Indep e n d e n t A ud i t o r ' s R e p o r t

Financial Information
Independent Auditor's Report … ………………………… 2
YMFG Business Situation …………………………………… 8
Consolidated Financial Statements …………………… 10
Notes to Consolidated Financial Statements … …… 14

1

Independent auditor’s report
To the Board of Directors of Yamaguchi Financial Group, Inc.:
OpinionWe have audited the accompanying consolidated financial statements of Yamaguchi Financial Group,
Inc.and its consolidated subsidiaries (collectively referred to as “the Group”), which comprise theconsolidated balance sheets as at March 31, 2023 and 2022, the consolidated statements of income andcomprehensive income, the consolidated statements of changes in net assets and the consolidated
statements of cash flows for the years then ended, and notes, comprising a summary of significant
accounting policies and other explanatory information.
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 2022, and its
consolidated financial performance and its consolidated cash flows for the years then ended inaccordance with accounting principles generally accepted in Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the
Audit of the Consolidated Financial Statements section of our report. We are independent of the Groupin 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 accordance with theserequirements. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the consolidated financial statements of the current period. These matters were addressed in thecontext of our audit of the consolidated financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.
Appropriateness of the Borrower Classification for Recipients of Management Improvement Support Initiatives
by Group Banks

The key audit matter

How the matter was addressed in our audit

In the consolidated balance sheet of
Yamaguchi Financial Group, Inc., loans andbills discounted (hereinafter referred to as the"Loans") of ¥8,347,832 million wererecognized, accounting for approximately
68.4%, which is a significant portion of the

The primary procedures we performed to assess theappropriateness of the borrower classification of therecipients of management improvement support
initiatives taking into account qualitative factors at
Group banks included the following:2

total consolidated assets. The corresponding
allowance for loan losses was ¥69,160
million. These included the balances of
Yamaguchi Bank, Ltd, Momiji Bank, Ltd
and Kitakyushu Bank, Ltd (hereinafterreferred to as the "Group banks"), all ofwhich are consolidated subsidiaries. Loans of
the Group banks, before eliminations ofintercompany balances of consolidated
subsidiaries, were ¥8,422,021 million and thecorresponding allowance for loan losses was¥68,931 million.
As described in Note 2, "SIGNIFICANTACCOUNTING POLICIES, (4) Accounting
Policies, Allowance for loan losses" to theconsolidated financial statements, the Groupbanks assess their receivables, including theLoans, in accordance with the selfassessment criteria. Based on the results ofthe self-assessments, the Loans are classified
into loans to normal borrowers, etc., and anallowance for loan losses is provided by eachclass, in accordance with the method
specified in the write-off and provisioning
standards, for the expected amount of losses
based on the actual rate of losses from bad
debts and the default probability, or theamount calculated by deducting the amount
expected to be collected through dispositionof collateral or execution of guarantees, etc.
As described in Note “Major accounting
estimates, Allowance for loan losses” to theconsolidated financial statements, in the selfassessment, the borrower classification isdetermined based on the status of theborrower's credit risk, taking into accountqualitative factors including forward-looking
information as well as quantitative factors
including financial information. If certain
conditions are met, such as the existence of areasonable and highly feasible business
improvement plan, the borrowerclassification is determined taking into
account the details of the plan.
The Group banks' primary business areasin Yamaguchi Prefecture, Hiroshima
Prefecture, and the city of Kitakyushu face3(1) Internal control testing
We evaluated the design and operating effectivenessof certain internal controls over the process ofdetermining the borrower classification, focusing on
the following:① Establishment of rules for self-assessment incompliance with the applicable accounting
standards.
② Verification and approval by the assessment
departments in determining the borrowerclassification.
(2) Evaluation of the appropriateness of the borrowerclassification
We mainly performed the following procedures forborrowers selected based on certain criteria. We
considered both quantitative and qualitative factors, inour selection.
① We inspected the financial analyses and othermaterials used as a basis for the borrowerclassification to determine whether the
borrower classification was carried out inaccordance with the Group bank’s rules for selfassessment.
② If a business improvement plan has beencreated, we mainly performed the following
procedures to assess the reasonableness andfeasibility of the plan,.
•

Inspection of the business improvement
plans

•

Inquiry to the assessment departments
about the basis for assumptions included in
the business improvement plans•

Comparison of financial position andoperating results of borrowers with theforward-looking information, including
planned figures③ We inquired of the assessment departments
about the basis for the borrower classification④ We assessed the appropriateness of theborrower classification by comprehensively
taking into account the actual financial status of
the borrower, the debt repayment capacity
considering the latest operating results and cash
flows, liquidity position, and forward-looking
information including the business
improvement plans.

various challenges, including a declining
population, a low birthrate and aging
demographic, and a shortage of businesssuccessors. In addition, the recent impact of
COVID-19 and inflation has made it crucial
for the Group banks' corporate customers toboost their profitability. In order to cope withthese circumstances, the Group banks
conduct business feasibility assessment
activities as part of measures to develop andrevitalize the regional economy. In particular,
the Group banks designate borrowers who
are deemed to require business improvement
support as "recipients of management
improvement support initiatives" and focus
on supporting them. Loans to borrowers
designated as “recipients of management
improvement support initiatives” amounted
to ¥131,222 million, and the corresponding
allowance for loan losses was ¥31,782
million.
The determination of the borrowerclassification for those borrowers designatedas recipients of management improvement
support initiatives takes into accountqualitative factors and depends significantly
on the estimates based on forward-looking
information, such as the reasonableness andfeasibility of the business improvement plans
prepared assuming such support. Suchestimates involve significant uncertainty andrequire a high degree of management
judgment.
We, therefore, determined that evaluationof the appropriateness of the allowance forloan losses of the Group banks for recipientsof management improvement support
initiatives, specifically the appropriateness ofthe borrower classification which takes into
account qualitative factors, was the mostsignificant in the audit of the consolidated
financial statements for this fiscal year, andaccordingly, a key audit matter.

4

Other Information
The other information comprises the information included in the YMFG business Situation , but does
not include the consolidated financial statements, the financial statements, and our auditor’s reports
thereon. Management is responsible for the preparation and presentation of the other information. The
audit and supervisory committee is responsible for overseeing the directors’ performance of theirduties with regard to the design, implementation and maintenance of the reporting process for the otherinformation.
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 to read theother information and, in doing so, consider whether the other information is materially inconsistent
with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears
to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of thisother 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 the Consolidated
Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with accounting principles generally accepted in Japan, and for such internal
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 the Group’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern inaccordance with accounting principles generally accepted in Japan.
The audit and supervisory committee is responsible for overseeing the directors’ performance of theirduties with regard to the design, implementation and maintenance of 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 to issue an auditor’sreport that includes our opinion. Reasonable assurance is a high level of assurance, but is not aguarantee that an audit conducted in accordance with auditing standards generally accepted in Japan
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected toinfluence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of our audit in accordance with auditing standards generally accepted in Japan, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:5

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, andobtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The riskof not detecting a material misstatement resulting from fraud is higher than for one resulting fromerror, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or theoverride of internal control.

Obtain an understanding of internal control relevant to the audit in order to design audit proceduresthat are appropriate in the circumstances, while the objective of the audit is not to express an
opinion on the effectiveness of the Group’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 of accounting
and based on the audit evidence obtained, whether a material uncertainty exists related to events orconditions that may cast significant doubt on the Group’s ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in our auditor’sreport 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 tocease to continue as a going concern.



Evaluate whether the presentation and disclosures in the consolidated financial statements are inaccordance with accounting standards generally accepted in Japan, the overall presentation,
structure and content of the consolidated financial statements, including the disclosures, andwhether the consolidated financial statements represent the underlying transactions and events in amanner that achieves fair presentation.

Obtain sufficient appropriate audit evidence regarding the financial information of the entities orbusiness activities within the Group to express an opinion on the consolidated financial statements.
We are responsible for the direction, supervision and performance of the group audit. We remainsolely responsible for our audit opinion.

We communicate with the audit and supervisory committee regarding, among other matters, theplanned scope and timing of the audit, 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 complied with
relevant ethical requirements regarding independence, and 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 those mattersthat were of most significance in the audit of the consolidated financial statements of the current period
and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the adverse consequences ofdoing so would reasonably be expected to outweigh the public interest benefits of such communication.
Convenience Translation
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year
ended March 31, 2023 are presented solely for convenience. Our audit also included the translation of
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.
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 Company and its
subsidiaries which is required to be disclosed pursuant to the provisions of the Certified Public
Accountants Act of Japan.

6

Atsuji Maeno
Designated Engagement Partner
Certified Public Accountant
Yoshinao Abe
Designated Engagement Partner
Certified Public Accountant
Noriyuki Akiyama
Designated Engagement Partner
Certified Public Accountant

KPMG AZSA LLC
Tokyo Office, Japan
November 2, 2023

7

YMFG Business Situation
Summary of Business Results■ The Regional Economy

Through the fiscal year ended March 31, 2023, theJapanese economy was on a moderate recovery path dueto the normalization of economic activities and the effects
of policies against commodity and energy prices hikes,
despite the lingering impact of the novel coronavirus
infection and the downward pressure on the economy
from rising resource prices brought by Russia’s invasion of
Ukraine and price increase caused by a weakening yen.
However, the outlook became increasingly uncertain
affected by the global monetary tightening and otherfactors including downside risks in overseas economies,
rising prices due to the weak yen, and financial instability
in the U.S. and Europe triggered by the U.S. bank failures.
In the regional economy, production activity picked up
overall as seen in the automobile industry, where major
manufacturers normalized plant operations and showed agradual recovery in production, despite the impact ofrising prices and other factors. Personal consumption also
showed a moderate recovery trend due to the easing of
the impact of the novel coronavirus infection and boosted
demand for travel due to governmental nationwide travel
support.
Against this backdrop, regional financial institutions
are strongly required to further facilitate the supply offunds and enhance their financial services, as well as toreinforce their financial strength and profitability. They are
expected to fulfill their mission of contributing to regional
economic development from the perspective of“regional
revitalization.”■ YMFG Performance

Amid these financial and economic conditions, all YMFG’s
officers and employees were united in their efforts tostrengthen the Group’s management base, bolster
operating performance, and contribute to the region, withthe support of its shareholders and business partners.
YMFG has started its mid-term management plan
“YMFG Medium-Term Management Plan 2022
- Co-Creating a Bountiful Future for Our Region.”With thecornerstone of management based on the Mission andReason for Existence (Purpose) of the Group, YMFG has
been working to realize the mid-term management planby striving for community- and customer-oriented businessactivities to improve the sustainability of the community
and YMFG.

unrealized gains (losses) on available-for-sales securities.
Deposits stood at ¥10,325.7 billion, down ¥8.8 billion
from the previous fiscal year-end, due to the Group’s
initiatives to enhance products and services to meetincreasingly diverse customer needs, as well as to steadyprogress in developing sales rooted in the region.
Loans and bills discounted increased ¥203.8 billion, to¥8,347.8 billion, due to the Group’s efforts to fulfill its role
as a regional financial institution through its financial
intermediary function and to proactively meet capitalneeds of business partners in response to their trust in
YMFG.
The Group’s holdings of securities amounted to¥1,534.1 billion, up ¥180.1 billion. This change is due tothe portfolio restructuring to promote a shift to a stableprofit structure in the management of securities.
Total assets amounted to ¥12,211.6 billion at fiscal
year-end, up ¥29.0 billion from one year earlier. This
increase was a result of increase in loans and bills
discounted and holdings of securities, against a backdrop
of increase in deposits and call money.
Net assets stood at ¥614.7 billion, down ¥21.7 billion
from a year earlier. The decrease was due to a ¥11.6
billion increase in retained earnings attributable toaccumulated profits, a ¥25.4 billion decrease in unrealized
gains on available-for-sale securities and a ¥9.8 billion
increase in treasury stock acquired.
Net cash used in operating activities was ¥143.3
billion, a ¥66.2 billion decrease from the previous fiscal
year, mainly due to the decrease in borrowed money. Net
cash used in investing activities was ¥155.6 billion, a¥617.5 billion decrease from the previous year, mainly
due to decrease in proceeds from sales of securities. Net
cash provided by financing activities was ¥1.8 billion, a¥15.0 billion increase from the previous fiscal year,
primarily due to the issuance of subordinated bonds. As aresult, cash and cash equivalents decreased ¥297.2 billion
to ¥1,854.7 billion at the end of the fiscal year.

■ Financial Results

On a consolidated basis, total income increased ¥2,816
million year on year, to ¥159,108 million, due primarily toincrease in interest on loans and discounts and gains onsale of stock, despite decrease in interest and dividends
on securities. As a result, net income attributable toowners of the parent increased ¥30,900 million year on
year, to ¥17,895 million.
Comprehensive income increased ¥30,034 million year
on year, to ¥(1,302) million. This increase was due
primarily to an increase of ¥30,921 million in net income,an increase of ¥10,028 million in remeasurements ofdefined benefit plans and a decrease of ¥14,150 million in8

Yamaguchi Financial Group, Inc., Management Indices (Consolidated)
Millions of yen

Millions of yen

Millions of yen

Millions of yen

Thousands of
U.S. dollars*1

2023

2022

2021

2020

2023

Consolidated total income

159,108

156,292

185,505

175,423

1,191,552

Consolidated net income (loss) attributable toowners of the parent

17,895(13,005)

24,95825,391

134,015

Consolidated comprehensive income(1,302)(31,336)

61,533(25,204)(9,750)Consolidated total net assets

614,666

636,345

681,139630,245

4,603,205

12,211,646

12,182,663

11,993,722

10,605,416

91,452,453

2,718.04
yen

2,652.26
yen2,729.94
yen2,458.73
yen

20.36
U.S. dollars

Current term net income (loss) per share

77.41
yen

(53.29)
yen

99.63
yen

100.07yen

0.58
U.S. dollars

Current term net income per share (diluted)*3

77.39
yen

—
yen

99.59
yen

93.86
yen

0.58
U.S. dollars

14.35%

12.65%

13.43%

12.62%—

Consolidated total assets
Net assets per share

Capital ratio*2
Earnings on equity – increase

2.88%(1.99)%

3.84%

3.97%

—

Group price earnings ratio*4

10.48 times— times

7.38 times

6.11 times—*1 US dollar amounts have been translated, for convenience only, at the rate of ¥133.53 = US$1.00 as of March 31, 2023.
*2 YMFG calculated its capital ratio according to the uniform international standard (Basel 3).
*3 Net income per share (diluted) for the year ended March 31, 2022 is not described, because net loss per share is recorded although dilutive
shares exist.
*4 Group price earnings ratio for the year ended March 31, 2022 is not described because net loss per share is recorded.

9

Consolidated Financial Statements
CONSOLIDATED BALANCE SHEETSMarch 31, 2023 and 2022

Millions of yen

ASSETS
AssetsCash and due from banks (Notes 3, 4 and 9)
Call loans and bills purchased (Note 4)
Monetary claims bought

Millions of yen

Thousands of U.S.
dollars (Note 1)

2023

2022

2023

¥1,878,858¥2,175,914$14,070,681

935

31,713

7,002

2,458

5,443

18,408

Trading assets (Notes 4 and 6)

3,976

3,101

29,776

Money held in trust (Notes 4 and 6)

17,40535,060130,345

Securities (Notes 4, 5, 6 and 9)

1,534,139

1,354,034

11,489,096

Loans and bills discounted (Notes 4, 7 and 8)

8,347,833

8,143,997

62,516,536

Foreign exchanges

36,77330,041

275,391

Lease receivables and investment assets

19,805

19,699148,319

Other assets (Notes 4, 6 and 9)

250,908

288,263

1,879,039

Tangible fixed assets (Notes 10, 11, 15 and 20)

81,122

83,133

607,519

Intangible fixed assets (Note 20)

6,578

6,991

49,262

Net defined benefit asset (Note 14)

34,33532,728257,133

Deferred tax assets (Note 21)

9,964

3,513

74,620

Customers’ liabilities for acceptances and guarantees (Note 16)

58,96750,382441,601

Allowance for loan losses
Total assets(72,410)(81,349)(542,275)¥12,211,646¥12,182,663$91,452,453

LIABILITIES AND NET ASSETS
Liabilities¥10,325,720¥10,334,558$77,328,840

Call money and bills sold (Notes 4 and 9)

Deposits (Notes 4 and 9)

340,053

78,0782,546,641

Payables under securities lending transactions (Notes 4 and 9)285,323

314,959

2,136,771

1,814

1,380

13,585403,303626,546

3,020,318

Trading liabilities (Notes 4 and 6)
Borrowed money (Notes 4, 9 and 13)
Foreign exchanges

99

172

741

Corporate bonds

42,40020,000317,532

Other liabilities (Notes 4 and 6)

123,477

102,982

924,715

Provision for bonuses

2,696

2,878

20,190Net defined benefit liability (Note 14)

2,589

2,652

19,389Provision for directors’ retirement benefits

282

287

2,112

Provision for loss on interest repayments

14

19

105

Provision for reimbursement of deposits

360

531

2,696

Provision for customers point services

125

83

936

Provision for directors’ stock benefits

428

489

3,205

Reserves under special laws

17

17

127

Deferred tax liabilities (Note 21)

684

1,422

5,122

Deferred tax liabilities for land revaluation (Notes 15 and 21)

8,629

8,883

64,622

Acceptances and guarantees (Note 16)

58,96750,382441,601

Total liabilities
Net Assets(Notes 22
and 23)

11,596,980

11,546,318

86,849,248

Capital stock

50,00050,000374,448

Capital surplus

58,63958,648439,145

Retained earnings

522,894

511,253

3,915,929

Treasury stock(34,847)(25,045)(260,968)

Total shareholders’ equity

596,686

594,856

4,468,554

Unrealized gains on available-for-sale securities (Note 6)(17,237)

8,172(129,087)

Deferred gains (losses) on hedges

11,253

4,749

84,273

Revaluation reserve for land (Note 15)

19,43220,001

145,525

Remeasurements of defined benefit plans

1,679

2,102

12,574

Total accumulated other comprehensive income

15,12735,024113,285

Stock options (Note 24)

43

82

322

Non-controlling interests

2,810

6,383

21,044

Total net assets
Total liabilities and net assets

614,666

636,345

4,603,205¥12,211,646¥12,182,663$91,452,453

See accompanying notes.

