Integrated Report2018Mission

Design the Futurewith Financial ExpertiseContinue to expand financial frontiers;
Provide the best solutions for customers and society;Pursue sustainable development for Japan and the world.

Editorial Policy
DBJ Group published its first report for increasing communication with stakeholders in fiscal 2003, Environmental Reportfor a Sustainable Society. This integrated report is intended
to provide financial and non-financial information to explain
DBJ Group’s business activities and initiatives in sustainablevalue creation to our broad spectrum of stakeholders. The
content is decided by the Management Committee.
Period Covered and Scope
Period: Fiscal 2017 (April 1, 2017–March 31, 2018)(Some information from outside this period is also included.)
Scope: In principle, the report covers DBJ and its 11 main
subsidiaries.

Guidelines and Entities Referenced	International Integrated Reporting Council (IIRC)
International Integrated Reporting Framework
Guidance for Integrated Corporate Disclosure andCompany-Investor Dialogues for Collaborative
Value Creation

Date of Publication
September 2018

Disclaimer
Integrated Report 2018 contains forward-looking statements. Forwardlooking statements are based on information available at the time ofwriting and hypotheses or judgments regarding uncertain factors.
Accordingly, actual results may differ materially if conditions change.

https://www.dbj.jp/en/
Latest news, financial services, case studies for investment, loans, various reports, information for investors, and details about CSR initiatives
Note: Detailed information in the main part can also be found on the DBJ corporate website.

Contents
DBJ Group’s Vision
2 Message from the President
6 DBJ Group’s Corporate Philosophy
8 Our History
10	Three Priority Areas for Realizing
a Sustainable Society

12 Sustainability Management
14	Fourth Medium-Term Management Plan
16	Financial Market Activation andStabilization Resulting from Cooperation
and Collaboration under the Fourth
Medium-Term Management Plan

DBJ Group’s Strategy
Business Strategy

18

Sector Strategy

28

Area Strategy

34

Function Strategy

Management Foundation Strategy

42

Financial Capital46

Human Capital

50Intellectual Capital

52

Relationship and Social Capital

Corporate Governance
54 Message from the Chairman
56 Corporate Governance
62	Directors, Audit & Supervisory Board
Members, and Executive Officers

Risk Management
64 Risk Management System
Corporate Data
68 Timeline
69 Shareholder		Summary of Changes to the
DBJ Act after Conversion toa Joint-Stock Company

70 Organizational Structure
Data Section
72	The Development Bank of Japan Inc. Act
91 Financial Condition
155	Corporate Information /Group Companies

Integrated Report 20181

Message from the President

As a top runner in sustainability
management, we promotea sustainable society driven by both
economic and social value.

Hajime Watanabe
President and CEO
Development Bank of Japan Inc.

2

Integrated Report 2018

Integrated Report 2018

Data Section

In 2015, we gave fresh thought to the role DBJ should play leading up to 2030. In the course of ourdebate, we identified a number of changes in the external environment which have a significant impact
on DBJ Group stakeholders: Japan’s declining population and its climate and energy issues; intensifying
global competition; and technological innovations such as AI and fintech. Since its founding during thepostwar reconstruction period, DBJ Group has dealt with issues ranging from urbanization and pollution
control, up through the period of high economic growth, to the challenges of crisis management andcompetitiveness building we are working on today. Based on the roles the Group has undertaken and thevalue it has realized over this time, we tried to identify the best areas in which to use our strengths overthe longer term in the interests of a sustainable society.
The result was Vision 2030. Drawn up in 2017, it establishes infrastructure, industry, and regional economies as the three priority areas (materiality items) for DBJ Group initiatives (see page 10). Our contributions in these areas will be consistent with the Group’s course so far, and we believe they will be in linewith what society and stakeholders expect from us in the future. The Group will do its utmost to promotesustainable development in these fields.

Corporate Data

3. The Long-Term Vision 2030 and Priority Areas

Risk Management

Since the days of its predecessors, the Japan Development Bank and the Hokkaido-Tohoku Development
Finance Public Corporation, DBJ Group has contributed to Japan’s sustainable development. It has achieved
this by responding flexibly to the issues of the day, through the periods of postwar reconstruction and highand stable growth, the bubble economy and its collapse, globalization, declining birth rates and aging
population, and growing environmental and disaster awareness. The past decade alone has seen dramaticchange in the wake of the global financial crisis and such major events as the Great East Japan Earthquake.
DBJ Group has developed new initiatives with an eye on the future, made possible by steady dialogue withour clients and other stakeholders. This dialogue we regard as a precious asset.
In October 2018, DBJ Group will mark its 10th anniversary as a joint-stock company. Going forward, we
will continue to focus on flexibly responding to the changing needs of our clients and society as a whole,in keeping with our mission of “designing the future with financial expertise” while maintaining the corevalues of initiative and integrity.

Corporate Governance2. The Role of DBJ GroupDBJ Group’s Strategy

Political instability is increasing today against a global backdrop of emerging protectionism and growing
geopolitical risk. The environment surrounding financial institutions is also changing rapidly amid tightened
financial regulations across the globe, rapid innovation in fintech, and negative interest rates in Japan.
In a world of rising uncertainty, a heightened awareness of the role of finance in building a sustainable
society has produced marked change in the environmental, social, and governance (ESG) movement.
In June 2017 the Task Force on Climate-related Financial Disclosures, formed under the auspices of the
Financial Stability Board (FSB), published its final recommendations. In Japan, corporate leadership in working towards the United Nations’ Sustainable Development Goals (SDGs) has been a powerful motivating
force, along with the ESG investment initiatives of the Government Pension Investment Fund (GPIF).
As countries across the world set forth shared goals for sustainable development and the world looks
to private companies for solutions to social issues, increasing numbers of companies are making suchinitiatives an integral part of their business.

DBJ Group’s Vision

1. Foreword

3Message from the President

We will approach the creation of value centered on these three areas through sustainability management. By this we mean the creation of both economic and social value through our business activities
with the aim of realizing a sustainable society. Based on its unique business model, DBJ Group will work
to enhance both its financial and non-financial value, pursuing dialogue with our stakeholders so as toimprove the value creation process.

4. I nitiatives under the Fourth Medium-Term Management
Plan (Fiscal 2017–Fiscal 2019)
The Fourth Medium-Term Management Plan: Initiate Change, Create the Future was drawn up in 2017by backcasting from the Group’s long-term vision. It focuses on contributing to Japan’s growth by supplying risk capital to new growth sectors and regions, particularly in the vision’s three priority areas, and on
creating diverse financing and investment opportunities by linking up and collaborating with other financial institutions.
In fiscal 2017, the first year of the plan, progress was made in investment in infrastructure. Industry
initiatives were put forth in aerospace, telecommunications, and healthcare, which we see as sources ofnext-generation growth. Special Investment Operations (see page 34) allowed us to exercise creativity
and originality in drawing up region-specific projects such as alliances between regional and overseas
companies. I believe the Group’s efforts to work as one in pursuing these initiatives also marked a significant advance.

5. Our Company Going Forward
Fiscal 2018 marks the halfway point in the Fourth Medium-Term Management Plan. In Future Investment
Strategy 2018, published in July 2018, the Japanese government presents the concept of Society 5.0,
which centers on a connected society based on digital technology. The challenge for our clients today is to
move into new areas that transcend traditional established industries. In fiscal 2018 DBJ Group introduced
initiatives in the innovative logistics sector to augment its activities in aerospace, telecommunications, andhealthcare. In addition to supplying risk capital, we see our role as taking on challenges in new sectors andfunctioning as a financial hub for a diverse range of businesses.
Other areas in which we will provide support include renewable energy and urban transportation anddistribution infrastructure, essential to the creation of strong and flexible communities which draw on
next-generation technologies to promote environmental friendliness and disaster resilience. Key measures
include expanding the flow of funds throughinstruments such as real estate investment trusts(REITs) designed to satisfy demand for real estate
renewal, and public–private partnerships (PPPs)
and private finance initiatives (PFIs) for infrastructure projects dealing with tightening fiscal
constraints.
When addressing local issues as part of theseforward-looking initiatives, we will need to keep
regional characteristics in mind. Ties and collaboration with local financial institutions and otherentities will be increasingly important. And withthe rise in the ESG movement, we will be actively
promoting our DBJ certification programs (seepage 51).

4

Integrated Report 2018

DBJ Group’s Vision
DBJ Group’s Strategy

August 2018

Corporate Data

President and CEO
Development Bank of Japan Inc.

Data Section



Risk Management

Sustainability management is the key to our value creation process, and human resources are its mostimportant foundation. DBJ’s officers and employees draw on our corporate DNA to pursue a balance ofeconomic and social value. They have inherited the DBJ DNA of long-term perspective, impartiality, publicmindedness, and reliability which have evolved over the years in the course of our business. Bolstered bythis DNA, the Group has always risen to meet the challenges of the times. We are constantly striving toenhance our skills in corporate and project assessment. Our expertise in long-term screening and assessment, based on a comprehensive view of regional or current issues, is equal to network building asa central Group asset.
The employees who embody the Group’s core values should be able to pursue their activities in full
health, and for this purpose we are promoting workstyle reform. In fiscal 2018 we introduced telecommuting to bring more flexibility to working patterns. Employees dealing with client and community issues needto have a good grasp of global trends, and to enhance their global perspective we offer an expanding
range of multilevel training programs including courses at universities overseas.
Dialogue with stakeholders is essential to fulfilling our mission as a top runner in sustainability management. I hope that this integrated report will serve to deepen communication among our employees,
customers, and the broader community.

Corporate Governance

6. A Top Runner in Sustainability Management

Integrated Report 2018

5

DBJ Group’s Corporate Philosophy
Design the Future with Financial ExpertiseDBJ Group updated its corporate philosophy to coincide with the unveiling of its Fourth MediumTerm Management Plan.
With due consideration paid to progress it has made thus far, projected changes in the businessenvironment, and outstanding social issues, DBJ Group has formulated a mission to relentlessly
pursue, core values to share, and its Vision 2030 to follow as a guide into the future.
In connection with these elements of its corporate philosophy, DBJ Group has identified four core
corporate values—long-term perspective, impartiality, public-mindedness, and reliability— that also
embody its strengths and areas of differentiation.

MissionVision 2030
Leveraging DBJ’s uniquestrengths to pursue its mission
and realize its vision

Business strategy
Sector strategy
Function strategy
Area strategy

Capital strategy
Sustainability
management

Values put into practicedefine our strengths

Execute strategy
based on values

Action Guideline

Values6

Integrated Report 2018

Financial capital
Human capitalIntellectual capital
Relationship and Social
capitalDBJ Group’s Vision

Sharing Our Corporate Philosophy
Further propagating and applying our corporate philosophy will improve awareness of our social
responsibility, enhance the sense of unity in DBJ Group, lower communication costs, and motivate
our employees to grow with intention and a sense of mission.

Design the Future with Financial ExpertiseContinue to expand financial frontiers;
Provide the best solutions for customers and society;Pursue sustainable development for Japan and the world.

Corporate Governance

As industry and infrastructure professionals skilled in handling
all types of risk, we will play a unique role in the economy andsociety of 2030—leading new business and market creation while
responding to crises and other social needs.

Risk Management

Our vision for 2030,
embodied in
our mission andstrategies

DBJ Group’s Strategy

Our unwavering
purpose andour incessantdetermination toshape the future

Corporate Data

Our strategy to reach our vision for 2030
Fourth Medium-Term Management Plan
DBJ’s unique strengths assist with strategy execution
Our DNAa long-term perspective, impartiality,
public-mindedness and reliability
Data Section

Our guidelines fortaking specificactions that
expresses our values

Responsibility to future generations.... • We fulfill our responsibility to the future by pursuing both
economic and social value.

The customer’s perspective................... • We devote unequaled thought to each possibility—from thecustomer’s point of view.

Outstanding service............................... • We review and enhance our services while improving productivity.
Commitment and cooperation............. • We work tirelessly to broaden frontiers and achieve best results.

Our unwaveringvalues sharedby management
and employees(base component)		• We respect diversity and work together for greater shared value.

Initiative   Integrity

Integrated Report 20187

Our History
Our Mission and Values

The Japan Development Bank (JDB) and the Hokkaido-Tohoku Development Finance Public
Corporation (HTDFP), the predecessors of DBJ, were established with the objective of reviving
Japan’s economy and society after the end of World War II.
These companies contributed to the sustained development of society by providing solutions
in tune with the times, changing themselves while staying true to their core values of taking onchallenges with integrity amid significant changes in the economic and social landscape.
Economic recovery

Rapid growth

Stable growth

Economic bubble

1951 The Japan Development Bank Law enacted

1951–1955

1966–1971

1985–1995

Strengthening of international
competitiveness and creation of social
development loans

Development of lifestyle and social
infrastructure and a smooth industrial
transformation

Aiming to enhance international competitiveness in accordance with the transition to an
open economic system, JDB focused on support
for industrial system improvements and independent technological development. It alsoemphasized social development throughregional development, urban redevelopment,
logistics modernization, pollution prevention,and other measures in a bid to relieve ­problems
accompanying high-level growth.

Pressing needs arose for increased domestic
demand and an industrial structural shift against
a background of aggravating trade friction withother countries. JDB focused on support forsocial capital improvement, creative technological development, and industrial transformationand other issues.
In the 1990s, it targeted environmental andenergy measures and regional economic stimulation with the aim of making Japan a lifestylesuperpower.

Kawasaki Steel Corporation (currently JFE SteelCorporation): Construction of Chiba Steelworks (Chiba)
Modernization of steelmaking through construction of
the first postwar blast furnace

Nissan Motor Co., Ltd.: Auto production facility(Kanagawa Prefecture)
Strengthening of the Japanese automobile industry forcapital liberalization

Kansai International Airport Company, Ltd.:
Kansai International Airport
Construction of a large international hub airport

1956–1965

1972–1984

Reconstruction and self-relianceof the economy
In 1951, JDB was established and commenced
accommodation loans to facilitate the development of the power supply, which forms thebasis of the economy and industry, and therationalization, modernization, and cultivationof coal, steel, marine transportation, and othermajor industries.

1996–2000

High-growth infrastructuredevelopment

Improvements to quality of life andstable energy supply

Creation of a vibrant and affluent
society and stable economy

To expand and reinforce the energy and transportation activities that underpin industrial
infrastructure, JDB served to power new economic expansion. It also provided loans for local
development to correct regional disparities.
Established in 1956, the Hokkaido
Development Finance Public Corporation wasrestructured in 1957 to form HTDFP and beganproviding investments and loans to promoteindustry in these two regions.

JDB began antipollution measures, regional andurban development, other social initiatives, andindustrial development. During the first oil crisis,
it provided investment and loans for energy
alternatives to fossil fuels, as well as efforts toconserve energy, to ensure stable energy supplies. It also supported development of largescale industrial sites.

JDB focused on such important areas as ongoing improvements to social capital, environmental and other measures, and support for
venture businesses. In addition, it swiftly implemented reconstruction loans in the wake of theGreat Hanshin-Awaji Earthquake and loans tostabilize the financial system by functioning asa safety net.

Nippon Yusen Kabushiki Kaisha: Liner Sanuki Maru
Rebuilding Japan’s merchant shipping fleet with financeunder the government’s shipbuilding program

New Town Center Development Co., Ltd. (Now Sunshine
City Corporation): Sunshine City construction (Central
Tokyo) Ikebukuro redevelopment for new urban
configuration

Nakayama Joint Power Generation Co., Ltd.:
Independent power producer (Osaka)
JDB offered project finance for Japan’s first steelmaker
to enter the power generation business triggered byderegulation.

8

Integrated Report 2018

Structural reform

2007 Enactment of the Development Bank of Japan Inc. Act

The 2008 financial crisis / The Great East Japan Earthquake2015 Amendments to the Development Bank of Japan Inc. Act

2001–2007
Financial solutions that support
communities, the environment,
and technology

2008 onward
Development Bank of Japan Inc.
established

Global financial crisis precipitated by
the 2008 financial crisis

Development Bank of Japan Inc. was establishedon October 1, 2008, as a special stock company
by means of conversion to a joint-stock company.
As an impartial provider of industrial finance,long-term funds, and risk capital provided
through integrated investment and loan services,
DBJ addresses the various issues that clients face.

The financial crisis in the autumn of 2008
precipitated a global financial crisis. As thissituation impaired the functioning of the bondmarkets, corporate cash flows worsened. DBJ
responded promptly with financial Crisis
Response Operations. Beginning in January
2009, these operations started to include
purchases of commercial paper in response tofalling functionality in that market.

Corporate GovernanceIn 1999, JDB and HTDFP were dissolved and theDevelopment Bank of Japan was established.
It focused its ­operations in three areas: community ­development, environmental conservation and ­sustainable societies, and the creationof new technologies and industries. In theseways, it contributed to the sustainable development of Japan’s economy.

DBJ Group’s Strategy

Post-bubble economy

PASMO Co., Ltd.: Development of the PASMO IC cardthat transformed public transport convenience
Note: PASMO is a registered trademark of PASMO Co., Ltd.

Risk Management

Great East Japan Earthquake disasterand crisis response

V-Lease Corporation
DBJ entered the business of operating leases for aircraft
engines, of which core parts are produced by Japanese
heavy industry companies. Through this business, we
aim to promote the further development of theJapanese airline industry.

Responding to the March 11, 2011, Great
East Japan Earthquake disaster and crisis, DBJ
worked with other financial institutions toprovide appropriate financing, particularly toelectric power companies. Through the Great
East Japan Earthquake Reconstruction Fund,established jointly with financial institutions in
the disaster-stricken region, DBJ continues toprovide risk capital through such methods as
subordinated loans and preferred shares.

Corporate Data

Development of innovative financial
products focused on sources ofcorporate value

Dexerials Corporation
DBJ supported the expansion of operations by providing
management resources, including human resources,
along with risk capital to Dexerials, which has worldleading technologies in the functional materials field.

Overseas business development
DBJ began to develop a foundation for providing investment and loans overseas with theintention of returning knowledge to Japan.

Data Section

Drawing on the knowledge gained from extending more than ¥3 trillion of investments andloans for environmental conservation projects
over more than 40 years, in 2004 DBJ launched
the Environmentally Rated Loan Program, whichuses its proprietary screening system to evaluate
firms’ non-financial information and determine
loan terms and conditions for selected firms
with high scores. Using the same method, DBJ
followed up with a disaster preparedness loan
program in 2006, which was renamed the BCM
Rated Loan Program in 2011, and the
Employees’ Health Management Rated Loan
Program in 2012.

DBJ Group’s Vision

The Development Bank of Japan (DBJ) was established in 1999. After becoming a joint-stock company in 2008, DBJ
steadfastly engaged in major Crisis Response Operations in the wake of the global financial crisis and the Great
East Japan Earthquake. Every day, DBJ strives to contribute to the sustained growth of the nation by addressing
diverse social needs with financial solutions such as loans, investments, advisory services, and asset management.

Joban Kosan Co., Ltd.: Spa Resort Hawaiians(Fukushima Prefecture)
Support for a theme park that became a symbol ofreconstruction after the Great East Japan Earthquake

Reinforcement of the function of
supplying growth capital
The Act for Partial Amendment of theDevelopment Bank of Japan Inc. Act, which wasenacted on May 20, 2015, created Special
Investment Operations. This new investment
scheme, a portion of the funding for which isprovided by the Japanese government, is atemporary measure to intensively provide thegrowth capital needed to promote the competitiveness of Japanese enterprises and regional
revitalization.

Senoko Power Ltd. (Singapore)
DBJ provided subordinated financing to Senoko Power,
the largest electric power company in Singapore.

Integrated Report 20189

Three Priority Areas for Realizing a Sustainable Society
Our Aspirations for the Future (Vision 2030)

With its values of initiative and integrity, DBJ Group has consistently responded to changes in the economic environment and social issues by providing solutions to fit the times and contribute to sustainable social development.
This has been accompanied by changes to DBJ Group itself. In 2017, the Group formulated Vision 2030, whichtakes into account changes in the external environment that have a significant impact on stakeholders, in the
pursuit of a sustainable society. In seeking to realize Vision 2030, the Group is building on its roles and dialogue
with stakeholders thus far with a focus on the three priority areas of infrastructure, industry, and the regions.

Roles Undertaken
Providing solutions that meet the needs of the times
amid major changes in the economic environment andsocial issues
Developing high-growth
infrastructure

Strengthening
international
competitiveness

Smoothening industrial
transformation

Creating an affluent
society

Regional revitalization

Regenerating business

Financial crisis response,
post-earthquake
reconstruction

Supplying risk capital

Long-running, continuous
collaboration and dialogue

Future Changes in theExternal Environment
In drawing up Vision 2030, we identified changes in the external environment that could have a major impact
on DBJ Group stakeholders in the
future. These sync with the United
Nations Sustainable Development
Goals (SDGs) and we aim to contributeto realizing those goals.

Population problems

Climate change,
natural resources, and energy
Advisory Board
Monitoring Board

Globalization

Stakeholders
AI, fintech, andother technological innovations

Government budgets,finances, and regulations

10

Customers

Communities

Employees

Financial institutions

Investors

Shareholders

Integrated Report 2018

DBJ Group’s Vision

Realizing asustainable society

DBJ Group’s Strategy

Vision 2030
As professionals in the industrial and infrastructure fields,
leveraging our ability to address diverse risks, taking the lead increating businesses and markets, and precisely responding toCorporate Governancesuch social demand as crisis response, we aim to play a unique rolein the economy and society in 2030.

DBJ Group has established infrastructure, industry, andthe regions as its three priority areas based on the roles
it has played and the functions it has undertaken to date,the social value it has realized, and future changes inthe external environment. Leveraging its professional

Risk Management

Our Three Priority Areas
strengths, the Group is assessing long-term changes inthe external environment to provide creative solutions
to issues confronting clients in infrastructure, industry,
and the regions and thereby play a part in creating asustainable society.

Corporate Data

Creation,
Conversion, and
Growth in Industry

Rebuilding of energy systems,
more advanced transportation
networks, creation of attractive
communities

Commercialization of new technologies, business restructuring
to improve productivity andhone competitiveness, businessdevelopment in global markets

Rebuild energy andtransportation infrastructure,
upgrade public infrastructure

Promote urban growth

New technologies and businesses(promote innovation)
Reorganization
Overseas expansion

Self-Reliance andRevitalization of
Local Economies

Data Section

Rebuilding andReinforcement ofInfrastructure

Industrial revitalization basedon regional characteristics,
overseas business development, response to inboundtourism, business succession

Solve issues specificto each region
Play a role connecting regions
to Tokyo, regions to regions,and regions to the world

Integrated Report 201811

Sustainability Management
Value Creation Process

As a top runner in sustainability management, DBJ Group seeks to promote sustainable development
in Japan and worldwide with solutions to issues facing clients and society.
The sustainability management targeted by DBJ Group consists of business activities based ona business model that leverages Group capabilities in fields such as integrated investment andloan services and consulting and advisory services. The business model is designed to simultaneously
raise economic value and social value in pursuit of a sustainable society. We are working constantly
on improving our value creation process through collaboration and dialogue with stakeholders,seeking refinements in our sustainability management to elevate the value we create.

Contributing to Solutions in
Our Three Priority Areas with
Sustainability Management

Communication with Stakeholders
Refining our economic and social value creation process throughdialogue with our stakeholders

Rebuilding andReinforcement ofInfrastructure

Rebuilding of energy
systems, more advanced
transportation networks,
creation of attractive
communities

Integrated Investment and Loan Services That Contribute to
Resolving Social and Client Issues

Risk Capital
Finance• Financing

Creation,
Conversion, and
Growth in Industry
Commercialization of newtechnologies, businessrestructuring to improve
productivity and hone competitiveness, business development in global markets• Investment
Creating Diverse
Financial Deal
Opportunities• Assetmanagement
Providing Our
Knowledge

Self-Reliance andRevitalization of
Local Economies
Industrial revitalization
based on regional characteristics, overseas businessdevelopment, response toinbound tourism, businesssuccession

12

Integrated Report 2018

• Consulting andadvisory• Special
Investment
Operations• Crisis Response
Operations

Crisis Response
Operations

Business activities
in tune withrisk appetites

DBJ Group’s Strategy

market instability as mandated under the DBJ Act.
Implementation of DBJ Group’s business model requires
special resources. While healthy financial capital is a vital
support, we also strive for the integrated expansion offinancial and non-financial capital, using clear definitions
for the human capital, intellectual capital, relationship capital, and social capital that impact on our financial value
creation in the long term.

DBJ Group’s Vision

For our clients in industry and infrastructure, we provide
integrated investment and loan services commensuratewith their risk appetite along with consulting and advisory
services. Additionally, for our investor clients we offer syndication and asset management services. These businessactivities extend to regions throughout Japan and overseas.
We also undertake Crisis Response Operations as
required by events such as major disasters or financial

Stakeholders
Customers

Employees

Financial institutions

Investors

Shareholders

etc.
Corporate GovernanceCollaboration,
dialogue

Communities

Advisory Board
Monitoring Board

DBJ Group’s Management Capital Communication

Risk Management

Financial Capital
Creationof financial
value

Investment of management resources

Corporate Data

Human Capital
Long-term
impact on ability
to create
financial value

Economic
Value
Creation

SocialValue
Creation

Increase andconversion ofcapital value

Sustainability Management for
Both Economic and Social Value

Data Section

Intellectual
CapitalCreationof nonfinancial
value

Relationship andSocial Capital
Outcome of business activities

Corporate Governance and Risk Management

Integrated Report 201813

Fourth Medium-Term Management Plan
Initiate Change, Create the Future

Specific strategies for the three priority areas in realizing
DBJ Group’s long-term vision were incorporated into the
Fourth Medium-Term Management Plan for fiscal 2017–
fiscal 2019.
In formulating this plan, we undertook an in-depth analysis of our vision and considered business strategies
centered on sectors, geographical areas, and functions aswell as management foundation strategies for financial andnon-financial capital.
With regard to our business strategy, we are expanding
our integrated investment and loan services for clients inthree infrastructure fields and in industries including new
sectors, and we will be extending these initiatives to regions
across Japan and overseas.
As for our management foundation strategy, we havedivided DBJ Group management resources into thecategories of financial, human, intellectual, and relationshipand social capital. We will promote the growth and transformation of these capitals by investing in our management
resources and improve our business activities to realize
better results.
Amid heightened uncertainty in the external environment, DBJ Group will continue to work as one in line with
its values of initiative and integrity to promote sustainablegrowth through the Fourth Medium-Term Management Plan.
The slogan of the plan—Initiate Change, Create the
Future—designates our intention to spend the next three
years creating a future foundation for DBJ Group that willallow it to respond flexibly to changes in the external environment and take on the challenge of changing itself forthe better.

