FINANCIAL REPORT 2023

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Contents

Contents
Nishi-Nippon Financial Holdings, Inc. and Subsidiaries
Consolidated Balance Sheet ...................................................................... 2
Consolidated Statement of Income ............................................................ 3
Consolidated Statement of Comprehensive Income ................................... 3
Consolidated Statement of Changes in Net Assets .................................... 4
Consolidated Statement of Cash Flows ...................................................... 6
Notes to Consolidated Financial Statements .............................................. 7
Quarterly Information (Unaudited).............................................................. 52
The Nishi-Nippon City Bank, Ltd.
Non-Consolidated Balance Sheet (Unaudited) .......................................... 53
Non-Consolidated Statement of Income (Unaudited)................................. 54
Non-Consolidated Statement of Changes in Net Assets (Unaudited) ........ 55
The Bank of Nagasaki, Ltd.
Non-Consolidated Balance Sheet (Unaudited) .......................................... 58
Non-Consolidated Statement of Income (Unaudited) ................................ 59
Non-Consolidated Statement of Changes in Net Assets (Unaudited) ........ 60
Notes to Non-Consolidated Financial Statements (Unaudited) ...................... 61
Independent Auditor’s Report ....................................................................... 62

Nishi-Nippon Financial Holdings GroupFINANCIAL REPORT 2023

1

Consolidated Balance Sheet
Nishi-Nippon Financial Holdings, Inc. and Subsidiaries
March 31st, 2023 and 2022
Thousands of
U.S. dollars (Note 1)

Millions of yen

2023

2022

2023

Assets:¥1,946,575¥2,614,747

Call loans and bills bought

Cash and due from banks (Note 5)

8,011

—

60,000Commercial paper and other debt purchased

42,73339,621

320,030

Money held in trust (Note 26)$14,577,813

11,609

11,682

86,940

Securities (Notes 3, 5, 24 and 25)

1,792,650

1,773,344

13,425,078

Loans and bills discounted (Notes 4, 5, 6 and 24)

67,066,575

8,955,399

8,470,861

Foreign exchange assets (Note 7)

17,311

22,757

129,645

Other assets (Notes 5 and 8)

99,07190,311

741,941

Tangible fixed assets (Notes 9 and 15)875,115

116,854

116,172

Intangible fixed assets

5,204

4,160

38,974

Asset for retirement benefits (Note 28)

8,038

7,548

60,198Deferred tax assets (Note 29)

6,367

2,109

47,688Customers’ liabilities for acceptances and guarantees

16,372

17,639122,614

Reserve for possible loan losses (Note 24)(40,455)(42,473)(302,973)

Reserve for devaluation of securities
Total assets

(562)

(577)

(4,214)¥12,985,181¥13,127,906$97,245,427$74,583,962

Liabilities and net assets:
Liabilities:
Deposits (Notes 5, 10, and 24)¥9,959,196¥9,834,637

Call money and bills sold (Note 5)

512,491

510,000

3,838,023

Payables under repurchase agreements (Note 5)

265,881251,120

1,991,175

Guarantee deposits received under securities lending transactions (Note 5)
Borrowed money (Notes 5, 11 and 24)

293,853

87,1882,200,654

1,249,709

1,755,240

9,359,019

Foreign exchange liabilities (Note 7)

504

201

3,777

Borrowed money from trust account

5,233

4,794

39,195120,171

113,952

899,957

4

—

30

4,647

4,773

34,805

Other liabilities (Note 12)
Provision for share-based remuneration for directors
Liability for retirement benefits (Note 28)
Reserve for retirement benefits for directors and corporate auditors

200

201

1,504

Reserve for reimbursement of deposits

545

825

4,086
8,944

1,194

1,096

Reserve under the special laws

Reserve for other contingent losses

12

12

96

Deferred tax liabilities (Note 29)

1,070

844

8,016

Deferred tax liabilities on revaluation of premises (Note 15)

14,646

14,652

109,687

Acceptances and guarantees

16,372

17,639122,614

12,445,737

12,597,181

93,205,553

Total liabilities
Net assets:
Capital stock (Note 13)

50,00050,000374,447

Capital surplus

118,706

121,123

888,986

Earned surplus

325,460

304,2362,437,361(5,698)(5,522)(42,677)

488,468

469,837

3,658,117
192,896

Treasury stock (Note 14)
Total shareholders’ equity
Net unrealized gains on securities available for sale, net of taxes (Note 25)

25,757

38,616

Net deferred gains (losses) on hedging instruments, net of taxes

1,015

(8)

7,606

Revaluation of premises, net of taxes (Note 15)

29,42529,438220,369

Retirement benefits liability adjustments, net of taxes (Note 28)(14,843)(15,715)(111,165)

41,35552,332309,707

9,620

8,555

72,049539,444

530,724

4,039,874¥12,985,181¥13,127,906$97,245,427

Total accumulated other comprehensive income
Non-controlling interests
Total net assets (Note 36)
Total liabilities and net assets
See accompanying Notes to Consolidated Financial Statements.

2

Nishi-Nippon Financial Holdings GroupFINANCIAL REPORT 2023

Consolidated Statement of Income
Nishi-Nippon Financial Holdings, Inc. and Subsidiaries
Years ended March 31st, 2023 and 2022
Thousands of
U.S. dollars (Note 1)

Millions of yen

2023

2022

¥81,242
21,0123,886
033,1361,369
8,064
12,605
161,318¥81,109
12,8934,225
032,468
1,919
3,069
2,941
138,627$608,419
157,364
29,1080
248,156
10,25560,395
94,402
1,208,103

451
319
7,627

443
(113)
383

3,383
2,392
57,124

22
589
3,390
12,021
16,13080,634
6,018
127,206
34,111

13
52
75
11,536
1,654
79,173
8,253
101,472
37,154169
4,411
25,38990,029120,802603,865
45,073
952,642
255,461

6,513
1,164
7,678
26,433

10,824
1,518
12,342
24,811

48,781
8,723
57,504
197,956368¥26,064575¥24,236

2,760$195,195

2023

Income:Interest and dividend income:Interest on loans and discounts
Interest and dividends on securities
Other interest income (Note 16)
Trust fees
Fees and commissions
Trading income
Other operating income (Note 17)
Other income (Note 18)
Total income
Expenses:
Interest expenses:
Interest on deposits
Interest on call money and bills soldInterest on payables under repurchase agreements
Interest on guarantee deposits received under securities lendingtransactions
Interest on borrowings
Other interest expenses
Fees and commissions
Other operating expenses (Note 19)
General and administrative expenses (Note 20)
Other expenses (Note 21)
Total expenses
Profit (loss) before income taxes
Income taxes (Note 29)
Current
Deferred
Total income taxes
Profit (loss)
Profit (loss) attributable to:Non-controlling interests
Owners of parent (Note 36)
See accompanying Notes to Consolidated Financial Statements.

Consolidated Statement of Comprehensive Income
Nishi-Nippon Financial Holdings, Inc. and Subsidiaries
Years ended March 31st, 2023 and 2022
Thousands of
U.S. dollars (Note 1)

Millions of yen

2023

2022

2023

¥26,433¥24,811$197,956

Net unrealized gains on securities available for sale

(12,962)(26,560)(97,075)

Net deferred gains (losses) on hedging instruments

1,023

1,419

7,668

Retirement benefits liability adjustments

872(11,963)

6,533

Share of other comprehensive income of affiliates accounted for by the equity method

56

—

426

(¥11,009)(¥37,104)($82,447)¥15,423(¥12,293)$115,509¥15,087(¥12,928)$112,986

¥336

¥635

$2,522

Profit (loss)
Other comprehensive income:

Total other comprehensive income (Note 22)
Comprehensive income
Comprehensive income attributable to owners of parent
Comprehensive income attributable to non-controlling interests
See accompanying Notes to Consolidated Financial Statements.

Nishi-Nippon Financial Holdings GroupFINANCIAL REPORT 2023

3

Consolidated Statement of Changes in Net Assets
Nishi-Nippon Financial Holdings, Inc. and Subsidiaries
Years ended March 31st, 2023 and 2022
Thousands of
U.S. dollars (Note 1)

Millions of yen

2023

2022

2023

¥50,000¥50,000$374,447———¥50,000¥50,000$374,447¥121,123¥127,202$907,090

Shareholders’ equity
Capital stock (Note 13)
Balance at beginning of the year
Changes during the year
Total changes during the year
Balance at end of the year
Capital surplus
Balance at beginning of the year
Changes during the year
Sale of treasury stock
Retirement of treasury stock
Total changes during the year
Balance at end of the year

(0)

(0)

(0)

(2,417)(6,078)(18,104)(2,417)(6,078)(18,104)¥118,706¥121,123$888,986¥304,236¥284,535$2,278,410—(¥244)—¥304,236¥284,290$2,278,410

Earned surplus
Balance at beginning of the year
Cumulative effects of changes in accounting policies
Restated balance
Changes during the year
Cash dividends paid (Note 37)(5,412)(4,445)(40,532)

Profit (loss) attributable to owners of parent

26,064

24,236

195,195
4,189

Increase in earned surplus due to an increase in the number of affiliates
accounted for by the equity method

559—

Reversal of revaluation of premises

13

153

97

21,224

19,945

158,950¥325,460¥304,236$2,437,361(¥5,522)(¥8,597)($41,359)(2,593)(3,004)(19,426)

0

0

3

2,417

6,078

18,104

Total changes during the year
Balance at end of the year
Treasury stock (Note 14)
Balance at beginning of the year
Changes during the year
Acquisition of treasury stock
Sale of treasury stock
Retirement of treasury stock
Total changes during the year
Balance at end of the year

(176)

3,074

(1,318)(¥5,698)(¥5,522)($42,677)¥469,837¥453,140$3,518,589—(¥244)—¥469,837¥452,895$3,518,589

Total shareholders’ equity
Balance at beginning of the year
Cumulative effects of changes in accounting policies
Restated balance
Changes during the year
Cash dividends paid (Note 37)(5,412)(4,445)(40,532)

Profit (loss) attributable to owners of parent

26,064

24,236

195,195

Acquisition of treasury stock(2,593)(3,004)(19,426)

0

0

3
4,189

Sale of treasury stock
Increase in earned surplus due to an increase in the number of affiliates
accounted for by the equity method

559—

Reversal of revaluation of premises

13

153

97

18,631

16,941

139,527¥488,468¥469,837$3,658,117

Total changes during the year
Balance at end of the year

4

Nishi-Nippon Financial Holdings GroupFINANCIAL REPORT 2023

Consolidated Statement of Changes in Net Assets
Nishi-Nippon Financial Holdings, Inc. and Subsidiaries
Years ended March 31st, 2023 and 2022

Thousands of
U.S. dollars (Note 1)

Millions of yen

2023

2022

2023

¥38,616¥65,238$289,199

Accumulated other comprehensive income
Net unrealized gains on securities available for sale, net of taxes
Balance at beginning of the year
Changes during the year
Net changes in items other than shareholders’ equity
Total changes during the year
Balance at end of the year

(12,859)(26,621)(96,302)(12,859)(26,621)(96,302)¥25,757¥38,616$192,896(¥8)(¥1,428)

($61)

1,023

1,419

7,668

1,023

1,419

7,668

¥1,015(¥8)$7,606¥29,438¥29,592$220,467

Net deferred gains (losses) on hedging instruments, net of taxes
Balance at beginning of the year
Changes during the year
Net changes in items other than shareholders’ equity
Total changes during the year
Balance at end of the year
Revaluation of premises, net of taxes
Balance at beginning of the year
Changes during the year
Net changes in items other than shareholders’ equity
Total changes during the year
Balance at end of the year

(13)

(153)

(97)

(13)

(153)

(97)

¥29,425¥29,438$220,369(¥15,715)(¥3,751)($117,690)

871(11,963)

6,524

871

(11,963)6,524(¥14,843)(¥15,715)($111,165)¥52,332¥89,651$391,914

Retirement benefits liability adjustments
Balance at beginning of the year
Changes during the year
Net changes in items other than shareholders’ equity
Total changes during the year
Balance at end of the year
Total accumulated other comprehensive income
Balance at beginning of the year
Changes during the year
Net changes in items other than shareholders’ equity
Total changes during the year
Balance at end of the year

(10,977)(37,319)(82,207)(10,977)(37,319)(82,207)¥41,355¥52,332$309,707¥8,555¥8,114$64,070

—

(¥32)

—

¥8,555¥8,081$64,070

1,065

473

7,979

1,065

473

7,979

¥9,620¥8,555$72,049¥530,724¥550,906$3,974,574—(¥277)—¥530,724¥550,629$3,974,574

Non-controlling interests
Balance at beginning of the year
Cumulative effects of changes in accounting policies
Restated balance
Changes during the year
Net changes in items other than shareholders’ equity
Total changes during the year
Balance at end of the year
Total net assets
Balance at beginning of the year
Cumulative effects of changes in accounting policies
Restated balance
Changes during the year
Cash dividends paid (Note 37)(5,412)(4,445)(40,532)

Profit (loss) attributable to owners of parent

26,064

24,236

195,195

Acquisition of treasury stock(2,593)(3,004)(19,426)

003Increase in earned surplus due to an increase in the number of affiliates
accounted for by the equity method

559

13

—
153

4,189

Reversal of revaluation of premises(9,911)(36,845)(74,227)

Sale of treasury stock

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

97

8,719

(19,904)

65,299¥539,444¥530,724$4,039,874

See accompanying Notes to Consolidated Financial Statements.

Nishi-Nippon Financial Holdings GroupFINANCIAL REPORT 2023

5

Consolidated Statement of Cash Flows
Nishi-Nippon Financial Holdings, Inc. and Subsidiaries
Years ended March 31st, 2023 and 2022
Thousands of
U.S. dollars (Note 1)

Millions of yen. Cash flows from operating activities:
Profit (loss) before income taxes
Depreciation
Losses on impairment of fixed assets
Gain on negative goodwill
Gain on step acquisition
Equity in gains of nonconsolidated subsidiaries and affiliate
Decrease in reserve for possible loan losses(Decrease) increase in reserve for devaluation of securities
Increase in provision for share-based remuneration for directors(Increase) decrease in asset for retirement benefits(Decrease) increase in liability for retirement benefits
Decrease in reserve for retirement benefits for directors and corporate auditors
Decrease in reserve for reimbursement of deposits
Increase (decrease) in reserve for other contingent losses
Income from lending activities
Funding costs
Gains on securities
Losses on money held in trust
Net foreign exchange gains
Losses on sale of tangible fixed assets
Net decrease in trading account assets
Net (increase) decrease in loans and bills discounted
Net increase in deposits
Net (decrease) increase in certificates of deposit
Net (decrease) increase in borrowed money, exclusive of subordinatedborrowings
Net decrease (increase) in due from banks, exclusive of central bank
Net increase in call loans
Net increase in call money
Net increase in guarantee deposits received under securities lendingtransactions
Net decrease (increase) in foreign exchange assets
Net increase (decrease) in foreign exchange liabilities
Net increase in borrowed money from trust accountInterest and dividends received
Interest paid
OthersSubtotal
Income taxes paid
Net cash provided by operating activities. Cash flows from investing activities:
Payments for purchase of securities
Proceeds from sale of securities
Proceeds from redemption of securities
Payments for increase in money held in trust
Payments for purchase of tangible fixed assets
Proceeds from sale of tangible fixed assets
Payments for purchase of intangible fixed assets
Payments for acquisition of subsidiaries’ shares resulting in changes
Net cash provided by investing activities. Cash flows from financing activities:
Dividends paid
Dividends paid to non-controlling shareholders
Payments for acquisition of treasury stock
Proceeds from sale of treasury stock
Net cash used in financing activities

2022¥34,111
5,845
66
(564)
(272)
(8,319)(2,025)
(14)
4
(489)
(1,707)
(0)
(279)
97
(106,142)
12,401
8,195
74(1,260)336—(484,538)
223,471(96,869)¥37,154
5,674
465
—
—
(56)
(1,595)0—
10,222
4,295
(55)
(360)
(158)
(98,228)
855
(45)
5
(674)
248
131
73,084
274,854
75,772$255,461
43,773500(4,228)(2,043)(62,306)(15,172)(108)
30(3,669)(12,783)(2)(2,092)731(794,892)
92,871
61,374557(9,438)2,517—(3,628,684)
1,673,566(725,454)(505,531)
676(11,124)
17,252

317,552(979)(2,898)358,698(3,785,898)
5,063(83,309)129,202

206,665
5,445
303
438
106,488(10,145)(17,602)(625,015)(14,716)(¥639,731)

46,053(11,682)(9)
1,589
99,359(1,080)(32,145)
1,156,049(4,950)¥1,151,099

1,547,705
40,782
2,269
3,286
797,489(75,980)(131,827)(4,680,709)(110,209)($4,790,918)(¥484,648)
300,099
173,881(17)(3,130)112(2,358)(4,380)(¥20,442)(¥500,365)
126,185
111,026(426)(3,339)419(1,995)—(¥268,495)($3,629,507)
2,247,429
1,302,192(132)(23,444)843(17,666)(32,808)($153,093)(¥5,409)(172)(2,593)0(¥8,175)(¥4,444)(162)(3,004)0(¥7,610)($40,509)(1,294)(19,426)
3($61,226)

2023

¥8

¥13

$62

. Net increase in cash and cash equivalents(¥668,341)¥875,006($5,005,176). Cash and cash equivalents at beginning of the year

¥2,608,074¥1,733,067$19,531,750. Cash and cash equivalents at end of the year (Note 35)¥1,939,733¥2,608,074$14,526,573. Effects of changes in exchange rates on cash and cash equivalents

See accompanying Notes to Consolidated Financial Statements.

6

2023

Nishi-Nippon Financial Holdings GroupFINANCIAL REPORT 2023

Notes to Consolidated Financial Statements
Nishi-Nippon Financial Holdings, Inc. and Subsidiaries

1. Basis of Presentation of Consolidated Financial Statements
The accompanying consolidated financial statements of Nishi-Nippon Financial Holdings, Inc. (the “Company”), and its consolidated
subsidiaries have been prepared in conformity with accounting principles generally accepted in Japan, which are different in certain respects
as to the application and disclosure requirements of International Financial Reporting Standards, and are compiled from the consolidated
financial statements prepared by the Company as required by the Financial Instruments and Exchange Law of Japan.
In addition, the notes to the consolidated financial statements include information which is not required under accounting principles
generally accepted in Japan but is presented herein as additional information.
Solely for the convenience of readers outside Japan, certain items in the original Japanese financial statements have been reclassified
for presentation.
As permitted by the Financial Instruments and Exchange Law, amounts of less than one million yen have been omitted by the Company.
Consequently, the totals shown in the accompanying consolidated financial statements (both in yen and U.S. dollars) do not necessarily
agree with the sum of the individual amounts.
The amounts in U.S. dollars are included solely for the convenience of readers outside Japan. A rate of ¥133.53= U.S.$ 1.00, theexchange rate on March 31st, 2023, has been used in translation. The translation is not intended to imply that the assets and liabilities
which originated in yen have been or could be readily converted, realized or settled in U.S. dollars at the above or any other rate.
In the consolidated financial statements, “—” is used to denote “nil” and “0” is used to denote rounding down to zero.