10

CONSOLIDATED STATEMENTS OF OPERATIONS
Years ended March 31, 2023 and 2022

Millions of yen

Millions of yen

Thousands of U.S.
dollars (Note 1)

2023

2022

2023

Interest on loans and discounts¥85,781¥67,497$642,410

Interest and dividends on securities

16,72522,547125,253

Other interest income

2,354

2,196

17,62900025,941

26,570194,271

Income (Note 26)
Interest income:

Trust fees
Fees and commissions
Trading income

1,094

1,752

8,193

Other operating income

13,011

20,10897,439Recoveries of written-off claims

9

10

67

Other income (Note 17)

14,193

15,612

106,290

Total income

159,108

156,292

1,191,552

Interest on deposits

3,593

1,594

26,908Interest on borrowings and rediscounts

6,576

747

49,247

Expenses
Interest expense:

Interest on bonds payable
Other interest expense

261

158

1,955

6,759

2,966

50,618Fees and commissions

9,156

9,561

68,569Other operating expenses

32,21747,786241,272

General and administrative expenses (Notes 18 and 24)

61,15560,562457,987

592

5,631

4,433

Other expenses (Note 19)

12,11332,79090,713

Total expenses

132,422

161,795

991,702

Income (loss) before income taxes

26,686(5,503)

199,850
56,392

Impairment losses (Note 12)

Income taxes (Note 21):
Current

7,530

941

Deferred

1,111

6,432

8,320

Net income (loss)

18,045(12,876)

135,138

Net income attributable to non-controlling interests

150

129

1,123

Net income (loss) attributable to owners of the parent¥17,895¥(13,005)$134,015

Yen

Yen

U.S. dollars (Note 1)

Amounts per share of common stock:

2023

2022

2023

Net income (loss) attributable to owners of the parent (Note 30)¥77.41¥(53.29)$0.58

Millions of yen

Thousands of U.S.
dollars (Note 1)

See accompanying notes.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Years ended March 31, 2023 and 2022

Millions of yen
2023

2022

2023

Net income (loss)¥18,045¥(12,876)$135,138

Other comprehensive income (Note 27)(19,347)(18,460)(144,888)(25,428)(11,278)(190,428)

Deferred gains (losses) on hedges

6,504

3,269

48,708Remeasurements of defined benefit plans(423)(10,451)(3,168)¥(1,302)¥(31,336)$(9,750)(1,434)(31,493)(10,739)

132

157

989

Unrealized gains (losses) on available-for-sale securities

Comprehensive income (Note 27)
Comprehensive income attributable to owners of the parent
Comprehensive income attributable to non-controlling interests
See accompanying notes.

11

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
Years ended March 31, 2023 and 2022

Millions of yen
Shareholders’ Equity

Balance at April 1, 2021

Capital Stock

Capital Surplus

Retained
Earnings

Treasury Stock

Total
Shareholders’Equity¥50,000¥58,655¥528,086¥(18,649)¥618,092

Cumulative effects of changes
in accounting policies
Restated balance

Accumulated other comprehensive income(320)
50,00058,655

527,766

Total
Unrealized gains
accumulatedon
Remeasurements
otheravailable-for- Deferred losses
Revaluation of defined benefit comprehensive
sale securities
on hedges
reserve for landplansincome¥19,477¥1,480¥23,192¥12,553¥56,702

Stock options¥117

Non-controlling
Interests
Total Net Assets¥6,228(320)(18,649)

617,772¥681,139(320)

19,477

1,480

23,192

12,55356,702

117

6,228

680,819

Changes of items during the year
Dividend paid

(6,699)(6,699)(6,699)Net loss attributable toowners of the parent(13,005)(13,005)(13,005)(6,501)(6,501)(6,501)

105

98

98

—

—

3,191

3,191

Purchase of treasury stock
Disposal of treasury stock(7)

Purchase of shares of
consolidated subsidiaries
Reversal of revaluation reserve
for land

3,191

Net changes of items otherthan shareholders’ equity
Total changes of items during theyear
Balance at March 31, 2022

(11,305)

3,269(3,191)(10,451)(21,678)

(35)

155

(21,558)—(7)(16,513)(6,396)(22,916)(11,305)

3,269(3,191)(10,451)(21,678)

(35)

155

(44,474)¥50,000¥58,648¥511,253¥(25,045)¥594,856¥8,172¥4,749¥20,001¥2,102¥35,024¥82¥6,383¥636,345

Changes of items during the year
Dividend paid

(6,823)(6,823)(6,823)

Net income attributable toowners of the parent

17,895

17,895

17,895(10,001)(10,001)(10,001)

199

209

209

(19)

(19)

569

569

Purchase of treasury stock
Disposal of treasury stock

10

Purchase of shares of
consolidated subsidiaries(19)

Reversal of revaluation reserve
for land569

Net changes of items otherthan shareholders’ equity
Total changes of items during theyear
Balance at March 31, 2023

(25,409)

6,504

(569)

(423)

(19,897)(39)(3,573)(23,509)—(9)

11,641(9,802)

1,830(25,409)

6,504

(569)

(423)

(19,897)(39)(3,573)(21,679)¥50,000¥58,639¥522,894¥(34,847)¥596,686¥(17,237)¥11,253¥19,432¥1,679¥15,127¥43¥2,810¥614,666

Thousands of U.S. dollars (Note 1)
Shareholders’ Equity

Balance at April 1, 2022

Retained
Earnings

Accumulated other comprehensive income

Treasury Stock

Total
Shareholders’EquityCapital Stock

Capital Surplus$374,448$439,212 $3,828,758 $(187,561) $4,454,857

Total
Unrealized gains
accumulatedon
Remeasurements
otheravailable-for- Deferred losses
Revaluation of defined benefit comprehensive
sale securities
on hedges
reserve for landplansincome$61,200$35,565$149,786$15,742$262,293

Stock options

Non-controlling
Interests
Total Net Assets$614$47,802 $4,765,566

Changes of items during the year
Dividend paid

(51,097)(51,097)(51,097)

Net income attributable toowners of the parent

134,015

134,015

134,015(74,897)(74,897)(74,897)

1,490

1,565

1,565

(142)

(142)

4,253

4,253

Purchase of treasury stock
Disposal of treasury stock

75

Purchase of shares of
consolidated subsidiaries(142)

Reversal of revaluation reserve
for land

4,253

Net changes of items otherthan shareholders’ equity
Total changes of items during theyear
Balance at March 31, 2022
See accompanying notes.

—$374,448(190,287)

48,708(4,261)(3,168)(149,008)(292)(26,758)(176,058)(190,287)

48,708(4,261)(3,168)(149,008)(292)(26,758)(162,361)$439,145 $3,915,929 $(260,968) $4,468,554 $(129,087)$84,273$145,525$12,574$113,285$322$21,044 $4,603,205(67)

87,171(73,407)

13,697

12

CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended March 31, 2023 and 2022

Millions of yen
2022¥26,686
5,038
592
68
(908)
(504)
(17)
(8,939)(183)(1,607)
(64)
(5)
(61)
(5)
(171)
42
—
(104,860)
17,1897,612
1,289(12,177)
(168)
(875)
434
(203,835)
22,778(31,616)(223,243)(96)
33,764
261,974(29,636)(6,731)
(73)
(106)
—
—
98,841(16,387)
21,929(144,031)(6,336)
7,019(143,348)¥(5,503)
5,401
5,631
400
—
—
5
8,005
26
26,879
(137)
(7)
54
(24)
(178)
13
0
(92,239)
5,465
34,738(245)(18,785)90(1,120)631(249,871)
323,940(956)(11,806)
3,392(23,412)(89,074)(11,456)(7,633)(22)
622(9,094)
1,241
81,234(5,614)(40,474)(69,883)(9,095)
1,846(77,132)$199,850
37,7294,433
509(6,800)(3,774)(127)(66,944)(1,370)(12,035)
(479)
(37)
(457)
(37)
(1,281)
315—(785,292)
128,728
57,006
9,653(91,193)(1,258)(6,553)
3,250(1,526,511)
170,583(236,771)(1,671,857)(719)
252,857
1,961,911(221,943)(50,408)
(547)
(794)
—
—
740,216(122,721)
164,226(1,078,642)(47,450)
52,565(1,073,527)

Cash flows from investing activities:
Purchases of securities
Proceeds from sales of securities
Proceeds from maturity of securities
Purchases of money held in trust
Proceeds from sales of money held in trust
Purchases of tangible fixed assets
Proceeds from sales of tangible fixed assets
Purchases of intangible fixed assets
Purchase of shares of subsidiaries resulting in change in scope of consolidation (Note 3)
Purchases of shares of affiliates accounted for by the equity method
Net cash provided by (used in) investing activities(820,504)
622,10730,141(4,960)21,126(2,019)1,362(2,446)(382)—(155,575)(2,107,076)
2,534,144
35,224(8,510)8,970(1,516)2,740(1,992)—(10)
461,974(6,144,717)
4,658,931
225,725(37,145)
158,212(15,120)
10,200(18,318)(2,861)—(1,165,093)

Cash flows from financing activities:
Issuance of subordinated bonds
Dividends paid
Dividends paid to non-controlling shareholders
Purchase of shares of subsidiaries not resulting in change in scope of consolidation
Purchases of treasury stock
Proceeds from disposal of treasury stock
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents
Net change in cash and cash equivalents
Cash and cash equivalents at the beginning of fiscal year
Cash and cash equivalents at the end of fiscal year (Note 3)

22,270(6,823)(2)(3,680)(10,001)
01,764
8(297,151)
2,151,826¥1,854,675—(6,699)(3)—(6,501)
0(13,203)7
371,646
1,780,180¥2,151,826

166,779(51,097)(15)(27,559)(74,897)0
13,21160(2,225,349)
16,114,925$13,889,576

Cash flows from operating activities:
Income (loss) before income taxes
Depreciation
Impairment losses
Amortization of goodwill
Gain on bargain purchase (Note 3)
Loss (gain) on step acquisitions (Note 3)
Equity in earnings of affiliates (Note 3)
Net change in allowance for loan losses
Net change in provision for bonuses
Net change in defined benefit asset
Net change in defined benefit liability
Net change in provision for directors’ retirement benefits
Net change in provision for directors’ stock benefits
Net change in provision for loss on interest repayments
Net change in provision for reimbursement of deposits
Net change in provision for customers point services
Increase (decrease) in reserves under special laws
Interest income
Interest expenses
Net gains related to securities transactions
Net losses (gains) from money held in trust
Net exchange losses (gains)
Net losses (gains) from disposition of fixed assets
Net change in trading assets
Net change in trading liabilities
Net change in loans and bills discounted
Net change in deposits
Net change in negotiable certificates of deposits
Net change in borrowed money excluding subordinated loans
Net change in deposits with bank
Net change in call loans and bills purchased
Net change in call money and bills soldNet change in payables under securities lending transactions
Net change in foreign exchanges (asset account)
Net change in foreign exchanges (liability account)
Net change in lease receivables and investment assets
Losses (gains) on cancellation of retirement benefit trusts (Note 3)
Loss (gain) on revision of retirement benefit planInterest received
Interest paid
Other, net
Subtotal
Income taxes paid
Income taxes refunds
Net cash provided by (used in) operating activities

13

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

Millions of yen
2023

See accompanying notes.

Notes to Consolidated Financial Statements
Years ended March 31, 2023 and 2022

1. BASIS OF PRESENTATION
Yamaguchi Financial Group, Inc. “YMFG”() is a holding
company for The Yamaguchi Bank, Ltd. “Yamaguchi(
Bank”), Momiji Bank, Ltd. “Momiji(
Bank”), The Kitakyushu
Bank, Ltd. “Kitakyushu(
Bank”) and other subsidiaries.
YMFG and its consolidated subsidiaries “the(Group”)
maintain their accounts and records in accordance withthe provisions set forth in the Financial Instruments andExchange Act and its related accounting regulation and in
conformity with accounting principles and practices
generally accepted in Japan “Japanese(
GAAP”). Japanese
GAAP are different in certain respects as to applicationand disclosure requirements of International Financial
Reporting Standards.
The accompanying consolidated financial statements
are a translation of the audited consolidated financial
statements of YMFG which were prepared in accordancewith Japanese GAAP and were filed with the appropriate
Local Finance Bureau of the Ministry of Finance as
required by the Financial Instruments and Exchange Act.
In preparing the accompanying consolidated financial
statements, certain restructuring and reclassifications havebeen made in the consolidated financial statements issued
domestically in order to present them in a form which ismore familiar to readers outside Japan.
The consolidated financial statements are stated inJapanese yen. The translations of the Japanese yenamounts into U.S. dollars are included solely for theconvenience of readers, using the prevailing exchange rate
at March 31, 2023, which was ¥133.53 to U.S.$1.00. Suchtranslations should not be construed as representations
that the Japanese yen amounts have been, could havebeen, or could in the future be, converted into U.S. dollars
at this or any other rate of exchange.

2. SIGNIFICANT ACCOUNTING POLICIESConsolidation and equity method(1) Scope of consolidation

Japanese accounting standards on consolidated financial
statements require a company to consolidate any
subsidiaries of which the company substantially controls
the operations, even if it is not a majority owned
subsidiary. Control is defined as the power to govern thedecision-making body of an enterprise.
(i) Consolidated subsidiaries were 23 at March 31, 2023
and 19 at March 31, 2022.
The names of the main consolidated subsidiaries arelisted on page 19 of“YMFG
Integrated Report 2023”.
The scope of consolidation includes Yamaguchi
Capital Co., Ltd. as YMFG made the company aconsolidated subsidiary through share acquisition in theyear ended March 31, 2023. It also includes UNICORN
Fund Investment Business Limited Liability Partnershipand Regional Trading Company Yamaguchi Co., LTD. asthey fall under the definition of consolidated
subsidiaries since YMFG made Yamaguchi Capital a
consolidated subsidiary.
In addition, the scope of consolidation includes

Momiji Card Co., Ltd., which was an affiliate accounted
for by the equity method, as YMFG made the company
a consolidated subsidiary through additional shareacquisition in the year ended March 31, 2023. As aresult, Momiji Card is excluded from the scope of
application of equity method.
(ii) Unconsolidated subsidiaries were 11 at March 31,
2023 and 0 at March 31, 2022.
Name of major subsidiary:
KAIKA Corporation
The unconsolidated subsidiaries are excluded fromthe scope of consolidation because their total assets,ordinary income, net income (in proportion toownership), retained earnings (in proportion toownership) and accumulated other comprehensive
income (in proportion to ownership) are so immaterial
that they do not hinder a rational judgment of YMFG’sconsolidated financial position and results ofoperations when excluded from the scope of
consolidation.
KAIKA Corporation and other 10 companies fallunder the definition of unconsolidated subsidiaries
since YMFG made Yamaguchi Capital a consolidated
subsidiary.

(2) Application of the equity method

Japanese accounting standards also require any
unconsolidated subsidiaries and affiliates with financial
and operating policies over which YMFG is able toexercise material influence to be accounted for by theequity method.
(i) No unconsolidated subsidiary was accounted for by theequity method at March 31, 2023 and 2022.
(ii) As at March 31, 2023 and 2022, two and three
affiliates were accounted for by the equity method,respectively.
Affiliates as at March 31, 2023 were as follows:
YM Saison Co., Ltd.
Nishiseto Marine Partners
Affiliates as at March 31, 2022 were as follows:
YM Saison Co., Ltd.
Momiji Card Co., Ltd.
Nishiseto Marine Partners(iii) As at March 31, 2023 and 2022, 11 and 0
unconsolidated subsidiaries were not accounted for by
the equity method.
Name of major subsidiary:
KAIKA Corporation
The unconsolidated subsidiaries that are notaccounted for by the equity method are also excluded
from the scope of application of equity method
because their net income (in proportion to ownership),retained earnings (in proportion to ownership) andaccumulated other comprehensive income (inproportion to ownership) do not have a material
impact on YMFG’s consolidated financial statements
when excluded from the scope of application of equity
method.
KAIKA Corporation and other 10 companies fallunder the definition of unconsolidated subsidiaries
that are not accounted for by the equity method since
YMFG made Yamaguchi Capital a consolidated
subsidiary.

14

(iv) There were no affiliates that were not accounted forby the equity method as at March 31, 2023 and 2022.

(3) The balance sheet dates of consolidated
subsidiaries(i) The balance sheet dates of consolidated subsidiaries
are as follows:
December 31: One company
March 31:
22 companies(ii) Consolidated subsidiaries are consolidated based on
their financial statements as of their balance sheet
dates.
Necessary adjustments are made to materialtransactions which occurred between the consolidatedbalance sheet date and the aforementioned balance
sheet dates.

(4) Accounting policies
Criteria for recording dividends payable on securities
Dividends distributed from other retained earnings (cashdividends only) are recorded in the year that includes theeffective date of the dividend-related resolution by theissuing company’s general meeting of shareholders, Boardof Directors or other institution with decision-making
authority.

Trading assets, trading liabilities and transactions for
trading purposes

The valuation method of“trading assets”and“trading
liabilities”is as follows:
Balances incurred by transactions of which the
purpose is to earn a profit by taking advantage ofshort-term fluctuations in a market or discrepancies indifferent markets of interest rates, currency exchange
rates, share prices or other indices (hereinafter referred toas“trading purposes”) are included in“trading assets”or“trading liabilities”in the consolidated balance sheets asof the date on which the transactions have been
contracted. The income or losses on these transactions
are recorded as“trading income”and“trading expenses”
in the consolidated statements of operations.
Trading assets and trading liabilities are valued, in thecase of securities and commercial paper, at the market
value as of the date of the balance sheet and, in the caseof derivatives, including swaps, futures and options, at theamount due if the transactions were to be settled as ofthe date of the balance sheet.“Trading income”and“trading expenses”include interest income and interest
expense, respectively, and gains and losses, respectively,
resulting from the valuation of securities, commercial
paper, derivatives, etc., which are included in“trading
assets”or“trading liabilities.”

Securities

With regard to the valuation of securities, held-to-maturity
debt securities are stated at amortized cost (straight-line
method) using the moving-average method.
Available-for-sale securities are stated at fair value (cost ofsale calculated primarily according to the moving-averagemethod). Shares, etc. that do not have a market price arevalued at cost using the moving-average method.
Unrealized gains (losses) on available-for-salesecurities (excluding valuation differences due to foreign

15

exchange fluctuations, which are included in foreignexchange trading gains or losses as other operating
income or other operating expenses) are reported as acomponent of net assets.

Money in trust

Trust assets within money held in trust are valued using
the market value method.

Derivatives

Derivatives other than those for which exceptional
accounting treatment is applied are stated at fair value.

Criteria for recording gains or losses on thecancellation of investment trusts

When handling the cancellation of investment trusts byconsolidated subsidiaries engaged in the banking
business, YMFG does not offset cancellation gains andlosses occurring on each transaction. Rather, cancellation
losses are recorded in“loss on redemption of government
bonds, etc.,”which is within“other operating expenses.”
Cancellation gains are recorded in“interest and dividends
on securities.”

Criteria for recording income and expenses related
to lease transactions

Criteria for recording income and cost are recognized at
the time lease fees are received. Income is recorded in“other operating income,”and cost of sale is recorded in“other operating expenses.”

Criteria for recording sales and cost of sales of
installment sales transactions

Payment dates are used as the basis for installment
agreements, with installment sales and installment costs
recoded in accordance with the elapsed period.
Installment sales are recorded in“other operating
income,”and installment costs are recorded in“otheroperating expenses.”Unrealized profit on installment
sales is recorded under“other liabilities,”and unrealized
installment profit is deferred for installment receivables
that have not come due as of the end of the year.

Method for recording revenue

YMFG recognizes revenue when control of promised
goods or services is transferred to a customer in an
amount that reflects the consideration to which YMFG
expects to be entitled in exchange for those goods orservices.

Method of hedge accounting

The subsidiaries that conduct banking business “the(Banks”) apply deferred hedge accounting in accordancewith the“Treatments of Accounting and Audit on
Application of Accounting Standard for Financial
Instruments in Banking Industry”(The Japanese Instituteof Certified Public Accountants “JICPA”() Industry Audit
Committee Report No. 24, March 17, 2022).
As for the hedge to offset market fluctuation, theBanks assess the effectiveness of the hedge by grouping
the hedged items such as deposits and loans and thehedging instruments such as interest rate swaps by theirmaturity.

