vested2,340 2,440

3,300 4,000 5,300 5,000 12,200–

31st March, 201810,020 10,760 23,000 26,600 36,400 36,200 82,600 83,100
Outstanding
Vested:31st March, 2017Outstanding–

VestedExercised
Forfeited

–

–

–

–

–

–

–

–

31st March, 2018Outstanding

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

2,340 2,440

3,300 4,000 5,300 5,000 12,200–

2,340 2,440

3,300 4,000 5,300 5,000 12,200–(*)	The number of stock options is converted into the numberof shares after the one-for-five reverse stock split ofcommon stock on 1st August, 2012.
Price information is as follows:

Average stock
price at
exercise473

473

31st 31st
August, July,2012 2013

473

473

30th
July,
2014

473

29th
July,
2015

473

27th
July,
2016

473

31st
July,
2017

–

Fair value
price atgrant date¥490 ¥535 ¥449 ¥430 ¥497 ¥474 ¥410 ¥353

Date ofresolution

24th 28th
February, July,
2011 2011

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

Average stock
price at
exercise
Fair value
price atgrant date

4.45

4.45

31st 31st
August, July,2012 2013

4.45

4.45

30th
July,
2014

4.45

29th
July,
2015

4.45

27th
July,
2016

4.45

31st
July,
2017

–

$4.61 $5.03 $4.22 $4.04 $4.67 $4.46 $3.85 $3.32

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

SENSHU IKEDA HOLDINGS,INC.

The method for estimating the fair value price of 2017 stock
option granted in the year ended 31st March, 2018 were as
follows:
Measurement method: Black-Scholes model
Major fundamental factors and assumptions used to measurefair value
Date of resolution

23. Other Income
Other income for the years ended 31st March, 2018 and 2017consisted of the following:

24.01%

Estimated remaining outstanding period *2

4.049 years

Gain on money held in trust

3.659%

Other

Interest rate with risk free *4(0.138)%Total

In estimating the vested number of stock options, theCompany basically reflects only the actual forfeited number,since it is difficult to make a reasonable estimate on the future
forfeited number.

22. Other Operating Income
Other operating income for the years ended 31st March, 2018and 2017 consisted of the following:
Millions of yen
2018
Gain on sales of securities andtrading account securities
Other
Total

2017

Thousands of
U.S. dollars

2018

Gain on sales of equity securities ¥18,539 ¥5,464 $174,501

Estimated dividend *3*1	Actual stock price during the period (from 13th August,2013 to 31st August, 2017) corresponding to the estimatedremaining outstanding period*2	For each director or executive officer in office, the difference
between “the average term of office of retired directors or
executive officers” and “the years in office of the director or
executive officer at the time stock options were granted”
was calculated, and if said difference was less than 0.8
years, the average of the estimated remaining outstanding
period was calculated using 0.8 years, by taking into
account the period remaining to the next annual
shareholders’ meeting.
*3	¥15 ($0.14) of latest annual dividend (including the effect ofreverse stock split) /¥410 ($3.85) of stock price on the basedate*4	Yield of Japanese government bonds approximating theestimated remaining outstanding period

2017

2018

31st July, 2017

Volatility of stock price *1

Thousands of
U.S. dollars

Millions of yen

188

441

1,769

11,716

8,399

110,278¥30,444 ¥14,305 $286,558

24. Other Operating Expenses
Other operating expenses for the years ended 31st March,2018 and 2017 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2017

2018

2018

Loss on sales of debt securities ¥17,169 ¥3,879 $161,605
Other

–

2,845

Total

26,778¥20,015 ¥3,879 $188,394

25. Other Expenses
Other expenses for the years ended 31st March, 2018 and2017 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2017

2018

2018

Provision for possible loan losses ¥– ¥1,709 $–Write-offs of loans and bills discounted

2,145

2,612

20,190Loss on sales of equity securities

52

70

489

Loss on devaluation of equity securities

35

163

329

1,052

250

9,902

Loss on money held in trust
Provision for contingent losses

419

16

3,943

Other

9,993

7,579

94,060Total¥13,699 ¥12,403 $128,943

2018¥4,643 ¥9,886 $43,702
975

1,580

9,177

¥5,618 ¥11,466 $52,880

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201846

26. Dividends

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

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

Recorddate

Effective Millions Thousands ofdateof yen U.S. dollars

Yen

U.S.
dollars

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

Third-class
31st March, 29th June,
preferred stock
2017
2017
¥262 $ 2,466 ¥35.00 $0.32
First series of seventh- 31st March, 29th June,¥375 $ 3,529 ¥15.00 $0.14
class preferred stock
2017
2017

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

Recorddate

Effective Millions Thousands ofdateof yen U.S. dollars

Yen

U.S.
dollars

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

0.07

Resolution by annual shareholders’ meeting on 28th June, 2016
Dividend amount Dividends per share
Type ofstock
Commonstock

Commonstock

Record date

Effective date

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

Third-class
Retained earnings 31st March, 2018 27th June, 2018preferred stock
First series of seventh- Retained earnings 31st March, 2018 27th June, 2018class preferred stock
Dividend amountMillionsof yenTypes of stockThousands of
U.S. dollars

Dividends per share
Yen

U.S. dollars¥2,106 $

19,823 ¥

7.50 $0.07

Third-classpreferred stock ¥

262 $

2,466 ¥

35.00 $0.32

First series of seventhclass preferred stock ¥

375 $

3,529 ¥

15.00 $0.14

Common stock

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2018

31st March, 29th June,
2016
2016
¥2,105 $18,762 ¥7.50 $0.06

Dividend amount Dividends per share

0.14

Common stock

U.S.
dollars

Resolution by Board of Directors on 14th November, 2016

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

Source ofdividends

Yen

Note:
The amount of cash dividends on common stock by resolutionof annual shareholders’ meeting on 28th June, 2016 includes
the ¥40 million ($356 thousand) in cash dividends on the
Company’s shares owned by the Employees’ Shareholder Trust.

0.32

Types of stock

Effective Millions Thousands ofdateof yen U.S. dollars

First series of seventh- 31st March, 29th June,¥375 $ 3,342 ¥15.00 $0.13
class preferred stock
2016
2016

Type ofstock

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

Recorddate

Third-class
31st March, 29th June,
preferred stock
2016
2016
¥262 $ 2,335 ¥35.00 $0.31

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

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

47

Cash dividends paid during the fiscal year ended 31st
March, 2017

Recorddate

Effective Millions Thousands ofdateof yen U.S. dollars

Yen

U.S.
dollars

30th September, 5th December,¥2,106 $18,771 ¥7.50 $
2016
2016

0.06

Third-class
30th September, 5th December,preferred stock
2016
2016
¥262 $ 2,335 ¥35.00 $

0.31

First series of seventh- 30th September, 5th December,class preferred stock
2016
2016
¥375 $ 3,342 ¥15.00 $

0.13

Note:
The amount of cash dividends on common stock by resolutionof Board of Directors on 14th November, 2016 includes the¥35 million ($311 thousand) in cash dividends on the
Company’s shares owned by the Employees’ Shareholder Trust.