2. Summary of Significant Accounting Policies(1) Scope of Consolidation
The consolidated financial statements include the accounts of the Company and its consolidated subsidiaries (the “Group”).
The number of consolidated and non-consolidated subsidiaries for the years ended March 31st, 2023 and 2022 is as follows:
2023

2022

i) Number of consolidated subsidiaries:87ii) Number of non-consolidated subsidiaries:

10

4(Changes in scope of consolidation)
City Ascom Co., Ltd. was included in the scope of consolidation in the consolidated fiscal year under review as a result of stockacquisition on October 3rd, 2022.
(2) Application of the Equity Method
The number of non-consolidated subsidiaries and affiliates, which are accounted for by the equity method, for the years ended
March 31st, 2023 and 2022 is as follows:
2023

2022

i) Number of non-consolidated subsidiaries accounted for by the equity method:00ii) Number of affiliates accounted for by the equity method:31iii) Number of non-consolidated subsidiaries not accounted for by the equity method:

104iv) Number of affiliates not accounted for by the equity method:2

1(Changes in scope of the equity method)
Kyushu Leasing Service Co., Ltd. and KLS Credit guarantee Co., Ltd. were included in the scope of the equity method in the consolidated
fiscal year under review as a result of stock acquisition on October 5th, 2022.
(3) Fiscal Years of Consolidated Subsidiaries
The closing dates of consolidated subsidiaries are the same as the closing date for the consolidated financial statements.
(4) Trading Account Assets and Liabilities
Transactions that seek gains on short-term fluctuations and arbitrage in interest rates, currency prices, market prices of financial
instruments (trading transactions) are recognized on a trade date basis. They are recorded as trading assets or trading liabilities on the
consolidated balance sheets and gains or losses on these transactions are recorded in trading income or trading expenses on the
consolidated statements of income.
The Company’s consolidated subsidiaries engaged in the banking business value securities, monetary claims, etc. held for trading
purpose at the market price prevailing at the balance sheet date. Derivatives, such as swaps, futures, and option transactions, are statedat the amount assuming that they were terminated or settled at the balance sheet date.
Trading income and expenses include interest income or expenses as well as changes in unrealized gains or losses on securities,
monetary claims and derivative financial products during the fiscal year.
Nishi-Nippon Financial Holdings GroupFINANCIAL REPORT 2023

7

Notes to Consolidated Financial Statements(5) Securities
Securities held to maturity are valued at amortized cost using the straight-line method with cost determined by the moving averagemethod. Investments in non-consolidated subsidiaries and affiliates not accounted for by the equity method are valued at cost
determined by the moving average method. Securities available for sale are valued at fair value with cost of sales determined by themoving average method. However, shares, etc. that do not have a market value are valued at cost determined by the moving averagemethod.
The difference between the acquisition cost and the carrying amount of securities available for sale, representing unrealized gains
and losses, is recognized as unrealized gains (losses) on securities available for sale, net of taxes, and included directly in net assets.
Securities held as components of individually managed money trusts whose principal objective is investments in securities are stated
at fair value.
(6) Derivatives
Derivatives held or written are stated at fair value.
(7) Tangible Fixed Assets (excluding leased assets)
Tangible fixed assets of the Company and its consolidated subsidiaries engaged in the banking business are depreciated by the
declining-balance method; however, buildings (excluding facilities attached to buildings) acquired on or after April 1st, 1998 aredepreciated by the straight-line method.
The useful lives for buildings and equipment are as follows:		

Buildings:

3 to 60 years		

Equipment:

2 to 20 years

Tangible fixed assets of other consolidated subsidiaries are depreciated mainly using the declining-balance method, basedon their estimated useful lives.
(8) Intangible Fixed Assets
Intangible fixed assets are amortized using the straight-line method. Software for internal use is amortized based on the estimated usefullife determined by the Group (5 years).
(9) Leased Assets
The tangible fixed assets capitalized under the finance lease transactions entered into on and after April 1st, 2008 where ownership ofleased assets is not transferred to lessees are depreciated by the straight-line method over the lease term with their residual value ofzero.
(10) Reserve for Possible Loan Losses
Major consolidated subsidiaries record the reserve for possible loan losses as follows:
For loans to insolvent customers who are undergoing bankruptcy or special liquidation, etc. (hereinafter, “borrowers underbankruptcy proceedings”) or who are in a similar financial condition although not yet in bankruptcy (hereinafter, “borrowers substantiallyin bankruptcy”), the reserve for possible loan losses is provided at the full amount of the book value of such loans after deducting theamount of direct write-offs (as defined below), and excluding the amounts deemed collectible from sale of the collateral pledged andthe guarantees that are deemed recoverable. For the unsecured and unguaranteed portion of loans to customers not presently in theabove circumstances, but with a high probability of becoming so (hereinafter “customers with high probability of becoming insolvent”),
the reserve for possible loan losses is provided at the amounts deemed necessary after deduction of the estimated realizable value ofcollateral and guarantees based on the customer’s overall financial condition.
For loans to borrowers with a rescheduled or restructuring plan, which exceed a certain amount, the discounted cash flow (DCF)
method is applied to provide for doubtful accounts, if cash flows from collection of principal and receipts of interest can be reasonably
estimated. Under the DCF method a reserve for possible loan losses is provided at the difference between the cash flows discounted
by the original interest rate and the carrying value of the loan.
For other loans, the reserve for possible loan losses is provided mainly at an anticipated amount of losses over the next one or
three years. The anticipated amount of losses was calculated by obtaining the loss rate based on the mean for a certain period of
actual loss rates calculated from actual losses for one or three years and then by making necessary adjustments in accordance with
future projections and other factors.
Regarding each loan, the Credit Review Office, which is independent of the operating divisions, reviews the operating
divisions’evaluation of each loan for collectibility based on self-assessment standards.
For loans to borrowers under bankruptcy proceedings and borrowers substantially in bankruptcy that are secured by collateral andguarantees, the unrecoverable portion of such loans is determined by subtracting the estimated recoverable amounts from the disposal

8

Nishi-Nippon Financial Holdings GroupFINANCIAL REPORT 2023

Notes to Consolidated Financial Statementsof the collateral and the amounts deemed recoverable from the guarantors. The unrecoverable amount is written off directly against thevalue of the loan (“direct write-off”). The amounts of such direct write-offs at March 31st, 2023 and 2022 were ¥8,077 million ($60,495
thousand) and ¥11,425 million, respectively.
Other consolidated subsidiaries record a general reserve for possible loan losses by applying the historical loan-loss ratio observed
over specific periods, and record a specific reserve for certain loans at the estimated uncollectible amount based on assessment ofeach borrower’s ability to repay.
(11) Reserve for Devaluation of Securities
In order to provide for a loss on investments, the Group estimates the amount deemed necessary based on a review of financial
position, etc. of the companies issuing securities or golf club membership.
(12) Provision for share-based remuneration for directors
In order to provide for payment of compensation for directors of the Company (excluding those who are Audit and Supervisory
Committee members) under the stock compensation plan, provision for share-based remuneration for directors is made for amount ofcompensation that is deemed to be accrued by the end of the fiscal year under review.
(13) Reserve for Retirement Benefits for Directors and Corporate Auditors
Reserve for retirement benefits for directors and corporate auditors is provided at the amount that would be paid in accordance with
the internally established rule at the balance sheet date if they were retired on that date.
(14) Reserve for Reimbursement of Deposits
Reserve for reimbursement of deposits is provided for possible losses on the future claims for withdrawal of the deposits, which wasderecognized, at an amount deemed necessary based on the estimates of the consolidated subsidiaries engaged in the banking
business.
(15) Reserve for Other Contingent Losses
Reserve for other contingent losses is provided for possible losses on loans under the shared responsibility system with the Credit
Guarantee Corporation as well as for possible losses resulting from other contingencies not covered by the other reserves, at an
amount deemed necessary based on the estimates of the future possible payments by the Group.
(16) Reserve under the Special Laws
Reserve under the special laws is a legal reserve for financial instruments exchange, which is provided for possible losses arising fromthe purchase or sale of securities or other securities-related trading activities by the Company’s consolidated subsidiary engaged in the
securities business at an amount estimated pursuant to Article 46, Item 5 of the Financial Instruments and Exchange Law as well as
Article 175 of the Cabinet Office Ordinance relating to the financial instruments services.
(17) Accounting for Retirement Benefits
In calculating the retirement benefit obligation for employees for certain consolidated subsidiaries, the retirement benefit obligation for
employees is attributed to each period by the benefit formula method.
Actuarial gain/loss is amortized using the straight-line method mainly over a period of 10 years following the year it arises, which
is within the average remaining years of service of the current employees.
For other consolidated subsidiaries, liability for retirement benefits and retirement benefit expenses are calculated using thesimplified method, which assumes the retirement benefit obligation to be equal to the benefits payable if all eligible employees voluntarily
terminated their employment at fiscal year end.
(18) Recognition of earnings
The Company recognizes revenues from contracts with customers when control of a promised good or service is transferred to acustomer in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods andservices. For fees and commissions that may be refunded, the Company posts refund liabilities and deducts such amounts fromrevenues.
(19) Foreign Currency Translation
Foreign currency-denominated assets and liabilities are translated into Japanese yen primarily at the exchange rate prevailing at thebalance sheet date.

Nishi-Nippon Financial Holdings GroupFINANCIAL REPORT 2023

9

Notes to Consolidated Financial Statements(20) Accounting for Leases
Finance lease transactions which were initially engaged by the consolidated subsidiaries prior to April 1st, 2008 where there is notransfer of ownership are accounted for by the same method as applicable to ordinary operating lease contracts.
(21) Hedge Accountingi) Hedge accounting for interest rate risks
The consolidated subsidiaries engaged in the banking business apply the deferred method as hedge accounting for interest raterisks of certain financial assets and liabilities by using the individual hedging, which directly matches hedged items and hedging
instruments. With regard to hedging transactions to offset fluctuations in the fair value of fixed-rate bonds classified as available-forsale securities, in accordance with operational rules concerning hedge accounting, hedged items are distinguished by identical typeof bonds and interest rate swaps are used as hedging instruments. Since significant terms related to those hedged items andhedging instruments are nearly identical, such hedging transactions are deemed highly effective in terms of evaluation of hedge
effectiveness. No evaluation is performed for hedge effectiveness of qualifying interest rate swaps accounted for by the special
treatment, as it is ascertained that the criteria for the special treatment are continually met.
ii) Hedge accounting for foreign exchange rate risk
The consolidated subsidiaries engaged in the banking business apply the deferred method as hedge accounting for foreign exchangerisks of various foreign currency-denominated financial assets and liabilities in accordance with the “Accounting and Auditing
Treatment for Accounting for Foreign Currency Transactions in Banking Industry” (JICPA Industry-specific Committee Practical
Guideline No. 25 of October 8th, 2020).The consolidated subsidiaries treat foreign exchange swap transactions as hedging
instruments for the purpose of the hedge of foreign currency-denominated financial assets and liabilities, and the subsidiaries test
hedge effectiveness by matching the foreign currency swap position as hedging instruments with the related foreign currencydenominated financial assets and liabilities as hedged items.
iii) Internal contract
For internal contracts, the consolidated subsidiaries engaged in the banking business manage the foreign currency swaps that aredesignated as hedging instruments in accordance with the strict criteria for external transactions stipulated in the JICPA Industryspecific Committee Practical Guideline No. 25. Therefore, the subsidiaries either recognizes gains or losses that arise from suchcurrency swaps as earnings or defers them, rather than eliminating them.
(22) Cash and Cash Equivalents in the Consolidated Statement of Cash Flows
Cash and Cash Equivalents in the consolidated statement of cash flows are composed of cash and due from central bank.
(23) Application of the Group Tax Sharing System
The Company and certain of its consolidated subsidiaries have applied the Group Tax Sharing System, with the Company serving as
the aggregate parent corporation.
(24) Accounting Principles and Procedures when related Accounting Standards are not clear
Gains/losses from cancellation/redemption of investment trusts are recorded under “Interest and dividends on securities,” provided,
however, that the amount of interim dividends from investment trusts is recorded in “Loss on redemption of bonds” under “Other
operating expenses” if such is negative overall.
(25) Significant Accounting Estimates
Reserve for possible loan losses:
Amount recorded on the consolidated financial statements for the fiscal year under review:Thousands of
U.S. dollars

Millions of yen

Reserve for possible loan losses

2023

2022

2023

¥40,455¥42,473$302,973

Information about the content of significant accounting estimates concerning disclosure items identified:(1) Calculation method
For the calculation method of reserve for possible loan losses, see “(10) Reserve for Possible Loan Losses,” under the “Summaryof Significant Accounting Policies.”(2) Key assumptions
Key assumptions include: i ) Future outlook of debtors’ business in the assessment of debtor companies; ii ) Impact period of
the novel coronavirus disease (COVID-19); and iii ) Future transition in the assessment of debtor companies and the amount tobe collected in the cash flow estimation method.

10

Nishi-Nippon Financial Holdings GroupFINANCIAL REPORT 2023

Notes to Consolidated Financial Statements

Details of each assumption are as follows:i) Future outlook of debtors’ business in the assessment of debtor companies
The future outlook of debtors’ business is determined by evaluating the repayment situation, financial position, businessperformance, etc., of each debtor.
ii) Impact period of the novel coronavirus disease (COVID-19)
Under the assumption that the impact will continue to be felt into the following fiscal year (year ending March 31st, 2024),
certain debtor companies have been re-classified in consideration of recent business and performance, the possible
impact of COVID-19 on their future business performance, etc. for the consolidated fiscal year under review (year ended
March 31st, 2023).
iii) Future transition in the assessment of debtor companies and the amount to be collected in the cash flow estimation
methodThe future transition in the assessment of debtor companies and the amount to be collected are set by evaluating eachdebtor based on their repayment situation and future plans.
(3) Possible impact on consolidated financial statements for the following fiscal year
All of the key assumptions are surrounded by uncertainty. As such, a change in the assumptions based on which the original
estimates were made can have a material impact on reserve for possible loan losses on consolidated financial statements forthe following fiscal year.
(26) Changes in Accounting Policies• Application of the “Implementation Guidance on Accounting Standard for Fair Value Measurement”
The Company has applied the “Implementation Guidance on Accounting Standard for Fair Value Measurement” (ASBJ Guidance
No. 31 of June 17th, 2021; hereinafter, “Fair Value Measurement Guidance”) from the beginning of the fiscal year under review, andwill prospectively apply the new accounting policies as stipulated by the “Fair Value Measurement Guidance” in accordance withthe transitional treatment provided in paragraph 27-2 of the “Fair Value Measurement Guidance”. This does not affect theconsolidated financial statements.
The Company does not include notes pertaining to the previous fiscal year on investment trusts in fair value information by levelwithin the fair value hierarchy in the notes on financial instruments in accordance with paragraph 27-3 of the “Fair Value
Measurement Guidance”.
(27) Accounting Standards Issued but Not Yet Effective“Accounting Standard for Current Income Taxes” (ASBJ Statement No. 27 of October 28th, 2022)“Accounting Standard for Presentation of Comprehensive Income” (ASBJ Statement No. 25 of October 28th, 2022)“Implementation Guidance on Tax Effect Accounting” (ASBJ Guidance No. 28 of October 28th, 2022)
i) Overview
Classification of income taxes when other comprehensive income is subject to taxation and accounting of tax effect on sales ofstocks of subsidiaries, etc. when the group taxation regime is applied have been determined.
ii) Scheduled date of adoption
The Company plans to adopt the above-mentioned accounting standard and implementation guidance from the beginning of
the fiscal year ending March 31st, 2025.
iii) Impact of the adoption of the accounting standard and implementation guidance
The Company is currently evaluating the effect of the adoption of this accounting standard and implementation guidance on its
consolidated financial statements.
Additional information• Board Benefit Trust
The Company has introduced the Board Benefit Trust (BBT) (hereinafter, the “Plan”) to make clearer the link between
compensation to the Company’s directors (excluding those who are Audit and Supervisory Committee members; thesame applies hereinafter in this section) and the Company’s stock value and to further raise awareness of the need tocontribute to the enhancement of corporate value over the mid- and long-term.
i) Overview of transactions
The Plan is a stock compensation plan whereby the Company’s common stock (hereinafter, the “Company Stock”) is
acquired through a trust (hereinafter, trust set up under the Plan is referred to as the “Trust”) by using money contributedby the Company, and the Company Stock and money in the amount equivalent to the fair value of the Company Stock(hereinafter, collectively the “Company Stock, Etc.”) are paid to the Company’s directors from the Trust. In principle,
directors shall receive the Company Stock, Etc. at the time of retirement.

Nishi-Nippon Financial Holdings GroupFINANCIAL REPORT 2023

11

Notes to Consolidated Financial Statementsii)The Company Stock remaining in the Trust
The Company Stock remaining in the Trust are recorded under net assets as treasury stock at the book value in the
Trust (excluding incidental expenses). The book value of treasury stock was ¥89 million ($672 thousand) and thenumber of shares of treasury stock was 121,000 shares as of March 31st, 2023.
• Application of the Practical Solution on the Accounting and Disclosure Under the Group Tax Sharing System
The Company and some of its consolidated subsidiaries have transitioned from the Consolidated Taxation System to theGroup Tax Sharing System from the fiscal year under review. Accordingly, the accounting treatment and the disclosure ofnational and local income tax, as well as the treatment of tax effect accounting, follow the “Practical Solution on the
Accounting and Disclosure Under the Group Tax Sharing System” (ASBJ Practical Solution No. 42 of August 12th, 2021).
Pursuant to the ASBJ Practical Solution No. 42, paragraph 32-1, changes in accounting policies due to the application of
the ASBJ Practical Solution No. 42 are deemed not to have any impact.

3. Securities
Securities at March 31st, 2023 and 2022 consisted of the following:Thousands of
U.S. dollars

Millions of yen

2023

2022

Japanese government bonds¥495,866¥500,561$3,713,518

Japanese municipal bonds

421,892

400,698

3,159,532

Corporate bonds (including government-guaranteed bonds)*

185,910

221,488

1,392,271

Stock**

144,270

126,367

1,080,433

Other securities***544,711524,228

4,079,321¥1,792,650¥1,773,344$13,425,078

Total

2023

* Corporate bonds included bonds offered through private placement. The guarantee obligation of Nishi-Nippon City Bank for such private placement bonds at March
31st , 2023 and 2022 were ¥17,634 million ($132,060 thousand) and ¥19,228 million, respectively.
** Stock included stock of non-consolidated subsidiaries and affiliates of ¥13,321 million ($99,767 thousand) and ¥702 million at March 31st, 2023 and 2022, respectively.
*** Other securities included investments in non-consolidated and affiliates subsidiaries of ¥2,091 million ($15,663 thousand) and ¥161 million at March 31st, 2023 and2022, respectively.

4. Loans and Bills Discounted
Loans and bills discounted at March 31st, 2023 and 2022 consisted of the following:Thousands of
U.S. dollars

Millions of yen

2023

2022

Bills discounted*¥15,905¥15,434$119,118

Loans on notes

186,919

169,458

1,399,830

Loans on deed

59,845,071

2023

7,991,112

7,561,314

Overdraft

761,462

724,6705,702,554

Total¥8,955,399¥8,470,861$67,066,575*

Bills discounted are recorded as cash lending / borrowing transactions in accordance with the “Accounting and Auditing Treatments for Application of AccountingStandard for Financial Instruments in Banking Industry” (JICPA Industry-specific Committee Practical Guideline No. 24 of March 17th, 2022). The consolidated
subsidiaries engaged in the banking business have right to sell or collateralize such bills at its discretion. Total face value of commercial bills and bills of exchangeacquired through discounting amounted to ¥15,905 million ($119,119 thousand) and ¥15,434 million at March 31st, 2023 and 2022, respectively.

The following table shows the claims classfied under the Banking Act and the Act on Emergency Measures for the Revitalization of the
Financial Functions. Claims include corporate bonds included in “Securities” in the consolidated balance sheet (limited to corporate bonds
for which the redemption of principal or interest payments, whether wholly or partly, is guaranteed by the financial institution that owns thecorporate bonds, and for which the issuance is implemented through the private placement of securities as defined in Article 2, Item 3 of the
Financial Instruments and Exchange Act), loans and bills discounted, foreign exchanges, amounts recorded in outstanding interest,
temporary payments, and consideration for acceptance of payment under “Other assets” on the balance sheet, and, if securities are loaned(noted), such securities (limited to those via loan for use or lease contract).

12

Nishi-Nippon Financial Holdings GroupFINANCIAL REPORT 2023

Notes to Consolidated Financial Statements

Thousands of
U.S. dollars

Millions of yen

2023

2022

2023

Claims in bankruptcy, reorganization, etc.**¥16,709¥14,575$125,138

Claims with risks***

95,40895,815714,506

796

374

5,965

Claims in arrears for three months or more****Loans with altered lending conditions*****
Total

32,771

32,514245,424¥145,685¥143,280$1,091,035**

Claims held against debtors with failed business status due to circumstances such as the commencement of bankruptcy proceedings, the commencement ofcorporate reorganization proceedings, or rehabilitation proceedings, and any other type of claims that are similar or equivalent thereto.
*** Claims whose debtor is not yet in the status of failure in business although such debtor’s financial status and business performance have deteriorated and for which it
is highly unlikely that the collection of principal or receipt of interest in accordance with the contract will be possible but that do not fall under claims in bankruptcy,
reorganization, etc.
**** Claims in arrears for which the principal or interest is delinquent for three months or more from the date immediately following the contractual due date, and that do
not fall under claims in bankruptcy, reorganization, etc. or claims with risks.
***** Loans for which there is a reduction in or an exemption of the interest rate, a grace period for the payment of interests, a grace period for the reimbursement of theprincipal, a waiver of the loan claim or any other arrangement that might be considered advantageous to a debtor are made for the purpose of the reconstruction of,or support to, the management of the debtor, and that do not fall under claims in bankruptcy, reorganization, etc., claims with risks, or claims in arrears for threemonths or more.
The amounts given above are gross amounts before the deduction of amounts of the allowance for loan losses.

5. Assets Pledged as Collateral
Assets pledged as collateral by the Group at March 31st, 2023 and 2022 consisted of the following:Thousands of
U.S. dollars

Millions of yen

2022

2023

2023

Assets pledged as collateral
¥35

¥35

$268

1,185,143

1,288,242

8,875,487

Cash and due from banks
Securities
Loans

1,457,330

1,231,046

10,913,884

Total¥2,642,510¥2,519,324$19,789,639¥12,736¥14,215$95,382—

40,100—265,881251,120

1,991,175

293,853

87,1882,200,654

1,248,193

1,753,174

9,347,659

Liabilities secured by the above assets
Deposits
Call money and bills soldPayables under repurchase agreements
Guarantee deposits received under securities lending transactions
Borrowed money

Other than the items shown above, the following items were pledged as collateral for foreign exchange transactions and/or as substitutes
for initial margin on futures at March 31st, 2023 and 2022:
Thousands of
U.S. dollars

Millions of yen

2022

2023

2023

Securities¥1,141¥1,141$8,545

Other assets¥1,400¥1,400$10,484

Additionally, the following was included in other assets at March 31st, 2023 and 2022:
Thousands of
U.S. dollars

Millions of yen

Cash collateral paid for financial instruments
Deposits included in other assets

2023

2022

2023

¥45,418¥48,746$340,135

2,464

2,474

18,459Nishi-Nippon Financial Holdings GroupFINANCIAL REPORT 2023

13

Notes to Consolidated Financial Statements

6. Contracts for Commitment Lines of Credit
Contracts for commitment lines of credit related to overdraft agreements and loan credit facilities represent a promise on a lending bank at a
specified credit limit, to a customer upon request for funds, unless there is a violation of the contractual conditions.
The aggregate amounts under commitment contracts not yet drawn down at March 31st, 2023 and 2022 are as follows:
Thousands of
U.S. dollars

Millions of yen

Aggregate amount under commitment contracts not yet drawn down
Of the above amount, those with original maturity of less than one year or cancellable at any time
without penalty

2023

2022

2023

¥2,023,899¥2,074,368$15,156,890

1,939,425

1,980,801

14,524,264

As many of these contracts expire without the right to extend the loans being exercised, the aggregate total of the undrawn amount does
not necessarily affect the future cash flows of the Group. Many of these contracts have stipulations that allow the consolidated subsidiaries
to turn down a loan request or reduce the amount of the credit line if there is a change in financial conditions, a need to secure their credit,or other similar reasons. In addition to obtaining necessary collateral (real estate, securities, etc.) at the time the contract is entered into,
the consolidated subsidiaries assess the condition of the customer’s business operations, and analyze other information, based on internal
procedures and standards. If necessary, the contract isreviewed and revised, or additional steps are taken to secure the credit extended tothe customer.