Also, the Banks apply deferred hedge accounting tohedge foreign exchange risks associated with various
foreign currency denominated monetary assets andliabilities as stipulated in the“Treatment of Accounting
and Auditing Concerning Accounting for Foreign Currency
Transactions in Banking Industry”(JICPA Industry Audit
Committee Report No. 25, October 8, 2020).
The effectiveness of the currency swap transactions,exchange swap transactions and similar transactions
hedging the foreign exchange risks of monetary assets andliabilities denominated in foreign currencies is assessed
based on comparison of the foreign currency position of
the hedged monetary assets and liabilities and thehedging instruments.
The Banks apply an exceptional accounting treatment,
as permitted if certain conditions are met, for certain
interest rate swaps utilized as hedging instrument. In thattreatment, the interest swap contracts are not recorded atfair values but the net interest to be paid or received
under the contracts is added or deducted to the interest
arising from their related hedged assets or liabilities.

Allowance for loan losses

The Banks provide allowance for loan losses according to
the following write-off and provisioning standards:
For loans to borrowers who are legally bankrupt (dueto bankruptcy, composition, suspension of transactions
with banks by the rules of clearinghouses, etc.) or
substantially bankrupt, an allowance is provided in theamount of loans, net of amounts expected to be collected
through disposition of collateral or through execution ofguarantees.
For loans to borrowers in danger of bankruptcy, anallowance is provided in the amount considered
uncollectible based on the amount of loans, net ofamounts expected to be collected through disposition ofcollateral or through execution of guarantees, and othersources.
Loans to normal borrowers and borrowers requiringcaution are classified into certain groups, and expected
losses are estimated for the upcoming one or three-year
period. For loans to normal borrowers, expected loss
amounts are calculated by using average values for actual
rates of losses from bad debts during a specific period in
the past, based on actual amounts of bad debt over a
one-year period, and adjusted as necessary for futureforecasts taking into account the expected deteriorationof operating performance. For loans to borrowers
requiring caution, expected loss amounts are calculated
by using average values for actual rates of losses from bad
debts or default probabilities during a specific period in
the past, based on actual amounts of bad debt or
bankruptcy over a three-year period, and adjusted asnecessary for future forecasts taking into account the
expected deterioration of operating performance.
For loans to a large borrower requiring caution who
has formulated a management improvement plan andcarries specifically large credit risk and whose loan
amount, net of amounts expected to be collected throughdisposition of collaterals or execution of guarantees,
exceeds a certain amount, difference between amountobtained by discounting cash flows at the initial
contractual interest rate and the book value of loans isrecorded as allowance for loan losses (discounted cash
flow method; hereinafter,“DCF method”), if the cash
flows related to the collection of principal and the receipt
of interest can be reasonably estimated.
Each branch as well as the credit supervision
department evaluates all loans in accordance with theself-assessment rule.
Other consolidated subsidiaries provide an allowance
for an amount calculated using the rate of collection
losses in the past for loans of normal borrowers in
addition to amounts estimated based on collectability
analysis for borrowers in danger of bankruptcy and certain
other borrowers.

Tangible fixed assets (excluding lease assets)

Depreciation of tangible fixed assets of YMFG and its
consolidated subsidiaries that conduct banking business iscomputed by using the declining-balance method except
for buildings (excluding fixtures) acquired after April 1,
1998 and fixtures and buildings acquired after April 1,
2016, which are depreciated using the straight-line
method.
The estimated useful lives of the assets are primarily as
follows:
Buildings: 7 to 50 years
Others: 2 to 20 years
Other consolidated subsidiaries depreciate their
tangible fixed assets using mainly the declining-balancemethod over the useful lives of the respective assets
provided by the Corporation Tax Act in Japan.

Intangible fixed assets (excluding lease assets)

Amortization of intangible fixed assets is computed byusing the straight-line method. Software costs for internal
uses are amortized over the estimated useful life (fiveyears).

Lease assets

Lease assets included within tangible and intangible fixed
assets related to finance lease transactions that do nottransfer ownership are depreciated over the lease termusing the straight-line method. For lease assets with aguaranteed residual value stated in their leaseagreements, the residual value is set at the guaranteedamount. Otherwise, the residual value is assumed to be
zero.

Income taxes

Income taxes comprise corporate, enterprise andinhabitant taxes. The Group recognizes tax effects of
temporary differences between the financial statement
basis and the tax basis of assets and liabilities. The asset
and liability approach is used to recognize deferred tax
assets and liabilities for the expected future tax
consequences of temporary differences.

Foreign currency translation

Foreign currency assets and liabilities and the accounts ofoverseas branches of YMFG and consolidated subsidiaries
are translated into yen at the rates prevailing at theconsolidated balance sheet date.

Provision for bonuses

16

Provision for bonuses is provided for payment of bonuses
to employees, in the amount of estimated bonuses thatare attributable to the year.

Method of accounting for retirement benefits

When calculating retirement benefit obligations, thebenefit formula method is used for attributing expected
retirement benefits to the year-end. The following
methods are used to expense prior service costs andactuarial gains or losses:
Prior service costs: Expensed as incurred using thestraight-line method over a fixed
period (two years) within theemployee’s average remaining
service period
Actuarial gains or losses: Apportioned for each year as
incurred using thestraight-line method over a
fixed period (10 to 11 years)
and expensed in each of thefollowing years
Some consolidated subsidiaries employ the simplified
method for calculating retirement benefit obligations andperiodic benefit costs, stating retirement benefit
obligations at the amounts required as if all employees
voluntarily terminate their employment as of the year-end.

Provision for directors’ retirement benefits

The provision for directors’ retirement benefits forconsolidated subsidiaries outside the banking business isprovided for the estimated amount corresponding to
accrued retirement benefit payments to directors as of theend of the year.

Provision for directors’ stock benefits

The provision for directors’ stock benefits is determinedaccording to the directors’ stock benefit regulations for
YMFG and its subsidiaries (banks within YMFG (Yamaguchi
Bank, Momiji Bank and Kitakyushu Bank) and YM
Securities; the same shall apply hereafter) in preparation
for the payment of stock benefits to directors (excluding
directors who are members of the Audit and Supervisory
Committee, part-time directors and outside directors) and
executive officers (hereinafter, the“Subject Directors,etc.”) based on expected stock benefit obligations as ofMarch 31, 2023.

Provision for loss on interest repayment

Provision for loss on interest repayment is provided forpossible losses on reimbursements of excess interest
payments and loan losses related to consumer financeloans extended at interest rates in excess of the maximum
interest rate prescribed in the Interest Rate Restriction
Law.
In accordance with the“Audit Guidelines on Consumer
Finance Companies’ Provisions for Possible Losses on
Reimbursements of Excess Interest Payments,”issued by
the JICPA in 2012, the amount of such provision isrationally estimated and booked based on actual
historical repayment claims by debtors.

Provision for reimbursement of deposits

Provision for reimbursement of deposits is provided for in

17

order to meet depositor requests for reimbursement on
deposits already derecognized as liabilities, in an amountdeemed necessary by estimating the losses corresponding
to the expected requests for reimbursements in the future.

Provision for customer point services

Provision for customer point services is provided inconjunction with a point system to promote credit carduse. The provision is recorded for the expected cost to be
incurred when credit card members use points they havereceived as of the balance sheet date.

Reserves under special laws

Reserves under special laws consist of the financial
instruments transaction responsibility reserve posted by
YM Securities Co., Ltd., which were calculated according
to the specified formula of Article 46-5 of the Financial
Instruments and Exchange Act and Article 175 of the
Cabinet Office Order Related to the Financial Instruments
Business, to prepare for future eventual losses originatingfrom incidents relating to the purchase and sale ofsecurities or other transactions.

Amounts per share of common stock

Computations of net income per share of common stock
are based on the weighted-average number of shares
outstanding during each year.
Cash dividends per share represent the cash dividends
declared as applicable to each year.

Amortization of goodwill

Goodwill is amortized mainly over a 10-year period using
the straight-line method.

Consumption taxes

Non-deductible consumption taxes for purchase ofproperty, plant and equipment are recognized as
expenses for the year of the purchase.

Adoption of group tax sharing system

YMFG and certain of its consolidated subsidiaries adopted
the group tax sharing system as provided under the“Actfor Partial Amendment of the Income Tax Act, etc.”

Major accounting estimates
Allowance for loan losses

The items below relate to all banks within YMFG.
1. Amounts in the consolidated financial statements forthe years ended March 31, 2023 and 2022

Total loan amount before
intra-Group eliminations

Corresponding allowance forloan losses

Millions of yen
2023
2022

Thousands of
U.S. dollars
2023¥8,422,021¥8,223,908$63,072,126

68,932

78,068516,229

Of this, the following amounts were to borrowers ofmanagement improvement support initiatives:

Total loan amount before
intra-Group eliminations

Corresponding allowance forloan losses

Millions of yen
2023
2022

Thousands of
U.S. dollars
2023¥131,223¥133,405$982,723

31,782

27,693

238,014

2. Details of major accounting estimates related to items
identified separately(1) Calculation method
At YMFG banks, branches and departments conducting
self-assessments perform asset appraisals of all
obligations, including loans, based on asset
self-assessment criteria. Asset appraisals are conducted inaccordance with borrowers’ credit risk. In addition tofinancial details and other quantitative information,
judgments incorporate factors related to the borrower,such as forecasts for the future. Appraisals also take into
consideration the satisfaction of certain conditions, suchas the formulation of management improvement plans
determined to be rational and highly likely to be achieved.
Borrower categories are determined on the basis of suchconsiderations.
Information related to recording the allowance forloan losses is provided in“Allowance for loan losses”
under (4) Accounting policies in“2. SIGNIFICANTACCOUNTING POLICIES.”(2) Major assumptions
YMFG’s primary business areas in Yamaguchi Prefecture,
Hiroshima Prefecture, and the city of Kitakyushu facevarious challenges, including a declining population, a lowbirthrate and aging demographic, and a shortage ofbusiness successors. In addition, the recent impact of
COVID-19 and inflation has made it crucial for the Groupbanks' corporate customers to boost their profitability.
As one aspect of its efforts to achieve regional
revitalization and regional economic invigoration amid
these circumstances, YMFG conducts business feasibility
assessments. YMFG designates borrowers that it
determines to require management improvement support
as“borrowers of management improvement support
initiatives”and concentrates on providing such support.
The determination of borrower categories asborrowers of management improvement support initiatives
is based on YMFG’s estimates of future forecasts, namely,
the expectation that management improvement plans on
which such support is based are rational and achievable.
For sectors strongly affected by COVID-19, additional
allowance for loan losses is recorded using the expected
loss rate adjusted based on the expected deterioration ofoperating performance.
(3) Impact on consolidated financial statements for the
next year
Deterioration of the overall economic environment, adecrease in the value of collateral or other unforeseen
circumstances could require the Group to change thestandards it has set or adjust expected losses.
Furthermore, accumulations in the allowance for loan
losses could have a significant effect on operating
performance and the financial condition.

Changes in accounting policies
Application of the Implementation Guidance on
Accounting Standard for Fair Value Measurement

YMFG has applied the“Implementation Guidance on
Accounting Standard for Fair Value Measurement”(ASBJ
Guidance No. 31, June 17, 2021; hereinafter, the“ASBJ

Guidance No. 31”) from the beginning of the year ended
March 31, 2023. YMFG prospectively applies the new
accounting policies stipulated by the ASBJ Guidance No.
31 in accordance with the transitional treatment provided
in Paragraph 27-2 of the ASBJ Guidance No. 31. The
application has no impacts on the consolidated financial
statements.
Notes on investment trusts in fair value information bylevel within the fair value hierarchy in the notes on
financial instruments pertaining to the year ended March
31, 2022 are not presented in accordance with Paragraph27-3 of the ASBJ Guidance No. 31.

Standards and guidance not yet adopted

The following standards and guidance were issued but
not yet adopted:-“Accounting Standard for Current Income Taxes”(ASBJ
Statement No. 27, revised on October 28, 2022)-“Accounting Standard for Presentation of Comprehensive
Income”(ASBJ Statement No. 25, revised on October 28,
2022)-“Guidance on Accounting Standard for Tax EffectAccounting”(ASBJ Guidance No. 28, revised on October28, 2022)(1) Overview
In February 2018, the“Partial Amendments to AccountingStandard for Tax Effect Accounting”(ASBJ Statement No.
28), etc. (hereinafter, the“ASBJ Statement No. 28, etc.”)
were published, and the transfer of the practical guidelineon tax effect accounting of the JICPA to the ASBJ wascompleted. In the process of the deliberation, it was
decided that the following two issues would be
reexamined after the publication of the ASBJ Statement
No. 28, etc. On this occasion, they were deliberated andpublished.
・ Classification of income tax expense (taxation on othercomprehensive income)・ Tax effects relating to the sale of shares in subsidiaries,
etc. (shares in subsidiaries or affiliates) in the case of
applying the group taxation regime(2) Effective date
To be effective from the beginning of the year ending
March 31, 2025.
(3) Effects of the application of the standards
The impact of applying the“Accounting Standard for
Current Income Taxes,”etc. on the consolidated financial
statements is currently being measured.

Additional information(Board Benefit Trust (BBT))YMFG has introduced a Board Benefit Trust “BBT”() toraise awareness among Subject Directors, etc. of YMFG
and its subsidiaries (banks within the Group (Yamaguchi
Bank, Momiji Bank and Kitakyushu Bank) and YM
Securities; the following shall apply hereinafter) towardraising operating performance at YMFG over the medium
to long term and contributing to increases in corporate
value.
(1) Overview of transactions
Via the trust, YMFG acquires YMFG’s common sharesusing funds provided by YMFG. YMFG’s share and cash18equivalent to fair value of YMFG’s stock measured at thetime of retirement are granted to be distributed via thetrust to Subject Directors, etc. according to Subject
Directors, etc.’ positions, and the level of achievement ofoperating performance in accordance with directors’ stock
benefit regulations established by YMFG and its
subsidiaries.
(2) Company shares residing in the trust
YMFG’s shares residing in the trust are recorded astreasury stock in the net assets section based on the bookvalue of the trust (excluding ancillary expenses).
The book value and the number of shares of thistreasury stock amounted to ¥573 million ($4 million) and
654 thousand shares on March 31, 2023 and ¥743 million
and 849 thousand shares on March 31, 2022.
(Application of the Practical Solution on the Accounting
and Disclosure Under the Group Tax Sharing System)YMFG and certain consolidated subsidiaries have
implemented the transition from the consolidated taxation
system to the group tax sharing system from the beginningof the year ended March 31, 2023. In line with thetransfer, the accounting and disclosure of corporate taxes,
local corporate taxes and tax effect accounting areconducted in accordance with the“Practical Solution on
the Accounting and Disclosure Under the Group Tax
Sharing System”(PITF No. 42, August 12, 2021;
hereinafter, the“PITF No. 42”). Moreover, based on
Paragraph 32-(1) of the PITF No. 42, the changes inaccounting policies in line with the application of the PITF
No. 42 are deemed to have no impacts.

3. CONSOLIDATED STATEMENTS OF
CASH FLOWS AND CASH
EQUIVALENTS
In preparing the consolidated statements of cash flows,
the Group considers cash and due from THE BANK OF
JAPAN as cash and cash equivalents.
The reconciliation of cash and due from banks in the
consolidated balance sheets and cash and cash
equivalents in the consolidated statements of cash flows
at March 31, 2023 and 2022 was as follows:

Cash and due from banks
Time deposits in other banks
Other
Cash and cash equivalents

Thousands ofMillions of yen
U.S. dollars
2023
2022
2023
¥1,878,858 ¥2,175,914 $14,070,681(11,228)(12,421)(84,086)(12,955)(11,667)(97,019)¥1,854,675 ¥2,151,826 $13,889,576

As a result of the acquisition of shares of Momiji Card
Co., Ltd. which was an affiliate accounted for by the equity
method, during the year ended March 31, 2023, Momiji
Card was included in the scope of consolidation. The
breakdown of the assets and liabilities at the initialconsolidation, the acquisition price of shares of Momiji
Card and the purchase of shares of Momiji Card were as
follows:

19

Millions ofyen

Thousands of
U.S. dollars¥3,071
2,497$22,999
18,700AssetsCurrent assets

Non-current assets
Liabilities

Current liabilities
Non-current liabilities

Unrealized gains at obtaining of control

2023

574

(2,698)(2,695)
(3)
831

2023

4,299

(20,205)(20,183)
(22)
6,223

Gain on bargain purchase(885)(6,628)Gain on step acquisitions(481)(3,602)Acquisition price of the shares
Equity method valuation until obtaining of control
Cash and cash equivalents of newly consolidated
subsidiary
Difference: Purchase of the shares

319
355

2,389
2,659

0

0

¥193

$1,446

The amounts of assets and liabilities of othercompanies which became newly consolidated subsidiaries
through the acquisition of shares are omitted as they are
immaterial.
Significant transactions not requiring use of cash or
cash equivalents were acquisition of securities due topartial cancellation of retirement benefit trusts of ¥25,026
million for the year ended March 31, 2022, and none forthe year ended March 31, 2023.

4. FINANCIAL INSTRUMENTS
Items pertaining to the status of financial instruments(1) Policies on financial instruments

YMFG provides community-based integrated financial
services centered on the banking, securities and credit
card businesses. Accordingly, the Group is subject to avariety of risks, including credit risk, market risk andliquidity risk. Due to changes in economic, social andfinancial conditions, these risks have grown more diverseand complex. Under these conditions, the Groupconsiders strengthening its risk management structure asa priority issue. To maintain and enhance the soundnessof its operations, YMFG has created groupwide risk
management regulations, which clarify the Group’s
fundamental stance on risk management.

(2) Content and risks of financial instruments

Of financial assets held by the Group, principally loans
and bills discounted extended to business partners are
subject to the credit risk from breach of contract. The
Group holds securities, principally debt securities, equity
securities and investment trusts, for trading purposes, forholding to maturity, for purely investment purposes or topromote positive business relations. These securities are
subject to issuer credit risk, interest rate fluctuation risk
and market price fluctuation risk.
The Group’s financial liabilities center on deposits andnegotiable certificates of deposit, and call money that itraises in the market. However, the Group is subject to theliquidity risk of becoming unable to secure necessary
funding. The Group is also subject to interest rate risk
arising from fluctuations in financial and economic
conditions.
The Group employs derivative transactions to hedge
underlying market risks on its assets and liabilities. The

Group also provides derivatives as financial products tomeet customers’ needs. Interest-related andsecurities-related derivative transactions are employed tolimit the impact on income of future interest rate
fluctuations and price fluctuations for loans and bills
discounted, deposits, securities and other instruments
bearing long-term interest at fixed rates. Currency-related
derivative transactions are used primarily to avoid
fluctuations in income stemming from future exchange
rate fluctuations, stabilize funding denominated in foreign
currencies, as well as offered as products to clients. With
regard to transactions to secure income through changes
in market rates, which are conducted on a limited basis,the Group has established stringent standards that include
risk limits and loss limits.
As market risk factors, interest-rate-related andsecurities-related derivative transactions are subject to therisk of fluctuations in interest rates and prices, andcurrency-related derivative transactions are subject toexchange rate fluctuations. For transactions that are notconducted on exchanges, the Group is subject to credit
risk, the risk of loss in the event a counterparty becomesunable to fulfill its contractual obligations due todeteriorating financial conditions.
With regard to use of hedge accounting, the Groupapplies deferred hedge accounting after it ensured inadvance that the established conditions are satisfied. As
for hedging methods, the Group employs the portfolio
hedge where certain group of assets with similar risk is
identified and such risk is hedged comprehensively. In
addition, for certain interest swap contracts, exceptional
accounting treatment is applied.