SENSHU IKEDA HOLDINGS,INC.

Cash dividends with record dates falling in the fiscal year
ended 31st March, 2017 and effective dates coming after
the end of the fiscal year
Source ofdividends

Types of stock
Common stock

Record date

Effective date

Retained earnings 31st March, 2017 29th June, 2017

Third-class
Retained earnings 31st March, 2017 29th June, 2017preferred stock
First series of seventh- Retained earnings 31st March, 2017 29th June, 2017class preferred stock
Dividend amountMillionsof yenTypes of stock
Common stock

Dividends per share

Thousands of
U.S. dollars

Yen

Current assets

2,106 $

18,771 ¥

7.50 $0.06

Third-classpreferred stock ¥

262 $

2,335 ¥

35.00 $0.31

First series of seventhclass preferred stock ¥

375 $

3,342 ¥

15.00 $0.13

Thousands of
U.S. dollars¥1,440$13,554

Fixed assets

3,764

35,429Goodwill

141

1,327

Current liabilities(901)(8,480)

Fixed liabilities(4,369)(41,123)

Non-controlling interests––

Purchase cost of shares

76

715

Cash and cash equivalents

(0)

(0)

¥75

$705

Balance: Expenditure for thepurchase

U.S. dollars¥Millions of yen

28. Leases
a.

Note:
The amount of cash dividends on common stock by resolutionof annual shareholders’ meeting on 28th June, 2017 includes
the ¥31 million ($276 thousand) in cash dividends on the
Company’s shares owned by the Employees’ Shareholder Trust.

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

b.

Operating leases

27. Cash and Cash Equivalents

As Lessee

A reconciliation of cash and due from banks in theaccompanying consolidated balance sheets to cash and cash
equivalents in the accompanying consolidated statements ofcash flows at 31st March, 2018 and 2017 were summarized
as follows:

Future minimum lease payments under non-cancellable
operating leases subsequent to 31st March, 2018 wereas follows:

Millions of yen
2018
Cash and due from banks
Deposits other than deposits
with the Bank of Japan
Cash and cash equivalents

2017

Thousands of
U.S. dollars
2018¥713,371 ¥675,966 $6,714,711(7,326)(6,722)(68,957)¥706,045 ¥669,243 $6,645,754

Main components of assets and liabilities of the company
that became a newly consolidated subsidiary following thepurchase of its shares by the Company
Main components of assets and liabilities of the newly
consolidated Senshu Ikeda Auto Lease Co., Ltd. at the start ofconsolidation following the purchase of its shares by theCompany, along with the relation between its purchase costand purchase-related expenditures (net) are as follows:Year ending 31st MarchMillions of yen

Thousands of
U.S. dollars

2019

¥838

$7,8872020 and thereafter
Total

5,472

51,506¥6,310$59,393

29. Income Taxes
Income taxes applicable to the Company and its domestic
subsidiaries comprise corporate tax, inhabitants’ taxes andenterprise tax which, in the aggregate, resulted in a statutory
tax rate of 30.8% for the years ended 31st March, 2018 and2017, respectively.

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2018

48

The tax effect of temporary differences which gave rise tosignificant portions of the deferred tax assets and liabilities at
31st March, 2018 and 2017 consisted of the following:Thousands of
U.S. dollars

Millions of yen
2017

2018

30. Comprehensive Income
Reclassification adjustments and tax effect amounts of othercomprehensive income for the year ended 31st March, 2018and 2017 were as follows:

2018

Reserve for possible loan losses ¥

11,204 ¥15,613 $ 105,459

Provision for employees’ bonuses

578

560

Net defined benefit liability

51

48

480

Loss on devaluation of securities

3,007

4,053

28,303Tax loss carryforwards

10,157

11,07895,604

669

658

6,297

Depreciation

5,440(4,051)(13,924)(38,130)

3,238

(36)

30,478Net unrealized gain (loss) on
available-for-sale securities(813)(13,960)(7,652)

Amount for the year

(421)

(427)

(3,962)

Reclassification adjustment

456

434

4,292

Amount before tax effect

34

7

320

Tax effect amount

(10)

(2)

(94)

(1,684)

Net unrealized gain on
deferred hedges

23

5

216

Remeasurements of defined
benefit plans:

12,98925,611Gross deferred tax assets

29,77139,361

280,224

Valuation allowance(16,745)(21,109)(157,614)

Total deferred tax assets

13,025

18,251

122,599

Deferred tax liabilities:
Net unrealized gain on availablefor-sale securities(4,155)(7,393)(39,109)

Stocks returned of retirement
benefit trust

(647)

–

(6,089)Net defined benefit asset(719)(1,148)(6,767)

Other

(32)

(64)

(301)

(5,733)(8,817)(53,962)

7,291 ¥9,434 $

68,627

Unrealized gain (loss) on deferred hedges:

Amount for the year

(1,491)

2,066(14,034)

Reclassification adjustment(1,143)(255)(10,758)

Amount before tax effect(2,634)

1,810(24,792)

805

(553)

7,577

(1,829)1,257(17,215)

Tax effect amountRemeasurements ofdefined benefit plans
Total other comprehensive income ¥A reconciliation of the statutory tax rate to the effective tax rate
for the years ended 31st March, 2018 and 2017 were as
follows:
2018

23,945

Tax effect amount

3,042

¥

2,544 ¥(3,406) $Amount before tax effect

4,305

Net deferred tax assets¥(62,085)

2,721

Total deferred tax liabilities

Amount for the year

(10,517)

1,380

(210)

2018

(6,596)

Other

(179)

2017

2018
Unrealized gain (loss) on
available-for-sale securities:
Reclassification adjustment

Net unrealized loss on availablefor-sale securities

Non-taxable accrued dividend income

Thousands of
U.S. dollars

Millions of yen

Deferred tax assets:

2017

Statutory tax rate

30.8%

30.8%

Permanently non–taxable income

(0.0)

(0.0)

Permanently non–deductible expenses

0.3

0.3

Valuation allowance

(9.0)

0.6

Per capita portion of inhabitants’ taxes

0.7

0.5

Deduction limit of tax loss
carryforwards

21.6

–

Amortization of goodwill

0.4

0.3

Other

0.5

(0.6)

Effective tax rate

45.3%

31.9%

(2,618) ¥(12,698) $ (24,642)

31.	Segment Information and RelatedInformation
Segment information
Reportable segment information is omitted because the Groupis engaged only in banking business and “other” in ouroperating results, including leasing business was immaterial
for the years ended 31st March, 2018 and 2017.
(1) Related informationa. Information about services
For the year ended 31st March, 2018
Millions of yen
Lending

Securities trading
and investment

Other

Total

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

49

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2018

SENSHU IKEDA HOLDINGS,INC.