Business Strategy
P18 – 41

Management
Foundation
Strategy

Fields (Sectors)

Financial capitalIndustrial
fieldsThree infrastructure fields

Functions

EnergyTransportation

Urban
development

Financing(includingcrisisresponse
operations)

Provide higher-value-added services,such as structured financing andmezzanine financing

Investments(including
special­investments
operations)

Promote long-term investments ininfrastructure and growth investments
in companies

Fees andcommissions

Expand the asset management businessin the infrastructure and private equity
fields, in addition to arrangement andadvisory services

Newfunctions

New fields

Investmanagement
resources

Integrated
management

Develop
fields where
innovation isprogressing

Non-financial
capital

Aerospace
Communications
Healthcare
Global logistics

Human capitalIntellectual
capitalOther businessdevelopment

Develop new functions tocomplement financing, advisory, andasset management services

Results ofbusiness activities

Areas

Regions andoverseas

P42 – 53

Relationshipandsocial capital

Support regional globalization, provide financing
opportunities overseas, provide solutions
Role connecting regions to the world

Corporate Governance and Risk Management
P54 – 67

14

Integrated Report 2018

Actual(Consolidated)

Gross ordinary income*1

ActualActualTarget(Fiscal 2016)(Fiscal 2017)(Fiscal 2019)¥182.6 billion¥171.1 billion¥174.3 billion¥190 billion¥103 billion¥87.6 billion¥91.9 billion¥80 billion¥19.2 billion¥4.5 billion¥12.6 billion

—

26%

30%

34%

About 35%

Of which, credit costs (negative = cost)*

2

Expense ratio*3—¥16.5 trillion¥16.9 trillion¥16 trillion

ROA*3 *4

1.1%

1.1%

1.0%

About 1%

ROE*3 *4

3.7%

3.0%

3.1%

About 3%

—

17.2%

16.8%

At least 14%

Total assets

Soundness

Capital adequacy ratio*5

Business Strategy
DBJ Group made progress in constructing a stable infrastructure investment portfolio; using Special Investment
Operations to support the overseas business developmentof regional infrastructure companies; promoting initiatives
in new sectors, particularly special investment in aerospace
through a cooperation agreement with Japan Aerospace
Exploration Agency (JAXA); advancing tie-ups and collaboration with regional financial institutions, including setting
up a cooperation fund; and expanding the asset management business.

Management Foundation Strategy
DBJ Group issued its largest Sustainability Bond ($1 billion)
to date; made progress in workstyle reform and businessefficiency; initiated an employee engagement survey;
promoted cross-department knowledge sharing; and participated in such external initiatives as Principles for
Responsible Investment (PRI).

Integrated Report 201815

Data Section

Note: Business categories are those used in business management.

Corporate Data

Review of the Fourth Medium-Term Management Plan’s First YearBusiness Profit and Loss (Consolidated)
In investment and loan operations, lending yields weredepressed by low interest rates. However, margins(¥billion)
Fiscal 2016
Fiscal 2017
improved, albeit slightly, as DBJ focused on high-margin
Loans
86.0
84.8
structured products, while the interest rate on external debt
Investment
63.2
65.8
declined due to the maturity of debt carrying high interest
Fee and commission income
21.8
23.6
rates. However, profits edged down due to interest
Gross ordinary income
171.1
174.3
payments on an increased debt balance.
Operating expenses(51.1)(59.1)High profits were maintained in investment operations
Net business profits
120.0
115.1
thanks to factors such as exits. A certain degree of progress
Other extraordinary items(0)
2.2
was made in constructing a stable investment portfolio.
Gains on reversal of reserves and
2.4
11.9
In loan operations, fee and commission income fromcollection of written-off claims
Loans
4.4
12.4
financing declined, but earnings exceeded those in theInvestment
(2.0)
(0.4)
previous fiscal year due to factors such as DBJ Asset
Pretax profit
124.4
129.4
Management’s contribution to profits.

Risk Management*1 Includes stock-related gains/losses, before credit costs and expense deductions*2 Credit costs (negative = cost) = reversal of allowance for loan losses (negative = provision) + reversal of reserve for contingent losses (negative = provision) + loan write-offs (negative) +collection of written-off claims + gain on sale of claims (negative = loss)*3 Expense ratio and ROA versus gross operating profit, ROE versus net income*4 Average for fiscal 2014–2016 uses simple average of ROA and ROE for each fiscal year
*5 Common equity Tier 1 risk-weighted capital ratio

Corporate Governance(Average for fiscal
2014–2016)

Current net income
Profitability

FourthMedium-Term Management Plan

DBJ Group’s Strategy

Third
Medium-Term Management Plan

DBJ Group’s Vision

Financial Targets of the Fourth Medium-Term Management Planbillion, respectively, from the targets of the Third MediumOver the time frame of the Fourth Medium-Term
Term Management Plan.
Management Plan, DBJ Group will increase the supply ofrisk capital, including Special Investment Operations, work
DBJ aims to maintain robust levels of shareholders’diligently to secure a stable earnings base for the longequity and profitability in order to continue conducting
term, and strengthen overseas projects, such as infrastrucSpecial Investment Operations, financial Crisis Responseture projects. The Fourth Medium-Term Management Plan
Operations, and the supply of other risk capital.
targets gross ordinary income of ¥190 billion and net(In the Third Medium-Term Management Plan, our target
income of ¥80 billion, increases of ¥30 billion and ¥10
for net income was ¥70 billion in the final fiscal year.)Financial Market Activation and Stabilization Resulting from Cooperation
and Collaboration under the Fourth Medium-Term Management Plan
Under the Fourth Medium-Term Management Plan, DBJ Group will provide unique solutions through optimal partnerships
with an emphasis on cooperation and collaboration with other financial institutions and non-financial companies.

Infrastructure

DBJ

EnergySpecial Investment Operations

Government
investments
and loans

Government

Transportation

Crisis Response Operations

Urban
development

SRI bonds
Financing

Industry
New technologies
and businesses
restructuring

Consulting andAdvisory Services

Investments

Domestic andoverseas
institutional
investors

Bonds andloans

Risk capital andknowledge

Overseas expansion

Regional financial
institutions

Asset Management

Group Companies

Asset
management

Regions
Industry promotion
Overseasdevelopment

Creation offinancing
opportunities

Collaboration

Cooperation

Financial institutions andnon-financial companies

Business succession

Procurement and Management of Funds	DBJ receives funding in various formats, including the
procurement and management of funds from institutional investors and financial institutions in Japan andabroad, and supplies risk capital to customers in thedomestic and overseas industrial and infrastructure fields.

Leading financial
institutions
Collaborative
funds

Provision of Knowledge
	DBJ Group creates added value through the provision ofknowledge in such forms as surveys and analyses backed
by its experience in industrial and infrastructure fields
and in risk analysis and structuring.
	Crisis Response Operations and Special Investment
Operations
	These operations are mandated by the DBJ Act and will
be properly undertaken as operations backed by theunique strengths of DBJ Group.

Achievements through Financial Market Tie-Ups and Collaboration
	Tie-Ups and Collaboration with Regional Financial
DBJ Asset Management Co., Ltd. Initiatives
P40
Institutions
P29
In its efforts to seek out and provide investment opportunities, DBJ Asset Management Co., Ltd. has set up seven
DBJ Group started borrowing from regional financial instico-investment programs targeted at seven regional financial
tutions in fiscal 2007 as part of its fund-raising activities
institutions and foreign private equity funds as of July 2018.
and has since developed relationships through investment
products such as syndicated loans and the establishment
In April 2018, Japan’s Government Pension Investmentof joint funds (there were 30 at the end of March 2018),
Fund (GPIF) appointed DBJAM as an investment manager
promoting regional risk capital supply.
focusing mainly on Japanese infrastructure.

	Continuing Issuance ofSocially Responsible Investment (SRI) Bonds

16

P43

(As of March 31, 2018)2017$1 billion

2016$500 million

2015€300 million

2014€250 million

Integrated Report 2018

DBJ Securities Co., Ltd. Initiatives
In addition to products that leverage DBJ Group strengths,
such as green bonds and bonds with business continuity
management ratings, DBJ Securities is addressing diverse
investor needs by introducing investors to instruments suchas Tokyo Pro-Bonds and private equity funds while also
seeking to stimulate financial market activity.

DBJ Group’s Strategy Business Strategy
Sector Strategy
18		 Energy Sector
DBJ Group
Working in unison, DBJ Group provides diverse,
high-value-added solutions for solving various
issues faced by its customers and for solving
issues throughout society.

20		 Transportation Sector
22		 Urban Development Sector
24		 Industrial Sectors
Area Strategy
28		 R egions
32		 Overseas

Overseas
locations• DBJ Singapore Limited• DBJ Europe Limited• DBJ Investment Consulting (Beijing) Co., Ltd.

Function Strategy
34		 Special Investment Operations /Crisis Response Operations

38		 Syndication, Advisory,
Investments
and loans, Assetmanagement• DBJ Capital Co., Ltd.
• DBJ Investment Advisory Co., Ltd.
• DBJ Securities Co., Ltd.
• DBJ Asset Management Co., Ltd.

Consulting Services

40		 Asset Management
Management Foundation Strategy
42		 Financial Capital

Research,
Consulting• Japan Economic Research Institute Inc.
• Value Management Institute, Inc.

46		 Human Capital
50		 Intellectual Capital
52		 Relationship and Social Capital

Real estate
management /IT services• DBJ Real Estate Co., Ltd.
• Consist, Inc.

Integrated Report 201817

Sector Strategy

Priority
Areas

Rebuilding of energy systems, more advanced transporta-

Rebuilding and Reinforcement of Infrastructure tion networks, creation of attractive communities

Energy Sector 
DBJ will contribute to the realization of a low-carbon society worldwide and the globalization of Japanese energy companies by taking
a leadership role in the financing of change in Japan’s energy markets.

Main Business Fields
Financing and advisory services areprovided to companies and projects inthe following sectors:• Electricity
• Gas
• Oil

Longer-Term External Environment and Social Issues
Japan’s energy industry is at a major crossroads. Withchanges in the macroeconomic structure, including the
population decline, and advances in energy conservation,
DBJ must promote the reduction of CO2 emissions while
dealing with deregulation in the electric power and gas
markets at the same time.
Under these conditions, issues related to financial
support for the energy industry entail the supply of capitalfunding to spur the spread of renewable energy and othernew technologies and to address growing risks. Moreover,risks in project financing need to be clarified more clearly,
and efforts should be undertaken to allow market participation by a broader range of companies.
Strategy
While maintaining strong relationships with customers, DBJ
will focus on providing capital funding (risk money) andadvisory services to facilitate industry restructuring.
Furthermore, DBJ will focus on the smooth supply of capitalby collaborating with a broad range of financial institutions
to meet demand for investments in the deregulated electric
power market in Japan, in addition to strengthening initiatives in project financing with clarified risk allocation.
DBJ Group will reinforce its asset management operations in the energy field with the aim of nurturing markets
able to recycle capital, thereby allowing more financial
institutions to participate in the domestic energy infrastructure market.

18

Integrated Report 2018

Balance of loans in the electricity,gas, oil refinery, heat, and water sectors
As of March 31, 2018¥3.4 trillion
Overseas, DBJ aims to become more involved in markets
that have taken the lead in fostering deregulation, andthen return any knowledge gained to the domestic market
to advance its development, while proactively supporting
Japanese companies in their efforts to develop businessoverseas. Through these and other efforts, we aim tocontribute to the realization of a low-carbon society on
a global basis.
Accomplishments and Initiatives to Date
In recent years, DBJ has assisted with business restructuring
and overseas business development in the electricity, gas,and oil sectors against a backdrop of structural reforms inthe domestic energy industry. DBJ has provided optimal
financial solutions in tune with the needs of the times,
concentrating on the replacement of aging thermal power
plants and the construction of new renewable energy
power plants.
Initiatives in fiscal 2017 included the raising of funds
for domestic solar power generation projects and a joint
investment with Tokyo Gas Co., Ltd. in a gas distributor inIndonesia. While helping Japanese energy firms strengthen
their overseas operations, DBJ has participated in projects
in the U.S. market, which is a pioneer in deregulating theelectric power market. For the purpose of gaining insightfor the domestic market, DBJ also participated in a natural
gas power generation project in Pennsylvania, U.S.A.

DBJ Group’s Vision

Case Studies

SDT Solar Power / Green Power Tsugaru
Green Power Tsugaru
DBJ, together with megabanks, helped raise project
financing for Green Power Investment Corporation, arenewable energy developer in which DBJ has invested,
to construct Wind Farm Tsugaru (121.6 MW), the largest
wind power generation project in Japan, in Tsugaru City,
Aomori Prefecture. Although some of its construction
began in 2017, Wind Farm Tsugaru truly began to takeform once the project financing was raised. The projectcontractor, Kajima Corporation, plans to install 38 windturbines made by General Electric with 3.2 MW of
output. When this project finishes construction in April
2020, it will be able to supply electricity equivalent to theannual energy consumption of 90,000 households.

DBJ Group’s Strategy
Corporate GovernanceRisk Management

SDT Solar Power
DBJ, Solar Frontier K.K., and Taiyo Oil Co., Ltd. established SDT Solar Power K.K. to develop and operate a17.3 MW-scale power generation project that uses solar
panels made by Solar Frontier K.K. at a solar and oil business site in Yamaguchi Prefecture. Construction on the
power plant began in summer 2016, and the facility
commenced commercial operations in November 2017as a reliable source of clean energy. DBJ not only helpedwith financing, but was also the financial advisor for thecompany, assisting with the formulation of a businessplan. DBJ also coordinated with a group of banks toraise project financing during the construction phase,with The Yamaguchi Bank, Ltd. as the arranger and aproactive supporter of projects
that help revitalize the region
and expand the use of renewable energy.

Rendering of completed wind farm

Message from Employees

Trying a New Type of Renewable Energy Financing
Corporate Data
Data Section

With decarbonization trending around the world, renewable energy has increasingly drawn attention. Aiming to help the government reach its target for a renewable energy ratio of 22–24% by2030, DBJ will support the financing of renewable energy projects while focusing on the characteristics of each type of energy source, such as solar, wind, biomass or hydro power. Thanks to thefeed-in tariff system that was introduced in 2012, it has become possible to expect stable revenues
from each renewable energy power plant. As a result, project financing has been on the rise as ameans of procuring funds for renewable energy plants. Although it takes time to put financing
together, including negotiating contracts and creating revenue models, upon visiting the completed
power plant, I came away with a profound sense of satisfaction with the meaningful work that wasdone. Lately, financing for renewable energy power plants has been on the rise, and from the standpoint of a sponsor, it has been a learning experience for me every day, participating in the operationof the power plant, drawing up annual budgets, and fixing broken equipment.

Efforts to Combat Climate Change in the Energy Field
Sustainability management means balancing economic value withsocial value. Based on this fundamental principle, the DBJ Group has
worked for many years to ensure a reliable supply of energy while
reducing environmental impacts.
In the renewable energy field in particular, DBJ supplies diverse
risk capital, including project financing, mezzanine loans and equity
financing, to wind and solar power generation projects in Japan
from their initial stages. DBJ also finances offshore wind power
projects in Europe, with the aim of learning from cutting-edge
initiatives overseas and applying those lessons in Japan.
In view of the global debate about climate change and theOECD’s Arrangement on Officially Supported Export Credits, aswell as Japan’s energy policy based on the 3E+S* strategic plan,
DBJ works to ensure reliable supply while combating climate change.
In renewable and alternative energy, we plan to increase the supplyof risk capital for wind and solar power, new power grids, andhydrogen projects in order to encourage their introduction. For new
projects involving coal-fired power plants, which emit large amountsof greenhouse gases, DBJ takes a more cautious approach. In theprocess for finance decisions, we evaluate each project from environmental perspectives, such as whether generation efficiency is at or
above the ultra-super-critical level, in order to reduce environmental
burdens as much as possible.
* Energy security, Economic efficiency, Environment, and Safety, as stated in Japan’s Basic Energy Plan.

Integrated Report 201819

Sector Strategy

Priority
Areas

Rebuilding of energy systems, more advanced transporta-

Rebuilding and Reinforcement of Infrastructure tion networks, creation of attractive communities

Transportation Sector 
DBJ aims to lead in a financial aspect the growth of the transportation
sector and advancement of transportation networks in Japan. DBJ will
also act as a bridge between Japan’s financial market and the global
transportation finance market.

Main Business Fields
Provision of financing to companies andfor projects in the transportation sector• Land transportation• Marine transportation• Air transportation

Longer-Term External Environment and Social Issues
Around the world, growing populations will lead to thegreater movement of people and goods and spur growthin the transportation sector. In Japan, a country reliant on
trade, it is imperative to maintain the reliable transportationof goods and address issues, such as the declining andaging population, as well as the influx of overseas visitors.
Accordingly, various issues are waiting for solutions forsustaining growth in the transportation sector and increasing the sophistication of transportation networks. Keen to
help its customers solve these issues, DBJ Group will
provide financial solutions tailored to diverse needs while
acting as a bridge between financial markets in Japan andthe global transportation finance market.
Strategy
While maintaining relations with customers in the transportation sector, we will refine our ability to respond flexibly tochanges in the external environment and society. Morespecifically, DBJ will further strengthen its optimal financial
solutions for quality projects and assets in the land, marine,
and air transportation fields, as well as supply risk capital to
Japanese companies for sharpening their international
competitiveness. Additionally, DBJ will provide financing

20

Integrated Report 2018

Balance of loans in the transportation infrastructure (transportation industry) sector
As of March 31, 2018¥2.2 trillion

opportunities to Japanese regional banks and other financial institutions and investors in the global transportation
finance market through improved syndicated loans andvarious investment and loan products that utilize investment and securities functions.
Accomplishments and Initiatives to Date
In recent years, DBJ has provided financial solutions
optimized to satisfy modern needs, including debtor-inpossession financing for a Japanese start-up airline, participation in airport concessions, aircraft financing with a focus
on material value, and ship financing to support industrial
value chains.
Initiatives in fiscal 2017 included collaboration withprivate financial institutions in syndicated loans for Solaseed
Air Inc. to acquire aircraft, project financing for the expansion of operations at the international passenger terminalbuilding at Haneda Airport, and project financing for LNG
carriers in response to the increasing attention on clean
energy. Moreover, DBJ collaborated with Sumitomo Mitsui
Banking Corporation to create the world’s first aircraft
financing scheme with insurance features. DBJ China and
DBJ Securities worked together on the issuance of bonds for
China Eastern Airlines on the TOKYO PRO-BOND Market.

DBJ Group’s Vision

Case Study

Re-Expansion Project of Haneda Airport International Terminal

Corporate GovernanceRisk Management

Rendering of completed Haneda Airport International
Terminal

Corporate Data

Message from Employees

DBJ Group’s Strategy

Tokyo International Air Terminal Corporation (TIAT), which operates the international passenger terminal building at Haneda Airport, is undertaking a project toexpand the terminal in preparation for a planned increase in international takeoff and landing slots at Haneda Airport in 2020. For this project, DBJ raised a
total of ¥145 billion (including about ¥95 billion in preexisting investments andloans) in project financing as the lead arranger.
Based on the Asian Gateway Initiative, TIAT was established in 2006 as a
special-purpose company (SPC) to implement a completely financially independent private finance initiative (PFI) project to internationalize Haneda Airport,
which had primarily served domestic routes back then. When TIAT was established, DBJ was deeply involved in the project as the lead arranger for putting
together syndicated loans with other financial institutions, and was also an
investor in its preferred shares. DBJ helped with raising additional funds for the2014 expansion and the most recent expansion of the airport.
The internationalization of Haneda Airport strengthened the appeal of theTokyo metropolitan area with 24-hour operations and convenient access to thecity center. Amid a sharp increase in the number of foreign tourists visiting
Japan, the greater passenger capacity at Haneda Airport will likely contributesignificantly to the region as a transfer point between domestic and international routes. The project to expand the international passenger terminal willplay an essential role in welcoming a greater number of foreign tourists as aresult of public–private initiatives to promote Japan as a tourism destination andin hosting the Tokyo 2020 Olympic and Paralympic Games. DBJ will continue tocontribute to the healthy development of the Japanese economy and promote
the movement of people by increasing the sophistication of transportation
networks while reinforcing Japan’s mainstay transportation infrastructure,­beginning with airports.

Helping to Open Skies as a Gateway to Japan
Data Section

This expansion project not only expanded buildings for the international passenger terminal, but also ventured in new directions, including the sharing of domestic and international routes at the No. 2 domestic terminal, a rarity in Japan, and an
examination of possible flight routes over the Tokyo metropolitan area. In light of the steady flow of passengers, there was no
doubting the overall potential of Haneda Airport with its prime location and brisk demand. Nevertheless, each issue wascarefully addressed while all the details were worked out. The airport management business entails various risks withelements of commerce and real estate mixed in. DBJ brought its project experience and expertise to bear on the analysis anddecision-making for whether project financing would be a frameworkthat could absorb all these risks. For an island nation like Japan, airports
are a special place because they serve as the gateway for both people
coming to Japan and those leaving on a trip. The expansion of international capacity at Haneda Airport, which is a special venue for businesstravelers and tourists thanks to its close proximity to the Tokyo metropolitan area, will further open the nation to the rest of the world. Despite
my limited contribution, We are proud to have played a role in thisexpansion project.

Integrated Report 201821

Sector Strategy

Priority
Areas

Rebuilding of energy systems, more advanced transporta-

Rebuilding and Reinforcement of Infrastructure tion networks, creation of attractive communities

Urban Development Sector 
Our vision is to grow alongside cities by helping with the maintenance, renewal, and expansion of urban functions. We also aim togrow with the real estate financing market as a market-stabilizing
mechanism.

Main Business Fields
Loans and investments in urban development projects undertaken by developers,
special-purpose companies for owning realestate, loans and investments for real estate
investment trusts (REITs), and managementof DBJ Green Building Certification with
the Japan Real Estate Institute• Urban development business• Real estate financing• Green Building Certification

Longer-Term External Environment and Social Issues
Increasing the international competitiveness of cities inJapan is key to enhancing the country’s overall competitiveness. Urban infrastructure, built up since 1945, is coming
due for an upgrade. Seamlessly upgrading urban infrastructure without interruption is important from the standpointof creating communities that take into account the environment and society.
The real estate finance market, an essential part of creating communities, is prone to instability due to international
exposure. The securitization market in particular was greatly
affected by the global financial crisis, while the real estate
finance market was thrown into disarray. In spite of suchconditions, it is necessary to ensure a reliable supply of
capital, spur growth in the real estate finance market, andpromote urban development.
Strategy
DBJ will facilitate urban development through the supply ofrisk capital, including financing for developers and individual development projects. We also support the growthof REITs, which have become increasingly important entities
for the stable management of properties.
DBJ will provide opportunities to invest in quality assets
for institutional investors around the world as well as
regional financial institutions. By engaging in collaborative
financing through proper risk-sharing agreements, we will

22

Integrated Report 2018

Balance of loans in the real estate sector
As of March 31, 2018¥1.8 trillion

create stable cash flows in the realestate finance market.
DBJ Green Building Certification
was created in fiscal 2011 as asystem for evaluating and certifying real estate from an environmental and social perspective. DBJ
continues to operate this system along with the Japan Real
Estate Institute, while endeavoring to improve the evaluation of environmental and social aspects of real estate.
Accomplishments and Initiatives to Date
In recent years, DBJ has concentrated efforts on loans andinvestments in urban development projects undertaken by
developers, special-purpose companies for owning realestate, and loans and investments for REITs.
As for special projects undertaken in fiscal 2017, DBJ
arranged subordinated loans under its Special Investment
Operations for Hulic Co., Ltd., as well as mezzanine loans
for an SPC that acquires and manages housing that
promotes employment.
As of March 31, 2018, a total of 539 properties havebeen recognized with DBJ Green Building Certification.

DBJ Group’s Vision

Case Study

Helping Nippon Steel Kowa Real Estate in the Development of AKASAKA INTERCITY AIR

Corporate GovernanceRisk Management
Corporate Data
Data Section

Message from Employees

DBJ Group’s Strategy

Located in Akasaka 1-chome, AKASAKA INTERCITY AIR is alarge-scale, mixed-use 38-story, 205-meter tall building withhigh-spec offices, conference rooms, retail stores, medical
offices, and housing with direct access to a Tokyo Metro
train station. The Akasaka 1-chome district is a rare part ofcentral Tokyo that consists of a mix of office and residential
areas and an international atmosphere represented by the
many embassies and foreign companies present there.
The property has over 5,000 square meters of greenerythat cover over half the site, giving office workers, residents,
passersby, and other members of the community a place
to rest and relax. Situated along the Roppongi thoroughExternal view of AKASAKA INTERCITY AIR
fare, the property creates a green oasis in the center ofthe grounds.
In addition, with about 200 meters of trees lining theboulevard on the west side, the project was designed to complete a network of green pathways for pedestrians thatconnect to Toranomon, based on the Akasaka–Toranomon Green Road Concept of about 850 meters of tree-lined roads
that start at Circular Route #2.
The development project received DBJ Green Building Certification (plan certification) as a building incorporating
outstanding environmental and social considerations in Japan, in recognition of its consideration for the environment,
amenities that satisfy the diverse needs of tenants, and excellent BCP performance.
Small and medium-sized office buildings in the 23 wards of Tokyo are advancing in age, and many were built underolder earthquake resistance standards. Ever since the Great East Japan Earthquake, companies have put more emphasison the earthquake-resistance, disaster preparedness, and BCP of office buildings when they move locations.
In light of the current conditions, Nippon Steel Kowa Real Estate Co., Ltd. is working on the development of the
BIZCORE series of high-grade, medium-sized office buildings, leveraging its know-how accumulated in the development,
management, and operation of more than 90 office buildings in the city center.
DBJ, along with private financial institutions, supports development by providing business funds to Nippon Steel Kowa
Real Estate for the upgrading and maintenance of the urban foundation.

Ongoing Support for Urban Redevelopment

Tokyo and other major cities in Japan are among the first in the world to have reached a mature stage. Reinforcing andrenewing urban functions has become an issue within the context of strengthening international competitiveness, improving
disaster preparedness, fostering tourist destinations, creating green spaces,
reinforcing the earthquake resistance of aging small and medium-sized
office buildings, and adapting to diverse work styles. The construction of
AKASAKA INTERCITY AIR, which opened its doors in September 2017,
and the development of the BIZCORE series are a part of efforts to help
solve these issues faced by cities. Real estate development requires large
sums of funds, and it takes a long time to recover investments. For thesereasons, it is often the case that deep risk-taking is necessary with stable,
long-term financing and mezzanine loans. We aim to back such efforts tocreate communities through the ongoing provision of business funds andassistance with financial technologies, such as asset financing.

Integrated Report 201823

Sector Strategy

Priority
Areas

Commercialization of new technologies, businessto improve productivity and hone competiCreation, Conversion, and Growth In Industry restructuring
tiveness, and business development in global markets

Industrial Sectors 
In industrial fields seeing changes brought about by technologicalinnovation, the creation of new businesses, and restructuring, DBJ
Group will take a direct approach to solving issues faced by customers
and society while searching for growth opportunities for itself. As an
incubator that creates new businesses and markets, DBJ aims to play
an essential role in strengthening the competitiveness of industries inJapan.
Main Business Fields
Provision of financing and advisory services for companies andprojects in the industrial sector• Manufacturing• Communications, broadcasting, media• Retail and foods• Healthcare• Hotels, Japanese-style inns, tourism, etc.

