INTEGRATEDREPORT

2023
The Hyakujushi Bank, Ltd.

Year ended March 31, 2023

Introduction

CONTENTSFor Our Stakeholders

Introduction

By fulfilling our role as a regional financial institution, the Hyakujushi Bank aims for the sustainable01

For Our Stakeholders

03

The Hyakujushi Bank in Numbers

04

The Bank’s Operational Foundation

Hyakujushi Group’s Vision

growth of local communities together with stakeholders.
The purposes of this Integrated Report is to obtain the understanding of our shareholders and investors, as well as our customers and local residents regarding the Bank’s initiatives, in addition to conveying

05

Message from the President

09

Long-term Vision

Hyakujushi Group’s Value Creation

our commitment to you all.

11

Hyakujushi Group’s Value Creation Process

13

Sustainability Management Framework

New Medium-Term Management Plan “Let’s Create a Good 114* ”
15Message from the Director in Charge of Corporate Planning

19

New Medium-Term Management Plan

21

Business Deployment Based on Material Issues*“Hyakujushi” basically means the number “114.”

Communication with Stakeholders
35

Corporate Governance

39

Board of Directors and Audit and Supervisory Committee Members

41
42

Outside Director Interview
Enhancement of Shareholder Value
The Hyakujushi Bank, Ltd.
(as of March 31, 2023)

Head Office
Established
Total assets

5-1, Kamei-cho, Takamatsu, Kagawa
November 1, 1878
¥5,784.5 billion

Deposits and negotiable certificates of deposit¥4,795.8 billion¥3,366.8 billion¥37.3 billion
29,100,000 shares
Total shares issued
1,995
Employees:
132 (Head Office, 99 branches, 22
Offices:
sub-branches, 6 Quick Square, 5Consulting Plaza)
Overseas representative offices: 1(Shanghai*)Non-branch ATMs and CDs: 145
Loans and bills discounted

Corporate VisionPaid-in capital

1 Prosper together with customers and communities
2 Create a vigorous corporate culture
3 Ensure sound business management and enhance corporate value

Code of Conduct*The Shanghai Representative Office closed on April 28, 2023.

- Promote close dialogue to deepen mutual trust

Editing Policy- Spare no effort to grow as professionals

The Hyakujushi Bank has prepared this report with the aim of communicating to ourstakeholders in straightforward terms the Bank’s initiatives for sustainable value
creation from both the perspective of financial and non-financial information. Whenediting this report, we referred to the Integrated Reporting Framework established by
the International Integrated Reporting Council as guidelines, and the Task Force on
Climate-Related Financial Disclosures (TCFD) for sustainability-related information.
This report (both the informative and reporting editions) also integrate disclosurematerials in accordance with Article 21 of the Banking Act (explanatory documents
related to the status of performance and financial condition of the bank). Please see
the reporting component for figures.

- Understand diversity and respect human rights- Strive to reduce environmental burden and contribute to regional vitalization- Take action exceeding the expectations of our shareholders

小豆島エンジェルロード

01

Th e Hyakujushi Bank, Ltd . Integrated R ep ort 2023

T he H yak ujushi Bank, Ltd . Integrated Rep ort 2023

02

Introduction

The Hyakujushi Bank in Numbers

The Bank’s Operational Foundation

Thanks to the support of the local community, the Hyakujushi Bank has continued operations for almost 150 years, making us one of the few number banks* still■ Solid Customer Foundation and Far-Reaching Network

in existence today. (A bank that uses the number of the temporary license it was issued upon establishment as its bank name)145

Locations in11

years ago

No. of customers(as of March 31, 2023)

1.24
55,013Retail customers

prefectures

millionCorporate customers

Okayama

Loans and bills discountedCore business net income(non-consolidated)(non-consolidated)(excludes gain/loss of cancellation of investment trusts, non-consolidated)(Billions of yen)

4,795.8(Billions of yen)

4,648.3

4,539.4

3,042.9

3,366.8

Okayama, Hiroshima, Fukuoka, Hyogo, Ehime,
Kochi, Tokushima

bill yenbill yen(Mar 31, ’22)

(Mar 31, ’23)

Profit(non-consolidated/consolidated*)(Mar 31, ’21)

3,164.8
15.0

bill yen(Billions of yen)

10.8

9.10

bill yen

11.7

8.3

9.1

(Year ended Mar 31, ’22) (Year ended Mar 31, ’23)

OHR ( n o n - c o n s o l i d a t e d )

76.10

%

(%)
Non- Consolidated
consolidated(Year ended Mar 31, ’21)

*Operating costs/ gross operating profit

9.1

Non- Consolidated
consolidated(Mar 31, ’23)

Consolidated capital ratio(Non-consolidated) (Consolidated)

8.3(Mar 31, ’22)

(%)
9.35

9.34

9.10

%

76.76

Urban areas■ The Potential of Kagawa Prefecture — the Bank’s home location

Kagawa (home base)
9,802 (51%)

Tokyo, Aichi, Osaka

2,676 (14%)

Total number of business partners(Total companies provided
with credit or other support)

Greater Setouchi area*
6,766 (35%)

23.5(Billions of yen)

9.0(Mar 31, ’21)

Our Customers(Mar 31, 2023)

Kochi

Greater Setouchi area (30 branches)

23.5

3,366.8

Tokyo, Aichi, Osaka

Tokushima

Ehime

Deposits and negotiable certificates of deposit

bill yen

Urban areas (8 branches)

KagawaFukuoka

4,795.8

Aichi

Hyogo

Hiroshima

We are a wide-area regional bank based in
Kagawa prefecture with branches across Japan

Since 1878

Tokyo

Kagawa (94 branches)

Osaka

EstablishedWith Kagawa Prefecture as our operational foundation, the Bank operates 132 branches in 11 prefectures throughout Japan. After our first expansion into Osaka in
1950, we opened branches in Tokyo, Okayama, and many other regions to ensure our operations were firmly rooted in each locality. Over the years, we havebecome one of the few regional banks to build a far-reaching network with a long history.

19,244*The prefecture of Shikoku,
Hyogo, Okayama, Hiroshima,
Fukuoka

Industrial structure adapts well to changeHome to factories of Japan’s top-ranking corporations engaged in fields that include construction machinery, and electrical machinery, Kagawa Prefecture attracts alarge number of such companies’ partner enterprises equipped with sophisticated core manufacturing technologies mainly in those fields.The prefecture also hosts
large factories that handle basic materials such as chemicals and non-ferrous metals, mainly located in industrial zones situated in the prefecture’s coastal region. In
addition, many food-related companies handling frozen foods, seasonings, and other such products have operations there. As such, Kagawa Prefecture tends to beresilient to economic shocks due to its well-balanced industrial structure not skewed toward any particular industry. Another distinctive feature of Kagawa is its
many niche leaders that are active in numerous specialized market segments.

Industrial Products and Agricultural/Fishery Products of which Kagawa prefecture has Japan’s top share

76.10
71.64

Leather gloves for sport(includes synthetic leather)

Uchiwa (round fan)/Sensu (folding fan)(including the bone part)

Construction cranes

Non- Consolidated
consolidated

1.6

2.5

Population(Year ended Mar 31, ’21)

(Year ended Mar 31, ’22) (Year ended Mar 31, ’23)

(Mar 31, ’21)

(Mar 31, ’22)

(Mar 31, ’23)

(Year ended Mar 31, ’21) (Year ended Mar 31, ’22) (Year ended Mar 31, ’23)

940,000* Consolidated profit is “Profit attributable to owners ofparent”

39 in JapanthCredit rating

Deposits share(within Kagawa pref.)Loans share(within Kagawa pref.)(Mar 31, 2023)(Mar 31, 2023)(Mar 31, 2023)

JCR

R&I

No.

(Japan Credit Rating Agency) (Rating and Investment Information, Inc.)A

A-

Long-term Issue
RatingIssue Rating

48.3

%

Hyakujushi

03

Th e Hyakujushi Bank, Ltd . Integrated R ep ort 2023

1

No.

38.6
City banks/Regional banks (other than Hyakujushi), Secondary regional banks, credit unions, etc.

1

Natural disaster damage

Kagawa prefecture
Prefecture GDP (nominal)

256mill yen
6th smallest
in Japan

Per capita

4,186thou yen
19th in Japan*Source: “Kagawa’s Ranking by 100 Indicators 2023” published by Kagawa Prefectural
Government%

Transportation and logistics hub

Kagawa Prefecture serves as a gateway to Japan’s Shikoku region. It is accordingly
equipped with an extensive regional transportation network that includes Seto
Ohashi Bridge, Shikoku Odan Expressway,Takamatsu Airport, and Takamatsu Port.
The prefecture features convenient transport access to the Tokyo metropolitan area
and the Kansai region, and occupies a key position in transport networks connecting Shikoku and Honshu.

74.7%

49.6%

46.8%

3,343mill yen

2,691mill yen

102,379mill yen

No. 1 in Japan

No. 1 in Japan

Kintoki Ginseng

No. 1 in Japan
Olives97%87%

1,794tons

540tons

No. 1 in Japan

No. 1 in Japan*Source:The survey of the Census of Manufacturers 2020 published by METI and “Kagawa’s
Agricultural/Fishery Industries by Statistics 2022” published by the Department of Agriculture
and Fisheries, Kagawa Prefectural Government

Number of ships entering Takamatsu Port(overseas + coastal)

30,436ships

No. 14 in Japan
No. 1 in Shikoku(2020)*Source: Ministry of Land, Infrastructure,Transport and Tourism website
T he H yak ujushi Bank, Ltd . Integrated Rep ort 2023

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Hyakujushi Group’s vision

Message from the President

Through evolution of the general consulting group,
we will create a society with well-being together withlocal community members

July 2023

Yujiro Ayada, President

Clarifying our vision with the keyword of “Well-being”
I sincerely thank you for your continued patronage of the Hyakujushi Bank.
In FY 2022, the final year of our previous medium-term management
plan “Try Mirai (Future)!,” we steadily advanced initiatives aimed attransforming into a general consulting group. As a result, as exemplified bya return to profitability of our customer-oriented services business, etc., I
believe we successfully laid the groundwork for a new stage. This is thanks
to the strong support of our various stakeholders, including customers,
shareholders, and employees, and for that I am deeply grateful.
When formulating the New Medium-term Management Plan launchedin April, we identified the major themes (material issues) the Hyakujushi
Group should address and slated our Long-term Vision 2030 to depict theideal version of ourselves once we have found solutions to the identified
material issues. This is the first time that the Hyakujushi Bank has formulated a long-term vision and, with “Well-being” as the keyword, we aim to
shift from the concept of “short-term perspective with the Bank as the
focal point” to the concept of “long-term perspective with the customers
and the community as the focal points” in order to promote sustainability
management.
As such, I’d like to introduce our Long-term Vision 2030 and New
Medium-term Management Plan in more detail, including the ideal visionof the company we strive to be and the sentiment behind it.

Business Deployment Based on Material Issues
With the aim of achieving our Corporate Vision to “prosper together withcustomers and communities,” we considered changes in the external
environment and ESG elements, then sorted the major themes our Groupshould address, and finally identified six “Hyakujushi Group MaterialIssues.”By deploying business focused on these Hyakujushi Group MaterialIssues, we hope to create a society of well-being together with local
community members.

Hyakujushi Group Material Issues

Efforts to revitalize the local economy
Respond to the era of 100-year lifetimes
Establish an environment where diverse human resources can participate and grow
Digital transformation of our operations and local communities
Initiatives to address environmental issues such as climate change
Establish a sustainable management foundation
P. 14 “Hyakujushi Group Material Issues”

The sentiment behind our “Long-term Vision 2030”
We chose “Through evolution of the general consulting group, we will
create a society with well-being together with local community members” as the underlying statement of our recently formulated Long-term
Vision 2030. The “local community members” component of thisstatement contains the sentiment of “jiri-tari” or “self-interest and05

Th e Hyakujushi Bank, Ltd . Integrated R ep ort 2023

altruism” through our Corporate Vision to “prosper together withcustomers and communities.”“Jiri-tari” is a Buddhism teaching and means that in our attempt toachieve long-term sustainability for the Hyakujushi Group, providing
our customers and communities with what they truly seek rather thanT he H yak ujushi Bank, Ltd . Integrated Rep ort 2023

06

Hyakujushi Group’s vision

Message from the President
prioritizing our own interests will ultimately result in our profit. We
hope to manifest this “Jiri-tari” concept in our future business activities
and the conduct of our employees. Based on this concept, we hope toachieve the sustainability KPIs pertaining to material issues for“Environment and Social Values,” as well as the targets of a consolidated
ROE of around 5% and consolidated capital ratio of around 10% for“Economic Values,” as the values we will create through the realization of
our Long-term Vision.

Evolution of the general consulting group
Our Long-term Vision statement contains the words “evolution of thegeneral consulting group” as opposed to the “transformation to a general
consulting group” of the previous medium-term management plan.
Here, if we look back at our accomplishments under the previous plan,
firstly in terms of framework, we consolidated the corporate consulting
functions that had previously been spread between different divisions to
newly establish a Consulting Division. Next, in terms of human resource
development, we established 114 Meister system as the Bank’s internal
qualification system, promoted diversification of career paths, andincreased the number of “Professional human resources” in consulting,digital, and other areas by 55 people through placement of trainees withoutside entities and mid-career recruitment. While pushing ahead withsuch framework establishment, we also enhanced our consulting services
in the areas where customer needs are especially high; namely consulting
in relation to business management, human resources, ICT, business
continuity, and overseas support. In that regard, I believe we progressed
fairly close to our goal of “transformation to a general consulting group”
set out in the previous medium-term management plan.
In our Long-term Vision 2030, we will further “evolve” the general
consulting group frameworks we prepared in our previous plan andstrengthen our ability to find solutions to the issues that our customers
and communities face.You may ask, what exactly do we aim for when we
say “evolve”? First, in the consulting domain, we will enhance the qualityof our consulting through further sophistication of our services. In
addition, we will boldly take on the challenge of participating in areas
we are now able to due to recent industry deregulation, thus broadening
the scope in which we can offer solutions. At the same time as expanding
our non-financial businesses, we will continue firmly providing consulting services as a regional bank that has walked alongside customers andcommunities and accumulated a wealth of knowledge in the financial
domain over our long history; recognizing that this is an indispensable
part of our business. With the ending of Japan’s low-interest policy thathas continued for many long years, the Hyakujushi Group’s sustainability
will no doubt require the sophistication of financial areas and synergism
with non-financial areas. I believe the “evolution of the general consulting group” will be achieved by strengthening our ability to find solutions
to the issues that our customers and communities face through theabove-mentioned initiatives which will lead to an increase in the profitof our main business.
P.09-10 “Long-term Vision 2030”

New Medium-term Management Plan “Let’s Create a Good 114
As Phase 1 of the Long-term Vision 2030, we have back-casted to establish
four key strategies for our new medium-term management plan “Let’s
Create a Good 114 .” In order to advance these strategies effectively, we
will promote three transformations as our “growth engines.””

Key strategies of “Let’s Create a Good 114”

Evolution of the general consulting group
Enhancement of employee well-being
Dramatic improvement of productivity
Establishment of a sustainable management foundation“strengthening of HR capability to promote strategy” in order to increase
employees’ passion and capability so that we may obtain the strategic
personnel allocation required to realize our vision. For example, throughthe side-job system introduced this April, we had already authorized theside jobs of Shinto priest and movie producer/scriptwriter. I believe
through such activities, employees can acquire a broad range of skills,
knowledge, and interpersonal connections that they can leverage tovitalize the local economy. Also, by establishing an environment in which
a diversity of people can work, we hope to create a virtuous circle ofgenerating new human capital.
We plan on rolling out various other measures related to employees,
and would be very happy if the result was employees coming to think “I’mglad I came to work at the Hyakujushi Group,” which would in turn leadto customers coming to think “I’m glad I do business with the Hyakujushi Group.”

DX (Digital Transformation)
Next is “DX,” which we have defined as the “growth engine that willtransform business through data and digital technology,” and aim toprovide customers and communities with new values and experiences aswell as dramatically improve productivity.
We also exerted efforts in promoting DX in our previous medium-term management plan “Try Mirai (Future)!” through activities
such as releasing the 114 Banking app as a non face-to-face channel forour retail customers and preparing for the introduction of a “branchtablet” aimed at alleviating the burden of customers filling out forms inthe branch and reducing wait times. In recognition of our efforts, theMinistry of Economy, Trade and Industry certified us as a DX Certified
Operator in October 2022, in accordance with its DX certification
system.
This time, under our “Let’s Create a Good 114 ” plan, we will
endeavor to not only advance initiatives aimed at enhancing customer
convenience, but also dramatically improve productivity throughdigitization of stores and business operations so that we may achieveultra-maximization of human capital through synergism between DX
and HRX.
Moreover, in order to achieve “digital transformation of our operations and local communities,” which has been identified as a Hyakujushi
Group Material Issue, our Group will combine its strengths to sophisticate our ICT consulting service and support the digital transformationof local customers and local government.

SX (Sustainability Transformation)
Finally, we have defined “SX” as the “growth engine to increase corporate
value on a mid-to-long term basis through achieving sustainability forboth local communities and the Hyakujushi Group.” Here, we will
promote business deployment based on the Hyakujushi Group MaterialIssues.
Among these, so that we can address “response to climate change” and“financial education amid the era of 100-year lifetimes” which are issuesof particularly high concern in recent years, we will strengthen ourefforts to achieve our long-term goals for FY 2030.
Specifically, as response to climate change, we will strengthen ourenergy-saving and energy-creating activities so that we may ease theburden on the environment, and have set a target of halving Scope 1 and
2 CO2 emissions reduced by half of FY 2013 level by FY 2030. In
addition to providing financial support for customers’ and communities’
decarbonization efforts by promoting sustainable finance, we will also
provide non-financial support by offering various solutions to help
customers decarbonize their businesses, thereby contributing to solving
environmental issues.
With the highest savings account balance per household and thehighest iDeCo subscription rate in Japan, Kagawa Prefecture has always
been a financially literate region, but we intend to expand our financial
education initiatives to the future generations (elementary, junior high,high school, and university students) and teachers in the region andcontribute to further improvement of financial literacy in the region
with a target of 10,000 people receiving such education by FY 2030.

P.19-20 “Let’s Create a Good 114

The 3 transformations of “Let’s Create a Good 114
HRX(Human Resources Transformation)
Firstly, in regards to “HRX,” we have defined this as the “growth engine
that will maximize human capital by linking management strategy withhuman resource strategy,” and aim for the ultra-maximization of ourability to offer value to customers and communities while achieving
synergism with DX promotion efforts. As per my motto, a quote from07

Th e Hyakujushi Bank, Ltd . Integrated R ep ort 2023

” (HRX, DX, SX)

Takeda Shingen, “The people are your castle, your stone walls, yourmoat. Protect them, and they shall protect you,” ultimately everythingcomes down to people, so we must shape our employees to be suchstrong assets.
In “Let’s Create a Good 114 ” we will roll out various measures toachieve “demonstration of capability by fostering engagement” and”“Hyakujushi is Good!” That’s what we hope to hear.
In formulating our recent Long-term Vision 2030 and “Let’s Create aGood 114 ” plan, we thoroughly renewed our awareness that thesignificance of our Group’s very existence is “promoting dialogue withcustomers and communities to generate wisdom, work hard, and exert
every effort at finding solutions in order to realize an abundant local
community where residents can continue enjoying a better life.”

By steadily promoting the new medium-term management plan “Let’s
Create a Good 114 ” as Phase 1 of our Long-term Vision 2030, I hope tohear feedback from customers and communities that “Hyakujushi is Good!”
I sincerely thank you and humbly request your continued support andpatronage of the Bank.

T he H yak ujushi Bank, Ltd . Integrated Rep ort 2023

08

Hyakujushi Group’s vision

Long-term Vision (the vision Hyakujushi Group aims for over the long term)
In addition to the declining population, falling birthrate, and aging population, issues related to sustainability in the region are becoming increasingly
diverse and complex, such as the transition to a decarbonized, recycling-oriented society and the response to the accelerating digital shift. In order for us,

The Hyakujushi Group’s Vision Anticipating FY 2030

the Hyakujushi Group, to grow sustainably together with the community in this changing environment, we need to enhance the sustainability of ourmanagement by proactively addressing local sustainability issues from a long-term perspective.
Based on this awareness, the Hyakujushi Group has identified key sustainability issues that should be prioritized as the “Hyakujushi Group Material

Long-term Vision 2030

Issues” and formulated the “Long-term Vision 2030” as a long-term direction to resolve such material issues.

Through evolution of the general consulting group, we
will create a society with well-being together with local
community members

Our Goal — Create Local Communities with Well-being

To Realize Our Vision - Evolve the General Consulting Group

When formulating our Long-term Vision 2030, first we considered what well-being actually is to each of our stakeholders. By serving as a partner helping

In order to realize our vision, we will go beyond the initiative of “transformation to a general consulting group” under the previous medium-term management

our stakeholders achieve their own version of well-being, we will create a society with well-being together with local community members where theplan “Tryenvironment and social values are even more enhanced.

of financial services and expansion of non-financial areas, as well as thoroughly pursue synergy between finance and consulting to increase the profit of our

Mirai (Future)!” to further strengthen our ability to find solutions to the issues that our customers and communities face through sophistication

main business, thus ultimately evolving the general consulting group.
Long-term Vision 2030

Create Local Communities with Well-being

A state where future generations cancontinue living with peace of mind byvitalizing the local economy and solving
key environmental and social issues.

A state where retail customers can live
without anxiety regarding the future
through realization of steady asset formation, etc. in line with life plans appropriate
for the era of 100-year lifetimes.

New business “challenge” areas
Regional
vitalization

Investmentcompany

Advertising
relatedEnvironment

Digital/BPO

Senior life support

Phase 3

Strengthen consulting function and explore new businesses[Evolution]
Strengthen ability to find solutions to issues andincrease profit of main business[Transformation]
Enrich our consulting service lineup
and build a sales framework

New business areas

Consulting areas

Well-being of employees
A state where employees can fully demonstrate their individual capability andachieve self-realization with a sense of being in a motivating and comfortable
work environment.

Enhancement of the Hyakujushi Group’s management sustainability

Business management
and revitalization

Business
continuity

Human resources

ICT

Overseas support

Area design

Environment and social values
09

Through solving key environment and social issues, we willrealize a society with well-being where local community
members can continue enjoying a better life.
Achieve sustainability KPIs relating toGroup material issues

Th e Hyakujushi Bank, Ltd . Integrated R ep ort 2023

Consulting area

Traditional bank operations
Promote sustainable finance andother high value-added products

Enhancement of shareholder value

Strengthen consulting function andexplore new business

Sophisticate finance area(new products/digitalization)

Create synergism by
merging financial/non-financial

Traditional bank operations

Introduce new products and services
utilizing digital technologies

Achieve environmental/social values at the same time as economic values

Values created through realization of our vision

Enhance the Hyakujushi Group’s management sustainability
through improving profitability and strengthening management foundation.
Long-term target levels
Consolidated ROE of around 5%
Consolidated capital ratio of around 10%

Non-financial area

A state whereby corporate customers cangain a real sense of their business growing
through solving important financial andnon-financial management issues.

Well-being of ourretail customers

Phase 2

Fin a n ci al a rea

Well-being of
the community

Phase 1
New Medium-term Management
Plan “Let’s Create a Good 114 ”

Economic values

Well-being of ourcorporate customers

Previous medium-term
management plan “TryMirai (Future)!”T he H yak ujushi Bank, Ltd . Integrated Rep ort 2023

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Hyakujushi Group’s vision

Hyakujushi Group’s Value Creation Process
INPUT

ACTIVITY

Hyakujushi Group’s strengths

Management strategy

Social capital
Overwhelming market share and presence developed in Kagawa Prefecture

48.3%
38.6%

Share of deposits:
Share of loans:

Relationship with regional companies
Total number of business partners

Broad geographic spread*1

Corporate
Vision1

Prosper together with customers and communities

2

Create a vigorous corporate culture

3

Ensure sound business management and enhance corporate value

Proportion of loans to areas outside Kagawa Prefecture: 59.2%

The value we offer

The values we want to achieve

Create unique local industries
Discover attractive local
resources
Solve key environmental andsocial issues

Business deployment based on the Hyakujushi Group Material Issues

Enhance corporate customer well-being

Human capital

Efforts to revitalize the local economy

Respond to the era of 100-year lifetimes

Exercise a financial intermediaryfunction

Personnel with advanced qualifications SME management consultants 26

Establish an environment where diverse
human resources can participate and grow

Digital transformation of our operations and local
communities

Support the solving of financial andnon-financial-related management
issues

Initiatives to address environmental
issues such as climate change

Establish a sustainable management foundation

114 Meister system*2

1st grade Certified Skilled Professional of Financial Planning: 120

63

Certified Meisters:*2 The Bank’s internal system for certifying three levels of
qualification in each of the eight fields related to banking services.

New Medium-term Management Plan

Intellectual capitalBusiness feasibility evaluation by sharing customers’
management issues
Evaluated companies:

4,758

Enhance retail customer well-being
Improve financial literacy

P.19 “New Medium-termManagement Plan”

Offer financial services by the bestbalance of real and digital

As Phase 1 of our Long-term Vision, we will advance transformation based on the three growth engines (SX,

Support total life design

HRX, and DX), and accelerate initiatives aimed at the evolution of the general consulting group.

Human Resources TransformationDX

Long-term Vision 2030
Through evolution of the general consulting
group, we will create a society with well-being
together with local community members

Achieve environmental/social
values as well as economic values

Sustainability
Transformation

Promote diversity and inclusion (D&I)
Establish a comfortable workplace environment

Digital Transformation

Professional development
Enhance health management

Key Strategies

Enhance mid- to long-term
corporate value

Evolution of the general consulting group

Dramatic improve- ment of productivity

Enhancement of employee well-being

Establishment of a sustain- able management foundation

High-transparency information
disclosure
Implement sustainability management

Economic values
Enhance the Hyakujushi Group’s
management sustainability throughimproving profitability and strengthening management foundation.
Long-term target levels
Consolidated ROE of around 5%

Consolidated capital ratio of around 10%

Enhance shareholder return

External
environment
Th e Hyakujushi Bank, Ltd . Integrated R ep ort 2023

Achieve sustainability
KPIs

Reform corporate culture by encouraging
employees to take on challenges

Enhance shareholder value*3 (as of March 31, 2023)

Regional environment with few natural disasters
Warm and rich natural environment
Transportation and logistics hub
Abundant tourism resources

SX

HRX

Financial capital

Natural capital

Realize a society with well-being
where local community
members can continue enjoying
a better life.

Enhance employee well-being

Recipients of business start-up support: 174
Recipients of sales channel development support: 809

Deposits and negotiable certificates of deposit: 4.7 trillion yen
Loans and bills discounted:
3.3 trillion yen
Consolidated capital ratio:
9.10%
External ratings*3:“A” (JCR), “A-” (R&I)

Environment and social values

The 3 transformations that will serve as growth engines

Provision of solutions to match each company’s life stage

11

OUTCOME

Enhance local community well-being

19,244*1 Total companies provided with credit or other support

OUTPUT

Poor regional economic growth

Declining population, declining birthrate and aging population

Shift to decarbonization and a circular economy

Social and economic digital shift

Intensified competition due to entrants from outside the industry

Ongoing low interest rate environment

Expansion of business areas due to deregulation

T he H yak ujushi Bank, Ltd . Integrated Rep ort 2023

12

Hyakujushi Group’s vision

Sustainability Management Framework
The Bank established the Sustainability Committee, under the supervision of the Bank’s Board of Directors and chaired by our president, to help
solve various issues local communities face from a long-term perspective in order to realize our Corporate Vision.The Sustainability Committee
promotes and strengthens sustainability management by engaging in the cross-organizational discussion of initiatives related to enhancing thesustainability of both our customers and the local community.

Hyakujushi Group Material Issues
Material issue

Sustainability Committee
Roles
Formulating policies on efforts to resolve various sustainability-related issues in such realms
as the environment, society, and economy
Board of Directors

Deliberating on strategy and measures and managing progress of the implementation thereof

Sustainability
Committee

Main matters deliberated in FY 2022

Efforts torevitalize thelocal economy

Formulating the FY 2022 Sustainability Plan and progress thereof
Monitoring progress of measures to promote D&I, etc.

Head Office
BranchesIdentifying Hyakujushi Group Material Issues and finalizing sustainability KPIs
Updating TCFD disclosure content

Respond to theera of 100-year
lifetimes

Identifying Material Issues
When formulating our Long-term Vision and New Medium-term Management Plan, with the aim of achieving our Corporate Vision to “prosper
together with customers and communities,” we considered changes in the external environment and ESG elements required by stakeholders,then sorted the major themes our Group should address, and finally identified the “Hyakujushi Group Material Issues.”

1

Extracted elements to beconsidered2

Extraction of a comprehensive list of factors that are important to local expectations, various ESG
issues, and the local community and stakeholders

Prioritization of the materiality through examining extracted issues from the perspectives of ourown sustainability and social enviromental sustainability.

Prioritization of issues
Prioritization of issues

Impact on the sustainability of society

Large

Identification of material issues

Biodiversity
Deforestation
Ocean acidification
Recycling
Microplastics

Era of 100-year lifetimes
DX promotion
Response to the next
generation
Response to environment
issuesLocal development/local
economy revitalization
Local business support

Local volunteers
Public policy

Web3
Local communities

Enhance employee wellbeing (human capitalmanagement)
Strengthen governance/
management foundation

Management of the legal
environment

Expand business areas
Respond to new regulations

Impact on the Hyakujushi Group’s sustainability

3
4
13

Establish anenvironment
where diversehuman
resources canparticipate andgrow

Discussion bycommittee, etc.

Finalization
by Board of Directors

Th e Hyakujushi Bank, Ltd . Integrated R ep ort 2023

E

Material issues

Initiatives to address environmental issues
such as climate change

S

Efforts to revitalize the local economy
Respond to the era of 100-year lifetimes
Establish an environment where diverse
human resources can participate and grow
Digital transformation of our operations
and local communities

G

Establish a sustainable managementfoundation

Digitaltransformationof ouroperations andlocal communities

Initiatives toaddress
environmental
issues such as
climate change

Large

Discussions in the Sustainability Committee from the perspective of the significance of the company’spresence in the region as a regional financial institution, the status of social issues that influence value
creation, and the relationship with management issues.

The Board of Directors finalized the Hyakujushi Group Material Issues that were discussed andidentified by the Sustainability Committee.

Establish asustainable
managementfoundation

Opportunity and risk

Main initiatives

Sustainability KPIOpportunities
Expansion of areas for industry-academia-government-finance collaboration for regional revitalization
Expansion of consulting needs due to the increasing sophistication and diversity of management issues of local companies

Revitalize “towns” by establishing co-creation frameworks
with local public authorities,
etc.

No. of initiatives aimed atsolving local issues: 150(cumulative total up to FY
2030)
No. of consultations, etc.
provided to corporate
customers: 3,000 a year
(FY 2030)

Risks
Reduced sustainability due to declining local
population and sluggish economy
Deterioration of corporate performance due to delayed
response to local companies’ management issues
Opportunities
Greater asset formation/asset management
needs in anticipation of the era of 100-year
lifetimes
Risks
Reduced competitiveness due to delayed
response to social structure changes triggered
by further progression of the aging society
Opportunities
Sustainable growth of human resource capability
by giving employees a sense of well-being
Create new values through promoting participation by a diversity of human resources
Risks
Decline in engagement and outflow of humanresources due to delayed response to changes insocial structure and diversification of values
Decline in human resource capability due toreduced QOL (quality of life) of employees
Opportunities
Digital shift of work and services throughadvancements in digital technologies
Increased solution needs in anticipation ofdigital transformation of local communities
Risks
Reduced competitiveness due to delayed
response to digital transformation and newentrants from outside the industry
Opportunities
Greater needs for finance solutions aimed atsolving environmental issues
Risks
Weakened social confidence due to insufficient
response to climate change, etc.
Deterioration of local business performance due
to extreme weather events and inability to adapt
to a decarbonized society

As the Hyakujushi Groupoverall, support corporate
customers in solving the issues
they face

As the Hyakujushi Groupoverall, support retailcustomers with their total life
designProvide financial education to
future generations
Through promotion of D&I,
establish a workplace environment
in which diverse human resources
can participate
Improve motivation by creating
challenging opportunities andimprove work comfortability byenriching work-life balance
Implement health enhancement
promotion measures aimed atpromoting health management
Work process reform leveraging
digital technologies andsophistication of digital channels
Enrich social media/website
content, etc.
As the Hyakujushi Group overall,
support digital transformation ofcustomer operations
Leading initiatives aimed atachieving a decarbonized/
circular society for the 2050
carbon neutrality target pledgedby the Japanese government
Strengthen initiatives aimed at
decarbonization of customers’
operations through sustainablefinance, etc.

Opportunities
Stronger business foundation through sophistication of
governance system and profit structure reforms, etc.

Strengthen governance

Risks
Weakened social confidence due to insufficient governance
Suspension of business activities or weakenedsocial confidence due to delayed response to
cyber attacks, disasters, etc.

Strengthen capital strategy andsophisticate risk management
systemEnhance corporate value
through profit structure reforms

Corresponding
SDGs

No. of customers provided
with asset formation support:
160,000 (FY 2030)
No. of people who havecompleted financial education
courses: 10,000 (cumulative
total up to FY 2030)

Sustain improvement of theengagement score
Share of females inmanagement: At least 30%(end of FY 2026)**New target to be set by FY
2026

No. of digitally-connectedcustomers: 400,000 (FY2030)
Double the number of ICT
consulting business partners(FY 2030)
CO2 emissions (Scope 1 & 2):
Reduce by half of FY 2013
level (FY 2030)
Sustainable financeWorking budget: ¥500.0 billion, of which¥200.0 billion is allocated to environmental
initiatives(cumulative total for FY 2021 through FY 2030)

Systematic reduction ofcross-shareholdings
Enhance dialogue withstakeholders

Strengthen system/digitalfoundations
T he H yak ujushi Bank, Ltd . Integrated Rep ort 2023

14

New Medium-Term Management Plan “Let’s Create a Good 114”

Message from the Director in Charge of Corporate Planning
Accomplishments of the previous medium-term management plan “TryMirai (Future)!”Key strategies

We will strive to enhance corporate value
by strengthening linkage between financial
strategy, management strategy and humanresource strategy
Career history
After joining the Bank in 1989, served as the General Manager of the
Akashi Branch from 2013, Assistant General Manager of the Credit
Supervision Division from 2016, General Manager of the Executive
Secretariat Office from 2018, General Manager of the Business Strategy
Division from 2020, and Executive Officer and General Manager,
Corporate Planning Division from 2021. Appointed to his current positionof Director and Managing Executive Officer in charge of the Bank’s
Corporate Planning Division and Personnel Division in June 2022.

1

2

3

Transformation to a general consulting
group

Development of human resources with highmarket value

Structural reforms leading to the future

Launched a total of 12 fee-charging consulting services and significantly enriched ourconsulting service lineup

Enhanced the lineup of the 114 Meistersystem, the Bank’s internal qualification system

Sophistication of non face-to-face channels
such as the 114 Banking app

Increased the number of personnel withadvanced qualifications*1 and professionals*2

Promotion of workforce optimization andcost structural reforms through engagement
in store restructuring and administrativereforms

Established a framework to offer consulting
services to corporate and retail customers.