32.	Related Party Transactions

For the year ended 31st March, 2017
Millions of yen
Lending

Securities trading
and investment

Other

Total

Income from external¥42,414 ¥29,749 ¥30,901 ¥103,065
customers

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

Transactions between a consolidated subsidiary and relatedparties:
Toshikazu Hosomi
Transactions and balances with Toshikazu Hosomi, who was a
relative of a director and engaged in the property leasing
business, as of 31st March, 2018 and 2017 were summarized
as follows:
2018
Transactions

For the year ended 31st March, 2018
Thousands of U.S. dollars
Lending

Securities trading
and investment

Other

Total

Balances

Type oftransaction

Millionsof yenThousands of
U.S. dollars

Account
nameMillionsof yenThousands of
U.S. dollars

Loan

¥–

$–

Loans on
deeds

¥415

$3,906

Accruedincome¥0$0Income from external$386,502 $300,065 $363,977 $1,050,564
customersb. Information about geographical areas(i) Income
Information about income has not been presented
as income from external customers inside Japanaccounts for more than 90% of the consolidated
income for the years ended 31st March, 2018 and2017.
(ii) Tangible fixed assets
Information about tangible fixed assets has notbeen presented as tangible fixed assets inside
Japan accounts for more than 90% of theconsolidated tangible fixed assets at 31st March,2018 and 2017.
c. Information about main customers
Information about main customers has not beenpresented as there is no income from particularcustomer which accounts for more than 10% of theconsolidated income for the years ended 31st March,2018 and 2017.
(2) Other information about reportable segments
Other information about reportable segments has notbeen presented as the Group is engaged only in banking
business for the years ended 31st March, 2018 and 2017.

2017
Transactions

Balances

Type oftransaction

Millionsof yenAccount
nameMillionsof yenLoan¥–Loans on
deeds

¥430

Accruedincome¥0

The conditions of the loan transactions are determined basedon the general conditions of similar transactions with third
parties.
SHIBUHICHI CO., LTD.
A director of the Company, Yasuki Hosomi and his relatives
directly own 100% shares in SHIBUHICHI Co., Ltd.
(“SHIBUHICHI”). SHIBUHICHI is located in Ikeda-city, Osaka,records share capital of ¥3 million ($28 thousand) and isengaged in the property leasing business. Transactions andbalances with SHIBUHICHI as of 31st March, 2018 and 2017
were summarized as follows.
2018
Transactions

Balances

Type oftransaction

Millionsof yenThousands of
U.S. dollars

Account
nameMillionsof yenThousands of
U.S. dollars

Loan

¥–

$–

Loans on
deeds

¥328

$3,087

Accruedincome¥0$0Unearned
income

¥0

$0

2017
Transactions

Balances

Type oftransaction

Millionsof yenAccount
nameMillionsof yenLoan¥–Loans on
deeds

¥339

Unearned
income¥0

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201850

The conditions of the loan transactions are determined basedon the general conditions of similar transactions with third
parties.
Michikuni Yamazawa
Transactions and balances with Michikuni Yamazawa, who wasa doctor and a relative of a director of the Company's
significant subsidiary, as of 31st March, 2018 were summarized
as follows:
Transactions

Balances

Type oftransaction

Millionsof yenThousands of
U.S. dollars

Account
nameMillionsof yenThousands of
U.S. dollars

Loan

¥–

$–

Loans on
deeds

¥20

$188

Unearned
income¥0$0The conditions of the loan transactions are determined basedon the general conditions of similar transactions with third
parties.
Corporate pension plans for employees
Transactions and balances with corporate pension fund of theCompany's significant subsidiary, as of 31st March, 2018 weresummarized as follows:
Transactions

Balances

Type oftransaction

Millionsof yenThousands of
U.S. dollars

Account
nameMillionsof yenThousands of
U.S. dollars

Partial refundof pension plan
assets¥3,374$31,758

–

¥–

$–

33.	Financial Instruments and Related
Disclosures
1.

General Information(1) Policy for financial instruments
The Group, whose core operation is The Senshu Ikeda
Bank, Ltd. (the “Bank”), is engaged in the various
financial services as a regional financial institution. The
Group holds financial assets and liabilities which are
subject to fluctuations in the interest rates and market
prices in the principal businesses such as deposit-taking
and lending services and market activities including
securities investment. In order to serve for setting up
strategic targets in response to the changes in market
environments, the Group conducts integrated asset andliability management (“ALM”) and utilizes derivative
contracts as a part of ALM.
(2) Contents of financial instruments and their risks
Financial assets held by the Group mainly consist of loans
to domestic corporate and individual customers, which
are exposed to credit risk arising from customers’
nonperformance of contractual obligations and interest
rate movement risk. Securities held by the Groupprincipally consist of equity securities, debt securities and51

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2018

investment trusts, which are held for pure investment
purpose and strategic investment purpose as availablefor-sale securities and partially, for holding to maturity andtrading purposes. These financial assets are exposed tocredit risk of issuers and market risk associated withinterest rates, stock prices and foreign exchanges.
Deposits which are major financial liabilities are exposed
to liquidity risk that unexpected cash flow might arise. In
addition, other fund raising sources are exposed to theliquidity risk that necessary fund might not be secured
when the Group fails to utilize the market under certain
circumstances, or that the Group might be obliged tofund at more unfavorable interest rates than normal. In
addition, these financial liabilities are exposed to the riskof fluctuations in interest rates as well as financial assets.
The Group uses derivative contracts to meet thecustomers’ needs and principally as a means of risk
control over the assets and liabilities. In addition, as apart of trading activities (to earn short-term trading gains),
futures instruments including equity and debt securities
are utilized. These derivatives are exposed to the credit
risk (counterparty risk) arising from customers’
nonperformance of contractual obligations and market
risk arising from the fluctuations in interest rates, stock
prices, foreign exchanges, etc.
(3) Risk management system for financial instruments
The Group has established the risk control department
independent from front offices and defines basic risk
management policies. Specifically, the risk management
system and various rules including the basic policy onrisk control are determined by the Board of Directors, andthe responsible functions by risk categories and theintegrated risk control function are clearly defined. In
addition, the “Risk Management Committee” and the“ALM Committee” have been established to monitor therisk profiles of the Group and discuss management issues
as well as risk control measures. And such matters arereported to the Board of Directors and accordingly,
effective risk management system at the managementlevel is structured.
a. Integrated risk management
The Group conducts integrated risk management inaccordance with the basic policy on risk control andvarious integrated risk control rules. Specifically, theGroup conducts integrated control by identifying therisks assessed by risk categories such as credit risk,
market risk and others including credit concentration
risk not considered in the computation process of thecapital ratio and interest rate risk of banking accounts
and compares them with management capacity(capital).
b. Credit risk management
The Group analyzes and controls the credit portfolio in
accordance with the Company’s policy on credit risk
control and various credit risk control rules. The GroupSENSHU IKEDA HOLDINGS,INC.