7. Foreign Exchange
Foreign exchange assets and liabilities at March 31st, 2023 and 2022 consisted of the following:Thousands of
U.S. dollars

Millions of yen

2022

2023

2023

Assets:Foreign exchange bills bought

¥0

¥16

$0

Foreign exchange bills receivable

170

315

1,275

Due from foreign banks (their accounts)

—

—

—

Due from foreign banks (our accounts)
Total

17,141

22,424

128,369¥17,311¥22,757$129,645

Liabilities:
Foreign exchange bills sold

¥5

¥—

$44

Foreign exchange bills payable

498

201

3,732

¥504

¥201

$3,777Total

8. Other Assets
Other assets at March 31st, 2023 and 2022 consisted of the following:Thousands of
U.S. dollars

Millions of yen

2022

2023

¥35

$238

Accrued income

7,233

6,359

54,174

Prepaid expenses

578

344

4,330

Financial derivative products

5,662

1,936

42,403

Cash collateral paid for financial instruments

45,41848,746340,135

Other

40,14632,888300,658¥99,071¥90,311$741,941

Total* Domestic exchange settlement account represents unsettled debit balances arising from inter-bank domestic exchange transfers.

14

2023

¥31

Domestic exchange settlement account*

Nishi-Nippon Financial Holdings GroupFINANCIAL REPORT 2023

Notes to Consolidated Financial Statements

9. Tangible Fixed Assets
Tangible fixed assets at March 31st, 2023 and 2022 consisted of the following:Thousands of
U.S. dollars

Millions of yen

2023

2022

2023

Land

¥75,659¥74,273$566,607

Buildings

31,62232,542

236,818

Construction in progress

530

55

3,970

Leased assets

361

324

2,707

8,680

8,977

65,010¥116,854¥116,172$875,115

Other tangible fixed assets
Total* The amounts of accumulated depreciation for tangible fixed assets at March 31st, 2023 and 2022 were ¥68,406 million ($512,296 thousand) and ¥66,755 million,
respectively.

The accelerated depreciation entry amounts for tangible fixed assets at March 31st, 2023 and 2022 are as follows:
Thousands of
U.S. dollars

Millions of yen

2022

2023

2023

¥6,614¥6,573$49,228

10. Deposits
Deposits at March 31st, 2023 and 2022 consisted of the following:Thousands of
U.S. dollars

Millions of yen

2023

2022

Current deposits¥451,568¥438,071$3,381,777

Ordinary deposits

6,792,829

6,481,429

50,871,186

Deposits at notice

14,73918,412

110,384

2,383,936

2,475,642

17,853,190

Negotiable certificates of deposit

167,423

264,293

1,253,827

Other deposits

148,698

156,787

1,113,597¥9,959,196¥9,834,637$74,583,962

Time deposits

Total

2023

11. Borrowed Money
The weighted average interest rates on borrowed money is 0.07% at March 31st, 2023.
The aggregate annual maturity amounts within five years of borrowed money after March 31st, 2023 are as follows:
Millions of yen

Thousands of
U.S. dollars

2024¥273,776$2,050,300

2025

245,097

1,835,525

2026

252,013

1,887,319

2027

478,814

3,585,818

2028

5

40

Year ending March 31st

Nishi-Nippon Financial Holdings GroupFINANCIAL REPORT 2023

15

Notes to Consolidated Financial Statements

12. Other Liabilities
Other liabilities at March 31st, 2023 and 2022 consisted of the following:Thousands of
U.S. dollars

Millions of yen

2022

2023

2023

Domestic exchange settlement account

¥181

¥41

$1,356

Accrued income taxes

1,599

7,393

11,979Accrued expenses

8,886

6,327

66,551

Unearned income

7,460

4,981

55,868Financial derivative products

5,315

7,287

39,809

365

341

2,736

2,630

496

19,695

Lease obligations
Cash collateral received for financial instruments
Asset retirement obligations

1,079

1,069

8,086

Others

92,65286,014

693,873

Total¥120,171¥113,952$899,957

13. Capital Stock
Capital stock during the year ended March 31st, 2023 consisted of the following:
Common stock

April 1st, 2022
Increase
Decrease*
March 31st, 2023

Capital stock

Issued shares

Millions of yen

Thousands of
U.S. dollars

151,596,955¥50,000$374,447———

3,000,000——

148,596,955¥50,000$374,447* The decrease of 3,000,000 shares is due to retirement of treasury shares.

Capital stock during the year ended March 31st, 2022 consisted of the following:

April 1st, 2021
Increase
Decrease*
March 31st, 2022

Common stock

Capital stock

Issued shares

Millions of yen

159,596,955¥50,000——

8,000,000—

151,596,955¥50,000* The decrease of 8,000,000 shares is due to retirement of treasury shares.

14. Treasury Stock
Treasury stock during the year ended March 31st, 2023 consisted of the following:
Common stock

Treasury stock

Number of shares

Millions of yen

Thousands of
U.S. dollars

April 1st, 2022

7,288,911(¥5,522)($41,359)

Increase**

2,813,715(2,593)(19,426)

Decrease**

3,000,588

2,417

18,107

March 31st, 2023*

7,102,038(¥5,698)($42,677)* The number of common shares under treasury stock at the end of the fiscal year under review includes 121,000 of the Company’s own stock held by the BBT.
**	The increase in the number of treasury stock by 2,813,715 shares is due to the acquisition of 2,687,400 shares of treasury stock, the demands for the purchase of
5,315 fractional shares, and the acquisition of 121,000 shares provided to the BBT. The decrease of 3,000,588 shares is due to retirement of treasury shares of
3,000,000 and sale of fractional shares of 588.

16

Nishi-Nippon Financial Holdings GroupFINANCIAL REPORT 2023

Notes to Consolidated Financial Statements

Treasury stock during the year ended March 31st, 2022 consisted of the following:
Common stock

Treasury stock

Number of shares

Millions of yen

April 1st, 2021

11,443,334(¥8,597)

Increase*

3,846,145(3,004)

Decrease*

8,000,568

6,079

March 31st, 2022

7,288,911(¥5,522)* T he increase of 3,846,145 shares is due to acquisition of treasury shares of 3,839,800 and purchase of fractional shares of 6,345.
The decrease of 8,000,568 shares is due to retirement of treasury shares of 8,000,000 and sale of fractional shares of 568.

15. Revaluation of Premises AccountBased on the Law Concerning Land Revaluation (Law No. 34, promulgated on March 31st, 1998), the consolidated subsidiaries engaged in
the banking business have revalued land used for business purposes. The deferred taxes on revaluation differences are presented in theaccount, “Deferred tax liabilities on revaluation of premises” in the liabilities of the consolidated balance sheet. The amount of revaluationdifferences, net of tax, is presented as “Revaluation of premises, net of taxes” in net assets.
The differences at March 31st, 2023 and 2022 are not presented as the aggregate market value of land subject to revaluation exceeded
the book value after revaluation.

16. Other Interest Income
Other interest income for the years ended March 31st, 2023 and 2022 consisted of the following:Thousands of
U.S. dollars

Millions of yen

2022

2023
¥28

¥0

$212

2,398

2,852

17,964

Interest on call loans and bills boughtInterest on deposits with banks

2023

Others

1,459

1,372

10,932

Total¥3,886¥4,225$29,108

17. Other Operating Income
Other operating income for the years ended March 31st, 2023 and 2022 consisted of the following:Thousands of
U.S. dollars

Millions of yen

2023

2022

2023

Gains on foreign exchange transactions¥1,260¥674$9,438

Gains on sale of bonds

1,482

1,670

11,104

Others5,321

724

39,852

Total¥8,064¥3,069$60,395

Nishi-Nippon Financial Holdings GroupFINANCIAL REPORT 2023

17

Notes to Consolidated Financial Statements

18. Other Income
Other income for the years ended March 31st, 2023 and 2022 consisted of the following:Thousands of
U.S. dollars

Millions of yen

2022

2023

2023

¥2,353¥1,448

Gains on money held in trust

14

10

111

Equity in earnings of affiliates

8,319

56

62,306

Gains on sale of stock and other securities$17,625

Gains on disposition of fixed assets

32

142

242

Recoveries of written-off claims

251

378

1,886

Rental income on land and buildings

523

542

3,920

Gain from negative goodwill

564

—

4,228

Gain on step acquisition

272

—

2,043

5

—

41

Others

266

362

1,995

Total

¥12,605¥2,941$94,402

Reversal of reserve for devaluation of securities

19. Other Operating Expenses
Other operating expenses for the years ended March 31st, 2023 and 2022 consisted of the following:Thousands of
U.S. dollars

Millions of yen

2022

2023

2023

¥11,737¥417$87,901

Losses on redemption of bonds

214

273

1,606

Losses on devaluation of bonds

—

51

—

Expenses for derivatives other than trading derivatives

205

912

1,536

Losses on sale of bonds

Others3,973—

29,758

Total¥16,130¥1,654$120,802

20. General and Administrative Expenses
General and administrative expenses for the years ended March 31st, 2023 and 2022 consisted of the following:Thousands of
U.S. dollars

Millions of yen

2023

2022

¥30,410¥30,893$227,739

2,238

245

16,762

48

54

360

Depreciation

5,780

5,674

43,291

Rental expenses

3,383

3,245

25,339

Salaries and allowances
Employee retirement benefits
Retirement benefits for directors and corporate auditors

18

2023

Taxes

5,621

5,731

42,101Others33,15133,328248,271

Total¥80,634¥79,173$603,865

Nishi-Nippon Financial Holdings GroupFINANCIAL REPORT 2023

Notes to Consolidated Financial Statements

21. Other Expenses
Other expenses for the years ended March 31st, 2023 and 2022 consisted of the following:Thousands of
U.S. dollars

Millions of yen

2022

2023

2023

Provision for possible loan losses¥1,984¥1,939$14,863

Losses on write-offs of claims

1,378

2,430

10,322Losses on sale of stock and other securities

64

0

483

Losses on devaluation of stock and other securities

52

2,358

396

Losses on disposition of tangible fixed assets

368

390

2,759

Impairment losses

66

465

500

Losses on sale of loans

182

20

1,366

Others

1,920

648

14,380Total¥6,018¥8,253$45,073

22. Other Comprehensive Income
Reclassification adjustments and tax effects related to other comprehensive income for the years ended March 31st, 2023 and 2022 are as
follows:
Thousands of
U.S. dollars

Millions of yen

2023

2022

2023

Amount arising during the year(¥26,438)(¥37,415)($197,993)

Reclassification adjustments

8,306

(639)

62,209(18,131)(38,054)(135,783)

5,168

11,49438,707(¥12,962)(¥26,560)($97,075)

Amount arising during the year(¥2,117)¥1,220($15,860)

Reclassification adjustments

3,591

822

26,894

Amount before tax effect

1,473

2,042

11,033Tax effect

(449)

(623)

(3,365)¥1,023¥1,419$7,668Amount arising during the year(¥1,622)(¥17,934)($12,150)

Reclassification adjustments

2,877

720

21,551

Amount before tax effect

1,255(17,214)9,400

Tax effect

(382)

5,250

(2,867)Retirement benefits liability adjustments¥872(¥11,963)$6,533

Amount arising during the year

¥56

¥—

$426

Reclassification adjustments

—

—

—

¥56

¥—

$426

(¥11,009)(¥37,104)($82,447)

Net unrealized gains on securities available for sale:Amount before tax effectTax effectNet unrealized gains on securities available for saleNet deferred gains (losses) on hedging instruments:

Net deferred gains (losses) on hedging instruments
Retirement benefits liability adjustments:

Share of other comprehensive income of affiliates accounted for using the equity method:

Share of other comprehensive income of associates accounted for using the equity method
Total other comprehensive income

Nishi-Nippon Financial Holdings GroupFINANCIAL REPORT 2023

19

Notes to Consolidated Financial Statements

23. Lease Transactions(1) Finance leasesi)	Information on finance lease transactions which are accounted for as operating leases at March 31st, 2023 and 2022 is summarized
as follows:
Thousands of
U.S. dollars

Millions of yen

2022

2023

2023

Amounts equivalent to acquisition cost
Tangible fixed assets
Total

¥970

¥970

$7,269¥970¥970$7,269¥923¥890$6,914¥923¥890$6,914

¥47

¥79

$355

¥47

¥79

$355

Amounts equivalent to accumulated depreciation
Tangible fixed assets
Total
Amounts equivalent to carrying value
Tangible fixed assets
Total

Note: The amount equivalent to acquisition cost includes an interest element as the total future finance lease payments are not significant to the balance of tangible
fixed assets at the end of the year.

ii) Future lease payments of finance leases which are accounted for as operating leases at March 31st, 2023 and 2022 are as follows:
Thousands of
U.S. dollars

Millions of yen

2022

2023

2023

Future finance lease payments
¥32

¥31

Due within one year
Due after one year
Total

$233

16

47

121

¥47

¥79

$355

Note: The amount of the future finance lease payments at the end of the year includes an interest element as the total future finance lease payments are not significant
to the balance of tangible fixed assets at the end of the year.

iii)	Total lease payments during the year and the amount equivalent to depreciation expenses for the years ended March 31st, 2023 and2022 are as follows:
Thousands of
U.S. dollars

Millions of yen

2022

2023

2023

Total lease payments during the year

¥32

¥32

$242

The amount equivalent to depreciation expenses *

32

32

242

* The amount equivalent to depreciation expenses was calculated using the straight-line method with no residual value over the lease term.

(2) Operating leases
Future lease payments required under operating leases that are non-cancelable at March 31st, 2023 and 2022 are as follows:
Thousands of
U.S. dollars

Millions of yen

2022

2023

2023

Future operating lease payments
Due within one year

¥228

¥238

Due after one year

148

227

1,108

¥376

¥466

$2,821

Total

20

Nishi-Nippon Financial Holdings GroupFINANCIAL REPORT 2023

$1,712

Notes to Consolidated Financial Statements

24. Financial Instruments(1) Matters related to status of financial instrumentsi)

Policies for financial instruments
The Group is engaged in the financial service business, with a primary focus on banking businesses such as deposits, loans,securities, and domestic and foreign currency exchange businesses. The Group manages and raises funds, taking into accountmarket conditions and balancing duration. To conduct these businesses, the Company comprehends the risks arising from all of its
assets and liabilities, including off-balance-sheet transactions, through the proper controls over these risks, and builds reasonable
and effective portfolios. Thus the Company operates a comprehensive asset and liability management (ALM) system with the aim of
maximizing and stabilizing its profits.
In addition, some of the Company’s consolidated subsidiaries are engaged in banking, credit card, credit guarantee services,credit management, restructuring support services, claims servicing businesses and financial instruments and exchange services.

ii) Types of financial instruments and related risks
Loans, which comprise 70% of the Group’s total assets, are primarily made to domestic corporations and individuals and are
exposed to credit risks resulting from non-performance of contracts. Should the creditworthiness of major borrowers deteriorate, thevalue of collateral sharply decline, or other unanticipated problems arise, it could cause an increase in the cost of credit such as an
unexpected write-off or rise in reserve for possible loan losses. Moreover, considering the relative weight of the invested assets, theimpact of any such problems could be substantial and could have a negative effect on the financial position and performance of theGroup.
Securities are mainly stocks, debt securities, and investment trusts and are exposed to the credit risk of each issuer and the riskof interest rate fluctuation. Stocks that are marketable are exposed to price volatility risks that a decline in their market prices cause
impairment losses and valuation losses on the stocks. Debt securities are also subject to price volatility risks that an increase in themarket interest rates following economic recovery may cause valuation losses on the securities.
Borrowed money and bonds are exposed to liquidity risks that, if some problems arise in cash management due to deteriorationin financial positions at the Group, the Group is forced to raise funds at higher interest rates than usual, market transactions are
suspended as a result of market turmoil, or it is forced to make transactions at a drastically unfavorable price than usual, it could
impact future operations of the Group.
Derivative transactions include interest rate swaps, forward exchange transactions, currency swaps, and currency options. These
derivatives are utilized primarily as hedging instruments to manage and mitigate the market risks of on-balance-sheet assets andliabilities. In addition, some of the derivative transactions in trading operations are used for the purpose of making profits throughshort-term fluctuations in the market rates, arbitrage transactions and others. Hedge transactions consist mainly of interest rate
swaps as a hedge against interest rate fluctuation risks arising from loans with fixed interest rates, and forward exchange transactions
and currency options as a hedge against exchange rate fluctuation risks arising from foreign currency-denominated assets andliabilities. The Company assesses the hedge effectiveness based on the difference between accumulated changes in cash flows ofhedged items and hedging instruments. However, no evaluation is performed for the hedge effectiveness of qualifying interest rate
swaps accounted for by the special treatment under the Accounting Standard for Financial Instruments, as it is ascertained that suchderivatives continually meet the criteria for special treatment. Risks related to these derivatives transactions include the market risk ofa potential loss in the fair value of financial instruments or portfolios resulting from fluctuations in interest rates, foreign exchange
rates, stock prices and other factors as well as the credit risk of a potential loss in the value of a transaction due to default by
counterparties to the contracts.
iii) Risk management system for financial instruments(a) Credit risk management
Recognizing the credit risk as our highest priority, the Group is working on strengthening controls over the credit risk in accordancewith the Group’s credit risk management policy and credit policy.
The Group applies its strict standards to the screening of individual credit extension, and credits that exceed certain thresholds
are reviewed further by specialized staff in its Credit Supervision Division. In this way, the Group is working to maintain thesoundness of its assets.
Regarding its loan portfolios, the Group tries to diversify risks to ensure that there is no concentration on any particularindustrial sectors or customers, through its systems of credit risk quantification and portfolio management by sector based on thecredit rating system.
In addition, in order to properly carry out write-offs and set provisions, the Group conducts self-assessments of its assets anduses an independent audit department to constantly monitor the status of the self-assessment procedures and adequacy of writeoffs and provisions.

Nishi-Nippon Financial Holdings GroupFINANCIAL REPORT 2023

21

Notes to Consolidated Financial Statements(b) Market risk management
The Group clearly separates the department responsible for conducting market transactions (front office) from the department
responsible for business administration (back office). Furthermore, the division which is independent from the market divisions has
been put in charge of risk management (middle office) to monitor conditions of the market transactions and their compliance withthe market risk-related regulations. The Group thus has a system of mutual controls among offices.
In addition, the Group is working to achieve stable profits by improving its management methods through a variety oftechniques for measuring risks such as VaR (Value at Risk) and BPV(Basis Point Value) methods, and by establishing a maximum
acceptable level for market risks and controlling the risks within the certain acceptable range.
(Quantitative information on market risks)
The measured quantity of market risks of the Group as a whole at March 31st, 2023 and 2022 were ¥73,872 million ($553,231
thousand) and ¥69,811 million, respectively.
Financial instruments of the consolidated subsidiaries engaged in the banking business which are subject to the measurement
include loans, deposits, securities and derivatives. The Group measures market risks using historical VaR method with anobservation period of five years, a confidence interval of 99% and a holding period of 6 months.
The Group performs backtesting, which compares VaR calculated by the model with actual performance (gain or loss). Basedon the results of the testing, we believe that the risk measurement model which we use captures market risks with sufficientaccuracy. However, since VaR measures market risks at a certain probability which is statistically calculated, it is not always
possible for the model to capture market risks in situations where market conditions change drastically.
(c) Liquidity risk management
The Group recognizes the liquidity risk as one of the most significant risks, because there are concerns over potential businessfailures and systemic risks when the liquidity risk rises. The Group provides against the liquidity risks by ensuring an adequate
reserve for outstanding claims and developing a contingency plan that assumes various scenarios.
As for the day-to-day cash management of the Group, a system of mutual controls among divisions has been put into place.
As a part of this system, the divisions responsible for the Group’s day-to-day cash management raise and manage marketable
funds, while the divisions responsible for managing the liquidity risk monitor the Group’s cash position. In this way, the Group
maintains a fluid and stable cash position.
(d) Risk management for derivative transactions
The Group’s derivative transactions are entered into using operational rules prepared in accordance with the Group’s internal
regulations. The rules stipulate the scope of derivative usage, authorization, responsibility, procedure, credit line, loss-cut rule, andreporting system. Each business line is responsible for each relevant risk management and for reporting to management, including
the ALM Committee, on a monthly basis.
iv) Supplementary explanation of the estimated fair value of financial instruments
Because various assumptions are used in the estimation of the fair value of financial instruments, the fair value may vary whendifferent assumptions are used.