Longer-Term External Environment and Social Issues
Amid changes in the external environment, including population problems, globalization, and such technological innovations as AI, customers are dealing with a variety of issues
that include the commercialization of new technologies
and other innovations, business restructuring to enhance
productivity and competitiveness, and overseas businessdevelopment with an eye on new growth opportunities.
Meanwhile, the financial environment is likely to include
diversification in capital providers, considering the ongoingsurplus capital conditions and advances in fintech and othertechnologies. As it becomes easier to access capital, providing unique added value will become essential to helping
customers solve their problems on the financial front.
Strategy
DBJ will offer solutions to the issues faced by customers—
centered on the fields of business portfolio optimization,
new business creation, overseas business development,
financial strategy, and capital policy—by mobilizing its
financing functions, knowledge, and unique networks
while leveraging its insight and expert knowledge of eachindustry. DBJ has created teams of specialists for establishing a solid business foundation in the aerospace, communications, and healthcare fields since 2017, and in thelogistics field since May 2018. While being deeply involvedin each industry, DBJ keeps an eye on socioeconomic megatrends and changes in the landscape to facilitate innovation

24

Integrated Report 2018

on various fronts of business development across industries(such as moving toward a hydrogen-based society) without
being beholden to traditional frameworks.
Accomplishments and Initiatives to Date
In the 1990s, DBJ was involved from an early stage infinancing new businesses, utilizing its ability to survey
industries and analyze corporations derived from its trackrecord of providing long-term capital for capital investments. From the early 2000s, when business and industry
restructuring came to the forefront, DBJ ramped up debtorin-possession financing, private equity investments, and
M&A advisory services. Since becoming a joint-stockcompany in 2008, DBJ has leveraged its knowledge andexperience in these fields to further improve its ability tosurvey industries. At the same time, DBJ has helped companies enhance their competitiveness and clients solve various
problems through advisory services backed by loans andinvestments to create new businesses and rebuild finances
while entering overseas markets and spinning off non-corebusinesses.
Initiatives in fiscal 2017 included the provision of DBJ
rated loans (see page 51) for the materials industry amid
growing interest in environmental, social, and governance(ESG) issues. These also included helping Fujitsu Ltd. andLenovo Group Limited establish their joint venture in the PC
business, in addition to efforts in new business fields.

25

Data Section

Integrated Report 2018

Corporate Data

Healthcare
In the healthcare field, DBJ Group has focused on medicine
and nursing care, and has launched new initiatives in thelife sciences field.

Risk Management

Responding to Innovation
Over the past few years, there has been a sudden rise intechnologies and innovations, such as in IT, new materials,
new energy, bioscience, and robotics, with the potential tosubstantially change the existing fabric of industry andsociety. For these new technologies to help society and leadto the creation of new businesses, it is important to spreadnew value systems and lay down rules for collaboration
across industries and between the public and private sectors.
DBJ Group created the Innovation Promotion Officeunder the Business Planning & Coordination Department inApril 2017 to facilitate collaboration among these diverse
players and take the long view for moving projects forward.
As for initiatives in fiscal 2017, DBJ, along with 10 othercompanies including automakers and infrastructure developers, established Japan H2 Mobility, LLC (JHyM) for the
purpose of building out a network of hydrogen refuelingstations for fuel-cell vehicles.

Corporate Governance

Logistics
In May 2018, DBJ newly established the Global Logistics
Office in its Corporate Finance Department, Division 3, inorder to sharpen its focus on the logistics field in light ofsweeping changes in the logistics industry being ushered in
by technological innovations including AI and IoT.
In terms of financial support, the Global Logistics Officesupports improvements in competitiveness and productivity
in the logistics field through assistance for creating new
industries with the latest technologies, the supply of risk
capital to companies innovating on the technological front,
and investments and loans for the latest, high-function
logistics facilities.
In terms of information support, DBJ holds Logistics
Innovation Workshops for industrial, government, andacademic entities to discuss issues and approaches related
to technological innovation in the logistics industry.

DBJ Group’s Strategy

Communications
Communications networks are responsible for handlingever-increasing volumes of data and communications traffic, and their importance is only growing. Along with thearrival of a society where everything is connected together
over networks, as key social infrastructure, communications
networks will have to become more resilient andsophisticated.
Our initiatives in fiscal 2017 included providing financing
for core communications assets, such as communications
towers and data centers, as well as purchasing shares, alongwith JTOWER Inc. and RISA Partners, Inc., in an operatingcompany in Vietnam with the largest In-Building Solution(IBS)—that is, mobile communications infrastructure s­ haring
inside buildings. In these and other ways, DBJ is proactively
supporting the overseas business development of Japanese
growth companies that have advanced technologies.

As for initiatives in fiscal 2017, DBJ cooperated with the
Ministry of Economy, Trade and Industry on the dissemination of knowledge related to medical equipment innovation. DBJ also provided growth opportunities and supported
overseas business development by matching Japanesecompanies with foreign firms through financing for medical
equipment venture funds in North America.

DBJ Group’s Vision

Aerospace
DBJ has been assisting the aircraft field for 30 years or so,ever since the Japan Development Bank era, through lending facilities based on the Aircraft Industry Promotion Act
for Japan’s first international joint development project for
jet engines. In April 2017, DBJ established the Aerospace
Office with the aim of developing the outer space field,
which is expected to grow as a new industry, in addition to
the aircraft field, leveraging the abundant knowledge andnetworks it has accumulated.
In fiscal 2017, initiatives in the aircraft field included theprovision of risk capital through Special Investment
Operations to support expansion in the civilian helicopter
business of Kawasaki Heavy Industries, Ltd. and the aircraft
engine businesses of Uemura K.K. and AeroEdge Co., Ltd.
In the outer space field, DBJ signed a collaborative agreement with Japan Aerospace Exploration Agency (JAXA) in
May 2017, under which it published a report titled“Strengthening the Competitiveness of Japan’s Space
Industry.” DBJ also invested in Global Positioning
Augmentation Service Corporation, a company planning asatellite positioning service accurate to the centimeter level
using Japan’s version of GPS; New Generation Small Rocket
Development Planning Co., Ltd., a company developing
small rockets; and ispace, inc., a company working tocommercialize resource development on the moon’s surface.

Sector Strategy

Case Study

Establishment of Joint Venture for Building Out Network of Hydrogen Refueling Stations
In February 2018, Japan H2 Mobility, LLC (JHyM) was establishedthrough joint investments by a total of 11 companies including DBJ
for the purpose of building out a network of hydrogen refuelingstations for fuel-cell vehicles (FCVs).
The newly established JHyM aims to bring Japan one step closer
to a hydrogen-based society by facilitating the proliferation of FCVs
and a self-sustaining hydrogen station business based on its plans to
Press conference on establishment of JHyM
create and fine-tune a network of optimally located hydrogen refueling stations across Japan.
Under the guidance of the Ministry of Economy, Trade andFinancing
JHyM
Infrastructurecompanies
Industry, the Strategic Roadmap for Hydrogen and Fuel Cells was
drawn up in March 2016 to define public–private targets for the
Financing
Deployment
New
Investors
JHyM
proliferation of hydrogen refueling stations for FCVs toward thehydrogenrefueling
realization of a hydrogen-based society in the future. JHyM wasstations
SubsidiesJapaneseestablished after it became apparent that a new framework isgovernment
needed for collaboration among the Japanese government, automakers, and hydrogen station network operators.
Use of funds from investors helps reduce initialinvestment burden of infrastructure companies
DBJ has cooperated with the parties involved in this project fromthe initial stages, working toward its realization, and helped bring
the project to fruition as the chief advocate for establishing the new company.
This initiative was highly significant for DBJ, bringing with it a recognition of its role in improving social value by helping move Japan toward a hydrogen-based society, as DBJ promoted this joint project while enlisting the cooperation of
key domestic players in the automobile and energy sectors. Other parties involved in this project stand to benefit as well,as it lessens initial risks related to the hydrogen refueling stations for infrastructure developers and spurs sales of FCVs forautomakers. The project also contributes to Japan’s energy policy, which seeks to expand the use of hydrogen energy
from the perspectives of energy security, energy conservation, and lessening environmental load.

Message from Employees

DBJ’s Financial Capabilities Help Make
Hydrogen-Based Society a Reality

For this project, DBJ was asked to play a specific role in navigating conflicts of interest among the involved parties, creating
business models, and formulating revenue targets. Navigating the conflicts of interest was rather difficult in this case, owing
to the many parties involved having different points of view. DBJ designed a framework to minimize risks and found thecommon ground where all the involved parties are satisfied. All of this led to the establishment of JHyM.
Creating the business model was also quite difficult due to the considerable uncertainties about the future, the rarity ofsuch projects in terms of the diverse parties involved from across various industries, and because it took so long to getthrough the examination phase. The project was also unique in that it was an all-Japan initiative, making it necessary toclear regulatory hurdles under the Anti-Monopoly Act.
Regardless, DBJ’s involvement in this paradigm shift in the automobile industry, a core industry in Japan, carries with it great meaning. Whether or not the automobile industry continues to drive
growth in the Japanese economy depends on the ability of eachdomestic player to address environmental issues. Japan has the besthydrogen-related technologies in the world, and for Japan to lead theworld, we believe DBJ will need to play a major role through JHyM.

26

Integrated Report 2018

DBJ Group’s Vision

Case Study

Development of the Domestic Space Industry
by Commercializing a New Generation of Small Rockets
DBJ Group’s Strategy
Risk Management
Corporate Data

Message from Employees

Corporate GovernanceIn August 2017, DBJ, along with Canon Electronics Inc., IHI AEROSPACE Co., Ltd., and Shimizu Corporation, established
New Generation Small Rocket Development Planning Co., Ltd. for the planning and examination of the small rocket
launch business, with the aim of tapping into demand for launching small satellites into outer space, a potential growthfield around the world.
In July 2018, New Generation Small Rocket Development Planning and the aforementioned four companies decided
to proceed to the business development stage after examining the feasibility of the business. After an additional roundof investment from the four companies, New Generation Small Rocket Development Planning was renamed Space One
Co., Ltd. and turned into an operating company. As major players in their own fields, the four companies’ collaborationon the project has given it more credibility. With a corporate vision of providing the most frequent launches in the world
for highly convenient access to outer space, the new company plans to accelerate efforts toward the commercializationof launch services during fiscal 2021.
As each company commits their expertise to the project, such as Canon Electronics’ know-how in reducing mass
production costs for consumer electronics, IHI AEROSPACE’s advanced technologies in rocket development, and Shimizu’s
resources in infrastructure development, DBJ’s role will be to act as a neutral facilitator of their alliance while examining
the feasibility of the business by leveraging its know-how accumulated in advancing and supporting the development of
the aircraft industry.
The establishment of infrastructure for frequently launching satellites
on small rockets in Japan will create greater opportunities for domestic
aerospace companies, which have had to rely on overseas rockets to gettheir satellites into space. As conditions come into place for creating businesses while technologies are verified, we anticipate the smooth development of technologies and businesses in the outer space field. Accordingly,
this project is highly significant for the development of Japan’s spaceindustry. DBJ is fully committed to this project in its aim of helping
strengthen the competitiveness of Japan’s space industry through new
Rocket launch at Japan Aerospace Exploration Agency (JAXA)
business development via collaboration across different sectors.
Photo courtesy of JAXA

Data Section

Corporate Collaboration across Industries and
New Business Creation

Canon Electronics is a leading mass-producer of electronics in the Canon Group. IHI AEROSPACE has engineered anddeveloped rocket launches for national projects while collaborating with other manufacturers. Shimizu has always been on
the front lines of infrastructure development in Japan. Although each company shares the same goal of creating a rocket
business by marshaling the necessary technologies and resources, they are all pieces in a great puzzle with different corporate
cultures and major gaps in the languages used to describe technological development. To steer the project toward commercialization, it was necessary to have someone put these pieces of the puzzle together. DBJ has functioned well as a mediator
for aligning opinions and forming business plans, because as a bank, DBJ has developed contacts across various industries,
and it has many years of experience working with the IHI Group, which is assuming the main role in rocket development
for this project, through its aircraft engine business.
In particular, while each company struggled to set clear targets for this project as
a new business, DBJ has provided key support for defining and setting targets fromthe standpoint of creating a space industry through this project and aiming to establish profitable businesses for the participants. There is a risk that unforeseen troubles
or problems will arise, but we will do our best to support the creation of new businesses and industries in Japan while making adjustments from a broad top-downview of the project.

Integrated Report 201827

Area Strategy

Priority
Areas

Self-Reliance and Revitalization of
Local Economies

Industrial revitalization based on regional characteristics,
overseas business development, response to inboundtourism, business succession

Regions 
DBJ Group provides solutions for regional issues, connecting regions
throughout Japan to Tokyo, domestic regions to those overseas, andregions the world over to each other.

Outline
DBJ Group provides services tailoredto the characteristics of each regionin Japan from 10 branches and eight
representative offices across the country.

• Investments and loans• Consulting services• Planning and research services

Longer-Term External Environment and Social Issues
The regional economic outlook is severe with declining
household spending and weaker demand for loans alongside a long-term downtrend in regional populations. As
regional economies contract, regional enterprises needgrowth strategies that include overseas business development, measures to improve corporate value through business restructuring and succession, and ascertainment ofgood opportunities in asset management.
Strategy
DBJ will provide services with two objectives in mind—
namely, to create value by connecting regions throughout
Japan to Tokyo, domestic regions to those overseas, andregions the world over to each other, and to solve problems
through risk capital and consulting. More specifically, while
taking into account regional characteristics, the themes of
key objectives entail improving the productivity and growthstrategies of regional companies through business restructuring and overseas business development, respectively, andcooperating with regional financial institutions to create
opportunities in asset management. As a part of these
initiatives, DBJ created the Regional Investment Promotion
Office in the Strategic Finance Department under the chief
investment officer on April 1, 2017, for the purpose of
facilitating the supply of risk capital to regional mid-tiercompanies and small and medium-sized enterprises.
By providing detailed solutions to regional problems, DBJ
Group strives to increase the value of its human capital(e.g., the skills and experience of its managers and employees), and relationship capital (e.g., networks).
28

Integrated Report 2018

Total number of business alliances withfinancial institutions
March 31, 2018107

Accomplishments and Initiatives to Date
In recent years, DBJ has provided financing tailored to thecharacteristics of each region through its Regional Areas
Genki Program (see page 29), risk capital through joint
funds with regional financial institutions, and knowledge tolocal governments. Through Crisis Response Operations, DBJ
has also provided assistance for reconstruction in the wakeof natural disasters in various regions, including the Great
East Japan Earthquake and the Kumamoto earthquakes.
Initiatives in fiscal 2017 included Special Investment
Operations providing support for the overseas businessdevelopment of local companies, as well as assistance fordomestic hotel operators through a joint fund with Hoshino
Resorts Inc. Additionally, DBJ formed funds with The
Hokuriku Bank, Ltd. and The Shizuoka Bank, Ltd., and it
also jointly developed loans with special provisions to waive
the original principal in the event of an earthquake withThe Hiroshima Bank, Ltd. DBJ also supplied risk capital toregions through collaboration with regional financial institutions, including assistance for evaluating the feasibility ofbusinesses for regional financial institutions. As of March
31, 2018, DBJ has entered into business alliances with a
total of 107 financial institutions.
Moreover, DBJ engaged in a variety of other activities, as
it distributed knowledge through the publication of reports
about solving regional issues, provided advice and suggestions for advancing PPP/PFI and rebuilding public infrastructure, supported the management of public assets, andoffered advisory services to local public organizations
related to comprehensive government policies.

DBJ Group’s Vision

Head office
10 branches
Eight representative offices
Kushiro Representative Office

Hokkaido Branch

Hakodate Representative OfficeNiigata Branch

Hokuriku Branch
Okayama Representative Office

Tohoku Branch

Matsue Representative Office

Head Office

Chugoku Branch
Kyushu Branch

Minami-Kyushu Branch

Collaboration and Cooperation with
Regional Financial Institutions

Shikoku Branch
Matsuyama Representative Office

DBJ provided support to 21 companies and held study
groups to help regional financial institutions gain a better
understanding of business feasibility assessments.
Collaboration for M&A of Local Companies andOverseas Information Dissemination
DBJ helps local companies address various management
issues, such as business restructuring and succession as well
as expansion of business domains, including overseas
expansion. As part of efforts to revitalize regions throughcollaboration with regional financial institutions, DBJ
creates M&A opportunities for local companies through its
network of regional banks (75 regional banks as of March
31, 2018). DBJ also provides information to regional financial institutions helping local companies get a toehold in
Asian markets through its Asia Financial Support Center(67 regional banks as of March 31, 2018).

Please click on the link to DBJ’s website for information about
support coverage in the areas of each branch (Japanese only).
https://www.dbj.jp/service/finance/area/
Integrated Report 201829

Data Section

Regional Areas Genki Program
Facing the challenges of population constraints, severe
financial conditions, environmental restrictions and global
competition, Japan’s regions must coordinate with one
another and implement diverse regional development
schemes that capitalize on their respective strengths,
competitive advantages, and latent potential. In fiscal 2010,
DBJ arranged a unique initiative, the Regional Areas Genki
Program, to support regional growth that capitalizes oneach region’s respective strengths and potential from information and funding aspects. In addition, each DBJ branch
focuses on its region’s distinctive fields and businesses,
based on its industrial structure, and partners with regional
financial institutions to offer financial support.

Corporate Data

Assisting Regional Financial Institutions with BusinessFeasibility Studies
Working with regional financial institutions, DBJ provides
support to the clients of regional financial institutions forassessing the feasibility of businesses that propose solutions
for solving management issues. Based on an analysis ofmacroeconomic conditions and individual companies, DBJ
engages in fact-finding to identify management issues atclients, and then presents its findings in an easy-to-understand format. DBJ subsequently comes up with various
financial solutions to solve the identified issues to help its
clients formulate their own growth strategies and drum up
business. Employees dispatched from regional financial
institutions are given opportunities to gain knowledge
through on-the-job training while performing businessfeasibility studies of the clients of their own bank. In 2017,

Kansai Branch

Risk Management

Collaborative Funds with Regional Financial
Institutions
DBJ collaborates with regional financial institutions withcustomer bases in their own regions to take advantage of
their networks and knowledge in order to advance thesupply of risk capital, including through preferred sharesand subordinated loans, to local companies. Through these
activities, DBJ aims to address diverse regional issues, suchas business succession, moving into growth fields, and therevitalization of local economies, while responding toemerging social needs against a backdrop of changing
demographics.
In fiscal 2017, DBJ created new funds with The Hokuriku
Bank, Ltd. and The Shizuoka Bank, Ltd. As of March 31,
2018, DBJ has created 30 collaborative funds with regional
financial institutions.

Tokai Branch

Corporate Governance

Oita Representative Office

DBJ Group’s Strategy

Aomori Representative OfficeToyama Representative Office

Area Strategy

Provision of Knowledge about Local Issues
Green Infrastructure
DBJ has published a research report entitled “DBJ Workshop
on Green Infrastructure for Rebuilding Urban Frameworks
Report: Proposal for Sustained Urban Renewal with GreenInfrastructure.”
Green infrastructure is designed to increase greeneryin urban areas and replace certain functional aspects of
conventional infrastructure in terms of disaster preparedness and the environment. Attracting attention in recent
years, green infrastructure enhances the appeal of cities
and increases sustainability. It is expected to help alleviate
financial burdens while updating infrastructure.
DBJ created the DBJ Workshop on Green Infrastructure for
Rebuilding Urban Frameworks, chaired by Associate Professor
Takanori Fukuoka from the Tokyo University of Agriculture,and invited President Takashi Onishi of the Toyohashi
University of Technology as an advisor as well as Distinguished
Professor Shiro Wakui from Tokyo City University and others
as leading experts to the workshop. Discussions covered
several topics related to facilitating green infrastructure insociety. The work group’s report outlines the discussions
undertaken by the experts and suggests ways to implement
green infrastructure in society based on their discussions.
Smart Venues and Estimations of Economic Scale ofSports Industry
In conjunction with the Smart Venue Workgroup (Chair:
Professor Yoshiyuki Mano from Waseda University Facultyof Sport Sciences), DBJ published a research report titled“Creation of Sports-Oriented Communities with Smart
Venues®—Multi-Function Facilities as Venues for Community
Exchange.” A smart venue is defined as a sustainable facility for exchange that includes multiple functions, including
management of neighboring areas. The report estimatesthat more than ¥2 trillion will be spent over the next 20
years on modernizing and building new stadiums andsports arenas, and recommends turning them into smart
venues that also function as spaces for exchange.
In the joint research paper “Estimation of Economic Scaleof Japan’s Sports Industry” with Doshisha University, DBJ
estimates the economic scale of the sports industry was ¥6.6
trillion in 2011. In “the Future Investment Strategy 2018,”
it is written that, with the cooperation of DBJ, the government will examine methods to estimate the size of the sports
market on an ongoing basis in a format that facilitates international comparisons. DBJ will continue to research andstudy the sports industry, which is likely to grow in the future.
Please click on the link below to see the Regional, Industry andEconomic Report on DBJ’s website (Japanese only).
https://www.dbj.jp/investigate/etc/index.html

30Integrated Report 2018

Collaboration with Local Governments
Initiatives in PPP/PFI and Public Asset Management
via Collaboration with Local Governments andRegional Financial Institutions
Local governments are directly dealing with issues, such asaging, related to public assets under their management.
Public asset management refers comprehensively to theplanning, management, utilization, and disposal of assets
from a management perspective. DBJ assists numerous
local governments in this regard, helping them create plansand draw up individual projects with Group think tanks.
In June 2013, DBJ set up PPP/PFI Promotion Centers tofacilitate collaboration with local governments and regional
financial institutions. While planning and holding seminars
at the PPP/PFI Academy, DBJ offers regional platforms forcooperating at the national level. In these and other ways,
DBJ has made a concerted effort to expand the use of PPP/
PFI, putting into place a structure for promoting their use.
In particular, the PPP/PFI Academy encourages roundtablediscussions and the sharing of case studies through a teleconference system that connects all of DBJ’s bases. In its
seventh year, the PPP/PFI Academy has welcomed a cumulative total of 6,000 people as participants.
DBJ is keen to supply risk capital and support the formation of pioneering businesses through research and advisory
services for properly advancing various PPP/PFI projects
tailored to regional issues and situations, based on collaboration with the national government, local governments,
private companies, and regional financial institutions.
Advisory Services on Comprehensive Government
Policies for Matsudo City
DBJ received a request from Matsudo City for help creatinga collaborative framework with a broad range of experts inmeasuring investment effectiveness from the business planning and proposal stages, evaluating effective and efficient
operating methods, and providing insight into the management of private companies. In July 2017, DBJ signed acomprehensive partnership agreement and advisory service
contract for consultations on the collaborative framework.
The main advisory services provided by DBJ entailed
advice, research, and analysis of the impact on city financesfrom the implementation of various projects, including
calculating the effectiveness of investments in projects tocreate communities, as well as the viability and the optimal
approach for executing individual projects.
With this advisory agreement, DBJ will help Matsudo City
achieve its aim to develop community management models
from a private-sector perspective by leveraging its knowledge and network accumulated in PPP/PFI and public asset
management, as well as various solutions including project
financing.

DBJ Group’s Vision

Case Study

Business Rehabilitation at Miyazaki Car Ferry

Corporate GovernanceRisk Management

Message from Employees

DBJ Group’s Strategy

Miyazaki Car Ferry Co., Ltd. operates a long-distance ferry service on routes
between Miyazaki and Kobe. The company also transports trucks that deliveragricultural products from around Miyazaki Prefecture to the Kansai, Chukyo,
and Tokyo regions. Agricultural produce must be reliably delivered by the next
day to Tokyo and other regions. The company has key transportation infrastructure for meeting tourist demand from the Kansai region.
However, the company’s two ferries have been in service for over 20 years andneed replacing. Although the company has reliably generated a certain level ofprofit, Miyazaki Car Ferry has large amounts of debt inherited from its predecessor, making it a challenge to raise funds.
In light of these circumstances, DBJ, along with local companies, financial institutions, and local governments in
Miyazaki Prefecture, in addition to the Regional Economy Vitalization Corporation of Japan, provided the financing
needed to rehabilitate Miyazaki Car Ferry and restart operations as a new company.
The rehabilitation of Miyazaki Car Ferry will not only keep people employed at the company but also keep in service its
ferry routes that are a lifeline for the economy of Miyazaki Prefecture, enabling the reliable shipment of regional products. After restarting as a new company, Miyazaki Car Ferry is now working to improve earnings and its governancestructure while drawing up specific plans to introduce new ferries, satisfying its initial objective. DBJ has dispatched amanager to serve as an outside director at the company to keep their dialogue going. Leveraging its networks andresearch and analysis capabilities, DBJ is providing the company with a complete solution to its problems while helping
it improve management and draw up plans for the future.

Corporate Data

Supporting All of Miyazaki with Ferry Services Essential
to the Regional Economy

Data Section

The business rehabilitation of Miyazaki Car Ferry was unique in that it involved asupport structure for all of Miyazaki with the establishment of Miyazaki Car Ferry as
a new company by a diverse range of stakeholders, including users of the ferry
service, local governments, and financial institutions.
This unique structure underscores the broad base of support Miyazaki Car Ferryhas gained from numerous stakeholders, reflecting the essential nature of its ferry
services for the regional economy. However, the diverse range of stakeholders has
meant that it is necessary to find common ground while engaging with the many
people involved.
Looking ahead, these diverse stakeholders will need to get behind the company as it addresses issues, including business
improvements and plans to introduce new ferries, and by marshaling the advantages offered by each stakeholder, thecompany will be able to take on future challenges. DBJ intends to support business improvements and help the company
manage its stakeholders.

Publication of DBJ BOOKs
Working as a unified group, DBJ has published the results of its surveys and research activities in a variety of fields
through various report brochures and professional journals. DBJ recently published DBJ BOOKs with the aim of
deepening the understanding of the latest topics and specialized fields among its broad readership.
In fiscal 2017, DBJ published its first round of two books, titled “Reforming Management of Waterworks—
Advanced Shape of Wide Area and Public–Private Partnerships (PPP/PFI)” and “Highlights of Tourism DMO Design
and Operation—Genuine Tourism Stimulus with DMO and Regional Revitalization.” DBJ plans to turn them into
a series.

Integrated Report 201831

Area Strategy

Priority
Areas

Self-Reliance and Revitalization of
Local Economies

Industrial revitalization based on regional characteristics,
overseas business development, response to inboundtourism, business succession

Overseas Positioning overseas operations within its sector strategies andfunction strategies, DBJ Group engages in global operations in
sectors providing high added value.

Outline
DBJ engages in overseas operations in line with its sector
strategies and function strategies. To coordinate these operations, it has subsidiaries in London, Singapore, and Beijing(including a branch office in Shanghai), as well as a representative office in New York.

Longer-Term External Environment and Social Issues
Based on projections for continued growth in the world
economy, DBJ Group is likely to see continued demand for
global business development from its core customers indomestic industries. At the same time, demand for capitalshould increase strongly from the infrastructure and transportation sectors against a backdrop of population growth
and the increasing volumes of movement in people andphysical goods. It is imperative that Japan’s economy andindustry sustain growth by effectively tapping into theseoverseas growth opportunities.
Strategy
DBJ will continue to engage in overseas operations in linewith its sector strategies and function strategies.
1) In infrastructure fields such as energy and transportation,
DBJ will provide investments and loans for the overseas
development of Japanese industry and for projects thatbring overseas knowledge to domestic markets.
2) DBJ will provide investment and advisory services tosupport the overseas industrial expansion needs of its
customers, including customers headquartered regionallyin Japan.
3) Group companies will manage investments in infrastructure assets and corporate assets for the purpose ofproviding Japanese investors with investment opportunities overseas.

32

Integrated Report 2018

Accomplishments and Initiatives to Date
When it first became a joint-stock company, DBJ began toextend corporate loans in developed countries where it
could apply its knowledge of industries in Japan. DBJ thengradually diversified into project finance, asset finance, andinvestment operations as business foundations were laid
overseas in accordance with DBJ Group’s sector strategies
and function strategies.
In Singapore and China, DBJ set up an M&A advisory
team to coordinate with the head office’s Business
Development Department in meeting the M&A needs ofcustomers in the Asian region.
Initiatives in fiscal 2017 included participation in syndicated loans for an airport in the United Kingdom, investment in a PPP project for a toll expressway in the UnitedStates, participation in syndicated loans for the leading
Singaporean company in the LPG carrier industry, the acquisition of bonds issued by a Chinese airline company on the
TOKYO PRO-BOND Market, and participation in an oil andgas floating production, storage, and offloading (FPSO)
project at a Japanese company that is destined for gas
fields off the shores of Ghana. Using a variety of financing
methods, DBJ promoted projects in a broad range ofsectors, countries, and regions.