maintains and operates a system of investigation,internal rating, asset self-assessment in monitoring
individual transactions.
These credit control procedures are performed byeach operating office, credit investigation department
and risk control departments of the Bank. With respect
to credit risk of issuers of securities and counterparty
risk of derivative transactions, the risk control
departments of the Bank monitor the identification of
credit information and fair values. In addition, the risk
control department of the Company reports on aregular basis to the Board of Directors of the Company.
Furthermore the internal audit departments audit thestatus of credit control.
c. Market risk management(i) Market risk management
The Group controls market risk arising fromfluctuations in interest rates, stock prices, foreignexchanges, etc. in accordance with the Company’s
policy on market risk control and various market risk
control rules. Specifically, the risk control
department of the Company identifies the volume ofmarket risk using the Value-at-Risk (VaR) method
and monitors compliance with the risk limits
resolved by the Board of Directors throughcontinuous monitoring system. For securities, inaddition to above risk limit control policy, the Grouphas established and managed loss cut rules. The
relevant information is periodically reported by therisk control department to the Risk Management
Committee and the Board of Directors.
The ALM Committee identifies and confirms the
make-up of assets and liabilities and interest raterisk and discusses future measures. Specifically,
the responsible department of the Company for
ALM identifies comprehensively interest rates andperiods of financial assets and liabilities andmonitors using gap analysis and interest ratesensitivity analysis to secure stable and continuous
earnings.
The Bank executes foreign exchange transactions
and foreign currency bond investments, which areexposed to foreign exchange risk, but thesubsidiary strives to minimize foreign exchange risk
by balancing the foreign exchange positions where
possible.
(ii) Derivative transactions
With respect to derivative transactions, theCompany has established an internal control
system including segregation of duties of thedepartments responsible for execution oftransactions, risk control and operation
administration and complies with the various market
risk control rules.

(iii)Quantitative information of market risk
The Group monitors the value at market risk offinancial instruments, such as deposits, loans andbills discounted and securities, using VaR everyday
as the change in market risk is larger than otherrisks.
The Group calculates the value at market risk
according to the variance-covariance approach(holding period–120 business days, confidence
interval–99.0%, and observation period–240
business days).
The value of market risk on financial instrumentswas ¥9.8 billion ($92.2 million) for interest rate and¥17.1 billion ($160.9 million) for stocks at 31st
March, 2018. The value of market risk as a wholewith correlation in consideration was ¥27.1 billion($255.0 million).
The Group carries out back-testing to compare themodel-calculating VaR of securities on the banking
activities which influenced by market fluctuation(holding period–one business day) with real gain
and loss in order to verify their accuracy.
However, VaR, which calculates the value of market
risk based on past fluctuations in the market,
sometimes cannot calculate the value of market risk
accurately under the condition that market
environment changes abruptly.
d. Liquidity risk management associated with fund raising
The Group conducts liquidity risk control for funding
activities in accordance with the Company’s policy on
liquidity risk control and various liquidity risk control
rules. Specifically, the department responsible for ALM
and the treasury department of the Bank identify theinvestment and funding status of the whole Group on atimely basis and control liquidity risk by securingliquidity of the assets, diversifying the funding
instruments and adjusting the short-term and longterm funding balances considering the market
environments to secure stable fund management.
The risk control department identifies its response
capability if liquidity risk is revealed through monitoring
periodically the amount of liquid reserve assets thatcan be readily converted into cash, monitors theappropriateness of its fund management and reports itto the Risk Management Committee and the Board of
Directors.
(4)	Supplementary explanation about fair value of financial
instruments
The fair value of financial instruments include, in addition
to the value determined based on the market price, avaluation calculated on a reasonable basis if no market
price is available. Since certain assumptions are used in
calculating the value, the result of such calculation mayvary if different assumptions are used.

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2018

52

2.

Fair value of financial instruments

Millions of yen

The carrying value, the fair value and the difference as of 31st
March, 2018 and 2017 are summarized in the following tables:
Note that securities such as unlisted equity securities forwhich fair value is extremely difficult to determine were notincluded in the following tables (See (Note 2) below):

Reserve for possible loan losses (*1)
Foreign exchange assets (*1)
Total assets
Deposits

Carrying
value
Fair value Difference¥713,371 ¥713,371 ¥–
3,783
3,783
–
100
100
–

11,000715,899
3,897,405

176
26,987
11,068715,899––
68–(13,676)
3,883,729
3,887,430
3,701
5,448
5,448
0
¥5,360,495 ¥5,364,266 ¥3,770¥4,902,103 ¥4,902,121 ¥18–
Negotiable certificates of deposit
900
900
Payables under securities
165,002
165,002–
lending transactions
Borrowed money
132,133
132,107(25)
Foreign exchange liabilities
562
562
–
Corporate bonds and notes
20,00020,08080
Total liabilities¥5,220,701 ¥5,220,775 ¥73
Derivative transactions (*2)
To which hedge accounting is¥(63) ¥(63) ¥–
not applied
To which hedge accounting is applied
2,897
2,897
–
Total derivative transactions¥2,833 ¥2,833 ¥–

53

172

172

–

Monetary claims bought (*1)

31

31

–

Trading account securities:
Money held in trust

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2018

317

317

–

26,97926,979–Securities:
Held-to-maturity debt securities

49,79950,070271

Available-for-sale securities

869,826

869,826–

3,793,092

3,801,526

8,434

6,340

6,340

0

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

176
26,987

Fair value Difference¥675,966 ¥675,966 ¥–Call loans and bills bought

Trading securities

Millions of yen
31st March, 2018
Cash and due from banks
Call loans and bills bought
Monetary claims bought (*1)
Trading account securities:
Trading securities
Money held in trust
Securities:
Held-to-maturity debt securities
Available-for-sale securities
Loans and bills discounted

31st March, 2017
Cash and due from banks

Carrying
value

Foreign exchange assets (*1)

3,813,333(20,241)

Total assets¥5,422,524 ¥5,431,230 ¥8,706

Deposits¥4,799,493 ¥4,799,611 ¥118

Call money and bills sold

14,80914,809–

Payables under repurchaseagreements

9,907

9,907

–

Payables under securities
lending transactions

249,762

249,762–

Borrowed money

160,997

161,01720

Foreign exchange liabilities

583

583

–

Corporate bonds and notes

20,00020,196

196

Total liabilities¥5,255,553 ¥5,255,888 ¥334

Derivative transactions (*2)
To which hedge accounting is
not applied
To which hedge accounting is applied
Total derivative transactions¥232 ¥232 ¥–
3,060

3,060

–

¥3,292 ¥3,292 ¥–SENSHU IKEDA HOLDINGS,INC.