22

Nishi-Nippon Financial Holdings GroupFINANCIAL REPORT 2023

Notes to Consolidated Financial Statements(2) Estimated fair value of financial instruments
Carrying value of financial instruments in the consolidated balance sheets at March 31st, 2023 and 2022 and their fair values andvaluation differences are as follows.
Stocks, etc. that do not have a market value and investments in partnerships are excluded from the table below (refer to Note 1).
Notes on cash and due from banks, call loans and bills bought, negotiable certificates of deposit, call money and bills sold, securities
sold under repurchase agreements, and cash collateral received for securities sent are omitted, because they comprise short-term
instruments whose carrying amounts approximate their fair value.
<At March 31st, 2023>
Millions of yen
Carrying value

Valuationdifferences

Fair value

Assets:i) Securities:
Held-to-maturity securities¥6,000¥6,186¥185

Available-for-sale securities*

1,751,334

1,751,334—ii) Loans and bills discounted

8,955,399

Reserve for possible loan losses**
Total assets(39,364)
8,916,034

8,979,316

63,281¥10,673,369¥10,736,836¥63,466¥9,791,772¥9,791,886¥113

Liabilities:i) Depositsii) Borrowed money

1,249,709

1,230,518(19,191)

Total liabilities¥11,041,482¥11,022,404(¥19,077)

Hedge accounting not applied

¥189

¥189

¥—

Hedge accounting applied

157

157

—

¥346

¥346

¥—

Derivatives***

Total derivatives

Thousands of U.S. dollars
Carrying value

Fair value

Valuationdifferences

Assets:i) Securities:$44,935$46,326$1,391

Available-for-sale securities*

13,115,663

13,115,663—

ii) Loans and bills discounted

67,066,575

Held-to-maturity securities

Reserve for possible loan losses**
Total assets(294,801)
66,771,773

67,245,683

473,909$79,932,372$80,407,673$475,300

Liabilities:$73,330,135$73,330,982$847ii) Borrowed money

9,359,019

9,215,298(143,720)

Total liabilities$82,689,154$82,546,281($142,873)

Hedge accounting not applied$1,417$1,417$—

Hedge accounting applied

1,177

1,177

—

$2,594$2,594$—i) Deposits

Derivatives***

Total derivatives* Available-for-sale securities include investment trusts that apply treatments considering net asset value to be the fair value in accordance with paragraph 24-9 of the“Fair Value Measurement Guidance” (ASBJ Guidance No. 31, June 17th, 2021 ).
** The general reserve for possible loan losses and the specific reserve for possible loan losses, which correspond to loans and bills discounted, have been deducted.
*** Derivative transactions recorded in Other assets and Other liabilities are presented in total.
The value of assets and liabilities arising from derivative transactions is shown at net value, and with the amount in parentheses representing net liability position.

Nishi-Nippon Financial Holdings GroupFINANCIAL REPORT 2023

23

Notes to Consolidated Financial Statements<At March 31st, 2022>
Millions of yen
Carrying value

Fair value

Valuationdifferences

Assets:i) Securities:
Held-to-maturity securities¥15,989¥16,341¥351

Available-for-sale securities

1,734,539

1,734,539—

ii) Loans and bills discounted

8,470,861

Reserve for possible loan losses*(41,148)
8,429,713

8,520,495

90,782¥10,180,242¥10,271,376¥91,134i) Deposits¥9,570,343¥9,570,513¥169ii) Borrowed money

1,755,240

1,747,863(7,377)

Total liabilities¥11,325,584¥11,318,376(¥7,207)¥—

Total assets
Liabilities:

Derivatives**
Hedge accounting not applied
Hedge accounting applied
Total derivatives

¥22

¥22

(5,373)(5,373)—(¥5,350)(¥5,350)¥—* The general reserve for possible loan losses and the specific reserve for possible loan losses, which correspond to loans and bills discounted, have been deducted.
** Derivative transactions recorded in Other assets and Other liabilities are presented in total.
The value of assets and liabilities arising from derivative transactions is shown at net value, and with the amount in parentheses representing net liability position.

(Note 1) The carrying amount of stocks, etc. that do not have a market value and investments in partnerships recorded on the
consolidated balance sheet are as follows, and are not included in “Available for sale securities” of fair value information offinancial instruments.
Thousands of
U.S. dollars

Millions of yen

Non-listed stocks
Investments in partnerships
Total

2023

2022

2023

¥31,362¥19,249$234,871

3,953

3,566

29,608¥35,315¥22,815$264,479

Notes: 1. Non-listed stocks are not within the scope of disclosures about fair value in accordance with paragraph 5 of the “Implementation Guidance on Disclosuresabout Fair Value of Financial Instruments” (ASBJ Guidance No. 19, March 31st, 2020).
2. In the years ended March 31st, 2023 and 2022, impairment losses of ¥52 million ($396 thousand) and ¥353 million were recorded for non-listed stocks,
respectively.
3. Investments in partnerships are not within the scope of discosures about fair value in accordance with paragraph 24-16 of the “Implementation Guidance on
Accounting Standard for Fair Value Measurement” (ASBJ Guidance No.31 of June 17th, 2021).

24

Nishi-Nippon Financial Holdings GroupFINANCIAL REPORT 2023

Notes to Consolidated Financial Statements(Note 2) Repayment schedules for monetary claims and securities with stated maturity at March 31st, 2023 and 2022
<At March 31st, 2023>
Millions of yen
Due in1 year or lessDue from
1 year to 3 years¥1,852,561

¥—

¥—

¥—

¥—

¥—

Held-to-maturity securities

6,000

—

—

—

—

—

Government bonds

6,000

—

—

—

—

—

Municipal bonds

—

—

—

—

—

—

Corporate bonds

—

—

—

—

—

—

Due from banks

Due from
Due from
Due from
3 years to 5 years 5 years to 7 years 7 years to 10 years

Due after
10 years

Securities:

OthersSecurities available for sale with maturity

—

—

—

—

—

—

113,202242,102

268,161

202,031521,171

226,617

Government bonds

8,000

18,000——271,000

213,000

Municipal bonds

23,510121,288

150,890108,041

18,220—

Corporate bonds

47,36749,76328,02628,704

32,633—34,32553,051

89,24565,284

199,317

13,6172,210,870

1,367,984

1,159,899

883,477

988,744

2,164,792¥4,182,633¥1,610,087¥1,428,061¥1,085,508¥1,509,915¥2,391,409

Due in1 year or lessDue from
1 year to 3 years$13,873,748

$—

$—

$—

$—

$—

Held-to-maturity securities

44,933

—

—

—

—

—

Government bonds

44,933

—

—

—

—

—

Municipal bonds

—

—

—

—

—

—

Corporate bonds

—

—

—

—

—

—

Others

—

—

—

—

—

—

847,765

1,813,094

2,008,252

1,513,001

3,903,029

1,697,128

OthersLoans and bills discounted
Total

Thousands of U.S. dollars

Due from banks

Due from
Due from
Due from
3 years to 5 years 5 years to 7 years 7 years to 10 years

Due after
10 years

Securities:

Securities available for sale with maturity
Government bonds

59,911

134,801——

2,029,506

1,595,147

Municipal bonds

176,065

908,323

1,130,012

809,117

136,448—

Corporate bonds

354,729

372,672

209,887

214,967

244,392—

Others257,058

397,297

668,352

488,915

1,492,681

101,981Loans and bills discounted
Total

16,557,103

10,244,774

8,686,435

6,616,318

7,404,660

16,212,028$31,323,550$12,057,869$10,694,688$8,129,320$11,307,689$17,909,156

Note: Excluded from Loans and bills discounted are ¥112,174 million ($840,070 thousand) relating to those whose repayment is not reasonably estimable because
the debtors are borrowers under bankruptcy proceedings, borrowers substantially in bankruptcy, or customers with high probability of becoming insolvent and¥67,457 million ($505,183 thousand) relating to those that do not have contractual maturity.

Nishi-Nippon Financial Holdings GroupFINANCIAL REPORT 2023

25

Notes to Consolidated Financial Statements<At March 31st, 2022>
Millions of yen
Due in1 year or lessDue from
1 year to 3 years¥2,502,865

¥—

¥—

¥—

¥—

¥—

Held-to-maturity securities

10,000

6,000

—

—

—

—

Government bonds

10,000

6,000

—

—

—

—

Municipal bonds

—

—

—

—

—

—

Corporate bonds

—

—

—

—

—

—

Due from banks

Due from
Due from
Due from
3 years to 5 years 5 years to 7 years 7 years to 10 years

Due after
10 years

Securities:

OthersSecurities available for sale with maturity

—

—

—

—

—

—

145,254

223,733

237,953

276,189455,656

197,034

Government bonds

25,00026,000——291,000

150,000

Municipal bonds

14,00566,460145,839

136,560

35,990—

Corporate bonds

81,56757,314

21,48829,95130,178—OthersLoans and bills discounted
Total

24,682

73,95770,626109,677

98,48747,034

1,905,692

1,302,410

1,147,579

842,791

961,745

2,131,679¥4,563,812¥1,532,143¥1,385,532¥1,118,980¥1,417,402¥2,328,713

Note: Excluded from Loans and bills discounted are ¥109,949 million relating to those whose repayment is not reasonably estimable because the debtors areborrowers under bankruptcy proceedings, borrowers substantially in bankruptcy, or customers with high probability of becoming insolvent and ¥69,014 million
relating to those that do not have contractual maturity.

(Note 3) Repayment schedules for bonds, borrowed money and other interest-bearing debts at March 31st, 2023 and 2022
<At March 31st, 2023>
Millions of yen
Due in1 year or lessDue from
1 year to 3 years

Due from
Due from
Due from
3 years to 5 years 5 years to 7 years 7 years to 10 years

Due after
10 years¥9,681,682¥225,306¥41,810¥5,966¥4,430¥0Call money and bills sold

512,491

—

—

—

—

—

Payables under repurchase agreements

265,881

—

—

—

—

—

Guarantee deposits received under
securities lending transactions

293,853

—

—

—

—

—

Borrowed money

273,776

497,111478,8192——¥11,027,685¥722,417¥520,630¥5,968¥4,430¥0

Due in1 year or lessDue from
1 year to 3 years

Deposits

Total

Thousands of U.S. dollars
Due after
10 years$72,505,676$1,687,307$313,118$44,683$33,177$0Call money and bills sold3,838,023

—

—

—

—

—

Payables under repurchase agreements

1,991,175

—

—

—

—

—

Guarantee deposits received under
securities lending transactions

2,200,654

—

—

—

—

—

Borrowed money

2,050,300

3,722,844

3,585,858

15

—

—

$82,585,830$5,410,152$3,898,976$44,698$33,177$0

Deposits

Total

Note: Demand deposits are included under “Due in 1 year or less.”

26

Due from
Due from
Due from
3 years to 5 years 5 years to 7 years 7 years to 10 years

Nishi-Nippon Financial Holdings GroupFINANCIAL REPORT 2023

Notes to Consolidated Financial Statements<At March 31st, 2022>
Millions of yen
Due in1 year or lessDue from
1 year to 3 years

Due from
Due from
Due from
3 years to 5 years 5 years to 7 years 7 years to 10 years

Due after
10 years¥9,540,804¥232,008¥49,405¥6,838¥5,580¥0Call money and bills sold

510,000

—

—

—

—

—

Payables under repurchase agreements

251,120

—

—

—

—

—

Deposits

Guarantee deposits received under
securities lending transactions

87,188

—

—

—

—

—

1,212,856

290,367

252,0096——¥11,601,969¥522,376¥301,415¥6,845¥5,580¥0

Borrowed money
Total

Note: Demand deposits are included under “Due in 1 year or less.”(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 assets or liabilities that are thesubject of the measurement.
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 thelevel of the lowest level input that is significant to the entire measurement.
i)	Financial instruments measured at fair value<At March 31st, 2023>
Millions of yen
Fair value
Category

Level 1

Level 2

Level 3

Total

Securities:
Available for sales securities:¥489,865¥421,892¥—¥911,758

Corporate bonds—

103,861

18,048

121,910

Residential mortgage-backed securities—

63,999—63,999Stocks

112,907——112,907

Other

160,156

353,768

10,633

524,559

Interest rates

—

1,874

—

1,874

Currencies

—

3,787

—

3,787

Stocks

—

—

—

—

Bonds

—

—

—

—

Merchandise

—

—

—

—

Credit derivatives

—

—

—

—

¥762,930¥949,185¥28,682¥1,740,797

Interest rates

—

267

—

267

Currencies

—

5,047

—

5,047

Stocks

—

—

—

—

Bonds

—

—

—

—

Merchandise

—

—

—

—

Credit derivatives

—

—

—

—

Total liabilities¥—¥5,315¥—¥5,315Government bonds, municipal bonds, etc.

Derivative transactions:

Total assets
Derivative transactions:

Nishi-Nippon Financial Holdings GroupFINANCIAL REPORT 2023

27

Notes to Consolidated Financial Statements<At March 31st, 2023>
Thousands of U.S. dollars
Fair value
Category

Level 1

Level 2

Level 3

Total

Securities:
Available for sales securities:$3,668,583$3,159,532$—$6,828,115

Corporate bonds—

777,814135,164

912,979

Residential mortgage-backed securities—

479,292—

479,292

Stocks845,562——

845,562

Other

1,199,404

2,649,359

79,636

3,928,400

Interest rates—

14,038—14,038Currencies—

28,364—28,364

Stocks

—

—

—

—

Bonds

—

—

—

—

Merchandise

—

—

—

—

Credit derivatives

—

—

—

—

$5,713,549$7,108,403$214,801$13,036,754

Government bonds, municipal bonds, etc.

Derivative transactions:

Total assets
Derivative transactions:Interest rates

—

2,005

—

2,005

Currencies—

37,803—37,803

Stocks

—

—

—

—

Bonds

—

—

—

—

Merchandise

—

—

—

—

Credit derivatives

—

—

—

—

Total liabilities$—$39,809$—$39,809

Note: Securities do not include investment trusts that apply treatments considering net asset value to be the fair value in accordance with paragraph 24-9 of the “Fair
Value Measurement Guidance” (ASBJ Guidance No. 31, June 17th, 2021 ). The consolidated balance sheet amount of such investment trusts is ¥15,189 million($113,757 thousand).

Reconciliation of investment trusts that apply treatments as allowed by the provisions of paragraph 24-9
<At March 31st, 2023>
Millions of yen
Gain or loss or other comprehensive
income for the period
Beginningbalance

Recorded ingain or loss

¥10,859¥—

Amount for which Amount for which
Purchases, sales, the net asset value the net asset value
Recorded in otherissuance, andof investment
of investment trusts
comprehensive
settlements, net trusts is regarded is not regarded asincomeas the fair value
the fair value
for the period*¥439¥3,891¥—¥—EndingbalanceOf gain/loss in fiscal year
ended March 31st, 2023,
net valuation gain/loss ofinvestment trusts held on
consolidated balance sheet
date¥15,189¥—

Thousands of U.S. dollars
Gain or loss or other comprehensive
income for the period
Beginningbalance$81,323

Recorded ingain or loss$—

Amount for which Amount for which
Purchases, sales, the net asset value the net asset value
Recorded in otherissuance, andof investment
of investment trusts
comprehensive
settlements, net trusts is regarded is not regarded asincomeas the fair value
the fair value
for the period*$3,287$29,145$—$—

EndingbalanceOf gain/loss in fiscal year
ended March 31st, 2023,
net valuation gain/loss ofinvestment trusts held on
consolidated balance sheet
date$113,757* Included in “Valuation difference on available-for-sale securities” under “Other comprehensive income” in the Consolidated Balance Sheet.

28

Nishi-Nippon Financial Holdings GroupFINANCIAL REPORT 2023$—

Notes to Consolidated Financial Statements<At March 31st, 2022>
Millions of yen
Fair value
Category

Level 1

Level 2

Level 3

Total

Securities:
Available for sales securities:¥472,474¥412,796¥—¥885,271

Corporate bonds—

140,969

19,693

160,663

Residential mortgage-backed securities—

60,824—60,824Government bonds, municipal bonds, etc.

Stocks107,117——

107,117

Other

70,308263,081

9,516

342,906

Derivative transactions:Interest rates

—

732

—

732

Currencies

—

1,203

—

1,203

Stocks

—

—

—

—

Bonds

—

—

—

—

Merchandise

—

—

—

—

Credit derivatives

—

—

—

—

¥649,901¥879,609¥29,209¥1,558,720

Total assets
Derivative transactions:Interest rates

—

574

—

574

Currencies

—

6,712

—

6,712

Stocks

—

—

—

—

Bonds

—

—

—

—

Merchandise

—

—

—

—

Credit derivatives

—

—

—

—

Total liabilities¥—¥7,287¥—¥7,287

Note:	Investment trusts, etc. to which the transitional treatment provided for in Article 5, Item 6 of the Supplementary Provisions to the “Cabinet Office Ordinance on
Partial Amendment of the Regulations on Terminology, Format and Preparation Method of Financial Statements, etc.” (Cabinet Office Ordinance No. 9, March
6th, 2020) is applied are not represented in the above table.
The amount of such investment trust, etc. on the consolidated balance sheet is ¥177,755 million.

ii)	Financial instruments other than financial instruments measured at fair value<At March 31st, 2023>
Millions of yen
Fair value
Category

Level 1

Level 2

Level 3

Total

Securities:
Securities Held-to-maturity:
Government bonds, municipal bonds, etc.

¥—

¥6,186¥—¥6,186

Corporate bonds

—

—

—

—

Other

—

—

—

—

—

—

8,979,316

8,979,316

Loans and bills discounted:¥—¥6,186¥8,979,316¥8,985,502

Deposits—

9,791,886—

9,791,886

Borrowings—

1,230,518—

1,230,518¥—¥11,022,404¥—¥11,022,404

Total assets

Total liabilities

Nishi-Nippon Financial Holdings GroupFINANCIAL REPORT 2023

29

Notes to Consolidated Financial Statements<At March 31st, 2023>
Thousands of U.S. dollars
Fair value
Category

Level 1

Level 2

Level 3

Total

Securities:
Securities Held-to-maturity:
Government bonds, municipal bonds, etc.

$—

$46,326$—$46,326

Corporate bonds

—

—

—

—

Other

—

—

—

—

—

—

67,245,683

67,245,683$—$46,326$67,245,683$67,292,010

Deposits—

73,330,982—

73,330,982

Borrowings—

9,215,298—

9,215,298$—$82,546,281$—$82,546,281

Loans and bills discounted
Total assets

Total liabilities<At March 31st, 2022>
Millions of yen
Fair value

Category

Level 1

Level 2

Level 3

Total

Securities:
Securities Held-to-maturity:
Government bonds, municipal bonds, etc.

¥—

¥16,341¥—¥16,341

Corporate bonds

—

—

—

—

Other

—

—

—

—

—

—

8,520,495

8,520,495

Loans and bills discounted:¥—¥16,341¥8,520,495¥8,536,836

Deposits—

9,570,513—

9,570,513

Borrowings—

1,747,863—

1,747,863¥—¥11,318,376¥—¥11,318,376

Total assets

Total liabilities(Note 1) Description of the valuation technique(s) and inputs used in the fair value measurements
Assets:i)

Securities
Fair value of securities that may be measured using non-adjusted quoted prices in active markets is classified as Level 1. Listed
shares and government bonds are typically included here.
Fair value of securities that are measured using quoted prices and whose respective markets are not very active is classified as
Level 2. Local government bonds, corporate bonds, and residential mortgage-backed securities are typically included here. For
investment trusts with no transaction price on the market, in cases where there are no material restrictions that would require market
participants to compensate for the risk associated with cancellation or repurchase requests, the net asset value is used as the fairvalue and they are classified as Level 2.
If quoted prices are not available, fair value is measured using the future cash flow present value technique and other valuation
techniques. For valuation, observable inputs are used in the best manner. Such inputs include TIBOR, government bond yields,conditional prepayment rates, credit spreads, the probability of bankruptcy, and the rate of loss at the time of bankruptcy. Fair valueof securities that are measured using significant unobservable inputs is classified as Level 3.

ii) Loans and bills discount
The fair value of loans and bills discounted is based on the present value of the total amount of principal and interest as categorized
by loan type, internal rating, and term, discounted by the credit-risk-adjusted market interest rate. Because the fair value of loans withfloating interest rates approximates their carrying value if a borrower’s credit capability does not differ markedly from the borrower’s
credit capability after execution (since they reflect the prevailing interest rates in the short term), the carrying value is treated as the fairvalue. Regarding loans to borrowers under bankruptcy proceedings, borrowers substantially in bankruptcy and customers with highprobability of becoming insolvent, since the fair value of such loans approximates their carrying value after deducing the reserve forpossible loan losses, which is calculated based on the present value of estimated future cash flows or the estimated amounts
collectible from the sale of collateral and guarantees, the carrying value is treated as the fair value. Their fair value is classified as
Level 3.