DBJ Group’s Vision

Case Study

Participation in Natural Gas Power Plant Project (Hickory Run Project)in Pennsylvania, U.S.A.
DBJ Group’s Strategy
Corporate Governance

Planned construction site

Risk Management
Corporate Data

DBJ was the coordinating lead arranger for project financing
totaling U.S.$53 billion for the Hickory Run Power Plant that is
to be constructed in Pennsylvania in the United States.
The power plant, located near Pittsburgh, Pennsylvania, is anominal 1,000 megawatt (MW) natural gas-fired combined cycle
power plant with a planned commercial operation date of April
2020. When completed, the electricity will be sold on the PJM
Energy Market, the largest wholesale power market in North
America. In the U.S., the shale gas revolution has spurred theconstruction of new natural gas-fired power plants and thediscontinuation of older coal-fired power plants. Whencompleted, the power plant is expected to greatly contributeto the area by providing efficient, clean, and reliable power.
Tyr Energy, Inc., a U.S. subsidiary wholly owned by ITOCHU, isthe largest investor in the project, and has driven it forward whileleveraging its operational know-how in the development andconstruction of the power plant. Kansai Electric Power Co., Inc.
is also participating as a major investor. Through its involvementin power generation projects in the U.S., which leads in deregulation of the electric power sector, DBJ is able to acquire knowledge related to finance in deregulated markets that is useful inthe overseas business development of Japanese companies. DBJ
aims to use this knowledge for the benefit of Japan’s rapidly
deregulating electric power market.

Power plant under construction

Tapping into Growth in Southeast Asia for Japan—Initiatives at DBJ Singapore Limited

Integrated Report 2018

Data Section

Since becoming a joint-stock company in 2008, DBJ Group has engaged in overseas operations in order to help Japanesecompanies develop business overseas and stimulate capital markets in Japan. In December 2008, DBJ Singapore Limited
was established as its first overseas subsidiary and its main base of operations for emerging markets in the Asia-Pacificregion. DBJ Singapore works closely with DBJ Group companies in Japan to provide investments, loans, and M&A advisory services in this region.
In the wake of the global financial crisis triggered by thecollapse of Lehman Brothers, emerging countries in Asia havecontinued to grow strongly, and Japanese companies havebeen expanding investments in the promising markets of thisregion. DBJ Singapore helps Japanese companies enter thesemarkets and provides investments and loans in Asian countries
to meet funding demand in the energy, transportation,communications, and other fields.
In its 10th year since being established, DBJ Singapore willcontinue to work with members and help customers develop
businesses while meeting diverse needs in Asian countries thatare key to the future growth of Japan.
33

Function Strategy

Special Investment 
Operations / Crisis
Response Operations
DBJ will provide optimal financing solutions tailored to customer needs,
from loans to mezzanine financing and investments, while reinforcing
its ability to adequately evaluate various risks.
Outline
DBJ provides loans and investments after analyzing businessprospects, evaluating risks, and creating financing schemes.
Taking into consideration the traits of each project and theintentions of participants, DBJ specializes in an integrated
investment and loan model that flexibly deploys loans,mezzanine financing, and investments.

DBJ’s Initiatives to Supply Risk Capital
Gas Company, Ltd. As of March 31, 2018, a total of ¥260.0
Special Investment Operations
billion in investments and loans had been extended toSpecial Investment Operations, established as an intensive
62 projects.
but temporary scheme to supply growth capital* from theperspective of promoting the competitiveness of JapaneseSpecial Investment Operations follows policy objectives,
enterprises along with regional revitalization, draws only ain accordance with the law, complementing and encouragportion of the investment (industrial investment) from theing private-sector enterprises and ensuring appropriate
Japanese government, enough to encourage the privatecompetitive relationships. To improve the structure of
sector to supply growth capital. In June 2015, DBJ kicked
Special Investment Operations and thereby maintain objecoff Special Investment Operations with risk capital for thetive evaluation and supervision of activities, an advisory
overseas independent power producer business of Shizuoka
body to the Board of Directors was established—the Special

Other financial
institutions

Capital account(megabanks, regionalbanks, private funds, etc.)

Investment(¥129 billion in
fiscal 2018)

Japanesegovernment(industrial
investment)

Provision(¥129 billion in
fiscal 2018)

Special Investment
Operations(Managing loans in
special account)
Fiscal 2018: ¥258 billion

Evaluate/inspect

Special Investment
Operations
Monitoring Board

34

Loans,
etc.

Integrated Report 2018

Complement andencourage private-sector
enterprises(including pump-priming)
Provide capital(including preferred sharesand subordinated loans)

Target company initiatives• Initiatives for effective use ofmanagement resources• Initiatives to promotemanagement innovation– Cultivate new business– Form alliances among
various sectors and groups

Policy objectives• Encourage self-reliant
development of regional
economies• Increase competitiveness ofJapan and domestic
enterprises• Develop markets for
growth capital

Enhance risk capital supporting growth

DBJ

* According to the Japanese government’s Study Panel Concerning the Promotion of
Expanding Growth Funding, certain financial institutions, including DBJ, are expected toserve in a pump-priming capacity for the foreseeable future to attract private-sector
investment by cultivating new capital providers, markets, and investors, thereby fostering
the development of an investment cycle led by the private sector.

DBJ Group’s Strategy

Case Study

Acquisition of Shares in National Car Parks Group, the United Kingdom,
through Joint Investment with Park24

Corporate Governance

DBJ acquired shares in National Car Parks Group, the United Kingdom’s largest
private parking lot operator, as part of a joint investment with Park24 Co., Ltd., theworld’s largest parking lot operator (by number of sites) as well as the operator ofJapan’s largest car-sharing service.
The acquisition provided Park24 with solid business foundations in the United
Kingdom that will enhance its position as a global player. Because the deal also helped
increase Japan’s international competitiveness in the parking lot business, DBJ was able to
NCP parking lot, U.K.
utilize its Special Investment Operations to acquire shares in National Car Parks Group.
Operating under the slogan “People, Cars, and Communities,” Park24 is contributing to the development of travel infrastructure services in Japan through its efforts to create a comfortable automobile
society. The company accelerated its overseas development in January 2017 with the acquisition of Secure Parking
Group, a parking lot operator focused on Asia and Oceania. In addition to providing assistance in financing as a joint
investor, DBJ is supplying Park24 with complementary resources accumulated in travel infrastructure financing in Japanand overseas and making investments in individual companies. DBJ hopes that the active support from these resources,
which include expertise, personnel, and information networks, will help maintain and extend National Car Parks Group’s
competitive edge and thus increase Park24’s corporate value.

Risk Management
Corporate Data

Case Study

Joint Investment in Singaporean Company with Chudenko

Data Section

When Chudenko Corporation acquired shares in Singaporean electricalengineering contractor RYB Engineering Pte. Ltd., DBJ Group made a joint
investment by acquiring shares issued by the acquisition SPC.
Chudenko is a comprehensive facility engineering firm supporting thestable supply of electric power in the Chugoku region. In its medium- tolong-term vision, which outlines what Chudenko hopes to achieve as anorganization by the time it celebrates its 80th anniversary in 2024, thecompany is aiming to actively expand its group presence beyond the
Chugoku region into other regions of Japan and overseas. Chudenko is seeking to grow its business domain with aview to raising corporate value.
RYB Engineering has built up its business with a focus on design and installation for data centers with demand forhigh technology, gaining a strong reputation in Singapore. The owner was looking for participation from a sponsor
with growth capabilities as it sought to expand its business.
Chudenko’s first overseas acquisition gives it a base for business in Southeast Asia, a market notable for its pace ofgrowth, and is a spur for overseas development and company growth.
DBJ Singapore Limited was responsible for establishing connections between Chudenko and RYB Engineering.
DBJ Group provided support for Chudenko in the form of financial advisory services from its Business Development
Department, while its Chugoku Branch supplied risk capital through Special Investment Operations, thus assisting inraising the international competitiveness of Chudenko and Japanese industry.
More information about Special Investment Operations, including our initiatives, is on the DBJ website(https://www.dbj.jp/service/invest/special/index.html).
Integrated Report 2018

DBJ Group’s Vision

Investment Operations Monitoring Board—with participationfrom outside experts in financial and capital markets, industry, and other professional groups (see page 58).

35

Function Strategy

Crisis Response Operations
DBJ’s Crisis Response Operations function as a stabilizing
force during periods of instability in the economy, society,and markets.
Crisis Response Operations, on the basis of the Japan
Finance Corporation Act (Act No. 57 of 2007, including
later revisions) consist of the provision of necessary funds

during such crises as disruptions in domestic or overseas
financial markets or large-scale disasters. In response tocrisis-related damage, Japan Finance Corporation provides
two-step loans as a complementary risk measure, among
other measures, to government-designated financial institutions (designated financial institutions) that supply necessary funds to address crisis damage.

Crisis Response Operations Scheme
Japanese Government• Capital contribution• Lending of funds• Interest subsidies

DesignatedJapan Finance Corporation

Two-steploans, etc.

(Crisis Response Facilitation Account)

Designated financial institutions
Private financial institution•	Prepares and announces “crisis response facilitation guidelines”(approved by the competent minister)•	Implements complementary risk and other measures on the basis ofagreements (approved by the competent minister) with designatedfinancial institutions

Private financial institution
Private financial institution

Defines a new scope for DBJ’s responsibilities,

DBJ

making Crisis Response Operations obligatory for• Designated financial institutions conductbusiness in accordance with the Crisis
Response Operations Rules (based on
approval of the competent minister).

an indefinite period• Extends the scope of Japanese government recapitalization securing
DBJ’s financial structure, etc.
• Establishes a new crisis response reserve account, reflecting this obligationin the Articles of Incorporation, and indicates mandatory Japanese government ownership of more than one-third of shares and other measures• Designated financial institutions conductbusiness with complete double checks ofrequired compliance at their financing
departments and their departments
responsible for crisis response operations.

Note: Capital increases related to Crisis Response Operations before the 2015 revisions
to the DBJ Act were transferred from capital to a crisis response reserve(¥206.5 billion). Capital increases for Crisis Response Operations after therevisions are to be added directly to the crisis response reserve.

Provision offunds, etc.

Clients

36

Integrated Report 2018

DBJ Group’s Vision

Accomplishments and Initiatives to Date
2008/10

2008/122011/3

Earthquake Disaster Crisis Response Operations(through March 31, 2011)

Main events that were
designated a crisis:•	Turmoil in international ­financial markets(Global financial crisis)•	Damage from heavy rainfall during
typhoon #18 in 2015

Total funds raised by the government in Crisis Response Operations(as of March 31, 2018)¥206,529 million

Total crisis countermeasure loans, loans with loss guarantee agreements, andcommercial paper purchases as of March 31, 2018:

Corporate Governance•	Great East Japan Earthquake•	Kumamoto earthquakes
in 20162018/3Financial Crisis Response Operations
and Earthquake Disaster Crisis
Response Operations

DBJ Group’s Strategy

Commenced Crisis
Response Operations
as a designatedfinancial institution• Loans: ¥6,216.1 billion (1,149 projects)•	Loans executed with loss guarantee agreements: ¥268.3 billion(47 projects, including those slated for application to Japan Finance Corporation)• Commercial paper acquisitions: ¥361.0 billion (68 projects)

Risk Management

Case Studies

In the fiscal 2011 supplementary budget passed in thewake of the Great East Japan Earthquake, ¥2.5 trillion
was earmarked for Japan Finance Corporation for Crisis
Response Operations targeting medium- and large-sizedenterprises. DBJ proactively provided assistance for clientsaffected both directly and indirectly by the disaster.
Along with designated financial institutions in thedisaster area, DBJ arranged the Great East Japan
Earthquake Reconstruction Fund, which has financed 56
reconstruction projects to date.
In December 2014, in response to the shift of thestage of earthquake reconstruction from the restorationof production facilities (the “restoration stage”) to efforts
to open up a new enterprise-based market that resumes
production, collaborates among multiple enterprises toboost industry competitiveness, builds infrastructure andreinforces functions (the “reconstruction and growthstage”), we have established a new reconstruction andgrowth support fund in collaboration with the Regional
Economy Vitalization Corporation of Japan. The newfund is aimed at providing subordinated loans andpreferred shares to enterprises whose businesses arecontributing to the reconstruction and growth of thedisaster-stricken region. We are promoting forwardlooking initiatives with a nationwide business model,
aiming to support regional growth and revitalization.

In 2016, DBJ established the Kumamoto Recovery Officewithin the Kyushu Branch to better provide useful knowledge and financial expertise for the restoration andreconstruction of regions affected by the Kumamoto
earthquakes.
In July 2016, DBJ formed the Kumamoto Reconstruction
Support Fund jointly with the Higo Bank, Ltd. and theKagoshima Bank, Ltd., financial institutions in the­disaster-stricken area. The fund supplies risk capital,
through such schemes as senior loans (repayment in fullon maturity, uncollateralized, non-guaranteed loans) andsubordinated loans, to businesses affected by the disaster.
Additionally, DBJ provided beneficial information about
restoration and reconstruction through a cross-­
departmental system, and offered survey and planning
services in conjunction with related local governments,
national institutions, and economic groups, as well as
local financial institutions.

Data Section

Kumamoto earthquakes in 2016

Corporate Data

Great East Japan Earthquake of 2011

Kumamoto Castle, damaged by the earthquakes(photo from the Ninomaru Parking Lot)

Integrated Report 201837

Function Strategy

Syndication, Advisory,
Consulting Services
DBJ mobilizes tie-ups and collaboration to provide syndicated loans andsupport for M&A designed to promote Japanese companies’ growthstrategies and strengthen their international competitiveness, andoffers impartial consulting with a long-term perspective. Alongwith related services, this helps clients solve the problems they
face and stimulates activity in financial markets.

OutlineSyndication
DBJ utilizes its impartial standpoint to call on a wide rangeof financial institutions in providing high-value-added syndicated loans that draw on such original DBJ financing products as DBJ Green Building Certification and the Regional
Areas Genki Program.
Advisory Services
DBJ offers expert advice related to corporate M&A—ranging
from the formulation of strategies, screening of acquisition
candidates, and assessment of corporate value to negotiations, structure policy, and post-merger integration assistance—for a variety of situations, including industry
restructuring, overseas business development, businessdomain expansion, business succession, and fund investments and exits.
Research & Consulting
Utilizing its extensive network of connections to universities, research institutions, experts, national governments,and local governments, DBJ provides support throughsurveys and problem-solving ideas related to business strategies and policy formation for urban development, regional
development, social capital maintenance, energy, the economy, and industry.
Strategy and Initiatives to Date
Syndication
Activities have included leveraging DBJ’s strengths in syndicated loans in the energy sector and reinforcing ties andpartnerships with regional financial institutions throughsuch means as business cooperation agreements for syndicated loans. In this way, DBJ is contributing to corporate
fund-raising while also providing financing opportunities
for financial institutions.

38

Integrated Report 2018

In fiscal 2017, DBJ and The Hiroshima Bank, Ltd. createda loan with a special provision that all or a portion of theprincipal amount borrowed would be waived in the eventof a major earthquake that met pre-determined conditions.
Both parties provided a syndicated loan using this instrument.
Advisory Services
As a result of its impartiality, DBJ has a wide network tomobilize in its advisory services, including not only Japanesefirms but also foreign companies and private equity funds.
In September 2017, when DBJ entered into an overseas
M&A advisory business cooperation agreement with BDA
Partners (headquartered in New York)—which needed todevelop business in Asia and other parts of the world—thesynergies generated between BDA’s overseas network and
DBJ Group’s M&A advisory organization and domestic andoverseas networks produced a more effective and efficient
overseas M&A advisory service for the client.
Research & Consulting
Japan Economic Research Institute, Inc. is a comprehensive
think tank that conducts research in the public, solutions,and international fields. In the public–private partnershipand project finance initiative fields, it has a top-class trackrecord in Japan backed by unparalleled experience andknow-how.
Value Management Institute, Inc. is also a comprehensive
think tank that excels in analysis using proprietary economic
models and insight into cutting-edge technologies. Its
highly specialized knowledge encompasses a broad rangeof policy fields, including the formulation of integrated
strategies for local governments across Japan.

DBJ Group’s Vision

Case Study

Proposal of ¥2 Billion Syndicated Loan for Tisco Logistics Corporation to
Build Distribution Warehouse with Head Office Functions
DBJ Group’s Strategy
Risk Management
Corporate Data

Message from Employees

Corporate GovernanceTisco Logistics Corporation is a road haulage operator headquartered in Yamagata
Prefecture. Its main area of operation outside of Yamagata Prefecture extends
from Tohoku to Kanto. Tisco Logistics has moved into third-party logistics (3PL),
taking over functions such as storage and inventory management from shippers
due to the trend in the logistics industry toward small lots and high-frequency
deliveries fueled by the growth of the e-commerce market and increasing
Rendering of the completed warehouse scheduled forconstruction
sophistication in inventory management. As a result of regional growth indemand for 3PL, Tisco Logistics wanted to build a distribution warehouse withhead office functions.
To this end, the Kirayaka Bank, Ltd., which is Tisco Logistics’ main bank andhas a business cooperation agreement regarding syndicated loans with DBJ,
consulted with DBJ. To finance the warehouse Tisco Logistics wanted to build,
DBJ and Kirayaka Bank proposed a ¥2 billion syndicated loan and a ¥200 million
preferred stock placement for strengthening the company’s balance sheet. In
addition to joint arrangers Kirayaka Bank and DBJ, eight companies participatedin the loan, the majority of which were regional financial institutions in
Yamagata and Miyagi prefectures. They included Shoko Chukin Bank, The Yamagata Bank, Ltd., Yamagata Shinkin Bank,
The 77 Bank Ltd., The Shonai Bank, Ltd., and The Sendai Bank, Ltd.
The ¥200 million of preferred stock issued by Tisco Logistics was taken up by the Jimoto Fund (a core business assistance fund investment limited partnership), created by DBJ together with Kirayaka Bank and Sendai Bank, which are
subsidiaries of Jimoto Holdings, Inc.
DBJ aims to assist in upgrading the functionality of regional logistics infrastructure through integrated investments andloans for local growth companies that support regional logistics.

Regional Financial Institutions Cooperating toSupport a Local Growth Company

Integrated Report 2018

Data Section

DBJ became involved after it was approached for consultation by Tisco Logistics’
main bank, Kirayaka Bank. Fund-raising was an issue to begin with, in part
because a large-scale investment of more than ¥2 billion was required. However,
DBJ and Kirayaka Bank wanted to support the company’s president in his desire
to develop a logistics business that plays a part in regional economic stimulationand held many discussions on how to proceed.
DBJ and Kirayaka Bank conducted a joint assessment of Tisco Logistics’ business potential and arranged for an injection of ¥200 million from the Jimoto Fundto put the balance sheet on a firm footing for large-scale investment. Given that
Tisco Logistics was a local growth company supporting regional logistics, we also
thought it would be ideal to have regional financial institutions unite to provide
assistance; therefore, we embarked on our first jointly arranged syndicated loan.
Due to the many financial institutions and experts such as lawyers and accountants involved, it took time to construct the plan and reconcile the various interests, but all went well.
We are confident that the funding plan based on DBJ’s integrated investment
and loan approach provided a local growth company with funds that will contribute to boosting the company’s competitiveness and enhancing the functionality ofregional logistics infrastructure.

39

Function Strategy

Asset Management
Backed by the DBJ Group philosophy and comprehensive financial
expertise, DBJ Asset Management Co., Ltd. (DBJAM) provides
investment and asset management services that meet clients’ bestinterests.
By stimulating the flow of funds and appropriately addressing
diverse investment needs, DBJAM aims to spur the development of
capital markets in Japan.

Outline
DBJAM is an asset management company thatspecializes in investments in the real estate,
private equity, and infrastructure fields.

• Real estate• Private equity• Infrastructure

Longer-Term External Environment and Social Issues
Japan is a nation with considerable assets, including over
¥1,700 trillion in household financial assets and ¥200 trillion
in pension assets. With the Japanese economy confronted
by a declining population and an aging society, it is imperative that this wealth (financial assets) is steadily expanded.
In realizing sustainable asset formation for the nation, it
is an extremely important policy issue for Japan to have ahealthy and efficient capital market. Financial institutions,pension funds, and other institutional investors must also
advance their investment capabilities in order to maintaina vibrant capital market.
DBJAM acknowledges the importance of such policy
objectives and believes that its services are well alignedwith the public interest.
Strategy
DBJAM, as a fiduciary investment manager, works in thebest interest of its institutional investor clients with the aimof achieving longer-term growth in returns on each investment, being aware of the profits flowing to the ultimate
beneficiaries. DBJAM also works to help its clients increase
their asset management capabilities.
To achieve these aims, DBJAM develops deep understanding of the financial standings, investment policies, andrisk/return preferences of its clients through active, thorough, and faithful engagement.
DBJAM believes that such an attitude allows it to provide
investment and asset management services that are truly
optimized for the client.
40

Integrated Report 2018

Through these services and operations, DBJAM contributes to the development of financial markets in Japan byenergizing new money flows, as well as the conversionof fund flows into reliable asset formation for thenation’s citizens.
Accomplishments and Initiatives to Date
DBJAM was established in November 2006 for the purposeof energizing the real estate finance market in Japan. Since
then, DBJAM has provided domestic real estate fundmanagement and asset management services. In 2016, it
formed and began asset management in DBJ Private REIT
Inc., an unlisted private real estate investment trust. In
addition, since 2013, DBJAM has begun to providing discretionary investment services and investment advisory services
related to alternative investments in overseas/domestic
private equity and infrastructure and overseas real estate.
In its efforts to seek out and provide investment opportunities, DBJAM has set up seven co-investment programs
targeted at regional financial institutions and foreign
private equity funds as of July 2018. In 2018, Japan’s
Government Pension Investment Fund appointed DBJAM as
an investment manager focusing mainly on Japanese
infrastructure.
As a result of these activities, DBJAM had ¥1,155 billion
in assets under management as of March 31, 2018.

DBJ Group’s Vision

Case Study

New Stimulation for the Real Estate Finance Market with Private REIT
DBJ Group’s Strategy

DBJAM established DBJ Private REIT Inc. in August 2016 to cater to diverse
investment needs by providing high-quality investment opportunities to entities
such as regional financial institutions and pension funds from an impartial andlong-term standpoint. One objective of the establishment of DBJ Private REIT
was to energize the real estate finance market.
DBJ Private REIT takes full advantage of DBJ Group’s extensive experience inurban and regional development and its wealth of expertise in real estate securitization, including REITs, in aiming for stable longer-term earnings and steady
growth in assets under management.
DBJ Private REIT is distinguished by a basic policy of investment in properties
with DBJ Green Building Certification or other environmental certifications topromote sustainable real estate. In 2017, DBJ Private REIT led the way in the private REIT
sector thanks to its being awarded a Green Star (highest designation) in the Global Real
Estate Sustainability Benchmark (GRESB) assessment.* Investment in sustainable real estateand property management guided by sustainability fit with current investor interest in environmental, social, and governance (ESG) issues while also leading to the maintenance andenhancement of asset value in the longer term.

Corporate GovernanceRisk Management* GRESB, established in 2009 by leading European pension fund groups, undertakes annual assessments that take into account realestate sector ESG performance.

Corporate Data

Message from Employees

Harnessing the Overall Power of DBJ Group in Private
REIT Management

Integrated Report 2018

Data Section

DBJ Private REIT currently has the funds of more than 70 investors, including financial institutions and pension funds,
under management. We believe private REITs are suited to long-term investors due to their ability to potentially generate
longer-term, stable income gains commensurate with fundamental real estate value by virtue of their non-listed, indefiniteperiod, open-ended structure. Private REITs are entrusted with the funds of professional investors (institutional investors)
and are required to perform to a high standard in real estate acquisition and management and in fund-raising. Furthermore,
as private REITs are predicated on being going concerns forindefinite periods, it is particularly important that they earn
the unwavering trust of investors over the long term.
Our employees, with distinct responsibilities in property
acquisition, fund-raising, property management, and DBJ
Private REIT management, will continue working together tobuild a track record of stable management and stable dividends.
And equipped with investment opportunities and services thatdraw on DBJ Group’s long-term perspective and impartiality,
they will engage in close communication with investors andparticipate in DBJ initiatives regarding ESG and sustainability
to maintain a customer-first approach in stable investment.

41

Management Foundation Strategy

Financial Capital
We target sustainable growth by constructing an
optimal risk–return portfolio while maintaining andstrengthening a robust financial base that supports
our unique business activities, including integrated
investment and loan services.

Basic Policy
Financial capital is a vital element of our business foundation implementing advanced business strategies centeredon our sector strategy (see page 18) and function strategy(see page 34) under the Fourth Medium-Term Management
Plan. A robust financial foundation of funds and capital isnecessary for DBJ Group to execute its sector strategy,
supply risk capital, and engage in Crisis Response

External
environment
Scenarioplanning

Operations. We aim to maintain and strengthen our financial capital by managing it within the context of a risk
appetite framework based on sophisticated analysis of risks
and returns with due consideration paid to regulatory capital (management focused on shareholders’ equity ratios)and economic capital (management of capital using stresstests).

BusinessstrategyStress test

Business plan

Execution

Monitoring

Strategy for
financial capital

Financial Soundness Indicators
Issuer ratings
Common equity Tier 1 risk-weighted capital ratio

42

Integrated Report 2018

A1 (Moody’s), A (S&P), AA (R&I), AAA (JCR)
16.8%

(As of March 31, 2018)(As of March 31, 2018)Issuance of SRI bonds(As of March 31, 2018)$1 billion in 2017$500 million in 2016€300 million in 2015€250 million in 2014

Capital Procurement (Non-Consolidated)(¥100 million)

Fiscal 2015

Fiscal 2016

Fiscal 2017

3,027.7
634.4
300.0
200.0
134.3
395.3
358.2
1,639.7

4,012.6
1,127.7
800.0
150.4
177.3
497.1
861.5
1,526.1

3,153.4
922.7
580.0
150.2
192.5
535.8
589.5
1,005.0

Corporate Data

Funds raised (flow)
Fiscal Investment and Loan Program
			 Of which, borrowings from FILP*			 Of which, government-guaranteed bonds (domestic)
			 Of which, government-guaranteed bonds (overseas)
Corporate bonds (FILP bonds)
Long-term debt
Of which, recovered, etc.

Risk Management* The Green Bond Principles (GBP): GBP arecomplied by the International CapitalMarket Association (ICMA), investors, issuers, and securities companies. These partiesare responsible for updating annually the Green Bond Principles, which are voluntary
process guidelines that recommend transparency and disclosure and promote integrityin the development of the green bond market by clarifying the approach for issuance ofa green bond. These parties also create a platform to share the latest information about
green bonds and send relevant information to society.

Corporate GovernanceGreen Bond Guidelines, 2017.
DBJ will continue to support
the sustainable growth of thismarket by continuing to issue
SRI bonds as well as proactively engaging in international and domestic initiatives.