Thousands of U.S. dollars
31st March, 2018
Cash and due from banks

Carrying
value

Fair value Difference$6,714,711 $6,714,711 $–Call loans and bills bought

35,60835,608–

Monetary claims bought (*1)

941

941

–

1,656

1,656

–

254,019

254,019–

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

103,539

104,179

640

Available-for-sale securities

6,738,507

6,738,507–

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

36,684,911(128,727)
36,556,184

36,591,020

34,836

51,28051,2800Total assets$50,456,466 $50,491,961 $35,485

Deposits$46,141,782 $46,141,952 $169

Negotiable certificates of deposit

8,471

8,471

Payables under securities
lending transactions–

1,553,106

1,553,106–

Borrowed money

1,243,721

1,243,477(235)

Foreign exchange liabilities

5,289

5,289

–

Corporate bonds and notes

188,253

189,006

753

Total liabilities$49,140,634 $49,141,330 $687

Derivative transactions (*2)
To which hedge accounting is
not applied
To which hedge accounting is applied
Total derivative transactions$(592) $(592) $–
27,26827,268–$26,666 $26,666 $–(*1)	General and specific reserves for loan losses
corresponding to loans are deducted. With respect toreserve for loan losses related to monetary claims bought
and foreign exchange assets, carrying value is shown,net of reserve, since the amount is insignificant.
(*2)	Derivative transactions include all derivatives recorded inother assets and other liabilities. Assets and liabilities
arising from derivative transactions are shown on a net
basis.
(Note 1)	Valuation method for the fair value of financial
instruments
Assets:Cash and due from banks
The carrying value of due from banks without maturities ispresented as the fair value since the fair value approximatesthe carrying value. The carrying value of due from banks withmaturities is presented as the fair value since the fair value
approximates the carrying value due to remaining maturitiesof less than one year.

Call loans and bills bought
The carrying amount is presented as the fair value since thefair value approximates the carrying amount because thecontractual term is short (less than one year).
Monetary claims bought
Receivables related to factoring business are computed in thesame manner as loans.
Trading account securities
The fair value of securities such as debt securities held for
trading is determined using the quoted market price or the
price provided by counterparty financial institutions.
Money held in trust
For securities that are invested as part of trust assets in an
independently managed money trust with securities
management as the primary purpose, the fair value of equity
securities is determined using quoted market prices and thefair value of debt securities is determined using quoted market
prices or the prices provided by counterparty financial
institutions. Note that information on money held in trust byholding purpose is disclosed in Note 6.
Securities
The fair value of equity securities is determined using thequoted market prices and the fair value of debt securities isdetermined using the quoted market prices or the prices
provided by counterparty financial institutions. The fair valueof investment trusts is determined based on the published net
assets value. The fair value of privately placed guaranteedbonds issued by the Bank is determined in the same manner
as loans. Note that information on securities by holding
purposes is disclosed in Note 5.
Loans and bills discounted
The carrying value of the loans with floating interest rates,
which reflect short-term market interest rates, is presented as
the fair value since the fair value approximates the carrying
value as long as the creditworthiness of the borrower has notchanged significantly since the loan origination. The fair valueof the loans with fixed interest rates is determined based on
the aggregated value of principal and interest by categories
of types of loans, internal ratings and maturities discounted
using the interest rate assumed if the same loans were newly
originated. The carrying value of the loans with shortcontractual terms (less than one year) is presented as the fairvalue since the fair value approximates the carrying value.
Loan losses on receivables from bankrupt, effectively bankrupt
or likely to become bankrupt borrowers are estimated basedon factors such as the present value of expected future cash
flows or the expected amount to be collected from collateraland guarantees. Since the fair value of these items
approximates the carrying value, net of the currently expectedloan losses, such carrying value is presented as the fair value.
The carrying value of the loans which do not have defined
repayment due dates because the loans are limited to within
the amount of pledged assets is presented as the fair value
SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201854

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

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

Foreign exchange assets
Foreign exchange assets consist of foreign currency deposits
with other banks (due from other foreign banks), export bills
and traveler’s checks, etc., (purchased foreign bills) and loans
on notes using import bills (foreign bills receivables). The
carrying value of these items is presented as the fair value,
since the fair value approximates the carrying value due tobeing deposits without maturity or having short contract terms(less than one year).

Derivative transactions:
See Note 34.
(Note 2)	Financial instruments whose fair value is extremely
difficult to determine at 31st March, 2018 and 2017
were as follows: These securities are not included in“Securities” under “Assets” as part of the fair value
information of financial instruments.

Liabilities:
Deposits and Negotiable certificates of deposit
The amount payable on demand as of the balance sheet date(i.e., the carrying value) is considered to be the fair value ofthe demand deposit. The fair value of time deposits isdetermined using the discounted present value of future cash
flows, grouped by certain maturity lengths. The discount rateused is the interest rate that would be applied to newly
accepted deposits. The carrying value of deposits whose
remaining maturity is within the short-term period (less than
one year) is presented as the fair value since the fair value
approximates the carrying value.
Call money and bills sold, payables under repurchaseagreements and payables under securities lending transactions
The carrying value is presented as the fair value since the fairvalue approximates the carrying value due to remaining
maturities of less than one year.
Borrowed money
The carrying value of floating rate borrowed money ispresented as fair value. This is because it reflects the market
interest rate in the short-term period, also the creditworthinessof the Company and the consolidated subsidiaries have notsignificantly changed since the borrowed money was
originated and accordingly fair value approximates the
carrying value. The fair value of fixed rate borrowed money iscalculated as the present value of expected future cash flows
from the aggregated value of principal and interest (theaggregated value of principal and interest using the interest
rate swap rate, in case of borrowings subject to special
treatment of hedge accounting for interest rate swaps) on
these borrowings grouped by certain maturity lengths, which
is discounted at an interest rate applicable to similarborrowings. The carrying value of borrowed money whose
remaining maturity is due within the short-term period (lessthan one year) is presented as the fair value since the fairvalue approximates the carrying value.
Foreign exchange liabilities
Foreign exchange liabilities consist of foreign bills sold andforeign bills payable. The carrying value is presented as thefair value since the fair value approximates the carrying value
due to remaining maturities of less than one year.

55

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2018

Thousands of
U.S. dollars

Millions of yen
2017

2018

2018

Unlisted equity securities (*1) (*2) ¥6,390 ¥6,179 $60,146
Investments in partnerships (*3)
Other
Total

3,037

3,638

28,5865

5

47¥9,433 ¥9,823 $88,789(*1)	No market price is available for unlisted equity securities
and the fair value is not disclosed since it is extremely
difficult to determine the fair value.
(*2)	The Company recognized impairment losses on unlisted
equity securities in the amount of ¥35 million ($329
thousand) and ¥155 million for the years ended 31st
March, 2018 and 2017, respectively.
(*3)	The fair value of investments in partnerships, whose
assets consist of securities such as unlisted equity
securities for which fair value is extremely difficult todetermine, is not disclosed.

SENSHU IKEDA HOLDINGS,INC.