Masashi Mori

*1 SME management consultants, 1st grade Certified
Skilled Professional of Financial Planning, etc.
*2 DX human resources, etc.

Profitability of our customer-oriented services businessDirector and Managing Executive Officer

In the final year of the previous medium-term management plan “Try Mirai (Future)!,” despite signs of recovery from the COVID-19 pandemic, wefaced hikes in the cost of raw materials and resources, fluctuation in interest rates and foreign exchange, the prolonged situation in Ukraine, and otherfactors that made it difficult to forecast the future business environment.
Amid such circumstances, profit attributable to owners of parent decreased by ¥2.6 billion year on year to ¥9.1 billion. This was mainly due todisposing of foreign bonds, etc. which contain built-in loss in order not to carry over loss to the future, despite the significant increase in gain on foreignexchange transactions and gains or losses related to financial derivatives.
As a result, in regards to achievement of the targets set under the previous medium-term management plan, we fell short of our non-consolidated
OHR target by a slim margin, however exceeded our targets for the corporate soundness indicator (consolidated capital ratio) and profitability indicator(consolidated profit.) Management expenses had been steadily decreasing under the previous medium-term management plan, and I believe this to be a
result of promoting structural reforms leading to the future.
In the previous medium-term management plan, we declared our vision as being a general consulting group that co-creates the future of customers andcommunities by offering new values like only we can,” and I believe we succeeded in establishing the necessary frameworks through newly forming theConsulting Division, enhancing our consulting service lineup, and so forth. These efforts led to a return to profitability of our customer-oriented services
business, which is a key point.

Targets of the previous medium-term management plan
76.76%
71.64%

Non-consolidated OHR

Soundness

76.10%

9.35%

Final year target
75% or less(¥1.5 billion)

9.10%(¥0.1 billion)

Year ended March 31, 2020

Consolidated profit*¥11.7 billion¥9.1 billion¥2.5 billion
March 31, 2021

March 31, 2022

Year ended March 31, 2021

Year ended March 31, 2022

Year ended March 31, 2023

Forecast of performance for FY 2023 and management targets of the new medium-term management plan
FY 2023 is the first year of our newly formulated medium-term management plan, “Let’s Create a Good 114 ” and we expect profit attributable toowners of parent to decrease to ¥6.5 billion, taking into account the continued uncertain market environment.
Under the new medium-term management plan, the entire Hyakujushi Group will unite to thoroughly pursue synergies between the financial andnon-financial domains, and by promoting the transformation to a profit structure that is less susceptible to market conditions, we aim to achieve a profit
attributable to owners of parent of ¥8.5 billion or more in FY 2025, the final year of the new plan. We see this target as the minimum line, and will work
to significantly exceed it by promoting reform of our business model, including the challenge of entering new business areas, and by striving to further
improve productivity.

Final year target
9.0% or more
Profit attributable to owners of parent

Profitability(¥2.6 billion)

Loan factors+¥2.7 billion
Profits from services, etc. +¥0.9 billion
Reduction in general andadministrative expenses +¥2.9 billion

Management targets of new medium-term management plan “Let’s Create a Good 114

9.34%

Consolidated capitalratio¥5.0 billion

vs. year ended March 31, 2020

Reflecting on FY 2022 performance and the previous medium-term management plan

Efficiency

Return to profitability

Avg. loan balance x loan to deposit spread + profits from services, etc. – general and administrative expenses

Final year target¥6.0 billion” (FY 2023 – FY 2025)

FY 2022 result

FY 2023 forecast

FY 2025 target¥9.1 billion¥6.5 billion¥8.5 billion or more

Consolidated capital ratio

9.10%

Around 9.0%

Non-consolidated OHR

76.10%

Around 70.0%

March 31, 2023

* Profit attributable to owners of parent

15

Th e Hyakujushi Bank, Ltd . Integrated R ep ort 2023

T he H yak ujushi Bank, Ltd . Integrated Rep ort 2023

16

New Medium-Term Management Plan “Let’s Create a Good 114”

Message from the Director in Charge of Corporate Planning
Enhancing sustainable corporate value — Achieving sustainable ROE growth with three drivers —I believe the prerequisite of “create local communities with well-being,” which our Long-term Vision 2030 aims for, is that the Hyakujushi Group sufficiently increases its profitability and soundness. To this end, by strengthening our initiatives for improving ROE, we will realize corporate managementwith an awareness of capital costs. Moreover, we’d like to see the Group take a stance of prioritizing ROE, so have set a consolidated ROE level as along-term target for the first time. Specifically, we hope to achieve a consolidated ROE of around 5% by FY 2030.
Improving ROE will require us to consider a number of components separately, however by focusing on the three drivers of improving EPS (earnings
per share), risk asset control, and expanding shareholder return, all measures will organically lead to the growth of ROE, which we will endeavor tosustain.
Firstly, from the perspective of improving EPS, of the four major strategies set out in the new medium-term management plan, by executing the two
strategies of evolving the general consulting group and dramatically improving productivity, we will strive to strengthen the top line and manage cost
control, however, as a director in charge of human resources, I also believe promoting the strategy of improving employee well-being is extremely
important.
The Hyakujushi Group has defined the improving of employee well-being as “increasing the number of employees who are passionate about solving
issues faced by customers and the community through creating a motivating and comfortable environment.” I think the essential factor to strengthening
profitability is having more employees with this kind of mindset while maximizing human capital through linkage between management strategy and HR
strategy.

Next, from the perspective of risk asset control and enhancing shareholder return, the key points will be engaging in efforts to reduce cross-shareholdings
and our shareholder return policy.
We have been continuously reducing our cross-shareholdings, and in FY 2022, achieved a reduction of ¥6.9 billion on a book value basis. We intend on
continuing reduction efforts to bring the book value basis of cross-shareholdings down a further ¥6.0 billion during the period of the current medium-term management plan period (FY 2023 – FY 2025). We have also indicated our plan to steadily reduce the consolidated net asset ratio of cross-shareholdings (market price basis) to 20% or less by the end of FY 2030, and are promoting the efficient use of capital.

Reduction of cross-shareholdings
36.5%

34.1%

106.5

20.0%

97.0

49.4

Market value balance (Billions of yen)Book value balance (Billions of yen)
Consolidated net asset ratio (market price basis)

31.5%

88.7

Consolidated net asset ratio (market price basis) To 20% or less
(6.9)
40.8

47.7

Reduce book value balance by ¥6.0 billion
34.8

Logic tree aimed at sustainable ROE growth
Major themes
Drivers

Components
ProfitImproving EPS

Strengthen top line

Cost control(Earnings Per Share)

ROA

FY 2021

FY 2022

FY 2023

FY 2024

FY 2025

FY 2030

In regards to our shareholder return policy, in addition to increasing the dividend per share by 5 yen year on year to 75 yen in FY 2022, in May 2023 wealso decided to acquire treasury stock at the upper limit of ¥600 million (acquisition period: June 12 – August 31, 2023). Moving forward, we willcontinue to our policy of distributing dividends by comprehensively considering all factors such as the sufficiency of retained earnings, profit status, andmanagement environment, while keeping stable return of profit in mind, with the ultimate goal of maximizing shareholder value for the long term.

Status of shareholder return
Growth investment

Profit■■ Annual dividend per share (yen)Total payout ratio (consolidated)

80.5%

Total assets

Maximize value of humancapital

ROE
Total assets

ProfitFY 2020

Risk asset
control

Equity

30.6%
26.2%

Reduce no. of issued
shares80
70

70

FY 2020

FY 2021

30.2%
75

31.1%

70

Financial leverage

Reduce systematic reduction ofcross-shareholdings

Total assets
EquityEquity17

Th e Hyakujushi Bank, Ltd . Integrated R ep ort 2023

Distribution policy
Enhancingshareholder return

FY 2019

Acquisition of treasury
stock

FY 2022

FY 2023 (forecast)In addition to the above, the Bank will focus on initiatives to ensure appropriate disclosure to our shareholders and all of our stakeholders, as well as
enhance dialogue with our stakeholders. The enhancement of dialogue with stakeholders has also been set as one of our sustainability KPIs to manage
the progress of Hyakujushi Group Material Issues and in addition to recommencing corporate briefing sessions for individual investors, which had beensuspended due to COVID-19, the Bank will disclose information on areas of high interest to stakeholders in a straightforward and timely fashion at thesame time as increasing opportunities to gather the voices of our stakeholders so that we may be highly evaluated and improve our PBR (pricebook-value ratio.)

T he H yak ujushi Bank, Ltd . Integrated Rep ort 2023

18

New Medium-Term Management Plan “Let’s Create a Good 114”

New Medium-term Management Plan
The new medium-term management plan (“Let’s Create a Good 114 ”) comprises three growth engines for transformation and four key

Signiﬁcanceof name

Name

Basic
policyKey
Strategies

Growthengines
supporting
strategies

This name contains our sentiment of offering high value-added services to customers
and communities so that they may come to say “Hyakujushi is good!,” thus creating a“good world” in which local community members can enjoy a true sense of well-being.

Profitability(consolidated)

As Phase 1 of our Long-term Vision, we will advance transformation based on the three
growth engines (SX, HRX, and DX), and accelerate initiatives aimed at the evolution of thegeneral consulting group.
Evolution of the general consulting group
Dramatic improvement of productivity

Promoting three transformations- Transformation –Enhancement of employee well-being
Establishment of a sustainable management foundation

SX [Sustainability] / HRX [Human Resources] / DX [Digital]

SX (Sustainability):
Achieve sustainability for both Hyakujushi Group and local communities
HRX (Human Resources): Maximize human capital by linking management strategy with human resource strategy
DX (Digital):
Transform business through data and digital technology

FY 2022

FY 2025

ResultManagement target(final year of previous medium-term management plan) (final year of current medium-term management plan)

Target item/fiscal year

strategies to achieve our goals of realizing local communities with well-being while enhancing the Hyakujushi Group’s management sustainability.

9.1 bill

8.5 bill or more¥

Profit¥(Profit attributable to owners of parent)

9.10 %

Soundness(consolidated)

Capital ratio

Efficiency(non-consolidated)

OHR (gross operating profit basis)

Around76.10 %

Around

9.0 %70.0 %Create local communities with well-being
Key Strategy 1

Evolution of the general consulting group

Key Strategy 2

Corporate customer strategies

Enhancement of employee well-being

Foster engagement

Key Strategy 4

Retail customer strategies

Group strategies

Dramatic improvement of productivity

Strengthen human resource capability

Work reforms

Key Strategy 3

Channel reforms

Promote DX

Promote HRX

Community Co-creation

Establishment of a sustainable management foundation

Stabilize securities management

Build system/digital foundations

Ensure thorough cost return management

Strengthen governance

Enhance Hyakujushi Group’s management sustainability
Promote SX
Enhance
En - shareholder
hance shareholder
value value
19

Th e Hyakujushi Bank, Ltd . Integrated R ep ort 2023

T he H yak ujushi Bank, Ltd . Integrated Rep ort 2023

20

New Medium-Term Management Plan “Let’s Create a Good 114 ”

Business Deployment Based on Material Issues

Efforts to Revitalize the Local Economy
Amid concern for the decline of local economy due to a declining birthrate and aging population as well as overconcentration in urban

areas, our mission as a regional financial institution is to support customers who engage in business activities rooted in the local com-munity to solve both the financial and non-financial issues they face and, as such, we are pushing ahead with initiatives to revitalize thelocal economy.

New Medium-Term Management Plan — Community Co-creation Strategy

New Medium-Term Management Plan — Corporate Customer Strategies

Revitalize “towns” by establishing co-creation frameworks with local public authorities, etc.
We will build co-creation frameworks aimed at local revitalization together with local public authorities, who are the main driver of town-building, as
well as external organizations who engage in local development. Through this, we will revitalize “towns” that support a virtuous cycle of work and people.
By directly involving ourselves in solving important local issues, we will achieve sustainable growth for both communities and the Hyakujushi Group.
Community DX/
environment protection
measures (GX)

Declining population/
declining birthrate & aging population/
education•Support DX and GX
promotion(local authorities,
companies, individuals)•Support UIJ turn (return torural Japan from cities)•Financial education•Support measures forinheritance and empty houses

Brand development
for local resources•Support popularization of goods produced/
manufactured in Kagawa•Support new product development•Leverage local trading company“Shikoku Brand”

Industry promotion

People Work

•Founding cram school•Support to entice companies•Support SDG promotion•Introduce human resources

Increase exchange
Promote industry andpopularize/expand
population andlocal resources
permanent population

Tourism
promotion

Agricultural
promotion•Collaborate withexternal institutions•Tourism monitoring•Tourism stimulation
fund•Agricultural funding•Promote utilization ofagricultural land
•Sixth industrialization,
etc.

Town

Town-building

Local branding
Area design
DX/GX•PPP/PFI•Support basic plan
formulation•Support grant applications•Support sales channel development•Business continuity/M&A•Industrial tourism, etc.

Strengthen our corporate consulting function
By expanding and deepening the consulting and solution services we provide, the Bank will sophisticate our function as a specialized consulting group inorder to support our corporate customers to solve both their financial and non-financial management issues, which are becoming increasingly diverse andcomplex.

orate customer
Corpsr tunitie
ss oppo
e
in
s
rt
u
suppo
More bsinessuberMo

orate customer
Corp

velopment
wth and de
ro
g
r
e
m
o
pport custSu

Total number of initiatives aimed at solving local issues

Realchannels

Digitalchannels

Branches

The Bank has entered into partnership agreements for local developmentwith all local governments in Kagawa prefecture (Kagawa prefectural
government, local governments of eight cities/nine towns). In
accordance with these agreements, we will collaborate on initiatives
aimed at revitalizing local economies.
[Main areas of partnership agreements]
Expand sales channels for local products

On “Kagawa PPP/PFI Regional Platform,” the platform the Bank
developed to strengthen public-private collaboration in Kagawa
prefecture, we not only implement projects on themes such as utilizationof public facilities, but a variety of themes focused on collaboration
between the public and private sectors.

Greater consumption

Group
company

Head office

Support company/industry business matching

Held closed-type sounding related to private use of public
facilities

Support company founding/establishment

Held workshops aimed at solving local issues

Promote tourism/agriculture, etc.

Held seminars for local government employees

Challenge new business areas

Strengthen ability to solve issues faced by corporate customers

FY 2030

Sustainability KPI

FY 2025
Medium-term management plan
Challenge indicators

Number of consultations, etc. provided a year (Cases)

The Bank entered into comprehensive partnership agreement with Japan Airlines aimed at the promotion of local

3,000 a year

Number of consultations, etc. provided to corporate customers[Results of main initiatives in FY 2022]

Income from consulting for corporate customers

40 % or more(vs. FY 2022)+700 mill yen

Income from corporate consulting (Billions of yen)

Share for Kagawa corporate customers

Share of loans to Kagawa prefecture corporate customers

3,000

(%)

40 or more

1.9

development. Both the Bank and Japan Airlines aim to effectively utilize our respective know-how and networks in the

37.8

areas of local tourism vitalization, tourist enticement, discovery/refinement of local resources in order to achieve local
development within Kagawa prefecture.

Population increase

150(cumulative)

Initiatives for PPP/PFI promotion

Initiatives for tourism promotion

Local
well-being

Strengthen collaboration aimed at sophistication of consulting

Deepen consulting/solution areas

Partnership agreements with local governments of Kagawa prefecture

More distribution

Virtuous local economy cycle

More core local companies

Build sales frameworks to suit the business stage
FY 2030

More employment

Support solving of issues from both finance andconsulting aspects

Realize a virtuous cycle of “town, people, and work”
Related sustainability KPI

Well-being ofretail customers

1.2

1,700
1,289

Initiatives for popularizing local products
In collaboration with related groups in Kagawa prefecture, the Bank launched a project aimed at popularizing “Kagawa Products
You Need to Know About” throughout the region. As the first activity, together with Kagawa prefecture restaurant operators, we
held an event themed on “Kama-age Iriko of Ibuki Island, Kan-onji city” during which a menu of dishes made from kama-age
iriko (a local specialty) was offered for a limited time only.
21

Th e Hyakujushi Bank, Ltd . Integrated R ep ort 2023

FY 2022
ResultFY 2025Plan

FY 2030
TargetFY 2022 result

FY 2025 plan

FY 2021 result

FY 2025 plan*This is a surmised value based on the financial performancedata of customers and there is a lag in results, therefore the
FY 2021 result is shown above
T he H yak ujushi Bank, Ltd . Integrated Rep ort 2023

22

New Medium-Term Management Plan “Let’s Create a Good 114 ”

Business Deployment Based on Material Issues

Efforts to Revitalize the Local Economy
Build sales frameworks to suit the business stage of corporate customers

Strengthen ability to solve issues faced by corporate customers

The Bank will sophisticate both our real channels and digital channels and take the optimal approach to suit the business stage and needsof corporate customers so that we can best leverage limited resources to support even more customers in solving any issues they may face.
Real channels

Full banking branch
Deposits

FinanceStrengthen site functions

Deposited assets

Full banking branch

Full banking branch
Deposits

Finance

Deposits

Deposited assets

Deposits

FinanceFinance

Refine branch functions

Deposited assets

To create touchpoints with more corporate customers, the Bank will
increase convenience by enhancing our information dissemination function
and various financial functions, as well as secure a variety of different customer touchpoints.
Current digital channels(corporate internet banking, etc.)
Establish digital foundation

BranchHead office

Corporate SA(Corporate Solution Advisor)

Consultant specialist

Group
companies,
etc.

Business matching, etc.

Investment company
Other deregulated areas

Wider

From FY 2022 we began providing personnel system consulting. We provide consistent support
covering everything from the proposal of personnel evaluation systems that meet the challenges ofeach company to the follow-up support for making employees aware of the system after its
introduction and ensuring that it permeates the company.
In April 2022, the Bank obtained a license to operate a fee-charging employment agency businesswithin the Bank itself, and is providing placement services mainly for management and executive-level personnel to businesses impacted by labor shortages.

Thoroughly investigate customers’ management issues through deeper
business feasibility evaluations and manage solving of such issues
through collaboration with consultant specialist.

Information session for employees of a customer receiving consulting support

Overseas expansion support: Plans to establish aVietnamese local subsidiary (Autumn 2023 onwards)
In autumn 2023, the Bank plans to establish a consulting company (local subsidiary: HBCV) for
customers who have a desire to expand into Vietnam with comprehensive support from the initial
meeting where we listen to their specific needs to expansion support and help on the ground in order to

HD Bank: 1 trainee
HBCV (establishment scheduled for FY 2023)
KASIKORN BANK: 1 trainee

be a reliable partner as the Hyakujushi Group overall.

Business continuity support

No. of customers seeking advice on business continuity (Cases)

With the aging of our customers’ management team, we have seen an increase in the number of consultations
Consultant specialist

Consulting
area

Professional
consulting
personnel

Lease

Cashless payment

System/ICT

Branding/sales channel development

Th e Hyakujushi Bank, Ltd . Integrated R ep ort 2023

Area design

customers considering expanding their business operations to Ho Chi Minh, Vietnam. We aim to provide

Provide consulting services and solutions based on professional knowledge to help solve customers’ management issues.

Collaboration

23

Share customers’ management issues through business feasibility
evaluations to provide appropriate financial services.Also, pass on(toss-up) any non-financial issues to the head office consulting division.

Project management
Consultant specialist

ICT consulting

Support for solving issues related to personnel and human resources

Corporate account manager
Toss-up

DeeperElectronic contract function

Customer

Provide consulting
service

Challenge new areas

Business continuity consulting Overseas expansion support consulting

Conceive new digital channels
Informative function

HR consulting

Sustainable finance, etc.

The Bank will sophisticate our consulting service by thoroughly investigating our corporate customer’s management issues shared through dialogue between
customers and their account manager at our branches to strengthen collaboration between head office personnel who are able to propose solutions from a
professional viewpoint. Moreover, by collaborating with our group companies, we will support the solving of our customers’ issues as the Hyakujushi Groupoverall.

ProvidefinancialservicesManagement consulting

Financial function
is central

Strengthen collaboration for sophistication of consulting function

Sharemanagement
issuesDeepening of consulting and solution areas

Diversify customer touchpoints

Deposited assets

Function customization/consolidation, etc.

Full banking branch

専門コンサルティング集団としての機能UP

Digital channels

By offering a high-quality consulting service for customers dealing with management
issues as they aim for business growth, the Bank will strengthen site functions andconsolidate branches to suit the market.

In order to meet the increasingly diverse and complex needs of our customers, we will strengthen our functions as a specialized consulting group by
further deepening the consulting and solutions areas that we have been enhancing since the period covered by the previous medium-term management
plan. In addition, we will strengthen our problem-solving capabilities by expanding into new areas that contribute to solving issues faced by ourcustomers and local communities.

Management
consulting

HR consulting

Business continuity Overseas expansion
consulting
support consulting

ICT consulting
Area design

1,090

from customers who are facing issues related to business succession due to the absence of successors and other

1,257

844

factors. In addition to support for succession within the consultee’s family and third-party succession through
M&A, we also plan to consider providing equity-based support through the establishment of an investmentcompany.

5 Corporate SAs

50 consultant specialists

Support solutions not available at the Bank itself.
Expand supported areas moving forward.

FY 2020
Results

Sustainability management support

FY 2021
Results

FY 2022
Results

With interest in sustainable management growing, the Bank offers the Hyakujushi SDGs Initiatives Support Service for evaluating customers’ business operations from an
SDG perspective and assisting them in promoting related initiatives.We also offer the 114 Sustainability Management Support Service to assist business operators taking
initiatives to sophisticate sustainability management in all the steps from identifying material issues to setting KPIs.

T he H yak ujushi Bank, Ltd . Integrated Rep ort 2023

24

New Medium-Term Management Plan “Let’s Create a Good 114 ”

Business Deployment Based on Material Issues

Respond to the Era of 100-year Lifetimes
With the advent of a super-aging society, the era of 100-year lifetimes is becoming a reality, and we will provide support to our
retail customers in their total life design. We will also engage in financial education of future generations in the community toencourage steady asset formation that will enable them to live without anxiety in the future.

Build sales frameworks to strengthen our consulting function
The Bank will build sales frameworks to ensure the optimal proposal for each individual life stage and need of our customers, and strengthen ourconsulting function to support retail customers.
Customer group

New Medium-Term Management Plan — Retail Customer Strategies

Super-affluent group•Company executive group

Supporting customers’ life designs through strengthening our consulting function
Amid this era of 100-year lifetimes, in order to respond to the various needs that arise over the course of our customers’ lives, we will strengthen our
their lifetime value. In addition, through the promotion of database marketing, which will be carried out by the Digital Strategy Office newly established

Asset formation
group

in April 2022, we will take an optimal approach to customers in line with their life events.
Va r i o u s l o a n s

Life events
Finance
assetsAsset management

Nursing care measures

I n h e r i t a n c e m eas u res

Employment[Head office] Life Plan Consultant (LPC)[Branches] Life Plan Advisor (LPA)

Investment trusts, discretionary
investment insurance, trusts
Reserve-type products/personalloans[Head office] Consulting Plaza/digital channel[Branches] Life Plan Advisor (LPA)

Tertiary education

Childbirth

Secure a variety of customer touchpoints utilizing non face-to-face channels
We will work to expand the base of our customer base by strengthening our non face-to-face channels to provide diverse customer experiences

Nursing care required

Vehicle purchase[Head office] Private Banking TeamF i n a n c i a l g e ro n t o l o g y - re l at e d s e r v i c e s

A sse t f o r m at i o nMarriage

Major channel and sales framework

Order-made products

Affluent group•Asset succession groupconsulting function and provide support for steady asset formation so that retail customers may live without anxiety in the future, and ultimately enhance

Credit cards

Proposed products

Retirement

Donation/inheritanceHome purchasewithout barriers between the real and digital worlds.

Introduction of the 114 Banking app

LeisureThe 114 Banking app introduced in February 2023 will

Provide long-term support for thevarious needs that arise throughout life

Illness/accident

serve as the core of our non face-to-face channels for retail

Target of
200,000 users
in three years

customers, and we will further enhance customer
convenience by expanding its functions.
P.29-30 “Digital transformation of our operations and local communities”

Expand digital services for retail customers with the banking app as the core

Based on database marketing, implement the optimal approach to suit customers’ life events.
Reallocations

Bankingapp

Callcenter

Database marketing
Information-gathering

Analysis

No. of customers provided with asset formation support:
No. of people who have completed financial education courses:
FY 2025

Medium-term management planchallenge indicators

Closing balance of assets related to retail customer life design ¥No. of customers provided with asset formation support (1000 people)
160
135

In March 2023, we launched an online agreement application

Step1

Step2

Step3

Step4

Opened MyPage

Apply for a screening

Contact customer

Online contract

service for personal loans. Going forward, we will graduallyLife design asset balance*
841.2

enhance this service’s functions and plan to support a wide
range of transactions to strengthen touchpoints with

Optimal approach

FY 2030
Sustainability KPIIntroduction of an online agreement application service for personal loans

customers who find it difficult to physically visit ourbranches.

160,000
10,000(cumulative)
900 billion or more
(Billions of yen)

Providing financial education for future generations
By expanding our financial education initiatives, we will raise the financial literacy level of future generations in local communities. In FY 2022, we
provided financial education to 250 members of the future generation through ways such as directly visiting and giving lectures at junior and senior highschools in Kagawa prefecture.
No. of people who have completed financial education courses (Persons)

900.0

10,000 (cumulative)

111
1,000 (cumulative)

250
FY 2022 result

FY 2025 plan

FY 2030 target

FY 2022 result

FY 2025 plan

* Closing balance of personal loans and deposit assets
created from long-term asset formation

25

Th e Hyakujushi Bank, Ltd . Integrated R ep ort 2023

FY 2022 result

FY 2025 plan

FY 2030 target

Providing a finance lecture at a high school
T he H yak ujushi Bank, Ltd . Integrated Rep ort 2023

26

New Medium-Term Management Plan “Let’s Create a Good 114 ”

Business Deployment Based on Material Issues

Establish an Environment Where Diverse Human Resources can Participate and Grow
Based on our principle of human capital management which positions people as “capital,” we will achieve both a motivating and comfortableenvironment in which a diversity of human resources can participate and grow. By raising our employees’ motivation and capabilities, we will
ensure each and every one of them can unleash their potential to the fullest and be a driving force in solving the issues that customers and communities face through personnel allocation linked with management strategy.

Strengthen human resource capability for strategy execution
Through acquisition of specialized knowledge, advanced skills, etc., the Bank is making efforts to strengthen employee capabilities in order to increase their ability to solve
any issues that customers and communities face.

Encourage acquisition of advanced qualifications
With the aim of increasing the number of employees with specialized knowledge,
the Bank has established a framework encouraging acquisition of high-level
qualifications such as SME management consultants.As a result, the number of
employees with high-level qualifications is growing year after year.

New Medium-Term Management Plan — HR Strategy

Tap into capability by encouraging engagement
In order to increase the number of employees who passionately strive to solve any issues customers and communities face, the Bank is strengthening its

No. of employees with high-level qualifications

initiatives to encourage employee engagement.

The Bank will encourage employee engagement by supporting employees to take up challenges for even greater participation and fostering a culture of recognizing
such a challenging spirit.

Introduction of an inter-bank exchange system
In FY 2022, we introduced a short-term exchange system for employees toexperience working in the area of their choice at our head office.Through thissystem we aim to support the autonomous career development of our employees
after they acquire specialized knowledge and experience in specialized duties athead office.

Opening of a career consultation desk
In February 2023, we established a career consultation service to support theautonomous career development of our employees.Through this we provide
advice on the use of various systems related to career development and support
for the concrete realization of employees’ career goals.

Create a workplace where everyone can work with peace of mind (Promotion of diversity & inclusion)
We are committed to creating a work environment where a diverse workforce can enjoy a motivating and comfortable atmosphere.

252
26

233
23

208
22

Transition to a corporate culture that encourages challenges

52

No. of employees certified under the 114 Meister system (as of March 31, 2023)

54

46

47

(Persons)

114 Meister system
Through our 114 Meister system for certifying the knowledge and business proficiency of employees in each area, we are encouraging employees toautonomously develop their careers and take initiative with respect toself-improvement. Moving forward, we will continue strengthening our
professional human resource base by increasing the number of employees withthe top level of “Meister.”

53

52

111

120

Qualifications

Meister (top level): 63

Consulting

Leader (advanced level): 455

87

March 2022

March 2021

1st grade Certified Skilled Professional of Financial PlanningManagement consultant

Officer (beginner level): 1,506

Life planning

Foreign exchange Deposit & remittance
Loans

Financing management

Head office operationsDX

New area

March 2023

1st grade Certified Skilled Professional of Financial Services

SME management consultants

Strengthen investment in human resource development

Human resource development investment(mill yen)

We will systematically develop professional human resources by strengthening our investment in this area
through enhancement of various training programs, encouragement of acquisition of qualifications, and so on.

165

140

Introduction of a side job system and career-return system
In addition to supporting diverse work styles, in April 2023 the Bank introduced the

FY 2022 result

side-job system that allows employees to work side jobs.We also introduced the

Build a human resource portfolio linked with management strategy

career-return system, whereby employees can resign early, acquire experience in anotherfield, then be reemployed by us.These systems are anticipated to help improve local
contribution and the Bank’s value by leveraging broad knowledge and skills obtained
through another field and side jobs, as well as tapping into new personal networks.

Initiatives to support work-childcare balance

Employee taking advantage of our side job system to work as a Shinto priest

Share of females in management

Male childcare leave acquisition ratio

End of FY 2022

FY 2022 result

26.6%

100%

The Bank will build the necessary human resource portfolio to execute management strategy through optimal allocation of human resources based on linkage between
management strategy and HR strategy. In order to achieve the “evolution of a general consulting group” which we have slated as our long-term vision in our new
medium-term management plan, we will create consulting human resources who engage in direct dialogue with customers and strengthen DX human resources totransform business models.
March 31, 2023
1,995 employees

The Bank is strengthening our support of employees who take maternity and childcare leave in the form ofproviding employees on childcare leave with information, we also encourage male employees to takechildcare leave.We will promote female participation by supporting work-childcare balance.

*

Strengthen health management

Sustainability KPIs

27

* Includes leave for the purpose of childcare

Branch administrative tasks
Branch:Customer
account manager
Head office:Consulting
human resources
DX human resources
Head office middle/
back office roles

L-boshi(highest rank)

Platinum Kurumin Plus

FY 2026 Share of females in management At least

Branch:Customer
account manager

Up by 50 employees
Up by 10 employees

Head office:Consulting humanresources

1

1

sales and other departments

2

Allocation to strengthened divisions through2 enhanced recruitment and reskilling aimed atstrengthening consulting sales capabilities.

3

3

Allocation to strengthened divisions throughDX human resources
Head office middle/
back office roles

Early-stage training of young employees andreskilling of administrative staff to reassign them toenhanced recruitment and human resource
development

Health and productivity

FY 2025 (compared to March 31, 2023)

FY 2030 Sustainable improvement of employee engagement scoreTh e Hyakujushi Bank, Ltd . Integrated R ep ort 2023

March 31, 2026 Plan
Down by around 70 employees(natural reduction)
Approx. 1,930 employees

Branch administrative tasks

the “Hyakujushi Childcare Support Program.” In addition to revising various leave frameworks andAs initiatives to address health matters unique to women, the Bank proactively offers internal training,
distributes awareness-raising materials, regularly disseminates information, and so on. Furthermore, ourefforts focused on infertility treatment such as introducing a “Childbirth Support Leave” as a systemenabling employees to take time off work to undergo for infertility treatment, etc. were recognized, andwe became the first company in Kagawa prefecture to be certified with “Platinum Kurumin Plus” inNovember 2022.

FY 2025 target

30%

Strategy KPI

50employees
Up by10employees

Creation of consulting human resources who engage in direct dialogue with customers Up by
DX human resources to transform business models

T he H yak ujushi Bank, Ltd . Integrated Rep ort 2023

28

New Medium-Term Management Plan “Let’s Create a Good 114 ”

Business Deployment Based on Material Issues

Digital Transformation of Group Operations and Local Communities
In order to adapt to changes in the environment, the Hyakujushi Group will transform its business processes, business model, and organization by utilizing data and digital technology, aiming to provide new value and experiences to customers, and dramatically improving businessproductivity. Furthermore, by actively engaging in efforts for the digital transformation of customers and communities, we will promote thedigital shift of society and economy.

Provide customers and communities with new values and experiences
Enhance non face-to-face channels and data utilization, etc. Corporate customer strategy Retail customer strategy

Channel reform

Secure diverse touchpoints with customers
In February 2023, the Bank launched the 114 Banking app for retail customers which
offers more convenience than our conventional online banking service. Going forward, we

New Medium-Term Management Plan — DX Strategy

will expand the functionality of the non face-to-face channel centered on the 114 Banking

The Hyakujushi Group has defined DX as the “growth engine that will transform business through data and digital technology,” and formulated DX

app and organically link it with face-to-face channels to expand touchpoints with retailstrategy to effectively promote each medium-term management plan strategy through DX. By concentrating on the six focus areas of the DX strategy andcustomers, improve convenience, and realize a customer experience without barriers

solving the Hyakujushi Group Material Issues, we aim to create local communities with well-being and improve the sustainability of our Group’s

between the real and digital worlds.
In addition, for the purpose of improving convenience for corporate customers, we will consider upgrading non face-to-face channels, such as the

management.

introduction of a corporate portal equipped with various functions.
Main initiatives

Related individual
strategies

Implement database marketing

Provide customers and communities with new values and experiences
Dramatically improve productivity
Build DX promotion framework
Community co-creation Corporate strategy

Retail strategy

Work reform

With our 114 Banking app as the core, we will enhance non face-to-face channel functions to maintain and expand customer touchpoints andimplement marketing based on data obtained through each channel so that we may provide proposals and services aligned with each customer’s needs.

Channel reform

Sophistication of ICT consulting service and close support
DX is becoming increasingly important in order to solve management issues faced by customers, such as the digital transformation of society and theeconomy, labor shortages, and so on. The Bank will collaborate with other Hyakujushi Group companies in relation to not only back office work suchas accounting and human resource management, but also the sophistication of ICT consulting services including front office work such as sales
support and order management. In this way, we will support the digital transformation of local customers and local governments.

DX promotion
Key focus areas

Value offered

Stakeholders

Dramatic improvement of productivity

Create an environment in which customers can access ourservices anywhere, anytime

Corporate customers Retail customers

Personalized proposals and services based on data

Corporate customers Retail customers Communities

Support digital transformation ofcustomers/communities

Utilize DX to solve customers’ management issues and social
issues in the community

Corporate customers Communities

Digital transformation of branches/work

Alleviate the burden of customers’ procedural tasks in branches,
reduce wait times and streamline branch/head office operations

Corporate customers Retail customers

Develop/hire DX human resources

An organization where all employees leverage DX to proactively
bring about change

Employees

Create new businesses

Promote digital transformation of local communities and economic revitalization through creation of new businesses

Corporate customers Retail customers Communities

Enhance non face-to-face channels
Data utilization, etc.