30

Nishi-Nippon Financial Holdings GroupFINANCIAL REPORT 2023

Notes to Consolidated Financial Statements

Liabilities:i)

Deposits
For demand deposits, the amount which would be paid if its repayment was demanded on the consolidated balance sheet date isdeemed to be the fair value. The fair value of time deposits is based on the discounted present value of future cash flows as
categorized by term duration. The prevailing interest rates are used to calculate the discount rate. Because the fair value of thosedemand deposits having short terms (one year or less) approximates their carrying value, the carrying value is treated as the fairvalue. Their fair value is classified as Level 2.

ii) Borrowed money
The fair value of borrowed money is based on the present value of the total amount of the principal and interest of the borrowed
money as categorized by term duration, discounted by the remaining period of such borrowings and the credit-risk-adjusted market
interest rate. For borrowed money with floating interest rates, because its fair value is deemed to approximate the carrying value, thecarrying value is treated as the fair value. Because the fair value of borrowed money with a short-term original contractual maturity(one year or less) approximates its carrying value, the carrying value is treated as the fair value. Their fair value is classified as Level 2.
iii) Derivative transactions:
The fair value of derivative transactions for which unadjusted quoted prices in active markets may be used is classified as Level 1.
Bond futures and interest rate futures are typically included here, provided, however, because the majority of derivative transactions
are made over-the-counter and thus no published quoted prices exist, their fair value is measured by using valuation techniques suchas the present value technique or the Black-Sholes model in accordance with the transaction type and the period until maturity.
Among key inputs used for these valuation techniques are interest rates, foreign exchange rates, and volatility. The fair price isadjusted based on the credit risk of the transaction partner and the credit risk of consolidated subsidiaries engaged in the banking
business. If unobservable inputs are not used or if the impact of such inputs, in the event that such inputs are used, is not significant,the fair value is classified as Level 2. Interest swaps, foreign exchange transactions, etc. are typically included here. If significant
unobservable inputs are used, the fair value is classified as Level 3.

(Note 2) Information on financial instruments measured at fair value whose fair value is classified as Level 3i)	Quantitative information on significant unobservable inputs<At March 31st, 2023>
Category

Valuation techniqueSignificant unobservable inputs

Range of inputs

Weighted average inputs

present value technique

Default rates
by credit rating

0.03%—1.48%

0.07%

Coverage ratio
by credit rating

5.32%—78.35%

38.52%

Default rates
by credit rating

0.03%

0.03%

Coverage ratio
by credit rating

33.33%

33.33%

Valuation techniqueSignificant unobservable inputs

Range of inputs

Weighted average inputs

present value technique

Default rates
by credit rating

0.03%—1.48%

0.07%

Coverage ratio
by credit rating

5.55%—80.86%

38.54%

Default rates
by credit rating

0.11%

0.11%

Coverage ratio
by credit rating

49.12%

49.12%

Securities:
Available for sale securities:
Private placement bonds

Preferred equity securities

present value technique<At March 31st, 2022>
Category

Securities:
Available for sale securities:
Private placement bonds

Preferred equity securities

present value technique

Nishi-Nippon Financial Holdings GroupFINANCIAL REPORT 2023

31

Notes to Consolidated Financial Statementsii)	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 the reporting period included in profit or loss for the period<At March 31st, 2023>
Millions of yen
Gain or loss or other comprehensive
income for the period
Category

Beginningbalance

Recorded ingain or loss*

Purchases, sales,
Recorded in other issuances, and Transfer into Transfer out of
Level 3settlements,
Level 3comprehensive
net***
incomefor the period**

Endingbalance

Gains or losses on
valuation of financial
assets and financial
liabilities held at theend of the reporting
period included in gainor loss for the period

Securities:
Available sales securities:
Private placementbonds¥19,693

¥38

(¥50)

(¥1,633)¥—¥—¥18,048¥—

Preferred equity
securities

9,516

—

95

—

—

—

9,611

—

—

—

22

1,000

—

—

1,022

—

Foreign securities<At March 31st, 2023>
Thousands of U.S. dollars
Gain or loss or other comprehensive
income for the period
Category

Beginningbalance

Recorded ingain or loss*

Purchases, sales,
Recorded in other issuances, and Transfer into Transfer out of
Level 3settlements,
Level 3comprehensive
net***
incomefor the period**

Endingbalance

Gains or losses on
valuation of financial
assets and financial
liabilities held at theend of the reporting
period included in gainor loss for the period

Securities:
Available for sales
securities:
Private placement
bonds$147,486$290($380)($12,231)$—$—$135,164$—

Preferred equity
securities

71,265

—

715

—

—

—

71,981

—

—

—

166

7,488

—

—

7,655

—

Foreign securities* Included in “Other operating income” and “Other operating expenses” of the consolidated statements of income** Included in “Net unrealized gains on securities available for sale” under “Other comprehensive income” in the consolidated statement of comprehensive income.
*** The increase in foreign securities is due to the acquisition of a consolidated subsidiary.

<At March 31st, 2022>
Millions of yen
Gain or loss or other comprehensive
income for the period
Beginningbalance

Purchases, sales,
Transfer into Transfer out ofissuances, andLevel 3
Level 3settlements, net

Endingbalance

Gains or losses on
valuation of financial
assets and financial
liabilities held at theend of the reporting
period included in gainor loss for the period*

Recorded ingain or loss*

Recorded in othercomprehensive
incomefor the period**¥17,836

(¥24)

(¥48)

¥1,930¥—¥—¥19,693¥—

Preferred equity
securities

—

—

4,960

4,556

—

—

9,516

—

Foreign securities

—

—

—

—

—

—

—

—

Category

Securities:
Available sales securities:
Private placementbonds* Included in “Other operating expenses” of the consolidated statements of income** Included in “Net unrealized gains on securities available for sale” under “Other comprehensive income” in the consolidated statement of comprehensive income.

iii)	Description of valuation processes used for fair value measurements
In its manual, the Group has established policies and procedures for measuring fair value, and back-office departments measure fairvalue accordingly. Whether the fair value thus obtained is measured using valid valuation techniques and inputs as well as whether
they are classified into an appropriate level of the fair value hierarchy is then verified to ensure that the polices and procedures formeasuring fair value are appropriate.
In measuring fair value, the Group uses a valuation model that most accurately reflects the nature, characteristics, and risks ofeach asset. In addition, when using quoted prices obtained from third parties, the Group verifies whether the prices are valid using
the methods deemed such as confirming the valuation techniques and inputs used.

32

Nishi-Nippon Financial Holdings GroupFINANCIAL REPORT 2023

Notes to Consolidated Financial Statementsiv)	Narrative description of sensitivity of the fair value measurement to changes in significant unobservable inputs
Significant unobservable inputs used in measuring the fair value of private placement bonds, etc. are default rates by credit rating andcoverage ratios measured by consolidated subsidiaries. The default rate indicates a probability of default, that is, borrowers falling
into arrears within a certain period. A significant increase (decrease) of this input can cause a significant decline (rise) in the fair value.

25. Securities(1) Trading securities and commercial papers (including those included in “Trading account assets”)
Not applicable(2) Held-to-maturity securities
i)

Securities whose fair value exceeds their carrying value<At March 31st, 2023>
Millions of yen
Carrying value

Valuationdifferences

Fair value

Bonds:
Government bonds
Municipal bonds
Corporate bonds¥6,000¥6,186

¥185

—

—

—

—

—

—

6,000

6,186

185

Others

—

—

—

Total

¥6,000¥6,186¥185

Thousands of U.S. dollars
Carrying value

Valuationdifferences

Fair value

Bonds:$44,935$46,326$1,391

Municipal bonds

—

—

—

Corporate bonds

—

—

—
1,391

Government bonds

44,93546,326

Others

—

—

—

Total

$44,935$46,326$1,391<At March 31st, 2022>
Millions of yen
Carrying value

Valuationdifferences

Fair value

Bonds:¥15,989¥16,341¥351

Municipal bonds

—

—

—

Corporate bonds

—

—

—

15,98916,341

351

Government bonds

Others

—

—

—

Total

¥15,989¥16,341¥351ii) Securities whose carrying value exceeds their fair value<At March 31st, 2023>
None<At March 31st, 2022>
None

Nishi-Nippon Financial Holdings GroupFINANCIAL REPORT 2023

33

Notes to Consolidated Financial Statements(3) Available-for-sale securities (including negotiable due from banks included in “Cash and due from banks”)i)Securities whose carrying value exceeds their acquisition cost
<At March 31st, 2023>
Millions of yen

StocksValuationdifferences

Carrying value

Acquisition cost¥105,039¥33,548¥71,490
125

Bonds:
Government bonds

30,77230,647

Municipal bonds

24,922

24,87745

Corporate bonds

104,542

103,828714

160,237

159,352

884

Others158,175

140,942

17,233

Total¥423,452¥333,844¥89,608

Thousands of U.S. dollars

StocksValuationdifferences

Carrying value

Acquisition cost

$786,637$251,246$535,390
938

Bonds:
Government bonds

230,455

229,516

Municipal bonds

186,641

186,303337

Corporate bonds

782,913

777,564

5,349

1,200,010

1,193,384

6,626

Others1,184,570

1,055,512

129,058

Total$3,171,219$2,500,143$671,075<At March 31st, 2022>
Millions of yen

StocksValuationdifferences

Carrying value

Acquisition cost

¥95,272¥30,206¥65,065
331

Bonds:
Government bonds

51,49751,165

Municipal bonds

19,93519,89837

Corporate bonds

130,862

129,891971

202,295

200,955

1,340

Others221,322205,364

15,958

Total¥518,891¥436,526¥82,364ii) Securities whose acquisition cost exceeds their carrying value<At March 31st, 2023>
Millions of yen
Valuationdifferences

Carrying value

Acquisition cost

¥7,868¥9,928(¥2,060)

Government bonds

459,093477,266(18,173)

Municipal bonds

396,970

399,545(2,575)

Corporate bonds

81,367

82,949(1,581)

937,430

959,761(22,330)

StocksBonds:

34

Others382,582409,725(27,142)

Total¥1,327,881¥1,379,416(¥51,534)

Nishi-Nippon Financial Holdings GroupFINANCIAL REPORT 2023

Notes to Consolidated Financial Statements

Thousands of U.S. dollars
Valuationdifferences

Carrying value

Acquisition cost

$58,924$74,357($15,432)

Government bonds

3,438,127

3,574,226(136,099)

Municipal bonds

2,972,890

2,992,181(19,290)

StocksBonds:

Corporate bonds

609,358

621,203(11,845)

7,020,376

7,187,611(167,234)

Others2,865,142

3,068,415(203,272)

Total$9,944,444$10,330,383($385,939)<At March 31st, 2022>
Millions of yen
Valuationdifferences

Carrying value

Acquisition cost

¥11,844¥14,324(¥2,479)

Government bonds

433,075

441,519(8,444)

Municipal bonds

380,763382,508(1,745)

StocksBonds:

Corporate bonds

90,626

91,160(534)

904,464

915,188(10,723)

Others299,339

312,295(12,955)

Total¥1,215,648¥1,241,807(¥26,159)(4) Available for sales securities sold for the years ended March 31st, 2023 and 2022 are as follows:<At March 31st, 2023>
Millions of yen
Proceeds
from sale

Stocks

Gains

Losses¥429¥1,296(¥10)

141,733

712

(594)

—

—

—

Bonds:
Government bonds
Municipal bonds
Corporate bonds

4,785

1

(8)

146,519

713

(603)

Others118,3091,800(11,133)

Total¥265,258¥3,810(¥11,747)

Thousands of U.S. dollars
Proceeds
from sale

Stocks

Gains

Losses$3,215$9,707($75)

1,061,435

5,335(4,454)———

Bonds:
Government bonds
Municipal bonds
Corporate bonds

35,8397(65)

1,097,274

5,343(4,519)Others886,016

13,483(83,381)

Total$1,986,506$28,534($87,976)

Nishi-Nippon Financial Holdings GroupFINANCIAL REPORT 2023

35

Notes to Consolidated Financial Statements<At March 31st, 2022>
Millions of yen
Proceeds
from sale¥870

Stocks

Gains

Losses¥766(¥0)

Bonds:
Government bonds

30,20448(118)

Municipal bonds

2,600

47

—

Corporate bonds

8,577

81

—

41,382

177(118)

Others54,026

2,137

(299)

Total

¥96,279¥3,081(¥417)(5) Securities whose purposes of holding have changed
There are no securities whose purposes of holding changed during the previous fiscal year.
Stocks of City Ascom Co., Ltd. and Kyushu Leasing Service Co., Ltd., which were held as available for sales securities, are held asstocks of subsidiaries and stocks of affiliates, respectively, from the fiscal year under review. With this change, available for sales
securities decreased by ¥1,867 million ($13,986 thousand) (net unrealized gains on securities available for sale down by ¥359 million($2,689 thousand) and deferred tax liabilities down by ¥157 million ($1,180 thousand)).
(6) Devaluation of securities
Securities other than trading securities (excluding shares, etc. that do not have market prices and investments in partnerships) aredevalued to the fair value, and the difference between the acquisition cost and the fair value is treated as the loss for the fiscal year(“devaluation”), if the fair value (primarily the closing market price at the consolidated balance sheet date) has significantly deteriorated
compared with the acquisition cost (including amortized cost) unless it is deemed that there is a possibility of a recovery in the fair value.
There are no impairment losses for the fiscal year under review.
The amount of devaluation was ¥2,056 million, of which ¥2,005 million for stocks and ¥51 million for bonds, for the year ended
March 31st, 2022.
The criteria for determining whether the fair value of a security has “significantly deteriorated” are outlined as follows:
1. The fair value is 50% or less of the acquisition cost, or
2.	The fair value exceeds 30% but is 50% or less of the acquisition cost and the security meets certain conditions such as thequoted market price for a certain period in the past and financial conditions of the issuer.
(7) Unrealized gains/losses on securities available for sale
The components of the unrealized gains/losses on securities available for sale at March 31st, 2023 and 2022 are as follows:<At March 31st, 2023>
Millions of yen

Thousands of
U.S. dollars

Revaluation difference¥38,074$285,136

Deferred tax liability(11,881)(88,979)

Revaluation difference (before non-controlling interest adjustment), net of taxes

26,192

196,156(505)(3,785)

Amount corresponding to non-controlling interests
Amount corresponding to the parent’s share of net unrealized gains on available-for-sale securities owned
by affiliates
Unrealized gains on securities available for sale, net of taxes

70

525

¥25,757$553,725<At March 31st, 2022>
Millions of yen

Revaluation difference¥56,205

Deferred tax liability(17,050)

Revaluation difference (before non-controlling interest adjustment), net of taxes

39,155

Amount corresponding to non-controlling interests
Amount corresponding to the parent’s share of net unrealized gains on available-for-sale securities owned
by affiliates
Unrealized gains on securities available for sale, net of taxes

36

Nishi-Nippon Financial Holdings GroupFINANCIAL REPORT 2023

(538)—
¥38,616

Notes to Consolidated Financial Statements

26. Money Held in Trust
Money held in trust at March 31st, 2023 and 2022 are as follows:
Thousands of
U.S. dollars

Millions of yen

2022

2023

2023

Money held in trust for investment purposes¥4,909¥4,982$36,764———

Acquisition Cost

¥6,700¥6,700$50,175

Carrying value

6,700

6,700

50,175———Carrying value
Unrealized gains/losses
Money held in trust for other purposes than investment purposes and held-to-maturity purposes:

Unrealized gains/losses

27. Derivatives(1) Derivative transactions to which hedge accounting is not applied
Summarized below are the contract value or the notional principal and the fair value of the derivative transactions at March 31st, 2023
and 2022, to which hedge accounting is not applied. The amounts of the contract value are not necessarily indicative of the actual
market risk of derivative transactions.
i)Interest related transactions<At March 31st, 2023>
Millions of yen
Contract value
Type of transactions

Total

Over one year

Fair value

Unrealized
gain (loss)

Over-the-counter transactions:Interest rate swaps:
Receive-fixed and pay-floating¥25,532¥22,560¥178

Receive-floating and pay-fixed

25,532

22,560

(12)

(12)

—

—

¥165

¥165

Total

¥178

Thousands of U.S. dollars
Contract value
Type of transactions

Total

Over one year

Fair value

Unrealized
gain (loss)

Over-the-counter transactions:Interest rate swaps:
Receive-fixed and pay-floating$191,212$168,951

Receive-floating and pay-fixed

191,212

168,951

(96)

(96)

—

—

$1,242$1,242

Total$1,338$1,338

Note: The above transactions are marked to market and unrealized gains/losses are included in the consolidated statement of income.

<At March 31st, 2022>
Millions of yen
Contract value
Type of transactions

Total

Over one year

Fair value

Unrealized
gain (loss)

Over-the-counter transactions:Interest rate swaps:
Receive-fixed and pay-floating¥29,540¥27,940

¥496

¥496

Receive-floating and pay-fixed

29,54027,940

(310)

(310)

—

—

¥185

¥185

Total

Note: The above transactions are marked to market and unrealized gains/losses are included in the consolidated statement of income.

Nishi-Nippon Financial Holdings GroupFINANCIAL REPORT 2023

37

Notes to Consolidated Financial Statementsii) Currency related transactions<At March 31st, 2023>
Millions of yen
Contract value
Type of transactions

Total

Over one year

Fair value

Unrealized
gain (loss)

Over-the-counter transactions:¥15,108¥12,187

¥5

¥5

Sell

8,523

—

49

49

Buy

5,575

—

23

23

Sell

91,55973,252(1,157)

246

Buy91,55973,252

1,102

157

—

—

¥23

¥482

Currency swaps
Forward foreign:

Currency option:

Total

Thousands of U.S. dollars
Contract value
Type of transactions

Total

Over one year

Fair value

Unrealized
gain (loss)

Over-the-counter transactions:$113,149$91,274

$42

$42

Sell

63,834

—

367

367

Buy

41,751

—

179

179

Sell

685,684

548,582(8,670)

1,849

Buy

685,684

548,582

8,255

1,176

—

—

$174

$3,614Currency swaps
Forward foreign:

Currency option:

Total

Note: The above transactions are marked to market and unrealized gains/losses are included in the consolidated statement of income.

<At March 31st, 2022>
Millions of yen
Contract value
Type of transactions

Total

Over one year

Fair value

Unrealized
gain (loss)

Over-the-counter transactions:¥18,469

Currency swaps¥14,757¥7¥7

Forward foreign:Sell

10,793

2

(335)

(335)

Buy

8,036

—

167

167

Sell

29,597

19,666

(502)

(143)

Buy

29,597

19,666

499

284

—

—

(¥162)(¥19)

Currency option:

Total

Note: The above transactions are marked to market and unrealized gains/losses are included in the consolidated statement of income.

(2) Derivative transactions to which hedge accounting is applied
Summarized below are the contract value or the notional principal and the fair value of the derivative transactions at March 31st, 2023
and 2022, to which hedge accounting is applied. The amounts of the contract value are not necessarily indicative of the actual market
risk of derivative transactions.

38

Nishi-Nippon Financial Holdings GroupFINANCIAL REPORT 2023

Notes to Consolidated Financial Statementsi)Interest related transactions<At March 31st, 2023>
Millions of yen
Contract value

Hedge accounting
methodType of transactions

Hedged item

Principle hedge
accounting method

Interest rate swaps:

Available-forsale securities

Special treatment forinterest rate swaps

Interest rate swaps:

Receive-floating and pay-fixed
Receive-floating and pay-fixed

Loans and bills
discounted,
and deposits

Total¥38,436¥25,343

10,000

—

—

—

—

—

Interest rate options
Total

Fair valueOver one year

¥1,440(Note)¥1,440Thousands of U.S. dollars
Contract value

Hedge accounting
methodType of transactions

Hedged item

Principle hedge
accounting method

Interest rate swaps:

Available-forsale securities

Special treatment forinterest rate swaps

Interest rate swaps:

Receive-floating and pay-fixed
Receive-floating and pay-fixed

Loans and bills
discounted,
and deposits

Total$287,847$189,800

74,889

—

—

—

—

—

Interest rate options
Total

Fair valueOver one year

$10,790(Note)$10,790

Note: Since the interest rate swaps, to which the special treatments are applied, are accounted for as synthetic products composed of loans and bills discounted
and deposits, their fair value is included in the fair value of the said loans and bills discounted and deposits which are disclosed in “Financial Instruments(Note 24)”.

<At March 31st, 2022>
Millions of yen
Contract value

Hedge accounting
methodType of transactions

Hedged item

Principle hedge
accounting method

Interest rate swaps:

Available-forsale securities

Special treatment forinterest rate swaps

Interest rate swaps:

Receive-floating and pay-fixed
Receive-floating and pay-fixed

Loans and bills
discounted,
and deposits

Total¥37,677¥35,229

42,76010,000————Interest rate options
Total

Fair valueOver one year(¥26)
(Note)(¥26)

Note: Since the interest rate swaps, to which the special treatments are applied, are accounted for as synthetic products composed of loans and bills discounted
and deposits, their fair value is included in the fair value of the said loans and bills discounted and deposits which are disclosed in “Financial Instruments(Note 24)”.

ii) Currency related transactions<At March 31st, 2023>
Millions of yen
Contract value

Hedge accounting
methodPrinciple hedge
accounting method

Fair value

Type of transactions

Hedged item

Total

Forward foreign

Securities denominated inforeign currencies¥121,427¥—(¥1,283)——(¥1,283)

Total

Over one year

Thousands of U.S. dollars
Contract value

Hedge accounting
methodPrinciple hedge
accounting method
Total

Over one year

Fair value

Type of transactions

Hedged item

Total

Forward foreign

Securities denominated inforeign currencies$909,366$—($9,612)——($9,612)

Note: The deferred method is applied as hedge accounting in accordance primarily with “Accounting and Auditing Treatment for Accounting for Foreign Currency
Transactions in Banking Industry” (JICPA Industry-specific Committee Practical Guideline No. 25).