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

Millions of yen

Millions of yen

31st March, 2018
Due from banks

Due inone yearor less

Due after Due after
one year three years
throughthroughthree years five years¥658,913 ¥– ¥–Call loans and bills bought

3,783

–

–

Monetary claims bought (*1)

100

–

–

93,282

169,819

78,62810,0001,000–

10,000

1,000–

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

83,282

168,819

78,628Government bonds

8,000

63,942–

Local government bonds

6,880

11,395

Corporate bonds

64,165

Other

4,237

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

31st March, 2018

Due after Due after
one year three years
throughthroughthree years five years¥629,234 ¥– ¥–

Due from banks
Call loans and bills bought

172

–

–

Monetary claims bought (*1)

31

–

–

150,768

116,504

31,13838,80011,000–Government bonds

25,000––

Corporate bonds

2,800

–

–

Other

11,00011,000–31,138

Securities:
Held-to maturity debt securities:

Available-for-sale securities
with maturities:

111,968

105,504

Government bonds

35,0002,000–

20,792

Local government bonds

13,052

10,0606,894

84,42554,316

Corporate bonds

62,866

84,73012,430

9,057

3,520

Other

1,049

8,714

11,813777,014

678,595

483,244757,325

651,480

500,070

5,448

–

–

6,340

–

–

¥1,538,542 ¥848,415 ¥561,872

Due from banks

31st March, 2017

Due inone yearor less

Loans and bills discounted (*1, 2)
Foreign exchanges assets
Total¥1,543,873 ¥767,985 ¥531,208

Millions of yen

Millions of yen

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

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

31st March, 2017

¥– ¥– ¥–

Due from banks

Call loans and bills bought

–

–

–

Call loans and bills bought––

Monetary claims bought (*1)

–

–

–

Monetary claims bought (*1)

–

–

–

4,655

154,487

51,943

22,460300,279

113,720

–

–

–

–

–

–

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

4,655

154,487

51,943–––

Securities:
Held-to maturity debt securities:

–

–

–

–

Government bonds

–

–

–

Corporate bonds

–

–

–

Other

–

–

–

22,460300,279

113,720

–

–

–

–

–

Available-for-sale securities
with maturities:

–

–

–

Corporate bonds

2,104

2,459

37,340Government bonds

Other

2,551

152,028

14,603

Local government bonds

2,000

302,344

390,967

1,232,722

Corporate bonds

18,721

3,159

52,310

–

–

–

Other

1,738

297,120

61,409293,521367,174

1,200,193–––

Loans and bills discounted (*1, 2)
Foreign exchanges assets
Total¥306,999 ¥545,455 ¥1,284,666

Loans and bills discounted (*1, 2)
Foreign exchanges assets
Total¥315,982 ¥667,454 ¥1,313,913

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2018

56

Thousands of U.S. dollars

31st March, 2018
Due from banks

Due inone yearor less

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

35,608––

Monetary claims bought (*1)

941

–

–

878,030

1,598,446

740,097

94,126

9,412–

94,126

9,412–

783,904

1,589,034

740,09775,301

601,863–

Local government bonds

64,759107,257

195,707

Corporate bonds

603,962

794,663511,257

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

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

39,881

85,25033,132

7,313,761

6,387,377

4,548,606

51,280––$14,481,758 $7,985,833 $5,288,704
Thousands of U.S. dollars

31st March, 2018
Due from banks

Due after
Due after
five years seven years
Due after
throughthroughseven years ten years ten years$– $– $–Call loans and bills bought

–

–

–

Monetary claims bought (*1)

–

–

–

43,815

1,454,132

488,921

–

–

–

–

–

–

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

Millions of yen$6,202,117 $– $–Call loans and bills bought
Securities:(Note 4)	Repayment schedule of bonds, borrowed money andother interest bearing liabilities.

43,815

1,454,132

488,921

–

–

–

–

–

–

19,804

23,145

351,468

24,0111,430,986

137,452

2,845,858

3,680,035

11,603,181

–

–

–

$2,889,674 $5,134,177 $12,092,112(*1)	Loans and bills discounted and monetary claims bought
do not include ¥32,515 million ($306,052 thousand) and¥43,567 million of receivables such as those due frombankrupt, effectively bankrupt or likely to becomebankrupt borrowers at 31st March, 2018 and 2017,
respectively, since it is not certain when they can becollected or redeemed.
(*2)	Overdraft accounts of loans are shown under “Due in one
year or less.”

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

900

–

–

165,002––

Borrowed money

26,476

104,620

1,036

–

–

–

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

31st March, 2018
Deposits (*1)

Due after
Due after
five years seven years
Due after
throughthroughseven years ten years ten years¥608 ¥360 ¥–

Negotiable certificates of deposit

–

–

–

Payables under securities
lending transactions

–

–

–

Borrowed money

–

–

–

20,000––

Corporate bonds and notes
Total¥20,608 ¥360 ¥–Millions of yen

31st March, 2017
Deposits (*1)

Due after Due after
Due in one one year three years
year orthroughthroughlessthree years five years¥4,520,389 ¥226,849 ¥19,160

Call money and bills sold

14,809––

Payables under repurchaseagreements

9,907

–

–

Payables under securities
lending transactions

249,762––

Borrowed money

45,745

6,993

101,258–––

Corporate bonds and notes
Total¥4,840,613 ¥233,842 ¥120,419
Millions of yen

31st March, 2017
Deposits (*1)

Due after
Due after
five years seven years
Due after
throughthroughseven years ten years ten years¥419 ¥785 ¥–Call money and bills sold

–

–

–

Payables under repurchaseagreements

–

–

–

Payables under securities
lending transactions
Corporate bonds and notes
Total

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2018

¥4,624,352 ¥226,348 ¥21,589

Payables under securities
lending transactions

Borrowed money57

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

–

–

–

7,000

–

–

20,000––¥27,419 ¥785 ¥–SENSHU IKEDA HOLDINGS,INC.

Thousands of U.S. dollars

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

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

Payables under securities
lending transactions

1,553,106––

Borrowed money

249,209984,751

9,751

–

–

–

Total

Millions of yen
Contract amount/notional principal$43,527,409 $2,130,534 $203,209
8,471

Corporate bonds and notes(1)	Currency related derivatives at 31st March, 2018 and2017

31st March, 2018

31st March, 2018
Deposits (*1)

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

Currency swaps

–

–

–

Payables under securities
lending transactions

–

–

–

Borrowed money

–

–

–

188,253––

Corporate bonds and notes
Total$193,975 $3,388 $–(*1)	Demand deposits are disclosed under “Due in one year
or less” of deposits.
	Deposits do not include ¥28,844 million ($271,498
thousand) and ¥31,889 million of time deposits beyond
maturity at 31st March, 2018 and 2017, respectively.