(3) Risk management structure related to financial
instruments(i) Management of credit risk
Through the appropriate operation of a credit rating
system, the Group endeavors to determine the financial
conditions of business partners and accurately evaluate
their credit risk. The Group has enhanced the precision of
its credit evaluations, reviewing business partner credit
ratings swiftly and appropriately for each financial period
and each time their credit conditions change.
The Group conducts self-assessments according tostringent standards that are consistent throughout theGroup. The Group performs write-off and provisions basedon the results of its self-assessments. The Group’s
authentication departments verify the content of suchself-assessments. Independence is maintained throughinternal audits conducted by audit & inspection
departments. In addition, the Group undergoes external
audits conducted by its independent external auditors.
With regard to the screening of individual transactions,
the Group employs a screening system suited to eachsubsidiary bank’s size of the business and characteristics
to conduct detailed screenings that take individual sector
and regional characteristics into consideration. In terms of
portfolio management, the Group strives to enhance its
risk management by first measuring credit risk, and thenmanaging risk by category, sector and geographic area.
Risk administration departments periodically obtain
credit information and fair value as a part of managing
credit risks on securities issuers and counterparty risks onderivative transactions.
(ii) Management of market risk
Qualitative information on the management of market risk
The Group has formulated a market risk management
process that identifies and quantitatively measures market
risks. An asset-liability management (ALM) system is
employed to control market risk within allowable limits,and the Group ALM Committee is periodically held torespond to such risks.
YMFG periodically evaluates market risk conditionsand verifies the appropriateness of risk controls.
Quantitative information on the management of market
risk
The market risk (estimated loss amount) of the loans,securities, deposits and derivatives transactions of
Yamaguchi Bank, Momiji Bank and Kitakyushu Bank of theGroup is calculated according to value at risk (VaR).
Furthermore, the covariance method is used to calculate
VaR.
As of March 31, 2023, the market risk (estimated loss
amount) of Yamaguchi Bank was ¥55,089 million ($413
million), the market risk (estimated loss amount) of Momiji
Bank was ¥25,994 million ($195 million) and the market
risk (estimated loss amount) of Kitakyushu Bank was¥25,057 million ($188 million). Also, as of March 31, 2022,
the market risk (estimated loss amount) of Yamaguchi
Bank was ¥50,361 million, the market risk (estimated loss
amount) of Momiji Bank was ¥20,507 million and themarket risk (estimated loss amount) of Kitakyushu Bankwas ¥21,609 million.
Assumptions used in calculating VaR include a holding
period of three months (however, one year for a holding
period for shares held for the purpose of strategic
investment), a confidence interval of 99.9% and an
observation period of five years.
Yamaguchi Bank, Momiji Bank and Kitakyushu Bank
conduct back-testing to compare the VaR calculated by
the model with the actual losses. Increasing price volatility
in financial markets has led to cases in which the banks
were unable to cover risks. As a result, VaR was corrected,using a multiple obtained from the number of conflicts
resulting from back-testing from the year ended March 31,
2021.
However, as the practice of measuring market risk
amount with a set risk probability calculated on the basisof historical market fluctuations remains unchanged evenafter revising the measurement method to appropriately
capture the market risk amount, in some cases it is notpossible to capture market risk in the event of suddenchanges in the market environment outside the normally
expected scope.
(iii) Management of liquidity risk related to fundraising
The majority of funds is raised through deposits, whichconstitute a stable base for procuring funds. The Groupmanages funds on the basis of elaborate forecasts,
confirming cash flows primarily through the managementof financial balances using short-term financial markets.
For cash flow management, the Group strives tomanage the liquidity risk by ensuring stability, preparing
for unexpected events, and maintaining highly liquid
assets.

20

(4) Supplementary explanation of items pertaining to
the fair value of financial instruments
As assumptions are used in the calculation of the fairvalues of financial instruments, different assumptions canyield different values.

Items pertaining to the fair value of financial
instruments

The table below indicates the consolidated balance sheet
amounts of financial instruments, as well as their fairvalues and the differences between the two. Line items
whose fair value is approximately the same as their bookvalue due to their short settlement period, including cash
and due from banks, call loans and bills purchased, callmoney and bills sold and payables under securities
lending transactions, as well as line items with little
significance to balance sheet amounts, have been omitted.
Shares and investments in partnerships, etc. that do nothave a market price are not included in the table below.
(Refer to (Note 1).)(i) Money held in trust(ii) Securities
Held-to-maturity debt securities
Available-for-sale securities (*1)(iii) Loans and bills discounted
Allowance for loan losses (*2)
Total assets(i) Deposits(ii) Borrowed money
Total liabilities
Derivative transactions (*3)
Hedge accounting not applied
Hedge accounting applied
Total derivative transactions(i) Money held in trust(ii) Securities
Held-to-maturity debt securities
Available-for-sale securities (*1)(iii) Loans and bills discounted
Allowance for loan losses (*2)
Total assets(i) Deposits(ii) Borrowed money
Total liabilities
Derivative transactions (*3)
Hedge accounting not applied
Hedge accounting applied
Total derivative transactions

Consolidatedbalance sheet
amount¥17,405

Millions of yen
2023
Fair value¥17,405

Difference¥—

50,91951,2131,450,773
1,450,773
8,347,833(69,160)
8,278,673
8,268,683¥9,797,770¥9,788,074¥10,325,720 ¥10,325,867
403,303403,253¥10,729,023 ¥10,729,120294—¥(864)¥(9,251)¥(10,115)

Consolidatedbalance sheet
amount¥35,060¥(864)¥(9,251)¥(10,115)(9,990)¥(9,696)
¥147
(50)
¥97
¥—
¥—
¥—

Millions of yen
2022
Fair value¥35,060

Difference¥—

38,61338,892
1,286,606
1,286,606
8,143,997(78,208)
8,065,789
8,133,259¥9,426,068¥9,493,817¥10,334,558 ¥10,334,732
626,546626,540¥10,961,104 ¥10,961,272

279—¥(6,828)¥(19,892)¥(26,720)¥(6,828)¥(19,892)¥(26,720)

67,470¥67,749
¥174
(6)
¥168
¥—
¥—
¥—

(i) Money held in trust(ii) Securities
Held-to-maturity debt securities
Available-for-sale securities (*1)(iii) Loans and bills discounted
Allowance for loan losses (*2)
Total assets(i) Deposits(ii) Borrowed money
Total liabilities
Derivative transactions (*3)
Hedge accounting not applied
Hedge accounting applied
Total derivative transactions

Thousands of U.S. dollars
2023
Consolidatedbalance sheet
amountFair value
Difference$130,345$130,345$—
381,330
383,532
10,864,772
10,864,772
62,516,536(517,936)
61,998,600
61,923,785$73,375,047 $73,302,434$77,328,847 $77,329,948
3,020,318
3,019,943$80,349,165 $80,349,891$(6,470)$(69,280)$(75,750)

2,202—(74,815)$(72,613)$1,101(375)$726$(6,470)$(69,280)$(75,750)(*1) Available-for-sale securities for the year ended March 31, 2023
include investment trusts to which the treatment of deeming net
asset value as fair value as provided in Paragraph 24-3 andParagraph 24-9 of the“Implementation Guidance on AccountingStandard for Fair Value Measurement”(ASBJ Guidance No. 31,
June 17, 2021) is applied. There are no investment trusts to which
the treatment provided in Paragraph 24-3 is applied. The
consolidated balance sheet amount of investment trusts to which
the treatment provided in Paragraph 24-9 is applied is ¥3,004
million ($22 million). Available-for-sale securities for the year ended
March 31, 2022 include investment trusts and others to which thetransitional treatment provided in Article 5-6 of the Supplementary
Provisions of the“Cabinet Office Ordinance Partially Amending theOrdinance, etc. on Terminology, Forms, and Preparation Methodsof Financial Statements, etc.”(Cabinet Office Ordinance No. 9,
March 6, 2020) is applied. The consolidated balance sheet amountof the investment trusts and others is ¥302,588 million.
(*2) The general allowance for loan losses and specific allowance forloan losses are deducted.
(*3) The amount collectively represents derivative transactions that arerecorded as trading assets and liabilities, and other assets andliabilities. This indicates the net amount of rights and obligations
under derivative transactions. Parentheses, ( ), indicate that the net
amount is negative.

(Note 1) Consolidated balance sheet amounts of sharesand investments in partnerships, etc. that do nothave a market price
Shares and investments in partnerships, etc. that do nothave a market price are not included in“available-for-salesecurities.”

Category(1) Unlisted equity securities (*1, *2)(2) Investments in partnerships, etc. (*3)
Total

Thousands of
U.S. dollars
Millions of yen
2023
2022
2023
Consolidated balance sheet amount¥9,575¥7,130$71,707
22,872
21,685
171,287¥32,447¥28,815$242,994(*1) Unlisted equity securities are not included in the scope of fair value
disclosures based on Paragraph 5 of the“Implementation
Guidance on Disclosures about Fair Value of Financial Instruments”(ASBJ Guidance No. 19, March 31, 2020).
(*2) During the years ended March 31, 2023 and 2022, impairment
losses of ¥11 million ($82 thousand) and ¥5 million were recordedon unlisted equity securities.
(*3) Investments in partnerships, etc. are not included in the scope offair value disclosure based on Paragraph 24-16 of the“Implementation Guidance on Accounting Standard for Fair Value
Measurement”(ASBJ Guidance No. 31, June 17, 2021).

(Note 2) Expected maturity amount of monetary claims
and securities with maturities after the
consolidated balance sheet date

21

$—
$—
$—

interest-bearing liabilities to be repaid after the
consolidated balance sheet dateMillions of yen
2023
More than More than More than
one year three years five years
Within one and within and within and within More thanyear
three years five years seven years seven years¥1,776,910
¥—
¥—
¥—
¥—

(1) Due from banks(2) Call loans and bills
935
—
—
—
—
purchased(3) Money held in trust
17,405————(4) Securities
53,589108,586
190,953
203,767
694,922
Held-to-maturity debt
4,807
20,111
12,836
4,582
8,570
securities
Local government
600
2,530
1,840
1,600
2,470
bond
Corporate bond
4,207
17,581
10,996
2,982
100
Available-for-sale
48,782
88,475
178,117
199,185
686,352
securities withmaturities
Japanese———
33,400351,900
government bondLocal government
12,261
28,187
46,82893,642
100,710bond
Corporate bond
12,74941,141
70,212
14,885
21,667
Others23,772
19,147
61,07757,258212,075(5) Loans and bills
1,734,652 1,278,661 1,185,882
922,697 3,225,941
discounted (*)
Total¥3,583,491 ¥1,387,247 ¥1,376,835 ¥1,126,464 ¥3,920,863(1) Due from banks(2) Call loans and bills
purchased(3) Money held in trust(4) Securities
Held-to-maturity debt
securities
Local government
bond
Corporate bond
Available-for-salesecurities withmaturities
Japanesegovernment bondLocal government
bond
Corporate bond
Others(5) Loans and bills
discounted (*)Total(1) Due from banks(2) Call loans and bills
purchased(3) Money held in trust(4) Securities
Held-to-maturity debt
securities
Local government
bond
Corporate bond
Available-for-salesecurities withmaturities
Japanesegovernment bondLocal government
bond
Corporate bond
Others(5) Loans and bills
discounted (*)
Total

Millions of yen
2022
More than More than More than
one year three years five years
Within one and within and within and within More thanyear
three years five years seven years seven years¥2,067,610
¥—
¥—
¥—
¥—
31,713————35,06033,211—
93,082—
135,791—
118,109—670,183

2,790

10,067

14,641

7,897

3,220

100

1,700

2,200

1,100

3,020

2,690

8,367

12,4416,797

200

30,421

83,015

121,150

110,212

666,963

—

—

8,200

18,500347,050

15,127

22,827

27,67250,496

127,976

8,152
7,142

32,152
28,03653,19032,08813,22427,992

24,531
167,406

1,682,917

1,228,819

1,135,369

868,266

3,228,626¥3,850,511 ¥1,321,901 ¥1,271,160¥986,375 ¥3,898,809

Thousands of U.S. dollars
2023
More than More than More than
one year three years five years
Within one and within and within and within More thanyear
three years five years seven years seven years$13,307,197
$—
$—
$—
$—
7,002

—

—

—

—

130,345
401,325—
813,196—
1,430,046—
1,525,995—
5,204,239

35,999150,603

96,12934,30764,180

4,493

18,947

13,78011,982

18,49831,506

131,656

82,34922,325749

365,326

662,593

1,333,917

1,491,688

5,140,059———

250,1312,635,363

91,822211,091

350,693

701,281754,21395,477
178,027

308,111
143,391

525,814457,410

111,473
428,803

162,263
1,588,220

12,990,729

9,575,833

8,881,016

6,910,035

24,158,923$26,836,598 $10,389,029 $10,311,062

Millions of yen(i) Deposits (*)(ii) Call money and bills sold(iii) Payables under securities
lending transactions(iv) Borrowed money
Total

2023
More than More than
one year
two years
Within one and within and within Three years
year
two years three years
or more¥9,772,673¥389,582¥131,171¥32,294
340,053——

285,323————

219,216¥10,617,265

32,709¥422,291

2,359¥133,530

149,019¥181,313

Millions of yen(i) Deposits (*)(ii) Call money and bills sold(iii) Payables under securities
lending transactions(iv) Borrowed money

Within one
year¥9,673,732

2022
More than More than
one year
two years
and within and within Three years
two years three years
or more¥480,751¥146,911

314,959———

611,586

3,984

2,461

8,515

78,078——¥10,678,355(i) Deposits (*)

Thousands of U.S. dollars
2023
More than More than
one year
two years
Within one and within and within Three years
year
two years three years
or more$73,187,111 $2,917,554$982,334$241,841

Total¥149,372¥33,164

Total(ii) Call money and bills sold(iii) Payables under securities
lending transactions(iv) Borrowed money¥484,735—¥41,679

2,546,641——

2,136,771———

1,641,698

244,958

17,666

1,115,996$79,512,221$3,162,512$1,000,000—$1,357,837(*) Within deposits, demand deposits are included in“within one year.”

Fair value information by level within the fair value
hierarchy

The fair value of financial instruments is classified into thefollowing three levels according to the observability andmateriality of inputs used to measure fair value:
Level 1 fair value: Fair value measured using observable
inputs, i.e. (unadjusted) quoted prices
in active markets for identical assets
or liabilities.
Level 2 fair value: Fair value measured using observable
inputs other than Level 1 inputs.
Level 3 fair value: Fair value measured using
unobservable inputs.
If multiple inputs are used that are significant to thefair value measurement, the fair value measurement iscategorized in its entirety in the level of the lowest level
input that is significant to the entire measurement.

$8,436,030 $29,363,162(*) Loans and bills discounted for which no period is specified areincluded in“within one year.”(Note 3) Estimated repayment amounts of deposits,
negotiable certificates of deposit and other22

(1) Financial instruments measured at fair value

Category
Money held in trust
Securities (*1)
Available-for-sale securities
Japanese government bondand local government bondCorporate bondEquity securities
Foreign bondInvestment trusts
Derivative transactions (*2)
Interest-rate-related
Currency-related
Total assets

Category
Money held in trust
Securities (*1)
Available-for-sale securities
Japanese government bondand local government bondCorporate bondEquity securities
Foreign bond
Derivative transactions (*2)
Interest-rate-related
Currency-related
Total assets

Category
Money held in trust
Securities (*1)
Available-for-sale securities
Japanese government bondand local government bondCorporate bondEquity securities
Foreign bondInvestment trusts
Derivative transactions (*2)
Interest-rate-related
Currency-related
Total assets

Level 1
¥5,640Millions of yen
2023
Fair value
Level 2
Level 3
¥11,765¥—(2) Financial instruments other than those measured
at fair value
Total¥17,405

373,964

278,101—

652,065—
99,52374,22965,242

145,549
107
109,942286,723

14,389———159,938
99,630184,171
351,965——¥618,598

14,526(24,642)¥822,071——¥14,389

14,526(24,642)¥1,455,058

Level 1
¥5,849Millions of yen
2022
Fair value
Level 2
Level 3¥29,211¥—

Total¥35,060

373,861

242,762—

616,623—
111,699
95,200117,351
136
29,123

13,886——131,237
111,835
124,323——¥586,609

6,496(33,216)¥391,863——¥13,886

6,496(33,216)¥992,358

Thousands of U.S. dollars
2023
Fair value
Level 1
Level 2
Level 3
Total
$42,238$88,107$—$130,345

2,800,599

2,082,686—

4,883,285—
745,323555,898
488,594

1,090,010
801
823,351
2,147,255

107,759———

1,197,769
746,124
1,379,249
2,635,849——$4,632,652

108,785(184,543)$6,156,452—
108,785—(184,543)$107,759 $10,896,863(*1) Securities for the year ended March 31, 2023 do not include
investment trusts to which the treatment of deeming net asset
value as fair value as provided in Paragraph 24-3 and Paragraph24-9 of the“Implementation Guidance on Accounting Standard for
Fair Value Measurement”(ASBJ Guidance No. 31, June 17, 2021)
is applied. The above table for the year ended March 31, 2022
does not include investment trusts and others to which thetransitional treatment provided in Article 5-6 of the Supplementary
Provisions of the“Cabinet Office Ordinance Partially Amending theOrdinance, etc. on Terminology, Forms, and Preparation Methodsof Financial Statements, etc.”(Cabinet Office Ordinance No. 9,
March 6, 2020) is applied.
(*2) The amount collectively represents derivative transactions that arerecorded as trading assets and liabilities, and other assets andliabilities. This indicates the net amount of receivables andpayables under derivative transactions. Parentheses, ( ), indicatethat the net amount is payable.

23

Category
Securities
Held-to-maturity debt securities
Japanese government bondand local government bondCorporate bond
Loans and bills discounted
Total assets
Deposits
Borrowed money
Total liabilities

Category
Securities
Held-to-maturity debt securities
Local government bondCorporate bond
Loans and bills discounted
Total assets
Deposits
Borrowed money
Total liabilities

Category
Securities
Held-to-maturity debt securities
Japanese government bondand local government bondCorporate bond
Loans and bills discounted
Total assets
Deposits
Borrowed money
Total liabilities

Level 1

¥6,226

Millions of yen
2023
Fair value
Level 2
Level 3

¥8,972—
3,497——¥6,226¥12,469— 10,325,867—
403,253¥— ¥10,729,120

Level 1¥—

¥15,198

32,51736,014
8,268,683
8,268,683¥8,301,200 ¥8,319,895— 10,325,867—
403,253¥— ¥10,729,120

Millions of yen
2022
Fair value
Level 2
Level 3¥—
¥8,104
—
3,418
—
—
¥—
¥11,522— 10,334,732—
626,540¥— ¥10,961,272

Total

Total

¥—
¥8,10427,37030,7888,133,259
8,133,259¥8,160,629 ¥8,172,151— 10,334,732—
626,540¥— ¥10,961,272

Thousands of U.S. dollars
2023
Fair value
Level 1
Level 2
Level 3
Total

$46,626$67,191$—$113,817—
26,189243,518
269,707—— 61,923,785 61,923,785$46,626$93,380 $62,167,303 $62,307,309— 77,329,940— 77,329,940—
3,019,943—
3,019,943$— $80,349,883$— $80,349,883(Note 1) Description of the valuation technique(s) andinputs used in the fair value measurements(1) Assets
Money held in trust
As for the securities held as trusted assets in money heldin trust established independently for the purpose ofinvesting mainly in the securities, the value on stock
exchanges is taken as fair value for the equity securities,
and either the value on exchanges or a price indicated bybrokers or information vendors is taken as fair value forthe debt securities. The fair value is classified as Level 1 orLevel 2.
Additional information related to money held in trustby the purpose of holding is described in the note entitled“Money held in trust.”
Securities
The fair value of securities for which unadjusted quoted
prices in active markets are available is classified as Level
1. These securities mainly include equity securities,
Japanese government bonds and government bonds(foreign bonds) of major countries (G7). The fair value of
securities for which quoted prices are used but themarkets are not active is classified as Level 2. These
securities mainly include local government bonds andcorporate bonds (excluding private placement bonds
guaranteed by Yamaguchi Bank, Momiji Bank andKitakyusyu Bank).