Nishi-Nippon Financial Holdings GroupFINANCIAL REPORT 2023

39

Notes to Consolidated Financial Statements<At March 31st, 2022>
Millions of yen
Contract value

Hedge accounting
methodPrinciple hedge
accounting method

Fair value

Type of transactions

Hedged item

Total

Forward foreign

Securities denominated inforeign currencies¥103,484¥—(¥5,346)——(¥5,346)

Total

Over one year

Note: The deferred method is applied as hedge accounting in accordance primarily with “Accounting and Auditing Treatment for Accounting for Foreign Currency
Transactions in Banking Industry” (JICPA Industry-specific Committee Practical Guideline No. 25).

28. Employee Retirement Benefits(1) Description of the retirement benefit plans
The Company’s consolidated subsidiaries adopt funded or unfunded defined benefit plans and/or the defined contribution plan toprovide for employee retirement benefits.
Under the defined benefit corporate pension plans (all funded), lump-sum or annuity payments are made at the amounts based onsalaries and the length of service periods of the covered employees. Nishi-Nippon City Bank, a consolidated subsidiary, has establisheda retirement benefit trust for its defined benefit corporate pension plan.
Under the lump-sum payment plans (principally unfunded, however, some plans have a funded status as a result of theestablishment of a retirement benefit trust), retirement benefits are paid in the form of a lump sum at the amounts based on salaries andthe length of service periods of the covered employees.
The consolidated subsidiaries may also pay additional retirement benefits that are not subject to actuarial calculation.
As of March 31st, 2023, the lump-sum payment plans have been adopted by 7 consolidated subsidiaries. The corporate pension
fund plans have been adopted by 2 consolidated subsidiaries. The defined contribution plan has been adopted by 1 consolidated
subsidiary.
For the lump-sum payment plans that certain consolidated subsidiaries have adopted, liability for retirement benefits and retirement
benefit expenses are calculated using the simplified method which assumes the retirement benefit obligation to be equal to the benefits
payable if all the eligible employees voluntarily terminated their employment at fiscal year end.
Some consolidated subsidiaries subscribe to the Japan Computer Information Service Employees’ Pension Fund (multi-employerplan) but are accounted for in the same manner as the defined contribution plan because of the inability to reasonably assess theamount of pension assets that correspond to the amount of contributions by the Company.
(2) Defined benefit plansi)	Reconciliation between the balances of retirement benefit obligation at the beginning and end of the year for the years ended March
31st, 2023 and 2022
Thousands of
U.S. dollars

Millions of yen

2022

2023

¥72,256¥73,948$541,123

Service cost

2,247

2,285

16,831

Interest cost

87

87

652

Actuarial gain and loss

247

185

1,854

Retirement benefits paid

(4,622)(4,250)(34,615)Retirement benefit obligation at beginning of the year

OthersRetirement benefit obligation at end of the year

40

2023

Nishi-Nippon Financial Holdings GroupFINANCIAL REPORT 2023

1,581

—

11,841¥71,797¥72,256$537,686

Notes to Consolidated Financial Statementsii) 	Reconciliation between the balances of plan assets at the beginning and end of the year for the years ended March 31st, 2023 and2022
Thousands of
U.S. dollars

Millions of yen

2023

2022

2023

Plan assets at beginning of the year

¥75,031¥91,241$561,904

Expected return on plan assets

2,467

3,002

18,478Actuarial gain and loss

(737)

(17,749)(5,522)Contributions by employer

695

728

5,205

Contributions by employees

136

144

1,020

(2,404)(2,336)(18,006)———¥75,188¥75,031$563,079

Retirement benefits paid
OthersPlan assets at end of the yeariii)	Reconciliation between the balances of retirement benefit obligation and plan assets at the end of the year and the amounts of theliability and asset for retirement benefits recognized in the consolidated balance sheets at March 31st, 2023 and 2022
Thousands of
U.S. dollars

Millions of yen

2023

2022

2023

Retirement benefit obligation (funded)¥71,277¥71,796$533,795

Fair value of plan assets(75,188)(75,031)(563,079)(3,910)(3,235)(29,284)

519

460

3,891

(¥3,390)(¥2,774)($25,392)

Retirement benefit obligation (unfunded)
Net liability (asset) for retirement benefits in the balance sheet

Thousands of
U.S. dollars

Millions of yen

2022

2023
Liability for retirement benefits¥4,6472023¥4,773$34,805

Asset for retirement benefits(8,038)(7,548)(60,198)

Net liability (asset) for retirement benefits in the balance sheet(¥3,390)(¥2,774)($25,392)

iv) Components of retirement benefit expenses for the years ended March 31st, 2023 and 2022
Thousands of
U.S. dollars

Millions of yen

2022

2023

2023

Service cost

¥2,111¥2,141

Interest cost

87

87

652

Expected return on plan assets(2,467)(3,002)(18,478)

Amortization of unrecognized actuarial gain and loss

2,240

720

16,778

267

299

1,999

¥2,238¥245$16,762

OthersRetirement benefit expenses$15,810Notes: 1. Contributions by employees to corporate pension funds, etc. have been deducted from the service cost.
2. Retirement benefit expenses of consolidated subsidiaries that have adopted the simplified method are reported in total under “Service cost.”v)	Items recorded in retirement benefits liability adjustments included in other comprehensive income (gross of income tax effects) for
the years ended March 31st, 2023 and 2022
Thousands of
U.S. dollars

Millions of yen

Actuarial gain and loss

2023

2022

2023

(¥1,255)¥17,214($9,400)

Nishi-Nippon Financial Holdings GroupFINANCIAL REPORT 2023

41

Notes to Consolidated Financial Statementsvi)	Items recorded in retirement benefits liability adjustments included in accumulated other comprehensive income (gross of income tax
effects) at March 31st, 2023 and 2022
Thousands of
U.S. dollars

Millions of yen

Unrecognized actuarial gain and loss

2023

2022

2023

(¥21,364)(¥22,620)($160,000)vii) Matters concerning plan assets(a) Percentages of each main category of the total plan assets at March 31st, 2023 and 2022 are as follows:
2022

2023
Bonds

26%

24%

Stocks48%

51%

Cash and deposits

0%0%Others

26%

25%

Total

100%

100%

Note: Retirement benefit trusts established for the corporate pension plans accounted for 22% and 21% of the total plan assets at March 31st, 2023 and 2022,
respectively. Retirement benefit trusts established for the lump-sum payment plans accounted for 18% and 17% of the total plan assets at March 31st,
2023 and 2022, respectively.

(b) The expected long-term rate of return on plan assets has been estimated by taking into account the current and expected
allocation of the plan assets and the current and anticipated long-term rate of return on diverse assets that constitute the plan
assets.
viii) Assumptions for actuarial calculation
Major assumptions for actuarial calculation as of March 31st, 2023 and 2022
2023

2022

1) Discount rates:

0.117%(principally)

0.117%(principally)

2) Expected long-term rate of return on plan assets:

3.30%(principally)

3.30%(principally)

3) Expected rate of pay increase:

2.76%(principally)

2.74%(principally)(3) Defined contribution plans
Contributions of ¥0 million ($1 thousand) and ¥0 million have been made to the defined contribution plan by the consolidated subsidiaryfor the years ended March 31st, 2023 and 2022, respectively.
(4) Multi-employer plan
Contributions of ¥24 million ($181 thousand) were made to the corporate pension fund plan (multi-employer plan) in the fiscal year underreview (no contributions were made in the previous fiscal year), which is accounted for in the same manner as the defined contribution
plan.
i)	Latest amount of pension assets accumulated under the multi-employer plan
Thousands of
U.S. dollars

Millions of yen

2023

2022

2023

Amount of pension assets¥260,833¥—$1,953,366

Amount of actuarial liabilities for the purpose of pension financing valuation

211,022—

1,580,337

Balance

49,810—373,029ii) Percentages of the Group’s premiums within the multi-employer plan
2023
Percentages of the Group’s premiums

2022

0.36%

—%

iii)	Supplementary explanations
Main factors behind the Balance in i) above are general reserves (previous fiscal year: nil, fiscal year under review: ¥49,810 million($373,029 thousand)). The percentages in ii) above do not match the actual percentages borne by the Group.

42

Nishi-Nippon Financial Holdings GroupFINANCIAL REPORT 2023

Notes to Consolidated Financial Statements

29. Income Taxes(1) The tax effect of temporary differences and tax loss carryforwards that give rise to the deferred tax assets and liabilities at March
31st, 2023 and 2022 are as follows:
Thousands of
U.S. dollars

Millions of yen

2023

2022

2023

Reserve for possible loan losses¥12,485¥14,229$93,503

Liability for retirement benefits

7,509

7,429

56,238

Accumulated depreciation

2,002

1,957

14,997

31

59

237

Deferred tax assets:

Loss carryforwards for tax purposes
OthersSub-total
Valuation allowance
Total deferred tax assets

7,613

7,439

57,01929,643

31,115

221,997(7,118)(7,808)(53,313)

22,52423,306

168,683

Deferred tax liabilities:
Reserve fund for deferred income of fixed assets

(0)

(0)

(6)

Unrealized losses on securities attributable to partition of corporation, net

(22)

(22)

(171)
(23,812)(3,179)(3,647)

Asset retirement obligations

(124)

(131)

(932)

Capital gain adjustments(1,259)(1,081)(9,433)

Gains on establishment of a retirement benefit trust

Share of retained earnings of affiliates accounted for by the equity method
Unrealized gains on securities available for sale, net

(308)

(103)

(2,313)(11,881)(17,050)(88,981)

(448)

(2)

(3,361)

Total deferred tax liabilities(17,226)(22,040)(129,011)

Net deferred tax assets (liabilities)(¥5,297)(¥1,265)($39,671)

Others(2) The reconciliation between the statutory tax rate and the effective tax rate reflected in the consolidated statement of income for theyear ended March 31st, 2023 is as follows:
2023
Statutory tax rate

30.5%

2022
30.5%

(Adjustments)
Items permanently not deductible for tax purposes such as entertainment expenses

0.5

0.3

Non-taxable dividend income and others

(0.9)

(0.7)

Inhabitant tax on per capita basis

0.3

0.3

Increase in valuation allowance

(2.1)

2.8
(0.0)

Capital gain adjustments
Equity in earnings of affiliates(7.4)

Others1.6

0.0

Effective tax rate

22.5%

33.2%

(3) Accounting treatment of national and local income tax or accounting treatment of tax effect accounting thereof
The Company and some of its consolidated subsidiaries have adopted the Group Tax Sharing System from the fiscal year under review.
Also, in accordance with the ASBJ Practical Solution No. 42, national and local income tax are accounted for, or tax effect accounting
thereof is accounted for and disclosed.

Nishi-Nippon Financial Holdings GroupFINANCIAL REPORT 2023

43

Notes to Consolidated Financial Statements

30. Overview of Business Combination· Business combination using the acquisition method
Pursuant to the memorandum of understanding concerning capital alliance, which was signed on February 25th, 2022, the Company
acquired City Ascom Co., Ltd. on October 3rd, 2022, to make it its consolidated subsidiary.
(1) Outline of business combinationi)	Name and description of business of party to be acquired
Name of party to be acquired

City Ascom Co., Ltd.

Description of business of party to be acquired

System development business, solution service provision businessii) 	Main reasons for business combination
To bring into the Group the solution function in the digital and digital transformation (DX) fields as part of efforts to enhance theGroup’s collective strength.
iii)	Date of business combination
October 3rd, 2022 (Deemed acquisition date: October 1st, 2022)iv) Legal form of business combination
Acquisition of equity interests for cash considerationv)	Name of company after business combination
No change after business combinationvi)	Ownership of voting rights acquired
Ratio of voting rights held immediately before business combination

14.3%

Ratio of voting rights acquired additionally on the date of business combination

71.5%

Ratio of voting rights after acquisition

85.8%vii) Main grounds for determining acquired company
The Company’s acquisition of its stock for cash consideration.
(2) Period of performance of the acquired company included in the consolidated statement of income for the fiscal year under review
From October 1st, 2022 to March 31st, 2023
(3) Acquisition cost of acquired companies and breakdown of consideration received by typeMillions of yen

Thousands of
U.S. dollars

Fair value on the date of business combination of common stock held immediately before business combination¥818$6,130Cash consideration of common stock acquired on the date of business combination

4,092

30,645Acquisition cost

¥4,910$36,775(4) Difference between the acquisition cost of the acquired company and the total amount of the acquisition costs of the respective
transactions leading to the acquisition
Gain on step acquisition¥272 million ($2,043 thousand)(5) Components and amount of major acquisition-related cost
¥42 million ($317 thousand)Advisory cost, etc.

(6) Amount of gain from negative goodwill and the causes of occurrencei)Amount of gain from negative goodwill¥564 million ($4,228 thousand)ii) The causes of occurrence
Since the acquisition cost fell below the net amount of assets accepted and liabilities assumed, the difference has been recognized
as a gain on negative goodwill.

44

Nishi-Nippon Financial Holdings GroupFINANCIAL REPORT 2023

Notes to Consolidated Financial Statements(7) Amount of assets accepted and liabilities assumed on the date of the business combination, and major components thereof
Amount of assets¥10,073 million ($75,436 thousand)ii) Amount of liabilities¥3,695 million ($27,679 thousand)i)

Additional Inforation· Acquisition of an affiliate accounted for by the equity method by stock
Pursuant to the capital and business alliance agreement signed on May 12th, 2022, the Company acquired shares of Kyushu Leasing
Service Co., Ltd. on October 5th, 2022, to make it into an affiliate accounted for by the equity method.
(1) Outline of stock acquisitioni)	Name and description of business of investee company
Name of investee company

Kyushu Leasing Service Co., Ltd.

Description of business of investee company

Leasing/installment business, finance business, fee businessii) 	Main reasons for making it into an affiliate accounted for by the equity method
To bring into the Group the leasing function as part of efforts to enhance the Group’s collective strengthiii)	The equity method application start date
October 1st, 2022iv) Ratio of voting rights after stock acquisition
29.9%(2) Period of performance of the investee company included in the consolidated statement of income for the fiscal year under review
From October 1st, 2022 to March 31st, 2023
(3) Amount equivalent to negative goodwilli)Amount of gain from negative goodwill¥7,637 million ($57,199 thousand)ii) The causes of occurrence
Since the acquisition cost fell below the Company’s equity related to the net assets at fair value of the investee company on the stockacquisition date, the difference has been recognized as the amount equivalent to that of negative goodwill.

31. Asset Retirement Obligations
Information on asset retirement obligations is as follows:
Asset retirement obligations that are recorded in the consolidated balance sheet(1) Overview of asset retirement obligations
The Group recognize asset retirement obligations for restoration obligations resulting from real estate lease agreements such as those of
the Group branch offices and commercial fixed-term leasehold agreements. The Group also recognize asset retirement obligations
pertaining to obligations to remove hazardous substances used in some of their branch offices in accordance with the Ordinance on
Prevention of Health Impairment due to Asbestos.
(2) Method for calculating the value of asset retirement obligations
An asset retirement obligation is calculated by first estimating the period of expected use of the asset, which is the relevant building’s
depreciation period (principally 39 years), and then discounting the value of the relevant liability using the government bond’s market rate
(principally 2.304%) that matches said depreciation period as the discount rate.

Nishi-Nippon Financial Holdings GroupFINANCIAL REPORT 2023

45

Notes to Consolidated Financial Statements(3) Changes in total asset retirement obligations for the years ended March 31st, 2023 and 2022
Thousands of
U.S. dollars

Millions of yen

2022

2023

2023

¥1,069¥813$8,011

Increase due to acquisition of tangible fixed assets

4

250

31

Adjustment for passage of time

12

11

93

Decrease due to fulfillment of asset retirement obligation

6

6

50

¥1,079

¥1,069$8,086

Balance at beginning of the year

Balance at end of the year

32. Revenue Recognition(1) Disaggregation of revenue from contracts with customers<In 2023>
Millions of yen
Reporting segment
Banking

Other

Total

¥22,685¥7,383¥30,068

Deposit-taking and lending

8,251

4,596

12,847Forex businesses

6,957

—

6,957

Securities-related businesses

2,586

2,447

5,033

Agency transactions

2,572

0

2,572

29

5,020

5,049

Fees and commissions

Ordinary revenues other than fees and commissions
Revenue from contracts with customers

22,714

12,40335,118

Ordinary revenues other than the above

111,989

13,339125,329

Ordinary revenues from third party customers¥134,704¥25,743¥160,448<In 2023>
Thousands of U.S. dollars
Reporting segment
Banking

Other

Total

$169,891$55,292$225,184

Deposit-taking and lending

61,79434,422

96,217Forex businesses

52,106—52,106

Securities-related businesses

19,36918,327

37,697

Agency transactions

19,266

1

19,268219

37,59537,815

170,11192,888262,999

Fees and commissions

Ordinary revenues other than fees and commissions
Revenue from contracts with customers
Ordinary revenues other than the above
Ordinary revenues from third party customers

838,687

99,901

938,589$1,008,798$192,790$1,201,588

Note: “Other” is a business segment that is not included in reporting segments and includes credit guarantees, credit cards, financial instruments transactions, andother financial businesses as well as information system service businesses.

46

Nishi-Nippon Financial Holdings GroupFINANCIAL REPORT 2023

Notes to Consolidated Financial Statements<In 2022>
Millions of yen
Reporting segment
Banking

Other

Total

¥22,205¥7,469¥29,674

Deposit-taking and lending

7,936

4,186

12,122Forex businesses

7,292

—

7,292

Securities-related businesses

3,378

2,960

6,338

Agency transactions

1,865

6

1,872

27

14

41

Revenue from contracts with customers

22,232

7,483

29,716

Ordinary revenues other than the above

103,159

5,609

108,768

Ordinary revenues from third party customers¥125,391¥13,093¥138,484

Fees and commissions

Ordinary revenues other than fees and commissions

Note: “Other” is a business segment that is not included in reporting segments and includes credit guarantees, credit cards, financial instruments transactions, andother financial businesses.

(2) Useful information in understanding revenue from contracts with customers
Useful information in understanding revenue is as presented in “2. Summary of Significant Accounting Policies, (18) Recognition of
earnings.”(3) Balance of contract liabilities and the transaction price allocated to the remaining performance obligationsi)

Balance of contract liabilities, etc.
Thousands of
U.S. dollars

Millions of yen

2022

2023

2023

Receivables from contracts with customers (beginning balance)

¥810

¥844

$6,070Receivables from contracts with customers (ending balance)

3,088

810

23,126

Contract liabilities (beginning balance)

348

445

2,607

Contract liabilities (ending balance)

391

348

2,935

Notes: 1. Contract liabilities are mainly related to advances received from customers and their balance decreases as they are appropriated when recognizing earnings.
2. Of the amount of income recognized, the amount included in the balance of contract liabilities (beginning balance) was ¥445 million for the previous fiscal
year and ¥348 million ($2,607 thousand) for the fiscal year under review.

ii) Transaction price allocated to the remaining performance obligations
The Group does not have significant transactions with an original expected duration of one year or more. Accordingly, the Group has
applied the practical expedient and omitted information on the remaining performance obligations.

33. Business Segment Information(1) Segment Informationi)

Segment information summary
Financial information can be individually obtained for each of the Group’s reportable segments. This information is regularly reviewed
by the board of directors in order to determine how to allocate business resources and to evaluate business performance.
The Group consists of 8 consolidated subsidiaries and 3 affiliates. The Group is engaged in the financial services business, with a
primary focus on the banking business.
Thus, while the Group is composed of business segments offering different financial services, the Group’s reportable segment is
the “banking business” which Nishi-Nippon City Bank and The Bank of Nagasaki are engaged in.
The “banking business” is a wide range of services including services for deposits, loans, securities investment, domestic andforeign currency exchange, and other incidental services.

ii) Method for calculating the amount of ordinary income, profit or loss, assets, liabilities and other items
The accounting policies of reported business segments are the same as those described in “2. Summary of Significant Accounting
Policies”. The segment income is reported on an ordinary income basis. In addition, internal ordinary income among segments isbased on the same transaction terms as used in ordinary transactions with third parties.

Nishi-Nippon Financial Holdings GroupFINANCIAL REPORT 2023

47

Notes to Consolidated Financial Statementsiii) Ordinary income, profit or loss, assets, liabilities and other items by reportable segments<In 2023>
Millions of yen
Reportable segment
Banking

Other

Total

Adjustments

Consolidated¥160,448

Ordinary income
Ordinary income from third party customers¥134,704¥25,743¥160,448¥—

Internal ordinary income among segments

1,988

13,67015,659(15,659)—

136,693

39,414

176,107(15,659)

160,448

Total ordinary income

20,773

21,55742,330(8,653)33,677

Segment assets

12,937,934

523,367

13,461,301(476,120)

12,985,181

Segment liabilities

12,423,397

98,117

12,521,515(75,777)

12,445,737

Segment profit

Other items
5,516

263

5,780

(0)

5,780

Interest and dividend income

104,121

10,262

114,384(8,242)

106,142Interest expenses

12,394134

12,529(128)

12,401

Increase in tangible and intangible fixed assets

5,195

293

5,489

—

5,489

Adjustments

Consolidated$1,201,588$—$1,201,588

Depreciation

Thousands of U.S. dollars
Reportable segment
Banking

Other

Total

Ordinary income
Ordinary income from third party customers
Internal ordinary income among segments
Total ordinary income$1,008,798$192,790

14,892

102,381

117,273(117,273)—

1,023,691

295,171

1,318,862(117,273)

1,201,588

Segment profit

155,570

161,440

317,010(64,803)252,207

Segment assets

96,891,594

3,919,473

100,811,068(3,565,640)

97,245,427

Segment liabilities

93,038,251

734,799

93,773,050(567,497)

93,205,553

Other items
Depreciation

41,316

1,974

43,291(0)43,291

Interest and dividend income

779,760

76,856856,617(61,724)

794,892

Interest expenses

92,822

1,009

93,831(959)

92,871

Increase in tangible and intangible fixed assets

38,9102,200

41,110—41,110Notes: 1. Ordinary income is presented instead of net sales.
2. The category of “other” includes business segments which are not reportable segments, such as financial-related services for credit guarantee, credit
card, financial instruments exchange and system information service.
3. Adjustments for segment profit, segment assets, segment liabilities, interest and dividend income and interest expenses are primarily eliminations ofinternal transactions among segments.