Digital transformation of branches/work

Employees

Acquisition of “DX Certified Operator” status
In October 2022, the Ministry of Economy,Trade and Industry certified the Hyakujushi Bank as a DX Certified Operator in accordance with its DX certification system.
Based on the Act on Facilitation of Information Processing, this is a system whereby METI certifies business
operators who have made preparations to promote DX, and the Bank’s utilization of digital technologies and initiatives
for framework establishment aimed at realizing DX were recognized.
FY 2030
Sustainability KPI

29400,000
Double the number of ICT consulting business partners (compared to FY 2022)
No. of digitally-connected customers

Th e Hyakujushi Bank, Ltd . Integrated R ep ort 2023

Support digital transformation of customers/communities Community co-creation Corporate customer strategy

Work reform

Channel reform

Introduction of branch tablets
With the aims of alleviating the burden of customers filling out forms in the branch andreducing wait times, we are working on the development of branch tablets so that we may
introduce them during FY 2023.
Moving forward, we will continue to proactively promote the digital transformation of
our branches and work through initiatives such as introducing a branch appointment
service, setting up a remote teller, and so on in order to improve branch convenience aswell as secure time and personnel for consulting sales aimed at solving customers’ issues
and concerns.

Shift from paper/
seal to digital data
Won’t wait

Simplified, straightforward
procedure

Don’t have

Reflect customers’ inputted
content in transactions

Won’t write

Digital transformation, head
office consolidation,
outsourcing

Build DX promotion framework
Develop/hire DX human resources
The Bank has engaged in initiatives for thedevelopment and hiring of DX human resources
through activities such as developing data analysts
in the Digital Strategy Office, adding the qualification of “DX human resource” to the 114 Meistersystem (The Bank’s internal qualification system),and hiring mid-career DX specialists.
We will need more DX human resources toeffectively execute the DX strategy formulated
this time. By raising the IT literacy level of
employees overall and fostering a DX mindset,
the Bank will systematically develop and hire
human resources for DX promotion as well as DX
specialists.

DX specialists
Human resources highly specialized in IT and digital-related areasDX
specialists

Development method Specialized training course

Acquisition of high-difficulty qualifications

OJT* Prepare a career path according to specialty for mid-career recruits and new graduates

Hire mid-career
specialists
Hire new graduatesfrom science streams

Human resources for DX promotion
Enhance expertise

Human resources for head office planning (human resources able to formulate DX business plans and promote projects)
ICT consulting team (Guidance on support-type ICT tool introduction, etc.)
OJT
Development method Specialized training course Qualification acquisition (exchange with System Division personnel,
training at/seconding to IT vendors)

Human resources
for DX promotion(head office)Fostering a DX mindset
by all employees
Raise IT literacy level
Branches, head office, group companies

Corporate relations branch manager

Head office employees (planning/sales managers)

Human resources able to coordinate the digital transformation of customers

Human resources able to promote the digital transformation of the Bank itself

Other employees

Development method IT passport acquisition Various examinations Various fundamental training courses

Human resources that can effectively use IT tools and leverage analysis data in sales activities
Development method Training courses Various examinations

OJT

T he H yak ujushi Bank, Ltd . Integrated Rep ort 2023

30

New Medium-Term Management Plan “Let’s Create a Good 114 ”

Business Deployment Based on Material Issues

Initiatives to Address Environmental Issues such as Climate Change — Response toTCFD Declaration —In October 2021, the Bank expressed its endorsement of the Task Force on Climate-related Financial Disclosures (TCFD)*1 recommendations, recognizing that addressing environmental and climate change issues is vital. The Bank’s initiatives in line with the TCFD
recommendations are as follows.
*1 The Task Force on Climate-related Financial Disclosures (TCFD) is an international advocacy organization established in 2015 by the Financial Stability Board (FSB) to address climate change
as a global challenge. It recommends disclosures to financial aspects based on the risks and opportunities of climate change from the perspective of financial market stabilization.

approximately ¥4.2 billion as the cumulative total through 2050.
The cumulative impact of losses due to damage to the Bank’s business branches and other facilities was up to ¥600 million through 2050.

Carbon-related assets• In the four sectors of carbon-related assets based on revised TCFD recommendations in October 2021 (energy, transportation, materials and buildings,

Governance•

We approached our analysis from two points of view: collateral damage and sales decline. As a result, the maximum increase in credit costs was

agriculture/food/forest products), carbon-related assets account for 29.7% of the Bank’s loan balance (as of March 31, 2023).

We have built a framework for the promotion of sustainability-related measures under the supervision of the Board of Directors, to further promoteand strengthen our initiatives related to sustainability management.

• We established the Sustainability Committee, chaired by the President, to formulate and implement policies, plans, and initiatives to address social and• The total loans to the energy (petroleum and coal) and utilities (electricity and gas) sectors (not including loans to water utilities, renewable energy
power generation businesses, etc.) account for 2.5% of the Bank’s loan balance. (As of March 31, 2023)• Moving forward, through engagement with the relevant sectors, in addition to sustainable finance, we will strive to provide various solutions aimed at
decarbonization, etc.

environmental opportunities and risks, including climate change. Important matters are also submitted or reported to the Board of Directors.

• In April 2020, we established the Hyakujushi Bank’s Environmental Policy, clearly stating the Bank’s policy on the environment.
• In addition, in order to further promote sustainability management, the achievement of sustainability management targets (reduction of CO emissions,2increase in the share of females in management, etc.) will be taken into account with respect to executive remuneration from FY 2023 onward.
WEB

Please see our website for “Hyakujushi Bank’s Environmental Policy.”

https://www.114bank.co.jp/company/policy/

Risk management• We recognize that the transition risks and physical risks caused by climate change may significantly impact the Bank’s business operations, strategies, andfinancial planning, and we are making preparations to manage these risks through an integrated risk management framework.

• We established the “Environmental and Social Management Policy for Financing and Investment Activity” in December 2020, and we support businesses
striving to resolve environmental and social issues, while also working to mitigate or avoid the impact of transactions with businesses and business

Strategy

operators with a significant negative impact.
WEB

We have designated addressing climate change and environmental conservation as a key management issue for the Bank, with the aim of achieving a

Please see our website for our “Environmental and Social Management Policy for Financing and Investment Activity”

https://www.114bank.co.jp/company/policy/

sustainable society. We are implementing initiatives from the perspectives of both opportunities and risks.

Opportunities• We recognize that supporting our customers and communities in their efforts to combat climate change and transition to a decarbonized society from a
medium- to long-term perspective will lead to the creation and expansion of business opportunities for financial institutions.

• We are working toward achievement of a decarbonized society through initiatives such as financing renewable energy businesses, assisting customers to
reduce their greenhouse gas emissions, and providing services aimed at alleviating environmental burden.

Risks• We perceive climate change risks in terms of physical risks and transition risks.
• Anticipated transition risks include an increase in credit risk for customers affected by factors such as more stringent climate-related policy/regulation

Indicators and targets
Long-term targets for the reduction of CO2 emissions
We have established long-term targets for the reduction of CO2 emissions to mitigate climate change risks. By striving for these targets, we aim to reduce
the CO2 emissions from our business activities over the medium to long term and contribute to the goal, established by the Japanese government, ofachieving carbon neutrality by 2050.
In FY 2022, we achieved a 43.6% reduction in CO2 emissions compared to FY 2013, through measures such as switching from city gas to carbon
neutral city gas for some stores, training centers, welfare facilities, etc. and switching the garbage bags we use within the Hyakujushi Group to garbage
bags made from 99% recycled materials.

and the advance of technological innovation aimed at decarbonization.

• Anticipated physical risks include credit risk due to damage to customers’ assets resulting from abnormal weather conditions, and operational risk due
to causes such as damage to the Bank’s branches.

1 Target

Scenario analysis
Transition risk
Based on the 2°C and 1.5°C scenarios of the International Energy Agency (IEA), we analyzed the situation of our credit portfolio in the event that a

Definition

Scope 1 and Scope 2 CO2 emissions*2

Targets[Interim target] 50% reduction vs. FY 2013 by FY 2030
[Ultimate target] Achieve carbon neutrality by 2050

*2 Scope 1: CO2 emissions directly resulting from such processes as the combustion of fuel (gasoline, etc.) by the Bank.
Scope 2: CO2 emissions indirectly resulting from the use of electricity, etc. provided by other companies to the Bank.

carbon tax is introduced and estimated the impact on the Bank’s finances.
For the purpose of analysis, we targeted the companies provided with credit that fell into the electricity and gas and marine transportation sectors. As aresult, the cumulative increase in credit costs is expected to be up to approximately 10.5 billion yen by 2050.
Physical risk
Based on the 2°C and 4°C scenarios of the Intergovernmental Panel on Climate Change (IPCC), we analyzed the impact on our credit portfolio oflarge-scale floods expected to occur by 2050 in all of our business areas and estimated the degree of impact on our financial condition.

31

Th e Hyakujushi Bank, Ltd . Integrated R ep ort 2023

Scope 1
Scope 2
(direct emissions) (indirect emissions)

2 Results
FY 2022

630 t

Total

4,896 t5,526 tReduction(vs. FY 2013)
43.6%

The calculated CO2 emissions (Scope 1 and 2) for the entire Hyakujushi Group in FY 2022 were 6,877 tons.

T he H yak ujushi Bank, Ltd . Integrated Rep ort 2023

32

New Medium-Term Management Plan “Let’s Create a Good 114 ”

Business Deployment Based on Material Issues

Business Deployment Based on Material Issues

Initiatives to Address Environmental Issues such as Climate Change — Response to TCFD Declaration —Establish a sustainable management foundation

Long-term targets for sustainable finance

We will enhance management sustainability by aiming to strengthen the management foundation of the Hyakujushi Group.

We have established long-term targets for sustainable finance to support efforts by local communities and customers to increase sustainability through ourfinancing and investment activities. We are striving to achieve these targets.
Results for the period ended March 31, 2023 (cumulative) were 125.2 billion yen (including 56.7 billion yen for environmental initiatives).

2 Result

Stabilization of securities management

Definition

Financing and investment activities that support and promote initiatives by
local communities and customers to resolve environmental and social issues

Target[Target period] 10 years between FY 2021 and FY 2030
[Target amount] Cumulative financing and investment of ¥500 billion (including ¥200 billion for environmental initiatives)

April 2021 – March 31, 2023
(cumulative)

125.2 billion yen (including 56.7 billion yen for environmental initiatives)

1 Target

New Medium-Term Management Plan – Individual Strategy

The Bank will manage its portfolio with a view to medium- to long-term and overall optimization, based on the condition of the Bank’s overall portfolio
and other factors, and will conduct stable securities management without bias toward short-term, periodic income.
Shift in securities (average balance)(Billions of yen)

1,238.8
183.2

Initiatives to grasp Scope 3 emissions

189.7

For Scope 1 and 2, the Bank had set long-term targets and calculated results accordingly, however from FY 2021, we added Scope 3 categories 1 through14 to the scope of calculation.

65.1
194.1

Greenhouse gas emission results (Scope 3)
Measurement category
1. Purchased products and services

Photocopy paper, data communication cost, postage, books and subscription costs, stationary, etc.

(t-CO2)

3. Fuel and energy-related activities notcovered in Scopes 1 and 2

Upstream emissions of purchased electricity, steam, and fuel639

4. Transportation, delivery (upstream)

Shipping fee (other company transportation, the Bank is the consigner)109

5. Waste

General waste

360

6. Business trips

Employee business trips

337

7. Commute

Employee commute

830

15. Investments

Finance for corporations

Total

225.3

4,015

(Not applicable)(not calculated)
8,767

The scope calculation method, emissions coefficient, etc. are in line with the Basic Guidelines on Accounting for Greenhouse Gas Emissions Throughout the Supply Chain Ver.
2.4 (Ministry of the Environment, Ministry of Economy, Trade and Industry, March 2022) and Database on Emissions Unit Values for Calculation of Greenhouse Gas
Emissions, etc., by Organizations Throughout the Supply Chain Ver. 3.2 (Ministry of the Environment, Ministry of Economy, Trade and Industry, March 2022).
Scope 3 categories 8, 9, 10, 11, 12, 13, and 14 are not applicable to the Bank. We will consider applying Scope 3 category 15 in the future.

Year ended Mar. 31, 2022

160.0(-29.7)60.5(-4.5)

219.1(+25.0)375.3(-5.8)

112.5(-112.7)

Medium- to long-term management prioritizing the future

Portfolio

Overall optimization management

Investment judgment

Judgment on medium- to long-term fundamentals

Year ended Mar. 31, 2023

Seasonal changes in finance
Securities portfolio management based on changes in the overall bankportfolio (sharing within the bank images of changes in the size,
composition, etc. of the securities portfolio)
Expected return and risk tolerance based on constraints related to

System and digital infrastructure development

Thorough cost return management

The Bank aims to downsize legacy systems and transform them into an

While taking into account the impact of price hikes and other factors, we

open system structure with a focus on digital. Furthermore, while

will ensure that our expenses and investments are focused on returns andmaintaining the stable operation of the core system, we will clarify theeffectiveness. In addition, we will continue to invest in DX and GX (Green

vision for the next core system.

Transformation) measures and practice advanced sustainability management.
VisionVisionCustomer services/customers

ATM

Computers Smartphones Tablets

API infrastructure
Digital Service
Platform (DSP)

Thorough expenses and investment emphasizing return/effectDownsize
legacy area

Utilize digital for earlystreamlining of work

Branch terminals

Bank
Work
Work
computers smartphones tablets

Maintain stable operation●

Handle institutional matters●

Minimize costs●

Consider slimmer structure
through architecture renewal

Living money

●
●

•
•

Thorough recycling, reusing, etc. (circular economy)
Revise procurement rules for goods and services, etc.
Measures from a P/L aspect (examples)
De-plasticization measures

Paperless measures

Car-sharing

External cloudInternet infrastructure
Develop connection environment
Cyber security prevention measures

Core systems (accounting/information systems)●

risk-taking

Internal bank work/employees

Early expansion ofdigital area

Downsize
legacy area

Enhance API

We plan to achieve ZEB* with zero CO2 emissions at the new branch, which is scheduled for construction andrelocation in the fall of 2023. The new branch is expected to achieve “ZEB” status, which means that 53% of theenergy consumed by the new branch will be “saved” by various facilities and 59% will be “created” by solar energy,
thereby reducing CO2 emissions to zero in real terms. Through this initiative combined with branch consolidation
efforts, we aim to reduce emissions by approximately 100 tons per annum.

(-14.8)

MissionIn the securities portfolio for the year ended March 31, 2023, the averagebalance decreased by 142.7 billion yen from the previous year due to theliquidation of unrealized loss issues in bonds, foreign securities, and others(investment trusts, etc.).

Self-utilization of electricity generated by solar power generation facility

Promote ZEB shift of branches and energy-saving at real estate properties for business operations

168.4■ Government bonds ■ Local government bonds ■ Corporate bonds ■ Stocks■ Foreign securities ■ Other ( ) Figures shown in parentheses are comparison Y.O.Y.)

Initiatives to alleviate environmental burden
The solar power generation facility installed at the former site of the Bank’s recreation facility, which commenced
operation in March 2023, reduces CO2 emissions through the use of a “self-utilization scheme” whereby theelectricity generated is consumed by the Bank itself. The annual reduction in CO2 emissions is expected to be 480
tons, which is equivalent to approximately 8% of the Group’s annual emissions.

(-142.7)

Items for consideration to achieve optimal portfolio management

2,477

Buildings for business, real estate, software

1,096.1

381.1

FY 2022 result

2. Capital goods

8-14. Leased assets (upstream), transportation(Not applicable)(downstream), processing of sale products, etc.

Direction

Bank internal system●

Downsize by migrating to external cloud,utilizing SaaS, etc.

●

Streamline bank internal
work through low-code
development

Shift to low cost and monetization through DX and GX

Living assets

utilize owned assets• Effectively• Introduce/utilize advanced and innovative technology and know-how, etc.
Measures from a B/S aspect (examples)
Utilize unused land

Convert branches into
virtual power plants

Utilize electric vehicles(V2X)*Abbreviation for Net Zero Energy Building

33

Th e Hyakujushi Bank, Ltd . Integrated R ep ort 2023

T he H yak ujushi Bank, Ltd . Integrated Rep ort 2023

34

Communication with Stakeholders

Corporate Governance
Assessment of Board of Directors’ effectiveness

Basic stance on corporate governanceCentered on the Board of Directors and Audit and Supervisory Committee system, the Bank effectively utilizes its Sustainability Committee,
Revenue Management Committee, Risk Management Committee, Compliance Committee, etc., to swiftly respond to cross-organizational

The Bank conducts an annual questionnaire targeting all Directors to evaluate the effectiveness of the Board of Directors based on an analysisof the results. The Board of Directors strives to improve its effectiveness by addressing issues identified in the assessment.

matters and secure effective corporate governance.
FY 2021 assessment results

Corporate governance framework

General Meeting of Shareholders
Appointment/Dismissal

Appointment/Dismissal

Appointment/Dismissal

FY 2022 initiatives

FY 2022 assessment results

Held practical officer study sessions
by external lecturers
Arranged free discussion sessions andother opportunities for dialogue

Deeper debate based on theLong-term Vision whichanticipates the future

Secured opportunities and time fordiscussion related to management
strategy

The Board of Directors is composed ofmembers who are diverse in terms ofskills, age, gender, etc. in order toAssessment

There is a need to absorb
new knowledge to respondto management issues suchas DX and decarbonization

Measures

The Bank is a company with an Audit and Supervisory Committee and strengthens its auditing and supervising functions in relation to the execution ofduties by Directors through the granting of voting rights at Board of Directors Meetings to the Directors serving as Audit and Supervisory Committee
members. In addition, for the purpose of improving objectivity and transparency of the governance system, the Nomination and Remuneration Governance Committee has been established, chaired by an outside director elected by mutual vote, and consisting of the president, the chairman of the Audit
and Supervisory Committee, and Outside Directors.
Furthermore, the Bank has introduced an Executive Officer System whereby the Executive Directors appointed by the Board of Directors are in chargeof business execution, and important business execution matters are discussed and determined by the Executive Committee, which consists of Managing
Executive Officers and above, as well as the Sustainability Committee, Revenue Management Committee, Risk Management Committee, Compliance
Committee and other committees established in order to swiftly respond to cross-organizational matters.

IssuesCorporate governance frameworkensure a high level of effectiveness bymaking steady progress in improving
governance-related matters such ascompliance, director appointment anddismissal, remuneration system,

Stronger assessment andsupervision of projects put
together in response to
management issues

Made reports to the Board of
Directors on the periodic progress of
key measures, issues, solutions, etc.

succession planning, etc., throughtransparency and other measures.

Audit/Supervision

Directors not serving as Audit and Supervisory Committee Members

Audit and Supervisory
Committee
Directors serving as Audit and Supervisory Committee Members

Representative Directors

Advisory
body

Board of Directors

Nomination and Remuneration Governance Committee

Collaboration/
ReportingIssues the Bank recognized as a result of the FY 2022 Board of Directors effectiveness assessment

Executive Directors

Effective progress management of the new medium-term management plan formulated in order to realize our Long-term Vision
Discussions utilizing management indicators including non-financial indicators for the realization of sustainability management

ReportInvolvement in human capital management and development of diverse management personnel, including women and young employees.

Sustainability
Committee

Revenue Management
Committee

Risk Management
Committee

Head Office and Branches

Compliance Committee Executive Committee

Board of Directors skills matrix
Audit

Instruction

Auditing Division

Accounts
audit

Accounting Auditors

Internal Directors (Executive Directors and Audit and Supervisory Committee Members) Outside Directors (Audit and Supervisory Committee Members)
Expected areas of expertise
Name

Board of Directors

The Board of Directors consists of 8 Directors (excluding Directors
serving as Audit and Supervisory Committee members) and 7 Directors serving as Audit and Supervisory Committee members (including
5 Outside Directors).
Directors are selected based on their expertise and skills that the
Bank expects with consideration to the business environment and management strategy, and care is taken to ensure that the entire Board of
Directors maintains a balance of skills that contributes to the sustainable development of the Bank’s group. We also pay attention to diversity when configuring the Board of Directors, including factors such as
gender, internationalism, occupational history, and age.
In principle, the Board of Directors meets once a month and in
addition to matters stipulated by laws and regulations or the Articles ofIncorporation, passes resolutions on important matters concerning
management and oversees business execution by Directors.
35

Th e Hyakujushi Bank, Ltd . Integrated R ep ort 2023

Board of Directors

No. of meetings in FY 2022 12Main matters deliberated in FY 2022
Finalization of Hyakujushi Group Material Issues and sustainability KPIFormulation of the Long-term Vision
Formulation of the Medium-term Management Plan (April 2023 –March 2026)
Formulation of the FY 2023 Compliance Program implementation plan
Partial revision to the Regulations for Money Laundering Prevention,
Etc.
Overview and Response to FY 2021 Board of Directors effectivenessassessment results
Revision to the remuneration amount for Directors (excluding Directors
serving as Audit and Supervisory Committee members)
Director bonuses, etc. (excluding Directors serving as Audit and Supervisory
Committee members)

Yujiro Ayada

Management Business
operation
controlRiskmanagement

Human
resources

Expected areas of expertise
IT/DX
strategyInternal Male

Ryohei Kagawa Internal Male
Kiichiro Oyama Internal Male
Masakazu Toyoshima Internal Male
Hiroyuki Kurokawa Internal Male
Hideaki Kanamoto Internal Male
Kazuhito Tada Internal Male
Masashi Mori Internal Male
Kazuhiro Kumihashi Internal Male
Tatsuya Sakuma Internal Male

Name

Yasuko Yamada

Nobuyuki Souda

Tomoko Fujimoto

Noriyuki Konishi

Yasushi Marumori

Corporate
management

FinanceFinancial
Regional
Legal affairs
accounting
revitalization

Outside Female
Independent
Outside Male
Independent
Outside Female
Independent
Outside Male
Independent
Outside Male
Independent(Note) The above skills matrix does not represent all the expertise and experience each Director has.

T he H yak ujushi Bank, Ltd . Integrated Rep ort 2023

36

Communication with Stakeholders

Reason for appointment as an Outside Director

Results of initiatives to strengthen governanceAttendance (FY 2022)

Name

Reason for appointment

YasukoYamadaYasuko Yamada worked for the Kagawa Prefectural Government, holding a number of important positions indepartments and divisions relating to the environment, welfare, accounting, and so forth. As such, she has
ample experience in local government, possesses expertise in particular on regional revitalization and financial accounting, and has excellent personality and insights. Further, she has served as the Bank’s Director and
Audit and Supervisory Committee Member since June 2019, and has been appropriately supervising its
management. Thus, the Bank has determined that she will continue to contribute to management supervision
as an Audit and Supervisory Committee Member with an independent standpoint and has appointed her as an
Outside Director serving as an Audit and Supervisory Committee Member.

12/12

Nobuyuki
Souda

Nobuyuki Souda has ample experience as a corporate manager at Nippon Life Insurance Company and Corporate-Pension Business Service Co., Ltd., possesses a wealth of knowledge in particular of finance and financial
accounting, and has excellent personality and insights. Further, he has served as the Bank’s Director and Audit andSupervisory Committee Member since June 2019, and has been appropriately supervising its management.Thus,
the Bank has determined that he will continue to contribute to management supervision as an Audit and Supervisory Committee Member with an independent standpoint and has appointed him as an Outside Director serving as an
Audit and Supervisory Committee Member.

11/12

TomokoFujimoto

Noriyuki
KonishiYasushiMarumori

12/12

The Audit and Supervisory Committee consists of 7 Directors (including 5
Outside Directors) serving as Audit and Supervisory Committee Members.
In principle, the committee meets once a month (13 meetings in FY 2022),
and occasionally as necessary to audit and supervise the execution of duties
by Directors.

2015

2016

2017

Established GovernanceCommittee

Institutional Design

2018

2019

2020

2021

2022

2023

Established a Nomination and Remuneration
Governance Committee
Shifted to a Company with Audit andSupervisory Committee

12/13

OutsideDirectors

Shifted to Prime Market of the Tokyo
Stock Exchange

Outside Outside Directors
Directors
2
1

Outside Directors
4Outside Directors
5(Female Directors)(Female Directors)(Female Directors)(Female Directors) (Female Directors)

Formulated the successor training policy
Implemented third-party assessment

Held self-assessment andimproved issues

13/13
Board ofDirectors

Amended the successor training policy

Disclosed the Directors skills matrix

Noriyuki Konishi possesses a high level of expertise in particular on accounting, audit, governance andreginal revitalization as an academic expert, has held important posts as Vice President of Aoyama Gakuin
University and Chairperson of Japanese Association for International Accounting Studies, etc., and has
excellent personality and insight. Further, he has served as the Bank’s Director and Audit and Supervisory
Committee Member since Jun. 2022, and has been appropriately supervising its management. Thus, theBank has determined that he will continue to contribute to management supervision as an Audit andSupervisory Committee Member with an independent standpoint and has appointed him as an Outside
Director serving as an Audit and Supervisory Committee Member.
Yasushi Marumori has ample experience as a corporate manager at MUFG Bank, Ltd. and Mitsubishi UFJ
Research and Consulting Co., Ltd., etc., possesses expertise in particular on finance, financial accounting
and consulting, as well as experience as an outside corporate auditor of a regional bank, and has excellent
personality and insights. Valuing his ability and experience highly, the Bank has determined that he willcontribute to management supervision as an Audit and Supervisory Committee Member with an independent standpoint. The Bank expects Mr. Marumori to play the role of providing guidance and suggestions
that facilitate the Bank’s management, drawing on his experience and knowledge as a corporate manager
and, as such, has appointed him as Outside Director serving as an Audit and Supervisory Committee
Member.

13/13

2014

OutsideAuditors
3

Tomoko Fujimoto not only possesses highly specialized knowledge as a lawyer, but has also served in a
number of public positions including the Kagawa Local Labour Council and the Takamatsu City Environment Council. As a result, she has diverse perspectives and ideas developed on the front line of local
government, along with a jurist’s perspective. Further, she has served as the Bank’s Director and Audit andSupervisory Committee Member since June 2021, and has been appropriately supervising its management. Thus, the Bank has determined that she will continue to contribute to management supervision as
an Audit and Supervisory Committee Member with an independent standpoint and has appointed her as an
Outside Director serving as an Audit and Supervisory Committee Member.

Audit and Supervisory Committee

2013 orearlier

Board of Directors Audit and Supervisory Committee

9/9

9/9

Appointed Director in June 2023

Officer
Remuneration

Other
Initiatives

Introduced stock option scheme
Abolished retirement benefits for officers

Introduced the performance-linked
stock compensation plan

Revised configuration ratio of fixed
remuneration and variable remuneration

Continued the performance-linked
stock compensation plan

Linked with the achievement status of targets*related
to sustainability management

Revised configuration ratio of fixed
remuneration and variable remuneration
Appointed a CCO (Chief Compliance Officer)
Abolished the Advisor System

Introduced Executive Officer System

Started thefree discussion sessions

Established the Corporate Governance
Guidelines*Reduce CO2 emissions (E) Improve share of females in management (S) Reduce cross-shareholdings (G)Board of Directors configuration
Audit and Supervisory Committee

No. of meetings in FY 2022 13

Independent Outside Directors

5Main matters deliberated in FY 2022
Formulation of audit policy and audit plans
Decision-making regarding the appointment and remuneration of Directors
not serving as Audit and Supervisory Committee Members

Directors

Audit of the contents of proposals to be submitted to the Regular Annual
General Meeting of Shareholders(including 2 female)

Resolution to reappoint Accounting Auditor

15

Internal Directors

10Consensus regarding remuneration, etc. for Accounting Auditor, etc.

Nomination and Remuneration Governance Committee(Voluntary committee)

The Nomination and Remuneration Governance Committee is chaired byan Outside Director and comprises of the President of the Bank, theChairperson of the Audit and Supervisory Committee, and 5 independent
Outside Directors. In principle, it meets at least twice per year as a generalrule (8 meetings held in FY 2022). As an advisory body to the Board of
Directors, the committee deliberates on the following: nomination ofcandidate Directors and dismissal of Directors; nomination and dismissal ofRepresentative Directors; remuneration and other matters concerning
Directors not serving as Audit and Supervisory Committee Members; andother important matters in terms of governance and management. The
Board of Directors is to respect the findings of the committee.

Nomination and Remuneration Governance Committee

No. of meetings in FY 2022 8

Main matters deliberated in FY 2022
Results of the candidate selection survey based on the succession plan
Report on the remuneration scheme for Directors (excluding Directors
serving as Audit and Supervisory Committee Members)
Proposal for new frameworks in FY 2023 (Director candidates, Executive Officer candidates, etc.)
Questionnaire to assess effectiveness of Board of Directors and results
thereof
Report, etc. on proposals for the Long-term Vision and medium-term
management plan, etc.

Free discussions
In addition to discussions at formal meeting bodies such as the Board of
Directors, free discussions have been held since 2021 as an opportunity
to freely and openly exchange opinions with Outside Directors. Direc-

Free discussion sessions

No. of meetings in FY 2022 5

Main themes of FY 2022
Opinion exchange regarding formulation of Long-term Vision

tors, executive officers, general managers, branch general managers, andOpinion exchange regarding formulation of the next medium-term
management planothers from within the Bank participate in discussions from a medium-

Status of Digital Strategy Office and issues, etc.

to long-term perspective. We are gradually increasing the number of
meetings a year, and plan on enriching the content.

37

Th e Hyakujushi Bank, Ltd . Integrated R ep ort 2023

T he H yak ujushi Bank, Ltd . Integrated Rep ort 2023

38

Communication with Stakeholders

Board of Directors and Audit and Supervisory Committee Members (as of July 1, 2023)
Directors (excluding Directors serving as Audit and Supervisory Committee Members)
Apr. 1982 Joined the Bank

Apr. 1982 Joined the Bank

Apr. 1983 Joined the Bank

Apr. 1986 Joined the Bank

Mar. 2006 General Manager, Ritsurin Branch, the Bank

Oct. 2012 Deputy General Manager, Corporate Planning
Division, the Bank

Apr. 2010 General Manager, Ota Branch, the Bank

Apr. 2008 General Manager, Nagoya Branch, the Bank

Apr. 2010 General Manager, Corporate Planning Division,
the Bank

Apr. 2010 General Manager, Business Management
Division, the Bank

Apr. 2012 Executive Officer and General Manager, Kobe
Branch, the Bank

Apr. 2012 Executive Officer and General Manager, Tokyo
Branch andApr. 2014 Managing Executive Officer, the Bank

Apr. 2015 General Manager, Compliance and Legal Affairs
Office, and Deputy General Manager, General
Administration Division, the Bank

Apr. 2016 Director and Senior Managing Executive Officer,
the Bank

Apr. 2014 Managing Executive Officer, the Bank

Representative Director
President

Jun. 2015 Director and Managing Executive Officer, theBank
Apr. 2016 Director and Senior Managing Executive
Officer, the Bank
Apr. 2017 President, the Bank (to present)

Ryohei Kagawa
Representative Director
Director, Deputy President
and CCORepresentative Director
Director and Senior Managing
Executive Officer

Apr. 2021 Director, Deputy President and CCO, the Bank
(to present)

Apr. 1983 Joined the Bank

Apr. 1985 Joined the Bank

Jul. 2007 Deputy General Manager, Tokyo Branch, the Bank

Oct. 2011 Deputy General Manager, Business Management
Division, the Bank

Jul. 2008 Deputy General Manager, Central Business Division,
the Bank

Kiichiro Oyama

Apr. 2019 Director, Senior Managing Executive Officer and
CCO, the Bank

Apr. 2011 General Manager, Hiroshima Branch, the Bank

Apr. 2012 Deputy General Manager, Credit Supervision
Division, the Bank

Apr. 2013 Deputy General Manager, Business Management
Division, the Bank

Apr. 2013 General Manager, Corporate Planning Division,
the Bank

Apr. 2014 Executive Officer and General Manager, Okayama
Branch, the Bank

Apr. 2015 Executive Officer and General Manager,
Corporate Planning Division, the Bank

Apr. 2017 Managing Executive Officer, the Bank

Apr. 2017 Managing Executive Officer, the Bank

Jun. 2017 Director and Managing Executive Officer, the Bank

Jun. 2017 Director and Managing Executive Officer, theBank (to present)

Apr. 2021 Director and Senior Managing Executive Officer, theBank (to present)

Masakazu Toyoshima
Director and Managing
Executive Officer

Kazuhiro Kumihashi
Director (Audit and Supervisory
Committee Member)

Yasuko Yamada
Director (Audit and Supervisory
Committee Member)Part-time/Outside

Apr.1982 Joined the Kagawa Prefectural Government
Apr.2008 Director, General Affairs Concentration Division,
General Affairs Department, Kagawa
Prefectural Government
Apr.2009 Deputy Director, Environmental Policy Division,
Environmental and Forestry Department, and
Deputy Director, Human Rights and Social Integration
Policy Division, General Affairs Department, Kagawa
Prefectural Government
Apr.2012 Director, General Affairs and Education Division, General Affairs Department, and Deputy Director, Human
Rights and Social Integration Policy Division, General
Affairs Department, Kagawa Prefectural Government
Apr.2013 Secretary-General, Kagawa Prefectural University of
Health Sciences
Apr.2014 Deputy Director-General, Health and Welfare
Department, Kagawa
Prefectural Government
Apr.2015 Treasurer and Chief, Accounting Bureau, Kagawa Prefectural Government
Apr.2018 Director, The Kagawa Museum (retired in Mar. 2019)
Jun.2019 Outside Director (Audit and Supervisory Committee
Member), the Bank (to present)

Nov. 2006 Registered as a lawyer

Oct. 2011 General Manager, Himeji Branch, the Bank

Apr. 2011 General Manager, Fukuoka Branch, the Bank

Apr. 2014 General Manager, Takamatsu Branch, the Bank

Sep. 2007 Founded Tomoko Fujimoto Law Firm (topresent)

Apr. 2014 Deputy General Manager, Credit Supervision
Division, the Bank

Apr. 2016 General Manager, Personnel Division, the Bank

Hiroyuki Kurokawa
Director and Managing
Executive Officer

Jun. 2021 Director and Managing Executive Officer, theBank (to present)

Tomoko Fujimoto

Director and Managing
Executive Officer

Director (Audit and Supervisory
Committee Member)Part-time/Outside

Apr. 2015 General Manager, Matsuyama Branch, the Bank

Oct. 2013 General Manager, Akashi Branch, the Bank

Apr. 2017 General Manager, Kobe Branch, the Bank

Apr. 2016 Assistant General Manager, Credit Supervision
Division, the Bank
Apr. 2018 General Manager, Executive Secretariat Office, theBankTokyo Public Affairs, the Bank
Apr. 2021 Executive Officer and General Manager, Business
Strategy Division, the Bank

Apr. 2020 General Manager, Business Strategy Division, theBank

Apr. 2022 Managing Executive Officer, the Bank

Apr. 2021 Executive Officer and General Manager, Corporate
Planning Division, the Bank

Jun. 2022 Director and Managing Executive Officer, the Bank
(to present)

Director and Managing
Executive Officer

Th e Hyakujushi Bank, Ltd . Integrated R ep ort 2023

Masashi Mori
Director and Managing
Executive Officer

Apr. 2022 Managing Executive Officer, the Bank
Jun. 2022 Director and Managing Executive Officer, the Bank
(to present)

