Annual Report

2005

Contents■ Message from the Governor

2■ DBJ in Profile3■ Introduction to Finance Projects

6

Community Development

7

Environmental Conservation and Sustainable Societies

17

Creation of New Technologies and Industries

25■ Business Areas

33■ Optimal Operations Management Framework

41■ Financial Condition48■ Accounts Based on Corporate Accounting Standards

50■ Accounts Based on Accounting Standards for Special Agencies, etc.

88

■ Board of Directors

100■ Organization Chart101■ Location of Head and Branch Offices and Directory102＊Detailed list of contents within

Figures in this publication
Figures in this publication have been rounded down to the nearest whole unit, so the sum of individual
figures may not match the total shown. Any figures that fall short of a single unit are shown as zero（0）.
A dash（ー）indicates that there is no figure for the item concerned1Message from the Governor
The Development Bank of Japan（DBJ）is a policy-based financial institution,
whose mission is to contribute to the effective implementation of Japan s socioeconomic policies. To best fulfill this mission, DBJ conducts its operations
according to three basic principles. These principles are:（1）clear policy
objectives;（2）coordination with private-sector financial institutions; and（3）sound management.
（1）Clear policy objectives
DBJ works with the government to contribute to policy objectives in the threepriority areas of community development, environmental conservation andsustainable societies, and creation of new technologies and industries.
Community development: Supporting regional and local initiatives,
Revitalizing communities is an urgent issue in ensuring the sustainable development of Japan s economy. DBJ works withlocal governments, local business leaders, and other community supporters, using its financial resources and knowledge toassist in creating unique and independent communities.
Environmental conservation and sustainable societies: Encouraging responsibility for the future,With the world s first environmentally-ranked loans and a variety of global warming measures, DBJ is helping to build aharmonious and sustainable society with promise for the future. DBJ is also active in the disaster prevention and publicwelfare sectors to ensure a safe and secure living environment for the people of Japan.
Creation of new technologies and industries: Making the most of innovation
DBJ is a firm supporter of technological development. While continuing to support venture companies and medium-sizedenterprises strong in technology and skills, the Bank now also employs its new Practical Application Support Center forTechnology and a Carve-out Fund to help create new technology-based industries.
To realize these policy objectives, DBJ has developed financing platforms using new methods such as private financeinitiatives（PFI）and public and private sector partnerships（PPP）, as well as business revitalization programs and new,funds. The Bank s efforts have expanded financial frontiers in Japan.
（2）Coordination with private-sector financial institutions
Given the dramatic changes in the financial environment, DBJ forms partnerships with major financial institutions andregional banks to aid in the promotion of socially significant projects.
（3）Sound management
By adhering to the principle of balanced revenue and expenditures, DBJ fulfills its mission as a policy-based financial,
institution without adding to the government s deficit.
Japan is confronting major changes in its socio-economic environment and must address many issues as it strives toensure new growth.
The knowledge and insight of a diverse range of people must be brought together to envision and then execute the most,effective solutions. DBJ s part in this process is to serve as a catalyst for the synthesis of new value by helping to bring theright resources together at the right time and place.
On behalf of everyone at DBJ, I ask your continued support and good will.
Takeshi Komura
Governor

2

DBJ in Profile

The Development Bank of Japan was established in accordance with theDevelopment Bank of Japan Law on October 1, 1999, as the successor to allrights and obligations of the Japan Development Bank and the HokkaidoTohoku Development Finance Public Corporation. The finance functions of theJapan Regional Development Corporation and the Japan Environment
Corporation were also transferred to DBJ.

Objectives
DBJ provides long-term financing and other policy-based schemes to qualified projects as asupplement and inducement to the lending and other services provided by ordinary financialinstitutions. By doing so, it promotes the upgrading, vitalization and sustainable development ofthe economy and society; the realization of an enhanced quality of life; and the creation of selfreliant regions.

Capitalization (as of the end of March 2005)
DBJ is capitalized at ¥1,215.4 billion (wholly owned by the government).

Number of Employees (as of the end of March 2005)
DBJ employs 1,357 workers.

Services
As an integrated policy-based financial institution, DBJ’s implementation of the following functions
supports desirable projects in line with Japan’s economic and social policy.
Supply of long-term funds (loans, debt guarantees, and other services):
DBJ supplies long-term, fixed-interest, good-quality funds which, in collaboration withfunding from private-sector banks, support projects that have high policy content.
Project support:
DBJ’s diverse skills and financing functions are put to practical use in promoting the smooth
formulation of projects with high policy content. This support is provided comprehensively at
every stage, from the project’s initial concept to its planning and commercialization.
Information supply:
Using its domestic and overseas networks, DBJ carries out study and research related toimportant economic, social, industrial, and local trends, and furnishes a wide range ofinformation to interested parties.