<In 2022>
Millions of yen
Reportable segment
Banking

Other

Total

Adjustments

Consolidated¥138,484

Ordinary income
Ordinary income from third party customers¥125,391¥13,093¥138,484¥—

Internal ordinary income among segments

1,534

11,671

13,205(13,205)—

126,925

24,764

151,690(13,205)

138,484

Total ordinary income

32,367

11,68144,049(6,180)37,868Segment assets

13,106,794

501,223

13,608,017(480,111)

13,127,906

Segment liabilities

12,578,718

89,10012,667,818(70,637)

12,597,181

Segment profit

Other items
Depreciation

5,472

202

5,674

—

5,674

Interest and dividend income

96,301

8,289

104,591(6,363)

98,228Interest expenses
Increase in tangible and intangible fixed assets

48

Nishi-Nippon Financial Holdings GroupFINANCIAL REPORT 2023

848

130

979

(123)

855

4,849

486

5,335

—

5,335

Notes to Consolidated Financial Statements

Notes: 1. Ordinary income is presented instead of net sales.
2. The category of “other” includes business segments which are not reportable segments, such as financial-related services for credit guarantee, credit
card and financial instruments exchange.
3. Adjustments for segment profit, segment assets, segment liabilities, interest and dividend income and interest expenses are primarily eliminations ofinternal transactions among segments.

(2) Related Information
Ordinary income by services:<In 2023>
Millions of yen
Loan

Ordinary income from third party customers

Securities¥87,959¥26,271

Other

Total

¥46,217¥160,448

Thousands of U.S. dollars

Ordinary income from third party customers

Loan

Securities

Other$658,721$196,744$346,122

Total

Loan

Securities$1,201,588

Note: Ordinary income is presented instead of net sales.

<In 2022>
Millions of yen

Ordinary income from third party customers¥87,420¥17,969

Other

Total

¥33,094¥138,484

Note: Ordinary income is presented instead of net sales.

(3) Impairment Losses on Tangible Fixed Assets by Reportable Segments<In 2023>
Millions of yen
Reportable segment
Banking

Impairment losses

Other

¥61

Total

¥4

¥66

Thousands of U.S. dollars
Reportable segment
Banking

Impairment losses

Other

$463

Total

$37

$500

<In 2022>
Millions of yen
Reportable segment
Banking

Impairment losses

¥465

Other

Total

¥—

¥465

(4) Amortization and Balance of Goodwill by Reportable Segments
Not applicable(5) Information of Gain from Negative Goodwill by Reportable Segments<In 2023>
Not applicable for the reportable segment of “Banking”. Under “Other,” negative goodwill occurred as City Ascom Co., Ltd. has been
made into a consolidated subsidiary. For the fiscal year under review, ¥564 million ($4,228 thousand) was posted as a gain from negative
goodwill due to said event.
<In 2022>
Not applicable

Nishi-Nippon Financial Holdings GroupFINANCIAL REPORT 2023

49

Notes to Consolidated Financial Statements

34. Related Party Transactions
There are no related party transactions to report for the years ended March 31st, 2023 and 2022.

35. Reconciliation of Cash and Cash Equivalents(Note 1) The reconciliation between “Cash and cash equivalents” in the consolidated statement of cash flows and each account in the
consolidated balance sheet is as follows:
Thousands of
U.S. dollars

Millions of yen

Cash and due from banks on the consolidated balance sheet
Due from banks, exclusive of central bank
Cash and cash equivalents on the consolidated statement of cash flows

2023

2022

2023

¥1,946,575¥2,614,747$14,577,813(6,842)(6,672)(51,239)¥1,939,733¥2,608,074$14,526,573(Note 2) Main components of assets and liabilities of companies that have become consolidated subsidiaries due to the acquisition of theirstock.
Components of assets and liabilities at the start of inclusion of City Ascom Co., Ltd. in the scope of consolidation due to theacquisition of their stock and the relationship between the value of acquisition of the stock of City Ascom Co., Ltd. and net
disbursements for the acquisition of City Ascom Co., Ltd. are as follows.
Thousands of
U.S. dollars

Millions of yen

2022

2023

2023

Assets¥10,073¥—$75,436

Liabilities(3,695)—(27,679)(901)—(6,752)Gain on negative goodwill

(564)

—

(4,228)Stock acquisition cost

4,910

—

36,775

Non-controlling interests

Acquisition cost up to gaining control

(255)

—

(1,916)

Gain on step acquisition

(272)

—

(2,043)

(1)

—

(7)

4,380

—

32,808Cash and cash equivalents on the consolidated statement of cash flows
Balance: Disbursements for the acquisition

36. Per Share Information
Yen

Net assets per share at end of the year
Profit (loss) attributable to owners of parent per share*

U.S. dollars

2023

2022

2023

¥3,744.47¥3,618.43$28.042181.56164.31

1.359(Note 1) Basis for net assets per share as of March 31st, 2023 and 2022 are as follows:
Thousands of
U.S. dollars

Millions of yen

Net assets
Items to be deducted from net assets
Non-controlling interests
Net assets attributable to common stock

2023

2022

¥539,444¥530,724$4,039,874

9,620

8,555

72,049

2023

9,620

8,555

72,049529,823

522,169

3,967,824

SharesNumber of shares of common stock outstanding at end of the year

2023

2022

141,494,917

144,308,044*	The Company’s own stock that remains in the BBT, which is posted as treasury stock under shareholders’ equity, is included in treasury stock, which is subtracted fromthe total number of outstanding shares at the end of the fiscal year for the purpose of calculating net assets per share. The number of said treasury stock outstandingat the end of the fiscal year that was subtracted for the purpose of calculating net assets per share was 0 shares and 121,000 shares for the previous fiscal year andthe fiscal year under review, respectively.

50

Nishi-Nippon Financial Holdings GroupFINANCIAL REPORT 2023

Notes to Consolidated Financial Statements(Note 2) Basis for profit (loss) attributable to owners of parent per share for the years ended March 31st, 2023 and 2022 are as follows:
Thousands of
U.S. dollars

Millions of yen

2022

2023

2023

Basis:
Profit (loss) attributable to owners of parent¥26,064¥24,236———

26,064

24,236

195,195

Items not attributable to common stock
Profit (loss) attributable to owners of parent available for shareholders of common stock$195,195

SharesAverage number of shares of common stock outstanding during the year

2023

2022

143,551,305

147,500,789*	The Company’s own stock that remains in the BBT, which is posted as treasury stock under shareholders’ equity, is included in treasury stock, which is subtracted incomputing the average number of shares of common stock outstanding during the year for the purpose of calculating profit (loss) attributable to owners of parent per
share. The average number of shares during the year of said treasury stock that was subtracted for the purpose of calculating profit (loss) attributable to owners ofparent per share was 0 shares and 66,489 shares for the previous fiscal year and the fiscal year under review, respectively.

(Note 3) Diluted profit (loss) attributable to owners of parent per share for the years ended March 31st, 2023 and 2022 was not presented
because the Group had no dilutive shares during the years.

37. Cash Dividends
Cash dividends paid during the years ended March 31st, 2023 and 2022 are as follows:<In 2023>
Types

Millions of yen

Thousands of
U.S. dollars

June 29th, 2022
Ordinary General Meeting of Shareholders

Cash dividends(¥20.0 per share)¥2,886

November 10th, 2022
Meeting of Board of Directors

Cash dividends(¥17.5 per share)¥2,525Resolution

Cut-off date

Effective date

$21,617

March 31st,2022

June 30th,2022$18,914

September 30th,
2022

December 9th,2022*	The total amount of dividends resolted by the Board of Directors on November 10th, 2022 includes dividends of ¥2 million ($15 thousand) on the Company’s own stockthat remains in the BBT.

<In 2022>
Resolution

Types

Millions of yen

Cut-off date

Effective dateJune 29th, 2021
Ordinary General Meeting of Shareholders

Cash dividends(¥15.0 per share)¥2,222

March 31st,
2021

June 30th,
2021

November 9th, 2021
Meeting of Board of Directors

Cash dividends(¥15.0 per share)¥2,222September 30th,
2021

December 10th,
2021

38. Subsequent Event
The following appropriation of earned surplus for the year ended March 31st, 2023 was approved at the shareholders’ meeting held on
June 29th, 2023:
Resolution

June 29th, 2023
Ordinary General Meeting of Shareholders

Types

Millions of yen

Thousands of
U.S. dollars

Cash dividends(¥27.5 per share)¥3,895$29,169

Cut-off date

Effective date

March 31st,
2023

June 30th,2023*	The total amount of dividends resolted by the Ordinary General Meeting of Shareholders on June 29th, 2023 includes dividends of ¥3 million ($24 thousand) on the
Company’s own stock that remains in the BBT.

Nishi-Nippon Financial Holdings GroupFINANCIAL REPORT 2023

51

Quarterly Information (Unaudited)
Nishi-Nippon Financial Holdings, Inc. and Subsidiaries
Year ended March 31st, 2023
Millions of yen
First Quarter
from April 1st, 2022
to June 30th, 2022

Ordinary income

Second Quarter

Third Quarter

from April 1st, 2022
from April 1st, 2022
to September 30th, 2022 to December 31st, 2022

Fourth Quarter
from April 1st, 2022
to March 31st, 2023

¥36,930¥73,839¥121,220¥160,448

Profit (loss) before income taxes

12,12818,91433,222

34,111

Profit (loss) attributable to owners of parent

8,283

13,50025,82326,064First Quarter

Second Quarter

yen
from April 1st, 2022
to June 30th, 2022

Profit (loss) attributable to owners of parent per share

Third Quarter

from April 1st, 2022
from April 1st, 2022
to September 30th, 2022 to December 31st, 2022

¥57.39¥93.56First Quarter

Second Quarter

Fourth Quarter
from April 1st, 2022
to March 31st, 2023

¥179.19¥181.56

Third Quarter

Fourth Quarter

yen
from April 1st, 2022
to June 30th, 2022

Profit (loss) attributable to owners of parent per sharefrom July 1st, 2022
from October 1st, 2022
to September 30th, 2022 to December 31st, 2022

¥57.39¥36.15First Quarter

Second Quarter¥85.73from January 1st, 2023
to March 31st, 2023

¥1.69

Thousands of U.S. dollars
from April 1st, 2022
to June 30th, 2022

Ordinary income

Third Quarter

from July 1st, 2022
from October 1st, 2022
to September 30th, 2022 to December 31st, 2022

Fourth Quarter
from January 1st, 2023
to March 31st, 2023

$276,568$552,983$907,814$1,201,588

Profit (loss) before income taxes

90,831

141,646

248,804

255,461

Profit (loss) attributable to owners of parent

62,031

101,102

193,394

195,195

First Quarter

Second Quarter

Third Quarter

Fourth Quarter

U.S. dollars
from April 1st, 2022
to June 30th, 2022

Profit (loss) attributable to owners of parent per sharefrom April 1st, 2022
from April 1st, 2022
to September 30th, 2022 to December 31st, 2022

$0.42

$0.70

First Quarter

Second Quarter$1.34

from April 1st, 2022
to March 31st, 2023

$1.35

U.S. dollars
from April 1st, 2022
to June 30th, 2022

Profit (loss) attributable to owners of parent per share

52

Nishi-Nippon Financial Holdings GroupFINANCIAL REPORT 2023

$0.42

Third Quarter

from July 1st, 2022
from October 1st, 2022
to September 30th, 2022 to December 31st, 2022

$0.27

$0.64

Fourth Quarter
from January 1st, 2023
to March 31st, 2023

$0.01

Non-Consolidated Balance Sheet (Unaudited)
The Nishi-Nippon City Bank, Ltd.
March 31st, 2023 and 2022
Thousands of
U.S. dollars

Millions of yen

2023

2022

2023

Assets:Cash and due from banks¥1,911,245¥2,559,666$14,313,231

Call loans

39,01140,000292,157

Money held in trust

11,609

11,682

86,940

Securities

1,757,285

1,753,670

13,160,226

Loans and bills discounted

8,737,883

8,236,035

65,437,607

Foreign exchange assets

17,311

22,757

129,645

Other assets

81,623

78,110611,271

Tangible fixed assets

110,891

111,825

830,464

Intangible fixed assets

4,646

3,706

34,793

Prepaid pension cost

26,73025,862200,181

Customers’ liabilities for acceptances and guarantees

14,737

15,849110,368

Reserve for possible loan losses(35,799)(36,995)(268,100)Reserve for devaluation of securities
Total assets

(440)

(458)

(3,302)¥12,676,735¥12,821,711$94,935,487

Liabilities and Net assets:
Liabilities:¥9,722,332¥9,591,957$72,810,098

Call money and bills sold

Deposits

512,491

510,000

3,838,023

Payables under repurchase agreements

265,881251,120

1,991,175

Guarantee deposits received under securities lending transactions

293,853

87,1882,200,654

1,242,152

1,732,473

9,302,421

504

201

3,777

Borrowed money from trust account

5,233

4,794

39,195

Other liabilities

Borrowed money
Foreign exchange liabilities

80,485

79,138602,755

Reserve for employee retirement benefits

214

192

1,604

Reserve for reimbursement of deposits

531

775

3,977

1,172

1,082

8,782

Reserve for other contingent losses
Deferred tax liabilities

1,600

5,938

11,985

Deferred tax liabilities on revaluation of premises

14,376

14,381

107,667

Acceptances and guarantees
Total liabilities

14,737

15,849110,368

12,155,568

12,295,093

91,032,488

85,74585,745642,144

85,68485,684

641,683460

Net assets:
Capital stock
Capital surplus
Capital reserve
Earned surplus
Legal reserve

61

61

Reserve for deferred capital gains

1

1

13

Unappropriated retained earnings

296,356

289,868

2,219,402

Total shareholders’ equity

467,849

461,3623,503,705

Net unrealized gains on securities available for sale, net of taxes

22,87435,824

171,305

Net deferred gains (losses) on hedging instruments, net of taxes

1,015

(8)

7,606

Revaluation of premises, net of taxes

29,42729,438220,380

Total valuation and translation adjustments

53,31765,255399,293

Total net assets

521,167

526,617

3,902,999¥12,676,735¥12,821,711$94,935,487

Total liabilities and net assets
See accompanying Notes to Non-Consolidated Financial Statements.

Nishi-Nippon Financial Holdings GroupFINANCIAL REPORT 2023

53

Non-Consolidated Statement of Income (Unaudited)
The Nishi-Nippon City Bank, Ltd.
Years ended March 31st, 2023 and 2022
Thousands of
U.S. dollars

Millions of yen

2023

2022

2023

Income:Interest income:Interest on loans and discounts¥77,310¥77,121$578,974

Interest and dividends on securities

20,517

12,546

153,656

Other interest income

2,422

2,800

18,142Trust fees
Fees and commissions
Trading income
Other operating income
Other income
Total income

0

0

0

25,384

24,817

190,099

3

0

25

2,811

2,373

21,058

3,676

2,827

27,532

132,126

122,486

989,491

Expenses:
Interest expenses:
Interest on deposits

407

455

3,053

Interest on call money and bills sold

319

(113)

2,392

7,627

383

57,124

Interest on borrowings

Interest on payables under repurchase agreements

585

47

4,383

Interest on guarantee deposits received under securities lending transactions

22

13

169

3,386

72

25,365
113,351

Other interest expenses
Fees and commissions

15,135

14,694

Other operating expenses

12,155

1,653

91,033General and administrative expenses

67,64867,084

506,614

Other expenses

4,822

6,827

36,115

Total expenses

112,112

91,119839,604

Income before income taxes

20,01431,367

149,886
34,231

Income taxes
Current

4,570

9,056

Deferred

949

1,267

7,111

5,520

10,324

41,343¥14,493¥21,043$108,543

Total income taxes
Net income
See accompanying Notes to Non-Consolidated Financial Statements.

54

Nishi-Nippon Financial Holdings GroupFINANCIAL REPORT 2023

Non-Consolidated Statement of Changes in Net Assets (Unaudited)
The Nishi-Nippon City Bank, Ltd.
Years ended March 31st, 2023 and 2022
Thousands of
U.S. dollars

Millions of yen

2023

2022

2023

¥85,745¥85,745$642,144———¥85,745¥85,745$642,144¥85,684¥85,684$641,683

Shareholders’ equity
Capital stock
Balance at beginning of the year
Changes during the year
Total changes during the year
Balance at end of the year
Capital surplus:
Capital reserve
Balance at beginning of the year
Changes during the year
Total changes during the year
Balance at end of the year

—

—

—

¥85,684¥85,684$641,683¥85,684¥85,684$641,683

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

—

—

—

¥85,684¥85,684$641,683

¥61

¥61

$460

Earned surplus:
Legal reserve
Balance at beginning of the year
Changes during the year
Total changes during the year
Balance at end of the year

—

—

—

¥61

¥61

$460

¥1

¥2

$14

(0)

(0)

0

(0)

(0)

(1)

¥1

¥1

$13

¥289,868¥275,004$2,170,815

—

(93)

—

¥—

¥274,910$—(8,017)(6,239)(60,043)00014,49321,043

108,543

Other earned surplus:
Reserve for deferred capital gains
Balance at beginning of the year
Changes during the year
Transfer from reserve for deferred capital gains
Total changes during the year
Balance at end of the year
Unappropriated retained earnings
Balance at beginning of the year
Cumulative effect of change in accounting principle
Restated balance at beginning of the year
Changes during the year
Cash dividends paid
Transfer from reserve for deferred capital gains
Net income
Reversal of revaluation of premises

11

153

86

Total changes during the year

6,487

14,95848,587¥296,356¥289,868$2,219,402

Balance at end of the year

Nishi-Nippon Financial Holdings GroupFINANCIAL REPORT 2023

55

Non-Consolidated Statement of Changes in Net Assets (Unaudited)
The Nishi-Nippon City Bank, Ltd.
Years ended March 31st, 2023 and 2022

Thousands of
U.S. dollars

Millions of yen

2022

2023

2023

Total earned surplus
Balance at beginning of the year
Cumulative effect of change in accounting principle
Restated balance at beginning of the year

¥289,932¥275,068

—

(93)

—

¥289,932¥274,974$2,171,290$2,171,290

Changes during the year
Cash dividends paid

(8,017)(6,239)(60,043)

Net income

14,49321,043

108,543

Reversal of revaluation of premises

11

153

86

Total changes during the year

6,487

14,957

48,586¥296,420¥289,932$2,219,876¥461,362¥446,498$3,455,118

—

(93)

—

¥461,362¥446,404$3,455,118

Balance at end of the year
Total shareholders’ equity
Balance at beginning of the year
Cumulative effect of change in accounting principle
Restated balance at beginning of the year
Changes during the year
Cash dividends paid

(8,017)(6,239)(60,043)

Net income

14,49321,043

108,543

Reversal of revaluation of premises

11

153

86

Total changes during the year

6,487

14,957

48,586¥467,849¥461,362$3,503,705¥35,824¥62,724$268,289

Balance at end of the year
Valuation and translation adjustments
Net unrealized gains on securities available for sale, net of taxes
Balance at beginning of the year
Changes during the year
Net changes in items other than shareholders’ equity
Total changes during the year
Balance at end of the year

(12,950)(26,899)(96,983)(12,950)(26,899)(96,983)¥22,874¥35,824$171,305(¥8)(¥1,428)

($61)

1,023

1,419

7,668

1,023

1,419

7,668

¥1,015(¥8)$7,606¥29,438¥29,592$220,467

Net deferred gains (losses) on hedging instruments, net of taxes
Balance at beginning of the year
Changes during the year
Net changes in items other than shareholders’ equity
Total changes during the year
Balance at end of the year
Revaluation of premises, net of taxes
Balance at beginning of the year
Changes during the year
Net changes in items other than shareholders’ equity
Total changes during the year
Balance at end of the year

(11)

(153)

(86)

(11)

(153)

(86)

¥29,427¥29,438$220,380¥65,255¥90,888$488,695

Total valuation and translation adjustments
Balance at beginning of the year
Changes during the year
Net changes in items other than shareholders’ equity
Total changes during the year
Balance at end of the year

56

Nishi-Nippon Financial Holdings GroupFINANCIAL REPORT 2023

(11,937)(25,633)(89,401)(11,937)(25,633)(89,401)¥53,317¥65,255$399,293

Non-Consolidated Statement of Changes in Net Assets (Unaudited)
The Nishi-Nippon City Bank, Ltd.
Years ended March 31st, 2023 and 2022

Thousands of
U.S. dollars

Millions of yen

2022

2023

2023

Total net assets
Balance at beginning of the year
Cumulative effect of change in accounting principle
Restated balance at beginning of the year

¥526,617¥537,386

—

(93)

—

¥526,617¥537,293$3,943,814$3,943,814

Changes during the year
Cash dividends paid

(8,017)(6,239)(60,043)

Net income

14,49321,043

108,543

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

11

153

86

(11,937)(25,633)(89,401)(5,450)(10,675)(40,814)¥521,167¥526,617$3,902,999

See accompanying Notes to Non-Consolidated Financial Statements.