DBJ Group’s Strategy

DBJ Socially Responsible Investment Bond (SRI Bond)
In 2014, DBJ became the first issuer in Japan to issue agreen bond. Also, DBJ has issued a DBJ Sustainability Bondeach year since 2015; DBJ’s $1,000 million issuance in fiscal
2017 was the largest sustainability bond ever issued by aJapanese issuer. The raised funds are allocated toward thecreation of a sustainable society through DBJ Green
Building Certification and the Environmentally Rated Loan
Program. Information on the management and allocationof funds is evaluated by third parties to increasetransparency.
In January 2017, DBJ became an issuer member, the firstJapanese firm with an issuer status, of the Green Bond
Principles* and in March 2017 participated on a committee
created by the Ministry of the Environment to draw up the

DBJ Group’s Vision

Specific Initiatives to Improve the Value of Financial Capitalprocurement activities with diversified maturities and methA pillar of DBJ Group’s business strategy is to provide longods. DBJ has been issuing green bonds and sustainability
term financing for infrastructure projects. To do so, DBJ
bonds since fiscal 2014. The issuance of these bonds has not
Group procures long-term funds through corporate bonds
only diversified our fund procurement base but also invigoand the Fiscal Investment and Loan Program (FILP). In recent
rated the socially responsible investment (SRI) bond market.
years, DBJ has stably procured funds through FILP as well as
by issuing corporate bonds, thereby augmenting its fund

* Borrowings from FILP in fiscal 2016 included ¥500 billion in the supplementary budget for “economic stimulus measures for investments in the future.”
Data Section

Message from Employees

Spreading Understanding of DBJ’s Principles and Workthrough IR Activities

In addition to procuring funds through the Fiscal Investment and Loan Program (FILP) and government-guaranteed bonds, DBJ
conducts its own credit-raising activities, such as issuing corporate bonds (FILP bonds) and borrowing money from regional
financial institutions. When conducting its own credit-raising activities, DBJ places emphasis on having investors understand andsupport its principles and work and, to facilitate that, dispatches representatives to conduct proactive IR activities in all regions ofJapan and overseas.
Amid rising global interest in environmental, social, and governance (ESG) investment,
DBJ aims to broaden the investor base for sustainability bonds—one of its distinctive fundprocurement methods—by introducing the unique activities of the Environmentally Rated
Loan Program and DBJ Green Building Certification and spreading understanding of thesustainability management activities of DBJ Group as a whole.

Integrated Report 201843

Management Foundation Strategy

Reference (Long-Term Profits / Losses, Financial Conditions)2008

2008–2010

Became ajoint-stock company

First Medium-Term Management Plan:
CHALLENGE 2010

Fiscal 2008

Consolidated(October 1, 2008 to
March 31, 2009)(Six-month fiscal period)

Fiscal 2009

Fiscal 2010

(April 1, 2009 to
March 31, 2010)(April 1, 2010 toMarch 31, 2011)

Total income

151.2

347.9

345.1

Income before income taxes(121.6)

51.9

95.0

N/A

(26.7)

(2.9)

3.5

(0.8)

9.3

Income before income taxes and minority interests(118.1)

51.1

104.3

Total income taxes(13.5)(10.8)(1.3)

Net income attributable to owners of the parent(128.3)

39.8

101.5

—

10.0

50.0

Total assets

14,028.0

15,595.7

14,845.2

Loans

12,008.8

13,514.6

13,031.4

Securities

1,246.5

1,289.4

1,165.5

Total liabilities

11,941.6

13,268.2

12,435.2

Borrowed money

8,067.8

9,082.4

8,576.4

Debentures and corporate bonds

3,513.0

3,746.3

3,629.3

Total equity

2,086.4

2,327.5

2,409.9

Common stock

1,000.0

1,181.1

1,181.1

Total capital ratio (Basel II, BIS standard)

18.87%

19.13%

20.50%

Total capital ratio (Basel III, BIS standard)

—

—

—

Ratio of risk-monitored loans (Banking Act basis)

1.60%

5.07%

1.28%

Return on assets (ROA)(0.92)%

0.27%

0.67%

Return on equity (ROE)(6.06)%

1.82%

4.31%

Number of employees

1,096

1,181

1,203

1,733.4

3,793.1

2,116.6

1,670.3

3,682.0

2,034.4

63.1

111.1

82.2

1,733.4

3,793.1

2,116.6

184.3

840.9

1,212.8

Of which, equity and fund-related gains/losses
Extraordinary profit/loss

Total dividend amount

Investment and fundraising flow (non-consolidated)
Loans and investments (flow)
Loans
Investments
Funds raised (flow)
Of which, recovery, etc.

44

Integrated Report 2018

2014–2016

2017–2019

Second Medium-Term Management Plan:
Endeavor 2013

Third Medium-Term Management Plan:
Supporting Japan’s Sustained Growth as a Global Innovator

Fourth Mid-Term
Management Plan

Fiscal 2012

Fiscal 2013

Fiscal 2014

Fiscal 2015

Fiscal 2016

Fiscal 2017

(April 1, 2012 toMarch 31, 2013)(April 1, 2013 toMarch 31, 2014)(April 1, 2014 toMarch 31, 2015)(April 1, 2015 toMarch 31, 2016)(April 1, 2016 to
March 31, 2017)(April 1, 2017 toMarch 31, 2018)

318.7

340.0

361.6

339.0

358.6

285.4

291.7

99.2

115.6

165.7

153.0

185.1

122.5

127.1

(1.3)

30.0

30.3

32.1

70.8

41.1

39.7

10.9

0.6

0.2

0.6

1.5

(0.0)

2.2

110.2

116.2

166.0

153.6

186.7

122.4

129.4

(31.9)(44.5)(40.8)(58.9)(57.6)(34.6)(35.0)

77.3

71.3

124.3

92.7

128.9

87.6

91.9

37.3

35.2

30.8

22.5

29.2

19.7

22.1

15,579.8

16,248.7

16,310.7

16,360.6

15,907.1

16,570.4

16,952.2

13,645.4

13,918.2

13,838.4

13,261.3

12,952.5

13,039.5

12,725.2

1,176.6

1,357.0

1,637.5

1,887.9

1,803.0

1,750.3

1,866.4

13,118.8

13,710.1

13,682.9

13,613.3

13,022.9

13,584.2

13,842.1

9,170.5

9,448.3

9,182.6

8,598.2

7,892.1

8,472.3

8,574.1

3,671.8

3,924.5

4,237.4

4,569.3

4,727.9

4,711.8

4,932.9

2,461.0

2,538.5

2,627.7

2,747.2

2,884.2

2,986.2

3,110.1

1,187.7

1,206.9

1,206.9

1,206.9

1,000.4

1,000.4

1,000.4

18.56%

—

—

—

—

—

—

—

15.52%

15.83%

16.80%

17.87%

17.47%

16.94%

1.47%

1.23%

0.99%

0.77%

0.64%

0.54%

0.47%

0.51%

0.45%

0.76%

0.57%

0.80%

0.54%

0.55%

3.18%

2.86%

4.83%

3.47%

4.60%

2.99%

3.03%

1,270

1,315

1,391

1,407

1,435

1,546

1,631

2,927.0

2,652.4

2,943.3

2,544.2

3,027.7

4,012.6

3,153.4

2,849.0

2,524.5

2,805.1

2,262.7

2,861.3

3,805.8

2,973.6

78.0

127.8

138.2

281.4

166.3

206.7

179.7

2,927.0

2,652.4

2,943.3

2,544.2

3,027.7

4,012.6

3,153.4

691.7

502.2

1,307.5

1,129.9

1,639.7

1,526.1

1,005.0

Corporate GovernanceRisk Management
Corporate Data
Data Section

Integrated Report 2018

DBJ Group’s Strategy

Fiscal 2011
(April 1, 2011 toMarch 31, 2012)

DBJ Group’s Vision(¥100 million)

2011–201345

Management Foundation Strategy

Human Capital
We aim to become a “human resource development bank”
with diverse human resources, and help employees develop
skills while raising their motivation.

As of March 31, 2018

Number of employees(consolidated)

1,631

Number of employees(non-consolidated)

1,182

Average length of service(non-consolidated)

14.4 years

Basic Policy
To steadily implement DBJ Group’s value creation process,which aims to create both economic and social value, andto realize Vision 2030, our vision for our future, it is imperative for us to nurture excellent employees who can implement the distinctive business models of DBJ Group,
including its integrated investment and loan services.
Furthermore, we think it is important to create structuresin which employees will be highly motivated. Improving thevalue of human capital is identified as one of the mostimportant themes under the Fourth Medium-Term
Management Plan and DBJ is taking concrete steps toachieve this goal.

Human Resource Development Vision
DBJ’s role has evolved and developed substantially to meetthe needs of the times. DBJ considers such innovation
crucial to maintaining its leadership position in theconstantly advancing field of finance.
To develop its all-important human resource assets,
DBJ encourages autonomous and pioneering behavior inits employees as financial professionals in keeping withthe vision of “generalists who can be specialists in many
fields.” While it is important to acquire specialist knowledge, responding to society’s constantly changing demands
also requires broad experience, deep knowledge, and theability to see the big picture. We continue to build a wide
variety of systems based on this philosophy.

Career Development
Vision for Human Resources
Human resources who realized theintegrated investment and loan services
business model

Human Resource Development System
On-the-job training andtraining in accounting
and financial analysis
Inheriting the DNA that
DBJ has developed overmany years“Generalists who can be
specialists in many fields.”(Employees with specialized knowledge
in a wide range of fields)

Promoting a deep
understanding of our visionand the sharing of our values

Strategic personnel
rotation
Financial solutions
Skills development
programs
Cultivating the ability toprovide high-level solutions,
responding to the needs of
new business domains,and fostering industry
professionals“Human Resource Development Bank”

46

Integrated Report 2018

Overseas study,
seconding,and dispatch(to DBJ Group companies,
government agencies, etc.)
Gaining a broad perspective
and range of knowledge
Strengthening our networkof human resources

DBJ Group’s Vision

Message from the Head of the Human Resources Management Department

All-Important Human Resources
All work comes down to a test of human capacity. That is
why DBJ focuses on fostering human capacity more than ondeveloping financial skills to be utilized in individual jobs.
To foster this human capacity, we rotate our employees,
especially those aged in their 20s, roughly every two years
so that the experience they gain in multiple jobs in different
departments and workplaces allows them to develop a
broad base of specialist knowledge in the field of finance.
At DBJ, our policy is not to rush in creating this knowledge
base but instead to build it steadily and carefully.
Recently, the number of overseas investment projects
involving Japanese and foreign companies has increased,
and accordingly DBJ is focusing on developing its global
human resources. In addition to sending young employees

DBJ Group’s Strategy

to study as trainees or overseas students, DBJ has worked
with overseas business schools to establish its own educational programs. In the future, we hope to allow an increasing number of young employees opportunities to benefit
from the experience of overseas study programs.
DBJ has made a commitment as an organization to takea long-term view in the development of human resources
who realized DBJ’s integrated investment and loan services
business model by offering employees various work andoverseas experience as well as a wide range of training
opportunities.

Corporate GovernanceTsutomu Murakami

Executive Officer,
Head of Human Resources Management Department• In offering practical experience, dispatch employees tocentral government agencies, Group companies in Japanand overseas, and companies in which DBJ has invested• When hiring new graduates, provide extensive, year-longtraining through new employee training programs,
including DBJ’s accounting and financial analysis training,which is roughly three months

Corporate Data

(2) Skills Development
DBJ conducts human resource development across theGroup by providing employees with practical on-the-job
training and ample other training opportunities.
• Strategically rotate employees so they steadily develop
highly specialized skills by gaining practical experience inmultiple departments

Risk Management

Specific Initiatives to Increase the Value of Human Capital(1) Intensification of the Hiring and Exchange of Human Resources across DBJ Group
DBJ will strengthen its hiring processes and practices and
DBJ will also work to further disseminate the DBJ Groupsecure the personnel necessary across the entire Group to
Vision 2030 and its value creation process by strengthening
implement its sector strategy, function strategy, and area
the exchange of human resources across DBJ Group.
strategy.

2017 Training Program Schedule for New Employees (Regular Employees)
May

June

July

AugustSeptember

October

Early April to mid-April

Early July

Early OctoberIntroductory training

Finance training

Mid-April to mid-June

Businessknowledge
training

Accounting and financial analysis training

Mid-July(business etiquette, communication, and PC and other training)

Data Section

April

November

October and November

English-language training

Legal training• DBJ provides abundant opportunities for training throughcombinations of rank-based, business-related, and selfimprovement training.
Established the Minami Aoyama Training Center and otherfacilities to provide concrete support for human resource development as well as qualitative and quantitative strengthening ofintangibles in the areas of career development, management
ability, and global awareness.

New employee training

Minami Aoyama Training Center

Integrated Report 201847

Management Foundation Strategy

Human Resource Training Program
Training for new employees
Rank-based

Management / leadership

Career development / management /leadership

Career Development Program

Strategic human resource development through job rotationand on-the-job training

Proposal ability

Front office

Screening ability

Finance

In-house
training

Work skills

Functional department
Management department

Financialaccounting

Legal

Corporate finance, etc.

Middle/Back office
Shared skills

Domestic
Dispatchoutside DBJ

Strategic global human resource development
Overseas

Self-study

Knowledge
and skills

Logical thinking / facilitation / presentation, etc.

Seconding to Group companies and outside institutions
Overseas university strategic partnership programs /Short-term study in top business schools / Overseas study /Trainee programs / Seconding to overseas institutions, etc.
Language study / Finance / Law / Accounting•	In order to develop global human resources, DBJ has created a robust system that allows employees to study overseas at
graduate schools and as trainees. Through a strategic partnership with the University of Oxford, DBJ has also created its
own leadership program, conducted completely in English, for young employees.
Partnership Program with the University of Oxford• A three-month leadership program (completely in English) independently created by DBJ
based on a strategic partnership with the University of Oxford• Program conducted by Jonathan Trevor based on the unique theory of Strategic Alignment• Approach to the strategic partnership with the University of Oxford in addition to thisleadership program(3) Motivation and Health Management• Increase motivation by conducting employee engagement surveys, considering survey results, developing action plans ineach department, and implementing improvement measures• In addition to periodic health checkups, introduce counseling services staffed by external professionals as a part ofmanagement that cares for the physical and mental well-being of employees
Diversity Management and Workstyle Reforms
Employees come together to work tirelessly to promote• In addition to enhancing work and leave systems forworkstyle reforms based on new ways of thinking, improvechild-rearing and elderly care, DBJ holds “iku-boss” seminars
productivity by reevaluating work processes, create systems
for management to support employees using these systems
that take into account work-life balance, and create organizaand seminars to assist in finding childcare facilities withtional structures wherein a diverse range of people can thrive.
enrollment capacity. DBJ also conducts career training andimplements training and other measures aimed at creating• Training aimed at into the reduction of overtime work:
an environment that is supportive of these initiatives.
Throughout the year, DBJ promotes improvement inwork efficiency by selecting model departments, holding• Set targets for empowering women, specifically for hiring
workshops, implementing concrete measures to reduce
women and promoting them to management positions
workloads, and spreading know-how gained from these• Proactively hire people with disabilities, maintain workmeasures across DBJ.
environments for diverse human resources
48

Integrated Report 2018

Training and Measures to Support Child-Rearing Systems

91%

Rehiring system (Number of registrants as of the endof fiscal 2017)27

Risk Management• As a result of these efforts, DBJ not only achieved a highratio of employees returning to work after taking childcare leave, but all employees not returning to work after
taking childcare leave cited a spouse’s job transfer as thereason for not returning and are registered in the rehiring
system. Therefore, in effect, all employees taking childcare
leave expressed the desire to return to work, if possible.
• A total of nearly 100 employees have taken advantage ofprograms allowing reduced work hours after returningfrom childcare leave or the flextime system, and DBJ
encourages employees to make use of systems that suit
their needs.

Corporate Data

Seminars on Finding Childcare Facilities
Since 2017, DBJ has been hosting seminars to assist in
finding childcare facilities with enrollment capacity. In
response to the situation of children who have been put
on waiting lists for childcare facilities, which has becomea serious issue in many of the cities in Japan where our
employees work, and to support employees returning towork after taking childcare leave, we provide information
on career development to employees who are considering having children and to assist DBJ employees and theirspouses in finding childcare. We host lectures by outside
experts and share the experiences of people who have
faced such issues. These informational programs are
aimed not only at employees and their spouses who aresearching for childcare facilities but also at managers
with subordinates in this situation. As of 2018, a totalof nearly 100 employees have attended these lectures.

Corporate GovernanceRatio of employees returning to work after taking
childcare leave (Number of employees having
completed childcare leave in fiscal 2017)“Iku-Boss” Training
DBJ has been conducting “iku-boss” training since 2014.
The aims of this initiative are to deepen understanding of
DBJ’s robust systems to support childbirth and childrearing and to promote understanding by managers ofsubordinates making use of the childcare leave andreduced work hours systems through case studies as well
as seminars presented by outside experts. As of March
31, 2018, a total of 200 employees have participatedin this training. In fiscal 2018, “iku-boss” training was
designated a mandatory program for young management candidates.

DBJ Group’s Strategy• In addition to maintaining systems to enable female
employees to work actively in a variety of departments
over a long period of time even as they navigate important life events such as marriage and childbirth, DBJ
conducts a variety of different types of training andimplements various support measures to create a workplace environment wherein use and understanding ofthese systems are promoted.

DBJ Group’s Vision

Employees’ Use of Childbirth and Child-Rearing
Support Systems

Employee Interviews

Data Section

Female Employee: I am currently raising two children and taking advantage of the reduced work hours after returning from childcare leave. Just
after 8:00 a.m., I take my children to childcare on my bicycle and arrive at
the office at 9:25 a.m. I finish work at 4:40 p.m., shop at the supermarket,
and then pick up my children from childcare. Because my time at work islimited, I try to focus and work efficiently and I receive support from myteam, with whom I share work responsibilities. Thanks to this arrangement,
I am able to lead a fulfilling life. Also, when one of my children suddenly
becomes ill, I can make full use of the child sick leave program and the policy
allowing annual paid leave to be taken in hourly units. I think employees
rearing children truly appreciate having these various systems in place.
Male Employee: I took a month’s childcare leave after the birth of my second child. The fact that I was able to focus onhousekeeping and child-rearing during the very difficult time immediately after the birth was not only important to myfamily but also a valuable experience that broadened my perspective. I was busier than expected during this time and,on many days, before I knew it, it was time to pick up my children at childcare. After going through this valuable, albeit
hectic, experience, I hope more men decide to take childcare leave so that they can have a similar experience. Even after
returning from leave, I was able to drop off and pick up my children from childcare and help out when they suddenly
became ill by taking my annual paid leave in hourly units and working from home. I am very thankful for this fulfilling
working environment.

Integrated Report 201849

Management Foundation Strategy

Intellectual Capital
DBJ aims to build on strengths in knowledge, the wellspringfor value-added operations such as research, analyses, and risk
management, as well as strengths in frameworks, including
processes, information and communication technology (ICT)systems, and organizations.

Basic Policy(1) Knowledge
We strive to improve skills as a core element of operations
necessary to differentiate our business model throughsurveys, research, analyses, and risk management centeredon industry.
(2) Processes
We will improve operations, including via investments in
ICT, by clarifying and simplifying business processes fromthe customer’s standpoint in order to rapidly and properly
address customer needs.
Specific Initiatives to Improve the Value ofIntellectual Capital
Knowledge
Improving Screening Capabilities and Proposal Abilities
In order to continue carrying out its mission while engaging
in high-risk operations such as integrated investment andloan services and crisis response, DBJ Group must maintainexcellence in not only industry analysis but also its capabilities to evaluate corporations and businesses. To increase thecorporate value of DBJ’s customers, we also strive topropose improved solutions that leverage DBJ’s capabilities
and unique characteristics.
Industry Analysis
The role of the Economic & Industrial Research Department is
to analyze and disseminate information on economic andindustrial trends in Japan and overseas, including macroeconomic trends and trends in key industries, and to support
investment activity. DBJ proactively works to accumulate anduse intellectual capital, including information on recent trends
in such areas as big data, AI, computer-assisted software
engineering (CASE), virtual/augmented reality, and fintech.
In April 2017, DBJ established the post chief research
officer and placed under it the Economic & Industrial
Research Department and the Sustainability Planning &50

Integrated Report 2018

Support Department. We provide knowledge-based solutions to customers in various industries, including solutions
from the perspectives of environmental, social, and governance issues and the Sustainable Development Goals(SDGs), based on our wide-ranging knowledge of industry.
For details, please follow the link below to the DBJ website.
https://www.dbj.jp/en/investigate/

Capital Investment Planning Survey
With a history of more than 60 years (since 1956), DBJ’s
Capital Investment Planning Survey looks at trends incorporate capital investment in Japan as well as corporate
activities based on the “broad definition of investment,”
including capital investment overseas, and spending on
R&D, M&A, and human resources. The results of the survey
are used for many purposes, such as furthering education
at universities and research at R&D organizations, in addition to serving as a reference for national economic policy
and corporate planning.
Cross-Sector Conference
Cross-sector innovation is accelerating and the number ofthemes that must be analyzed by industrial surveys isincreasing. Against this background, to pursue deep industry
knowledge while maintaining a cross-sector perspective, DBJ
Group set up the Cross-Sector Conference in fiscal 2017 asa platform for sharing information among the Economic &Industrial Research Department, business offices, and Group
companies. To discover and share cross-sector knowledge,
we convened the Cross-Sector Conference nine times infiscal 2017 with such themes as CASE, logistics, andhealthcare.
Research Institute of Capital Formation
The Research Institute of Capital Formation (RICF) wasestablished in 1964 with Dr. Osamu Shimomura, who advocated for the principles behind Japan’s post-1940s, higheconomic growth, as its first executive director. The institute2,000(Left axis)(Right axis)

Environmental rating
Cumulative amount

BCM rating

Health management rating
137

1,000
107

Total number of
rated loans:

750

45

1,073
¥1,853.3 billion

500

17
4

250
33
0

(Fiscal year) 2004

67

2005

11

103

1

(As of March 31, 2018)

13

100

126

2006

2007

19
162

2008

23
198

2009

28

55

369

145
415

75
234

278

190
470

523

574

1,600

315
1,200
621
800

308

400

244

2010

2011

2012

2013

2014

2015

2016

2017

Integrated Report 2018

051

Data Section(¥100 million)

1,250

Corporate Data

(Number)

Risk Management

DBJ Rated Loans

Corporate Governance

DBJ Certification Programs
rating loans is revised every year by a panel of advisors
Using its independently developed screening system, DBJ
consisting of external experts with due attention paid tocertification programs set terms and conditions of loans
the latest issues and trends around the world.
based on corporations’ non-financial information.
Evaluations of the sustainability of corporations’ activities
In February 2018, DBJ received a commendation fromcontribute to practical implementation of the Plan‐Do‐
the Association of Development Financing Institutions in
Check‐Act (PDCA) cycle. Also, by factoring non-financial
Asia and the Pacific (ADFIAP) in recognition of its efforts
information into the assessment of corporate value, DBJ
through the Employees’ Health Management Rated Loan
aims to create an environment wherein companies with
Program. DBJ certification programs provide broad support
medium- to long-term growth potential can be evaluatedfor the efforts of its customers while contributing to theby financial markets and stakeholders.
creation of a sustainable society.
DBJ launched the Environmentally Rated Loan Program in
Environmental
Health Management
2004, the first such program in the world. In 2006, DBJ
BCM Rating
RatingRating(Business
continuationrisk)
launched the BCM Rated Loan Program to evaluate disaster(Environmental risk)(Human productivity risk)
preparedness and measures to ensure business continuation. Furthermore, in 2012 DBJ began to offer the
Employees’ Health Management Rated Loan Program,which assesses a company’s efforts at health management
to improve the productivity of its employees through workstyle reforms and measures to raise employee awareness ofhealth issues. To date, we have provided more than 900
For details on DBJ certification programs, please follow the link
below to the DBJ website (Japanese only).
rated loans to customers while engaging in dialogue withhttps://www.dbj-sustainability-rating.jp/
them to support their initiatives. Our screening sheet for

DBJ Group’s Strategy

Processes
Work Reform Project
DBJ established the Work Reform Project in fiscal 2016
under the leadership of a deputy president and withmembers from a range of departments to devise measuresto raise added value for customers, including streamlining
investment and loan processes, increasing productivity,
vitalizing organizations, streamlining how meetings are
conducted, reviewing decision-making processes, setting up
a mobile work environment, introducing a video-conference system, and streamlining settlement procedures.

DBJ Group’s Vision

serves as a venue for creating intellectual capital throughcooperation and collaboration between DBJ and external
experts at universities and other organizations. Its research
includes a focus on the formation of a sustainable economy
and society from an academic and liberal standpoint. In
recent years, the institute has expanded the means for creating intellectual capital by establishing new committees forresearching sustainability, publishing research papers
through Springer, an international academic publishingcompany, and holding international academic conferences in
conjunction with foreign academic journals and think tanks.

Management Foundation Strategy

Relationship andSocial Capital
DBJ Group aims to create value by cooperating with other parties to enhance the value of its network and brand.
Its also aims to achieve sustainable growth in business andcorporate value while developing social capital forsociety as a whole.

Basic Policy
Relationship Capital
DBJ Group has built diverse networks with customers,
financial institutions, investors, and national and local
government agencies for the purpose of exchanging information and avoiding conflicts of interest. DBJ Group utilizes
its unique networks to identify issues affecting the economy and society and to conduct investment and loan operations. We aim to maintain our reputation and improve ourbrand value through the services we provide to customers.
Social Capital
DBJ Group defines social capital as a resource shared acrosssociety that underpins the foundations of market economics. Increasing the value of social capital is a basic tenet forrealizing a sustainable society. DBJ specifically engages inunique initiatives within the context of (1) the natural environment, (2) social infrastructure, and (3) system capital.
Social capital(1)
Naturalenvironment

Details

Forests, mountains, rivers,
lakes, soil, air

Example of initiatives

Environmentally Rated
Loan Program
DBJ Green Building
Certification

Energy, transportation,
urban infrastructure,
Socialinfrastructure industrial value chains

Loans and investments forinfrastructure and industrial
projects
BCM Rated Loan Program

Stabilization and stimulationof the financial system,
System capital development and invigoration of financial markets

Crisis Response Operations
Supply of risk capitalSocially responsible
investing bond issuance

(2)

(3)

Concrete Measures to Increase the Value ofRelationship Capital and Social Capital
Universities and Research Institutions
DBJ uses its network of roughly 450 scholars at 116 universities in Japan and abroad to promote research activities
and human resource development, mainly in the social

52

Integrated Report 2018

science fields. From early on, we have worked to make thisnetwork a global one, launching a system to support overseas researchers in 1991 which now includes 38 overseas
researchers from 14 countries including the US, Canada,
the UK, Germany, France, Singapore, China, South Korea,
and Australia.
In fiscal 2017, we hosted the DBJ Sustainability
Conference with the theme of CSR, the Economy and
Financial Markets. Through this and other international
academic conferences, we deepen discussions between
global researchers and businesses such as DBJ and these
conferences have been well received as an opportunity forexchanges that take place in an environment different fromuniversities.
The DBJ Academy provides training to DBJ employees
and students from outside DBJ as part of our efforts tofoster human resources capable of conducting high-level
financial operations. In fiscal 2017, with the help of 18
outside instructors in various fields from 11 universities, wewere able to provide instruction to a total of 481 students.
Comprehensive Partnership Agreement with AISTIn September 2017, DBJ and the National Institute ofAdvanced Industrial Science and Technology (AIST) signed
a partnership agreement with the purpose of pursuing
open innovation to contribute to the construction of nextgeneration social and industrial infrastructure.
Through this partnership, private-sector companies are
given access to technologies developed by AIST so that they
can be commercialized. This arrangement assists corporations
working with DBJ Group in solving problems by using leading-edge technologies and encourages the launch of joint
development projects. Under the agreement, DBJ and AIST
plan to exchange information and hold discussions aimed atstrengthening communication with private-sector companies
and identifying good matches for collaborative projects.