The fair value of investment trusts that do not have atransaction price in the market is their net asset value if
there are no material restrictions which allow market
participants to require consideration for risk in relation tocancellation or repurchasing claims. The fair value isclassified as Level 2.
Since private placement bonds guaranteed by
Yamaguchi Bank and Momiji Bank do not have a quoted
price, their fair value is determined by discounting thetotal amount of interest, principal and guarantee
commission to their present value, using the interest rate
obtained by adding the credit cost for each internal rating
category. The fair value is classified as Level 3 because thediscount rate is unobservable.
Loans and bills discounted
For loans and bills discounted with floating interest rates,
as in the short term their values reflect market interest
rates, unless the credit status of the obligor has changed
significantly since the loans were extended, their fair value
is similar to their book value, so their book value is taken
as their fair value. For loans and bills discounted bearing
fixed interest rates, fair value is determined for each type
and period by discounting the total amount of interest
and principal to their present value, using as the discountrate the market interest rate as of the valuation date for
operating loans and bills discounted plus the credit costfor each internal rating category. For consumer loans andbills discounted and housing loans, fair value isdetermined by discounting the total amount of interest
and principal to their present value using the assumed
interest rate on new loans of the same type. These fairvalues are classified as Level 3, because they are
determined using a discount rate reflecting risk factors,
such as credit risk, and the discount rate is unobservable.
With regard to loans to legally bankrupt obligors,
substantially bankrupt obligors or obligors who are indanger of bankruptcy, the estimated collectible amount isbased on either the present value of estimated future cash
flows or the expected amounts recoverable from thedisposal of collateral and/or under guarantees, etc. As thefair value is essentially equivalent to the amount after
deducting the allowance for possible loan losses from thebook value as of the consolidated balance sheet date, it isclassified as Level 3.
For loans that have no specific repayment period, as
the fair value is assumed to be equivalent to the bookvalue according to the expected payment dates andinterest rates, book value is taken as the fair value. The
fair value is classified as Level 3.

fair value.
The fair value of deposits is classified as Level 2.
Borrowed money
Short-term market interest rates are used for borrowings
having a short contract period (within one year) or
variable interest rates. In addition, the market value isassumed to be similar to the book value, as the credit
standing of YMFG and its consolidated subsidiaries isunchanged before and after taking out these borrowings.
The current values of borrowings having a long contract
period (more than one year) and borrowings with fixedinterest rates are calculated by applying an assumed
discount rate to the total principal amount borrowed,
separating principal amounts according to their borrowing
periods.
The fair value of borrowed money is classified as Level
2.
Derivative transactions
The fair value of derivative transactions for which
unadjusted quoted prices in active markets are available
is classified as Level 1. These derivative transactions
mainly include bond futures transactions and stock futurestransactions.
However, most of the derivative transactions areover-the-counter transactions and do not have a quoted
price. Accordingly, the fair value of these derivativetransactions is determined using valuation techniques,
such as a present value technique and the Black-Scholesmodel, in accordance with the type of transactions andthe period to maturity. The main inputs used in thesevaluation techniques include interest rates, exchange rates
and volatility. Moreover, price adjustments are madebased on the credit risk of counterparties as well as thatof YMFG and its consolidated subsidiaries. The calculationof credit risk-related price adjustments takes into accountprobability of default and loss given default which areobserved from credit default swaps, or those which are
estimated from the country, sector and external ratings,
etc. of counterparties. The fair value of over-the-countertransactions which use observable inputs or which use
unobservable inputs whose effect is immaterial isclassified as Level 2. These transactions include plain
vanilla interest rate swap transactions and foreignexchange forward contract transactions.
(Note 2) Information about Level 3 fair value of financial
instruments measured at fair value(2) Liabilities
Deposits
The fair value of demand deposits is determined as thepayment amount if payment were required on the
consolidated balance sheet date (book value). The fairvalue of time deposits is determined by discounting future
cash flows to their present value by certain time periods.
The discount rate employed is the interest rate required
for newly accepted deposits. For deposits having a shortperiod (within one year) and time deposits with variableinterest rates, as their fair values and book values areapproximately the same, their book value is taken as their24

(1) Quantitative information on significant
unobservable inputs
Category
Securities
Corporate bondPrivate placementbondCategory
Securities
Corporate bondPrivate placementbond

Valuationtechniques
Present value
technique

Valuationtechniques
Present value
technique2023
Significant
unobservable inputs Scope of inputs
Credit cost
rate

0.024%7.309%

2022
Significant
unobservable inputs Scope of inputs
Credit cost
rate

0.016%0.326%

Weighted averageof inputs

0.128%

Weighted averageof inputs

0.044%(2) Reconciliation from the beginning balances to theending balances and gains or losses on valuationof financial assets and liabilities held at the endof the year included in profit (loss) for the year
Profit (loss) or othercomprehensive income for theyear

BeginningbalanceSecurities
Available-forsale securities
Corporate¥13,886bond

Gains or losses
on valuation offinancial assets
and liabilities
held at thePurchases,
end of the year
Recorded insales,
included in
Recorded inotherissuances andprofit (loss) for
profit (loss) comprehensive settlements, Transfer into Transfer out of(*1)
income (*2)
net
Level 3 (*3)
Level 3 (*4) Ending balance the year (*1)

¥—

¥(83)

Profit (loss) or othercomprehensive income for theyear

Securities
Available-forsale securities
Corporatebond

Beginningbalance¥12,331

Millions of yen
2023

¥586

¥—

¥—

¥14,389¥—

Millions of yen
2022

Gains or losses
on valuation offinancial assets
and liabilities
held at thePurchases,
end of the year
Recorded insales,
included in
Recorded inotherissuances andprofit (loss) for
profit (loss) comprehensive settlements, Transfer into Transfer out of(*1)
income (*2)
net
Level 3 (*3)
Level 3 (*4) Ending balance the year (*1)

¥—

¥(33)

¥1,588¥—¥—¥13,886¥—

Thousands of U.S. dollars
2023

Profit (loss) or othercomprehensive income for theyear

BeginningbalanceSecurities
Available-forsale securities
Corporate$103,992
bond

Gains or losses
on valuation offinancial assets
and liabilities
held at thePurchases,
end of the year
Recorded insales,
included in
Recorded inotherissuances andprofit (loss) for
profit (loss) comprehensive settlements, Transfer into Transfer out of(*1)
income (*2)
net
Level 3 (*3)
Level 3 (*4) Ending balance the year (*1)$—$(622)$4,389$—$— $107,759$—(*1) There were no gains or losses on valuation of financial assets andliabilities held at the end of the year included in profit (loss) for theyear.
(*2) Included in“unrealized gains (losses) on available-for-salesecurities”under“other comprehensive income”in the
consolidated statements of comprehensive income.
(*3) There was no transfer out of Level 2 fair value into Level 3 fairvalue.
(*4) There was no transfer out of Level 3 fair value into Level 2 fairvalue.

(3) Description of valuation processes used for fairvalue measurements
The risk administration divisions of the Group haveestablished policies and procedures for measuring fairvalue, and each trading division measures fair value

25

accordingly. Independent authentication departments
verify whether the fair value obtained is measured using
valid valuation techniques and inputs as well as whether
they are classified into an appropriate level of the fairvalue hierarchy to ensure that the policies and procedures
for measuring fair value are appropriate.
In measuring fair value, YMFG uses a valuation modelthat most appropriately reflects the nature, characteristics
and risks of each asset. In addition, when using quoted
prices obtained from third parties, YMFG verifies whether
the prices are valid using appropriate methods, such asconfirming the valuation techniques and inputs used andcomparing them with similar financial instruments.

(4) Narrative description of sensitivity of the fairvalue measurement to changes in significant
unobservable inputs

Discount rate
The discount rate is determined by adding brand-specificrisk premiums according to credit risk to the base market
interest rate, such as TIBOR and OIS. Generally, asignificant increase (decrease) in the discount rate will
result in a significantly lower (higher) fair value
measurement.

5. SECURITIESSecurities held at March 31, 2023 include shares of
unconsolidated subsidiaries and affiliates amounting to¥97 million ($726 thousand). The corresponding figure atMarch 31, 2022 was ¥37 million.
Bonds held at March 31, 2023 and 2022 of ¥42,400
million ($318 million) and ¥20,000 million, respectively,
comprise waivers in the event of substantial bankruptcy
and subordinated bonds.
The amount of guarantee obligations for private
placement bonds (Article 2-3 of the Financial Instruments
and Exchange Act), out of bonds included in securities,
amounted to ¥46,789 million ($350 million) and ¥40,924
million as of March 31, 2023 and 2022, respectively.

6. FAIR VALUE INFORMATION
Securities

The following tables summarize book values, fair values
and acquisition cost of securities with available fair values
as of March 31, 2023 and 2022:(a) Trading securities
Amount of unrealized gain (loss) on trading securities
included in the consolidated statements of operations— ¥(4) million ($(27) thousand) and ¥(4) million as at
March 31, 2023 and 2022, respectively.

(b) Held-to-maturity debt securities
Millions of yen
2023
Book value Fair value

Type
Japanese government
bonds
Local government bonds
Corporate bonds
Subtotal
Securities with fair Japanese government
value not exceeding bonds
book value
Local government bonds
Corporate bonds
Subtotal
Total
Securities with fairvalue exceeding
book value

Difference¥6,016¥6,226¥210

2,400
32,924
41,3402,412
33,10941,747

12
185
407

—

—

—

6,640
2,939
9,579
¥50,919

6,560
2,906
9,466
¥51,213

(80)
(33)
(113)
¥294

Millions of yen
2022
Type
Book value Fair value
Securities with fair Local government bonds¥2,900¥2,922
value exceeding
Corporate bonds
29,45929,757
book value
Subtotal
32,35932,679Securities with fair Local government bonds
5,220
5,181
value not exceeding Corporate bonds
1,034
1,031
book value
Subtotal
6,254
6,212
Total
¥38,613 ¥38,891

Difference
¥22
298
320
(39)
(3)
(42)
¥278

Thousands of U.S. dollars
2023
Type
Book value Fair value
Securities with fair Japanese government$45,054$46,627
value exceeding
bonds
book value
Local government bonds
17,97318,063
Corporate bonds
246,566 247,951
Subtotal
309,593 312,641
Securities with fair Japanese government——
value not exceeding bonds
book value
Local government bonds
49,727
49,128
Corporate bonds
22,01021,755
Subtotal
71,73770,883
Total$381,330 $383,524

Difference$1,573
90
1,385
3,048
—

Securities withbook value
exceedingacquisition cost

Securities withbook value notexceedingacquisition costType
SharesJapanese government
bonds
Local government bonds
Corporate bonds
OthersSubtotal
SharesJapanese government
bonds
Local government bonds
Corporate bonds
OthersSubtotal
Total

Book value¥86,246

Securities withbook value
exceedingacquisition cost

Securities withbook value notexceedingacquisition costType
SharesJapanese government
bonds
Local government bonds
Corporate bonds
OthersSubtotal
SharesJapanese government
bonds
Local government bonds
Corporate bonds
OthersSubtotal
Total

Acquisition
cost
Difference¥36,214¥50,032

33,87432,6991,175

17,58658,898117,455
314,059
13,38517,50258,728115,277
260,420
16,553

84
170
2,178
53,639(3,168)340,090364,277(24,187)

260,515
101,040
421,685
1,136,715¥1,450,774

264,513
102,563469,5131,217,419¥1,477,839(3,998)(1,523)(47,828)(80,704)¥(27,065)

Millions of yen
2022
Book value¥95,975

Securities withbook value notexceedingacquisition cost(d) Held-to-maturity debt securities sold during the year
There were no held-to-maturity securities sold during theyears ended March 31, 2023 and 2022.
(e)Available-for-sale securities sold during the year

SharesJapanese government bonds
Local government bonds
Corporate bonds
Others
Total

Millions of yen
2023
Sale
Total gain Total loss
amounton saleon sale¥18,807¥6,997¥1,440144,457
774
2,996
1,015
—
0
19,3197
0217,148
3,125
8,825¥400,746¥10,903¥13,261

SharesJapanese government bonds
Local government bonds
Corporate bonds
Others
Total

Millions of yen
2022
Sale
Total gain Total loss
amounton saleon sale¥11,670¥442¥1,920605,664
969
4,666
94,368492—
102,021294
6806,809
6,241
22,099¥1,620,532¥8,438¥28,691

SharesJapanese government bonds
Local government bonds
Corporate bonds
Others
Total

Thousands of U.S. dollars
2023
Sale
Total gain Total loss
amounton saleon sale$140,845$52,400$10,784
1,081,832
5,796
22,4377,601—
0144,67952
01,626,211
23,40366,090$3,001,168$81,651$99,311

(599)
(255)
(854)
$2,194(c) Available-for-sale securities
Millions of yen
2023

Securities withbook value
exceedingacquisition costThousands of U.S. dollars
2023
Acquisition
Type
Book value
cost
Difference
Shares$645,892$271,205$374,687
Japanese government
253,681244,881
8,800
bonds
Local government bonds
131,701
131,072629
Corporate bonds
441,084
439,811
1,273
Others879,615
863,304
16,311
Subtotal
2,351,973
1,950,273
401,700
Shares100,232
123,957(23,725)
Japanese government
2,546,918
2,728,053(181,135)
bonds
Local government bonds
1,950,985
1,980,926(29,941)
Corporate bonds
756,684
768,090(11,406)
Others3,157,979
3,516,161(358,182)
Subtotal
8,512,798
9,117,187(604,389)
Total$10,864,771 $11,067,460$(202,689)

Acquisition
cost
Difference¥44,523¥51,452

5,222

4,959

263

6,612
37,744
49,126
194,679
15,8606,611
37,62447,010140,727
20,7231
120
2,116
53,952(4,863)368,639

384,348(15,709)236,150
93,492377,785
1,091,926¥1,286,605

237,999
94,293398,725
1,136,088¥1,276,815(1,849)(801)(20,940)(44,162)¥9,790(f) Securities for which the purpose of holding changed
There were no securities for which the purpose of holding
changed at March 31, 2023 and 2022.

Impairment losses on securities

Regarding securities (excluding shares and investments inpartnerships, etc. that do not have a market price) otherthan trading securities, if their market values have fallen
substantially below their acquisition price and are notexpected to recover to the acquisition price, such market
values are recorded as the consolidated balance sheet
amounts. The valuation difference is recorded as a loss forthe year in which such difference is realized (hereinafter,“impairment losses”).
During the year ended March 31, 2023, impairment
losses were ¥95 million ($711 thousand) on equity
securities and during the year ended March 31, 2022,
impairment losses totaled ¥380 million on equity

26

securities. The basis for determining whether the market
value has fallen significantly is as follows:
If the market value of the securities in general has
fallen by 30% or more compared with the acquisition cost,the value of the securities is determined to have“fallen
significantly.”However, in the case of shares andequivalent securities, if their market value has fallen by
30% or more but less than 50% of the acquisition cost,
the determination of whether the value has“fallen
significantly”takes into consideration other factors suchas the issuing company’s credit risk (independent debtor
classification, external ratings, etc.) and previous
percentage decreases over a specific period of time in the
past.

Unrealized gains (losses) on available-for-salesecurities

Money held in trust

YMFG’s interest in net unrealized gains(losses) on valuation of available-for-salesecurities held by affiliates accounted forby the equity method

Information on money held in trust as of March 31, 2023
and 2022 was as follows:(a) Money held in trust classified as trading purposes

Money held in trust classified as trading
purposes

Money held in trust classified as trading
purposes

Money held in trust classified as trading
purposesMillions of yen
2023
Unrealized gains
Consolidated (losses) included
balance sheet
in profit (loss)
amountfor the year
¥4,822¥—Millions of yen
2022
Unrealized gains
Consolidated (losses) included
balance sheet
in profit (loss)
amountfor the year
¥4,894¥—

Thousands of U.S. dollars
2023
Unrealized gains
Consolidated (losses) included
balance sheet
in profit (loss)
amountfor the year
$36,112$—(b) Money held in trust classified as held-to-maturity
There are no corresponding transactions as at March 31,
2023 and 2022.
(c) Available-for-sale money held in trust
Consolidatedbalance sheet
amountAvailable-for-sale money held in trust¥12,583

Consolidatedbalance sheet
amountAvailable-for-sale money held in trust¥30,166

Millions of yen
2023
Acquisition
cost¥13,103

Unrealized
gains (losses)¥(520)

Millions of yen

Net unrealized gains (losses)

Available-for-sale securities

Acquisitioncost¥30,489

Unrealized
gains (losses)¥(323)

2023¥(25,358)

2022¥11,345

(520)

(323)

(24,838)

Available-for-sale money held in trust

2023$(189,905)(186,011)(3,894)

3,132

60,421(17,290)8,213(129,484)

53

41

397

—

—

—

¥(17,237)¥8,172$(129,087)

Unrealized gains (losses) on
available-for-sale securities before
following adjustment
Equivalent to non-controlling interests

Unrealized gains (losses) on
available-for-sale securities

11,668

Thousandsof U.S.
dollars

8,068

Deferred tax assets
Deferred tax liabilities

Valuation differences on investments in partnershipsthat do not have a market price of ¥2,229 million ($16,693
thousand) at March 31, 2023 and valuation differences oninvestments in partnerships, etc. that do not have amarket price of ¥1,877 million at March 31, 2022 arerecorded in available-for-sale securities of net unrealized
gains in the list above.