Nishi-Nippon Financial Holdings GroupFINANCIAL REPORT 2023

57

Non-Consolidated Balance Sheet (Unaudited)
The Bank of Nagasaki, Ltd.
March 31st, 2023 and 2022
Thousands of
U.S. dollars

Millions of yen

2023

2022

2023

$240,362

Assets:Cash and due from banks¥32,095¥52,921

Securities

11,5609,029

86,578Loans and bills discounted

267,312275,9932,001,889

Other assets

1,837

1,834

13,764

Tangible fixed assets

4,364

4,490

32,687

Intangible fixed assets

174

285

1,303

Prepaid pension cost

86

—

650

Deferred tax assets

—

132

—

Customers’ liabilities for acceptances and guarantees

10

12

77

Reserve for possible loan losses

(318)

(396)

(2,386)

Reserve for devaluation of securities

(43)

(43)

(325)

¥317,080¥344,261$2,374,602

Total assets
Liabilities and net assets:
Liabilities:¥259,069¥262,977$1,940,156

Call money and bills sold

Deposits

31,00040,000232,157

Borrowed money

6,200

20,90046,431Other liabilities

1,313

1,184

9,838

Reserve for employee retirement benefits

9

14

69

Reserve for retirement benefits for directors and corporate auditors

76

100

570

Reserve for reimbursement of deposits

14

50

108

Reserve for other contingent losses

21

14

162

Deferred tax liabilities

11

—

88

Deferred tax liabilities on revaluation of premises

508

509

3,808

Acceptances and guarantees
Total liabilities

10

12

77

298,235

325,763

2,233,469

7,621

7,621

57,078

Net assets:
Capital stock
Capital surplus
Capital reserve

3,500

3,500

26,211Other capital surplus

2,463

2,463

18,452

Earned surplus
224

210

1,682

Unappropriated retained earnings

Legal reserve

3,547

3,380

26,567

Total shareholders’ equity

17,357

17,176

129,991

337

169

2,525

1,150

1,151

8,615

Net unrealized gains on securities available for sale, net of taxes
Revaluation of premises, net of taxes
Total valuation and translation adjustments

1,487

1,321

11,141

Total net assets

18,845

18,497141,132¥317,080¥344,261$2,374,602

Total liabilities and net assets
See accompanying Notes to Non Consolidated Financial Statements.

58

Nishi-Nippon Financial Holdings GroupFINANCIAL REPORT 2023

Non-Consolidated Statement of Income (Unaudited)
The Bank of Nagasaki, Ltd.
Years ended March 31st, 2023 and 2022
Thousands of
U.S. dollars

Millions of yen

2023

2022

2023

¥3,492¥3,525$26,155

¥332

¥239

$2,488

28

115

214
5,064

Income:Interest and dividend income:Interest on loans and discounts
Interest and dividends on securities
Other interest income
Fees and commissions

676

700

Other income

118

57

889

Total income

4,648

4,638

34,812

Expenses:
Interest expenses:
Interest on deposits

44

55

332

Interest on call money and bills sold

(18)

(23)

(138)

Interest on borrowings

—

0

—

Other interest expenses
Fees and commissions
Other operating expenses
General and administrative expenses

1

3

10

975

969

7,304

0

0

7

3,184

3,262

23,846

Other expenses

90

59

681

Total expenses

4,278

4,328

32,043

369

310

2,768

Income before income taxes
Income taxes
Current

49

32

371

Deferred

70

45

526

Total income taxes
Net income

119

77

897

¥249

¥232

$1,870See accompanying Notes to Non Consolidated Financial Statements.

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59

Non-Consolidated Statement of Changes in Net Assets (Unaudited)
The Bank of Nagasaki, Ltd.
Years ended March 31st, 2023 and 2022
Thousands of
U.S. dollars

Millions of yen

2023

2022

2023

¥7,621¥6,121$57,078

—

1,500

—

—

1,500

—

¥7,621¥7,621$57,078¥3,500¥2,000$26,211

—

1,500

—

—

1,500

—

¥3,500¥3,500$26,211¥2,463¥2,463$18,452

Shareholders’ equity
Capital stock
Balance at beginning of the year
Changes during the year
Issuance of new shares
Total changes during the year
Balance at end of the year
Capital surplus:
Capital reserve
Balance at beginning of the year
Changes during the year
Issuance of new shares
Total changes during the year
Balance at end of the year
Other capital surplus
Balance at beginning of the year
Changes during the year———

¥2,463¥2,463$18,452¥5,963¥4,463$44,663

—

1,500

—

—

1,500

—

¥5,963¥5,963$44,663

¥210

¥210

$1,577

Reserve of legal retained earnings

14

—

104

Total changes during the year

14

—

104

¥224

¥210

$1,682¥3,380¥3,201$25,314

Reserve of legal retained earnings

(14)

—

(104)

Cash dividends paid

(70)

—

(524)

Net income

249

232

1,870

Total changes during the year
Balance at end of the year
Total capital surplus
Balance at beginning of the year
Changes during the year
Issuance of new shares
Total changes during the year
Balance at end of the year
Earned surplus:
Legal reserve
Balance at beginning of the year
Changes during the year

Balance at end of the year
Other earned surplus:
Unappropriated retained earnings
Balance at beginning of the year
Changes during the year

Reversal of revaluation of premises

1

(54)

11

Total changes during the year

167

178

1,253

¥3,547¥3,380$26,567¥3,590¥3,412$26,891

Balance at end of the year
Total earned surplus
Balance at beginning of the year
Changes during the year
Cash dividends paid

(70)

—

(524)

Net income

249

232

1,870

Reversal of revaluation of premises

1

(54)

11

Total changes during the year

181

178

1,358

¥3,772¥3,590$28,249

Balance at end of the year

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Nishi-Nippon Financial Holdings GroupFINANCIAL REPORT 2023

Non-Consolidated Statement of Changes in Net Assets (Unaudited)
The Bank of Nagasaki, Ltd.
Years ended March 31st, 2023 and 2022

Thousands of
U.S. dollars

Millions of yen

Total shareholders’ equity
Balance at beginning of the year
Changes during the year
Issuance of new shares
Cash dividends paid
Net income
Reversal of revaluation of premises
Total changes during the year
Balance at end of the year
Valuation and translation adjustments
Net unrealized gains on securities available for sale, net of taxes
Balance at beginning of the year
Changes during the year
Net changes in items other than shareholders’ equity
Total changes during the year
Balance at end of the year
Revaluation of premises, net of taxes
Balance at beginning of the year
Changes during the year
Net changes in items other than shareholders’ equity
Total changes during the year
Balance at end of the year
Total valuation and translation adjustments
Balance at beginning of the year
Changes during the year
Net changes in items other than shareholders’ equity
Total changes during the year
Balance at end of the year
Total net assets
Balance at beginning of the year
Changes during the year
Issuance of new shares
Cash dividends paid
Net income
Reversal of revaluation of premises
Net changes in items other than shareholders’ equity
Total changes during the year
Balance at end of the year

2023

2022

2023

¥17,176¥13,997$128,633

—
(70)
249
1
181
¥17,357

3,000
—
232
(54)
3,178
¥17,176

—
(524)
1,870
11
1,358
$129,991

¥169

¥44

$1,269

167
167
¥337

125
125
¥169

1,256
1,256
$2,525¥1,151¥1,097$8,626(1)(1)¥1,15054
54¥1,151(11)(11)$8,615¥1,321¥1,141$9,896

166
166¥1,487

179
179¥1,3211,244
1,244$11,141¥18,497¥15,139$138,530

—
(70)
249
1
166
347
¥18,845

3,000
—
232
(54)
179
3,357
¥18,497

—
(524)
1,870
11
1,244
2,602
$141,132

See accompanying Notes to Non-Consolidated Financial Statements.

Notes to Non-Consolidated Financial Statements (Unaudited)
The Nishi-Nippon City Bank, Ltd. and The Bank of Nagasaki, Ltd.
March 31st, 2023 and 2022

1. Basis of Presentation of Financial Statements
The accompanying non-consolidated financial statements of The Nishi-Nippon City Bank, Ltd. and The Bank of Nagasaki, Ltd. (theBanks) have been prepared from the accounts maintained by the Banks in accordance with the provisions set forth in the JapaneseCorporation Law, the Banking Law, and accounting principles generally accepted in Japan, which are different in certain respects as tothe application and disclosure requirements of International Financial Reporting Standard.

2. Other Accounting Principles and Practices Employed by the Bank
Accounting principles employed by the Banks in preparing the accompanying non-consolidated financial statements which havesignificant effects thereon, are explained in Note 2 of the Notes to Consolidated Financial Statements.

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Independent Auditor’s Report
The Board of Directors
Nishi-Nippon Financial Holdings, Inc.
OpinionWe have audited the accompanying consolidated financial statements of Nishi-Nippon Financial
Holdings, Inc. and its consolidated subsidiaries (the Group), which comprise the consolidatedbalance sheet as at March 31, 2023, 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.
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, 2023, and its consolidated
financial performance and its consolidated cash flows for the year then ended in accordance withaccounting 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 the consolidated
financial statements in Japan, and we have fulfilled our other ethical responsibilities in accordancewith these requirements. We believe that the audit evidence we have obtained is sufficient andappropriate 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 these matters.
Determination of debtor classification in self-assessments of debtors that have formulated
business improvement plans and debtors affected by COVID-19 and calculation of the reservefor possible loan losses for debtors for which the cash flow estimation method is applied
Description of Key Audit Matter
Nishi-Nippon Financial Holdings, Inc. andits consolidated subsidiaries (the Group)
recorded loans and bills discounted of¥8,955,399 million and reserve for possible
loan losses of ¥40,455 million on its
consolidated balance sheet as of March 31,
2023.

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Auditor’s Response
We mainly performed the following audit
procedures:(1) Overall procedures㺃 In order to assess whether the Group’s
policies comply with generally accepted
corporate accounting standards, weconsidered the Group’s self-assessment
standards and write-offs and allowances
standards with reference to AccountingStandards for Financial Instruments.

The Group has as its core subsidiary The
㺃 We evaluated whether the Group’s
Nishi-Nippon City Bank, Ltd., and is engaged
internal controls ensure the accuracy andin the loan business mainly in Fukuoka.
completeness of the calculation of the reserve
Loans and bills discounted is a significant
for possible loan losses, determinations ofpart of the Group’s business as it accounts forthe debtor classification and credit ratings
approximately 70% of the total assets on therelevant to such determinations, as well as
consolidated balance sheet, and loan losses
debtor information upon which suchmay arise if, for example, the creditworthinessdeterminations are made.
of debtors deteriorates or the value of collateral 㺃 We sampled debtors that formulated highly
such as real estate declines.
feasible drastic business improvement
Accordingly, the Group records the amountplans (or reasonable and highly feasibleof expected losses that won’t be collected as abusiness improvement plans) for which thereserve for possible loan losses, and the details
impact of the change in debtor classificationof this process are noted in “(10) Reserve foron the reserve for possible loan losses
Possible Loan Losses,” and “(25) Significant
exceeded a certain amount. We also sampled
Accounting Estimates” under Note 2 “Summary
debtors that were affected by COVID-19
of Significant Accounting Policies.”from the standpoint of the industry to which
they belong or their operating results, andThe reserve for possible loan losses is calculated
debtors for which the cash flow estimationin line with the write-offs and allowances
method is applied to test management’s
method for each debtor class based on theclassification of the sampled debtor.
determination of the debtor classification
through self-assessment.
㺃 With regard to the determination of the debtor
classification, we inspected a set of materials
The determination of the debtor classification
related to the Group’s self-assessment,
through self-assessment is made by evaluating
which included materials related to a
the relevant debtor’s ability to repay loans
description of the debtor’s business, materials
based on the debtor’s repayment status, financial
related to the borrowing and repayment
position, business performance, and future
status, research materials that provide
prospects thereof.
details of the actual financial position,
In particular, categorizing debtors as Requiring
financial statements, and the trial balance,
Caution when the debtor formulates ‘highly
to gain an understanding of the sampledfeasible drastic business improvement plans’
debtors’ status of recent repayments, financial
or ‘reasonable and highly feasible businessposition, and business performance. In
improvement plans’ requires validation of theaddition, we made inquiries as necessary ofreasonableness and feasibility of such business
the Credit Supervision Division and Credit
improvement plans. ‘Highly feasible drastic
Management Division and evaluated thebusiness improvement plans’ (or ‘reasonable
responses we received.
and highly feasible business improvement
plans’) are formulated based on significant
assumptions such as expected future sales
and future earnings levels, including profit orloss, of debtors, and are affected by factors
such as changes in the operating environment
surrounding debtors and the outcome of businessstrategies. Therefore, the determination of the
debtor classification is highly dependent on
judgement by the Group’s management.

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Additionally, these determinations become even (2) Procedures addressing key audit mattersmore dependent on judgement by the Group’s 㺃 To examine the reasonableness and feasibility
management in cases where COVID-19 hasof highly feasible drastic businesshad a significant impact on the business
improvement plans (or reasonable andconditions of the debtor. The Group includes
highly feasible business improvement plans),
a discussion of the impact of COVID-19 in
we analyzed trends from past results of“(24) Significant Accounting Estimates”
major plan items such as future sales andunder Note 2.
earnings levels, including profit or loss, ofFurther, calculation of the reserve for possible
debtors and compared the assumptions
loan losses for debtors for which the cashused in these business improvement plans
flow estimation method is applied is highlywith the actual results to evaluate whether
dependent on judgement by the Group’s
the debtor had historically achieved its
management since such calculation is based
previous business improvement plans. We
on significant assumptions, such as futurealso made inquiries as necessary of thechanges in debtor classification and amounts
Credit Supervision Division and Credit
expected to be collected in the future.
Management Division regarding items
such as progress of business improvement
Therefore, we determined that theplans and evaluated the responses wereasonableness and feasibility of highly
received. In addition, we inspected thefeasible drastic business improvement plans
contact history between the Group and its(reasonable and highly feasible businessdebtors as well as materials such as minutes
improvement plans) and the outlook on theof meetings and interim trial balances torecovery of the operating results of debtors
assess whether there was new information
after COVID-19 is contained, which have aor indications that targets set out in plans will
significant impact on the determination ofsignificantly fall short of being achieved.
debtor classification in self-assessments
conducted by The Nishi-Nippon City Bank,㺃 To examine the recoverability of futureLtd., a consolidated subsidiary of the Group,
operating results of debtors affected by
and future changes in debtor classification
COVID-19, we inspected materials regarding
and amounts expected to be collected in thethe extent of the deterioration in their
future, which are used in the cash flowbusiness performance compared to pastestimation method and have a significant
operating results and future actions to be
impact on the calculation of the reserve fortaken by debtors, and made inquiries as
possible loan losses, are key audit matters.
necessary of the Credit Supervision
Division and Credit Management Divisionand evaluated the responses we received.
㺃 Regarding debtors for which the cash flow
estimation method is applied in thecalculation of the reserve for possible loan
losses, in order to assess whether future
expectations for debtors identified throughself-assessment are reflected in thecalculation of the reserve for possible loan
losses, we agreed the future changes ofdebtor classification and amounts expected
to be collected in the future to supporting
documentation, and made inquiries asnecessary of the Credit Supervision Division
and Credit Management Division about thelatest information and considered theconsistency of the responses we received
with the basis for determination of thereserve for possible loan losses.

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Appropriateness of determination of amount equivalent to negative goodwill
Description of Key Audit Matter

Auditor’s Response

As described in “Acquisition of an affiliate
accounted for by the equity method by stockacquisition” under “Additional Information”
of Note 30 “Overview of Business
Combinations,” the Group recorded anamount equivalent to negative goodwill of¥7,637 million as part of equity in earnings ofaffiliates on its consolidated statement ofincome for the year ended March 31, 2023.
This amount equivalent to negative goodwill
arose from the Group acquiring 29.9% of thetotal outstanding shares of Kyushu Leasing
Service Co., Ltd. on October 5, 2022.
When an amount equivalent to negative
goodwill is expected to arise, the Group
reviews whether all identifiable assets andliabilities have been identified and whether
the purchase price has been appropriately
allocated and, as a result of this review, if thepurchase price is less than the net amountallocated to the assets acquired and liabilities
assumed, then the Group recognizes anamount equivalent to negative goodwill,
which is treated as profit for the year in whichsuch amount arise.
As part of the above process, the valuation ofassets and liabilities, which serves as thebasis for allocating the purchase price to all
identifiable assets and liabilities, includes
elements of significant judgments andestimates by management.
Therefore, we determined that theappropriateness of the determination of theamount equivalent to negative goodwill is a
key audit matter.

We mainly performed the following audit
procedures:㺃 We evaluated the Group’s internal controls
to assess whether the amount equivalent tonegative goodwill was appropriately
determined.
㺃 In order to obtain an understanding of the
background of the acquisition of shares andthe determination process regarding thepurchase price of the shares, we madeinquiries of management and inspected therelated minutes of meetings of the board of
directors and others.
㺃 In order to consider the reasonableness ofthe purchase price calculation method, we
made inquiries of the division in the Group
responsible for the calculation and inspected
related documents.
㺃 We recalculated the fair value of theidentifiable assets acquired and liabilities
assumed.
㺃 In considering the fair value measurements
for significant real estate included in theidentifiable assets, we evaluated thecompetence, capabilities, and objectivity of
external specialists used by the Group. In
addition, we obtained and considered theresults of appraisals of real estate acquiredby the Group.
㺃 In order to assess the accuracy of the amountequivalent to negative goodwill, we obtainedmaterials used in the determination of theamount and considered the consistency
between such materials and related
documents and, in addition, considered theaccuracy of the calculation.

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Other Information
The other information comprises the information included in Financial 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 anddisclosure of the other information. The Audit and Supervisory Committee is responsible foroverseeing the Group’s reporting process of the other information.
Our opinion on the consolidated financial statements does not cover the other information and
we do not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is toread the other information and, in doing so, consider whether the other information is materiallyinconsistent with the consolidated financial statements or our knowledge obtained in the audit orotherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of
this other information, we are required to report that fact.
We have nothing to report in this regard.
Responsibilities of Management and the Audit and Supervisory Committee for theConsolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial
statements in accordance with accounting principles generally accepted in Japan, and for suchinternal control as management determines is necessary to enable the preparation of consolidated
financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing theGroup’s ability to continue as a going concern and disclosing, as required by accounting principles
generally accepted in Japan, matters related to going concern.
The Audit and Supervisory Committee is responsible for overseeing the Group’s financial
reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial
statements 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 expected
to influence the economic decisions of users taken on the basis of these consolidated financial
statements.
As part of an audit in accordance with auditing standards generally accepted in Japan, we
exercise professional judgment and maintain professional skepticism throughout the audit. Wealso:࣭ Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks,and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.

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࣭ Consider internal control relevant to the audit in order to design audit procedures that areappropriate 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.
࣭ Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates 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
related to events or conditions that may cast significant doubt on the Group’s ability tocontinue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor’s report to the related disclosures in the consolidated
financial statements or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditor’s report.
However, future events or conditions may cause the Group to cease to continue as a going
concern.
࣭ Evaluate the overall presentation, structure and content of the consolidated financial
statements, including the disclosures, and whether the consolidated financial statements
represent the underlying transactions and events in a manner that achieves fair presentationin accordance with accounting principles generally accepted in Japan.
࣭ Obtain sufficient appropriate audit evidence regarding the financial information of theentities or business activities within the Group to express an opinion on the consolidated
financial statements. We are responsible for the direction, supervision and performance ofthe group audit. We remain solely responsible for our audit opinion.
We communicate with the Audit and Supervisory Committee regarding, among other matters,
the planned scope and timing of the audit and significant audit findings, including any significant
deficiencies in internal control that we identify during our audit.
We also provide the Audit and Supervisory Committee with a statement that we have compliedwith the ethical requirements regarding independence that are relevant to our audit of theconsolidated financial statements in Japan, and to communicate with them all relationships andother matters that may reasonably be thought to bear on our independence, and where applicable,
related safeguards.
From the matters communicated with the Audit and Supervisory Committee, we determine thosematters 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’sreport unless law or regulation precludes public disclosure about the matter or when, in extremelyrare circumstances, we determine that a matter should not be communicated in our report because
the adverse consequences of doing so would reasonably be expected to outweigh the public
interest benefits of such communication.
Interest Required to Be Disclosed by the Certified Public Accountants Act of Japan
Our firm and its designated engagement partners do not have any interest in the Group which is
required to be disclosed pursuant to the provisions of the Certified Public Accountants Act ofJapan.

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Convenience Translation
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 translation
has been made on the basis described in Note 1 to the consolidated financial statements.
Ernst & Young ShinNihon LLC
Tokyo, Japan
August 9, 2023/s/ ᑠ⃝⿱἞
Yuji Ozawa
Designated Engagement Partner
Certified Public Accountant/s/ ▼ᕝ⌶ஓ
Takuya Ishikawa
Designated Engagement Partner
Certified Public Accountant/s/ ୰ᅬ㱟ஓ
Tatsuya Nakazono
Designated Engagement Partner
Certified Public Accountant

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英文

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