34. Derivatives¥50,173 ¥35,557 ¥263 ¥263

Selling

13,910

137

150

150

Buying

7,384

137

(84)

(84)

Selling

34,00920,460(1,374)305

Buying34,00920,4601,374

0Currency options:

Total

–

– ¥328 ¥634
Millions of yen

Contract amount/notional principal
31st March, 2017Over
one year

Total

Fair
value

Valuation
gain (loss)

Over-the-counter transactions:
Currency swaps¥64,198 ¥49,979 ¥389 ¥389

Forward foreignexchange contracts:
Selling

11,659

–

(70)

(70)

Buying

2,862

–

12

12

Selling

33,86623,242(1,358)374

Buying33,86623,242

1,358

(69)

Currency options:Total– ¥331 ¥636
Thousands of U.S. dollars

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

Valuation
gain (loss)

Forward foreignexchange contracts:$5,722 $3,388 $–Negotiable certificates of deposit

Fair
value

Over-the-counter transactions:$45,338,196 $3,115,295 $212,961
Thousands of U.S. dollars

Over
one year

Total

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

Total

Fair
value

Valuation
gain (loss)

Over-the-counter transactions:
Currency swaps$472,260 $334,685 $2,475 $2,475

Forward foreignexchange contracts:
Selling

130,929

1,289

1,411

1,411

Buying69,503

1,289

(790)

(790)

Selling

320,114

192,582(12,932)

2,870

Buying320,114

192,582

12,9320

Currency options:

Total

–

– $3,087 $5,967

Notes:
1.	Transactions in the table above are stated at the fairvalue and the related valuation gain (loss) is reported in
the consolidated statement of operations.
2.	The fair value is determined by using the discounted
cash flow method or others.
SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201858

(2)	Bond related derivatives at 31st March, 2018 and 2017
Millions of yen
Contract amount/notional principal
Over
Fair
Total one year value

31st March, 2018
Financial instruments exchanges:
Bond futures:
Selling ¥30,495
Buying–Bond futures options:
Selling–
Buying–Total–– ¥(392) ¥(392)
–
–
–
–
–
–
–
–
–
– ¥(392) ¥(392)Millions of yen
Contract amount/notional principal
Over
Fair
Total one year value

31st March, 2017
Financial instruments exchanges:
Bond futures:
Selling ¥6,078
Buying6,177
Bond futures options:
Selling–
Buying–
Total–

Valuation
gain (loss)

Valuation
gain (loss)– ¥(86) ¥(86)
–
(12)
(12)
–
–
–
–
–
–
– ¥(98) ¥(98)(1)	Interest related derivatives at 31st March, 2018 and2017
31st March, 2018

Major hedged
item

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

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2018

Total

Over
one year

Fair
value

¥84,992¥84,992¥1,008––¥1,008

31st March, 2017

Millions of yen
Contract amount/notional principal

Hedge accounting Transaction
methodtype

Major hedged
item

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

–
–
–
–
–
–
– $(3,689) $(3,689)

Millions of yen
Contract amount/notional principal– $(3,689) $(3,689)–––

Notes:
1.	Transactions in the table above are stated at the fairvalue and the related valuation gain (loss) is reported in
the consolidated statement of operations.
2.	Calculation method for fair value	The fair value of transactions listed on exchanges isdetermined using the last quoted market price at the
Osaka Exchange, Inc., etc.

59

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

Hedge accounting Transaction
methodtype

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

31st March, 2018
Financial instruments exchanges:
Bond futures:
Selling $287,038
Buying–Bond futures options:
Selling–
Buying–Total–

2.	Derivative transactions to which hedge accounting isapplied

31st March, 2018

Total

Over
one year

Fair
value

¥185,113¥185,113¥2,160––¥2,160

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

Hedge accounting Transaction
methodtype

Major hedged
item

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

Total

Over
one year

Fair
value

$799,999$799,999$9,487––$9,487

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

SENSHU IKEDA HOLDINGS,INC.

35. Amounts per Share(2)	Currency related derivatives at 31st March, 2018 and2017
31st March, 2018

Amounts per share at 31st March, 2018 and 2017 and for theyears then ended were summarized as follows:

Millions of yen
Contract amount/notional principal

Hedge accounting Transaction
methodtype
DeferralCurrency
hedge
swaps
accounting

Major hedged
item

Total

Over
one year

Fair
value

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

Forwardforeignexchange
contracts

–

Total

–

–

–

–

–

¥1,888

31st March, 2017

Millions of yen

DeferralCurrency
hedge
swaps
accounting

Major hedged
item

Total

Over
one year

Fair
value

Loans
denominated inforeign currencies ¥24,019¥20,878¥900

Forwardforeignexchange
contracts–

Total
31st March, 2018

–

–

–

–

–

¥900

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

Hedge accounting Transaction
methodtype
DeferralCurrency
hedge
swaps
accounting
Forwardforeignexchange
contracts
Total

Major hedged
item

Total

Over
one year

Fair
value

Loans
denominated inforeign currencies $196,093$111,097$17,771–

Net assets
Net income:
25.68
39.61
0.24
Basic
Diluted
24.13
35.39
0.22
Cash dividends¥15 ¥15 $0.14
Common stock
Third-class preferred stock¥70 ¥70 $0.65
First series of seventh-class preferred stock ¥30 ¥30 $0.28

Net assets per share as of 31st March, 2018 and 2017 werecomputed based on the following information:

Contract amount/notional principal
Hedge accounting Transaction
methodtype

Yen
U.S. dollars
2018
2017
2018
¥736.33 ¥736.46 $6.93

–

–

–

–

–

$17,771

Thousands ofMillions of yen
U.S. dollars
2018
2017
2018
¥248,935 ¥249,217 $ 2,343,138
Total net assets
Payment for third-class preferred stock(15,000)(15,000)(141,189)
Dividends for third-class
(262)
(262)
(2,466)preferred stock
Payment for first series of(25,000)(25,000)(235,316)
seventh-class preferred stock
Dividends for first series of
(375)
(375)
(3,529)seventh-class preferred stock
Stock subscription rights
(122)
(105)
(1,148)Non-controlling interests(3,533)(4,760)(33,254)
Amounts to be deducted from total net assets(44,293)(45,504)(416,914)
Net assets attributable to common stock¥204,642 ¥203,713 $ 1,926,223
as of 31st March, 2018 and 2017
Number of shares of common stock as of 31st
March, 2018 and 2017 used to compute net
277,919
276,611
asset per share (Unit: thousand shares)

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

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201860

Net income per share for the years ended 31st March, 2018and 2017 are computed based on the following information:
Millions of yen
2018
2017