For more information, please follow the link below to the DBJ
website (Japanese only).
https://www.dbj-i.net/jp

Corporate Data
Data Section

DISCLOSURE INSIGHT ACTION

For more information, please follow the link below (Japanese only).
https://www.jeri.or.jp/wec/

DBJ Connect
Beginning in June 2017, at the suggestion of our young
employees, we launched DBJ Connect, a service promoting
open innovation collaboration between start-ups andestablished companies, in collaboration with Creww, acompany that operates the largest start-up community inJapan. The programs that DBJ Connect operates allow
start-ups to leverage the management resources of established companies to accelerate the growth of their businesses and offer established businesses a foothold into
emerging new businesses.

Risk Management

Participation in Outside Initiatives
DBJ actively participates in and contributes to outside
initiatives aimed at promoting sustainability management.
For example, in December 2016, DBJ and DBJ AssetManagement Co., Ltd. became signatories of the United
Nations-supported Principles for Responsible Investment(PRI) and, since February 2018, have served as members of
the PRI Infrastructure Advisory Committee. Also, DBJ invited
Richard Howitt, chief executive officer of the International
Integrated Reporting Council (IIRC), to take part in an
exchange of views among businesspeople involved in integrated reporting. Further, DBJ joined the Global Real Estate
Sustainability Benchmark as an investor member and participates in study groups hosted by the Japanese Ministry of
Economy, Trade and Industry on long-term investment insustainable growth (ESG and investment in intangible
assets) and round table conferences held by the Japanese
Ministry of the Environment on ESG financing.

Corporate Governance

DBJ Women Entrepreneurs Center (DBJ-WEC)
DBJ provides comprehensive support, including entrepreneurial know-how and networking opportunities, tonurture growth businesses led by women from new
vantage points that could change society and the economy
for the better. As a part of these efforts, DBJ holds a business plan competition every year for women entrepreneurs.
New business ideas that evince excellent business potential
and innovativeness are awarded business grants of up to¥10 million. After the competition finishes, the winners areconnected with outside experts and venture capitalists who
help them turn their business plans into reality by supporting the growth and development of their business ideas.
In addition to the DBJ Women Entrepreneurs Prize, the
DBJ Women Entrepreneurs Prize for Excellence and the DBJ
Women Entrepreneurs Prize for Business Promotion, in 2017
DBJ created the DBJ Women Entrepreneurs Prize for Social
Design. DBJ presents these awards for high-utility sustainable plans that make strong contributions to society andcontribute to the solution of regional issues while taking
into consideration the Sustainable Development Goals (SDGs).
More than 2,100 business plans have been submitted
over the past six competitions, expanding the scopeof opportunity for women
entrepreneurs.

DBJ Group’s Strategy

For more information, please follow the link below (Japanese only).
https://www.jeri.or.jp/sctm/about/ihub.php

DBJ Connect’s first program was Kyoto Open Accelerator,
wherein four established companies based in Kyoto collaborated with six start-ups.

DBJ Group’s VisioniHub4.0 (innovation Hub4.0)
Along with Japan Economic Research Institute, DBJ engages
in the management of technology training and innovationiHub4.0 activities. By using its impartial position and broad network, DBJ
aims to resolve social issues throughlogical and innovative businesssolutions.

ADFIAPfinancing sustainable development

Approval of TCFD
In June 2018, DBJ expressed its approval of the final reporton the recommendations of the Task Force on Climaterelated Financial Disclosures (TCFD). Going forward, DBJ
will respond appropriately through scenario analysis basedon recognition of the risks and opportunities related toclimate change.
Integrated Report 201853

Corporate Governance

Message from the Chairman

With ongoing efforts to strengthen governance,
we contribute to sustainable growth throughan innovative value creation process.

1. Toward the Creation of a Unique Business ModelIn accordance with the Development Bank of Japan Inc. Act, DBJ Group promotes sustainability management that balances economic value with social value, with the aim of realizing a sustainable society. Under
the current Fourth Medium-Term Management Plan, DBJ supports forward-looking initiatives by supplying
risk capital through Special Investment Operations. These initiatives aim to stimulate new flows of risk
capital in Japan by collaborating and cooperating with private financial institutions. Through investments
and loans in new fields, DBJ contributes to the strengthening of Japan’s international competitiveness.
DBJ also supplies risk capital for addressing local issues through joint funds created with regional financial
institutions.
Furthermore, DBJ plays the role of rapidly supplying capital during responses to such crises as natural
disasters. During turmoil in international financial markets, the Great East Japan Earthquake, the Kumamoto
earthquakes, and other events that required fresh capital, DBJ has been there to rapidly provide relief.

2.	Governance Suitable for Our Business Model, andDialogue with Stakeholders
In order to continue playing this unique role, it is essential that DBJ has robust corporate governance,
ensures transparency in management, and takes into consideration the opinions of external experts. For
these reasons, DBJ has set up the Operations Audit Committee, Compensation Committee, and Personnel
Evaluation Committee as advisory bodies to the Board of Directors. Based on this framework, aiming toincrease the effectiveness of the Board of Directors, we believe it is also imperative to listen to the opinionsof our stakeholders.
In a reasonably competitive environment, it is very important for DBJ to collaborate and cooperate withprivate financial institutions, thus DBJ periodically creates events, usually twice a year, for exchanging opinions with representatives of such institutions. In addition, with regard to Special Investment Operations,
DBJ has set up the Special Investment Operations Monitoring Board (see page 58) as an advisory body to
the Board of Directors that meets twice a year in order to deliberate and evaluate projects, as well as
embolden private-sector enterprises and complement their operations while maintaining appropriatecompetitive relations.
The opinions elicited from the periodic social events with private financial institutions and the outcomesof deliberations by the Special Investment Operations Monitoring Board are reported to the Advisory Boardand debated. As an advisory body to the Board of Directors, the Advisory Board (see page 57) is made up

54

Integrated Report 2018

DBJ Group’s Vision
DBJ Group’s Strategy

August 2018

Yasushi Kinoshita
Chairman

Integrated Report 201855

Data Section

Corporate Data

In 2017, DBJ Group created the Policy on Sustainability and the Sustainability Committee in light of theincreasing need to review corporate management from the standpoint of sustainability, given recent developments including the adoption of the Sustainability Development Goals (SDGs) and the Paris Agreement.
The Sustainability Committee has discussed matters that are important for management, such as constantly
changing social issues for the realization of a sustainable society, and in 2018, directors enthusiasticallyexchanged opinions about initiatives related to energy, climate change, and the SDGs.
DBJ Group aims to realize a sustainable society while balancing economic value and social value byoffering solutions to issues faced by society and the Group’s customers. DBJ will create innovative businessmodels for advancing sustainability management and maintaining a balanced value creation process.
Moreover, we will continue making every effort to ensure robust and effective corporate governance basedon the notion that nothing is more important than the trust placed in us by our customers and society.

Risk Management

3.	Realizing a Value Creation Process That Balances
Economic Value with Social Value

Corporate Governanceof outside experts and directors in fields including manufacturing, infrastructure, regional communities,
and finance. The Advisory Board provides valuable opinions about matters concerning the safeguardingof appropriate competitive relations with private financial institutions and DBJ Group’s management plans.
I believe a unique aspect of DBJ Group’s corporate governance is the continuous reassessment of its novel
value creation process while engaging in dialogue with stakeholders.
Moreover, to advance initiatives one step ahead of the times, it is important for DBJ to ensure the appropriateness of its operations based on the Companies Act. For this purpose, the Board of Directors formulated the Internal Control System Basic Policy, which positions legal compliance, risk management, andinternal audits as important issues for management.

Corporate Governance

Basic Position on Corporate Governance
DBJ is governed by the Development Bank of Japan Inc. Act (the DBJ Act) in accordance with the following objective.

Article 1
Development Bank of Japan Inc. (hereinafter referred to as the “Corporation”) shall be a joint-stock company (kabushiki-kaisha)
whose objective is to contribute to the smooth supply of funds to those needing long-term business funds, as well as to thesophistication of financial functions.
DBJ is working to enhance its unique governance system in
addition to usual management supervision as a company
with a board of directors and company auditors (Audit &Supervisory Board) through a business model built upon
features such as integrated investments and loans andproper execution of the preceding objective in order toraise the value of tangible and intangible management
resources to be invested and to realize sustainable management that aims for both economic and social value.
Specifically, the 2015 revisions to the DBJ Act establishedthe creation of Special Investment Operations and obligatory measures to be considered, requiring that DBJ conduct
its operations in a manner that does not obstruct appropriate competitive relations with other entities, in particular,
applying these requirements to the Advisory Board, madeup of outside experts and directors, and the Special
Investment Operations Monitoring Board, composed ofoutside experts, which function as advisory bodies to theBoard of Directors. These bodies provide advice on DBJ’s

overall management and deliberate and evaluate businessresults, including consistency with the policy objectives ofSpecial Investment Operations, ensuring that appropriatecompetitive relations are maintained with private financial
institutions.
DBJ’s Corporate Governance System
A company with a board of
directors and company auditors(Audit & Supervisory Board)

Institutional design configuration
Number of directors

10

Of whom are outside directors

2

Number of Board of Directors’ meetings
this fiscal year
Number of Audit & Supervisory Board
members
Of whom are outside Audit &Supervisory Board members
Number of Audit & Supervisory Board
meetings this fiscal year

13
5
3
14

Adoption of executive officer system

Yes
Deloitte Touche Tohmatsu
LimitedAccounting auditor

Overview of DBJ’s Corporate Governance System
General Meeting of
Shareholders

Matters requiring authorization ofcompetent minister ppointment and dismissal of representativeA
directors and Audit & Supervisory
Board members

Audit & Supervisory
Board members,
Audit & Supervisory Board

ReportingOperations Audit
Committee

Concurrent positions as directors
Amendments to Articles of Incorporation
Board of Directors

Disposition of surplus funds
Merger, corporate split, and dissolution

Compensation
Committee

Accounting auditor

ReportingInternal Audit
Department

Personnel Evaluation
Committee

Basic policy on business plans,
redemption plans, and fund procurement

Cooperation

Advisory Board
Executive
Committee
Decision-making
bodies

ALM & Risk
Management
Committee

Departments
Subsidiaries

56

Integrated Report 2018

AuditsSpecial Investment Operations
Monitoring Board

Deliberative
bodiesGeneral Risk
Management
Committee

Committee on
Investment and
Loan Decisions

New Operation
Screening
Committee

Advisory Panelon Investments
and Loans

Sustainability
Committee(new)Core Business
SystemRestructuring
Committee

Auditsduties. The Audit & Supervisory Board and Audit &Supervisory Board members audit the execution of duties
by directors, based on their audit policy and audit plans.
Audit & Supervisory Board members attend Board of
Directors’ and other important meetings and may query the
execution of business by directors, peruse documents, andconduct branch audits.

Advisory Bodies to the Board of Directors

Personnel Evaluation Committee
The Personnel Evaluation Committee, composed of outside
directors and other outside experts, evaluates personnel
proposals on the selection of directors and Audit &Supervisory Board members.

Reiko Akiike

Senior Partner and Managing Director,
The Boston Consulting Group

Masayuki Oku

Honorary Advisor of
Sumitomo Mitsui Financial Group, Inc.

Kazuaki Kama

Executive Corporate Advisor,
IHI Corporation

Katsunori Nakanishi Chairman and CEO,The Shizuoka Bank, Ltd.

Yoshizumi Nezu

President, Tobu Railway Co., Ltd.

Outside Directors
Akio Mimura

Honorary Chairman of
Nippon Steel & Sumitomo Metal Corporation

Kazuo Ueda

Professor and Head of Office for New Department
Planning, Kyoritsu Women’s University,
Faculty of International Studies

Integrated Report 201857

Data Section

Advisory Board
Since DBJ’s establishment as a joint-stock company in
October 2008, the Advisory Board has been in place as anadvisory body to advise the Executive Committee, providing
advice on overall management. Revisions in 2015 to the
DBJ Act stipulate for an indefinite period obligatory

Outside Experts

Corporate Data

Compensation Committee
The Compensation Committee, whose members include
outside directors, considers the type of executive compensation structure that befits DBJ from the standpoint of
ensuring transparency and objectivity regarding
compensation.

Risk Management

Operations Audit Committee
The Board of Directors has established the Operations Audit
Committee, delegating to this body the authority to deliberate important matters related to internal audits. This
committee met two times during the fiscal year ended
March 31, 2018.

measures to be considered, in particular, requiring that DBJ
conduct its operations in a manner that would not obstructappropriate competitive relations with other entities.
Accordingly, this board is positioned anew as an advisory
body to the Board of Directors. As one of its roles, evenmore than before, the Advisory Board is tasked with deliberating and evaluating important affairs related to ensuringthat appropriate competitive relations are maintained withprivate financial institutions.
This board convened twice during the fiscal year ended
March 31, 2018. This board is composed of the following
outside directors and experts in fields including manufacturing, infrastructure, regional communities, and finance.

Corporate GovernanceIn pursuit of sustainability management and DBJ’s corporate
objectives, the following committees have been establishedas advisory bodies to the Board of Directors for the purposeof maintaining transparency in management and to reflect
the knowledge of outside experts.

DBJ Group’s Strategy

The Audit & Supervisory Board comprises five members.
The Companies Act prescribes that a majority of Audit &Supervisory Board members be outside members (in DBJ’scase, three of the five). DBJ offices contribute three members(two members proper to DBJ and one an outside member).
Also, DBJ has created the Audit & Supervisory Board
Office, which under the board’s direction, assists board
members, including outside members, in performing their

DBJ Group’s Vision

Audit & Supervisory Board Members, Audit & Supervisory Board

Corporate GovernanceSpecial Investment Operations Monitoring Board
One of the measures of the 2015 revisions to the DBJ Act
was in regard to Special Investment Operations. The act
stipulates the establishment of a Special Investment
Operations Monitoring Board as an advisory body to theBoard of Directors. This monitoring board is tasked withdeliberating projects and evaluating their performance interms of appropriateness against policy objectives and withemboldening private-sector enterprises and complementing
their operations while maintaining appropriate competitive
relations. This board, whose members include outside
experts in fields such as manufacturing, infrastructure,regional communities, and finance, convened twice during
the fiscal year ended March 31, 2018.
In order to examine whether appropriate competitive
relations with other entities are being maintained, roundtable discussions are held regularly with the Japanese
Bankers Association, the Regional Banks Association ofJapan, and the Second Association of Regional Banks,

including these entities’ private financial institution
members. Each group met twice in fiscal 2017, for a totalof six meetings. Disputes and opinions raised in these meetings are reported to and deliberated by the Advisory Boardand the Special Investment Operations Monitoring Board.
Outside Experts
Hideharu Iwamoto

Vice Chairman & Senior Executive Director ofJapanese Bankers Association

Masayuki Oku

Honorary Advisor of
Sumitomo Mitsui Financial Group, Inc.

Katsunori Nakanishi Chairman and CEO,The Shizuoka Bank, Ltd.

Takashi Yamanouchi Advisor,

Mazda Motor Corporation

Keisuke Yokoo

Vice Chairman & President ofJapan Association of Corporate Executives

Fumiaki Watari

Honorary Executive Consultant of
JXTG Holdings, Inc.

Executive Committee
The Board of Directors has vested in the Executive Committee decision-making authority regarding the execution of business.
Accordingly, the Executive Committee makes important management decisions. The committee met 38 times during the
fiscal year ended March 31, 2018.
Committees under the Executive Committee
Name

Role

ALM & Risk Management Committee

This committee deliberates and makes decisions pertaining to portfolio risk management and asset–liability
management.

General Risk Management Committee

This committee deliberates and makes decisions on important items related to operational risk management,
system risk management, legal compliance, responses to antisocial forces, client protection management, andother important items.

Committee on Investment and
Loan Decisions

This committee handles, deliberates, and makes decisions related to investments and loans, overseas businessstrategy, and operations and management conditions.

New Operation Screening Committee

This committee deliberates and makes decisions on the commencement of initiatives involving new businesses.

Advisory Panel on Investments
and Loans

This panel handles the advance deliberation on and monitoring of investments and loans as well as deliberations
on overseas business strategy and operations and management conditions.

Sustainability Committee

This committee deliberates on items related to both economic and social value as well as dialogue
with stakeholders.

Core Business System Restructuring
Committee

This committee deliberates items related to policies for restructuring core business systems.

DBJ established the Sustainability Committee, which has
operated since fiscal 2017 onward, as part of efforts tocontribute to a sustainable society, in accordance with DBJ
Group’s Policy on Sustainability (please refer to page 61).
This committee approaches important social issues from an
ESG perspective and incorporates this attitude into businessactivities, including investments and loans as well as asset
management.
The committee met twice during the fiscal year ended
March 31, 2018.

58

Integrated Report 2018

Matters Requiring Authorization ofCompetent Minister
The DBJ Act prescribes matters for which Minister ofFinance authorization is required. Major items requiringsuch authorization are as follows:•	Appointment and dismissal of representative directors
and Audit & Supervisory Board members•	Amendments to Articles of Incorporation•	Disposition of surplus funds; Merger, corporate split, anddissolution; Basic policy on business plans, redemption
plans, and fund procurement

Messages from Outside Directors

DBJ Group’s VisionCorporate Governance Helps Us Solve Social Issues
Akio Mimura
Outside Director

DBJ Group’s Strategy

April
April

1963: Joined Fuji Iron & Steel Co., Ltd.
2000:	Representative Director and Executive
Vice President of Nippon Steel Corporation
April
2003:	Representative Director and President of
Nippon Steel Corporation
April
2008:	Representative Director and Chairman of
Nippon Steel Corporation
October 2008: Director at DBJ (current position)
October 2012:	Director, Member of the Board andSenior Advisor of Nippon Steel &Sumitomo Metal CorporationJune
2013:	Senior Advisor of Nippon Steel &Sumitomo Metal Corporation
November 2013:	Chairman of the Tokyo Chamber ofCommerce & Industry (current position)
Chairman of the Japan Chamber ofCommerce & Industry (current position)
June
2018:	Honorary Chairman of
Nippon Steel & Sumitomo Metal
Corporation (current position)

Corporate GovernanceRisk Management

I have served as an outside director since 2008 when DBJ became ajoint-stock company, and I am currently a member of the Advisory
Board, a body that facilitates corporate governance by incorporating
the opinions of outside experts into the management of DBJ. The
Advisory Board is positioned as an advisory body to the Board of
Directors in accordance with the revisions of the DBJ Act of 2015. The
role of the Advisory Board is not only advising DBJ management forbalancing economic value and social value, but also deliberating for
DBJ to ensure appropriate competitive relations with private financial
institutions. I also believe that the Advisory Board has fulfilled its
responsibilities for performing checks from a third-party perspectiveon the proper execution of legally mandated Special Investment
Operations, Crisis Response Operations, collaboration with private
financial institutions, and DBJ Group management.
Amid rapid change in the economy, international politics, technology, demographics, and other aspects of society, DBJ aims to contribute to the resolution of various social issues while moving to achieve
the objectives of the Fourth Medium-Term Management Plan thathas been underway since fiscal 2017. To this end, it is essentialthat DBJ constantly engages in dialogue and cooperates with its stakeholders. As an outside director, I will continue to carry out my duties
and facilitate contributions to society from a governance standpoint.

Corporate Data

Strengthening Corporate Governance toPromote Sustainability Management
Kazuo Ueda
Outside Director

April
March
April
April
OctoberApril

1980:	Assistant professor at the University of
British Columbia, School of Economics
1982:	Assistant professor at Osaka University,
School of Economics
1989:	Assistant professor at Tokyo University,
School of Economics
1993:	Professor at Tokyo University, School of
Economics
1998:	Deliberative member of the Bank ofJapan’s Policy Board
2005:	Professor at Tokyo University, School of
Economics
2008:	Outside director at DBJ (current position)
2017:	Professor and Head of Office for New
Department Planning, Kyoritsu Women’s
University, Faculty of International Studies(current position)Director of Tokyo
University’s Center for Advanced Researchin Finance (current position)

Integrated Report 2018

Data Section

July
April

Over the past few years, interest in social sustainability, expressedin terms including ESG and the SDGs, has risen sharply. To date, DBJ
has fulfilled various roles in accordance with the needs of society,constantly undertaking new initiatives for realizing a sustainable society, such as developing DBJ certification programs and supplying risk
capital through joint investments with private non-financial companies
and financial institutions.
I believe DBJ’s initiatives draw on the long evolution of its corporate
DNA to date, and proper governance is needed for DBJ to contributeto the medium- and long-term development of society and the economy, as well as to the realization of a sustainable society. This uniquebusiness model is supported by the Advisory Board and the Special
Investment Operations Monitoring Board. As a member of theAdvisory Board, I work closely with outside experts to advise DBJ on
overall management. I will do my part in pursuit of sustainable social
development and the sustainability management that DBJ strives for.

59Corporate GovernanceInternal Control System Basic Policy
DBJ has established the following internal controls toensure operational soundness, with the Board of Audit,
Ministry of Finance, Financial Services Agency, and otherinstitutions also conducting examinations of overallmanagement.
Status of Internal Control System
In accordance with the Companies Act, the Board of
Directors has established an internal control system underthe Internal Control System Basic Policy. Specifically, thissystem is designed to determine the status of legal compliance, risk management, and internal audits, as well asother items of importance to management. The internal
control system is designed to confirm applicable regulations
and the status of their implementation in various
departments.
The full text of the Internal Control System Basic Policy is alsoavailable on the DBJ website (Japanese only).
https://www.dbj.jp/co/info/governance_policy.html

Internal Audits
DBJ has established the Internal Audit Department under
the direct supervision of the president of DBJ and independent of other operating departments. The department
conducts inspections to ensure the appropriateness andeffectiveness of internal controls, including overall operational compliance and risk management, and performs

evaluations and recommends improvements. The Operations
Audit Committee deliberates and decides audit plans, audit
reports, and other important matters related to internal
audits, and this information is reported to the Board of
Directors. As of the end of June 2018, 22 people belonged
to the Internal Audit Department.

Accounting Audits
DBJ has in place an agreement whereby Deloitte Touche Tohmatsu LLC conducts accounting audits as its accounting auditor.

Three-Pronged Auditing Approach
DBJ’s Audit & Supervisory Board members, the Internal Audit Department, and the accounting auditor periodically and asnecessary exchange opinions and information, and communicate in an effort to ensure effective and appropriate audits.

Compliance
DBJ recognizes compliance as one of its most importantmanagement issues. As basic policies to ensure that theexecution of duties by directors and regular employees
complies with laws and regulations and the Articles ofIncorporation, we have formulated a corporate philosophy,
a Basic Compliance Policy and other compliance-related
regulations. In addition to its basic regulations on compliance, DBJ has created and provided notice throughout theorganization of a Compliance Manual and a complianceprogram. We seek to thoroughly implement the complianceactivities outlined below.
Compliance Principles
DBJ has formulated the compliance principles indicatedbelow as part of its creation of compliance regulations.

60

Integrated Report 20181) DBJ’s executives and employees are keenly aware of DBJ’s
social mission and responsibilities as a public-sector bankand recognize that illegal acts or improper business operations harm the reputation of DBJ and interfere significantlywith DBJ’s ability to fulfill its objectives under the new
DBJ Act. We also realize DBJ’s need to always conduct
activities appropriately and in compliance with the law.
2) DBJ’s executives and employees are well aware that DBJ
must conduct its businesses legally and appropriately
and be responsible for explaining its actions to thegeneral public.
3) DBJ refuses all advances from anti-social forces andcooperates with police and other related institutions toprevent any sort of relationship with such elements.

internal system. One specific initiative is the establishmentof a compliance hotline.
The objective of this internal reporting system is to
swiftly identify and resolve any legal violations. DBJ is also
preparing Conflicts of Interest Management Regulations
as a basic policy in addition to systems to manage conflictsof interest.

We have incorporated a declaration on our policies into
our Declaration on Personal Information Protection.
DBJ is a registered financial institution under the
Financial Instruments and Exchange Act. In accordance withthis act and the Cabinet Office Ordinance on Financial
Instruments Business, etc., DBJ has drawn up a policy introduced for the management of conflicts of interest andprovides an overview of the publicly announced policy.

Policy on Sustainability
DBJ Group formulated the Policy on Sustainability in 2017 in order to facilitate the creation of both economic value and social
value while engaging in dialogue with stakeholders and effecting continuous improvement in the value creation process.

Responses to Japan’s Stewardship Codein their long-term strategies. After investing, we leverage
our networks and strengths in information, industry
research, and financing technologies to provide total
financing solutions that address the issues they face.
Through dialogue with investee enterprises, we work torealize their long-term development and maximize theircorporate value over the long term.
DBJ believes that its investment operations have been
conducted in close affinity with the spirit of the Code.
In providing risk capital and knowledge, we consider theappropriate fulfillment of stewardship responsibilities byinstitutional investors to be of service from the perspectiveof working with diverse financial players to ensure thesmooth formulation of financial and capital markets.
Accordingly, we are in agreement with the meaning of theprinciples provided in the Code.
The full text, including the May 2017 revisions to the code, isavailable on the DBJ website (Japanese only).
https://www.dbj.jp/co/info/stewardship.html

Integrated Report 201861

Data Section

In August 2014, DBJ stated its acceptance of the “Principles
for Responsible Institutional Investors (Japan’s StewardshipCode)” (the “Code”). Under the Code, stewardship responsibilities refer to the responsibilities to enhance themedium- to long-term investment return for clients andbeneficiaries by improving and fostering investee enterprises’ corporate value and sustainable growth throughconstructive “purposeful dialogue” (engagement), basedon an in-depth understanding of the investee enterprises
and their business environments.
DBJ recognizes that, in addition to operational selection
and focus and the realization of growth strategies, calls forcorporate governance are growing. Recognizing the importance of the meaning of equity, in our equity investments
we support the long-term advancement of the investee
enterprises that are our clients, taking particular note of
their social responsibilities. When making investments, we
endeavor to gain an in-depth understanding of investee
enterprises, their business environments, and their management teams’ intention and to share with investee enterprises

Corporate Data

The full text of the Policy on Sustainability is available on the DBJ website.
https://www.dbj.jp/en/co/csr/regular/index.html

Risk Management

The Client Protection Management Basic Policy, Declaration on
Personal Information Protection, and Policy for Managing
Conflicts of Interest can also be found on the DBJ website(Japanese only).
https://www.dbj.jp/co/info/compliance.html

Corporate Governance

The establishment and maintenance of systems for client
protection management and the protection of personal
information are vital because doing so protects the people
who use the financial institution’s systems and raises theirlevel of convenience. DBJ recognizes the extreme importance of such systems from the standpoint of operationalsoundness and appropriateness. DBJ has formulated a
Client Protection Management Basic Policy to ensure strict
compliance with laws and regulations, protect the interestsof its clients, and raise the level of client convenience. We
have also created internal regulations based on this policy,
which we employ in briefings to raise in-house awareness.