Derivatives(1) Derivative transactions at March 31, 2023 and 2022,
to which hedge accounting is not applied(a) Interest-rate-related:
Millions of yen
2023
Type
Over-the-counter:
Interest rate swaps:
Receivable fixed, payable floating
Receivable floating, payable fixed
Total

Contract
amounts

Over oneyear
Fair value¥65,167
90,169¥—¥56,365
81,365¥—¥(2,635)
1,917¥(718)

Millions of yen
2022
Type
Over-the-counter:
Interest rate swaps:
Receivable fixed, payable floating
Receivable floating, payable fixed
Total

Millions of yen
2022

Thousands of U.S. dollars
2023
Consolidatedbalance sheet Acquisition
Unrealized
amountcost
gains (losses)
Available-for-sale money held in trust$94,234$98,128$(3,894)

27

Information on unrealized gains (losses) on
available-for-sale securities and available-for-sale money
held in trust was as follows:Type
Over-the-counter:
Interest rate swaps:
Receivable fixed, payable floating
Receivable floating, payable fixed
Total

Contract
amounts

Over oneyear
Fair value¥68,01068,011¥—¥66,839
66,840¥—¥(1,112)
1,825
¥713

Unrealized
gains(losses)¥(2,635)
1,917¥(718)

Unrealized
gains(losses)¥(1,112)
1,825
¥713

Thousands of U.S. dollars
2023
Unrealized
Contract Over one
gains
amounts
year
Fair value (losses)$488,033
675,271$—$422,115
609,339$—$(19,733) $(19,733)
14,356
14,356$(5,377)$(5,377)

(b) Currency-related:
Millions of yen
2023
Type
Over-the-counter:
Currency swaps
Foreign exchange forward
contracts:
Sold
BoughtCurrency options:
Sold
BoughtTotal

Contract
amounts

Over oneyear
Fair value

Unrealized
gains(losses)¥133,941¥77,094¥(2,648)¥(485)

269,528
246,358

104,438
102,661(5,254)
7,842(5,254)
7,842

465,604
465,604¥—

375,400
375,400¥—(12,044)
11,959¥(145)

242
2,934¥5,279(2) Derivative transactions as at March 31, 2023 and2022, to which hedge accounting is applied(a) Interest-rate-related:

Type
Principal accounting procedure:Interest rate swaps
Receivable floating, payable fixedInterest rate swaps employing exceptional
accounting treatment:Interest rate swaps
Receivable floating, payable fixed
Total

Millions of yen
2022

Type
Over-the-counter:
Currency swaps
Foreign exchange forward
contracts:
Sold
BoughtCurrency options:
Sold
BoughtTotal

TypeOver-the-counter:
Currency swaps
Foreign exchange forward
contracts:
Sold
BoughtCurrency options:
Sold
BoughtTotal

Contract
amounts

UnrealizedOver one
gains
year
Fair value (losses)¥138,528¥72,929¥(4,125)¥(69)

207,932
109,344

78,60576,967(9,111)
5,755(9,111)
5,755

212,131
212,131¥—

168,844
168,844¥—(7,723)
7,662¥(7,542)267
1,493¥(1,665)

Thousands of U.S. dollars
2023
Unrealized
Contract Over one
gains
amounts
year
Fair value (losses)$1,003,078$577,353$(19,831)$(3,632)

2,018,483
1,844,964

782,131
768,823(39,347)
58,728(39,347)
58,7283,486,887
3,486,887$—

2,811,353
2,811,353$—(90,197)
89,560$(1,087)

1,812
21,973$39,534(c) Stock-related:
There were no stock-related transactions as at March 31,
2023 and 2022.
(d) Bond-related:
There were no bond-related transactions as at March 31,
2023 and 2022.
(e) Commodity-related:
There were no commodity-related transactions as at
March 31, 2023 and 2022.
(f) Credit-derivatives:
There were no credit-related transactions as at March 31,
2023 and 2022.

Type
Principal accounting procedure:Interest rate swaps
Receivable floating, payable fixedInterest rate swaps employing exceptional
accounting treatment:Interest rate swaps
Receivable floating, payable fixed
Total

Type
Principal accounting procedure:Interest rate swaps
Receivable floating, payable fixedInterest rate swaps employing exceptional
accounting treatment:Interest rate swaps
Receivable floating, payable fixed
Total

Millions of yen
2023
Contract Over one
amounts
year
Fair value¥408,217¥408,217¥15,244

9
¥—

—
¥—

*
¥15,244

Millions of yen
2022
Contract Over one
amounts
year
Fair value¥402,778¥280,878¥5,783

42
¥—

42
¥—

*
¥5,783Thousands of U.S. dollars
2023
Contract Over one
amounts
year
Fair value$3,057,118 $3,057,118

67
$—

—
$—

$114,162*$114,162(*) Of interest rate swaps employing exceptional accounting treatment,
as these instruments are accounted for together with the hedgedloans and bills discounted and borrowings, their fair value isincluded in the fair value of said loans and bills discounted within“4.
FINANCIAL INSTRUMENTS.”(b) Currency-related:

Type
Principal accounting procedure:
Currency swaps
Total

Type
Principal accounting procedure:
Currency swaps
Total

Type
Principal accounting procedure:
Currency swaps
Total

Millions of yen
2023
Contract Over one
amounts
year
Fair value¥374,619¥—¥127,681¥—¥(24,496)¥(24,496)

Millions of yen
2022
Over oneyear
Fair value

Contract
amounts¥324,749¥—¥112,040¥—¥(25,676)¥(25,676)

Thousands of U.S. dollars
2023
Contract Over one
amounts
year
Fair value$2,805,504$—$956,197 $(183,449)$— $(183,449)(c) Stock-related:
There were no stock-related transactions at March 31,
2023 and 2022.
(d) Bond-related:
There were no bond-related transactions at March 31,
2023 and 2022.

28

7. LOANS AND BILLS DISCOUNTED
Loans under the Banking Act and the Act on Emergency
Measures for the Revitalization of the Financial Functionsat March 31, 2023 and 2022 are as follows. These loans
consist of corporate bonds in“securities”(limited to those
corporate bonds for which redemption of the principal
and payment of interest are fully or partially guaranteed
and which are issued through private placement of
securities (Article 2-3 of the Financial Instruments andExchange Act)), loans and bills discounted, foreignexchanges, interest accrual and suspense payments in“other assets”and customers’ liabilities for acceptancesand guarantees in the consolidated balance sheets, aswell as securities loaned under a loan-for-use or leaseagreement.
(1) Bankrupt/de facto bankrupt loans amounting to¥21,097 million ($158 million) and ¥33,432 million
denote loans at March 31, 2023 and 2022,
respectively, held against borrowers with failed
business status due to commencement of bankruptcy
proceedings, commencement of reorganization
proceedings or commencement of rehabilitation
proceedings, and any other type of loans equivalent
thereto.
(2) Doubtful loans amounting to ¥101,104 million ($757
million) and ¥89,439 million denote loans at March
31, 2023 and 2022, respectively, whose borrower is
not yet in the status of failure in business althoughsuch borrower’s financial status and operating
performance are worsening, and for which it is highly
probable that the principal will not be collected orinterest will not be received in accordance with thecontract, excluding bankrupt/de facto bankrupt loans.
(3) Loans past due for three months or more amounting to¥152 million ($1 million) and ¥364 million denoteloans at March 31, 2023 and 2022, respectively,
where payment of interest or principal has been
delayed for three months or more, excluding
bankrupt/de facto bankrupt loans and doubtful loans.
(4) Restructured loans amounting to ¥8,188 million ($61
million) and ¥4,569 million denote loans at March 31,
2023 and 2022, respectively, to borrowers for which
the repayment terms have been modified to morefavorable terms including reduction of interest rate,
deferral of interest payments, extension of principal
payments and debt forgiveness with the objective ofpromoting recovery of borrowers in economic
difficulty, excluding bankrupt/de facto bankrupt loans,doubtful loans and loans past due for three months or
more.
The total of bankrupt/de facto bankrupt loans,doubtful loans, loans past due for three months or more
and restructured loans amounted to ¥130,541 million($977 million) and ¥127,804 million at March 31, 2023
and 2022, respectively.
The loan amounts disclosed above are amounts
before deducting an allowance for loan losses.

29

Commercial bills

Bills discounted are accounted for as financing
transactions in accordance with the Industry Audit
Committee Report No. 24, March 17, 2022, of the JICPA,
although the Banks have the right to sell or pledge themwithout restrictions. The total face value of commercial
bills and purchased foreign exchange bills obtained as aresult of discounting was ¥19,445 million ($146 million) at
March 31, 2023 and ¥20,760 million at March 31, 2022.

Loan participation

Based on the“Accounting Treatment and Presentation ofLoan Participation”(JICPA Accounting System Committee
Report No. 3, November 28, 2014), the consolidatedbalance sheet amount of loan participation agreements inwhich the Banks have acquired the economic benefits andrisks of the underlying loans from the original lender was¥783 million ($6 million) and ¥2,783 million at March 31,
2023 and 2022, respectively.

8. COMMITMENT LINES
Loan agreements and commitment line agreements
relating to loans are agreements that oblige theconsolidated subsidiaries to lend funds up to a certain
limit agreed in advance. The consolidated subsidiaries
make the loans upon the request of an obligor to draw
down funds under such loan agreements as long as there
is no breach of the various terms and conditions stipulated
in the relevant loan agreement. The unused commitment
balance relating to these loan agreements amounted to¥947,581 million ($7,096 million) at March 31, 2023 and¥937,356 million at March 31, 2022. Of this amount,¥814,119 million ($6,097 million) at March 31, 2023 and¥745,398 million at March 31, 2022 relate to loans forwhich the term of the agreement is one year or less, or
unconditional cancellation of the agreement is allowed at
any time.
In many cases the term of the agreement runs its
course without the loan ever being drawn down.
Therefore, the unused loan commitment will notnecessarily affect future cash flows. Conditions areincluded in certain loan agreements that allow theconsolidated subsidiaries either to decline the request fora loan draw-down or to reduce the agreed limit amountwhen there is due cause to do so, such as when there is achange in financial condition or when it is necessary toprotect the consolidated subsidiaries’ credit. Consolidated
subsidiaries take various measures to protect their credit.
Such measures include having the obligor pledge collateral
to the consolidated subsidiaries in the form of real estate,securities, etc., at entering into a loan agreement or inaccordance with the consolidated subsidiaries’
established internal procedures for confirming the obligor’s financial condition, etc., at regular intervals.

9. PLEDGED ASSETS

12. IMPAIRMENT LOSSESAt March 31, 2023 and 2022, the following assets were
pledged as collateral for certain liabilities of the Banks.

During the years ended March 31, 2023 and 2022,
impairment losses were recorded on the following assets.

Cash and due from banks
Securities
Loans and bills discounted

Millions of yen
2023
2022
¥14
¥14
480,685535,274
597,147
585,530

Thousands of
U.S. dollars
2023
$105
3,599,828
4,472,006

The collateral was pledged to secure the following:

Deposits
Payables under securities lendingtransactions
Borrowings

Millions of yen
2023
2022
¥40,427¥48,378

Thousands of
U.S. dollars
2023$302,756

285,323

314,959

2,136,771

382,700

605,400

2,866,023

In addition, securities not included in the aboveschedules were pledged as collateral for operatingtransactions, such as foreign exchange contracts andforward exchange contracts. These securities amounted
to ¥1,964 million ($15 million) at March 31, 2023 and¥1,983 million at March 31, 2022.
Also, other assets included security deposits, collateralpledged for transactions involving public funds, collateralpledged for financial instruments, collateral pledged forexchange settlements, financial futures margin and margin
on bond futures transactions, as indicated below.

Deposits
Collateral pledged for transactions
involving public funds
Collateral pledged for financial
instruments
Collateral pledged for exchange
settlements
Financial futures margin
Margin on bond futures transactions

Millions of yen
2023
2022
¥1,700¥1,864
1,197

Thousands of
U.S. dollars
2023$12,731

1,299

8,964

35,24944,831

263,978

71,00084,000531,716

10
1,000

10
1,000

75
7,489

10. ACCUMULATED DEPRECIATION
Accumulated depreciation of tangible assets was ¥81,143
million ($608 million) at March 31, 2023 and ¥80,477
million at March 31, 2022.

Location
WithinHiroshima
Prefecture
WithinYamaguchi
PrefecturePrimary use
Business-use
assetsTypeLand,buildings

Business-use
assets

170

—

1,273

WithinFukuoka
Prefecture
Within Oita
Prefecture
Within Ehime
Prefecture

Business-use
assetsLand,buildings,
other tangible
fixed assets
Land,buildings

140

—

1,048

Land,
buildings
Buildings,
other tangible
fixed assets
Buildings

54

—

404

2

—

15

24

—

180

Land,
buildings,
other tangible
fixed assets

—

1,941

—

Land,
buildings,
other tangible
fixed assets

—

1,501

—

Land,
buildings,
other tangible
fixed assets
Buildings

—

251

—

—

190

—

Land,
buildings
Land,buildings

—

54

—

—

46

—

Buildings,
other tangible
fixed assets
Buildings,
other tangible
fixed assets
Buildings,
other tangible
fixed assets
Buildings

—

43

—

—

18

—

—

13

—

—

12

—

Land,
buildings

—

17

—

At March 31, 2023 and 2022, accumulated advanced
depreciation amount of tangible fixed assets was ¥7,960
million ($60 million) and ¥9,628 million, respectively.
Advanced depreciation expenses in the years ended
March 31, 2023 and 2022 were none and ¥1,592 million,
respectively.

Welfarefacility
Business-use
assetsOverseas

Business-use
assetsWithinBusiness-use
Yamaguchi
assets,Prefecture
corporate
assets,welfarefacility
WithinBusiness-use
Hiroshimaassets,Prefecture
corporate
assets,welfarefacility
Within Hyogo Business-use
Prefecture
assets,welfarefacility
Within Tokyo Welfare
Metropolitan facility
Within Aichi
WelfarePrefecture
facility
WithinWelfareShimanefacility
Prefecture
WithinBusiness-use
FukuokaassetsPrefecture
Within Osaka Business-use
Prefecture
assetsWithin Oita
Prefecture

Business-use
assetsWithinKumamoto
Prefecture
Other

Business-use
assets

—

11. ADVANCED DEPRECIATION AMOUNTOF TANGIBLE FIXED ASSETS

Impairment loss
Thousandsof U.S.
Millions of yen
dollars
2023
2022
2023
¥202
¥—
$1,513Total

Business-use
assets,welfarefacility—

Other assets,
goodwill

—

1,545

—

¥592

¥5,631$4,433(1) Land, buildings and other tangible fixed assets
YMFG and its consolidated subsidiaries that engage in thebanking and securities business group their business-use
assets into the smallest units possible from the standpointof management accounting, which is the branch (Ifmultiple branches operate in a same building, thesebranches are grouped in one group). Idle assets are, in
principle, grouped as units of individual assets. In addition,
corporate headquarters, administrative centers, training
facilities, company housing and dormitories are
considered corporate assets, as these are related to all
the consolidated subsidiaries which are engaged in thebanking business.
Consolidated subsidiaries that do not engage in thebanking and securities business group their assets, inprinciple, on an individual company basis.
In the year ended March 31, 2023, the book values of30

business-use assets which were determined not to create
sufficient operating cash flow and assets to be moved,
discontinued in use or sold are reduced to theirrecoverable values, and the reduction of ¥592 million($4,433 thousand) was recognized as impairment losses.
This amount includes land of ¥398 million ($2,980
thousand) buildings (including disposal costs) of ¥194
million ($1,453 thousand) and movable property of ¥0
million ($0 thousand).
In the year ended March 31, 2022, the book values ofbusiness-use assets which were determined not to create
sufficient operating cash flow and assets to be moved,
discontinued in use or sold are reduced to theirrecoverable values, and the reduction of ¥4,086 million
was recognized as impairment losses. This amountincludes land of ¥3,071 million, buildings (including exit
and disposal costs) of ¥1,009 million and movable
property of ¥6 million.
The recoverable amount used to estimate theimpairment loss for the years ended March 31, 2023 and2022 is the net selling price, which is calculated bydeducting the expected disposal cost from the expected
disposal value.
(2) Other assets
In the year ended March 31, 2022, the book values ofother assets whose value has declined are reduced totheir recoverable values, and the reduction of ¥18 million
was recognized as impairment losses.
(3) Goodwill
In the event of signs of impairment of fixed assets statedin the consolidated financial statements (including
goodwill), if the total amount of undiscounted future cash
flows from the target assets falls below the book value of
fixed assets (including goodwill), book value is reduced to
the recoverable value, and the reduction in book value isrecognized as an impairment loss.
With respect to goodwill which YMFG recorded at theacquisition of Hoken Hiroba, a consolidated subsidiary,
Hoken Hiroba experienced a substantial decline in thenumber of people visiting its branches amid the prolonged
COVID-19 pandemic, during the year ended March 31,
2022, and income declined and operating performance
deteriorated accordingly. As a result, YMFG determinedsigns of impairment in this business, including goodwill. In
deliberating on whether to recognize impairment losses,
YMFG determined that the amount of undiscounted future
cash flows from the target fixed assets (including goodwill)
fell below their book value, so recognized goodwill of¥1,527 million as impairment losses.

Payment schedule of borrowed money as of March 31,
2023 is as follows:

31

Overview of severance payments and pension plans

YMFG and some consolidated subsidiaries employ funded
and unfunded defined benefit and defined contributionplans as employee retirement benefits.
Defined benefit plans include defined benefit
corporate pension plans and lump-sum retirement plans.
Also, some are established as retirement benefit trusts.
Moreover, in the year ended March 31, 2022, part ofplan assets under defined benefit corporate pension plans
was transferred to defined contribution pension plans.
Some consolidated subsidiaries employ the simplified
method for calculating retirement benefit obligations.

Defined benefit plans(1) Reconciliation of retirement benefit obligation
balances at the beginning and the end of the years
ended March 31, 2023 and 2022

Retirement benefit obligations at the
beginning of the year
Service cost
Interest cost
Actuarial differences
Retirement benefit payments
OthersRetirement benefit obligations at theend of the year

Millions ofyen¥219,216
32,7092,359
131,378
11,611
6,029¥403,302

Thousands of
U.S. dollars$1,641,698
244,956
17,666
983,884
86,95445,151$3,020,309

Millions of yen
2023
2022

Thousands of
U.S. dollars
2023¥51,382¥53,953$384,797

1,317
159(1,360)(3,389)
5

1,396
116
(681)
(3,398)
(5)

9,863
1,191
(10,185)(25,380)37¥48,114¥51,381$360,323(2) Reconciliation of plan asset balances at the beginningand the end of the years ended March 31, 2023 and2022

Balance of plan assets at the beginningof the year
Expected return on plan assets
Actuarial differences
Contribution from employer
Retirement benefit payments
Decrease resulting from transfer todefined contribution pension plans
Cancellation of retirement benefit
trustsOthersBalance of plan assets at the end of
the year

Millions of yen
2023
2022

Thousands of
U.S. dollars
2023¥81,457¥110,770$610,028

1,534(1,340)430(2,423)

1,846(1,946)456(2,358)

11,488(10,035)
3,220(18,146)—(1,241)——(26,286)

—

204

216

1,520

¥79,862¥81,457$598,075(3) Reconciliation of the balances of retirement benefit
obligations and plan assets at March 31, 2023 and2022, and the carrying amounts of net defined benefit
liability and net defined benefit asset

Retirement benefit obligations offunded plans
Plan assets

13. BORROWED MONEY

2023
2024
2025
2026
2027
ThereafterTotal

14. PROVISION FOR EMPLOYEERETIREMENT BENEFITS

Retirement benefit obligations of
unfunded plans
Net carrying amount of liabilities andassetsNet defined benefit liability
Net defined benefit asset
Net carrying amount of liabilities andassetsMillions of yen
2023
2022

Thousands of
U.S. dollars
2023¥47,999¥51,269$359,462(79,861)(81,457)(598,075)(31,862)(30,188)(238,613)

116

112

869

¥(31,746)¥(30,076)$(237,744)

Millions of yen
2023
2022
¥2,589¥2,652(34,335)(32,728)

Thousands of
U.S. dollars
2023$19,389(257,133)¥(31,746)¥(30,076)$(237,744)

Defined contribution plans(4) Retirement benefit costs and their breakdowns

Service cost (*1)
Interest cost
Expected return on plan assets
Recognized actuarial loss
Recognized past service cost
OthersRetirement benefit costs on defined
benefit plans
Gains on cancellation of retirement
benefit trusts (*2)
Loss on revision of retirement benefit
plan (*3)

Thousands ofMillions of yen
U.S. dollars
2023
2022
2023
¥1,317¥1,396$9,863
159
116
1,191
(1,534)(1,846)(11,488)
(628)
(621)
(4,703)—(2,788)
—
96
106
719
¥(590)¥(3,637)$(4,418)¥—¥9,094

$—

—

1,241

—

(*1) Excludes employee contribution portion of defined benefit
corporate pensions.
(*2)“Gains on cancellation of retirement benefit trusts”are recorded inother income.
(*3)“Loss on revision of retirement benefit plan”is recorded in otherexpenses.