Tatsuya Sakuma
Director (Audit and Supervisory Committee Member)

Nobuyuki Souda
Director (Audit and Supervisory
Committee Member)Part-time/Outside

Nov. 2019 Takamatsu City Environment Council

Hideaki Kanamoto

Apr. 1989 Joined the Bank

Apr. 2021 Executive Officer and General Manager,
Operations Supervision Division, the Bank

Apr. 2019 Chairperson, Kagawa Prefecture Dispute
Coordinating Committee (Kagawa Labor
Bureau)Apr. 2021 Managing Executive Officer, the Bank

Apr. 1990 Joined the Bank

Apr. 2017 Executive Officer and General Manager,
Corporate Planning Division, the Bank

Apr. 2015 Vice Chairperson, Kagawa Bar Association(retired in Mar. 2016)

Apr. 2018 Executive Officer and General Manager, Personnel Division, the Bank

Apr. 2019 Executive Officer and General Manager, Tokyo
Branch and General Manager in charge of

39

Jun. 2021 Director and Audit and Supervisory Committee
Member, the Bank (to present)

Apr. 1985 Joined the Bank

Jun. 2019 Director and Managing Executive Officer, the Bank
(to present)

Kazuhito Tada

Apr. 2021 Managing Executive Officer and Advisor to
Auditing Division, the Bank

Jan. 2009 Deputy General Manager, Tokyo Branch, the Bank

Apr. 2019 Managing Executive Officer, the Bank

Apr. 2013 General Manager, Executive Secretariat Office,the Bank

Apr. 2018 Managing Executive Officer and General
Manager, Auditing Division, the Bank

Apr. 1986 Joined the Bank

Apr. 2016 Executive Officer and General Manager, Tokyo
Branch and General Manager in charge of Tokyo
Public Affairs, the Bank

Apr. 2012 Deputy General Manager, Corporate Planning
Division, the Bank

Apr. 2016 Executive Officer, General Manager, General
Administration Division, and General Manager,
Compliance and Legal Affairs Office, the Bank

Jun. 2014 Director and Managing Executive Officer, theBank

General Manager in charge of Tokyo Public
Affairs, the Bank

Yujiro Ayada

Directors serving as Audit and Supervisory Committee Members

Yasushi Marumori
Director (Audit and Supervisory
Committee Member)Part-time/Outside

Apr. 2020 Trustee and Vice President (responsible forinternal control and diversity promotion),
Kagawa University (part-time; to present)
Jun. 2021 Outside Director (Audit and Supervisory
Committee Member), the Bank
Nov. 2021 Chairperson, Kagawa Local Labour Council(Kagawa Labor Bureau) (part-time; to present)

Noriyuki Konishi
Director (Audit and Supervisory
Committee Member)Part-time/Outside

Apr. 2023 Managing Executive Officer and Advisor to
Auditing Division, the Bank
Jun. 2023 Director and Audit and Supervisory Committee
Member, the Bank (to present)

Apr. 1986 Joined Nippon Life Insurance Company
Mar. 2014 Executive Officer and General Manager, Affiliated Business Dept.,
Nippon Life Insurance Company
Mar. 2016 Executive Officer, General Manager, Affiliated Business Dept. andAdviser (Corporate Planning Dept.), Nippon Life Insurance
Company
Mar. 2017 Executive Officer, Deputy General Manager, Agency Marketing
Headquarters, and Deputy General Manager, Financial Institution
Relations Headquarters, Nippon Life Insurance Company
Mar. 2018 Managing Executive Officer and General Manager, Financial
Institution Relations Headquarters, Nippon Life Insurance
Company
Jul. 2018 Director, Managing Executive Officer (Head of Agency
Management Sector, Financial Institution Relations Sector, andMarketing Support Sector [relating to agency management andfinancial institution relations]), and General Manager, Financial
Institution Relations Headquarters, Nippon Life Insurance
Company
Mar. 2019 Director, Nippon Life Insurance Company (retired in Jul. 2019)
Apr. 2019 Representative Director and Executive Vice President,Corporate-Pension Business Service Co., Ltd.
Jun. 2019 Outside Director (Audit and Supervisory Committee Member),the Bank
Apr. 2020 Representative Director and President, Corporate-Pension
Business Service Co., Ltd. (to present)
Jun. 2020 Outside Audit & Supervisory Board Member, Taikisha Ltd. (topresent)

Apr. 2004 Professor, Faculty of Economics and Concurrent
Professor, School of Law, Okayama University
Apr. 2008 Head of Management Sciences, Graduate Schoolof Humanities and Social Sciences, Okayama
University
Apr. 2009 Professor, Graduate School of Professional
Accountancy, Aoyama Gakuin University
Professional Graduate Schools (to present)
Apr. 2012 Visiting Senior Scholar, Research Institute of
Capital Formation, Development Bank of Japan(to present)
Apr. 2016 Head, Graduate School of Professional Accountancy, Aoyama Gakuin University Professional
Graduate Schools
Apr. 2018 Trustee, Aoyama Gakuin School Corporation (topresent)
Dec. 2019 Vice President, Aoyama Gakuin University (topresent)
Oct. 2021 Chairperson, Japanese Association for International Accounting Studies (to present)
May 2022 Auditor, Japan Association of Corporate Directors(part-time) (to present)
Jun. 2022 Outside Director (Audit and Supervisory
Committee Member), the Bank (to present)

Apr.1981 Joined The Mitsubishi Bank, Ltd. (currently, MUFG
Bank, Ltd.)
Apr.2008 Executive Officer, The Bank of Tokyo-Mitsubishi UFJ,
Ltd. (currently, MUFG Bank)
May2011 Managing Executive Officer, The Bank of Tokyo-Mitsubishi UFJ, Ltd. (retired in Jun. 2012)
Jun.2012 Director & Senior Executive Vice President, Mitsubishi
UFJ Research and Consulting Co., Ltd.
Jun.2013 Outside Corporate Auditor, The Nanto Bank, Ltd.
(retired in Jun. 2015)
Dec.2014 Director, Mitsubishi UFJ Research and Consulting Co.,
Ltd. (retired in Mar. 2015)
Mar.2015 Full-time Audit & Supervisory Board Member, Asahi
Glass Co., Ltd. (currently, AGC Inc.) (retired in Mar.
2019)
Jun.2019 Vice Chairman (Representative Director), The
Mitsubishi Economic Research Institute (to present)
Jun.2019 Outside Audit & Supervisory Board Member, TOTO
LTD.
Jun.2022 Outside Director (Audit and Supervisory Committee
Member), TOTO LTD. (to present)
Jun.2023 Outside Director (Audit and Supervisory Committee
Member), the Bank (to present)

T he H yak ujushi Bank, Ltd . Integrated Rep ort 2023

40

Communication with Stakeholders

Enhancement of Shareholder Value

Outside Director Interview

Nobuyuki Souda Outside Director

Q1

participation, the achievements of the Bank’s initiatives are evident throughthe acquisition of “L-boshi” and “Platinum Kurumin Plus,” as well as thehigh share of females in management. In addition, efforts toward diverse
work styles, such as the establishment of a side job system and career-return system, are making further progress.
I believe that the key issues for the future are the systematic development and career recruitment of a diverse range of highly specialized human resources in areas such as digital and risk management, and thedevelopment of a system that encourages each and every employee togrow autonomously and take on challenges. Regional financial institutions
have always attracted people who wish to see their communities grow andlocal residents lead happy lives. The Bank’s new medium-term management plan defines HRX (Human Resources Transformation) as one of its
growth engines, and I truly believe if employees with this kind of mindset
strive for autonomous growth, sincerely listen to the voice of the customer, contemplate matters together, and boldly challenge themselves to takeon initiatives that will make the community better — in other words, “HRX
Action” — it will lead to “lively human capital” who will create an evenmore openhearted organizational culture at the Bank and be the powerfuldriving force of the Bank’s sustainable growth.

Please tell us your assessment of the Bank’s
corporate governance.

I believe with the shift to a Company with an Audit and Supervisory Committee, establishment of a Nomination and Remuneration Governance Committee

Shareholder returns
The Bank sets our dividend distribution policy by comprehensively considering all factors such as the sufficiency of retained earnings, profit status, andmanagement environment, while keeping stable shareholder returns in mind.
For the fiscal year ended Mar. 31, 2021 For the fiscal year ended Mar. 31, 2022 For the fiscal year ended Mar. 31, 2023
Total annual dividends (billions of yen)
Dividend per
share
(Yen)

2.0

2.0

2.1

Interim

40 yen30 yen35 yenYear-end

30 yen40 yen40 yenAnnual70 yen70 yen75 yenPurchase of treasury stock (billions of yen)

−

1.0

0.6*

Shareholder returns (billions of yen)

2.0

3.0

2.7

Consolidated profit (billions of yen)

2.5

11.7

9.1

Dividend payout ratio

80.5%

17.6%

23.8%

Shareholder return ratio

80.5%

26.2%

30.2%

*The amount of treasury stock repurchased for the fiscal year ended March 31, 2023 is based on the case where shares are repurchased at the maximum
amount of the treasury stock repurchase limit announced on May 11, 2023.
[Details of acquisition quota] Maximum number of shares to be repurchased: 400,000 shares; Maximum repurchase amount: 600 million yen; Repurchaseperiod: June 12, 2023 to August 31, 2023

Proactive information disclosure
The Bank strives to enhance its recognition and reputation through the timely and appropriate provision of information to shareholders, customers andQ3

Please tell us about the role that the Hyakujushi Bank,
as a regional financial institution, should play andwhat you expect from the Group in the future.

investors.
<IR Calendar>• Financial statement• Q1 financial statement• Interim financial statement• Q3 financial statement

chaired by an Outside Director, appointment of a CCO, etc., the Bank’s governance system is steadily growing stronger.The members of the Board of Direc-

Regional financial institutions have strongly supported local economies bytors have diverse careers and discuss topics with vitality, so I can really sense“walking alongside the community,” and I believe that no matter how soci-that the effectiveness is improving.What I feel has made particular progress is

ety changes in the future, the source of corporate value will remain thethe revitalization of communication among the various levels of executives,same. That is why I really feel the “Create Local Communities withmanagers, and staff. Opportunities and mechanisms for dialogue with various

Well-being” stated in the Bank’s Long-term Vision 2030 clearly conveys

layers are also provided for Outside Directors, and constructive discussions are

our mission. Personally, I really like the accompanying statement of “to-held as they share their awareness of actual situations.

gether with local community members.”

June

July

• Regular Annual General
Meeting of Shareholders• IR for institutional
investors• Issue mini-disclosure
magazine

August September October November December January February March• IR for local customers• Issue Integrated Report(Disclosure Magazine,
informative and reporting
editions)• Publish Annual Report• Issue interim disclosure magazine• Issue interim mini-disclosure magazine*IR for individual investors is held as needed.

Shareholder Benefit Program

As the social environment continues to change, business strategies and profit

I believe that local economies will follow their own unique develop-

structures must become more sophisticated from the perspective of sustainabil-ment paths in the future, taking advantage of their characteristics and re-ity management, and a high level of governance that balances both defense andsources. In such a situation, both companies and individuals need a partner

offense tactics is essential. Just as a car needs a monitor that can accurately grasp

who can accompany them in their business and daily life and help generate

a variety of information and a brake that is effective in order for the driver towell-being. In a sense, we want to aim for becoming like a “family doctor,”

step on the gas pedal with confidence, it will become even more important for

because this perfectly exemplifies how we must be a company chosen by

Shareholders who have had continuous ownership* of 100 or more shares (one unit) for at least one year are eligible for the program, with March 31 of eachbanks to have a strong governance structure that can control risks, including

our customers as a truly reliable consulting partner.

year as the record date.

upside risks, in a timely and swift manner.

Q2

Please tell us your assessment of the Bank’s
human capital management and whatchallenges you see for the future.

There is still a clear gap between the “To-Be” (vision) and “As-Is” (cur-The management philosophy that regards human resources as capital andvalues employees has always existed in Japanese companies, and I can sensea good corporate culture of great respect for employees throughout the
Bank as well. Particularly with regard to promoting women’s active

Th e Hyakujushi Bank, Ltd . Integrated R ep ort 2023

As a way of expressing our appreciation to our shareholders for their ongoing support, increasing the attractiveness of investing in our shares, and encouraging
more people to hold our shares over the long term, the Bank has introduced a shareholder benefit program.
Eligible shareholders

Description of benefit program

rent status) of the Bank that we have clarified in our Long-term Vision, but

Shareholders can choose their favorite item according to the number of shares they own from an exclusive catalog listing

it is precisely this gap that is our opportunity for further growth and evo-

local specialties of Kagawa Prefecture as well as donation courses for social contribution activities.

lution, and I sense great potential in our future as the entire Hyakujushi
Group unites and moves toward the next stage. Going forward, I will continue to supervise and offer advice from an objective position and support
everyone at the Hyakujushi Bank as we aim to create a society with

41

April Maywell-being together with local community members.

This exclusive catalog is published every June.
No. of shares owned

Exclusive catalog

100 shares or more but less than 500 shares

2,500 yen equivalent

500 shares or more

5,000 yen equivalent* The term “continuous ownership for one year or more” means that the same shareholder number is recorded in the shareholder
registry as of the record date (March 31) and March 31 and September 30 of the previous year, and that the shareholding of 100
shares or more is recorded consecutively in the shareholder registry.

T he H yak ujushi Bank, Ltd . Integrated Rep ort 2023

42

Risk Management
While the growing globalization of economic and financial affairs, together with the increasing sophisticationof financial technology, are creating new business opportunities for financial institutions, the risks faced byfinancial institutions are also becoming more varied and complex. We regard sophisticated risk management
techniques as being of primary importance for maintaining the soundness of a bank’s business, and we also recognize the importance of appropriate responses to changing customer needs. To achieve these goals, we makeevery effort to properly recognize, assess and manage risks.
Efforts toward Comprehensive Risk Management

Basic concepts of risk management

Risk Management Framework

Banking operations are facing a variety of risks, including
credit risk, market risk, liquidity risk, and operational risk.
We apply proper management to each risk depending on thecharacteristics of the operation and the risk. By ascertaining
risks in a comprehensive manner and comparing them to ourlevel of capital adequacy, we strive to achieve soundness andstability in our overall management and also to improve theefficiency of our operations: in other words, to practice integrated risk management.
Moreover, our basic policies on overall and specific risk
management are determined by the Board of Directors foreach financial year, and through implementation of measuresfor each category of risk in accordance with these policies, we
strive to achieve sophisticated risk management on an ongoingbasis.

We have defined the types of risks to manage in our risk
management rules, drawn up by the Board of Directors. We
then determine the category to which each risk belongs, anddecide the divisions responsible for managing each category,along with management rules. We have also established an
independent Risk Control Division to integrate risk management and carry out comprehensive management.
Additionally, through the establishment of the Risk Management Committee and subcommittees for each risk category as organizations under the Committee, andcross-sectional consultations on matters regarding risk management on a regular basis, we have put in place a highlysophisticated framework for the maintenance and management of risk.

General Meeting of Shareholders
Board of Directors
Risk Management Committee
Overall Risk
Control Divisions

Risk Control Division

Credit Risk Management
Subcommittee

Market Risk Management
Subcommittee

Conduct Risk*

Operational Risk
Management Subcommittee
Climate Change Risk**The Bank will consider the impact of these risks in terms of their close association with the risks below.

Risk Management
DivisionsCredit Risk

Market Risk

Liquidity Risk

Operational Risk

Risk Control Division

Risk Control Division

Treasury andInternational Division

Risk Control Division

Each division, office, branch
Subsidiaries

43

Th e Hyakujushi Bank, Ltd . Integrated Rep ort 2023

Risk Classification

Outline of Risks

Auditing
Division

Division in Charge

Credit Risk

Risk of reduction in the value of assets or their loss altogether due to deteriorating financial
position at customers to which the Bank has granted credit

Market Risk

Risk of suffering loss due to volatility of financial assets and liabilities resulting from financial
market fluctuation

Interest Rate Risk

Risk of reduced profits or total losses due to changes in interest rates arising because of discrepancies in interest rates on assets and liabilities, and in instrument maturities

Foreign Exchange Risk

Risk of suffering loss due to a decrease in the yen-converted amount of foreign currency denominated assets and liabilities due to exchange market fluctuations

Price Volatility Risk

Risk of a fall in asset values due to changes in the value of securities

Risk Control Division

Risk Control Division

Liquidity Risk

Risk of suffering loss from difficulty in procuring necessary funds or abnormally high interest raterequirements in securing funds, due to causes such as unforeseen outflows of funding or turmoil
in financial markets

Treasury andInternational Division

Operational Risk

Risk of suffering loss due to inappropriate or malfunctioning internal processes, personnel conduct or IT systems, or external factors

Risk Control Division

Process Risk

Risk of suffering loss due to or by executives’ or employees’ failure to perform duties, or to
improper outside intervention

System Risk

Risk of suffering loss due to partial or complete system breakdown, malfunction, system deficiency, or improper use of the computer system

Legal Risk

Risk of losses due to the violation of laws and ordinances and contracts and signing of inappropriate contractual commitments

Compliance Management
Division

Human Resources Risk

Risk of losses caused by labor malpractice, workplace safety and environmental hygiene deficiencies and risk of employer liability in the event of illegal behavior by Bank employees

Personnel Division

Tangible Asset Risk

Risk of suffering loss due to damage to assets resulting from disaster or defective asset
management

General Administration
Division

Operations Supervision
Division

Conduct Risk

Risk of damage to the Bank’s credibility as a result of behavior or actions by the Bank or its officers or employees that fail to meetthe fair and reasonable expectations of the Bank’s customers and counterparties, employees, society in general, shareholders, orothers, and cause losses to these stakeholders or damages their interests

Climate Change Risk

Risk of impact on the soundness and stability of business management from the physical risks or transition risks associated withclimate change, materializing in the form of other risks

Practice of comprehensive risk management
We have introduced a framework for risk-adjusted capital
allocation in which the credit and market risks inherent inbanking operations are quantified; capital corresponding torisk amount (risk-adjusted capital) is allocated for each risk
category, and risks are controlled within risk-adjusted capital,
to earn revenues that correspond to the risks while keeping
overall risks within our management capacity. Under thisframework, based on the amount of equity capital (core capital) less the operational risk equivalent amount, risk-adjusted
capital to cover credit and market risk is allocated each halfyear and the changes in risk trends and the risk-return balance
are monitored, enabling ascertainment and management ofrisk-adjusted profitability and efficiency.

Risk Management Framework

Audit and Supervisory Committee

Risks Subject to Management

In addition, stress tests are conducted on a regular basis andthe impact that major changes in the economic and market
environments have on Bank profits and management stability
is monitored, and the management soundness is also assessed.

Definitions
Core capital:
Equity capital established under Basel III (domestic standard)
Operational risk equivalent amount:
Calculated using the Basic Indicator Approach
Return on risk-adjusted capital (RORAC):
Profit and loss indicator, arrived at by deducting expenses, deemed allowancecosts from gross operating profits

Risk Audit System
In order to enhance and strengthen risk management, it isnecessary to verify whether the risk management system isfunctioning effectively. The Audit Department periodically
audits the operations of the Bank’s head office, subsidiaries
and branches to verify the adequacy of the risk management
system.

In this way, the Bank is committed to the development of arisk management system that will enable us to manage a variety of risks appropriately and to identify and address issues at
an early stage in order to gain the trust of our customers.

T he H yak ujushi Bank, Ltd . Integrated Rep ort 2023

44

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Consolidated Financial Highlights

Compliance System

Thousands of
U.S. dollars(Note 1)

Basic Policy
Regional financial institutions have highly public and social nature and bear the social mission of contributing to the development of asound regional economy. The Bank strives to practice thorough compliance as one of the top priorities in its management in order to
win trust from customers, local residents, and shareholders. Specifically, we ensure that each officer and employee execute their duties
in compliance with laws, regulations, and other rules, while they take actions based on high level of ethics.

Compliance System

Compliance System

At the Bank, under the oversight of CCO (Chief Compliance
Officer), who has the highest responsibility for compliance, theCompliance Management Division centrally manages all compliance-related issues. We also appoint a manager or a person in
charge at each department, office, and branch to put into practice and instill compliance, while aiming to spread complianceculture by checking the compliance status with a checklist andconducting study sessions. Furthermore, the Compliance Committee, chaired by the CCO, holds cross-organizational discussions to improve and upgrade the system.

Audit and Supervisory
Committee

Board of Directors

Compliance Committee(Chairman: CCO)

Executive Committee

Instructions

Education

ReportConsultation

Head Office, Branches

In response to stern demands from the international community, the Bank regards the prevention of money laundering as
one of the important issues in its management strategy andother relevant policies, and strives to enhance its anti-money
laundering system. Furthermore, we have in place an antimoney laundering policy and disclose it on our website.

The Hyakujushi Bank, Ltd. and its consolidated subsidiaries(hereinafter collectively the “Group”) strongly recognizes
the importance of measures to prevent money launderingand terrorism financing (hereinafter, “money laundering”).
In response to stern demands from the international community, the Group regards the prevention of money laundering as one of the important issues in its management
strategy and other relevant policies, and will build an internal control system as described below to conduct theGroup’s business on that basis.

Customer management policy• To protect our customers from money laundering, theGroup will determine and implement risk reduction measures to be taken and appropriately manage customers, bycreating a customer acceptance policy, as well as investigating and analyzing customer information and transaction
details.

Organizational structure• The Group will build a centralized management system bydesignating a person and a department responsible foranti-money laundering measures. In addition, we will
advance our measures across the organization through the
involvement of management.
Risk-based approach• The Group will identify and assess its own risks pertaining tomoney laundering, and take measures commensurate withthe risks in order to effectively reduce them.

45

Th e Hyakujushi Bank, Ltd . Integrated R ep ort 2023

2023

2022

2021

2020

2019

2023

¥84,949
71,73913,2093,056
979¥73,147
58,10815,0391,705
1,631¥68,989
63,877
5,111
3,402
(855)

¥76,895
65,928
10,9663,518(266)¥77,292
68,477
8,814
3,565
(450)

$636,179
537,250
98,921
22,886
7,331

—
9,172

—
11,702

—
2,565

—
7,715

115
5,584

—
68,688AT YEAR-END:
Loans and bills discounted
Securities and trading account securities
Foreign exchange assets
Other assets
Total assets

3,362,245
1,044,674
19,938
1,382,497
5,809,359

3,159,889
1,274,877
6,236
1,306,258
5,747,266

3,035,782
1,272,956
9,429
1,057,396
5,375,569

2,847,316
1,259,734
9,793
837,097
4,953,946

2,825,869
1,046,956
5,750
1,017,044
4,895,624

25,179,697
7,823,515
149,314
10,353,456
43,506,021

Deposits and negotiable certificates ofdeposit
Foreign exchange liabilities
Other liabilities
Total liabilities

4,780,670
248
747,336
5,528,260

4,632,815
321
829,786
5,462,929

4,525,292
1,341
557,229
5,083,870

4,155,267
296
548,5444,704,115

4,044,109
352
564,580
4,609,048

35,802,216
1,857
5,596,764
41,400,883

37,32230,486
187,908(513)
255,204

37,32230,486
183,444(2,030)249,223

37,32230,486
173,620(2,071)
239,357

37,32230,486173,374(1,999)239,184

37,32230,486167,615(2,041)
233,382279,502228,308
1,407,234(3,841)
1,911,210

14,66925,891

42,59515,04847,822

109,855

138
7,952
3,113

2,611
7,927
(1,339)

2,720
7,928
(945)

(7,447)
7,976(4,971)(1,121)
8,540(2,109)1,033
59,552
23,31325,87321—
281,098¥5,809,359

35,091
21—
284,336¥5,747,266

52,29941—
291,699¥5,375,569

10,60541—249,831¥4,953,946

53,131
61—
286,576¥4,895,624

193,761
157—
2,105,129$43,506,021

FOR THE YEAR:
Total income
Total expenses
Profit before income taxes
Income taxes-current
Income taxes-deferred
Profit attributable to non-controllinginterests
Profit attributable to owners of parent

Compliance Management Division

Anti-Money Laundering Policy

Operation policy• The Group will comply with anti-money laundering laws
and regulations.

Millions of yen
For the years ended or as of March 31

Notification of suspicious transactions• The Group will build a system utilizing IT systems andother tools to accurately detect, monitor, and analyze suspicious customers and transactions, while notifying authorities without delay in case of suspected money laundering.
Management of correspondent banks• The Group will collect information on correspondentbanks, evaluate it properly, and take appropriate measuresaccording to risks. In addition, we will cut off relationships
with fictitious banks that have no actual status.
Training for officers and employees• The Group will provide appropriate and continuous training to all officers and employees to deepen their professional understanding of anti-money laundering as a wholeorganization.
Internal audit• The Group’s internal audit department with an independent standpoint, conducts regular audits on the status of theGroup’s anti-money laundering and other preventive measures, and will improve the Group’s system based on theaudits results.

Common stock
Capital surplus
Retained earnings
Treasury stock
Total stockholders’ equity
Net unrealized gains on other securities,
net of taxes
Net deferred gains (losses) on hedging
instruments, net of taxes
Revaluation reserve for landRemeasurements of defined benefit plans
Total accumulated other comprehensive
incomeShare subscription rights
Non-controlling interests
Total net assets
Total liabilities and net assets

Notes: 1. Yen figures have been rounded, omitting numbers below the million mark, in accordance with the Japanese Commercial Code and the common accounting practice inJapan.
2. U.S. dollar amounts represent translations of Japanese yen at the exchange rate of ¥133.53 to US$1.00 on March 31, 2023.

Attention regarding forward-looking statements
The reader is advised that this report contains forward-looking statements, which are not statements of historical fact but constituteestimates or projections based on facts known to the Bank’s management as of the time of writing. Actual results may therefore differ
substantially from such statements.

T he H yak ujushi Bank, Ltd . Integrated Rep ort 2023

46

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Consolidated Balance Sheets

Consolidated Statements of Income
Millions of yen

As of March 31

Assets:Cash and due from banks
Call loans and bills bought
Monetary claims bought
Trading account securities
Securities (Notes 6, 8, 9 and 10)
Loans and bills discounted (Notes 8, 10 and 11)
Foreign exchange assets (Note 8)
Lease receivables and investments in leases
Other assets (Notes 8 and 10)
Tangible fixed assets (Notes 13 and 14)
Intangible fixed assets
Net defined benefit asset
Deferred tax assets
Customers’ liabilities for acceptances and guarantees (Note 8)
Reserve for possible loan losses
Total assets

2022

2023

¥1,115,997¥9,73028,445—
1,274,877
3,159,889
6,236
21,26575,424
37,134
4,654
8,276
737
22,881(18,285)¥5,747,266¥1,197,854—
34,9509
1,044,665
3,362,245
19,93818,67770,67936,867
4,406
15,948732
19,898(17,514)¥5,809,359

Liabilities and net assets
Liabilities:
Deposits (Note 10)
Negotiable certificates of deposit
Call money and bills soldPayables under securities lending transactions (Note 10)
Borrowed money (Notes 10 and 30)
Foreign exchange liabilities
Other liabilities
Reserve for bonuses for directors and corporate auditors
Net defined benefit liability
Reserve for retirement benefits for directors and corporate auditors
Reserve for claims on dormant accounts
Reserve for contingent liabilities
Reserve for stock-based compensation plan
Deferred tax liabilities
Deferred tax liability for land revaluation (Note 14)
Acceptance and guarantees
Total liabilities
Net assets :Stockholders’ equity:
Common stock
Capital surplus
Retained earnings
Treasury stock
Total stockholders’ equity
Accumulated other comprehensive income:Net unrealized gains on available-for-sale securities, net of taxes
Net deferred gains on hedging instruments, net of taxes
Revaluation reserve for land (Note 14)
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Share subscription rights
Total net assets
Total liabilities and net assets$8,970,673—
261,73867
7,823,447
25,179,697
149,314
139,871529,311
276,095
32,996
119,433
5,481
149,015(131,161)$43,506,021

2023

2022

Thousands of U.S. dollars(Note 1)2023

¥4,696,403
84,267
20,360—624,432
248
73,773
49
248
38
163
69
181
3,048
5,077
19,8985,528,260¥4,558,239
74,57623,254
12,696700,615
321
58,400
57
208
39
125
107
147
6,180
5,077
22,881
5,462,929$35,171,145
631,071
152,475—
4,676,342
1,857
552,482
366
1,857
284
1,220
516
1,355
22,82638,021
149,015
41,400,883

37,32230,486
187,908(513)
255,204

37,32230,486
183,444(2,030)249,223

279,502228,308
1,407,234(3,841)
1,911,210

14,669
138
7,952
3,113
25,87321
281,098¥5,809,359

25,891
2,611
7,927(1,339)35,091
21
284,336¥5,747,266

109,855
1,033
59,552
23,313
193,761
157
2,105,129$43,506,021
U.S. dollars(Note 1)
2023

Millions of yen
As of March 31

Thousands of U.S. dollars(Note 1)
2023

Millions of yen
For the years ended March 31

Income:Interest on loans and bills discounted
Interest and dividends on securities
Other interest income
Fees and commissions
Other operating income
Other income (Note 17)
Total income
Expenses:
Interest on deposits and negotiable certificates of deposit
Interest on call money and bills soldInterest on borrowed money
Other interest expenses
Fees and commissions
Other operating expenses
General and administrative expenses (Note 18)
Other expenses (Note 19)
Total expenses
Profit before income taxes
Income taxes :Current
Deferred
Subtotal
ProfitProfit attributable to owners of parent

Thousands of U.S. dollars(Note 1)
2023

2023

2022

¥32,898
13,577
1,389
12,176
13,04011,86584,949¥26,513
13,167
1,454
12,191
7,361
12,457
73,147$246,371
101,677
10,402
91,18597,65588,856636,179

3,488
583
1,861
1,971
3,144
18,03634,2158,436
71,73913,209

524
94
160
728
3,052
7,931
35,204
10,411
58,10815,03926,121
4,366
13,936
14,76023,545135,070
256,234
63,176537,250
98,921

3,056
979
4,036
9,172
¥9,172

1,705
1,631
3,336
11,702¥11,70222,886
7,331
30,22568,688¥68,688
U.S. dollars(Note 1)
2023

Yen
For the years ended March 31

2023

2022

Per share
Basic earnings¥315.57¥396.83$2.363

See accompanying notes to consolidated financial statements.

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Yen
As of March 31

2023

2022

Per share
Net assets¥9,719.34¥9,639.96

Consolidated Statements of Comprehensive Income
Millions of yen

Thousands of U.S. dollars(Note 1)2023

For the years ended March 31

2023

2022

ProfitOther comprehensive loss (Note 20)
Net unrealized losses on available-for-sale securities, net of taxes
Net deferred losses on hedging instruments, net of taxes
Remeasurements of defined benefit plans
Total comprehensive loss
Total comprehensive loss attributable to:
Owners of parent¥ 9,172(9,242)(11,222)(2,472)4,452¥   (70)¥ 11,702(17,207)(16,703)
(109)
(394)
¥ (5,504)$ 68,688(69,212)(84,041)(18,512)33,340$   (524)¥   (70)¥ (5,504)$   (524)

See accompanying notes to consolidated financial statements.

$72.787

See accompanying notes to consolidated financial statements.

47

Th e Hyakujushi Bank, Ltd . Integrated R ep ort 2023

T he H yak ujushi Bank, Ltd . Integrated Rep ort 2023

48

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Consolidated Statements of Changes in Net Assets

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Consolidated Statements of Changes in Net Assets

Millions of yen
Stockholders’ equity
For the years ended March 31
Balance as of March 31, 2021
Cumulative effects of changes in accounting
policies
Restated balance

Thousands of U.S. dollars (Note 1)

Commonstock

CapitalsurplusRetainedearnings

Treasury stock

Total
stockholders’equity¥37,322¥30,486¥173,620¥(2,071)¥239,357

—

—

(97)

—

(97)

¥37,322¥30,486¥173,523¥(2,071)¥239,260

Stockholders’ equity

Dividends from surplus
Purchase of treasury stock
Disposal of treasury stock
Transfer from revaluation reserve for land
Net changes in items other than stockholders’equityTotal changes in items during the period
Balance as of March 31, 2022

Commonstock

CapitalsurplusRetainedearnings

Balance as of March 31, 2022

$279,502$228,308$1,373,803

Transfer from revaluation reserve for land

—
—
—
—
—
—

—
—
—
—
—
—

(16,460)
68,688—(0)(18,617)(179)——(7,496)232
18,617—(16,460)
68,688(7,496)
232
—
(179)

Net changes in items other than stockholders’equity

—

—

—

—

—

—
$279,502—$228,308

33,423$1,407,234

Dividends from surplus
Profit attributable to owners of parent

—
—
—
—
—

—
—
—
—
—

(1,774)
11,702
—
(7)
0

—
—
(1)
43
—

(1,774)
11,702
(1)
36
0

—

—

—

—

—

—
¥37,322—¥30,486

9,921¥183,44441¥(2,030)

9,963¥249,223

—
—
—
—

—
—
—
—

(2,198)
9,172
—
(0)

—
—
(1,001)31(2,198)9,172(1,001)31(2,486)

2,486

—

—

—

(24)

—

(24)

—

—

—

—

—

—
¥37,322—¥30,486

4,463¥187,908

1,516¥(513)

5,980¥255,204

Treasury stock$(15,202) $1,866,419

Changes in items during the period

Changes in items during the period
Profit attributable to owners of parent

Total
stockholders’equityFor the years ended March 31

Purchase of treasury stock
Disposal of treasury stock
Cancellation of treasury stock

Total changes in items during the period
Balance as of March 31, 2023

11,35344,783$(3,841) $1,911,210

Changes in items during the period
Dividends from surplus
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock
Cancellation of treasury stock
Transfer from revaluation reserve for land
Net changes in items other than stockholders’equityTotal changes in items during the period
Balance as of March 31, 2023

Thousands of U.S. dollars (Note 1)
Accumulated other comprehensive income

For the years ended March 31

Net unrealized
gains onavailable-forsale securities,
net of taxes

Net deferredgains onhedging
instruments,
net of taxes

Revaluation
reserve forland

Balance as of March 31, 2022

$193,896$19,553

—
—
—
—
—
—

Remeasurementsof defined benefit
plans

Total
accumulated
othercomprehensive
incomeSharesubscription
rightsTotal net
assets$59,364$(10,027)$262,794$157$2,129,379

—
—
—
—
—
—

—
—
—
—
—
—

—
—
—
—
—
—

—
—
—
—
—
—

—
—
—
—
—
—

(16,460)
68,688(7,496)
232
—
(179)

(84,041)(18,512)

179

33,340(69,033)—(69,033)(84,041)$109,855(18,512)$1,033

179$59,552

33,340$23,313(69,033)$193,761—$157(24,249)$2,105,129

Changes in items during the period
Dividends from surplus
Profit attributable to owners of parent
Purchase of treasury stock

For the years ended March 31
Balance as of March 31, 2021
Cumulative effects of changes in accounting
policies
Restated balance

Net unrealized
gains onavailable-forsale securities,
net of taxes

Millions of yen
Accumulated other comprehensive income
Total
Net deferred
accumulated
gains onRemeasurements
otherhedging
Revaluationof defined benefit comprehensive
instruments,
reserve forplans
incomenet of taxes
land

Disposal of treasury stock
Cancellation of treasury stock
Transfer from revaluation reserve for land
Sharesubscription
rightsTotal net
assets¥42,595¥2,720¥7,928¥  (945)¥52,299¥41¥291,699

—

4

—

—

4

—

(93)

¥42,595¥2,724¥7,928¥  (945)¥52,303¥41¥291,605

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

(1,774)
11,702(1)36
0(16,703)(16,703)¥25,891

(113)
(113)
¥2,611(0)(0)¥7,927(394)(394)¥(1,339)(17,212)(17,212)¥35,091

(19)
(19)
¥21

(17,231)(7,268)¥284,336

—
—
—
—
—
—

—
—
—
—
—
—

—
—
—
—
—
—

—
—
—
—
—
—

—
—
—
—
—
—

—
—
—
—
—
—

(2,198)9,172(1,001)
31—(24)(11,222)(11,222)¥14,669(2,472)(2,472)¥  13824
24¥7,952

4,452
4,452¥ 3,113(9,218)(9,218)¥25,873——¥21(9,218)(3,238)¥281,098

Net changes in items other than stockholders’equityTotal changes in items during the period
Balance as of March 31, 2023

See accompanying notes to consolidated financial statements.