DBJ Group’s Strategy

Client Protection Management Basic Policy / Declaration on Personal Information Protection /Policy for Managing Conflicts of Interest

DBJ Group’s Vision

Compliance System
DBJ has established the Legal and Compliance Department
to take overall responsibility for planning, preparing, andadjusting compliance activities. In addition, DBJ has established the General Risk Management Committee to reflect
on legal compliance matters, determine the extent ofcompliance, and deliberate on improvements to DBJ’s

Directors, Audit & Supervisory Board Members, and Executive Officers(as of the end of July 2018)

Directors
Chairman

Director and Managing Executive Officer

Yasushi Kinoshita

Koji Narita

1979: Joined the Ministry of Finance2013: Administrative vice minister
2015: Deputy President of DBJ
2018: Chairman of DBJ

In charge of Treasury Department,
Syndication & Credit Trading Department,
Sustainability Planning and Support
Department
1987:	Joined the Ministry of Finance2016:	Director-General of the Chugoku Local
Finance Bureaus
2017:	Director and Managing Executive
Officer of DBJ

President and CEO

Director and Managing Executive Officer

Hajime Watanabe

Makoto Anayama

1981:	Joined The Japan Development Bank
2008:	General Manager, Head of Urban
Development Department
2009:	Executive Officer,
Head of Corporate Planning &Coordination Department
2011:	Director and Managing Executive
Officer of DBJ
2015: Deputy President of DBJ
2018: President and CEO of DBJ

In charge of Accounting Department,
Credit Analysis Department,
Risk Management Department,
Legal Affairs & Compliance Department,
Research Institute of Capital Formation

Deputy President

Director and Managing Executive Officer

Shin Kikuchi

Seiji Jige

1984:	Joined The Japan Development Bank
2011:	Executive Officer, Head of Growth &Cross Border Investment Group
2011:	Executive Officer, Head of Corporate
Planning & Coordination Department
2013:	Managing Executive Officer of DBJ
2015:	Director and Managing Executive
Officer of DBJ
2018:	Deputy President of DBJ

In charge of Business Planning &Coordination Department, International
Strategy & Coordination Department,
Economic & Industrial Research
Department

Director and Managing Executive Officer

Outside Director

Satoshi Tomii

Akio Mimura

In charge of Strategic Finance
Department, Growth & Cross Border
Investment Department

Honorary Chairman of Nippon Steel &Sumitomo Metal Corporation;
Chairman of Tokyo Chamber ofCommerce and Industry;
Chairman of Japan Chamber ofCommerce and Industry

1985:	Joined The Japan Development Bank
2012:	Executive Officer, Head of Growth &Cross Border Investment Group
2014:	Managing Executive Officer,
Head of Growth & Cross Border
Investment Department
2015:	Director and Managing Executive
Officer of DBJ

Integrated Report 2018

1986:	Joined The Japan Development Bank
2012:	Executive Officer in Charge of Special
Missions
2013:	Executive Officer, Head of Corporate
Planning & Coordination Department
2015:	Managing Executive Officer of DBJ
2018:	Director and Managing Executive
Officer of DBJ

2008:	Director at DBJ

Director and Managing Executive Officer

Outside Director

Kenkichi Fukuda

Kazuo Ueda

In charge of Corporate Planning &Coordination Department,
Information Resources Department,
General Affairs Department

Professor and Head of Office for
New Department Planning,
Kyoritsu Women’s University,
Faculty of International Studies;
Director of Tokyo University’s Center for
Advanced Research in Finance

1983:	Joined The Japan Development Bank
2009:	General Manager,
Head of Chugoku Branch
2012:	Executive Officer, Head of Human
Resources Management Department
2014:	Managing Executive Officer,
Head of Kansai Branch
2016:	Director and Managing Executive
Officer of DBJ

62

1986:	Joined The Japan Development Bank
2011:	Head of Economic & Industrial Research
Department
2013:	Executive Officer, Head of Business
Planning & Coordination Department
2015:	Managing Executive Officer of DBJ
2018:	Director and Managing Executive
Officer of DBJ

2008:	Director at DBJ

Executive Officers (excluding those who are concurrently directors)

Audit & Supervisory Board Member

Managing Executive Officer

Executive Officer

Atsushi Kurashige

Hisanobu Sekine

Ryusei Segawa

1986:	Joined The Japan Development Bank
2010:	General Manager,
Credit Analysis Department
2011:	General Manager, Secretariat Office
2013:	General Manager, Head of Urban
Development Department
2017:	Audit & Supervisory Board Member
at DBJ

In charge of Structured Finance
Department, Hokkaido Branch,
Tohoku Branch, Niigata Branch

In charge of Internal Audit

Executive Officer

Takao Kaizu

Managing Executive Officer

Mitsue Kurihara

Yoshinao Ikeda

1987:	Joined The Japan Development Bank
2011:	Senior Vice President of Healthcare &Hospitality Industry Office,Corporate Finance Department,
Division 4
2013:	General Manager, Head of Corporate
Finance Department, Division 6
2015:	Audit & Supervisory Board Member
at DBJ

In charge of Corporate Finance
Department, Division 1 and 2

Managing Executive Officer

Masayuki Tsuda

Toshio Yamasaki

Keisuke Takegahara
Deputy Chief Research Officer,
Chief Manager of Sustainability
Management Office, Corporate
Planning & Coordination Department

Executive Officer

Shigeru Tamagoshi
Head of Business Planning &Coordination Department

Executive Officer

Managing Executive Officer

Toshiyasu Takazawa

Norifumi Sugimoto

Head of Corporate Planning &Coordination Department

In charge of Regional Planning
Department, Hokuriku Branch,
Tokai Branch, Kyushu Branch,
Minami-Kyushu Branch

Executive Officer

Managing Executive Officer(Head of Kansai Branch)

Head of Growth & Cross Border
Investment Department

Shoichiro Kubota
Corporate Data

1982:	Joined The Sumitomo Trust andBanking Co., Ltd.
2017:	President of Sumitomo Mitsui Trust
General Service Co., Ltd.
2018:	Advisor of Sumitomo Mitsui Trust
General Service Co., Ltd.
2018:	Audit & Supervisory Board Member
at DBJ

Executive Officer

Risk Management

In charge of Urban Development
Department, Real Estate Finance
Department, Corporate Finance
Department, Division 3

Head of Human Resources
Management Department

Corporate Governance

Audit & Supervisory Board Member

Tsutomu Murakami

DBJ Group’s Strategy

Managing Executive Officer

In charge of Financial Institutions
Department, Corporate Finance
Department, Division 6

Outside Audit & Supervisory Board Member

DBJ Group’s Vision

Audit & Supervisory Board Members

Hiroshi Shimizu
In charge of Kansai Branch,
Chugoku Branch, Shikoku Branch

Outside Audit & Supervisory Board Member

Makoto Ito
2008:	Audit & Supervisory Board Member
at DBJ

Yasushi Babasaki
Data Section

Advisor at Nagashima Ohno &Tsunematsu; Visiting Professor,
Nihon University Law School

Managing Executive Officer

In charge of Corporate Finance
Department, Division 4

Managing Executive Officer

Michihiro Kishimoto
In charge of Corporate Finance
Department, Division 5

Outside Audit & Supervisory Board Member

Shinji Hatta
Professor, OHARA Graduate School of
Accounting; Professor Emeritus,
Aoyama Gakuin University
2008:	Audit & Supervisory Board Member
at DBJ

Notes: Of the 15 directors and Audit & Supervisory Board members, 14 are male andone is female, leaving the female to male ratio at 6.7%.
Standards and policies related to independence in the selection of outside directors andoutside Audit & Supervisory Board members are not applicable.
Akio Mimura, Honorary Chairman of Nippon Steel & Sumitomo Metal Corporation, isan outside director of DBJ. DBJ has no special relationship with Mr. Mimura, and its
business with Nippon Steel & Sumitomo Metal Corporation is conducted normally.
DBJ has no special-interest relationship with any other of its outside directors or outside
Audit & Supervisory Board members.
DBJ has signed liability limitation agreements with its outside directors and outside Audit& Supervisory Board members, based on Paragraph 1, Article 427, of the Companies Act.

Integrated Report 2018

63

Risk Management

Risk Management System
DBJ conducts risk management from the perspective ofensuring management soundness. To ensure appropriate
management of individual risk categories, DBJ has developed a vital risk management system that specifies andevaluates manageable risks and clarifies which department
is responsible for each type of risk. The Risk Management
Department oversees comprehensive risk management
activities.

The ALM & Risk Management Committee and theGeneral Risk Management Committee deliberate on important matters concerning risks and conduct regular monitoring, in line with the basic policy related to comprehensive
risk management approved by the Board of Directors.

Asset/Liability and Risk Management System Overview

Executive
Committee

President

ALM & Risk Management
Committee

Risk
Management
Department

Credit Analysis
Department

Treasury
Department

Investment
and Loan
Departments/
OfficesComprehensive Risk Management
The Risk Management Department assesses both comprehensive and individual risks. Based on risk guidelines thatweigh Executive Committee business plans and the resultsof stress tests, the Risk Management Department controls
the amount of comprehensive risk and that of individual

risk categories at a determined level. Furthermore, theCorporate Planning & Coordination Department has begun
efforts to measure risk–return by such means as risk-adjusted
return on capital.

1. Credit Risk
Credit risk refers to the risk of sustaining losses resulting
from a decline in or loss of the value of assets due to deterioration in the financial condition of the borrower. DBJ
provides corporate loans and non-recourse loans, making
credit risk acquisition a source for profits. As such, it represents a significant risk category, with DBJ conducting credit
management of individual projects as well as bank-wide
portfolio management, accordingly.
i. Credit Administration of Individual Loans
When making an investment or loan, DBJ examines theentity’s project viability and the project’s profitability froma fair and impartial standpoint. DBJ is not subject to the
Banking Act or the Act on Emergency Measures for the
Revitalization of the Financial Functions (Act No. 132 of
1998), but carries out independent asset assessments inline with internal policies for self-assessment of credit

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Integrated Report 2018

quality based on the Financial Services Agency’s Financial
Inspection Manual. The results of self-assessments are
subject to an audit by an auditing corporation and arereported to management. Credit risk and amounts aremonitored to confirm that they are within the limits established for individual borrowers.
The sales and credit analysis departments hold separate
roles in the screening and administering of credit for individual projects, and each department keeps the operationsof the other in check.
The Committee on Investment and Loan Decisions meetsas needed to deliberate important issues concerning themanagement and operation of individual projects.
These mutual checking functions serve to ensure the appropriateness of the finance operation and management system.

Asset Self-Assessment System
Asset self-assessments are used to define asset classifications that will offset recoverability risk or the degree of riskof value loss based on the borrower rating, the corresponding borrower category, and the collateral or guarantee
status. Such assessments help DBJ establish timely andappropriate amortization schedules and reserve levels.

DBJ Group’s Vision
DBJ Group’s Strategy

Borrower Rating System
DBJ’s borrower rating system measures creditworthiness by
combining an evaluation point rating and a borrower category rating with the results quantifying a potential client’s
credit circumstances.
The evaluation point rating selects indicator and evaluation categories that are common across all industries, scoring
the creditworthiness of the potential borrower quantitatively
and qualitatively. On the other hand, the borrower category
rating measures specific items related to the borrower,
looking at the borrower’s realistic financial condition, cash
flows, and debt repayment history, generating a comprehensive assessment of a borrower’s repayment capacity.
Borrower Rating Classifications
Borrower
RatingDefinition

Normal borrowers

1–8

Borrowers with favorable business conditions who have been confirmed to have noparticular problematic financial circumstances.

Borrowers requiringcaution

9–11

Borrowers experiencing weak business conditions, are unstable, or have issues with
their finances. These borrowers need to be managed with caution.

Substandard
borrowers

12

Either some or all of the debt of these borrowers requiring caution is undermanagement.

Substandard claims

Borrowers in dangerof bankruptcy

13

Borrowers in this category are having financial difficulties but are not bankrupt.
Management improvement plans and the like are progressing poorly, and theseborrowers are highly likely to fall into bankruptcy.

Doubtful claims

Effectively bankrupt
borrowers

14

Although not legally or formally in bankruptcy, these borrowers are experiencing
severe financial difficulties and are realistically falling into bankruptcy as their lackof potential for restructuring has been confirmed.

15

These borrowers are in bankruptcy, legally and formally. Specifically, these borrowers
are in bankruptcy or liquidation, under corporate reorganization, bankruptcy
proceedings or civil rehabilitation, or have had transactions suspended by a billclearinghouse.

Claims in bankruptcy,
reorganization claims,
and similar claims

maximum loss that could be incurred at a certain rate ofprobability minus the EL. The EL and UL calculations arereported to the ALM & Risk Management Committee.
Through such monitoring and the consideration of countermeasures, DBJ is committed to controlling risk and devising effective measures to improve risk–return.

Investment risk refers to the risk of sustaining losses resulting from a decline in or loss of the economic value of assets
due to worsening financial conditions for entities receiving
funds and to changing market environments. DBJ’s investments include the provision of mezzanine and equity
financing, particularly to unlisted entities, such as corporations, funds, infrastructure, and real estate. As a source ofprofits, investments represent one of DBJ’s most significant
risk categories. DBJ makes investment decisions andmanages individual investments as well as its bank-wide
portfolio accordingly.

In addition to investment analysis and management inline with credit risk management, investment decisions
based on target returns in accordance with investment category and regular monitoring are utilized to manage individual investments. In terms of portfolio management, we
conduct risk measurement that applies credit and market
risk assessment methods, with a focus on differences
between investment categories and recovery methods.

Integrated Report 201865

Data Section

2. Investment Risk

Corporate Data

ii. Portfolio Management
DBJ performs a comprehensive analysis of data based onborrower ratings and calculates the loan portfolio’s overall
exposure to credit risk. Credit risk exposure can be classified
as (1) expected loss (EL), the average loss expected during a
specific loan period; and (2) unexpected loss (UL), theNormal claims

Risk Management

Bankrupt borrowers

Claims Classified under the
Financial Revitalization Act

Corporate Governance

Borrower Category

Risk Management

3. Market Risk
The primary focuses in terms of market risk management
are interest rate risk and exchange risk. DBJ classifies
market risk as passive risk pertaining to investment andloan activities and implements management in the manner
detailed below. DBJ does not have any trading-related risk
because it does not engage in trading (specified
transactions).
i. Interest Rate Risk
Interest rate fluctuations can create mismatches on rates ofinterest on assets and liabilities or on interest periods, creating the risk of reduced profits or the risk of losses. Interest
rate risk can reduce the economic value of DBJ’s assets orinterest income.
Based on monitoring through multifaceted indices, suchas value at risk (VaR) and interest rate sensitivity analyses(basis point value), as well as ALM policies established by
the Executive Committee, DBJ conducts comprehensive
management of current assets and liabilities to optimize
net interest expenses and economic value by adequately
controlling interest rate risk and financial liquidity risk. In
regard to controlling interest risk, a portion of the interest
rate risk is covered through interest rate swaps.

ii. Exchange Risk
Exchange risk is the risk of loss due to volatility in exchange
rates, and this risk affects entities holding a net excess ofassets or liabilities denominated in foreign currencies. DBJ’s
exchange risk derives from financing in foreign currencies
and issuing foreign currency bonds. However, DBJ uses
exchange swaps and other instruments to limit this risk interms of assets and liabilities denominated in foreign
currencies at a net-base position.
DBJ uses swap transactions to manage counterparty risk bycontinuously monitoring the creditworthiness of all parties
and by setting a limit to financing for each counterparty.
DBJ also conducts risk management through margin transfers by means of a centralized exchange and mutual credit
support annex.

4. Liquidity Risk
Liquidity risk is the risk of a mismatch occurring in the periods when funds are used and raised or of an unexpected
outflow of funds, causing differences in the flow of funds(cash liquidity risk). Such situations make securing funds
difficult and create situations in which interest rates onborrowed funds are substantially higher than usual rates.
At other times, because of market complexities, entities inthese circumstances may become unable to participate inmarket transactions, compelling them to conduct transactions under substantially less favorable terms than otherwise would be the case. The risk of losses for these reasons
is known as market liquidity risk.
As its main methods of acquiring funds, in addition toissuing corporate bonds and taking out long-term loans,

DBJ relies on the stable procurement of long-term funds
from the Japanese government’s Fiscal Investment and Loan
Program and government-guaranteed bonds rather than on
short-term funds such as deposits. Contingency plans are
established as appropriate to meet unexpected short-term
funding requirements and cash flow shortfalls.
Additionally, DBJ maintains daytime liquidity by using the
Bank of Japan’s real-time gross settlement system, whereby
settlement is made instantly for each transaction. Everyeffort is made to ensure that settlement conditions aremanaged appropriately.
In addition to credit, investment, and market risk, the
ALM & Risk Management Committee deliberates DBJ’sliquidity risk.

5. Operational Risk
DBJ defines operational risk as the risk of loss arising frominternal processes, people or systems that are inappropriate
or non-functioning, or from external events. DBJ works toestablish a risk management system to minimize risk andprevent potential risks from materializing. The General Risk
Management Committee has been established to deliberate
topics concerning operational risk management.

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Integrated Report 2018

Within operational risk management, DBJ conducts administrative risk management and system risk management as
described below.

The BCP describes in an easy-to-understand format therole of the Disaster Response Committee, work priorities,
and specific actions and procedures to be taken in the eventof a disaster. When drawing up policies for business continuity and restoration, the Company envisions specific incidents, such as an earthquake underneath the Tokyo
metropolis, and methodically decides how to respond to
anticipated damage in each disaster scenario.

Measures to Ensure Business Continuity

Risk Management

DBJ prepares a business continuity plan (BCP) to protect theinterests of its stakeholders, including its clients, its shareholder, and its executives and employees, as well as to fulfill
its social mission. The BCP aims to ensure the continuity
and rapid recovery of core operations in the event of emergencies, such as natural disasters (in particular, large-scale
earthquakes), influenza and other pandemics, system failures, and power outages.

Corporate GovernanceBusiness Continuity Initiatives

DBJ Group’s Strategy

ii. System Risk Management
System risk refers to the risk of loss due to a computer
system breakdown or malfunction, system defects, or
improper computer use. DBJ has implemented the followinginternal processes to optimize system risk management andproperly manage risk with regard to system risk. The System
Risk Management Division is responsible for managing DBJ’s
system risk centrally, based on its system risk management
regulations. By determining security standards from a varietyof viewpoints—from information system planning and development to operation and use—the department extends therisk management system bank-wide and addresses appropriate system risk management operations.

DBJ Group’s Visioni. Administrative Risk Management
Administrative risk refers to the risk of sustaining losses
resulting from employees neglecting to perform their duties
correctly or from accidents, fraud, and the like. To reduce or
prevent administrative risk, DBJ prepares manuals, performs
checks on administrative procedures, provides educationand training, and uses systems to reduce the burden of
administrative duties.

We have prepared a variety of measures to ensure business continuity.

Clarification of Initial Response and Procedures forContinuing or Recovering Core Operations
For individual business units, we have established inadvance the procedures for the initial response and thecontinuation or recovery of core operations so that relevant
divisions can respond quickly and with certainty on core
operations even when in a state of confusion.

Initiatives to Maintain or Improve BCP Viability
DBJ conducts various types of instruction and training ofexecutives and regular employees to maintain or improvethe viability of its BCP. Furthermore, employing a Plan-DoCheck-Act cycle, we revise the BCP to reflect training

results and recent information, and the Executive
Committee reviews it regularly and amends it as necessary.

Integrated Report 201867

Data Section

Multilayered Communication Procedures
We introduced a safety confirmation system to quickly
determine the whereabouts and status of executives andemployees even at night and on holidays. In addition, we
distributed satellite telephones to key locations and personnel to ensure multilayered communication procedures.

Chain of Command and Delegation of Authority
To assure that decision-making concerning the continuity ofcore operations is prompt and certain, in the event that theDisaster Response Committee is established, we have put inplace a chain of command and an alternative hierarchy bywhich authority can be delegated.

Corporate Data

Enhanced System Robustness
We ensured advanced security levels at the main center andcreated a backup center to operate in the event that themain center ceases to operate.

Timeline

The Japan Development Bank, the Hokkaido-Tohoku Development Finance Public Corporation,and the Development Bank of Japan
Year

Month

Event

1951

April

The Japan Development Bank (JDB) established1952

JDB branches opened in Osaka (now the Kansai Branch), Sapporo (now the Hokkaido Branch),
Nagoya (now the Tokai Branch), and Fukuoka (now the Kyushu Branch)

1956

June

The Hokkaido Development Finance Public Corporation established

1957

April

The Hokkaido Development Finance Public Corporation, reorganized as the Hokkaido-Tohoku Development
Finance Public Corporation (HTDFP) branches, opened in Sapporo (now the Hokkaido Branch) andSendai (now the Tohoku Branch)

1960

JDB branch opened in Takamatsu (now the Shikoku Branch)

1961
1962

JDB branches opened in Hiroshima (now the Chugoku Branch) and Kanazawa (now the Hokuriku Branch)
April

1963

JDB representative office opened in New YorkJDB representative offices opened in Kagoshima (renamed Minami-Kyushu Branch in October 1999) and Matsue

1964

July

1972

January

1985

June

1987

September

1989

JDB representative office opened in London
HTDFP representative office opened in Niigata (renamed Niigata Branch in July 1989)
The Japan Development Bank Law revised1)	Investment function (pertaining to business in such areas as research and development,
urban development, and energy use stipulated by government ordinance) added
2) R&D fund investment function added
Low interest rate loan system funded partially by sale of NTT shares created by JDB and HTDFP
JDB representative offices opened in Oita, Matsuyama, Okayama, and Toyama
HTDFP representative offices opened in Hakodate and Aomori

1995

February

1997

SeptemberBill entitled “Pertaining to Consolidation and Rationalization of Special-Purpose Companies, etc.” approvedby the Cabinet (decision dissolving JDB and HTDFP and consolidating them as a new bank approved)

1998

December

JDB and HTDFP loans in response to changes in the financial environment commenced(March 31, 2001, sunset clause introduced)

1999

June
October

JDB loans to assist disaster recovery commenced

The Development Bank of Japan Law (Law No. 73 of 1999) approved
All rights and responsibilities of JDB and HTDFP and all financing operations of Japan Regional Development Corporation andJapan Environment Corporation transferred to the Development Bank of Japan
DBJ representative offices opened in Kushiro and Singapore

2002

May

2005

December

2006

May

The Act on Promotion of Administrative Reform for Realization of Small and Efficient Government(Act No. 47 of 2006) approved

June

Policy-Based Financing Reform Plan decided upon by DBJ head office for the Implementation of Policy Finance Reform

2007

June

The Development Bank of Japan Inc. Act (Act No. 85 of 2007) approved

The Development Bank of Japan Law revised (additional spot inspections by the Financial Services Agency introduced)
Important Policy of Administrative Reform approved by the Cabinet

Development Bank of Japan Inc.
Year

Month

2008

October

Event

Development Bank of Japan Inc. (DBJ) established (Capital: ¥1 trillion)
Crisis Response Operations begun by DBJ as a designated financial institution

December
2009

June

Act for Partial Amendment of the Development Bank of Japan Inc. Act (Act No. 67 of 2009) approved

September

Capital increased to ¥1,103,232 million

November

DBJ Europe Limited launched

2010

March

2011

May

2012

DBJ Singapore Limited launched

Capital increased to ¥1,181,194 million
The Development Bank of Japan Inc. Act partially amended based on establishment of the Act for Extraordinary Expenditure andAssistance to Cope with the Great East Japan Earthquake (Act No. 40 of 2011)

December

Capital increased to ¥1,187,364 million

March

Capital increased to ¥1,187,788 million

June

Capital increased to ¥1,198,316 million

December

Capital increased to ¥1,206,953 million

2014

June

DBJ Investment Consulting (Beijing) Co., Ltd. (formerly Japan Asia Investment Consulting (Beijing) Co., Ltd.) converted to wholly
owned subsidiary

2015

May

Act for Partial Amendment of the Development Bank of Japan Inc. Act (Act No. 23 of 2015) approved
Special Investment Operations started
Advisory Board positioned as an advisory body to the Board of Directors
Special Investment Operations Monitoring Board established

August68

Capital reduced by ¥206,529 million, and crisis response reserve increased by the same amountIntegrated Report 2018

Shareholder

Address

Number of shares held (thousands of shares)

Percentage of total equity (%)

Finance Minister

1-1, Kasumigaseki 3-chome, Chiyoda-ku, Tokyo

43,632100.00Total—

43,632100.00

Corporate Data

Note: For the full text of the DBJ Act, please refer to the Data section.

Risk Management

provision of funding in response to large-scale disasters andeconomic crises, the amending act makes DBJ’s Crisis
Response Operations obligatory for an indefinite period.
From the perspective of promoting the provision of growth
capital to revitalize regional economies and increase thecompetitiveness of enterprises, the amending act calls for
DBJ to accept a certain amount of capital from the Japanese
government (industrial investment). This investment is to be
used for a new scheme, Special Investment Operations, tostrengthen and develop the Fund for Japanese Industrial
Competitiveness. In addition, with regard to the applicationof DBJ’s investment and loan functions toward crisis
response and the provision of growth capital, measures
were introduced obliging the Japanese government to holdat least a certain percentage of DBJ’s shares.
As part of this structural revision, deliberations by theJapanese government’s Study Panel Concerning thePromotion of Expanding Growth Funding covered such
topics as DBJ’s proper implementation of Crisis Response
Operations, the importance of initiatives for providing
growth capital (equity and mezzanine financing) to address
shortages in Japanese financial and capital markets, and anevaluation of DBJ’s initiatives following its conversion to a
joint-stock company.

Corporate GovernanceOn October 1, 2008, DBJ transitioned from a special public
corporation to a joint-stock company. In preparation for
full-scale privatization following the disposal of all Japanese
government-owned shares, DBJ has continued working toenhance its corporate value through integrated investment
and loan services. These activities include providing longterm loans; equity, mezzanine financing and other typesof risk capital; and M&A advisory services.
On the other hand, shortly after DBJ’s conversion toa joint-stock company, the global financial crisis and theGreat East Japan Earthquake occurred. The Japanese
government called on DBJ to steadily mount large-scale
Crisis Response Operations. Due to these crises, theDevelopment Bank of Japan Inc. Act (Act No. 85 of 2007:“DBJ Act”) was amended twice, with DBJ accepting an
additional increase in Japanese government capital. Also,by the end of fiscal 2014, the Japanese government was
to review DBJ’s organization, including its shareholdings,
as stipulated by the revision.
Based on the deliberations by the Japanese government’s
Study Panel Concerning the Promotion of Expanding
Growth Funding, the Act for Partial Amendment of theDevelopment Bank of Japan Inc. Act, which was enacted on
May 20, 2015, maintains the direction toward full-scale
privatization. At the same time, in order to fully ensure the

DBJ Group’s Strategy

Summary of Changes to the DBJ Act after Conversion toa Joint-Stock Company

DBJ Group’s Vision

As of March 31, 2018
Name

Highlights of 2015 Revisions to the DBJ Act

BeforerevisionFull-scale privatization and disposal of all Japanese
government-held shares, targeting around five toseven years from April 1, 2015

Data Section

1. Measures maintaining direction toward full-scale privatization•	No changes in the main provisions, including Article 1, which stipulates DBJ’s objectives

After•	Disposal of shares as soon as practicable (considering its effect on achieving DBJ’s
revision objectives as well as on the market situation)

2. Measures ensuring appropriate implementation of Crisis Response Operations
Beforerevision•	Conducting Crisis Response Operations as a designated financial institution•	Enabling Japanese government recapitalization incrisis response by March 31, 2015

•	Assuming responsibility for Crisis Response Operations for an indefinite period (at thesame time reflecting this obligation in the Articles of Incorporation)

After•	Extending for an indefinite period the scope of the Japanese government’s recapitalrevision ization securing DBJ’s financial structure, with the Japanese government having suchobligations as holding more than one-third of DBJ’s shares

3. Measures establishing new Special Investment Operations scheme to temporarily provide growth capital in a concentrated manner

Beforerevision

Provision of risk capital through the Fund for JapaneseIndustrial Competitiveness•	Reinforcement of the Fund for Japanese Industrial Competitiveness (a portion of thefinancial resources for which are provided through measures for industrial investment);
implementation of Special Investment Operations as a measure for a limited period of
Aftertime, through fiscal 2025 (at the same time reflecting this obligation in the Articles ofrevision Incorporation, complementing and encouraging private-sector enterprises, etc.)•	Obligation that the Japanese government shall hold one-half or more of shares until
the conclusion of Special Investment Operations

4. Provisions referencing consideration for private financial institutions through ongoing Japanese government involvement
As per the Third Medium-Term Management Plan,
Before sustainment of close communications, maintaining arevision focus on operations in collaboration with otherfinancial institutions•	The Corporation shall, for an indefinite period, pay special attention in conducting its
business so that it will not affect its appropriate competitive relationships with otherbusiness entities
After•	The Japanese government shall hear the opinions of representatives of ordinary
revision financial institutions and other relevant persons concerning Japanese government
revisions on an as-needed basis regarding Crisis Response Operations and Special
Investment Operations

Integrated Report 201869

Organizational Structure (as of August 1, 2018)

Business Planning & Coordination Department

General Meeting of
Shareholders

Innovation Promotion OfficeFinancial Institutions Department
Urban Development Department
Audit & Supervisory
Board Members /Audit & Supervisory
Board

International Strategy & Coordination Department
Corporate Finance Department,
Division 1

Audit & Supervisory
Board Office

Corporate Finance Department,
Division 2

Aerospace Office

Corporate Finance Department,
Division 3

Global Logistics Office

Corporate Finance Department,
Division 4
Corporate Finance Department,
Division 5
Board of Directors

Corporate Finance Department,
Division 6

Executive Committee

Healthcare Industry Office

Hokkaido Branch
Tohoku Branch
Advisory Board

Tohoku Recovery & Growth Support OfficeNiigata Branch
Hokuriku Branch
Tokai BranchSpecial Investment
Operations
Monitoring Board

Kansai Branch
Chugoku Branch
Shikoku Branch
Kyushu Branch

Kumamoto Recovery Office

Minami-Kyushu Branch
Real Estate Finance Department
Chief
Investment
Officer

Strategic Finance Department

Regional Investment Promotion Office

Growth & Cross Border Investment Department
Structured Finance Department
Syndication & Credit Trading Department
Business Development Department

Chief
Research
Officer

Sustainability Planning & Support Department
Economic & Industrial Research Department
Regional Planning Department
Research Institute of Capital Formation

Economic Research Office
Industrial Research & Customer Solutions
Planning Office
Corporate Management & Accounting
Research OfficeSecretariat Office
Human Resources Management Department

Representative Offices:
Hakodate, Kushiro, Aomori,Toyama, Matsue, Okayama,
Matsuyama, Oita

Corporate Planning & Coordination Department

Overseas Representative Office:
New York

General Affairs Department

Overseas Subsidiaries:
DBJ Singapore Limited
DBJ Europe Limited
DBJ Investment Consulting (Beijing) Co., Ltd.