(5) Remeasurements of defined benefit plans
Items posted as remeasurements of defined benefit plans(before tax-effect exclusions) break down as follows:

Actuarial gain (loss)
Past service cost
Total

Millions of yen
2023
2022
¥(608)¥(12,241)—(2,788)¥(608)¥(15,029)

Thousands of
U.S. dollars
2023$(4,553)—$(4,553)(6) Cumulative remeasurements of defined benefit plans
Items posted as cumulative remeasurements of defined
benefit plans (before tax-effect exclusions) break down as
follows:

Unrecognized actuarial gain (loss)
Total

Millions of yen
2023
2022
¥(2,414)¥(3,022)¥(2,414)¥(3,022)

Thousands of
U.S. dollars
2023$(18,078)$(18,078)(7) Plan assets(i) Percentages of major asset categories to total plan
assets are as follows:
Bonds
SharesOthers
Total

2023
36%
35%
29%
100%

2022
36%
36%
28%
100%

(Note) Plan assets include 33% of corporate pension plans established
as retirement benefit trusts at March 31, 2023 and 31% at
March 31, 2022.

(ii) Method of establishing expected long-term return onplan assets(Corporate pensions)
Based on the weighted average rate according to thepolicy asset mix (medium- to long-term portfolio) of the
expected rate of return for individual investment fiduciary
institutions, net of investment cost
(Retirement benefit trusts)
Past dividend performance is converted to yield.
(8) Basis of actuarial calculation
The basis of actuarial calculations as of March 31, 2023
and 2022
Discount rate
Expected long-term rate of return on plan
assetsExpected rate of salary increase2023
0.00%—1.98%

2022
0.00%—1.27%

0.90%—2.28%

1.00%—2.60%

0.63%—3.84%

0.63%—3.84%

The required contribution to the consolidated subsidiaries’
defined contribution plans at March 31, 2023 and 2022
was ¥310 million ($2 million) and ¥317 million,
respectively.

Other items pertaining to retirement benefits

As a result of transferring part of plan assets from defined
benefit corporate pension plans to defined contribution
pension plans in the year ended March 31, 2022,“loss onrevision of retirement benefit plan”of ¥1,241 million wasrecorded in other expenses.

15. REVALUATION RESERVE FOR LAND
Pursuant to the Law concerning Revaluation of Land (Law
No. 34, promulgated on March 31, 1998, the“Law”),
YMFG revalued certain land used for banking operations
by consolidated subsidiaries. The tax-equivalent portion ofthis revaluation amount was recorded in liabilities under“deferred tax liabilities for revaluation reserve for land,”and the reminder under net assets as“revaluation reserve
for land.”
Revaluation date: March 31, 1998
Article 3-3 of the Law establishes the evaluation
method as that prescribed by Article 2-4 of the Order for
Enforcement of Law on Revaluation of Land (Enforcement
Order No. 119, promulgated on March 31, 1998), and theamount of land tax is calculated on the basis of the land
tax amount specified under Article 16 of the Land-holding
Tax Act, adjusted rationally in accordance with the basisof calculation announced officially by the Director Generalof the National Tax Administration Agency.
Total difference between the market value of land forbusiness use revalued in accordance with Article 10 of the
Law and the total post-revaluation book value of land at
March 31, 2023 and 2022 was ¥11,453 million ($86
million) and ¥12,474 million, respectively.

16. CONTINGENT LIABILITIES —ACCEPTANCES AND GUARANTEESAll contingent liabilities, including letters of credit,
acceptances and guarantees are reflected in acceptancesand guarantees. As a contra account, customers’ liabilities
for acceptances and guarantees are shown on the asset
side, which represent the Banks’ right of indemnity from
customers.

17. OTHER INCOME
Items included in other income for the years ended March
31, 2023 and 2022 were as follows:

Gains on sale of stock
Dividends from creditor groupinsurance
Income from investment partnership

Millions of yen
2023
2022
¥9,669¥3,725

Millions of
U.S. dollars
2023
$72

1,274

919

10

260

398

2

32

18. GENERAL AND ADMINISTRATIVE
EXPENSES

21. INCOME TAXES

Items included in operating expenses for the years ended
March 31, 2023 and 2022 were as follows:

Salary and allowance
Depreciation

Millions of yen
2023
2022
¥27,866¥28,729
5,038
5,401

Thousands of
U.S. dollars
2023$208,687
37,72919. OTHER EXPENSES
Items included in other expenses for the years ended
March 31, 2023 and 2022 were as follows:

Loss on sale of stock
Loss on investment in money held in
trust
Losses on investment partnership
Loss on financial derivatives
Losses on devaluation of stocks andother securities

Millions of yen
2023
2022
¥2,811¥7,140Thousands of
U.S. dollars
2023$21,051

1,289

0

9,653

900
118

858
424

6,740
884

106

386

794

20. LEASE TRANSACTIONS
1. Finance lease transactions
Finance lease transactions that do not transfer ownership
Borrower(i) Content of lease assets
Tangible fixed assets
		 Mainly vehicles and office equipment
Intangible fixed assets
		 Software(ii) Depreciation method for lease assets
As described in“Tangible fixed assets (excluding leaseassets)”under (4) Accounting policies in“2.
SIGNIFICANT ACCOUNTING POLICIES.”
2. Operating leases
Future minimum lease payments at March 31, 2023 and2022 were as follows:
Borrower

Within one year
More than one year
Total minimum lease payments

Millions of yen
2023
2022
¥119
¥130
421
522
¥540
¥652

Thousands of
U.S. dollars
2023
$891
3,153
$4,044

Millions of yen
2023
2022
¥64
¥44
116
127
¥180
¥171

Thousands of
U.S. dollars
2023
$479
869
$1,348

LenderWithin one year
More than one year
Total minimum lease payments

1. Significant components of the deferred tax assets andliabilities as of March 31, 2023 and 2022 were as
follows:

Deferred tax assets:
Allowance for loan losses
Unrealized gains (losses) on
available-for-sale securities
Net operating losses carryforwards
Provision for bonuses
Depreciation
Losses on devaluation of securities
Net defined benefit liability
Other
Deferred tax assets
Valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Deferred gains or losses on hedges
Net defined benefit asset
Securities contributed to retirement
benefit trusts
Capital gain (loss) adjustment
Gains on cancellation of retirement
benefit trusts
Reserve for advanced depreciationof non-current assets
Unrealized gains (losses) on
available-for-sale securities
Other
Total deferred tax liabilities
Net deferred tax assets (liabilities)

Millions of yen
2023
2022

Thousands of
U.S. dollars
2023¥20,534¥22,692$153,778

8,068

4,693

60,421

806
795
632
487
433
2,397
34,152(10,970)
23,182

1,014
881
637
611
324
2,370
33,222(10,168)
23,054

6,036
5,954
4,733
3,647
3,243
17,951
255,763(82,154)
173,609(4,924)(2,903)(2,076)(2,906)(36,876)(21,740)(2,448)(2,620)(18,333)(1,884)(1,886)(14,109)(896)(1,793)(6,710)(656)(1,324)(4,913)—(7,826)—(189)(13,900)¥9,282(533)(20,964)¥2,090(1,415)(104,096)$69,513

2. Significant differences between the statutory effective
tax rate and the actual income tax rate after applicationof deferred income tax accounting for the year ended
March 31, 2023 were as follows:
Effective statutory tax rate
(Adjustments)
Changes in the valuation reserve
Items that are not permanently included in
profits, such as dividends received
Items that are not permanently included inlosses, such as entertainment expenses
Gain on bargain purchase
Gain on step acquisitions
Inhabitant tax on a per capita basis
Consolidation adjustments
OthersTax burden after the application of tax-effectaccounting

2023
30.46%

2022
—%

3.17%

—%

(1.07)%

—%

0.57%

—%

(1.03)%(0.58)%
0.49%(0.01)%
0.38%

—%
—%
—%
—%
—%

32.38%—%(Note) Information for the year ended March 31, 2022 is not describedas loss before income taxes is recorded.

3. Accounting of corporate taxes and local corporate
taxes or accounting of relevant tax effect accounting
YMFG and certain consolidated subsidiaries haveapplied the group tax sharing system from year ended
March 31, 2023. Moreover, they conduct theaccounting and disclosure of corporate taxes and local
corporate taxes or relevant tax effect accounting inaccordance with the PITF No. 42.

22. NET ASSETS
Under the Companies Act of Japan (the“Act”), the entire
amount paid for new shares is in principle required to be
designated as common stock. However, a company may,by a resolution of the Board of Directors, designate an
amount not exceeding one-half of the price of the newshares as additional paid-in capital, which is included in33

capital surplus.
Under the Act, in cases where dividend distribution of
surplus is made, the smaller of an amount equal to 10% of
the dividend or the excess, if any, of 25% of common
stock over the total of additional paid-in capital and legal
earnings reserve must be set aside as additional paid-in
capital or legal earnings reserve. Legal earnings reserve is
included in retained earnings in the accompanying
consolidated balance sheets.
Under the Act, legal earnings reserve and additional
paid-in capital may be used to eliminate or reduce a
deficit, or may be capitalized, by a resolution of theshareholders’ meeting.
Under the Act, additional paid-in capital and legal
earnings reserve may not be distributed as dividends,
however all of these may be transferred to other capitalsurplus and retained earnings, respectively, which arepotentially available for dividends.
The maximum amount that YMFG can distribute as
dividends is calculated based on the unconsolidated
financial statements of YMFG in accordance with the Act.
At the annual shareholders’ meeting held on June 28,2023, the shareholders approved cash dividends
amounting to ¥3,612 million ($27 million). Suchappropriations have not been accrued in the consolidated
financial statements as of March 31, 2023 and to berecognized in the period in which they are approved by
the shareholders.
At the annual shareholders’ meeting held on June 24,
2022, the shareholders approved cash dividends
amounting to ¥3,337 million. Such appropriations havenot been accrued in the consolidated financial statements
as of March 31, 2022 and to be recognized in the period
in which they are approved by the shareholders.

23. CHANGES IN NET ASSETS
1. Type and number of shares issued and treasury shareswere as follows:

Shares issued
Common stock
Total
Treasury stock
Common stock (*1, *2)
Total

Number of shares (in thousand)March 31,
March 31,2022
Increase
Decrease
2023
264,353
264,353————

264,353
264,353

26,865
26,865

12,621
12,621

227
227

39,26039,260(*1) The increase in the number of treasury stock is due to market
purchases of 12,621 thousand shares, and purchases of sharesconstituting less than one trading unit, totaling 0 thousand shares.
The decrease of treasury stock included 194 thousand shares
due to the exercise of rights of the BBT, 32 thousand shares for the
exercise of share options and purchases of shares constituting lessthan one trading unit, which amounted to 0 thousand shares.
(*2) Treasury stock as of beginning and ending of the year ended
March 31, 2023 includes 849 thousand shares and 654 thousand
shares held by the BBT, respectively.

Shares issued
Common stock
Total
Treasury stock
Common stock (*1, *2)
Total(*1) The increase in the number of treasury stock is due to market
purchases of 9,805 thousand shares, and purchases of sharesconstituting less than one trading unit, totaling 1 thousand shares.
The decrease of treasury stock included 71 thousand shares dueto the exercise of rights of the BBT and 41 thousand shares for the
exercise of share options.
(*2) Treasury stock as of beginning and ending of the year ended
March 31, 2022 includes 921 thousand shares and 849 thousand
shares held by the BBT, respectively.

2. Stock options
Stock options at March 31, 2023 and 2022 were ¥43
million ($0 million) and ¥82 million, respectively.
3. Information on dividends is as follows:(a) Dividends paid in the years ended March 31, 2023 and2022

Type of shares
Resolved at the board of
directors meeting on May
13, 2022
Common stock
Resolved at the board of
directors meeting on
November 11, 2022
Common stock

Aggregate
amount ofdividends(Millions of
yen)

Cash
dividends
per share(Yen)¥3,337 (*1)

¥14.00Mar. 31, 2022 Jun. 27, 2022

¥3,486 (*2)

¥15.00Sep. 30, 2022

Recorddate

Effective
date

Dec. 9, 2022(*1) The total amount of dividends on common stock includes ¥12
million in dividends to the BBT.
(*2) The total amount of dividends on common stock includes ¥10
million in dividends to the BBT.

Type of shares
Resolved at the board of
directors meeting on May
14, 2021
Common stock
Resolved at the board of
directors meeting on
November 12, 2021
Common stock

Aggregate
amount ofdividends(Millions of
yen)

Cash
dividends
per share(Yen)¥3,225 (*1)

¥13.00Mar. 31, 2021 Jun. 28, 2021

¥3,474 (*2)

¥14.00Sep. 30, 2021 Dec. 10, 2021

Recorddate

Effective
date(*1) The total amount of dividends on common stock includes ¥12
million in dividends to the BBT.
(*2) The total amount of dividends on common stock includes ¥13
million in dividends to the BBT.

Type of shares
Resolved at the board of
directors meeting on May
13, 2022
Common stock
Resolved at the board of
directors meeting on
November 11, 2022
Common stock

Aggregate
amount ofdividends(Thousandsof U.S.
dollars)Cashdividends
per share(U.S.
dollars)$24,991 (*1)

$0.11

Mar. 31, 2022 Jun. 27, 2022

$26,106 (*2)$0.10

Sep. 30, 2022

Recorddate

Effective
date

Dec. 9, 2022(*1) The total amount of dividends on common stock includes $90
thousand in dividends to the BBT.
(*2) The total amount of dividends on common stock includes $75
thousand in dividends to the BBT.

Number of shares (in thousand)March 31,
March 31,2021
Increase
Decrease
2022
264,353
264,353————

264,353
264,353

17,171
17,171

9,806
9,806

112
112

26,865
26,86534

(b) Dividends to be paid in the years ending March 31,
2024 and 2023 are as follows:

Type of shares
Resolved at the boardof directors meetingon May 12, 2023
Common stock(Millions of yen, except per share amount)
Aggregate
amount ofCashdividends
dividends(Millions Source of per share
RecordEffectiveof yen)dividends
(Yen)
date
date

¥3,612*Retainedearnings¥16.00Mar. 31,2023

Jun. 28,
2023* The total amount of dividends on common stock includes ¥10 million
in dividends to the BBT.

Type of shares
Resolved at the boardof directors meetingon May 13, 2022
Common stock(Millions of yen, except per share amount)
Aggregate
amount ofCashdividends
dividends(Millions Source of per share
RecordEffectiveof yen)dividends
(Yen)
date
date

¥3,337*Retainedearnings¥14.00Mar. 31,2022

Jun. 27,
2022* The total amount of dividends on common stock includes ¥12 million
in dividends to the BBT.

Type of shares
Resolved at the boardof directors meetingon May 12, 2023
Common stock(Thousands of U.S. dollars, except per share amount)
Aggregate
amount ofCashdividends
dividends(Thousands
per shareof U.S.
Source of(U.S.
RecordEffective
dollars)
dividends
dollars)
date
date$27,050*

Retainedearnings$0.12

Mar. 31,2023

Jun. 28,
2023* The total amount of dividends on common stock includes $75
thousand in dividends to the BBT.

24. STOCK OPTIONS
At a Board of Directors meeting, resolutions were passedwith regard to subscription requirements for the allotmentof stock options as compensation to directors of YMFG’s
banking subsidiaries, Yamaguchi Bank, Momiji Bank andKitakyushu Bank. The details of these resolutions aredescribed below:
1. Recording of expenses related to stock options andname of line items
There were no expenses in the years ended March 31,
2023 and 2022.
2. The contents of the stock options are outlined as
below:
Category and number of
persons to be granted stock
options
Number of stock options byclass of stock*
Grant date2016
27 directors (excluding directors who aremembers of the Audit and Supervisory
Committee, part-time directors and outside
directors) of YMFG’s subsidiaries, Yamaguchi
Bank, Momiji Bank and Kitakyushu Bank
122,000 shares of YMFG’s common stock
August 25, 2015

Vesting conditions
No vesting conditions set
Target length of service period No target length of service period set
Period for exercise of rights

Category and number of
persons to be granted stock
options
Number of stock options byclass of stock*
Grant dateAugust 26, 2015—August 25, 2045

2015
27 directors (excluding outside directors) of
YMFG’s subsidiaries, Yamaguchi Bank, Momiji
Bank and Kitakyushu Bank
182,900 shares of YMFG’s common stock
July 29, 2014

Vesting conditions
No vesting conditions set
Target length of service period No target length of service period set
Period for exercise of rights

July 30, 2014—July 29, 2044

2014
Category and number of
27 directors (excluding outside directors) of
persons to be granted stock
YMFG’s subsidiaries, Yamaguchi Bank, Momiji
options
Bank and Kitakyushu Bank
Number of stock options by
225,100 shares of YMFG’s common stockclass of stock*
Grant dateJuly 23, 2013
Vesting conditions
No vesting conditions set
Target length of service period No target length of service period set
Period for exercise of rights
July 24, 2013—July 23, 2043

2013
Category and number of
27 directors (excluding outside directors) of
persons to be granted stock
YMFG’s subsidiaries, Yamaguchi Bank, Momiji
options
Bank and Kitakyushu Bank
Number of stock options by
294,900 shares of YMFG’s common stockclass of stock*
Grant dateJuly 30, 2012
Vesting conditions
No vesting conditions set
Target length of service period No target length of service period set
Period for exercise of rights
July 31, 2012—July 30, 2042

Note: Stated as the equivalent number of shares.
From the year ended March 31, 2016, the issuance ofstock options to directors of YMFG’s subsidiaries,
Yamaguchi Bank, Momiji Bank and Kitakyushu Bank
(excluding directors who are Audit and Supervisory
Committee members, part-time directors and outside
directors) was discontinued.

35

3. The summary of stock option activity is as indicatedbelow:(a) Number of stock options
Prior to vesting
As of the end of the previous year
GrantedExpired
VestedRights not yet determined
After vesting
As of the end of the previous year
Rights determined
Rights exercised
ExpiryAmount unexercised

2016

2015

2014

2013

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

26,700—15,600—
11,10026,900—10,400—16,50012,800
—
6,400
—
6,400

8,300
—
—
—
8,300

2016
¥1

Yen
2015
2014
¥1
¥1

2013
¥1

(b) Price information
Exercise price
Average share price at time of
exercise
Fair value on date granted

740

740

740

—

1,377

1,015

973

619

4. Method for estimating the number of rights determined
for stock options
Due to the difficulty of rationally estimating the future
number of rights that will expire, in general a method is
employed that reflects only the number of rights that haveactually expired.

25. INVESTMENT AND RENTAL PROPERTYThis note is omitted, as the total amount of investment
and rental property is immaterial.