Changes in items during the period
Dividends from surplus
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock
Transfer from revaluation reserve for land
Net changes in items other than stockholders’equityTotal changes in items during the period
Balance as of March 31, 2022
Changes in items during the period
Dividends from surplus
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock
Cancellation of treasury stock
Transfer from revaluation reserve for land
Net changes in items other than stockholders’equityTotal changes in items during the period
Balance as of March 31, 2023

49

Th e Hyakujushi Bank, Ltd . Integrated R ep ort 2023

T he H yak ujushi Bank, Ltd . Integrated Rep ort 2023

50

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

2023

2022

Thousands of U.S. dollars(Note 1)2023¥   13,209
3,129
63
(770)
(7)
(1,274)
39
(1)
37
(37)
33
(47,866)
7,907
14,736(16,175)(380)(9)(202,355)
138,163
9,691(76,183)(10,186)
3,224(2,893)(12,696)(13,702)(73)
2,587
47,118(5,796)(640)(151,107)(1,046)(152,153)¥   15,039
3,249
72
113
36
(1,121)
4
(9)
(121)
(20)
24
(41,136)
1,508
3,343
(17,619)(279)
13(124,107)
117,668(10,145)
307,28368(14,576)
11,164(43,947)
3,193(1,020)1,601
40,944(1,503)
7,962
257,681(3,759)253,921$    98,921
23,432471(5,766)(52)(9,540)
292
(7)
277
(277)
247
(358,466)
59,215
110,357(121,133)(2,845)(67)(1,515,427)
1,034,696
72,575(570,530)(76,282)
24,144(21,665)(95,079)(102,613)(546)
19,373352,864(43,405)(4,792)(1,131,633)(7,833)(1,139,466)(528,251)474,209283,113(1,095)(1,409)443
227,010(713,439)
440,070
246,559(1,358)(1,322)
384(29,105)(3,956,047)
3,551,329
2,120,220(8,200)(10,551)
3,317
1,700,067(1,001)7(2,198)(3,191)(1)
3(1,774)(1,772)(7,496)52(16,460)(23,897)3
71,6691,086,721¥1,158,391

7223,050
863,671¥1,086,721

22
536,725
8,138,403$ 8,675,136

Millions of yen
For the years ended March 31

Cash flows from operating activities
Profit before income taxes
Depreciation
Impairment losses
Net change in reserve for possible loan losses
Net change in reserve for bonuses for directors and corporate auditors
Net change in net defined benefit asset
Net change in net defined benefit liability
Net change in reserve for retirement benefits for directors and corporate auditors
Net change in reserve for claims on dormant accounts
Net change in reserve for contingent liabilities
Net change in reserve for stock-based compensation planInterest income
Interest expenses
Net loss related to securities transactions
Net gain related to foreign exchange
Net gain on disposal of fixed assets
Net change in trading account securities
Net change in loans and bills discounted
Net change in deposits
Net change in negotiable certificates of deposit
Net change in borrowed money excluding subordinated borrowings
Net change in due from banks other than Bank of Japan
Net change in call loans and others
Net change in call money and others
Net change in payables under securities lending transactions
Net change in foreign exchange assets
Net change in foreign exchange liabilities
Net change in lease receivables and investments in leases
Proceeds from fund operations
Payments on fund procurement
Other
Subtotal
Payment of income taxes
Net cash provided by (used in) operating activities
Cash flows from investing activities
Purchase of securities
Proceeds from sales of securities
Proceeds from redemption of securities
Purchases of tangible fixed assets
Purchases of intangible fixed assets
Proceeds from sales of tangible fixed assets
Net cash provided by (used in) investing activities
Cash flows from financing activities
Purchase of treasury stock
Proceeds from sales of treasury stock
Dividends paid
Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net change in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year (Note 3 (16))
See accompanying notes to consolidated financial statements.

51

Th e Hyakujushi Bank, Ltd . Integrated R ep ort 2023

1. Basis of presenting consolidated financial
statements

The accompanying consolidated financial statements of The Hyakujushi Bank,
Ltd. (hereinafter the “Bank”) and its consolidated subsidiaries (hereinaftercollectively the “Group”) are prepared on the basis of accounting principles
generally accepted in Japan, which are different in certain respects as to theapplication and disclosure requirements of International Financial ReportingStandards, and are compiled from the consolidated financial statements
prepared by the Bank as required by the Financial Instruments and Exchange Act
of Japan.
The Japanese yen figures in the consolidated financial statements are in
millions, with fractions omitted.
The translation of the Japanese yen amounts into U.S. dollars is included
solely for the convenience of the reader, using the prevailing exchange rate at
March 31, 2023, which was ¥133.53 to U.S.$1.00. The conveniencetranslations should not be construed as representations that the Japanese yenamounts have been, could have been, or could in the future be, converted into
U.S. dollars at this or any other rate of exchange.

2. Fiscal year ends

The account closing date of the Bank and its consolidated subsidiaries is thesame.

3. Significant accounting policies(1) Consolidation
The consolidated financial statements include the accounts of the Bank and all 8
subsidiaries.
There are no affiliates accounted for by the equity method as of March 31,
2023.
Shikoku Alliance Capital Co., Ltd. and SHIKOKU BRAND inc. are affiliates
not accounted for by the equity method. Affiliated companies not accounted forby the equity method are excluded from the scope of the equity method because
the Bank’s interests in their respective amounts of net profits or losses, retained
earnings or other accumulated comprehensive income do not have a material
impact on the consolidated financial statements.
[Changes in the scope of consolidation]
Hyakujushi Saita Agency Co., Ltd. completed liquidation procedure on June24, 2022. The company’s statement of income until the completion ofliquidation procedure are consolidated.
(2) Trading account securities
Under the Accounting Standards for Financial Instruments, trading accountsecurities are stated at fair value (cost of sales is calculated by the movingaverage cost method).
(3) Securities
Held-to-maturity debt securities are stated at amortized cost using the movingaverage cost method. Investments in affiliates not accounted for by the equity
method are stated at cost by the moving-average cost method. Available-for-salesecurities are stated at fair value (cost of sales is calculated by the movingaverage cost method), whereas shares, etc. that do not have a market price arestated at cost by the moving-average cost method.
Unrealized gain or loss on available-for-sale securities (net of the related tax
effect) has been reported as a component of net assets.
(4) Derivatives
Under the Accounting Standards for Financial Instruments, derivatives arestated at fair value.
(5) Depreciation(a) Tangible fixed assets (excluding lease assets)
Depreciation of tangible fixed assets is calculated principally using the decliningbalance method (However, the straight-line method is used for facilities attached
to buildings and structures acquired on or after April 1, 2016). Useful lives oftangible fixed assets are as follows:
Buildings: 10 to 50 years
Equipment: 5 to 15 years
Tangible fixed assets held by the consolidated subsidiaries are depreciated, inprinciple, by the declining-balance method, based on the respective estimateduseful lives of the assets.

(b) Intangible fixed assets (excluding lease assets)
Intangible fixed assets are amortized by the straight-line method. Depreciationof software for internal use is calculated using the straight-line method over theuseful lives (principally 5 years).
(c) Lease assets
Lease assets held by the Bank are depreciated over the leasing contract periodsby the straight-line method with residual value at zero.
(6) Reserve for possible loan losses
Reserve for possible loan losses is provided as follows, based on the defined rules
for write-offs and provisioning.
Reserve for possible loan losses for bankrupt or substantially bankrupt
debtors is provided based on the amount after deducting the collectible portion,
based on the fair value of any underlying collateral or guarantees, except for a
portion written-off, as explained below.
Reserve for possible loan losses for debtors not currently bankrupt but
likely to go bankrupt is provided considering the overall solvency assessment
after deducting the collectible portion, based on the fair value of any underlying
collateral or guarantees.
Reserve for possible loan losses on loans other than the above is provided
principally at the amounts of expected losses over the next 1 year or 3 years,
which are determined by making necessary adjustments considering forecasts ofloss rates calculated based on the average historical default rates corresponding
to a certain period consistent with those for 1 year or 3 years.
In accordance with the Bank’s asset self-assessment standards, loans areassessed by branch staff and head office staff in charge of inspection, the resultsof which are audited by independent staff in charge of audits. Provision is madeto reflect these assessment procedures.
In the case of loans to debtors who are bankrupt or substantially bankrupt,
the amount remaining after deduction of the amount of collateral considered tobe disposable and the amount recoverable under guarantees is set off from theoriginal outstanding loan balance. The amount of such write-offs totaled ¥8,191
million ($61,342 thousand) and ¥8,906 million as of March 31, 2023 and 2022,
respectively.
A reserve for possible losses on ordinary loans held by the Bank’s
consolidated subsidiaries is provided based on loan loss experience as calculatedusing the historical default rates. A reserve for possible losses on specific loans
held by the Bank’s consolidated subsidiaries is provided based on the amountdeemed irrecoverable after careful examination of the recoverability of the loans
in question on an individual basis.
(7) Reserve for bonuses for directors and corporate auditors
A provision is made for the payments of bonuses to directors and corporate
auditors of the Bank based on an estimated amount deemed necessary.
(8)	Reserve for retirement benefits for directors and corporate
auditors
In order to provide for the payment of retirement benefits to directors andcorporate auditors of consolidated subsidiaries, a provision is made based on theestimated amount incurred at the end of the consolidated reporting period.
(9) Reserve for claims on dormant accounts
A provision is made for losses on claims on dormant accounts in the future in an
amount deemed necessary, taking into account the Bank’s historical refund
record.
(10) Reserve for contingent liabilities
A provision is made for an estimated amount considered necessary for losses
which may occur in the future due to contingencies other than those covered forin other reserves.
(11) Reserve for stock-based compensation plan
In order to provide for the delivery of the Bank’s shares from the BIP Trust, aprovision is made for an estimated amount of benefits corresponding to thenumber of points allotted to directors in accordance with BIP Trust’s sharedelivery rules.

T he H yak ujushi Bank, Ltd . Integrated Rep ort 2023

52

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements(12) Accounting method for retirement benefits
To calculate retirement benefit obligations, the Bank used the benefit formula asa method for attributing estimated retirement benefits over the period until
March 31, 2023. The amortization method for prior service costs and actuarial
differences is as follows:
Prior Service Costs:
Prior service costs are charged fully to income at the time of occurrence.
Actuarial Differences:
Actuarial differences of the plans are to be amortized from the fiscal year
following their occurrence by the straight-line method over a fixed period of 10
years, which is within the average remaining service period of the employees at
the time of occurrence in each fiscal year.
In calculating net defined benefit liability and retirement benefit costs, someconsolidated subsidiaries apply a simplified method that provides theirretirement benefit obligation at an amount to be paid for voluntary termination
at the balance sheet date.
(13) Accounting standards for posting of significant earnings andexpenses(a) Finance lease transactions
The corresponding amounts are recognized in “Other income” and “Other
expenses” at the time of receipt of lease payments.
(b) Revenue from contracts with customers
Revenue from contracts with customers is the revenue recognized from service
provision related to financial services such as deposit and loan services, foreign
currency exchange services, and securities-related services, and is recognized at
the amount expected to be received in exchange for goods or services whencontrol of such goods or services promised by such service provision istransferred to the customer.
(14) Foreign currency translation
Receivables and payables in foreign currencies are translated into Japanese yen
primarily at the year-end rates. Translation differences arising from availablefor-sale securities (bonds), including the effect of changes in exchange rates, areaccounted for as net unrealized gains/losses on available-for-sale securities.
(15) Hedge accounting(a) Hedges against interest rate fluctuations
The Bank applies the deferred hedge accounting method to interest rate swaps
used to hedge interest rate risk on certain financial assets when the critical termsof the underlying hedged items (Japanese Government Bonds and U.S. Treasury
Bonds) and hedging instruments (interest rate swap transactions) match.
Evaluation of hedge effectiveness is omitted as material terms related to thehedged items and hedging instruments are substantially identical and the market
fluctuations or cash flow fluctuations are offset at the time of commencement
and continuously thereafter.
(b) Hedging against currency fluctuations
The Bank applies the deferred hedge accounting stipulated in the basic
provisions of JICPA Industry Committee Practical Guideline No. 25 issued on
October 8, 2020 to currency swap and foreign exchange swap transactions
executed for the purpose of lending or borrowing funds in different currencies.
Pursuant to JICPA Industry Committee Practical Guideline No. 25, theBank assesses the effectiveness of currency swap and foreign exchange swap
transactions executed for the purpose of offsetting the risk of changes incurrency exchange rates by verifying that there are foreign currency monetaryclaims and debts (foreign securities and foreign currency loans) corresponding
to the foreign-currency positions.
Hedge transactions to which “Treatment of Hedge Accounting for Financial Instrumentsthat Reference LIBOR” is appliedAmong the above hedge transactions, all hedge transactions included in thescope of application of “Treatment of Hedge Accounting for Financial
Instruments that Reference LIBOR” (ASBJ Revised Practical Solution No.40,
March 17, 2022) are subject to the exceptional treatment prescribed in the
Revised Practical Solution. The details of hedge transactions to which the
Revised Practical Solution is applied are as follows.
Hedge accounting method: Deferred hedge accounting
Hedging instruments: Interest rate swaps
Hedged items: Securities
Types of hedge transactions: Offset market fluctuations

53

Th e Hyakujushi Bank, Ltd . Integrated R ep ort 2023

(16) Statements of cash flows
The reconciliations between cash and due from banks in the consolidatedbalance sheets and cash and cash equivalents in the consolidated statements ofcash flows are as follows:
Thousandsof U.S.
Millions of yen
dollars
March 31
2022
2023
2023
Cash and due from banks............. ¥1,197,854 ¥1,115,997 $8,970,673
Time deposits with banks other(27,540) (284,879)(38,040)than Bank of Japan..................
Deposits with banks other than
(574)
(836)
(6,260)Bank of Japan........................
Other....................................
(1,161)(585)(4,381)
Cash and cash equivalents...... ¥1,158,391 ¥1,086,721 $8,675,136(17) Other significant accounting policies adopted
Net gains and losses from the cancellation and redemption of investment trusts(excluding ETF) are included in “Interest and dividends on securities” in the caseof gains for the investment trusts as a whole, and included in “Loss onredemption of bonds” under “Other operating expenses” in the case of losses.
Gains on cancellation and redemption of investment trusts of ¥4,186
million ($31,348 thousand) and ¥3,092 million were recorded in “Interest anddividends on securities” for the fiscal years ended March 31, 2023 and 2022,
respectively.
(18) Significant accounting estimates
Reserve for possible loan losses(i)	Amounts recognized in the consolidated financial statements at the end of
fiscal year
Reserve for possible loan losses: ¥17,514 million ($131,161 thousand) and¥18,285 million as of March 31, 2023 and 2022, respectively.
(ii)	Information on the nature of significant accounting estimates for identified
items(1)	Method used in making the accounting estimates
The collectability of loans and other receivables fluctuates depending on
factors such as domestic and international economic trends, the businessconditions of the debtors operating in areas where the Bank’s wide-area
network exists, mainly in its home prefecture of Kagawa, the decline in thevalue of real estate used as collateral, and the status of the novel coronavirus
disease (COVID-19) outbreak. For this reason, the group mainly calculates
the amount of expected losses from future bad debts for each debtor
category and records it as reserve for possible loan losses.
The method of calculating the reserve for possible loan losses is
described in “3. Significant accounting policies (6) Reserve for possible loan
losses.”(2)	Key assumptions used in making accounting estimates
The main assumptions used in the calculation of the reserve for possible loan
losses are “the future business prospects of each debtor in determining the
debtor classification.”
The “future business prospects of each debtor in determining the debtor
classification” consist of the assessment of the financial condition andrepayment capacity of each borrower based on the impact of the COVID-19
infection, high prices and resources on supply chains caused by the Russia’s
invasion of Ukraine and changes in local economy. In addition to this,individual assessment of debt repayment capacity of each debtor based on
the progress of each debtor’s management improvement plan and otherfactors is conducted.
Although the start of repayment of the special loan for the COVID-19
infection may increase the risk of cash flow failure in some cases, a reservefor possible loan losses is provided based on the assumption that there will be
no significant impact on the determination of debtor classification, etc., as
the normalization of corporate activities progresses with the cessation of the
COVID-19 infection and a new refinancing guarantee program is initiated by
the national government.
(3)	Impact on the consolidated financial statements for the next fiscal year
The above “2) Key assumptions used in making accounting estimates” issubject to uncertainty as it will be affected by changes in the businessenvironment surrounding the debtors and the success or failure of theirbusiness strategies. Therefore, in the event of an unexpected deterioration in

the business conditions of major debtors or a worsening of the COVID-19
outbreak that affects the assumptions used for the initial estimate, there may
be a significant impact on the reserve for possible loan losses in the
consolidated financial statements for the next fiscal year.
(19) Changes in accounting policies
Adoption of “Implementation Guidance on Accounting Standard for FairValue
Measurement””
The Group has applied the “Implementation Guidance on Accounting Standard
for Fair Value Measurement” (ASBJ Guidance No. 31, June 17, 2021;
hereinafter “Guidance on Fair Value Measurement”) effective from the beginningof the current fiscal year, and prospectively applies the new accounting policies
stipulated by the Guidance on Fair Value Measurement in accordance with thetransitional treatment provided in Paragraph 27-2 of the Guidance on Fair Value
Measurement. Accordingly, investment trusts are classified into investment
trusts whose investment trust assets are financial instruments and investment
trusts whose investment trust assets are real estate, and fair value is calculated bydetermining whether there is a market trading price, whether there are material
restrictions on cancellation, etc., and whether the net asset value is deemed fairvalue. This change does not affect the consolidated financial statements for thecurrent fiscal year.

4. Additional information

Board Incentive Plan (BIP) Trust
The Bank has introduced a BIP Trust for directors (excluding directors serving
as audit and supervisory committee members, outside directors and nonresidents of Japan; hereinafter collectively referred to as the “Bank’s directors”).
(i) Transaction overview
The BIP Trust is a stock incentive plan for directors, aimed at further raising
motivation to contribute to the medium- to long-term improvement of businessperformance and enhance the Bank’s corporate value. Under the plan, a certain
number of points are granted to the Bank’s directors based on their ranks andthe level of achievement of performance targets, and the Bank’s sharescorresponding to the aggregate number of points or money equivalent to thevalue of the Bank’s shares are granted or delivered to the Bank’s directors upon
their retirement.
(ii)	Accounting treatment for transactions delivering the Company’s own stock
through the trust
The Bank applies the “Practical Solution on Transactions of Delivering theCompany’s Own Stock to Employees, etc., through Trusts” (ASBJ PITF No.
30, March 26, 2015).
(iii)Matters relating to the Bank’s shares held by the trust(1)	The book values of the shares held by the trust were ¥226 million ($1,692
thousand) and ¥257 million as of March 31, 2023 and 2022, respectively.
(2)	The Bank’s shares held by the trust have been recorded as treasury stock instockholders’ equity.
(3)	The numbers of shares at year-end were 76 thousand and 87 thousand as ofMarch 31, 2023 and 2022, respectively. The average numbers of shares
during the year were 79 thousand and 88 thousand for the fiscal years ended
March 31, 2023 and 2022, respectively.
(4)	The number of shares at year-end and the average number of shares during
the year in 3) above are included in the number of treasury stock to be
deducted in the calculation of per share information.

T he H yak ujushi Bank, Ltd . Integrated Rep ort 2023

54

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements
5. Changes in net assets

2023(1) Type and number of shares issued and treasury shares are as follows:
Thousands of shares
Increase
Decrease

March 31, 2022
2023
Shares issued
Common stock (Note 1) ..............................................................
30,000Total.......................................................................................
30,000Treasury stock
Common stock (Notes 2, 3 and 4)...................................................
506
Total.......................................................................................
506

March 31, 2023

—
—

900
900

29,10029,100

584
584

910
910

180
180

Notes: 1. The 900 thousand share decrease in the number of common shares is due to the cancellation of treasury stock.
2. The number of shares of common stock at the end of the fiscal years ended March 31, 2023 and 2022 includes 76 thousand and 87 thousand shares, respectively, of the Bank’s shares
held by the BIP Trust.
3. The 584 thousand share increase in the number of common shares of treasury stock consists of increases of 583 thousand shares due to an acquisition based on a resolution of the Boardof Directors and 0 thousand shares due to a purchase demand for fractional shares from shareholders.
4. The 910 thousand share decrease in the number of common shares of treasury stock consists of decreases of 900 thousand shares due to the cancellation of treasury stock, 10 thousand
shares due to the delivery of shares to the beneficiaries from the BIP Trust, and 0 thousand shares due to an additional purchase demand for fractional shares from shareholders.

Thousands of shares
Increase
Decrease

2022
March 31, 2021
Shares issued
Common stock ..........................................................................
30,000Total.......................................................................................
30,000Treasury stock
Common stock (Notes 1, 2 and 3)...................................................
517
Total.......................................................................................
517

March 31, 2022

—
—

—
—

30,00030,000

1
1

11
11

506
506

Notes: 1. The number of shares of common stock at the end of the fiscal years ended March 31, 2022 and 2021 includes 87 thousand and 92 thousand shares, respectively, of the Bank’s shares
held by the BIP Trust.
2. The 1 thousand share increase in the number of common shares of treasury stock is due to a purchase demand for fractional shares from shareholders.
3. The 11 thousand share decrease in the number of common shares of treasury stock consists of decreases of 6 thousand shares due to the exercise of share subscription rights, 5 thousand
shares due to the delivery of shares to the beneficiaries from the BIP Trust, and 0 thousand shares due to an additional purchase demand for fractional shares from shareholders.

Resolution
June 29, 2022 (Regular Annual General Meeting of Shareholders)(Note 1) ..............................................................................
November 14, 2022 (Meeting of the Board of Directors)(Note 2) ..............................................................................

Type of share
Commonstock
Commonstock

Total dividend
amount(Thousands of
U.S. dollars)

Dividend
per share(U.S. dollars)$8,859$0.299

7,593

0.262

Record date
Effective date
March 31,
June 30,
2022
2022
September 30, December 9,
2022
2022

Notes: 1. In accordance with the resolutions approved at the Bank’s Regular Annual General Meetings of Shareholders held on June 29, 2022 and June 29, 2021, total amount of dividends paid
includes the dividend payment to the BIP Trust of ¥3 million ($22 thousand) and ¥2 million, respectively. These exclusions reflect the Bank’s classification of the shares held by the Trustas treasury stock.
2. In accordance with the resolutions approved at the Meetings of the Board of Directors held on November 14, 2022 and November 9, 2021, total amount of dividends paid includes thedividend payment to the BIP Trust of ¥2 million ($14 thousand) and ¥2 million, respectively. These exclusions reflect the Bank’s classification of the shares held by the Trust as treasury
stock.

(b) Dividends paid after the balance-sheet date2023
Total dividend
amountResolution
Type of share (Millions of yen)
June 29, 2023 (Regular Annual General Meeting of Shareholders)Common(Note)....................................................................................
stock¥1,159Source ofdividends
Retainedearnings

Dividend
per share
(Yen)
¥40.0

Record date Effective date
March 31,
June 30,
2023
2023

2022
Total dividend
amountResolution
Type of share (Millions of yen)
June 29, 2022 (Regular Annual General Meeting of Shareholders)Common(Note)....................................................................................
stock¥1,183

Source ofdividends
Retainedearnings

Dividend
per share
(Yen)
¥40.0

Record date Effective date
March 31,
June 30,
2022
2022

2023
(2) Matters concerning share subscription rights and own share options
The balance of share subscription rights (for stock options) as of March 31, 2023 and 2022 stood at ¥21 million ($157 thousand) and ¥21 million, respectively. At end of
the previous and current fiscal years, no shares had been earmarked for share subscription rights.
(3) Information on dividends(a) Dividends paid

Total dividend
amountDividend(Thousands of Source ofper share
Resolution
Type of share U.S. dollars) dividends (U.S. dollars) Record date Effective dateJune 29, 2023 (Regular Annual General Meeting of Shareholders)CommonRetained
March 31,
June 30,(Note)....................................................................................
stock$8,679earnings$0.2992023
2023
Note: The total dividend amounts resolved on June 29, 2023 and June 29, 2022 include the dividends for the BIP Trust of ¥3 million ($22 thousand) and ¥3 million, respectively.

2023
Resolution
Type of share
June 29, 2022 (Regular Annual General Meeting of Shareholders)Common(Note 1) .................................................................................
stock
November 14, 2022 (Meeting of the Board of Directors)
Common(Note 2)..................................................................................
stock

Total dividend
amount(Millions of yen)

Dividend
per share(Yen)¥1,183

¥40.0

1,014

35.0

Total dividend
amount(Millions of yen)

Dividend
per share
(Yen)

¥887

¥30.0

887

30.0

Record date
Effective date
March 31,
June 30,
2022
2022
September 30, December 9,
2022
2022

2022
Resolution
Type of share
June 29, 2021 (Regular Annual General Meeting of Shareholders)Common(Note 1) .................................................................................
stock
November 9, 2021 (Meeting of the Board of Directors)
Common(Note 2) .................................................................................
stock

Record date
March 31,2021
September 30,
2021

Effective dateJune 30,
2021
December 10,
2021

6. Securities and trading account securities(1) Investments in affiliates
Investments in affiliates as of March 31, 2023 and 2022 totaled ¥50 million($374 thousand) and ¥50 million, respectively.
(2) Securities lending transactions
National government bonds as of March 31, 2023 and 2022 included bonds of¥10,099 million ($75,630 thousand) and ¥28,327 million, respectively, whichwere lent to third parties without collateral under lending contracts.
(3) Trading account securities
Valuation profit (losses) of ¥0 million and nil were recognized for the fiscal years
ended March 31, 2023 and 2022, respectively.
(4) Held-to-maturity debt securities
Consolidated balance sheet amount and fair value of held-to-maturity securities
and their difference as of March 31, 2023 were as follows:

2023
Fair value exceeding
consolidated balance sheet
amountBonds:
Local............................
Subtotal........................
Total.....................................

2023
Fair value exceeding
consolidated balance sheet
amountBonds:
Local............................
Subtotal........................
Total.....................................

Millions of yen
Consolidatedbalance sheet
Fair
amountvalue
Difference¥36,900
36,900¥36,900¥37,068
37,068¥37,068

¥168
168
¥168

Thousands of U.S. dollars
Consolidatedbalance sheet
Fair
amountvalue
Difference$276,342
276,342$276,342$277,600
277,600$277,600$1,258
1,258$1,258

Not applicable as of March 31, 2022.

55

Th e Hyakujushi Bank, Ltd . Integrated R ep ort 2023

T he H yak ujushi Bank, Ltd . Integrated Rep ort 2023

56

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements(5) Available-for-sale securities(a) Consolidated balance sheet amount and acquisition cost of available-for-salesecurities and their difference as of March 31, 2023 and 2022 were as
follows:
Millions of yen
Consolidatedbalance sheet Acquisition
amountcost
Difference2023
Consolidated balance sheet
amount exceedingacquisition cost
Equity stock...................... ¥   98,773 ¥  41,497
Bonds:
National........................
18,17818,118
Local............................
19,786
19,669Corporate......................
21,591
21,55859,55659,346
Other...........................
56,05055,650Subtotal........................
214,380
156,494
Consolidated balance sheet
amount not exceedingacquisition cost
Equity stock......................
9,996
11,821
Bonds:
National........................
20,721
22,852
Local............................
335,300
344,350
Corporate......................
175,726
179,250
531,748
546,454
Other...........................
244,695
265,185
Subtotal........................
786,441
823,461
Total..................................... ¥1,000,822 ¥ 979,955¥ 57,276
59
116
33
209
399
57,885(1,824)(2,131)(9,050)(3,523)(14,705)(20,489)(37,019)¥ 20,866

Millions of yen
Consolidatedbalance sheet Acquisition
amountcost
Difference2022
Consolidated balance sheet
amount exceedingacquisition cost
Equity stock...................... ¥  104,155 ¥   45,784
Bonds:
National........................
101,451
101,267
Local............................
69,18868,754
Corporate......................
42,90842,794
213,548
212,817
Other...........................
74,89872,224
Subtotal........................
392,603
330,825
Consolidated balance sheet
amount not exceedingacquisition cost
Equity stock......................
10,643
12,132
Bonds:
National........................
141,026
146,493
Local............................
314,032
317,764
Corporate......................
175,602177,293
630,661
641,551
Other...........................
234,946
247,285
Subtotal........................
876,251
900,969
Total..................................... ¥1,268,855 ¥1,231,794

57

Th e Hyakujushi Bank, Ltd . Integrated R ep ort 2023

¥ 58,371
183
434
114
731
2,674
61,778(1,488)(5,466)(3,732)(1,690)(10,890)(12,338)(24,717)¥ 37,060

Thousands of U.S. dollars
Consolidatedbalance sheet Acquisition
amountcost
Difference2023
Consolidated balance sheet
amount exceedingacquisition cost
Equity stock...................... $  739,706 $  310,769
Bonds:
National........................
136,134
135,684
Local............................
148,176
147,300
Corporate......................
161,694
161,446
446,012444,439
Other...........................
419,755
416,760
Subtotal........................ 1,605,481 1,171,976
Consolidated balance sheet
amount not exceedingacquisition cost
Equity stock......................
74,85988,526
Bonds:
National........................
155,178
171,137
Local............................ 2,511,046 2,578,821
Corporate...................... 1,316,003 1,342,394
3,982,236 4,092,368
Other........................... 1,832,509 1,985,958
Subtotal........................ 5,889,620 6,166,861
Total..................................... $7,495,109 $7,338,837$428,937
441
868
247
1,565
2,988
433,498(13,659)(15,958)(67,775)(26,383)(110,125)(153,441)(277,233)$156,264(b) Gains and losses on sale of available-for-sale securities for the fiscal years
ended March 31, 2023 and 2022 are as follows:2023
Equity stock............................
Bonds:
National...........................
Local...............................
Corporate.........................
Other....................................
Total.....................................

2022
Equity stock............................
Bonds:
National...........................
Local...............................
Corporate.........................
Other....................................
Total.....................................

Proceeds
from sale¥  7,539
210,12158,61030,581
299,313
158,855¥465,709

Proceeds
from sale¥  6,079
43,957
138,608
24,490207,056
234,629¥447,765

Millions of yen
Gains onLosses onsale
sale¥2,997¥  127
245
48
5
299
134
¥3,431

6,779
96
252
7,128
10,870¥18,126

Millions of yen
Gains onLosses onsale
sale¥2,308¥  692
115
236
13
364
2,607
¥5,281

563
174
5
743
7,184
¥8,620Thousands of U.S. dollars
Proceeds
Gains onLosses on
from sale
sale
sale
2023
Equity stock............................ $   56,459$22,444 $    951Bonds:
National........................... 1,573,586
1,834
50,767
Local...............................
438,927359
718
Corporate.........................
229,01937
1,887
2,241,541
2,239
53,381Other.................................... 1,189,657
1,003
81,404
Total..................................... $3,487,673$25,694 $135,744(6) Impairment losses on securities
For securities other than trading securities (excluding shares, etc. that do nothave a market price and investments in partnerships), if the fair value has fallen
significantly below their acquisition cost and the fair value is not expected torecover, said securities are recorded at fair value on the consolidated balance
sheet and the valuation difference is treated as loss for the fiscal year(“impairment loss”).
Impairment losses were nil in the fiscal years ended March 31, 2023 and2022, respectively.
The Bank determines whether fair value has decreased significantly based on
the degree of such decrease. If the fair value as of the end of the fiscal year has
decreased by 50 percent or greater than acquisition cost, all securities are
deemed to have decreased materially. And if the fair value has decreased by 30
percent or more but less than 50 percent, the determination shall be made bytaking into account changes in fair value over a certain period in the past and theperformance of the issuing company concerned.

7. Net unrealized gains on available-for-salesecurities

The following is a breakdown of net unrealized gains on available-for- salesecurities recorded in the consolidated balance sheet:

Valuation difference...................
Available-for-sale securities....
Money held in trust.............
Deferred tax liabilities................
Net unrealized gains on availablefor-sale securities (before equity
equivalent)...........................
Net unrealized gains attributable tonon-controlling interests..........
Parent’s ownership interest ofaffiliates’ unrealized gains onavailable-for-sale securities.......
Net unrealized gains on availablefor-sale securities...................

Thousands ofMillions of yen
U.S. dollars
2022
2023
2023
¥37,060 $156,264¥20,866
37,06020,866
156,264———(11,168)(6,196)(46,401)
14,66925,891

109,855

—

—

—

—

—

—

¥14,669¥25,891$109,855

8. Loans and bills discounted

Claims under the Banking Act and the Act on Emergency Measures for the
Revitalization of Financial Functions are as follows. Claims include corporate
bonds in “Securities” in the consolidated balance sheets (limited to those forwhich redemption of the principal and payment of interest is guaranteed inwhole or in part, and for which the bonds were issued through private
placement of securities (Article 2, Paragraph 3 of the Financial Instruments andExchange Act)), loans and bills discounted, foreign exchange assets, accrued
interest and suspense payments in “Other assets,” and customers’ liabilities for
acceptances and guarantees, as well as the securities in the case of a loan of
securities (limited to those under a loan-for-use or lease agreement) that are
indicated in the notes.