Thousands of
U.S. dollars
2018

Net income attributable toowners of the parent for the year ¥8,395 ¥12,210 $79,019
Dividends for third-class preferred stock based
(262)
(262)
(2,466)on the resolution by Board of Directors
Dividends for third-class preferred stock
based on the resolution at the regular
(262)
(262)
(2,466)
general shareholders’ meeting
Dividends for first series of seventh-classpreferred stock based on the resolution
(375)
(375)
(3,529)by Board of Directors
Dividends for first series of seventh-classpreferred stock based on the resolution at
(375)
(375)
(3,529)the regular general shareholders’ meeting
Amounts not attributed to(1,275)(1,275)(12,001)
common stock shareholders
Net income attributable to owners of theparent attributable to common stock ¥7,120 ¥10,935 $67,018
Average outstanding numberof shares of common stock
277,260
276,049(Unit: thousand shares)
Diluted net income per shareafter adjusting potential shares
Dividends for first series ofseventh-class preferred stock
based on the resolution by Board
375
375
3,529
of Directors
Dividends for first series ofseventh-class preferred stock
based on the resolution at theregular general shareholders’
375
375
3,529
meeting
Adjustment to net income attributableto owners of the parent¥750 ¥750 $7,059
Number of increased common
48,81454,097stock (Unit: thousand shares)
Of which, stock subscription rights
270
218
Of which, for first series of seventh48,543
53,879class preferred stock

Note:
Cash dividends per share represent the cash dividends
proposed by the Board of Directors as applicable to thefiscal year.
 or the purpose of calculation of net income per shareFand diluted net income per share after adjusting potential
shares, own shares held in trust recorded as treasury
stock under the category of shareholders’ equity were
included in treasury stock to be subtracted from theaverage outstanding number of shares. Likewise, for the
purpose of calculation of net assets per share, these own
shares held in trust were included in treasury stock to be
subtracted from the total number of outstanding shares atthe end of the fiscal year.

61

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2018

The average outstanding number of shares of treasury
stock subtracted for the calculation of net income pershare and diluted net income per share after adjusting
potential shares is 4,750 thousand shares for the year
ended 31st March, 2017 and 3,575 thousand shares forthe year ended 31st March, 2018. The number of treasury
stock at the end of the fiscal year subtracted for the
calculation of net assets per share is 4,198 thousand
shares for the year ended 31st March, 2017 and 2,924
thousand shares for the year ended 31st March, 2018.

SENSHU IKEDA HOLDINGS,INC.

Report of Independent Auditor
Senshu Ikeda Holdings, Inc.

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2018

62

Non-consolidated Financial Information of The Senshu Ikeda Bank (Unaudited)
Non-consolidated Balance Sheets (Unaudited)
The Senshu Ikeda Bank, Ltd.
As of 31st March, 2018 and 2017

Millions of yen
2018
2017

Thousands of U.S.
dollars (Note 1)
2018

AssetsCash and due from banks
Call loans and bills bought
Monetary claims bought
Trading account securities
Money held in trust
Securities
Loans and bills discounted
Foreign exchange assets
Other assets
Tangible fixed assets
Intangible fixed assets
Prepaid pension cost
Deferred tax assets
Customers’ liabilities for acceptances and guarantees
Reserve for possible loan losses
Reserve for possible investment losses
Total assets¥709,597
3,783
100
176
26,987760,428
3,908,034
5,448
47,44836,490
5,180
9,468
6,895
9,322
(9,308)(1,768)¥ 5,518,286¥673,721
172
31
317
26,979954,214
3,811,171
6,340
30,06937,874
5,208
10,602
9,944
12,945(12,188)(3,011)¥5,564,391$ 6,679,188
35,608941
1,656
254,019
7,157,643
36,784,958
51,280446,611
343,467
48,757
89,11864,90087,744(87,612)(16,641)$51,941,698

Liabilities
Deposits
Negotiable certificates of deposit
Call money and bills soldPayables under repurchase agreements
Payables under securities lending transactions
Borrowed money
Foreign exchange liabilities
Corporate bonds and notes
Other liabilities
Provision for employees’ bonuses
Accrued retirement benefits for employees
Accrued retirement benefits for directors and corporate auditors
Reserve for reimbursement of deposits
Reserve for point services
Reserve for contingent losses
Acceptances and guarantees
Total liabilities¥ 4,953,983
900––
165,002
121,685562
20,00016,566
1,610
306
29
512
145
770
9,322
5,291,397¥4,848,297–
14,8099,907
249,762
150,989583
20,00028,221
1,551
855
29
486
137
350
12,9455,338,928$46,630,111
8,471
–
–
1,553,106
1,145,378
5,289
188,253
155,929
15,154
2,880
272
4,819
1,364
7,247
87,74449,806,071

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

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

61,385
104,185
52,443218,014
7,588
(139)
7,449
225,463¥5,564,391

577,795
980,657
515,333
2,073,795
62,914(1,082)
61,8222,135,626$51,941,698

Liabilities and net assets

63

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2018

SENSHU IKEDA HOLDINGS,INC.

Non-consolidated Statements of Operations (Unaudited)
The Senshu Ikeda Bank, Ltd.
For the years ended 31st March, 2018 and 2017

Millions of yen
2018
2017

Sustained contribution to the regional communities
Management Principle

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

Management Policy

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

CONTENTS
Top Message ……………………………………………… 2

Approach to Facilitation of Financing ………………… 20

Start of the Fourth Medium-TermBusiness Plan ……………………………………………… 3
For the Future ~Approach to ESG~ …………………… 7

Corporate Information

FY2017 Financial Results ………………………………… 8
Corporate Governance …………………………………… 9Compliance Structure …………………………………… 14
Risk Management Structure …………………………… 16

1

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 2018

Thousands of U.S.
dollars (Note 1)
2018

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

40,883
11,081503
15,385
4,472
1,965
543
80
1,710
1,243
19,39897,268¥42,094
14,034435
13,79910,760
–
535
–
–
–
6,319
87,979$384,817
104,301
4,734
144,813
42,093
18,495
5,111
753
16,095
11,699182,586
915,549

2,529
435
2,282
9,127
20,01546,26539
53
2,590
83,33913,928

3,226
616
3,796
8,812
3,879
47,230195
93
3,986
71,837
16,14223,804
4,094
21,47985,909188,394
435,476367
498
24,378784,440
131,099

(297)
6,318
6,021
7,906

1,556
4,074
5,630
¥10,511(2,795)59,46956,673$74,416

Expenses
Interest expenses:
Interest on deposits
Interest on borrowings and rediscounts
Other interest expenses
Fees and commissions
Other operating expenses
General and administrative expenses
Loss on sales or disposal of fixed assets
Loss on impairment of fixed assets
Other expenses
Total expenses
Income before income taxes
Income taxes
Current
Deferred
Total income taxes
Net income¥………………………………… 22

Business Description of the Group …………………… 24
Organization and Board of Directors ………………… 25
Consolidated Financial Informationof Senshu Ikeda Holdings ……………………………… 28
Non-consolidated Financial Informationof The Senshu Ikeda Bank (Unaudited) ……………… 63

SENSHU IKEDA HOLDINGS,INC. ANNUAL REPORT 201864

ANNUAL REPORT

2018

Year Ended March 31,2018

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