26. REVENUE RECOGNITION
1. Disaggregation of revenue from contracts withcustomers
The Group’s business is predominantly consisted of thebanking business, and the securities brokerage, credit
card, leasing, consulting and other businesses conductedby the Group collectively are limited.
Disaggregation of revenue from contracts withcustomers is as follows:
Category
Fees and commissions
Deposit and loan and bill
discounted business
Exchange business
Securities-related businessAgency business
Safe custody and safe deposit box
business
Other businesses
Other income
Income from contracts with customers
Income from other sources
Income from external customers

Millions of yen
2023
2022
¥23,664¥23,823

Thousands of
U.S. dollars
2023$177,227

5,615

5,095

42,058

4,871
3,734
216

4,911
4,014
248

36,47927,964
1,618

203

209

1,520

9,025
747
24,411
132,913¥157,324

9,346
603
24,426
122,591¥147,017

67,5885,594
182,821995,371$1,178,192

2. Useful information in understanding revenue fromcontracts with customers
As described in“Method for recording revenue”under (4)Accounting policies in“2. SIGNIFICANT ACCOUNTINGPOLICIES.”

3. Contract asset and contract liability balances andtransaction price allocated to the remaining
performance obligations(1) Contract asset and contract liability balances
Contract assets and contract liabilities of YMFG and its
subsidiaries are omitted, as their balances have little
significance and have not changed significantly. Revenue
recognized in the year ended March 31, 2023 fromperformance obligations satisfied in prior periods is
immaterial.
(2) Transaction price allocated to the remaining
performance obligations
As for the transaction price allocated to the remaining
performance obligations, YMFG and its subsidiaries haveno significant contracts whose term initially expectedexceeds one year. Accordingly, consideration fromcontracts with customers contains no significant financing
component included in the transaction price.

27. CONSOLIDATED STATEMENTS OFCOMPREHENSIVE INCOME
Amounts of reclassification adjustments and tax effectamounts related to other comprehensive income in theyears ended March 31, 2023 and 2022 were as follows:

Unrealized gains (losses) on availablefor-sale securities
Amount generated during the year
Reclassification adjustments
Before tax effect adjustment
Tax effect amount
Unrealized gains (losses) on availablefor-sale securities
Deferred gains (losses) on hedges
Amount generated during the year
Reclassification adjustments
Before tax effect adjustment
Tax effect amountDeferred gains (losses) on hedges
Remeasurements of defined benefit
plans
Amount generated during the year
Reclassification adjustments
Before adjustment for tax effects
Tax effect amountRemeasurements of defined benefit
plans
Total other comprehensive income

Millions of yen
2023
2022

Thousands of
U.S. dollars
2023¥(39,883)
3,481(36,402)
10,973¥(38,468)
22,591(15,877)4,599$(298,677)
26,074(272,603)
82,176(25,429)(11,278)(190,427)

8,351
1,001
9,352
(2,848)
6,504

3,544
1,156
4,700
(1,431)
3,269

62,5407,496
70,036(21,329)
48,707

20
(628)
(608)
185

(1,265)(13,764)(15,029)4,578

150(4,703)(4,553)
1,385

(423)

(10,451)(3,168)¥(19,348)¥(18,460)$(144,888)

28. SEGMENT INFORMATIONBusiness segment information is not presented, as theGroup’s business is predominantly consisted of thebanking business, and the securities brokerage, credit
card, leasing, consulting and other businesses conductedby the Group collectively are limited.
Geographic segment information is not presented, as
domestic income of the Bank and consolidated
subsidiaries and their consolidated assets locatedsubstantially in Japan represent more than 90% of theGroup’s consolidated income and assets.
Overseas sales information is not presented, as
overseas sales are less than 10% of the Group’s
consolidated income.

3629. RELATED PARTY TRANSACTIONS
Details of the transactions between the consolidated
subsidiaries of YMFG submitting the consolidated financial
statements and related parties are as follows:
Executives and major shareholders of YMFG submitting
the consolidated financial statements (only for individuals),etc.

For the year ended March 31, 2023
Category:

Executive

Name:
Kazuo Tsukuda
Occupation or title:	Director and Audit andSupervisory Committee
Member of YMFG
Relationship with related party:
Lender of funds
Lending of funds*
Content of transaction:
Transaction amount:	¥223 million ($2 million)
Account name:Year-end balance:(average balance)
Loan¥223 million ($2 million)* Conditions for this transaction and method of deciding the transaction
conditions were the same as general transactions.

For the year ended March 31, 2022

Category:
Executive
Kazuo Tsukuda
Name:
Occupation or title:	Director and Audit andSupervisory Committee
Member of YMFG
Relationship with related party:
Lender of funds
Content of transaction:
Lending of funds*
Transaction amount:	¥223 million (averagebalance)
Account name:Loan
Year-end balance:¥223 million* Conditions for this transaction and method of deciding the transaction
conditions were the same as general transactions.

Corporate pensions for employees, etc.

For the year ended March 31, 2023

There was no transaction related to corporate pensions for
employees, etc.

Category:
Corporate pensions
Name:
Retirement benefit trusts
Relationship with related party:	Plan assets on retirement
benefit accounting
Content of transaction:
Return of part of assets
Transaction amount:¥25,026 million

30. PER SHARE DATA
Net assets per share
Net income (loss) per share
Net income per share (diluted)

U.S. dollars
2023$20.360.58
0.58(Note) Net income per share (diluted) for the year ended March 31,
2022 is not described, because net loss per share is recorded
although dilutive shares exist.

37

Net assets
Amounts excluded from net assets
Stock options
Non-controlling interests
Net assets attributable to common
stock at the year-end
Number of common stock at the yearend used for the calculation of net
assets per share (in thousands)*

Millions of yen
Thousands of
except number of shares U.S. dollars
2023
2022
2023
¥614,666¥636,344$4,603,205
2,853
6,465
21,366
43
82
322
2,810
6,383
21,044
611,813629,879

4,581,839

225,093

237,488—* Shares of YMFG held by the BBT are shown on the balance sheets astreasury stock, so are not included in the above number of common
stock at the year-end used for the calculation of net assets per share.
The number of the shares held by the BBT was 654 thousand as ofMarch 31, 2023 and 849 thousand as of March 31, 2022.

Net income (loss) per share is calculated based on thefollowing:

Net income (loss) attributable toowners of the parent
Amount not attributable to commonshareholders
Net income (loss) attributable toowners of the parent for common
stock
Average shares of common stockduring the year (*1) (in thousands)

Millions of yen
Thousands of
except number of shares U.S. dollars
2023
2022
2023
¥17,894¥(13,006)$134,015———

17,894(13,006)

134,015

231,171

244,077—

Diluted net income per share is calculated based on thefollowing:

Net income adjustment attributable toowners of the parent
Increase of shares of common stock (inthousands)
Warrant
Dilutive shares not included in thecalculation of diluted net income pershare due to no dilutive effectMillions of yen
Thousands of
except number of shares U.S. dollars
2023
2022
2023
¥—

¥—

$—

52

118

—

52

118

—

—

—

—

(*1) Shares of YMFG held by the BBT are shown on the balance sheetsas treasury stock, so are not included in the above average sharesof common stock during the year. The average number of theshares was 706 thousand in the year ended March 31, 2023 and899 thousand in the year ended March 31, 2022.
(*2) Diluted net income per share for the year ended March 31, 2022 is
not described, because net loss per share is recorded although
dilutive shares exist.

31. SUBSEQUENT EVENTSFor the year ended March 31, 2022

yen
2023
2022
¥2,718.04 ¥2,652.26
77.41(53.29)77.39—

Net assets per share are calculated based on thefollowing:

For the year ended March 31, 2023

Dividends were made in June 2023. Please refer to“22.
NET ASSETS.”

Acquisition of treasury stock

At a Board of Directors meeting on May 12, 2023, YMFG
resolved to acquire treasury stock, based on Article 156of the Companies Act as applied by replacing terms
pursuant to provisions of Article 165-3 of the Act, for the
purpose of returning profits to shareholders throughimproving capital efficiency.
1. Type of shares to be acquired
Common stock of YMFG
2. Total number of shares to be acquired

20,000,000 shares (maximum)(8.88% of the total number of shares issued (excluding
treasury stock))
3. Total acquisition price of the shares¥10.0 billion ($74,890 thousand) (maximum)
4. Acquisition period
May 15, 2023 to March 22, 2024
5. Acquisition method
Market purchases on the Tokyo Stock Exchange

Cancellation of treasury stock

At a Board of Directors meeting on May 12, 2023, YMFG
resolved to cancel treasury stock, based on provisions ofArticle 178 of the Companies Act.
1. Type of shares to be canceled
Common stock of YMFG
2. Total number of shares to be canceled
29,586,000 shares(11.19% of the total number of shares issued (including
treasury stock) prior to cancellation)
3. Scheduled cancellation dateJune 30, 2023

Introduction of Employee Stock Ownership Plan
(J-ESOP) and disposal of treasury stock through third
party allotment
At a Board of Directors meeting on May 12, 2023, YMFG
resolved to introduce an Employee Stock Ownership Plan
(J-ESOP) (hereinafter referred to as the“Plan”; and thetrust established in relation to the Plan based on a trust
agreement entered into with Mizuho Trust & Banking Co.,
Ltd. is referred to as the“Trust”), an incentive plan toprovide employees with treasury stock for the purpose ofbolstering employee morale and motivation towards
improved share price and operating performance byenhancing the interrelationship among share price,
operating performance and employee treatment and by
sharing economic effects with shareholders. YMFG also
resolved to dispose of treasury stock through third party
allotment (hereinafter, the“Disposal of Treasury Stock”)
following the introduction of the Plan.
1. Overview of the Trust(1) Name
Employee Stock Ownership Plan (J-ESOP)(2) Trustor
YMFG(3) Trustee
Mizuho Trust & Banking Co., Ltd.
(Re-trustee: Custody Bank of Japan, Ltd.)(4) Beneficiaries
Employees who meet beneficiary requirements set forth in
the stock benefit regulations(5) Trust administrator
Selected from YMFG employees(6) Type of trust
Money held in trust other than a money trust(third-party-benefit trust)(7) Purpose of trust
To provide YMFG shares, etc., which are the trust assets,
to beneficiaries in accordance with the stock benefit
regulations(8) Contract date of the TrustMay 29, 2023
(9) Date of placing money in trust
May 29, 2023
(10) Trust period
May 29, 2023 to the termination of the trust(No specific termination date will be determined; the trust
will continue as long as the Plan continues.)
2. Overview of the Disposal of Treasury Stock(1) Disposal date
May 29, 2023
(2) Type and number of shares to be disposed of
910,000 shares of common stock(3) Disposal price¥830 ($6.22) per share(4) Total disposal value¥755,300,000 ($5,654 thousand)(5) Planned allottee
Custody Bank of Japan, Ltd. (Trust Account E)(6) Other
The Disposal of Treasury Stock is subject to theeffectiveness of securities registration statements filed
under the Financial Instruments and Exchange Act.

For the year ended March 31, 2022

Dividends were made in June 2022. Please refer to“22.
NET ASSETS.”

Acquisition of treasury stock

At a Board of Directors meeting on May 13, 2022, YMFG
resolved to acquire common stock issued by YMFG as
follows, based on Article 156 of the Companies Act asapplied by replacing terms pursuant to provisions ofArticle 165-3 of the Act, in accordance with provisions ofArticle 7 of the Articles of Incorporation of YMFG pursuant
to provisions of Article 165-2 of the Act for the purpose ofenhancing shareholder returns and improving capitalefficiency.
1. Resolution at a Board of Directors meeting on May 13,2022(1) Type of shares to be acquired
Common stock of YMFG

38

(2) Total number of shares to be acquired
20,000,000 shares (maximum)

32. BUSINESS COMBINATIONS
For the year ended March 31, 2023

(3) Total acquisition price of the shares¥10,000,000,000 (maximum)

1. Business combination due to acquisition
Acquisition of additional shares in an affiliate accounted
for by the equity method by YMFG
(1) Overview of the transaction(i) Name and business of the acquired company(4) Acquisition period
May 16, 2022 to March 24, 2023
(5) Acquisition method
Market purchases on the Tokyo Stock Exchange

Issuance of unsecured subordinated bonds (with a
non-viability write-off clause)

Based on the resolution at a Board of Directors meeting
held on September 26, 2022 for issuance of unsecured
bonds, YMFG determined the following conditions for theissuance on October 14, 2022. Issuance for the 8th and9th series of unsecured callable bonds were completed
on October 20, 2022 and October 31, 2022, respectively.
Name

Total amount of
issue

Denomination ofeach bondCoupon rate

Issue price

Redemption price
Maturity date
Use of proceeds

Collateral/guarantee

8th series of unsecured
9th series of unsecured
subordinated callable bonds subordinated callable bonds(with a non-viability write-off (with a non-viability write-off
clause)clause)(Green Bonds)(Green Bonds)¥2,400 million¥20,000 million¥100 million¥1 million

1. ‌First five years (until
1. ‌First five years (until
October 20, 2027): 1.10%
October 31, 2027): 1.10%
per annum
per annum
2. ‌After five years: Six-month 2. ‌After five years: Mid-rate
Japanese yen TIBOR
for five-year Japanese yen+0.68%
swap + 0.68%¥100 per face value ¥100 of each bond¥100 per face value ¥100 of each bondOctober 20, 2032
October 31, 2032

The proceeds from the issuance of these bonds will be
used by the Banks to finance new and existing loans thatmeet the following eligibility criteria:
1. Renewable energy   ‌Financing for the following renewable energy power
generation projects (both new/existing projects):   i. Solar power generation   ii. Biomass‌power generation (limited to projects thatuse sustainable feedstock or waste materials)   iii. Wind power generation   iv. ‌Hydro power generation (limited to projects with acapacity less than 25 MW)
2. Green buildings   ‌Financing for projects associated with (1) construction/purchase of new buildings or (2) renovation/rebuildingof existing buildings which have obtained, or arescheduled to obtain, the following certifications:   i: LEED: Gold or higher   ii. BREEAM: Excellent or higher   iii. CASBEE: Rank A or higher   iv. BELS: Four stars or higher   v. DBJ Green Building: Four stars or higher
These bonds are not secured by collateral or guarantee
and there are no assets pledged particularly for thesebonds.

Name

Momiji Card Co., Ltd.

Business

Credit card business(ii) Principal reason for conducting the businesscombination
YMFG made Momiji Card a wholly-owned subsidiarythrough acquiring shares held by non-controllingshareholders for the purpose of leveraging the Groupsynergies and enhancing the Group’s consolidated
revenue.
(iii) Date of the business combination
March 31, 2023(iv) Legal form of the business combination
Conversion to a subsidiary through the acquisition ofshares(v) Name of the company following the combination
Unchanged(vi) Percentage of voting rights acquired
Percentage of voting rights held immediately prior to the
39.9%
business combination
Percentage of additional voting rights acquired on thedate of the business combination
60.1%
Total percentage of voting rights following the acquisition
100.0%(vii) Main reasons for deciding to acquire the company
YMFG acquired shares for cash consideration.
(2) Period of the financial results of the acquired company
included in the consolidated financial statements
As the acquisition date is deemed to have been March 31,
2023, income of the acquired company for the period
from April 1, 2022 through March 31, 2023 is recorded as
equity in earnings of affiliates.
(3) Acquisition cost of the acquired company andbreakdown of consideration
Fair value of common stock owned immediately prior to
the business combination as of the date of the businesscombination¥127 million ($951 thousand)Consideration for additional common stock acquired¥191 million ($1,430 thousand)Acquisition cost¥318 million ($2,381 thousand)(4) Content and amounts of principal acquisition-related
expenses
Not applicable(5) Difference between the acquisition cost of theacquired company and total acquisition cost forindividual transactions leading up to the acquisition
Gain on step acquisitions ¥481 million ($3,602 thousand)(6) Amount of and reasons for goodwill and method andperiod of amortization
Not applicable39

(7) Amount of and reasons for gain on bargain purchase(i) Amount of gain on bargain purchase¥885 million ($6,628 thousand)(ii) Reasons for gain on bargain purchase
The amounts of assets and liabilities of the acquiredcompany obtained at fair value as of the date of thebusiness combination exceeded the acquisition cost.

(4) Changes in YMFG’s equity related to the transaction
with non-controlling shareholders(i) Principal reason for changes in capital surplus
Acquisition of additional shares in subsidiaries(ii) Amount of decrease in capital surplus due to thetransaction with non-controlling shareholders¥285 million ($2,134 thousand)(8) Amounts of assets accepted and liabilities assumed on
the date of the business combination and breakdown
thereof

Acquisition of shares in a subsidiary through dividends inkind(1) Overview of the transaction(i) Name and business of the combined company

Current assets
Non-current assets
Total assets¥2,497 million ($18,700 thousand)¥574 million ($4,299 thousand)¥3,071 million ($22,999 thousand)Current liabilities
Non-current liabilities
Total liabilities¥2,695 million ($20,183 thousand)¥3 million($22 thousand)¥2,698 million ($20,205 thousand)(9) Impact on the consolidated statements of operations
for the year ended March 31, 2023 based on theassumption that the business combination wascompleted at the beginning of the year has been
omitted, as it is immaterial.
2. Transaction under common control
Acquisition of additional shares in consolidated
subsidiaries by YMFG
(1) Overview of the transaction(i) Names and businesses of the combined companies
Name
YM Lease Co., Ltd.

Yamagin Card Co., Ltd.

Leasing

Business

Credit card business(ii) Date of the business combination
December 29, 2022(iii) Legal form of the business combination
Acquisition of shares from non-controlling shareholders(iv) Names of the companies following the combination
Unchanged(v) Other matters related to the overview of thetransaction
YMFG increased the Group’s equity ratio to 100% throughacquiring shares held by non-controlling shareholders forthe purpose of leveraging the Group synergies andenhancing the Group’s consolidated revenue.

Name

YM Lease Co., Ltd.

Leasing

Business(ii) Date of the business combination
March 31, 2023(iii) Legal form of the business combination
Dividends in kind from the consolidated subsidiary(iv) Name of the company following the combination
Unchanged(v) Other matters related to the overview of thetransaction
YMFG acquired shares held by the consolidated subsidiaryfor the purpose of promptly reflecting YMFG’s
management strategies and sales measures according toregional characteristics in business activities.
(2) Overview of accounting standards employed
The transaction was handled as a transaction undercommon control, based on the“Accounting Standard forBusiness Combinations”(ASBJ Statement No. 21, January
16, 2019) and the“Guidance on Accounting Standard forBusiness Combinations and Accounting Standard forBusiness Divestures”(ASBJ Guidance No. 10, January 16,2019).

For the year ended March 31, 2022

There were no business combinations.

(2) Overview of accounting standards employed
The transaction was handled as a transaction with
non-controlling shareholders among transactions undercommon control, based on the“Accounting Standard forBusiness Combinations”(ASBJ Statement No. 21, January
16, 2019) and the“Guidance on Accounting Standard forBusiness Combinations and Accounting Standard forBusiness Divestures”(ASBJ Guidance No. 10, January 16,2019).
(3) Matters related to the acquisition of additional sharesin subsidiaries
Acquisition cost and breakdown of consideration
Consideration for
the acquisition
Acquisition cost

Cash and duefrom banks¥3,629 million ($27,177 thousand)¥3,629 million ($27,177 thousand)40