Millions of yen
2022
2023

Claims subject to bankruptcy proceeding and reorganization proceedings andany other type of claims equivalent thereto mean the claim held against debtors
with failed business status due to the grounds such as commencement ofbankruptcy proceedings, commencement of reorganization proceedings, orcommencement of rehabilitation proceedings, and any other type of claims
equivalent thereto.
Claims with risks mean the claims whose debtor is not yet in the status of
failure in business although such debtor’s financial status and businessperformance are worsening, and for which it is highly likely that the collectionof principal or receipt of interest in accordance with the contract is impossible,
excluding the claims subject to bankruptcy proceeding and reorganization
proceedings and any other type of claims equivalent thereto.
Loans overdue for three months or more mean loans for which payment ofprincipal or interest has been delayed for three months or more from the datefollowing the agreed payment date, excluding the claims subject to bankruptcy
proceeding and reorganization proceedings and any other type of claims
equivalent thereto and the claims with risks.
Restructured loans mean loans on which creditors grant concessions (e.g.,
reduction of the stated interest rate, deferral of interest payment, concessions ofprincipal repayment, waiver of the face amount, or other concessive measures)to the debtors to assist them in recovering from financial difficulties andeventually being able to pay creditors, excluding the claims subject tobankruptcy proceeding and reorganization proceedings and any other type ofclaims equivalent thereto, the claims with risks and the loans overdue for threemonths or more.
Ordinary claims mean the claims categorized as those other than the claims
set forth above, whose debtors are not found to be problematic in terms of thefinancial status and business performance.
The above claim amounts are before deduction of reserve for possible loan
losses.
Bills discounted are treated as financial transactions in accordance with
“Accounting and Auditing Treatment Relating to Adoption of AccountingStandards for Financial Instruments for Banks (JICPA Industry Committee
Practical Guideline No. 24, March 17, 2022).” Commercial bills and foreign
bills bought are permitted to be sold or pledged and their total face value was asfollows:

Bills discounted..............................

Millions of yen
2022
2023
¥12,848¥13,572

Thousands of
U.S. dollars
2023$101,640

9. Guarantee obligations

Guarantee obligations for bonds in private placement (defined in Article 2,
Paragraph 3 of the Financial Instruments and Exchange Act of Japan) included incorporate bonds under “Securities” in the consolidated balance sheets were¥23,707 million ($177,540 thousand) and ¥26,354 million as of March 31,
2023 and 2022, respectively.

Thousands of
U.S. dollars
2023

Claims subject to bankruptcy
proceeding and reorganization
proceedings and any other typeof claims equivalent thereto...... ¥    5,695 ¥    5,435 $    42,649
Claims with risks......................
29,93029,509220,991
Claims requiring management......
27,112
26,087
195,364
Loans overdue for three months ormore..................................
111
374
2,800
Restructured loans....................
27,00025,712
192,555
Sub-total................................
62,47861,293459,020
Ordinary claims........................ 3,348,285 3,149,563 25,075,151
Total..................................... ¥3,409,579 ¥3,212,042 $25,534,179

T he H yak ujushi Bank, Ltd . Integrated Rep ort 2023

58

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements
10. Assets pledged as collateral

Assets pledged as collateral as of March 31, 2023 and 2022 consisted of thefollowing:
Millions of yen
2022
2023
Assets pledged as collateral:
Securities.........................
Loans and bills discounted.....
Total...............................
Liabilities corresponding to assets
pledged as collateral:
Deposits...........................
Payables under securities
lending transactions..........
Borrowed money................

¥561,172130,080
691,253

Thousands of
U.S. dollars
2023¥484,461 $4,202,591
256,221974,163
740,682 5,176,761

17,04017,212

127,611—604,762

12,696678,399—
4,529,034

In addition to the assets presented above, the following assets were pledged ascollateral for exchange clearance transactions and futures contracts at March
31, 2023 and 2022:

Securities................................
Other assets............................

Thousands ofMillions of yen
U.S. dollars
2022
2023
2023
¥   372 $    531¥    71
30,00030,000224,668

As of March 31, 2023 and 2022, in addition to the items presented above, otherassets included cash collateral paid for financial instruments of ¥9,298 million($69,632 thousand) and ¥6,710 million, and guarantees and household depositsof ¥1,051 million ($7,870 thousand) and ¥1,055 million, respectively.

11. Commitment line agreements on overdrafts andloans

Commitment line agreements on overdrafts and loans are agreements to lendfunds to customers upon application up to a prescribed amount as long as there
is no violation of any condition established in the contract. The balance of unusedloans under these agreements as of March 31, 2023 and 2022 was as follows:
Thousands ofMillions of yen
U.S. dollars
2022
2023
2023
Unused commitments................ ¥1,040,754 ¥1,009,060 $7,794,158
Contracts with less than a yearof contract period orcontacts that are cancellable
unconditionally at any time.
919,092 7,083,838
945,905
Since many of these commitments are expected to expire without being drawn
upon, the total amount of unused commitments does not necessarily have effecton the future cash flow of the Group. Many of these commitments have clausesthat allow the Group to refuse an application from customers or reduce the limit
amount with proper reasons (e.g. changes in financial situation, to secure claims,etc.). In addition, the Group may request the customers to pledge collateralsuch as real estate and securities at the time of the contracts if necessary and takenecessary measures periodically based on a prescribed internal procedure after
conclusion of contracts such as monitoring customers’ business status, revising
contracts and securing claims.

12. Income taxes(1) Deferred tax assets
Major components of deferred tax assets as of March 31, 2023 and 2022 wereas follows:
Millions of yen
2022
2023
Deferred tax assets:
Net unrealized losses on availablefor-sale securities................... ¥ 11,253
Excess reserve for possible loan
losses.................................
6,440
Excess depreciation...................
1,016
Reserve for bonuses...................
488
Loss on devaluation of equity
securities.............................
337
Net deferred losses on hedging
instruments..........................
77
Net defined benefit liability..........
—
Other....................................
2,185
Subtotal.................................
21,799Valuation reserve......................
(6,362)
Deferred tax assets....................
15,437
Deferred tax liabilities:
Net unrealized gains on availablefor-sale securities................
(17,450)
Net deferred gains on hedging
instruments.......................
(137)
Reserve for advanced
depreciation of non-current
assets...............................
(119)
Net defined benefit asset..........
(19)
Other.................................
(25)
Deferred tax liabilities................
(17,752)
Net deferred tax liabilities........... ¥ (2,315)

Thousands of
U.S. dollars
2023

Based on the Law on the Revaluation of Land, the Bank’s land was revalued on
March 31, 1999.
The amounts equivalent to deferred tax on the land revaluation wererecorded as deferred tax liability for land revaluation in liabilities, and net
unrealized gains on the land revaluation were recorded as revaluation reserve forland in stockholders’ equity.
As of March 31, 2023 and 2022, the difference between the carrying
amount and the fair value of the revalued land was ¥12,322 million ($92,278
thousand) and ¥12,331 million, respectively.

¥ 7,514$ 84,273

6,914
1,067
505

48,2287,608
3,654

15. Asset retirement obligations

333

2,523

35
2,320
2,089
20,780(6,218)14,562576—
16,363
163,251(47,644)
115,606

Notes on investment and rental property have been omitted due toimmateriality.

(18,682)(130,682)(1,175)(1,025)

(119)
(891)
—
(142)
(27)
(187)
(20,005) (132,943)¥ (5,443) $ (17,336)(2) Income taxes
The following table shows the major items responsible for the difference
between the statutory tax rate and the effective tax rate after application oftax-effect accounting for the fiscal years ended March 31, 2023 and 2022.
Statutory income tax rate..............................
Reconciliation:
Non-deductible expenses, including
entertainment expenses..........................
Non-taxable income, including dividend
income..............................................
Per-capita resident tax...............................
Increase (decrease) of valuation reserve..........
Other...................................................
Effective income tax rate under tax-effectaccounting.............................................

14. Revaluation reserve for land

2023
30.4%

2022
30.4%

0.5

0.3

(3.4)
0.4
1.1
1.5

(2.6)
0.4
(7.8)
1.4

30.5%

22.1%

13. Accumulated depreciation and reduction entry

Accumulated depreciation of tangible fixed assets as of March 31, 2023 and2022 amounted to ¥37,755 million ($282,745 thousand) and ¥37,546 million,
respectively.
Reduction entry, which is deferred gain on tangible fixed assets deductible
for tax purposes, amounted to ¥2,396 million ($17,943 thousand) and ¥2,452
million as of March 31, 2023 and 2022, respectively. Reduction entry for the
fiscal years ended March 31, 2023 and 2022 amounted to nil, respectively.

Notes on asset retirement obligations have been omitted due to immateriality.

16. Investment and rental property

Other income includes the following:

Salaries and allowances were included in general and administrative expenses,
which amounted to ¥14,358 million ($107,526 thousand) and ¥14,546 million
for the fiscal years ended March 31, 2023 and 2022, respectively.

19. Other expenses(1) Other expenses include the following:Th e Hyakujushi Bank, Ltd . Integrated R ep ort 2023

Thousands ofMillions of yen
U.S. dollars
2022
2023
2023
¥6,255¥5,978$44,768
1,912
1,433
10,731(2) Impairment losses
During the fiscal years ended March 31, 2023 and 2022, the Bank recorded
impairment losses on fixed assets as described below:
Millions of yen
Impairment losses
2022
2023
Kagawa Pref.... Assets forLand,business use and buildings
idle assets
and(2023: 27
movableslocations2022: 19
locations)Land and
Other............ Assets forbusiness use and buildings
idle assets
and(2023: 3
movableslocations2022: 5locations)

Total.............

59

Thousands ofMillions of yen
U.S. dollars
2022
2023
2023
¥7,594¥7,251$54,302
2,308
2,997
22,444

18. General and administrative expenses

Cost of lease............................
Loan write-offs........................

Kagawa Pref.... Assets forLand,business use and buildings
idle assets
and(2023: 27
movableslocations)
Other............ Assets forbusiness use
and idle assets(2023: 3locations)
Total.............

17. Other income

Lease revenue..........................
Gain on sale of equity securities....

Thousands of
U.S. dollars
Impairment
losses
2023

¥61

¥67

land: 21

land: 57

buildings: 38

buildings: 8

movables: 2

movables: 1¥0¥5

land: 0land: 0buildings: 0
movables: 0¥63
land: 21
buildings: 39
movables: 2buildings: 4
movables: 0¥72
land: 57
buildings: 12
movables: 2

Land andbuildings$456
land: 157
buildings: 284
movables: 14$  0
land: 0buildings: 0
movables: 0$471
land: 157
buildings: 292
movables: 14

The Bank posted impairment losses of ¥63 million ($471 thousand) and ¥72
million, respectively, during the fiscal years ended March 31, 2023 and 2022 onland, buildings and movables due to a fall in operating cash flows and continuous
declines in land prices. The Bank reduced the carrying amounts of thecorresponding assets to the recoverable amounts, and recorded the difference
between the carrying amount and recoverable amount of each asset as
impairment losses under other expenses.
In general, the Bank treats each of its branches as a single asset group unit forrecognition and measurement of impairment losses; however, jointly managed
branches are treated as a single cash generating unit. Values of idle assets andassets for disposal are measured on an individual basis.
Regarding head office buildings, operation and training centers,
dormitories, and housing and welfare facilities, these facilities are classified as
the Bank’s common property, as it is deemed difficult to specify each asset as asource of identifiable cash flows in the future.
At the Bank’s consolidated subsidiaries, each business base of subsidiaries isusually considered as the smallest grouping unit. Idle assets and assets for
disposal, however, are valued on an individual basis.
For the fiscal year ended March 31, 2023, the recoverable amounts aremeasured using the higher of either the net selling prices or the value in use. Net
selling prices are calculated on the basis of appraisal values of land or theamounts computed using the method laid down by the National Tax Agency ofJapan for calculation of land prices (used as the basis for computing taxable
amounts as set forth in Article 16 of the Land Tax Law) after deducting
estimated costs of disposal.
For the fiscal year ended March 31, 2022, the recoverable amounts aremeasured using the net selling prices. Net selling prices are calculated on thebasis of appraisal values of land or the amounts computed using the method laid
down by the National Tax Agency of Japan for calculation of land prices (used as
the basis for computing taxable amounts as set forth in Article 16 of the Land Tax
Law) after deducting estimated costs of disposal.

T he H yak ujushi Bank, Ltd . Integrated Rep ort 2023

60

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements
20. Matters relating to consolidated statements ofcomprehensive income

2. As lessor(1) Breakdown of investment in leases

The amount of recycling and amount of income tax effects associated with othercomprehensive loss:
Millions of yen
2022
2023
Net unrealized losses on availablefor-sale securities, net of taxes:
Amount recognized during theyear................................ ¥(26,745)
Amount of recycling...............
10,551
Prior to income tax effect......
(16,194)
Income tax effect................
4,972
Net unrealized losses onavailable-for-sale securities,
net of taxes....................
(11,222)Net deferred losses on hedging
instruments, net of taxes:
Amount recognized during theyear................................
(5,291)
Amount of recycling...............
1,738
Prior to income tax effect......
(3,552)
Income tax effect................
1,080
Net deferred losses on
hedging instruments.........
(2,472)Remeasurements of defined benefit
plans:
Amount recognized during theyear................................
6,242
Amount of recycling...............
154
Prior to income tax effect......
6,397
Income tax effect................
(1,944)Remeasurements of defined
benefit plans...................
4,452
Total other comprehensive loss.....
¥(9,242)

Thousands of
U.S. dollars
2023¥(24,176) $(200,292)
247
79,015(23,929) (121,276)
7,225
37,235(16,703)(84,041)

(530)
373
(157)
47

(39,624)
13,015(26,600)
8,088

(109)

(18,512)

(657)
91
(566)
172

46,746
1,153
47,906(14,558)(394)¥(17,207)

33,340$(69,212)

21. Finance leases

Information on finance leases for the fiscal years ended March 31, 2023 and2022 are as follows:
1. As lessee
Finance lease transactions that do not transfer ownership(1) Components of lease assets(a) Tangible fixed assets
Primarily consisting of ATMs(b) Intangible fixed assets
Not applicable.
(2) Depreciation and amortization methods for lease assets
Depreciation and amortization methods for lease assets are described in “3.
Significant accounting policies (5) Depreciation”.

Lease receivables......................
Estimated residual value..............
Interest received.......................
Investments in leases..................

Thousands ofMillions of yen
U.S. dollars
2022
2023
2023
¥20,140 $131,483¥17,557
3,025
2,791
20,901(2,255)(1,929)(14,446)¥20,910 $137,939¥18,419(2) Schedule for collection of lease receivables and receivables oninvestments in leases by leasing contract maturity

2023
Up to 1 year............................
Over 1 year, up to 2 years............
Over 2 years, up to 3 years..........
Over 3 years, up to 4 years..........
Over 4 years, up to 5 years..........
Over 5 years............................

Millions of yen
Receivables on
Lease receivables investments in leases¥101¥5,742
63
4,542
46
3,277
24
2,069
23
1,094
2
832

2022
Up to 1 year............................
Over 1 year, up to 2 years............
Over 2 years, up to 3 years..........
Over 3 years, up to 4 years..........
Over 4 years, up to 5 years..........
Over 5 years............................

Millions of yen
Receivables on
Lease receivables investments in leases¥180¥6,443
91
5,039
48
3,792
26
2,497
3
1,298
4
1,069

2023
Up to 1 year............................
Over 1 year, up to 2 years............
Over 2 years, up to 3 years..........
Over 3 years, up to 4 years..........
Over 4 years, up to 5 years..........
Over 5 years............................

Thousands of U.S. dollars
Receivables on
Lease receivables investments in leases$756$43,001
471
34,014344
24,541
179
15,494
172
8,192
14
6,230

3. Operating leases
As lessor
Future minimum lease payments related to non-cancellable operating leasetransactions

Up to 1 year............................
Over 1 year.............................
Total.....................................

22. Financial instruments

Thousands ofMillions of yen
U.S. dollars
2022
2023
2023
¥0
¥—
$—
—
—
—
¥0
¥—
$—

1. Disclosures related to financial instruments(1) Financial instrument policies
The Group provides banking services, including leasing and other financial
services. The Group limits risk within the scope of its business capacity, while
realizing profits commensurate with the risk of the financial instruments held.
To accomplish this goal, the Group quantifies, to the greatest extent possible,
various risks related to financial instruments using statistical methods. It
categorizes capital (risk capital) according to the size of the risk, engaging in“integrated risk management,” incorporating a capital allocation system thatmonitors risk versus return. The Group continues to improve efficiency in risk
management, ensuring greater stability and soundness for the business as awhole.

61

Th e Hyakujushi Bank, Ltd . Integrated R ep ort 2023

(2) Nature and extent of risks arising from financial instruments
The major types of financial assets held by the Group are loans and bills
discounted and securities. Loans and bills discounted are mainly for domestic
corporations and individuals, and are exposed to credit risk, interest rate risk,
and foreign exchange risk. If loans and bills discounted are concentrated
excessively on a particular corporate group or industry type, the Group’s
stockholders’ equity may suffer significant adverse effects. Therefore, the Group
has set maximum loan balances for each corporate group or industry type, andhas in place a system for monitoring compliance with these thresholds toprevent such an excessive concentration of risk.
Securities mainly consist of stocks, bonds, investment trusts and direct
investments. These investments are used as a pure investment vehicle or as a
non-pure investment vehicle. In addition, certain bonds are held for resale andheld-to-maturity. These investments are exposed to the credit risk of the issuingbody, interest rate risk, price volatility risk and/or foreign exchange risk.
Securities include financial instruments with limited market liquidity, including
private placement bonds underwritten by the Group, private equity shares, anddirect investments.
Financial liabilities mainly consist of deposits received from domestic
corporations and individuals. These financial liabilities are exposed to interest
rate risk, exchange rate risk, and liquidity risk.
Derivative transactions entered into by the Group include interest rate andcurrency swaps, options, futures/forward contracts, and cap transactions. Thesetransactions are generally entered into with a client to cover the underlying
financial instrument. Such transactions are variously exposed to interest raterisk, foreign exchange risk, price volatility risk, and the credit risk of thecounter party.
For certain interest rate swaps, individual deferred hedge accounting isapplied so that the hedged items and hedging instruments directly match.
Evaluation of hedge effectiveness is omitted as material terms related to thehedged items and hedging instruments are substantially identical and the market
fluctuations or cash flow fluctuations are offset at the time of commencement
and continuously thereafter. In addition, the Bank applies the deferred hedge
accounting stipulated in the basic provisions of JICPA Industry Committee
Practical Guideline No. 25 for currency swap and foreign exchange swap
transactions that are concluded for the purpose of hedging foreign exchange raterisk associated with foreign currency denominated financial assets. Hedge
effectiveness of these hedge transactions is evaluated by confirming thecorrespondence of the position to the amount of foreign currency denominatedfinancial assets hedged.
(3) Risk management for financial instruments(a) Credit risk management
The Group has compiled Credit Risk Management Rules and related
documents, and the Risk Management Committee (Credit Risk Management
Subcommittee) monitors and manages credit risk exposures.
In addition, the Risk Management Division acts as the credit risk managing
department for granting and verifying internal credit ratings, measures theamount of credit risk and sets and manages credit limits.
(b) Market risk management
The Group has established Market Risk Management Rules along with relevant
documentation, and the Risk Management Committee (Market Risk
Management Subcommittee) monitors market risk and maintains management
systems. The Revenue Management Committee (Budget ALM Subcommittee)
deliberates on the stability of medium and long-term profit in light of risk
circumstances.
Departments involved in the execution of market transactions (Treasury
and International Division) have been divided into front office (transaction
execution), back office (clerical), and middle office (market risk management)roles. This creates a system of internal checks and balances, with the Risk
Management Division in charge of managing overall market risk.
(i) Interest rate risk management
The Group manages interest rate risk using statistical methods to quantify thesize of the interest rate risk. When deemed necessary, the Group establishes andmanages limits on positions and/or profits and losses for securities, derivatives,and other market transactions. The Group also enters into derivativetransactions for interest rate swaps to hedge interest rate risk as part of ALM.

(ii) Foreign exchange risk management
The Group uses statistical methods to quantify and manage foreign exchangerisk. The Group also establishes and manages limits on positions and profits andlosses.
(iii) Price volatility risk management
The Group uses statistical methods to quantify and manage price volatility risk.
The Group establishes and manages limits on positions and profits and losses.
(iv) Quantitative information regarding market risks
a. Financial instruments held for trading purposes
In measuring the VaR of interest rate risks associated with trading securities,
interest rate futures and related transactions as well as the VaR of foreign
currency exchange risks associated with foreign exchange trading andrelated transactions, the Group applies the historical simulation methodwith a holding period of 10 days, a confidence interval of 99% and an
observation period of 1,200 business days. As of March 31, 2023 (theconsolidated balance sheet date), the volume of the aforementioned risks offinancial instruments held for trading purposes (estimated amount of loss)
amounted to ¥12 million ($89 thousand) (compared with ¥11 million at
the end of the previous fiscal year).
b. Financial instruments not held for trading purposes
In measuring the VaR of interest rate risks associated with loans and bills
discounted, investment securities, deposits, and interbank, interest rate
swap and related transactions, as well as the VaR for volatility risks associatedwith the prices of publicly listed company shares and investment trusts, etc.
the Group applies the historical simulation method with a holding period of
120 days, a confidence interval of 99% and an observation period of 1,200
business days.
The VaR of financial instruments not held for trading purposes
amounted to ¥48,018 million ($359,604 thousand) and ¥57,708 million asof March 31, 2023 and 2022, respectively.
c. VaRThe Group uses back testing to compare the VaR computed by the models
and the hypothesized gain/loss (gain or loss assumed generated when theportfolio is fixed at the time of measuring the VaR) to verify the reliability ofthese measured models.
However, VaR determined using the historical simulation method is ameasure of the volume of market risk at a certain event probability
statistically computed utilizing changes in historical market data. In thiscontext, there are cases in which VaR cannot capture risk under sudden anddramatic changes in the market beyond normal circumstances. To
supplement the limitations of VaR, the Group conducts stress testing
periodically in addition to the management using VaR.
(c) Liquidity risk management
The Group has established Liquidity Risk Management Rules and other related
guidelines as a basis for managing liquidity risk. The Group has also established
Liquidity Crisis Response Rules to ensure a prompt response to unexpected
situations that may affect cash management. These rules assume that unexpected
situations will arise and classify them into the categories of “caution” and “crisis”,
thereby enabling the Group to respond in a timely and appropriate manner.
The Liquidity Risk Management Department (Treasury and International
Division) performs daily and monthly cash projections to ensure proper andstable cash management based on the Group’s investment/acquisition structure,ensuring sufficient liquidity reserves. The Liquidity Risk Management
Department is also responsible for identifying, analyzing, assessing andmonitoring liquidity risk in consideration of internal and external factors that
may have an impact on the said risk.
(4) Supplementary information regarding fair value of financial
instruments
Since certain assumptions are used to calculate the fair value of financial
instruments, the said value may vary when differing assumptions are used.

T he H yak ujushi Bank, Ltd . Integrated Rep ort 2023

62

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements
2. Fair value of financial instruments
The consolidated balance sheet amount, fair values and the differences as ofMarch 31, 2023 and 2022 are as follows. Shares, etc. that do not have a market
price and investments in partnerships are not readily determinable are notincluded in the following table (Note 1). Notes to cash and due from banks, callloans and bills bought, monetary claims bought, foreign exchange (assets andliabilities), call money and bills sold, and payables under securities lendingtransactions are omitted because the fair values approximate book values due totheir short maturities.
Millions of yen
Consolidatedbalance sheet
amountFair value Difference
2023(1) Trading account securities....... ¥        9 ¥        9¥    —(2) Securities
Held-to-maturity debt
securities...........................
36,90037,068168
Available-for-sale securities..... 1,000,822 1,000,822—(3) Loans and bills discounted....... 3,362,245
Reserve for possible loan
losses*1.............................
(16,087)
3,346,158 3,321,294(24,863)
Total assets.............................. 4,383,889 4,359,195(24,694)(1) Deposits............................ 4,696,403 4,696,925
522(2) Negotiable certificates ofdeposit..............................
84,267
84,2702(3) Borrowed money..................
624,432
624,262(169)
Total liabilities.......................... 5,405,102 5,405,458
355
Derivative Transactions*2
Not subject to hedge accounting.
(314)
(314)
—
Subject to hedge accounting......
(2,554)(2,554)—
Total Derivative Transactions........ ¥   (2,868) ¥   (2,868) ¥    —Millions of yen
Consolidatedbalance sheet
amountFair value Difference

2022(1) Securities
Available-for-sale securities..... ¥1,268,855 ¥1,268,855(2) Loans and bills discounted....... 3,159,889
Reserve for possible loan
losses*1.............................
(16,737)
3,143,152 3,141,889
Total assets.............................. 4,412,007 4,410,745(1) Deposits............................ 4,558,239 4,558,378(2) Negotiable certificates ofdeposit..............................
74,576
74,579(3) Borrowed money..................
700,615
700,571
Total liabilities.......................... 5,333,430 5,333,529
Derivative Transactions*2
Not subject to hedge accounting.
(389)
(389)
Subject to hedge accounting......
513
513
Total Derivative Transactions........ ¥      123 ¥      123¥    —(1,262)(1,262)
139
2
(43)
98
—
—
¥    —

Thousands of U.S. dollars
Consolidatedbalance sheet
amountFair value Difference
2023(1) Trading account securities....... $        67 $        67 $     —(2) Securities
Held-to-maturity debt
securities...........................
276,342
277,600
1,258
Available-for-sale securities..... 7,495,109 7,495,109—(3) Loans and bills discounted....... 25,179,697
Reserve for possible loan
losses*1............................. (120,474)
25,059,222 24,873,017(186,197)
Total assets.............................. 32,830,742 32,645,809(184,932)(1) Deposits............................ 35,171,145 35,175,054
3,909(2) Negotiable certificates ofdeposit..............................
631,071
631,094
14(3) Borrowed money.................. 4,676,342 4,675,069(1,265)
Total liabilities.......................... 40,478,559 40,481,225
2,658
Derivative Transactions*2
Not subject to hedge accounting.
(2,351)(2,351)—
Subject to hedge accounting......
(19,126)(19,126)—
Total Derivative Transactions........ $   (21,478) $   (21,478) $     —
*1	General reserve for possible loan losses and specific reserve for possible loan losses forloans and bills discounted are deducted from above.
*2	Derivative transactions in the above table are recorded on a net basis with liabilities
presented in parentheses.
*3	Items with no material impact have not been listed.

(Note 1) The consolidated balance sheet amount of shares, etc. that do not havea market price and investments in partnership are as follows. These are
not included in Available-for-sale securities in the tables above.

Category
1. Private equity shares*1*2.........
2. Investments in partnership*3*4...

Thousands ofMillions of yen
U.S. dollars
Consolidated
Consolidated balance balance sheet
sheet amountamount
2022
2023
2023
¥2,730¥2,653$19,868
3,292
4,289
32,120*1	Private equity shares are excluded from fair value disclosure in accordance with
Paragraph 5 of the “Implementation Guidance on Disclosures about Fair Value of
Financial Instruments” (ASBJ Guidance No. 19, March 31, 2020).
*2	Impairment loss on private equity shares of ¥5 million ($37 thousand) and ¥1 million
were recognized for the fiscal years ended March 31, 2023 and 2022, respectively.
*3	Investments in partnership are excluded from the disclosure of fair value in accordancewith Paragraph 24-16 of “Implementation Guidance on Accounting Standard for Fair
Value Measurement” (ASBJ Guidance No. 31, June 17, 2021).
4* 	Impairment loss on investments in partnership of ¥37 million ($277 thousand) and ¥3
million were recognized for the fiscal years ended March 31, 2023 and 2022,
respectively.

(Note 2) The redemption schedule and the corresponding estimated amounts of monetary claims and securities with maturities subsequent to March 31, 2023 and 2022
are as follows:

2023
Securities:
Held-to-maturity debt securities..............................
Local government bonds..................................
Available-for-sale securities with maturities.................
National government bonds..............................
Local government bonds..................................
Corporate bonds............................................
Other.........................................................
Loans and bills discounted*.....................................
Total................................................................

2022
Securities:
Available-for-sale securities with maturities.................
National government bonds..............................
Local government bonds..................................
Corporate bonds............................................
Other.........................................................
Loans and bills discounted*.....................................
Total................................................................

2023
Securities:
Held-to-maturity debt securities..............................
Local government bonds........................................
Available-for-sale securities with maturities.................
National government bonds..............................
Local government bonds..................................
Corporate bonds............................................
Other.........................................................
Loans and bills discounted*.....................................
Total................................................................

Th e Hyakujushi Bank, Ltd . Integrated R ep ort 2023¥      —
—52,077—
9,073
12,52930,473
1,244,062¥1,296,139¥     ——
86,00018,00018,30924,79924,891
571,071¥657,071

Up to 1 year

Over 1 year,
up to 3 years¥   56,976
25,0002,497
10,524
18,954
1,116,427¥1,173,404¥ 84,907—
22,18520,603
42,118536,958¥621,865

Up to 1 year

Over 1 year,
up to 3 years$      —
—390,002—67,947
93,829228,210
9,316,722$9,706,725$      —
—644,050
134,801
137,115
185,718
186,4074,276,724$4,920,774

Millions of yen
Over 3 years, Over 5 years,
up to 5 years
up to 7 years

Over 7 years,
up to 10 years

Over 10 years¥ 10,830
10,830156,275—
80,957
62,954
12,364275,465¥442,571¥     ——
330,833—
216,062
73,31041,460303,009¥633,843¥     ——
75,29422,00028,71015,944
8,639
542,438¥617,733

Millions of yen
Over 3 years, Over 5 years,
up to 5 years
up to 7 years

Over 7 years,
up to 10 years

Over 10 years¥107,398
10,00041,35331,643
24,401
274,686¥382,084¥450,250
20,000270,362
106,910
52,978292,236¥742,486¥188,994
118,000
31,00526,097
13,891
505,709¥694,704

Thousands of U.S. dollars
Over 3 years, Over 5 years,
up to 5 years
up to 7 years

Over 7 years,
up to 10 years

Over 10 years$      —
—2,477,593—
1,618,078
549,015
310,492
2,269,220$4,746,820$      —
—563,873
164,756
215,007
119,40364,697
4,062,293$4,626,173¥ 26,166
26,166
154,131—
10,875
11,249132,006
379,764¥560,062¥195,123
71,00019,05324,23380,837
386,930¥582,054$  195,955
195,955
1,154,279—
81,442
84,243
988,586
2,844,035$4,194,278$   81,105
81,105
1,170,336—
606,283
471,459
92,5932,062,944$3,314,393*Loans and bills discounted do not include ¥35,174 million ($263,416 thousand) and ¥35,324 million in loans to bankrupt, substantially bankrupt and likely to go bankrupt debtors or otherloans of which repayment is not expected, or ¥11,259 million ($84,318 thousand) and ¥11,617 million in loans with no established maturity as of March 31, 2023 and 2022, respectively.

(Note 3) The redemption schedule of corporate bonds, borrowed money and other interest-bearing debt scheduled to be repaid subsequent to March 31, 2023 and 2022
is as follows:2023
Deposits*..........................................................
Negotiable certificates of deposit..............................
Borrowed money.................................................
Total................................................................

2022
Deposits*..........................................................
Negotiable certificates of deposit..............................
Borrowed money.................................................
Total................................................................

63

Up to 1 year

Over 1 year,
up to 3 years

Up to 1 year
¥4,497,302
84,267138,289¥4,719,859

Over 1 year,
up to 3 years¥182,443—
269,576¥452,019

Millions of yen
Over 3 years, Over 5 years,
up to 5 years
up to 7 years¥  6,299¥10,144——
215,029877¥221,328¥11,021

Over 7 years,
up to 10 years
¥213
—
233
¥446

Over 10 years
¥ —
—
425
¥425

Up to 1 year
¥4,359,368
74,536424,827¥4,858,731

Over 1 year,
up to 3 years¥182,31040
94,239¥276,589

Millions of yen
Over 3 years, Over 5 years,
up to 5 years
up to 7 years¥  6,220¥ 137——
179,641
1,336¥185,861¥1,473

Over 7 years,
up to 10 years¥10,202—289¥10,492

Over 10 years
¥—
—
281
¥281

T he H yak ujushi Bank, Ltd . Integrated Rep ort 2023

64

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements

2023
Deposits*..........................................................
Negotiable certificates of deposit..............................
Borrowed money.................................................
Total................................................................

Up to 1 year
$33,680,086
631,071
1,035,639$35,346,805

Over 1 year,
up to 3 years$1,366,307—
2,018,842$3,385,149

Thousands of U.S. dollars
Over 3 years, Over 5 years,
up to 5 years
up to 7 years$   47,172$75,967——
1,610,342
6,567$1,657,515$82,535

Over 7 years,
up to 10 years$1,595—
1,744$3,340Over 10 years
$   —
—
3,182
$3,182*Among deposits, demand deposits are included in “Up to 1 year.”

3. Fair value information by level within the fair value hierarchy
The fair value of financial instruments is classified into the following three levels according to the observability and materiality of inputs used to measure fair value.
Level 1 fair value: Fair value measured using observable inputs, i.e. quoted prices in active markets for identical assets or liabilities.
Level 2 fair value: Fair value measured using observable inputs other than Level 1 inputs.
Level 3 fair value: Fair value measured using unobservable inputs.
If multiple inputs are used that are significant to the fair value measurement, the fair value measurement is categorized in its entirety in the level of the lowest level
input that is significant to the entire measurement.
(1) Financial instruments measured at fair value

2023
Trading account securities and securities:
Trading securities
National government bonds..............................
Available-for-sale securities
National government bonds..............................
Local government bonds..................................
Corporate bonds............................................
Equity stock.................................................
Other.........................................................
Total assets.........................................................
Derivative transactions
Interest rate related........................................
Currency related...........................................
Total derivative transactions....................................

Level 1Millions of yen
Fair Value
Level 2
Level 32023
Trading account securities and securities:
Trading securities
National government bonds..............................
Available-for-sale securities
National government bonds..............................
Local government bonds..................................
Corporate bonds............................................
Equity stock.................................................
Other.........................................................
Total assets.........................................................
Derivative transactions
Interest rate related........................................
Currency related...........................................
Total derivative transactions....................................

Level 1Thousands of U.S. dollars
Fair Value
Level 2
Level 3$       67$       —

$     —

$       67291,312——814,573
159,170$1,265,138—
2,659,230
1,300,591—
2,026,862$5,986,684——
177,113—65,363$242,477

291,3122,659,230
1,477,705
814,5732,251,404$7,494,308$       —
—$       —

$5,002(26,480)$ (21,478)$     ——
$     —

$5,002(26,480)$ (21,478)*For investment trusts to which the treatment of deeming net asset value as fair value is applied, no note is provided regarding the fair value information by level within the fair value hierarchy.
The amount of such investment trusts in the consolidated balance sheet is $861 thousand.

Total¥      9¥     —

¥    —¥       938,899——108,770
21,254¥168,934—
355,087
173,668—
270,647¥799,402——
23,650—8,728¥32,378

38,899355,087
197,318
108,770
300,630¥1,000,715¥    ——¥    —¥    668(3,536)¥ (2,868)¥    ——¥    —¥     668
(3,536)¥   (2,868)(2) Financial instruments other than those measured at fair value

2023
Securities:
Held-to-maturity debt securities
Local government bonds..................................
Loans and bills discounted......................................
Total assets.........................................................
Deposits............................................................
Negotiable certificates of deposit..............................
Borrowed money.................................................
Total liabilities.....................................................