3Creating and publicly disclosing investment guidelines based on Medium-Term Policy Principles:
DBJ conducts its work according to the Medium-Term Policy Principles of the Development
Bank of Japan, which are prepared by the competent ministers.
Investment and Finance Guidelines are prepared and publicly disclosed for each fiscal year. Inaddition, the Management Council, consisting of independent experts, deliberates on andannounces the progress of work related to matters set down in the Medium-Term Policy
Principles.
Complementing and encouraging private financial institutions:
The Development Bank of Japan Law prohibits competition with private financialinstitutions. DBJ’s role is to complement and encourage private financing.
Ensuring sound finance:
In managing its work as a policy-based financial institution, DBJ strives for sound andefficient operations based on the principles of certainty of repayment and balanced revenues
and expenditures, as well as for strong risk management capacity and an upgraded system ofasset/liability management.
Evaluating policy effectiveness:
DBJ works to ensure its accountability as a governmental institution by evaluating objectively
the contribution of its financing to policy effectiveness.

DBJ in Profile

Characteristics of Business Management

Business Scale
Lending scale and target fields correspond to each year’s policy requirements, and, together withfiscal investment plans, are determined by the Diet. Annual settlements are also submitted to theDiet. DBJ’s business scale for fiscal year 2005 is ¥1,168 billion.

■ Principles of Work Management

Government

Competent ministers[Medium-Term Policy Principles](e.g., 3-year policy items)

DBJ[Investment and Finance Guidelines]
Prepared each fiscal year in accordancewith Medium-Term Policy Principles･ Complementing and encouraging Implementation of the budget
Operations evaluation
private financial institutions･ Ensuring sound finance･ Evaluating policy effectiveness ofpolicy finance(Disclosure)Management Council
Inspection by
Outside experts’ studies and reports
specialist agency
on implementation of the(e.g.,board of audit)
Medium-Term Policy Principles

Creditmanagement
Asset assessment

External audit

Accountability to the public4

DBJ in Profile■ Structure of Fund Procurement

FILP Agency Bonds
Fiscal Investment
and Loan Program
Government-Guaranteed
Bonds
FinancialMarkets

DBJSpecial
AccountBonds

Private-Sector
Businesses,
etc.

Loans,etc.

Fiscal Loan Fund
Special AccountCitizens
andResidents
of JapanServices,etc.

Industrial Investment
Special Account■Financial Highlights
Consolidated

Millions of yen

Thousands of U.S.dollars

For the Fiscal Years ended March 31,2005

2004

2005

Total Revenues

487,684

528,890

4,541,246

Total Expenses

373,821414,9033,480,968

Net Earnings

112,639

113,987

1,048,881

As of March 31,2005

2004

2005

Total Assests

14,471,618

15,326,171

134,757,598

Loans

13,860,747

14,785,724

129,069,259

12,591,701

13,572,524

117,252,082

Bonds and Notes

1,994,801

1,780,606

18,575,297

Borrowings

10,214,800

11,403,450

95,118,726

1,753,646

17,463,630

Total Liabilitites

Total Equity

1,875,419

As of March 31,2005

2004

13.93%

12.49%

Capital Equity
Risk-based Capital Ratio(BIS Capital Ratio)

Non-Consolidated

Millions of yen

Thousands of U.S.dollars

For the Fiscal Years ended March 31,2005

2004

2005

Total Revenues

484,513528,890

4,511,718

Total Expenses

371,963

414,904

3,463,669

Net Earnings

112,550

113,986

1,048,049

As of March 31,2005

2004

2005

Total Assests

14,465,803

15,326,174

134,703,447

Loans

13,860,747

14,785,724

129,069,259

12,590,725

13,572,527

117,242,995

Bonds and Notes

1,994,801

1,780,606

18,575,297

Borrowings

10,214,800

11,403,450

95,118,726

1,753,646

17,460,452

Total Liabilitites

Total Equity

1,875,007

As of March 31,2005

2004

13.90%

12.49%

Capital Equity
Risk-based Capital Ratio(BIS Capital Ratio)

The rate of ¥107.39=$1.00, the effective exchange rate prevailing as of March 31, 2005, has been used in conversion.

■ Ratings for Development Bank of Japan (as of June 2005)
Ratings on FILP Agency Bonds

Ratings on Government-Guaranteed Bonds

Moody’s

S&P

R&I

JCR

A2AA−AAAAAANotes: 1. FILP agency bonds are not government-guaranteed.
2. Moody’s: Moody’s Investors Service, Inc.
S&P: Standard & Poor’s
R&I: Rating and Investment Information, Inc.
JCR: Japan Credit Rating Agency, Ltd.

5

Moody’s

S&P

Foreign currency-denominatedforeign bonds
Yen-denominated foreign bonds

AaaAA−

Domestic bonds

A2−