Level 1

¥—
—
¥—
¥—
—
—
¥—

Level 1Millions of yen
Fair Value
Level 2
Level 3¥242,477——
114,799
26,544¥383,821¥     —
383,220
192,145—
88,879¥664,246¥    ——
26,365—
15,170¥41,535¥   242,477
383,220
218,511
114,799
130,594¥1,089,603¥    ——¥    —¥  3,870(3,746)¥    123¥    ——¥    —¥3,870(3,746)¥      123

Total

*Investment trusts, etc. to which the transitional treatment provided in Paragraph 26 of the “Implementation Guidance on Accounting Standard for Fair Value Measurement” (ASBJ Guidance No.
31, July 4, 2019) has been applied are not included in the table above. The amount of such investment trusts, etc. in the consolidated balance sheet as of March 31, 2022 is ¥179,251 million.

2022
Loans and bills discounted......................................
Total assets.........................................................
Deposits............................................................
Negotiable certificates of deposit..............................
Borrowed money.................................................
Total liabilities.....................................................

2023
Securities:
Held-to-maturity debt securities
Local government bonds..................................
Loans and bills discounted......................................
Total assets.........................................................
Deposits............................................................
Negotiable certificates of deposit..............................
Borrowed money.................................................
Total liabilities.....................................................

Millions of yen
Fair Value
Level 2
Level 3¥   37,068
3,321,294¥3,358,363¥4,696,925
84,270624,262¥5,405,458

Level 1
¥—
¥—
¥—
—
—
¥—

Millions of yen
Fair Value
Level 2
Level 3¥     —
¥3,141,889¥    —¥3,141,889¥4,558,378¥     —
74,579—700,571—¥5,333,529¥    —

Total¥3,141,889¥3,141,889¥4,558,378
74,579700,571¥5,333,529

Level 1Thousands of U.S. dollars
Fair Value
Level 2
Level 3

Total

$—
—
$—
$—
—
—
$—

¥   37,068—¥37,068¥4,696,925
84,270624,262¥5,405,458

Total¥      —3,321,294¥3,321,294¥      ———
¥      —*For investment trusts to which the treatment of deeming net asset value as fair value is applied, no note is provided regarding the fair value information by level within the fair value hierarchy.
The amount of such investment trusts in the consolidated balance sheet as of March 31, 2023 is ¥115 million ($861 thousand).

2022
Securities:
Available-for-sale securities
National government bonds..............................
Local government bonds..................................
Corporate bonds............................................
Equity stock.................................................
Other.........................................................
Total assets.........................................................
Derivative transactions
Interest rate related........................................
Currency related...........................................
Total derivative transactions....................................

Total$   277,600—$   277,600$35,175,054
631,094
4,675,069$40,481,225$       —24,873,017$24,873,017$       ——
—$       —$   277,600
24,873,017$25,150,625$35,175,054
631,094
4,675,069$40,481,225(Note 1) Description of valuation techniques and inputs used in the fair value measurements
AssetsTrading account securities and securities:
Trading account securities and securities for which unadjusted quoted market prices in active markets are available are classified as Level 1 fair value. This mainly includes
listed equity stock and national government bonds.
Securities for which published quoted market prices are available but the market is not active are classified as Level 2 fair value. This mainly includes local government
bonds and corporate bonds. For investment trusts for which no market trading prices exist, the net asset value is used as fair value and classified as Level 2 fair value if there
are no material restrictions that would require compensation for the risk from market participants with respect to cancellation or repurchase requests.

65

Th e Hyakujushi Bank, Ltd . Integrated R ep ort 2023

T he H yak ujushi Bank, Ltd . Integrated Rep ort 2023

66

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements
When quoted market prices are not available, fair value is estimated using valuation techniques such as valuation prices obtained from third parties such as brokers orpresent value of future cash flows. The valuation is based on the maximum use of observable inputs, which include TIBOR, national government bond yields, swap rates,
and credit spreads. When significant unobservable inputs are used in the calculation, the fair value is classified as Level 3 fair value.
Investment trusts in the fiscal year ended March 31, 2022 were based on published reference prices, and no level is assigned by applying transitional measures inaccordance with Paragraph 26 of the “Implementation Guidance on Accounting Standard for Fair Value Measurement.”
The fair value of self-guaranteed privately-subscribed bonds is calculated by discounting the total amount of principal and interest by the interest rate that would beassumed if similar bonds were issued, by category based on internal rating and term, and is classified as Level 3 fair value because the discount rate is unobservable.
Notes regarding securities by purpose of holding are described in “6. Securities and trading account securities.”
Loans and bills discounted:
The fair value of loans and bills discounted is calculated by discounting the total amount of principal and interest by the interest rate that would be applicable to a similar
new loan based on the loan type, internal rating, and term, and is classified as Level 3 fair value because the relevant discount rate is unobservable. For loans to bankrupt,
substantially bankrupt and likely to go bankrupt debtors, reserve for possible loan losses is provided based on the present value of estimated future cash flows or theamount expected to be collected through collateral and guarantees, etc. As the fair value approximates the amount of loans less the amount of reserve for possible loan
losses on the consolidated balance sheet as of the end of the fiscal year, this value is used as fair value and classified as Level 3 fair value.
For loans and bills discounted that do not have a repayment date due to characteristics such as limiting such loans to the scope of collateral assets, book value is usedas fair value because the fair value is assumed to approximate the book value based on the expected repayment period and interest rate terms, etc. Such loans and bills
discounted are classified as Level 3 fair value.
Liabilities
Deposits and Negotiable certificates of deposit:
For demand deposits, the amount payable on demand at the end of the fiscal year (book value) is considered to be the fair value. The fair value of time deposits is calculated
as the present value of future cash flows discounted by a certain period of time. The discount rate used is the interest rate applicable to new deposits. For those with short
deposit terms (6 months or less), book value is used as fair value because the fair value approximates the book value. Such fair value is classified as Level 2 fair value.
Borrowed money:
The present value of borrowed money is calculated by discounting the total amount of principal and interest of the relevant borrowings, classified by a certain period oftime, by the interest rate assumed for similar borrowings.
For those with floating interest rates, the book value is used as the fair value because the fair value is considered to approximate the book value since the floating interest
rate reflects the market interest rate in a short period of time and the credit conditions of the Bank and its consolidated subsidiaries have not changed significantly since
the borrowings were executed. For those with short contractual terms (1 year or less), book value is used as fair value because the fair value approximates the book value.
Such fair value is classified as Level 2 fair value.
Derivative transactions:
For exchange-traded transactions, those for which unadjusted quoted prices in active markets are available are classified as Level 1 fair value.
For over-the-counter transactions, fair value is calculated using valuation techniques such as present value techniques and option pricing models with inputs such as
interest rates, exchange rates, and volatility. In addition, price adjustments are made based on the credit risk of the counterparty and the Bank’s own credit risk. When
unobservable inputs are not used or their effect is not material, the Bank classifies the instruments as Level 2 fair value, and when significant unobservable inputs are used,
the Bank classifies the instruments as Level 3 fair value.
(Note 2) Information about Level 3 fair value of financial instruments measured at fair value(1) Quantitative information on significant unobservable inputs
2023
Securities:
Available-for-sale securities:
Privately-subscribed bonds

2022
Securities:
Available-for-sale securities:
Privately-subscribed bonds

Valuationtechniques

Significant
unobservable
inputsRange of inputs

Weighted
average of inputs

Present value
technique

Credit spread

0.06% to 0.31%

0.17%

Valuationtechniques

Significant
unobservable
inputsRange of inputs

Weighted
average of inputs

Present value
technique

Credit spread

0.04% to 0.27%

0.08%(2)	A reconciliation from the beginning balances to the ending balances and gains or losses on valuation of financial assets and financial liabilities held at the end of thereporting period included in profit or loss for the period
Millions of yen
Securities
Available-for-sale securities
Privately-subscribedbonds
Structured bonds
2023
Beginning balance.............................................................................
¥26,365¥15,170
Profit or loss or other comprehensive income for the period
Recorded in profit or loss (*1) .......................................................
0(1,946)
Recorded in other comprehensive income (*2) ...................................
(68)
1,998
Purchases, sales, issuances, and settlements (net) ......................................
(2,646)(6,493)
Transfer into Level 3 (*3)...................................................................
——
Transfer out of Level 3 (*4) ................................................................
——
Ending balance.................................................................................
¥23,650¥ 8,728
Gains or losses on valuation of financial assets and financial liabilities heldat the end of the fiscal year included in profit or loss for the period..............
¥    —¥    —
Millions of yen
Securities
Available-for-sale securities
Privately-subscribed
2022
bonds
Structured bonds
Beginning balance.............................................................................
¥23,378¥36,964
Profit or loss or other comprehensive income for the period
Recorded in profit or loss (*1) .......................................................
0(1,597)
Recorded in other comprehensive income (*2) ...................................
(27)
1,279
Purchases, sales, issuances, and settlements (net) ......................................
3,014(21,477)
Transfer into Level 3 (*3)...................................................................
——
Transfer out of Level 3 (*4) ................................................................
——
Ending balance.................................................................................
¥26,365¥15,170
Gains or losses on valuation of financial assets and financial liabilities heldat the end of the fiscal year included in profit or loss for the period..............
¥    —¥    —
Thousands of U.S. dollars
Securities
Available-for-sale securities
Privately-subscribedbonds
Structured bonds
2023
Beginning balance.............................................................................
$197,446$113,607
Profit or loss or other comprehensive income for the period
Recorded in profit or loss (*1) .......................................................
0(14,573)
Recorded in other comprehensive income (*2) ...................................
(509)
14,962
Purchases, sales, issuances, and settlements (net) ......................................
(19,815)(48,625)
Transfer into Level 3 (*3)...................................................................
——
Transfer out of Level 3 (*4) ................................................................
——
Ending balance.................................................................................
$177,113$ 65,363
Gains or losses on valuation of financial assets and financial liabilities heldat the end of the fiscal year included in profit or loss for the period..............
$  —
$  —
(*1) Included in “other operating income” and “other operating expenses” in the consolidated statements of income.
(*2) Included in “net unrealized gains (losses) on available-for-sale securities” under “other comprehensive income” in the consolidated statements of comprehensive income.
(*3) Transferred out of Level 2 fair value into Level 3 fair value. Not applicable for the fiscal year.
(*4) Transferred out of Level 3 fair value into Level 2 fair value. Not applicable for the fiscal year.

(3) Description of valuation processes used for fair value measurements
The Group’s risk management department and middle office have established policies and procedures for the calculation of fair value, and the front office formulatesa fair value model in accordance with these policies and procedures. The fair value calculated by the back office is verified by the middle office to ensure theappropriateness of the fair value valuation model and inputs, and the appropriateness of the classification of fair value levels. The results of the verification are reported
to the risk management department each fiscal year to ensure the appropriateness of the fair value calculation policies and procedures.
The fair value model utilizes observable data to the extent possible. In cases where quoted market prices obtained from third parties are used, the Group verifies
the appropriateness of the prices by comparing them with recalculated results using observable inputs.
(4) Description of sensitivity of the fair value measurement to changes in significant unobservable inputs
Credit spread:
The credit spread is the additional interest rate included in the coupon rate of the privately-subscribed bonds and is an estimate calculated based on the past one yearof issuance. A significant increase (decrease) in the credit spread would result in a significant decrease (increase) in the fair value.

67

Th e Hyakujushi Bank, Ltd . Integrated R ep ort 2023

T he H yak ujushi Bank, Ltd . Integrated Rep ort 2023

68

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements
23. Accrued retirement benefits(2) Defined benefit plan(a) Reconciliation of retirement benefit obligations at beginning and end of period

For the years ended March 31,
Retirement benefit obligations at
beginning of period................
Service costs*....................
Interest costs.....................
Actuarial differences............
Retirement benefits paid.......
Prior service costs...............
Retirement benefit obligations at
end of period........................

Thousands of
U.S. dollars
2023

Millions of yen
2022
2023

For the fiscal years ended March 31,
Service costs*..........................
Interest costs...........................
Expected return on pension assets.
Amortization of actuarial
differences...........................
Amortization of past service costs.....
Retirement benefit costs fordefined benefit plans...............

¥58,765
1,596
139(6,606)(2,202)—¥58,818
1,608
139
260
(2,061)—$440,088
11,952
1,040(49,472)(16,490)—¥51,691¥58,765$387,111

Thousands of
U.S. dollars
2023¥66,833¥66,335$500,509

1,228
(364)
1,232
(1,538)¥67,391

1,160
(396)
1,256
(1,522)¥66,833

9,196(2,725)9,226(11,518)$504,688(c) Reconciliation of retirement benefit obligations and pension assets at end of period andnet defined benefit liability and net defined benefit asset recorded in the consolidatedbalance sheet

As of March 31,
Retirement benefit obligations offunded plan..........................
Pension assets..........................
Retirement benefit obligations of
unfunded plan.......................
Net amount of liabilities and assets
recorded in consolidated balance
sheet..................................

As of March 31,
Net defined benefit liability..........
Net defined benefit asset.............
Net amount of liabilities and assets
recorded in consolidated balance
sheet..................................

69

Thousands of
U.S. dollars
2023

Millions of yen
2022
2023
¥ 51,691(67,391)(15,699)¥58,765 $ 387,111(66,833) (504,688)(8,067) (117,569)—¥(15,699)——¥ (8,067) $(117,569)

Thousands ofMillions of yen
U.S. dollars
2022
2023
2023
¥   208 $   1,857¥    248(8,276) (119,433)(15,948)¥(15,699)¥(8,067) $(117,569)

Th e Hyakujushi Bank, Ltd . Integrated R ep ort 2023

154
—

91
—

1,153
—

¥  662¥  678$ 4,957(e) Remeasurements of defined benefit plans in other comprehensive income
The breakdown of items (before adjusting for tax effects) recorded inremeasurements of defined benefit plans.

For the fiscal years ended March 31,
Actuarial differences..................
Total.....................................

Thousands ofMillions of yen
U.S. dollars
2022
2023
2023
¥ (566)¥6,397$47,906¥ (566)¥6,397$47,906(f) Remeasurements of retirement benefit plans in accumulated other comprehensive
income
The following is a breakdown of items (before adjusting for tax effects) recorded
in remeasurements of retirement benefit plans:(b) Reconciliation of pension assets at beginning and end of period
Millions of yen
2022
2023

Thousands ofMillions of yen
U.S. dollars
2022
2023
2023
¥1,608¥1,596$11,952
139
139
1,040
(1,160)(1,228)(9,196)*Retirement benefit costs of consolidated subsidiaries that use the simplified method arerecorded in a lump-sum in “Service costs.”*Retirement benefit costs of consolidated subsidiaries that apply the simplified method are
all recorded within “Service costs.”

For the fiscal years ended March 31,
Pension assets at beginning of
period................................
Expected return on pension
assets............................
Actuarial differences............
Contribution from employer....
Retirement benefits paid.......
Pension assets at end of period......

24. Stock options(d) Breakdown of retirement benefit costs(1) Overview of retirement benefit scheme adopted by the Bank
As defined-benefit type plans, the Bank has established a contract-type defined
benefit corporate pension plan and a retirement lump-sum payment plan. In
some cases, an extra severance package is provided to employees on theirretirement and so on. In addition, the Bank has set up a retirement benefit trust.
The Bank’s consolidated subsidiaries have established a retirement lumpsum payment plan as defined-benefit type plans, and a defined contribution
pension plan as defined-contribution type plan. Further, for the retirement
lump-sum payment plan of consolidated subsidiaries, net defined benefit
liability and retirement benefit costs are calculated by the simplified method.

As of March 31,
Unrecognized actuarial differences.
Total.....................................

Thousands ofMillions of yen
U.S. dollars
2022
2023
2023
¥ (1,924)¥4,472$33,490¥ (1,924)¥4,472$33,490(g) Items related to pension assets(i) The following is the percentage of total pension assets by main category:
As of March 31
Bonds.....................................................
Stocks.....................................................
Life insurers’ general account........................
Other.....................................................
Total......................................................

2023
15.5%
35.6
24.6
24.3
100.0%

2022
12.8%
34.0
24.9
28.3
100.0%

Note: Total pension assets include retirement benefit trusts established for the
corporate pension plan (18.4% and 18.0% as of March 31, 2023 and 2022,
respectively) and retirement benefit trusts established for the retirement
lump-sum payment plan (21.6% and 21.0% as of March 31, 2023 and 2022,
respectively).

(ii) Method for determining expected long-term rate of return on pension assets:
To determine expected long-term rate of return on pension assets, the Bank
considers the current and projected pension asset allocations, as well as
long-term rate of current returns and expected returns from each category
consisting of pension assets.

1. Amount and title of expense recognized for stock options

Not applicable.

2. Stock option details, size, and changes(1) Stock option details
2014 stock options 2015 stock options 2016 stock options
Category and number of grantrecipients.................................

The Bank’s ten
directors(excluding
outside directors)

The Bank’s nine
directors(excluding
outside directors)

The Bank’s eight
directors(excluding
outside directors)

Type and number of stock options
granted (Note)........................... Common stock:
13,660 shares
Grant date................................... July 25, 2014
Vesting terms............................... No vesting terms
Service period............................... No service period
specifiedExercise period............................. July 26, 2014 to
July 25, 2044

Common stock:9,430 shares
July 24, 2015
No vesting terms
No service period
specified
July 25, 2015 toJuly 24, 2045

Common stock:
13,770 shares
July 26, 2016
No vesting terms
No service period
specified
July 27, 2016 toJuly 26, 2046

Note: Converted to the number of shares equivalent to that after the 1-for-10 reverse stock split implemented on October 1, 2018.

(2) Stock option size and changes(a) Number of stock options
2014 stock options 2015 stock options 2016 stock options
Prior to vesting (shares):
Prior fiscal year end..................
Granted.................................
Expired.................................
Vested shares..........................
Unvested shares.......................
After vesting (shares):
Prior fiscal year end..................
Vested shares..........................
Exercised...............................
Expired.................................
Unexercised............................

1,140
—
—
—
1,140

1,720
—
—
—
1,720

3,680
—
—
—
3,680

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

Note: Converted to the number of shares equivalent to that after the 1-for-10 reverse stock split implemented on October 1, 2018.

(b) (Unit price information (in year)
2014 stock options 2015 stock options 2016 stock options
Exercise price............................... Per share: ¥    1 Per share: ¥    1 Per share: ¥    1Average price at exercise..................
———
Fair value on grant date.................... Per share: ¥3,350 Per share: ¥4,090 Per share: ¥2,850
Note: Converted to the price equivalent to that after the 1-for-10 reverse stock split implemented on October 1, 2018.

3. Method for estimating number of vested stock options
In general, as it is difficult to rationally estimate the future number of expired
stock options only the actual number of expired stock options is reflected.

(h) Assumptions for making actuarial calculation
Major assumptions for actuarial calculations at the end of the fiscal year
1) Discount rate.................................
2) Expected long-term rate of return........
3) Assumed salary increase rate...............

2023
0.91%
mainly2.00% to
3.00%
3.22%

2022
0.23%
mainly2.00% to
3.00%
3.20%

(3) Defined contribution pension plan
The required contribution to the defined contribution plans of consolidated
subsidiaries was ¥7 million ($52 thousand) and ¥7 million for the years ended
March 31, 2023 and 2022, respectively.

T he H yak ujushi Bank, Ltd . Integrated Rep ort 2023

70

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements
25. Derivative transactions(1) Type of transactions
The Group undertakes the following derivative transactions: interest-rate swaps
and others for interest rate-related transactions; currency swaps, forward
exchange contracts and currency options for currency-related transactions; andbond futures for bond-related transactions.
(2) Aims and policy
The Bank offers derivative products to meet customer needs, and to minimize
risk from exchange rate and interest rate fluctuations regarding the Bank’s assets
and liabilities.
Fair value of interest rate-related transactions as of March 31,
2023 and 2022 were as follows:

2023
Over the Counter
Interest rate swaps:
Fixed ratereceivable/variable rate
payable...........
Variable ratereceivable/fixed
rate payable......
Others:Sell...................
Buy...................
Total....................

2022
Over the Counter
Interest rate swaps:
Fixed ratereceivable/variable rate
payable...........
Variable ratereceivable/fixed
rate payable......
Others:Sell...................
Buy...................
Total....................

2023
Over the Counter
Interest rate swaps:
Fixed ratereceivable/variable rate
payable...........
Variable ratereceivable/fixed
rate payable......
Others:Sell...................
Buy...................
Total....................

71

Millions of yen
Contracted value
Appraised
Total
Over 1 year Fair value profit/(loss)¥29,747¥28,186¥30

28,186

313

313

6,313
6,313

5,922
5,922

(47)
47
¥344

49
16
¥409

Millions of yen
Contracted value
Appraised
Total
Over 1 year Fair value profit/(loss)¥32,657¥31,631

¥378

¥378

32,657

31,631

14

14

7,437
7,437

7,299
7,299

(16)
17
¥392

95
(9)
¥478

Thousands of U.S. dollars
Contracted value
Appraised
Total
Over 1 year Fair value profit/(loss)

222,773
47,27747,277$211,083$224

211,083
44,34944,349

2,344
(351)
351
$2,576Th e Hyakujushi Bank, Ltd . Integrated R ep ort 2023

2023
Over the Counter
Currency swaps.......
Forward exchange
contracts:
Sell................
Buy................
Currency options:Sell................
Buy................
Others:Sell................
Buy................
Total....................

¥30

29,747$222,773

Fair value of currency-related transactions as of March 31, 2023 and 2022 wereas follows:

$224
2,344
366
119
$3,062

2022
Over the Counter
Currency swaps.......
Forward exchange
contracts:
Sell................
Buy................
Currency options:Sell................
Buy................
Others:Sell................
Buy................
Total....................

Millions of yen
Contracted value
Appraised
Total
Over 1 year Fair value profit/(loss)¥  7,082¥ 7,082¥     2¥     2150,201138,363

40,316
41,405(2,612)
2,572(2,612)
2,572

112,237
112,237

87,71587,715(6,513)
6,343(1,164)
1,968

210,522
210,522210,255
210,255

4,508(4,958)¥  (658)

4,535(2,343)¥ 2,957(3) Derivative transactions subject to hedge accounting
The following are the contracted value or the amount equivalent to the principal and the fair value for each type of derivative transaction subject to hedge accounting asof the end of the fiscal year. The contracted value, other price or value below does not indicate by itself the market risk of the derivative transaction.
(a) Interest rate-related transactions
As of March 31, 2023

Hedge accounting method

Millions of yen
Contracted value
Appraised
Total
Over 1 year Fair value profit/(loss)

Type
Main hedged item
Interest rate swaps
Available-for-salesecurities
General accounting rules Variable rate receivable/fixed(bonds)rate payable
Total

Contracted value¥23,100

Millions of yen
Contracted value over
1 year¥23,100

Fair value
¥323
¥323

As of March 31, 2022

Hedge accounting method

Type
Main hedged item
Interest rate swaps
Available-for-salesecurities
General accounting rules Variable rate receivable/fixed(bonds)rate payable
Total

Contracted value¥149,100Millions of yen
Contracted value over
1 year¥124,100

Fair value¥3,477¥3,477

As of March 31, 2023¥  6,748¥ 6,748¥     3¥     3111,260
88,78129,751
28,073(4,603)
3,886(4,603)
3,886

118,524
118,524

87,941
87,941(4,326)
4,291

964
67

71,571
71,571

71,571
71,571(49)
16¥  (782)(32)
864¥ 1,149(b) Currency-related transactions
As of March 31, 2023

Thousands of U.S. dollars
Contracted value
Appraised
Total
Over 1 year Fair value profit/(loss)

Hedge accounting method2023
Over the Counter
Currency swaps....... $   53,036
Forward exchange
contracts:
Sell................ 1,124,848
Buy................ 1,036,194
Currency options:Sell................
840,537
Buy................
840,537
Others:Sell................ 1,576,589
Buy................ 1,576,589
Total....................

$ 53,036$     14$     14301,924
310,080(19,561)
19,261(19,561)
19,261

656,893
656,893(48,775)
47,502(8,717)
14,7381,574,589
1,574,589

33,760(37,130)$ (4,927)

33,962(17,546)$ 22,144

Hedge accounting method

TypeInterest-rate swaps
General accounting rules Variable rate receivable/fixed
rate payable
Total

Main hedged item
Available-for-sale securities(bonds)Thousands of U.S. dollars
Contracted value
Contracted value
over 1 year
$172,994$172,994

Fair value$2,418$2,418

Note: In general, deferred hedge accounting method is applied to hedging transactions for interest rate risk arising from financial assets.

Type
Currency swaps
General accounting rules
Monetary swaps

Main hedged item
Foreign currency receivables
Total

Contracted value¥33,421104,834

Millions of yen
Contracted value over
1 year¥26,706—

Contracted value¥33,192
56,463

Millions of yen
Contracted value over
1 year¥12,349—

Fair value¥(1,039)(1,838)¥(2,878)

As of March 31, 2022

Hedge accounting method

Type
Currency swaps
General accounting rules
Monetary swaps

Main hedged item
Foreign currency receivables
Total

Fair value¥(1,358)(1,605)¥(2,964)

As of March 31, 2023

Hedge accounting method

Type
Currency swaps
General accounting rules
Monetary swaps

Main hedged item
Foreign currency receivables
Total

Thousands of U.S. dollars
Contracted value overContracted value
1 year
$250,288$200,000
785,096—

Fair value$(7,781)(13,764)$(21,553)

Note: In general, deferred hedge accounting is applied according to “Accounting and Auditing for Foreign Currency Transactions in the Banking Industry” (JICPA Industry Committee Practical
Guideline No. 25).

T he H yak ujushi Bank, Ltd . Integrated Rep ort 2023

72

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements
26. Revenue recognition

Disaggregation of revenue from contracts with customers

Category
Operating income.............................................................................
Of which, Fees and commissions.....................................................
Deposit and loan services..............................................................
Foreign exchange services.............................................................
Securities-related services.............................................................
Guarantee services......................................................................
Agency services..........................................................................
Others.....................................................................................

Millions of yen
2022
2023
¥73,092¥84,888
12,19012,175
2,415
2,878
3,055
2,805
1,753
1,097
387
380
94
91
4,483
4,922

Thousands of U.S.
dollars
2023$635,722
91,17821,55321,006
8,215
2,845
681
36,860(Note) The above table also includes income based on “Accounting Standard for Financial Instruments” (ASBJ Statement No. 10).

27. Segment information(1) Overview of reportable segments
Reportable segments are the Group’s constituent business units for which separate financial data can be obtained and that are examined periodically by the Board of
Directors for the purposes of determining the allocation of management resources and evaluating operating results.
The Group is engaged mainly in banking activities. Consolidated subsidiaries provide financial services primarily engaging in leasing activities. The Bank and its
individual consolidated subsidiaries, which comprise a corporate group, each prepare business and other plans while developing business activities.
As a result, the Group has identified the two reportable segments of banking and leasing, which comprise the basic segments of the Bank and its individual consolidated
subsidiaries by operation. Operations under the banking segment include the provision of services relating deposits, loans, marketable securities and related investment aswell as foreign currency exchange. Operations under the leasing segment include leasing and other operations conducted by Hyakujushi Lease Co., Ltd.
(2) Calculation methods for ordinary income, profit and loss, assets and liabilities and other items by reportable segment
The method of accounting treatment applied to reportable segments is the same as that described in “3. Significant accounting policies.”
Moreover, reportable segment profit is based on ordinary profit.
Intersegment ordinary income is based on transaction prices between third parties.
(3) Information regarding ordinary income, profit and loss, assets and liabilities and other items by reportable segment
Information about reportable segments of the Bank and its consolidated subsidiaries for the years ended March 31, 2023 and 2022 is as follows:

2023
Ordinary income:Outside customers............................
Inter-segment transactions...................
Total...................................................
Segment profit.......................................
Segment assets.......................................
Segment liabilities...................................
Other items:.........................................
Depreciation...................................
Interest income................................
Interest expenses..............................
Gain from disposal of tangible assets.......
Loss from disposal of tangible assets.......
Impairment losses.............................
Tax expenses...................................
Increases in tangible fixed assets andintangible fixed assets......................

73

Total

Adjustment

Consolidated
total

Banking

Leasing¥   75,414583¥   75,998¥   11,871¥5,789,023¥5,524,635¥ 7,382563¥ 7,945¥   489¥25,614¥20,279¥   82,796
1,147¥   83,943¥   12,361¥5,814,637¥5,544,915¥ 2,091
3,414¥ 5,506¥ 1,593¥23,654¥ 9,412¥   84,888
4,561¥   89,450¥   13,954¥5,838,291¥5,554,328¥—(4,561)¥ (4,561)¥   (658)¥(28,932)¥(26,067)¥   84,888—¥   84,888¥   13,295¥5,809,359¥5,528,260¥    2,654
48,087
7,906
0
74
63
3,448

¥   145
278
63
65
0
—
121

¥    2,800
48,365
7,970
65
74
63
3,570

¥   287
86
25
—
10
—
507

¥    3,088
48,452
7,995
65
84
63
4,077

¥     41
(585)
(88)
(4)
0
—
(41)

¥    3,129
47,866
7,907
61
84
63
4,036

2,139

2

2,142

300

2,442

68

2,510

Th e Hyakujushi Bank, Ltd . Integrated R ep ort 2023

Total

Millions of yen
Otherbusinesses

2022
Ordinary income:Outside customers............................
Inter-segment transactions...................
Total...................................................
Segment profit.......................................
Segment assets.......................................
Segment liabilities...................................
Other items:.........................................
Depreciation...................................
Interest income................................
Interest expenses..............................
Gain from disposal of tangible assets.......
Loss from disposal of tangible assets.......
Impairment losses.............................
Tax expenses...................................
Increases in tangible fixed assets andintangible fixed assets......................

Total

Leasing¥   63,356
592¥   63,948¥   13,781¥5,726,730¥5,458,147¥ 7,727627¥ 8,355¥   327¥29,219¥24,286¥   71,083
1,220¥   72,303¥   14,109¥5,755,950¥5,482,434¥ 2,009
3,403¥ 5,412¥ 1,643¥22,797¥ 9,204¥   73,092
4,624¥   77,716¥   15,752¥5,778,748¥5,491,638¥—(4,624)¥ (4,624)¥   (564)¥(31,481)¥(28,708)¥   73,092—¥   73,092¥   15,187¥5,747,266¥5,462,929¥    2,796
41,338
1,515
0
122
72
2,782

¥   117
272
73
76
0
—
83

¥    2,913
41,611
1,588
76
122
72
2,866

¥   288
92
30
—
8
—
496

¥    3,201
41,703
1,618
76
131
72
3,362

¥     47
(567)
(109)
(20)
—
—
(26)

¥    3,249
41,136
1,508
55
131
72
3,336

2,458

2

2,460

193

2,653

27

2,680

Adjustment

Consolidated
total

Thousands of U.S. dollars
Other
Total
businesses
Total

Leasing

Adjustment

Consolidated
total

Banking

Banking2023
Ordinary income:Outside customers............................ $   564,771
Inter-segment transactions...................
4,366
Total................................................... $   569,145
Segment profit....................................... $   88,901
Segment assets....................................... $43,353,725
Segment liabilities................................... $41,373,736
Other items:.........................................
Depreciation................................... $    19,875
Interest income................................
360,121
Interest expenses..............................
59,207
Gain from disposal of tangible assets.......
0
Loss from disposal of tangible assets.......
554
Impairment losses.............................
471
Tax expenses...................................
25,821
Increases in tangible fixed assets andintangible fixed assets......................
16,018

Total

Millions of yen
Otherbusinesses$ 55,283
4,216$ 59,499$  3,662$191,822$151,868$   620,055
8,589$   628,645$    92,570$43,545,547$41,525,612$ 15,659
25,567$ 41,234$ 11,929$177,143$ 70,486$   635,722
34,157$   669,886$   104,500$43,722,691$41,596,105$—(34,157)$ (34,157)$  (4,927)$(216,670)$(195,214)$   635,722—$   635,722$    99,565$43,506,021$41,400,883$   1,085
2,081
471
486
0
—
906

$    20,969
362,203
59,686486
554
471
26,735$  2,149
644
187
—
74
—
3,796

$    23,125
362,854
59,874486
629
471
30,532$     307
(4,381)
(659)
(29)
0
—
(307)

$    23,432
358,466
59,215456
629
471
30,22514

16,041

2,246

18,288509

18,797

Notes: 1. In place of sales, which are usually posted by companies other than banks, the Bank and its consolidated subsidiaries report ordinary income. In addition, adjusted differences arerecorded as the difference between ordinary income and ordinary income recorded on consolidated statements of income.
2. The Other businesses segment is comprised of business segments not included in reportable segments and mainly consists of credit card and credit guarantee operations.
3. For the fiscal year ended March 31, 2023, the amounts in the column of “Adjustment” under the following line items primarily represent the elimination arising from the inter-segment
transactions: Segment profit, Segment assets, Segment liabilities, Depreciation, Interest income, Interest expenses, Gain from disposal of tangible assets, Loss from disposal of tangible
assets, Impairment losses, Tax expenses and Increases in tangible fixed assets and intangible fixed assets.
For the fiscal year ended March 31, 2022, the amounts in the column of “Adjustment” under the following line items primarily represent the elimination arising from the inter-segment
transactions: Segment profit, Segment assets, Segment liabilities, Depreciation, Interest income, Interest expenses, Gain from disposal of tangible assets, Impairment losses, Tax
expenses and Increases in tangible fixed assets and intangible fixed assets.
4. Segment profit is adjusted with ordinary profit recorded on consolidated statements of income.

T he H yak ujushi Bank, Ltd . Integrated Rep ort 2023

74

The Hyakujushi Bank, Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements
28. Related-party transactions(Associated information)
1. Information on each service
Millions of yen
2023
Income from external customers...........................

Lending services¥34,809

Securities investment
services¥18,106

Leasing services¥7,382Other¥24,589

Total¥84,888

Millions of yen
Securities investment
services¥20,201

2022
Income from external customers...........................

Lending services¥27,957

Leasing services¥7,7272023
Income from external customers...........................

Thousands of U.S. dollars
Securities investment
Lending services
services
Leasing services$260,682$135,594$55,283

Other¥17,205

Total¥73,092

The weighted average interest rate applicable to the total balance of borrowed
money as of March 31, 2023 is 0.57%.

29. Per share data

Amounts per share as of March 31, 2023 and 2022 and for the fiscal years thenended were summarized as follows:
Yen
U.S. dollars
2022
2023
2023
Net assets per share..................... ¥9,719.34 ¥9,639.96$72.787
Basic earnings per share................
396.83315.57
2.363
Diluted earnings per share.............
396.72315.502.362

Other$184,145

Total$635,722
Net assets...............................
Amount excluded from net assets..
(of which, share subscription
rights)................................
Net assets attributable to common
stock at the fiscal year-end.......
Number of common stock at the
fiscal-year end for calculation of
net assets per share (inthousands)...........................

Millions of yen,Thousands of
except number of shares
U.S. dollars
2022
2023
2023
¥284,336 $2,105,129¥281,098
21
21
157
21

21

157

281,077

284,315

2,104,972

28,91929,493

3. Information on each major customer
	Information is omitted since there are no specific customers from whom ordinary income accounts for 10% or more of ordinary income in the consolidated statements
of income.

2. Basic and diluted earnings per share figures are calculated on the basis of thefollowing.

(Information on impairment losses on fixed assets by reportable segment)
Information regarding impairment losses on fixed assets by reportable segment for the years ended March 31, 2023 and 2022 was as follows:

Basic earnings per share
Profit attributable to owners ofparent.............................
Amount not attributable tocommon stockholders.........
Profit attributable to common
stockholders.....................
Average number of common
stock during the year (inthousands).......................
Diluted earnings per share
Increase in number of common
stock (in thousands)............
(of which, sharesubscription rights).........

Millions of yen
2023
Impairment losses on fixed assets..........................

Banking¥63

Leasing
¥—

Total
¥63

Other
¥—

Corporate/
Elimination
¥—

Total
¥63

Millions of yen
2022
Impairment losses on fixed assets..........................

Banking¥72

Leasing
¥—

Total
¥72

Other
¥—

Corporate/
Elimination
¥—

Total
¥72

Thousands of U.S. dollars
2023
Impairment losses on fixed assets..........................

Th e Hyakujushi Bank, Ltd . Integrated R ep ort 2023

Banking$471

Leasing
$—

Total
$471

Other
$—

Annual maturities of borrowed money as of March 31, 2023 are as follows:
Millions of yen
Up to 1 year.................................... ¥138,289
Over 1 year, up to 2 years....................
90,791
Over 2 years, up to 3 years..................
178,785
Over 3 years, up to 4 years..................
214,001
Over 4 years, up to 5 years..................
1,028
Over 5 years....................................
1,538

Thousands of
U.S. dollars$1,035,639
679,929
1,338,912
1,602,643
7,698
11,518Notes: 1. Net assets per share figures are calculated on the basis of the following.

2. Information on each area
(1) Ordinary income	Information is omitted since the amount attributed to income from external customers in Japan accounts for more than 90% of the ordinary income in the
consolidated statements of income.
(2) Tangible fixed assets
Information is omitted since the amount attributed to tangible fixed assets located in Japan accounts for more than 90% of the tangible fixed assets in the
consolidated balance sheets.

75

30. Borrowed money

Not applicable to the fiscal years ended March 31, 2023 and 2022.

Corporate/
Elimination
$—

Total
$471

Millions of yen,
except number of shares
2022
2023

Thousands of
U.S. dollars
2023¥9,172¥11,702$68,688

—

—

—

9,172

11,702

68,68829,06629,49068

68

3. The Bank’s own stock remaining in the BIP Trust recorded as treasury stock instockholders’ equity is included in treasury stock to be deducted in thecalculation of net assets per share, basic earnings per share, and diluted earnings
per share.
			 The number of the said treasury stock deducted at year-end in the calculationof net assets per share was 76 thousand shares and 87 thousand shares as of March
31, 2023 and 2022, respectively. Moreover, the average number of the said
treasury stock deducted in the calculation of basic earnings per share and diluted
earnings per share during the year was 79 thousand shares and 88 thousand
shares for the fiscal years ended March 31, 2023 and 2022, respectively.

31. Subsequent event

Acquisition and cancellation of treasury stock
At a meeting of the Board of Directors held on May 11, 2023, the Bank resolvedto acquire its treasury stock in accordance with the provisions of Article 156 of
the Companies Act as applied mutatis mutandis pursuant to the provisions ofArticle 165, Paragraph 3 of the same Act, and implemented the acquisition as
described below. In addition, with regard to the cancellation of its treasury stockin accordance with the provisions of Article 178 of the Companies Act, which
was resolved at the same meeting of the Board of Directors, the total number ofshares to be cancelled was confirmed as described below. (Note 1)
Furthermore, at a meeting of the Board of Directors held on September 20,
2023, the Bank resolved to cancel its treasury stock in accordance with theprovisions of Article 178 of the Companies Act. (Note 2)
1. Details of treasury stock acquired(1) Type of shares acquired: Common stock(2) Total number of shares acquired: 306,000 shares(3) Total cost of stock acquired: ¥599.9754 million ($4,493 thousand)(4) Period of acquisition of treasury stock: From June 12, 2023 to August 14,
2023(5) Method of acquisition: Market purchase on the Tokyo Stock Exchange
2. Details of treasury stock to be cancelled(1) Type of shares to be cancelled: Common stock(2) Total number of shares to be cancelled:
306,000 shares (Note 1)
4,000 shares (Note 2)
310,000 shares in total (Ratio to the total number of shares issued
before cancellation: 1.07%)(3) Scheduled date of cancellation: September 29, 2023
(4) Total number of shares issued after cancellation: 28,790,000 shares

T he H yak ujushi Bank, Ltd . Integrated Rep ort 2023

76

Independent Auditor’s Report

The Board of Directors
The Hyakujushi Bank, Ltd.
OpinionWe have audited the accompanying consolidated financial statements of The Hyakujushi Bank,
Ltd. and its consolidated subsidiaries (the Group), which comprise the consolidated balance
2023, and the consolidated statements of income, comprehensive income,sheet as at March 31, 2022,
changes in net assets, and cash flows for the year then ended, and notes to the consolidated
financial statements.
In our opinion, the accompanying consolidated financial statements present fairly, in all material
respects, the consolidated financial position of the Group as at March 31, 2022,
2023, and its
consolidated financial performance and its consolidated cash flows for the year then ended inaccordance with accounting principles generally accepted in Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for
the Audit of the Consolidated Financial Statements section of our report. We are independent of
the Group in accordance with the ethical requirements that are relevant to our audit of theconsolidated financial statements in Japan, and we have fulfilled our other ethicalresponsibilities in accordance with these requirements. We believe that the audit evidence wehave obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significancein our audit of the consolidated financial statements of the current period. These matters wereaddressed in the context of the audit of the consolidated financial statements as a whole, and informing the auditor’s opinion thereon, and we do not provide a separate opinion on thesematters.
Adequacyof borrower
determining
reservepossibleloan lossesof
Determinationof debtorclassification
classificationinwith
respect tothe
entities
forforwhich
an assessment
business evaluation is necessary, entities for which a business improvement plan has been
Descriptionof KeyAuditor’s Response
formulated
and entities
forAuditwhichMattera downgrade in the debtor classification
has a certain degreeof impact on profit or loss of the Group.
The group has a wide-area retail network in
In considering the adequacy of the borrower
JapanDescription
in 11 prefectures
surroundingtheSetoclassification,
our audit Response
procedures consistedof Key Audit Matter
Auditor’s
Inland Sea and urban areas, mainly inprimarily of the following:
KagawaPrefecture,with itsretaillendingTheGroup
has a wide-area
network in
consideringof controls
the･In WeevaluatedthetheappropriatenessGroup's internalJapan
in 11representing
prefectures surrounding
the Seto
debtor classification, our audit procedures
operations
a core businessfor determining the borrower classification.
Inlandurban areas,
mainlyin andconsistedprimarilyof the following:
activity.Sea
Asandof March
31, 2023,
loans
The
controls
tested included,
but were not
Ernst&Young
Ernst& Young
ShinNihon
ShinNihon
LLC
LLC

77

Th e Hyakujushi Bank, Ltd . Integrated R ep ort 2023

bills discounted and advancesIndependentof 3,362,245 Auditor’s
limitedto, controls to evaluate the accuracy
Reportmillion yen were recorded in the consolidated
and completeness of schedules used inbalance sheet, accounting for 57% of
determining the borrower classification andconsolidated assets in the amount ofcontrols over the underlying credit rating
5,809,359
millionyen.
data concerning the borrower.
The
Board ofDirectors
The
Hyakujushi
Bank,
Ltd.
The collectability of loans to customers by･ We selected samples taking into accountthe Group is subject to uncertainties mainly
the type of business, the location of thedue to economic trends in Japan andborrower, the financial position andOpinionoverseas, fluctuations in the businessrepayment capacity, the group's lending
conditionsof borrowers
who operateinpolicy statements
and potential
creditHyakujushi
risk estimatedWe
have audited
the accompanying
consolidated
financialof TheBank,
KagawaPrefecture
and thesurrounding
from comprise
external information.
In ordertoLtd.
and its
consolidated
subsidiaries(the Group), which
the consolidatedbalanceregion,andfluctuationsin theidentify ofriskincome,scenarios
where credit income,risk is
sheet
as at
March
31, 2022,
and economic
the consolidated statements
comprehensive
environment
as anda declinein thefor
value
assumedbenoteshigh tofromdifferentchangesin net such
assets,cash flows
the ofyear thenended, toandtheaconsolidated
secured statements.
real estate, and the impact ofperspective than those described above andfinancial
COVID-19, and inflation and rising resource
select borrowers for which there are
In our opinion, the accompanying consolidated financial statements present fairly, in all material
prices in supply chains due to the invasion ofconcerns about deterioration in their future
respects, the consolidated financial position of the Group as at March 31, 2022, and its
Ukraine by Russia (“COVID-19, etc.”). As abusiness performance outlook, we
consolidated financial performance and its consolidated cash flows for the year then ended inresult, provision for additional losses arising
performed an analysis by using a selfaccordance with accounting principles generally accepted in Japan.
from new non-performing loans may affectassessment data analysis tool (a tool that
the Group's financial position and cash flow
visualizes borrowers and claims data based
Basis for Opinion
conditions.
on regions, and industries, etc. in selfWe conducted our audit in accordance with auditingassessment
standards generally
accepted
Japan. Our
audits andsupportsinthe
As such, the Group calculates the amounts
responsibilities under those standards are further describedin the Auditor’s
Responsibilities
identificationofspecificborrowers
to beforof expected loans that cannot be collected andthe Audit of the Consolidated Financial Statements sectionofour report.
Weextent
are independentofauditedfocusingontheof
creditrecords them as reserve for possible loan
the Group in accordance with the ethical requirements
thatandarealsorelevant
to ouraudit of therisk),
selectedborrowers
losses.
consolidated financial statements in Japan, and we havefulfilled our
ethical set incorresponding
tootherrisk scenarios
The reserve forloan
lossesincluded
responsibilities
in possible
accordance
with
these
requirements.
We believeof
that
auditofevidence
weconsideration
thetheresults
the analysis.
in theconsolidatedbalancesheet
as of Marchhaveobtainedis sufficientandappropriate
to provide a basis for our opinion.
･ We inspected data on the recent repayment
31,2023 was 17,514 million yen. Details,
status of sampled borrowers, their financial
suchAudit
as calculation
Key
Matters methodology, areposition, business performance, and future
described in Section 6 “Reserve for possible
Key audit matters are those matters that, in our professional
judgment,
wereof mostprospects
significancecash flows,
and otherbusinessbyloan losses,” in Note 3 “Significant
in our audit of the consolidated financial statements inspectingof the current
period. These
matters
information
relatedto the were
Accounting Policies” to the consolidated
addressed in the context of the audit of the consolidated
financialstatements as
a whole,and inGroup's
self-assessment,suchasfinancial statements.
forming the auditor’s opinion thereon, and we do notexplanatory
provide a separate
opinionon thesematerials
includinga
The reserve for possible loan losses ismatters.
description of the business, borrowing andcalculated in accordance with the Group's
repayment status, research materials
pre-established self-assessment provision
providing an understanding of the actual
Determinationof debtor classification
withtherespect to entities for which an assessment ofpolicy. The calculation
process includes
financial position, financial statements, andbusiness
evaluationnecessary,
entities for which a business improvement plan has been
determinationof theisborrowerclassification,
the trial balances. In addition, we
formulated
and entities
which athe
downgrade
debtor classification has a certain degree
which is determinedby forassessingrelevant in theexamined consistency with reportsofimpacton
profit
or
loss
of
the
Group.
borrower's ability to repay loans based on its
obtained from credit agencies, maderepayment status, financial position, businesscomparisonswith available
external
Description of Key Audit Matter
Auditor’s
Response
performance, and future prospects, including
information, made inquiries to responsible
theandhead of the loan
Theimpact
Group of
hasCOVID-19,
a wide-areaetc.
retail network in
In personnel
considering
thetheappropriatenessof thedepartment,
andconsidered
responses
Japan
in
11
prefectures
surroundingtheSeto
debtorclassification,
our
audit
procedures
In determining the classification ofreceived,necessaryto supplement
InlandSea andareas,
in theconsisted as
primarilyof thefollowing: ourborrowers,
it is urban
importantto mainly
determine
Ernst&Young
Ernst& Young
ShinNihon
ShinNihon
LLC
LLC

T he H yak ujushi Bank, Ltd . Integrated Rep ort 2023

78

outlook for improvement in businessunderstanding.
Independent Auditor’sReportperformance (including the details of･ We examined the reasonableness andmanagement improvement plans, etc.) as
feasibility of business improvement plans
there are many cases when uncertainty
by analyzing the trends from past results ofassociatedfuture business performance
The
Board ofwith
Directors
the major planned items such as sales andincreases,
especiallyentities for which a
The
Hyakujushi
Bank,forLtd.
profits or losses of borrowers, etc.,
downgrade in the borrower classification has
evaluating the accuracy of estimates baseda certain degree of impact on profit or loss
on the historical degree of achievement ofand whose repayment status and financial
Opinionbusiness improvement plans in previous
conditions have deteriorated, entities which
years, aswell as performinga
We have audited the accompanying consolidated financial
statementsof The HyakujushiBank,have obtained loans following the Group's
comprehensive
analysisthat included
Ltd. and its consolidated subsidiaries (the Group), which
comprise theconsolidatedbalanceexamination of their future business outlook
degree ofofimpact
of comprehensive
factors such as income,sheet as at March 31, 2022, and the consolidated statements
income,and growth potential (entities for which an
COVID-19,
Furthermore,
we examinedchanges in net assets, and cash flows for the year thenended, andetc.
notes
to the consolidated
assessment of business feasibility is
consistency of borrower's financial plan
financial statements.
necessary), and entities which haveand results with reports obtained from
Indeveloped
our opinion,
the accompanying
consolidated
statements present fairly, in all material
management
improvement
plans financial
credit agencies, made comparisons withrespects,
financial
position of the Group as at March 31, 2022, and its(entitiesthe
for consolidated
which a business
improvement
available external information, madeconsolidated
financialperformance and its consolidated cash flows for the year then ended inplan has beenformulated).
inquiries to responsible personnel and theaccordance with accounting principles generally accepted in Japan.
head of the loan department, andThe above-mentioned outlook forconsidered responses received, as
improvement in business performance forBasis for Opinion
necessary to supplement ourborrowers, including debt repayment capacityWe
our audit in accordancewith onauditingunderstanding.
standards generally accepted in Japan. Our
andconductedbusiness improvement
plans, is based
responsibilities
under thosestandards
are further
significant assumptions,such
as forecastsof described in the Auditor’s Responsibilities for
the
Audit
of theFinancial Statements section of our report. We are independent of
futuresales
andConsolidated
expenses of borrowers.
theGroup inthe
accordancewiththeimprovement
ethical requirements that are relevant to our audit of the
Therefore,
outlook forsuch
consolidated
financial
in Japan, and we have fulfilled our other ethicalis affected bychangesstatementsin the economic
responsibilities
in accordancethese andrequirements. We believe that the audit evidence weenvironment surrounding
thewithborrowerhave
obtainedorisfailure
sufficientappropriate
to provide a basis for our opinion.
the successof itsandbusinessstrategy,
and the determination of borrower
Key
Audit Mattersclassification
will depend more on the
judgmentofmanagement.
Key audit matters are those matters that, in our professional judgment, were of most significancein Accordingly,
our audit of thefinancialof the current period. These matters were
weconsolidated
have determinedthat statements
theaddressed
contextclassificationof the audit ofinthe consolidated financial statements as a whole, and in
adequacyinoftheborrower
forming
the auditor’sopinion
thereon,loan
and we do not provide a separate opinion on these
determining
the reservefor possible
matters.
losses with respect to entities for which adowngrade in the borrower classification has
a certain degree of impact on profit or loss
Determination of debtor classification with respect to entities for which an assessment ofand whose repayment status and financial
business evaluation is necessary, entities for which a business improvement plan has been
conditions have deteriorated, entities forformulated and entities for which a downgrade in the debtor classification has a certain degree
which an assessment of business feasibility isof impact on profit or loss of the Group.
necessary, and entities for which a business
improvement
plan of
hasKeybeen
formulated
Description
Audit
Matterto be
Auditor’s Responsea key audit matter.
The Group has a wide-area retail network in
In considering the appropriateness of theJapan in 11 prefectures surrounding the Seto
debtor classification, our audit procedures
Inland Sea and urban areas, mainly inconsisted primarily of the following:
Ernst&Young
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79

Th e Hyakujushi Bank, Ltd . Integrated R ep ort 2023

Other Information

Independent Auditor’s Report

The other information comprises the information included in the INTEGRATED REPORT that
contains audited consolidated financial statements but does not include the consolidated
financial statements and our auditor’s report thereon. Management is responsible for preparation
The disclosure
Board of Directors
andof the other information. The Audit and Supervisory Committee is responsible for
The
Hyakujushi
Bank, Ltd.
overseeing the Group’sreporting process of the other information.
Our opinion on the consolidated financial statements does not cover the other information andwe
do not express any form of assurance conclusion thereon.
OpinionInwithaudit of the consolidated
responsibility
toWeconnection
have audited
theouraccompanying
consolidatedfinancial
financialstatements,
statements ourof TheHyakujushiisBank,
read
the
other
information
and,
in
doing
so,
considerwhethertheotherinformationismateriallyLtd. and its consolidated subsidiaries (the Group), which comprise the consolidated balance
inconsistent
with thestatementsor ourofknowledge
obtained in theincome,audit orsheet as at March
31, consolidated
2022, and thefinancial
consolidated
statements
income, comprehensive
otherwise
appearstobematerially
misstated.
changes in net assets, and cash flows for the year then ended, and notes to the consolidated
financialstatements.
If,based onthe work we have performed, we conclude that there is a material misstatement of
this
other
information,
we are required
to reportfinancial
that fact.statements present fairly, in all material
In our opinion, the accompanying
consolidated

respects,
the consolidated
position of the Group as at March 31, 2022, and its
Wehave nothing
to report financial
in this regard.
consolidated financial performance and its consolidated cash flows for the year then ended inaccordance with accounting
principles
in Japan. Committee for the
Responsibilities
of Management
and generally
the Auditaccepted
and Supervisory
Consolidated Financial Statements
Basis for Opinion
Management is responsible for the preparation and fair presentation of these consolidated
We conducted
our auditin accordance
auditingprinciples
standardsgenerally
generallyaccepted
acceptedin
inJapan,Japan.andOurfinancialstatementsin accordance
withwithaccounting
responsibilities
those
standards aredetermines
further describedin the to
Auditor’s
Responsibilities
forsuch internalundercontrol
as management
is necessary
enable thepreparation offor
the Audit of theConsolidated
Financial
Statements
our report. We
are independentofconsolidated
financialstatementsthat arefree from section
materialofmisstatement,
whetherdue to fraud
theerror.
Group in accordance with the ethical requirements that are relevant to our audit of theorconsolidated financial statements in Japan, and we have fulfilled our other ethicalIn preparing the consolidated financial statements, management is responsible for assessing the
responsibilities in accordance with these requirements. We believe that the audit evidence weGroup’s ability to continue as a going concern and disclosing, as required by accounting
have obtained is sufficient and appropriate to provide a basis for our opinion.
principles generally accepted in Japan, matters related to going concern.

The
Supervisory Committee is responsible for overseeing the Group’s financial
Key Audit
Auditand
Matters
reporting process.
Key audit matters are those matters that, in our professional judgment, were of most significancein our audit of the consolidated financial statements of the current period. These matters wereAuditor’s Responsibilities for the Audit of the Consolidated Financial Statements
addressed in the context of the audit of the consolidated financial statements as a whole, and in
Our
objectives
are to obtainassurance
about
whetherthe consolidated
financialforming
the auditor’sopinionreasonable
thereon, andwe do notprovidea separate
opinion on
thesestatements
matters. as a whole are free from material misstatement, whether due to fraud or error, and toissue an auditor’s report that includes our opinion. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be
Determination of debtor classification with respect to entities for which an assessment of
expected to influence the economic decisions of users taken on the basis of these consolidated
business evaluation is necessary, entities for which a business improvement plan has been
financial statements.
formulated and entities for which a downgrade in the debtor classification has a certain degree
Asof anauditing standards generally accepted in Japan, weof partimpactonauditprofitinoraccordance
loss of the withGroup.
exercise professional judgment and maintain professional skepticism throughout the audit. We
Auditor’s Response
also: Description of Key Audit Matter・
Identify
the risksof network
material in
misstatementof the consolidated
financial
The
Group andhas assessa wide-arearetailIn considering
the appropriatenessof thestatements,
whether
due
to
fraud
or
error,
designandperform
audit
procedures
Japan in 11 prefectures surrounding the Seto
debtor classification, our audit responsive
procedures tothoseSea
risks,
obtainaudit
evidence
andprimarily
appropriate
to provide
a basis forInlandandandurban
areas,
mainlyin that is sufficientconsistedof thefollowing:
our opinion.
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T he H yak ujushi Bank, Ltd . Integrated Rep ort 2023

80

・ Consider internal control relevantto the audit
in order Report
to design audit procedures that are
Independent
Auditor’s
appropriate in the circumstances for our risk assessments, while the purpose of the audit of
the consolidated financial statements is not expressing an opinion on the effectiveness of theGroup’s internal control.
The
Board ofthe
Directors
・ Evaluate
appropriateness of accounting policies used and the reasonableness of
Theaccounting
Hyakujushiestimates
Bank, Ltd.
and related disclosures made by management.
・ Conclude on the appropriateness of management’s use of the going concern basis ofaccounting and, based on the audit evidence obtained, whether a material uncertainty exists
Opinionrelated to events or conditions that may cast significant doubt on the Group’s ability to
We continue
have audited
accompanying
consolidated
financialstatementsof TheHyakujushi
as a thegoing
concern. If weconclude thata material
uncertainty
exists,
we are Bank,
Ltd.required
and its consolidated
subsidiaries(theGroup),
which
comprisetheconsolidated
to draw attention in our auditor’s report to the related disclosures in the balance
sheet
as
at
March
31, 2022,statements
and the consolidated
statements areof income,comprehensive
income,consolidated financial
or, if such disclosuresinadequate,
to modify ourchangesinnetassets,
and
cash
flows
for
the
year
then
ended,
and
notes
to
the
consolidated
opinion. Our conclusions are based on the audit evidence obtained up to the date of our
financialstatements.
auditor’sreport. However, future events or conditions may cause the Group to cease tocontinueas thea going
concern. consolidated financial statements present fairly, in all material
In ouropinion,accompanying
respects,
theconsolidated
financial positionof theMarch
31, 2022,financial
and its
・ Evaluate the overall presentation,
structureandGroup
contentasofatthe
consolidated
consolidated
financialperformanceandits
consolidated
cash
flows
for
the
year
then
ended instatements, including the disclosures, and whether the consolidated financial statements
accordancewithaccounting
principles
generally
acceptedinJapan.
represent the underlying transactions and events in a manner that achieves fair presentationin accordance with accounting principles generally accepted in Japan.
Basis for Opinion
・ Obtain sufficient appropriate audit evidence regarding the financial information of the
We entities
conducted
our auditactivities
in accordance
auditing
in Japan. Ouror businesswithinwith
the Group
tostandards
express angenerally
opinion acceptedon the consolidated
responsibilities
under
those
standards
arefurther
described
inthe
Auditor’s
Responsibilities
forfinancial statements. We are responsible for the direction, supervision and performance of
the AuditoftheConsolidated
Financial
Statements
sectionof
ourreport.
Weareindependentofthe group audit. We remain solely responsible for our audit opinion.
the Group in accordance with the ethical requirements that are relevant to our audit of theWecommunicate
with statements
the Audit andSupervisory
regarding,among
other matters,
consolidated
financial
in Japan,and weCommittee
have fulfilled
our other
ethicaltheplannedscopeandtiming
of
the
audit
and
significant
audit
findings,
includingany
responsibilities in accordance with these requirements. We believe that the audit evidence
wesignificant
deficiencies
ininternal
controlthat
we
identify
duringouraudit.
have obtained is sufficient and appropriate to provide a basis for our opinion.
We also provide the Audit and Supervisory Committee with a statement that we have complied
Key
Matters
with Audit
the ethicalrequirements regarding independence that are relevant to our audit of theconsolidated
financialstatementsin that,Japan,
to communicate
with themandKey audit matters are thosematters
in andour professional
judgment,
wereallofrelationships
most significanceothermattersthatmayreasonably
bethought
to
bear
on
our
independence,
and
where
in our audit of the consolidated financial statements of the current period. These matters wereapplicable,inrelated
safeguards.
addressed
the context
of the audit of the consolidated financial statements as a whole, and informing
auditor’s
opinion thereon,andAudit
we doand
notSupervisory
provide a separate
opinionthese those
From thethe
matters
communicatedwith theCommittee,
we ondeterminematters.
matters that were of most significance in the audit of the consolidated financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in our auditor’sreportunless lawofordebtor
regulationprecludeswith
publicdisclosure
aboutmatterwhen, in of
Determination
classification
respect
to entities
forthewhich
an orassessment
extremelyrare
circumstances,
wedeterminethatamattershouldnotbecommunicatedin ourbusiness evaluation is necessary, entities for which a business improvement plan has beenreportbecausetheadverseconsequences
of
doing
so
would
reasonably
beexpected
tooutweigh
formulated and entities for which a downgrade in the debtor classification has a certain degree
thebenefits
communication.
of public
impactintereston profit
or lossof
ofsuchthe Group.
Interest
Required toby the Certified Public Accountants
Act of Japan
Descriptionof Be
KeyDisclosed
Audit Matter
Auditor’s Response
Our firm and its designated engagement partners do not have any interest in the Group which is
The Groupa wide-arearetailtonetworkin
Inofconsidering
thePublic
appropriatenessofAct
the ofrequired
to behasdisclosed
pursuant
the provisions
the Certified
Accountants
Japan
in
11
prefectures
surroundingtheSeto
debtorclassification,
our
audit
procedures
Japan.
Inland Sea and urban areas, mainly inconsisted primarily of the following:
Ernst&Young
Ernst& Young
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81

Th e Hyakujushi Bank, Ltd . Integrated R ep ort 2023

Convenience Translation

Independent Auditor’s Report

The U.S. dollar amounts in the accompanying consolidated financial statements with respect tothe year ended March 31, 2023 are presented solely for convenience. Our audit also included thetranslation of Japanese yen amounts into U.S. dollar amounts and, in our opinion, such
The
Board hasof Directors
translation
been made on the basis described in Note 1 to the consolidated financial
The
Hyakujushi
Bank, Ltd.
statements.
Ernst & Young ShinNihon LLC
OpinionTokyo, Japan
We have audited the accompanying consolidated financial statements of The Hyakujushi Bank,
September
2023
Ltd.
and its25,
consolidated
subsidiaries (the Group), which comprise the consolidated balance
sheet as at March 31, 2022, and the consolidated statements of income, comprehensive income,changes in net assets, and cash flows for the year then ended, and notes to the consolidated
financial statements.
/s/ Motoki Nagao
In our opinion, the accompanying consolidated financial statements present fairly, in all material
Motokirespects,Nagao
the consolidated financial position of the Group as at March 31, 2022, and its
DesignatedPartner and its consolidated cash flows for the year then ended inconsolidatedEngagement
financial performance
CertifiedPublicAccountant
accordance with accounting principles generally accepted in Japan.
Basis for OpinionWe
conducted
our audit in accordance with auditing standards generally accepted in Japan. Our/s/ Teruaki
Kawaguchi
responsibilities
under those standards are further described in the Auditor’s Responsibilities for
Teruaki Kawaguchi
theAudit ofEngagement
the Consolidated
Financial Statements section of our report. We are independent of
DesignatedPartnertheGroupPublicin accordancewith the ethical requirements that are relevant to our audit of theCertifiedAccountant
consolidated financial statements in Japan, and we have fulfilled our other ethicalresponsibilities in accordance with these requirements. We believe that the audit evidence wehave obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significancein our audit of the consolidated financial statements of the current period. These matters wereaddressed in the context of the audit of the consolidated financial statements as a whole, and informing the auditor’s opinion thereon, and we do not provide a separate opinion on thesematters.
Determination of debtor classification with respect to entities for which an assessment ofbusiness evaluation is necessary, entities for which a business improvement plan has beenformulated and entities for which a downgrade in the debtor classification has a certain degreeof impact on profit or loss of the Group.
Description of Key Audit Matter

Auditor’s Response

The Group has a wide-area retail network inJapan in 11 prefectures surrounding the Seto
Inland Sea and urban areas, mainly in

In considering the appropriateness of the
debtor classification, our audit proceduresconsisted primarily of the following:

Ernst&Young
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T he H yak ujushi Bank, Ltd . Integrated Rep ort 2023

82

Corporate Information

Corporate Information

Profile (as of March 31, 2023)* The Shanghai Representative Office closed on April 28, 2023.

Head Office
Established
Total assets
Deposits and negotiable certificates of deposit
Loans and bills discounted
Paid-in capital
Total shares issued
Employees
OfficesNon-branch ATMs and CDs

5-1 Kamei-cho, Takamatsu, Kagawa
November 1, 1878
¥5,784.5 billion¥4,795.8 billion¥3,366.8 billion¥37.3 billion
29,100 thousand shares
1,995
132 (Head Office, 99 branches, 22 sub-branches, 6 Quick Square, 5 Consulting Plaza)
Overseas Representative Offices: 1 (Shanghai)*
145 locations

India
Business collaboration
State Bank of India

General Meeting of Shareholders
Board of Directors
ChairmanPresident
Deputy President
Directors
Nomination and Remuneration GovernanceCommittee
Audit and Supervisory Committee
Audit and Supervisory
Committee Members

VariousCommittees
Executive
Committee

VietnamHYAKUJUSHI
BUSINESSCONSULTING VIETNAMCOMPANY LIMITED(To be established in
FY2023)Business cooperation
VIETCOMBANK
Business collaboration
HDBank(Bank staff deployment)

China
Representative Office

ThailandBusiness collaboration
KASIKORNBANK Public Company Limited(Bank staff deployment)

Organization (as of July 1, 2023)
The Hyakujushi Bank

Overseas Support Organizations (as of April 30, 2023)

Corporate Headquarters

the Philippines
Business collaboration
BDO Unibank, Inc.
Metropolitan Bank and Trust Company[Corporate Administration Sector]
Corporate Strategy Office
Corporate Planning Group
Corporate Planning
Financial Affairs Group
Division
Public Relations and SDGs Promotion Office
Tokyo Liaison Office
Risk Control Division

Risk Control Group
Credit Risk Control Group

Compliance Management
Division

Legal Compliance Group
Money Laundering Countermeasures Group

General Administration
Division

Compliance and Legal Affairs Office
General Administration Group
General Affairs Administration Group

Personnel Division

Personnel Planning Group
Salary and Welfare Group
Personnel Development GroupOperations Supervision
Division

Operations System Supervision GroupOperations Management GroupOperations Guidance Group
Systems Planning Group
Systems Management Group

Central Operations
DivisionCentral Operations Center
Operations Center
Business Support Center
Branch Support Center
Central Receivables Documents Center

Executive Secretariat
Office[Market Sector]

Treasury andInternational Division

Business and Planning Group
Market Business Group
Securities Operation Group
Market Management Group
Fund Securities Management Group
Foreign Exchange Business Support Group
Overseas Representative Offices

MexicoBusiness cooperation
Mexico State Government
Estado de Aguascalientes
JaliscoGuanajuato
Nuevo LeónEl Banco Nacional deMéxico (Banamex)

Indonesia
Business collaboration
PT. Bank Negara Indonesia (Persero) Tbk.

List of Major Shareholders (as of March 31, 2023)
Name

Subsidiaries
Nihonbashi FudosanCo., Ltd.
Central Business
Division
Branches

Hyakujushi Business
Service Co., Ltd.

Sub-branches

Hyakujushi Jinzai
Center Corporation

Deposit andExchange
Operations Area
liaison & Loan
Operations Area

The Hyakujushi System
Service Co., Ltd.

Central Foreign
Exchange Branch

The Hyakujushi JCB
Card Co., Ltd.

The Master Trust Bank of Japan, Ltd. (Trust Account)
Custody Bank of Japan, Ltd.
Hyakujushi Bank Employee Shareholding Association
Nippon Life Insurance Company
TAIHEIYO CEMENT CORPORATION (Note) 2
NAMBA HOLDINGS CORPORATION
NH Foods Ltd. (Note) 3
SUMITOMO LIFE INSURANCE COMPANY
Meiji Yasuda Life Insurance Company
Tadano Ltd.
Totalof shares held to the total
No. of shares held Ratio
number of shares outstanding(thousand shares) (excluding
treasury shares) (%)

Address
11-3, Hamamatsu-cho 2-Chome, Minato-ku, Tokyo
8-12, Harumi 1-Chome, Chuo-ku, Tokyo
5-1 Kamei-cho, Takamatsu-shi, Kagawa Prefecture
6-6, Marunouchi 1-Chome, Chiyoda-ku, Tokyo
1-1, Koishikawa 1-chome, Bunkyo-ku, Tokyo
9-1-2803, Oosaki 2-chome, Shinagawa-ku, Tokyo
4-9, Umeda 2-Chome, Kita-ku, Osaka
18-24, Tsukiji 7-Chome, Chuo-ku, Tokyo
1-1, Marunouchi 2-Chome, Chiyoda-ku, Tokyo
34, Shindenchoko, Takamatsu-shi, Kagawa Prefecture
–

2,504
1,619
669
629
595
556
505
500
490
438
8,509

8.63
5.58
2.30
2.17
2.05
1.91
1.74
1.72
1.69
1.51
29.34

(Notes)1. The 103 thousand treasury shares held by the Bank are excluded from the number of shares outstanding.
2. The number of shares held by TAIHEIYO CEMENT CORPORATION includes 595 thousand shares that have been contributed to the retirement benefit trust; however, the right to provide instructions for the voting
rights to those shares has been retained by TAIHEIYO CEMENT CORPORATION.
3. The number of shares held by NH Foods Ltd. includes 373 thousand shares that have been contributed to the retirement benefit trust; however, the right to provide instructions for the voting rights to those shares has
been retained by NH Foods Ltd.

The Hyakujushi DC
Card Co., Ltd.

[Marketing Related Sector]
Business Strategy
Division

TaiwanBusiness collaboration
CTBC Holding Co., Ltd.

Business Strategy Group
Digital Strategy Office
Channel Strategy Group
Branch Management Group
Customer Service Center

Consulting Division

Consulting Group1
Consulting Group2

Regional Vitalization
Division

Regional Vitalization Group

Retail Promotion
Division

Asset Accumulation Group

Business Support
Division

Loan Business Center
Asset Business Center
DB Center

Credit Supervision
Division

Credit Planning Group
Credit Department
Ship Financing Office
Management Support Group
Credit Management Group
Real Estate Valuation and Financial Registration Center

Auditing DivisionInspection Group
Risk Audit Group

Hyakujushi Sogo
Hosho Co., Ltd.
Hyakujushi Lease
Co., Ltd.

Consulting Plaza Branch

Audit and Supervisory Committee Members’ Office83

Th e Hyakujushi Bank, Ltd . Integrated Rep ort 2023

T he H yak ujushi Bank, Ltd . Integrated Rep ort 2023

84THE HYAKUJUSHI BANK, LTD.
5-1, Kamei-cho, Takamatsu, Kagawa 760-8574, Japan
https://www.114bank.co.jp