Credit Analysis Department

Operations Audit
Committee

70

Integrated Report 2018

Risk Management Department

Public Relations OfficeSustainability Management OfficeInformation Resources Department

Accounting Department

Legal Affairs & Compliance Department
Treasury Department
Internal Audit Department

Settlement & Accounting Operations OfficeDBJ Group’s Vision

Data Section

72	The Development Bank of Japan Inc. Act
91 Financial Condition

DBJ Group’s Strategy
Corporate GovernanceRisk Management
Corporate Data
Data Section

Integrated Report 2018

71

The Development Bank of Japan Inc. Act(Act No. 85 of 2007)

Promulgated: June 13, 2007 by Act No. 85 of 2007
Enforced: April 1, 2017
Last Amended : June 3, 2016 by Act No. 62 of 2016

Chapter I General Provisions (Article 1 and Article 2)
Chapter II Business Operations (Article 3 through Article 25)
Chapter III	Miscellaneous Provisions (Article 26 throughArticle 29)
Chapter IV	Penal Provisions (Article 30 through Article 35)
Supplementary Provisions

Chapter I General Provisions
Article 1 Purpose
Development Bank of Japan Inc. (hereinafter referred to as the“Corporation”) shall be a joint stock company (kabushiki-kaisha)
whose object is to maintain the foundations of investment andfinancing functions of long-term business funds as theDevelopment Bank of Japan by conducting business activities
utilizing the methods of combining investments and financing
and other sophisticated financial methodologies, while maintaining the autonomy of management with the goal of realizing
full-scale privatization, thereby contributing to smooth supply offunds to those who need long-term business funds, as well as tothe sophistication of financial functions.
Article 2 Restriction on Use of Trade Name
1. Any entity other than the Corporation shall not use the characters of Development Bank of Japan Inc. (Kabushiki Kaisha
Nippon Seisaku Toshi Ginko), in its trade name.
2. The provision of Article 6, Paragraph 2 of the Banking Act (ActNo. 59 of 1981) shall not apply to the Corporation.

Chapter II Business Operations
Article 3 Scope of Business Operations
1. The Corporation shall engage in the following business operations to attain its objectives:(1) To accept deposits (limited to certificates of deposit (CDs)and other deposits stipulated in the Cabinet Order);(2) To lend money;(3) To make capital contributions;(4) To guarantee the due performance of debts andobligations;(5) To sell and purchase Securities (other than those that fallwithin monetary claims represented by certificates set forthin Item (7), Short-term Notes, Etc.; the same in Item (8))(other than those that fall within securities-related derivatives transactions (the securities-related derivatives
transactions set forth in Article 28, Paragraph 8, Item (6) of
the Financial Instruments and Exchange Act (Act No. 25 of
1948); hereinafter in this Item and Item (11) the same), or
enter into securities-related derivatives transactions (limited
to those made for investment purposes), except in cases
where these business operations fall within those operations
referred to in Item (3);(6) To lend Securities;(7) To acquire or transfer monetary claims (including claims represented by certificates stipulated in the Ministry of FinanceOrdinance such as negotiable bank deposit certificates);(8) To subscribe for Specified Bonds or Preferred Investment
Securities issued by a Specified Purpose Company (limited
to the cases where the Specified Purpose Company acquires
only designated monetary claims or beneficial interests intrusts with which designated monetary claims are entrustedwith cash proceeds derived from issue of those Specified
Bonds or Preferred Investment Securities as set forth in the
Asset Liquidation Plans, and except for, in case of Specified
Bonds, Specified Short-term Notes), and other similar securities stipulated in the Ministry of Finance Ordinance(hereinafter in this Item referred to as the “Specified
Bonds”) (except in cases where it is intended for secondary
distribution (uridashi)), or to handle primary offering (boshu)
of the Specified Bonds so subscribed;(9) To acquire or transfer Short-term Notes, Etc.;(10) To act as an agent or intermediary for execution of agreements which provides for lending money on behalf of banks(the banks set forth in Article 2, Paragraph 1 of the Banking
Act (Act No. 59 of 1981); hereinafter the same) and otherentities engaged in the financial business stipulated in the
Cabinet Order;

72

Integrated Report 2018(11) To enter into derivatives transactions set forth in Article 2,
Paragraph 20 of the Financial Instruments and Exchange
Act (other than those that fall within the securities-related
derivatives transactions), except in cases where these business operations fall within those operations referred to in
Item (7);(12) To do the activities referred to in Article 2, Paragraph 8,
Item (7) of the Financial Instruments and Exchange Act;
(13) To do the activities referred to in Article 2, Paragraph 8,
Item (9) of the Financial Instruments and Exchange Act(limited, in the case of the handling of primary offering or
secondary distribution, to those to be conducted upon
entrustment by financial instruments firms engaged in thetype I financial instruments trading business set forth in
Article 28, Paragraph 1 of the Financial Instruments andExchange Act (the financial instruments firms set forth in
Article 2, Paragraph 9 of the Financial Instruments andExchange Act; hereinafter the same), and for such financial
instruments firms);(14) To do the activities referred to in Article 2, Paragraph 8,
Item (11) of the Financial Instruments and Exchange Act;
(15) To do the activities referred to in Article 2, Paragraph 8,
Item (13) of the Financial Instruments and Exchange Act;
(16)	To do the activities referred to in Article 2, Paragraph 8,
Item (15) of the Financial Instruments and Exchange Act;
(17) With respect to securities (including, if such securities are
not issued, rights to be represented by such securities) ortransactions referred to in each Item of Paragraph 2 ofArticle 33 of the Financial Instruments and Exchange Act, todo the activities set forth in each Item of the said Paragraph(other than those referred to in Items (3), (5), (7) through(9), (11) and (13));(18) To provide other entities with consulting services regarding
business transfer, merger, corporate split, share-for-shareexchange (kabushiki kokan) or share transfer (kabushikiiten), or to act as a broker for these transactions;(19) To provide other entities with consulting services regarding
management, and to conduct investigations or provide
information as required for the business operations of otherentities;(20) To conduct investigations, research or training regarding
financial and other economic issues; and(21) To do activities incidental to each of the foregoing Items.
2. In addition to the business operations of the preceding
Paragraph, the Corporation may engage in such business activities as necessary to attain its object, subject to authorization of
the Minister of Finance.

(referred toas the“Cooperative
Financial
Institutions”)

Article 2, Paragraph 11; Article Cooperative
27-28, Paragraph 3; Article 28, Financial
Paragraph 4; Article 33,
Institutions
Paragraph 1; Article 33-5,
Paragraph 2; Article 33-7;
Article 58; Article 60-14,
Paragraph 1; Article 66, andArticle 202, Paragraph 2, Items(1) and (2)Article 33-8, Paragraph 1(referred to as the“Cooperative Financial
Institutions”),
Development Bank ofJapan Inc.
Cooperative Financial
Institutions, Development
Bank of Japan Inc.

Integrated Report 201873

Data Section

Article 6 Method of Issue of the Development Bank ofJapan Bonds
1. If the Corporation issues certificates representing theDevelopment Bank of Japan Bonds, such certificates shall be in
bearer form; provided, however, that the Corporation may issue
those certificates in registered form upon request of a subscriberor owner of the Bonds.
2. If the Corporation issues the Development Bank of Japan Bonds,
the Corporation shall not enter into a custody agreement with asubscriber of the Bonds in which matters set forth in the Ministryof Finance Ordinance and the Cabinet Office Ordinance arecontained.

Corporate Data

Article 5 Issue of the Development Bank of Japan Bonds
1. The Corporation may issue the Development Bank of Japan
Bonds.
2. The provision of Article 702 of the Companies Act (Act No. 86
of 2005) shall not apply where the Corporation issues theDevelopment Bank of Japan Bonds.
3. Only with respect to the Development Bank of Japan Bonds
issued outside of Japan, the Corporation may issue certificates
representing the Development Bank of Japan Bonds (includinginterest coupons appertaining thereto; hereinafter in thisParagraph, and Article 13, Paragraphs 3 and 4, Item (1), thesame), as prescribed in the Cabinet Order, in the event that it isnecessary to deliver replacement certificates to anyone who has
lost those certificates.

Risk Management

2. Any directors, accounting counsel (kaikei sanyo) (including, if an
accounting counsel is a firm, its members who should performthe duties as such; hereinafter in this Paragraph the same), statutory auditors, executive officers (shikkoyaku) or employees shallnotify the Minister of Finance without delay as set forth in the
Minister of Finance Ordinance if they take up a position of director, accounting counsel, statutory auditor or executive officer ofa Financial Instruments Firm (limited to the firms that engages inthe securities-related business set forth in Article 28, Paragraph
8 of the Financial Instruments and Exchange Act; hereinafter inthis Paragraph the same) (including the cases where a director,
accounting counsel, statutory auditor or executive officer of a
Financial Instruments Firm come to concurrently hold a positionof director, accounting counsel, statutory auditor or executive
officer of the Corporation), or they resign a director, accounting
counsel, statutory auditor or executive officer of a Financial
Instruments Firm.

Corporate Governanceare the financial are the financial instituinstitutions
tions, or if Development
Bank of Japan Inc. conducts the business activity referred to in Article
3, Paragraph 1, Item (16)of The Development
Bank of Japan Inc. Act(Act No. 85 of 2007)

DBJ Group’s Strategy

Article 4 Application by Changing the Provisions of the
Financial Instruments and Exchange Act to Read
1. For the purpose of application of the provisions of the Financial
Instruments and Exchange Act to the Corporation, the words
and phrases indicated in the center columns of the table below
in the provisions of that Act in the left columns shall be changed
to read the words and phrases indicated in the right column,
respectively:

Article 2, Paragraph 8

DBJ Group’s Vision

3. “Securities” in Items (5) and (6) of Paragraph 1 and Paragraph 5
mean the securities set forth in Article 2, Paragraph 1 of the
Financial Instruments and Exchange Act, and the rights which
are deemed as securities as set forth in Article 2, Paragraph 2 of
the Financial Instruments and Exchange Act.
4. “Short-term Notes, Etc.” in Items (5) and (9) of Paragraph 1, andthe next following Paragraph mean:(1) Short-term notes Etc. set forth in Article 66, Item (1) of the
Act Concerning the Central Depositary System of Corporate
Debentures, Shares, Etc. (Act No. 75 of 2001);(2) Short-term investment corporation notes set forth in Article
139-12, Paragraph 1 of the Act Concerning Investment
Trusts and Investment Corporations (Act No. 198 of 1951);(3) Specified short-term notes set forth in Article 2, Paragraph
8 of the Act concerning Liquidation of Assets (Act No. 105
of 1998);(4) Rights to be indicated on debt securities (other than thosehaving the nature of corporate debentures with stock acquisition rights (shinkabu-yoyaku-ken-tsuki shasai)) to be issued
by foreign corporations, the ownership rights of which shallbe determined based on the entries or recordings in thecentral depositary account register as prescribed by the Act
Concerning the Central Depository System of Corporate
Debentures, Shares, Etc., which satisfy all of the following
requirements:		a. The amount of each right is not less than JPY100 million;		b.	It is stipulated that the principal amount of such debt
securities shall be redeemed on a definitely specified date
which occurs a year after the date on which the aggregate amount of such rights is paid, and further that no
payment shall be made in installments; and		
c.	It is stipulated that interest shall become due and payable
on the same date as the maturity date of the principal
amount in Sub-item b.
5. The business operations referred to in Paragraph 1, Item (7) (inthe case of monetary claims represented by the certificates set
forth in the said Item which fall within Securities) and the business operations referred to in Paragraph 1, Item (9) (in the caseof Short-term Notes, Etc.) shall include the business operations
to do the activities referred to in Article 2, Paragraph 8, Items (1)through (6), and (8) through (10) of the Financial Instruments
and Exchange Act.
6. The terms “Specified Purpose Company,” “Asset Liquidation
Plan,” “Specified Bonds,” “Specified Short-term Notes” or“Preferred Investment Securities” referred to in Paragraph 1,
Item (8) mean the specified purpose company, asset liquidation
plan, specified bonds, specified short-term debentures or preferred investment securities set forth in Article 2, Paragraphs 3,
4 or 7 through 9 of the Act concerning Liquidation of Assets,
respectively.
7. If the Corporation engages in the business activity referred toParagraph 1, Item (10), the provision of Article 52-36, Paragraph
1 of the Banking Act and other provisions equivalent to that provision of the said Paragraph which apply to those who engage inthe financial business stipulated in the Cabinet Order set forth inParagraph 1, Item (10) and are prescribed in the Cabinet Order,
shall not apply.

The Development Bank of Japan Inc. Act

3. The Corporation may issue certificates representing theDevelopment Bank of Japan Bonds by way of a secondary distribution (uridashi). In that case, the Corporation shall determine
the distribution period.
4. If the Corporation issues certificates representing theDevelopment Bank of Japan Bonds, the Corporation shall indicate the following matters on the face of those certificates:(1) Trade name of the Corporation;(2) Amount of the Bonds represented by the certificate;(3) Interest rates on the Development Bank of Japan Bonds
represented by the certificate;(4) Method of redemption and maturity date of theDevelopment Bank of Japan Bonds represented by thecertificate; and(5) Numbers of the certificate.
5. If the Corporation intends to issue the Development Bank ofJapan Bonds by way of a secondary distribution, the Corporation
shall give public notice of the following matters:(1) Distribution period;(2) Aggregate amount of the Development Bank of Japan Bonds;(3) If payment for the Development Bank of Japan Bonds ismade in more than one installment, the amount of, andtime schedule for, such payments;(4) Issue price or minimum price of the Development Bank ofJapan Bonds;(5) If the Corporation intends to issue the Development Bankof Japan Bonds, the ownership rights of which shall be
determined based on the entries or recordings in the central
depositary account register as prescribed by the Act
Concerning the Central Depository System of Corporate
Debentures, Shares, Etc., description to the effect that theDevelopment Bank of Japan Bonds are subject to the said
Act; and(6) Matters referred to in Items (1) through (4) of the immediately ­preceding Paragraph.
6. The Corporation may issue the Development Bank of Japan
Bonds at a discount.
Article 7 Extinctive Prescription of the Development Bank ofJapan Bonds
The extinctive prescription periods of the principal of, and interest on, the Development Bank of Japan Bonds to be issued by
the Corporation shall be fifteen (15) years and five (5) years,
respectively.
Article 8 M utatis Mutandis Application of the Currency andSecurities Counterfeiting Control Act
The Currency and Securities Counterfeiting Control Act (Act No.
28 of 1895) shall be applied mutatis mutandis to the counterfeiting of certificates representing the Development Bank ofJapan to be issued by the Corporation.
Article 9 Special Rules When Starting Acceptance of
Deposits, Etc.
1. If the Corporation intends to start acceptance of deposits set
forth in Article 3, Paragraph 1, Item (1) or issue of theDevelopment Bank of Japan Bonds, the Corporation shall obtain
the prior approval of the Minister of Finance.
2. If the Minister of Finance intends to give the approval referred toin the preceding Paragraph, the Minister of Finance shall, in
advance, have a discussion with the Prime Minister and obtain
his/her consent.
3. The Prime Minister may request the Minister of Finance to provide the Prime Minister with the required materials andexplanations, whenever the Prime Minister deems necessary after
the discussion referred to in the immediately preceding
Paragraph.
4. The Prime Minister may request the Corporation to cooperatewith the Prime Minister such as providing materials and explanations, to the required extent, whenever the Prime Minister74

Integrated Report 2018

deems especially necessary after the discussion referred to in
Paragraph 2.
5. The provisions of Article 4, Paragraph 1 of the Banking Act andArticle 4, Paragraph 1 of the Long-Term Credit Bank Act (Act No.
187 of 1952) shall not apply to the business operations to be
conducted by the Corporation in the case that the Corporation
obtains the approval referred to in Paragraph 1.
Article 10 Mutatis Mutandis Application of the Banking Act
1. The provisions of Articles 12-2 (other than Paragraph 3), 13,
13-2, 13-4, 14, 14-2, 20, 21, 23 and 57-4 (limited to the portions relating to Item (1)) of the Banking Act shall apply mutatis
mutandis to the Corporation when the Corporation obtains theapproval referred to in Paragraph 1 of the immediately preceding Article. For this purpose, references to the “Prime Minister”
and “Cabinet Office Ordinance” in these provisions (other than
the second sentence of Article 13-4 and Article 20, Paragraph 7of the Banking Act) shall be changed to read the “Minister ofFinance and the Prime Minister” and the “Ministry of FinanceOrdinance and the Cabinet Office Ordinance,” respectively, andreference to “Article 38, Items (1) and (2), and Article 38-2” inArticle 13-4 of the Banking Act shall be changed to read “Article
38-2,” and other necessary technical changes to read shall beprescribed in the Cabinet Order.
2. For the purpose of application of the provisions of the Financial
Instruments and Exchange Act which shall be applied mutatis
mutandis after changing to read in Article 13-4 of the Banking
Act which is applied mutatis mutandis after changing to read in
the preceding Paragraph, reference to the “Cabinet Office
Ordinance” in those provisions shall be changed to read the“Ministry of Finance Ordinance and Cabinet Office Ordinance.”
3. If the Government stipulates an ordinance pursuant to the provisions of the Banking Act which shall be applied mutatis mutandis
after changing to read in Paragraph 1, the Government shall pay
attention so that interests of users of business operations of the
Corporation such as money lending, when it gives the approvalreferred to in Paragraph 1 of the immediately preceding Article
may not be unreasonably infringed.
Article 11 Fiscal year
The fiscal year of the Corporation shall commence on April 1 ofeach year and end on March 31 of the following year.
Article 12 Shares
1. If the Corporation intends to solicit those who will subscribe forshares offered for sale set forth in Article 199, Paragraph 1 of
the Companies Act (Act No. 86 of 2005) (hereinafter in Article
34, Item (4) referred to as the “Shares Offered for Sale”) or
stock acquisition rights offered set forth in Article 238,
Paragraph 1 of the Companies Act (hereinafter in Article 34,
Item (4) referred to the “Stock Acquisition Rights Offered”), or
to deliver shares or stock acquisition rights in connection with ashare-for-share exchange, the Corporation shall obtain authorization of the Minister of Finance.
2. Without delay after the delivery of shares upon exercise of stockacquisition rights, the Corporation shall submit a report thereon
to the Minister of Finance.
Article 13 Corporate Debentures, Development Bank of Japan
Bonds and Borrowings
1. Prior to the beginning of each fiscal year, the Corporation shallprepare its basic policy regarding the issue of corporate debentures (shasai) (other than the Development Bank of Japan Bonds,“Corporate Debentures”; hereinafter the same) and theDevelopment Bank of Japan Bonds (excluding the short-term
notes set forth in Article 66, Item (1) of the Act Concerning theCentral Depositary System of Corporate Debentures, Shares, Etc.
(Act No. 75 of 2001) from both the Corporate Debentures andthe Development Bank of Japan Bonds, respectively; hereinafterin this Article and Article 18 the same), as well as regarding theArticle 15 Resolution for Election of Representative Directors
and Other Officers
Resolutions for appointment and dismissal of the representative
directors or representative executive officers of the Corporation,
appointment and dismissal of statutory auditors, or appointment
and dismissal of audit committee members (kansaiin) shall not
become effective without authorization of the Minister of Finance.

Integrated Report 201875

Data Section

Article 19 Subsidiaries Subject to Authorization
1. If the Corporation intends to make any of the following entities(other than individuals in the cases of those referred to in Items(3), (4) and (7); hereinafter referred to as the “Subsidiaries
Subject to Authorization”) its subsidiary (the subsidiary set forthin Article 2, Item (3) of the Companies Act), the Corporation
shall obtain authorization of the Minister of Finance in advance:(1) Banks;(2) Long-term credit banks (the long-term credit banks set forthin Article 2 of the Long-Term Credit Bank Act (Act No. 187
of 1952));(3) Financial Instruments Firms (limited to those who engage intype I financial instruments trading business set forth in
Article 28, Paragraph 1 of the Financial Instruments andExchange Act);(4) Money lenders (the money lenders set forth in Article 2,
Paragraph 2 of the Money Lending Business Act (Act No. 32
of 1983), and exclude those who concurrently conduct thebusiness referred to in the preceding Items or fall within
other requirements stipulated in the Ministry of FinanceOrdinance);(5) Trust companies (the trust companies set forth in Article 2,
Paragraph 2 of the Trust Business Act (Act No. 154 of 2004));(6) Insurance companies (the insurance companies set forth in
Article 2, Paragraph 2 of the Insurance Business Act (ActNo. 105 of 1995)); andCorporate Data

Article 18 Redemption Plan
Prior to the beginning of each fiscal year, the Corporation shalldraw out redemption plans for the Corporate Debentures, theDevelopment Bank of Japan Bonds and the borrowings andobtain authorization of the Minister of Finance, as stipulated in
the Ministry of Finance Ordinance. If the Corporation intends torevise it, the same shall apply.

Risk Management

Article 17 Business Plan
Prior to the beginning of each fiscal year, the Corporation shalldraw out a business plan for the new fiscal year and obtain
authorization of the Minister of Finance, as stipulated in the
Ministry of Finance Ordinance. If the Corporation intends torevise it, the same shall apply.

Corporate Governance

Article 16 Authorization of Concurrent Positions of Directors
1. Any director (or, if the Corporation is a company maintaining
committees (iinkai secchi kaisha), any executive officer) who performs the day-to-day business of the Corporation shall not
perform the day-to-day business of any other corporation without authorization of the Minister of Finance.
2. The Minister of Finance shall, upon receipt of an application for
the authorization referred to in the preceding Paragraph, grant
his/her authorization, except in cases where it is determined thatany matter so applied may interfere with sound and proper management of the Corporation.

DBJ Group’s Strategy

Article 14 Limits on Borrowing and Limitation on Extensionof Credit
1. The aggregate amount of the items identified below shall not
exceed the amount equal to fourteen (14) times the total
amount of paid-in capital and reserves (capital reserve andearned surplus reserve; hereinafter in this Article the same); provided, however, that if it is necessary, to refinance the issued oldbank debentures (the bank debentures set forth in Article 43,
Paragraph 1 of the Development Bank of Japan Act (Act No. 73
of 1999; hereinafter referred to as the “Old DBJ Act”) before
abolishment as set forth in Article 26 of the Supplementary
Provisions which were issued pursuant to the provision of Article
43, Paragraph 1 or Paragraph 4 of the Old DBJ Act, the “OldBank Debentures”; hereinafter the same), the Corporate
Debentures or the Development of Bank of Japan Bonds, theCorporation may issue the Corporate Debentures and theDevelopment Bank of Japan Bonds, in excess of such amount
only within the period of time required for such refinancing:(1) Outstanding amount of deposits;(2) Outstanding amount of borrowings;(3) Outstanding amount of funds deposited pursuant to theprovision of Article 42, Paragraph 5 of the Old DBJ Act;
(4) Outstanding amount of the obligations representing theprincipals of the Old Bank Debentures;(5) Outstanding amount of the obligations representing theprincipals of the Corporate Debentures and theDevelopment Bank of Japan Bonds issued; and(6) Outstanding amount of those items which have the same
economic nature as those referred to in each of the foregoing, howsoever described.
2. The aggregate amount of the items identified below shall not
exceed the sum of: (i) the amount of paid-in capital and reservesand (ii) the upper limit set forth in the main sentence of the preceding Paragraph:(1) Outstanding amount of the amounts of loans made andclaims acquired (other than those relating to Securities set
forth in Item (3));(2) Outstanding amount of obligations of guarantee;(3) Outstanding amount of Securities acquired (the Securities
set forth in Article 3, Paragraph 3 and exclude the Securities
referred to in Article 2, Paragraph 1, Items (1) and (2) of the
Financial Instruments and Exchange Act (including the rights
to be represented on such securities when such Securities
are not issued), and those relating to capital contributions
under the next following Item); and(4) Outstanding amount of capital contributions.

DBJ Group’s Vision

borrowings (limited to those with more than one year to maturity; hereinafter in this Article and Article 18 the same), which
provides for matters relating to the issue of the Corporate
Debentures and the Development Bank of Japan Bonds, and theborrowing of money, such as the amounts of issue and borrowings, denominated currency of the Corporate Debentures, theDevelopment Bank of Japan Bonds and the borrowings, as stipulated in the Ministry of Finance Ordinance, and obtain
authorization of the Minister of Finance. If the Corporation
intends to revise it, the same shall apply.
2. If the Corporation issues the Corporate Debentures or theDevelopment Bank of Japan Bonds, or borrows money, theCorporation shall submit a report thereon to the Minister of Financewithout delay, as stipulated in the Minister of Finance Ordinance.
3. Only with respect to the Corporate Debentures issued outside ofJapan, the Corporation may issue certificates representing the
Corporate Debentures, as prescribed in the Cabinet Order, in theevent that it is necessary to deliver replacement certificates toanyone who has lost those certificates.
4. The provisions of the second sentence of Paragraph 1, andParagraph 2 shall not apply to the following cases:(1) When the Corporation issues certificates representing the
Corporate Debentures or the Development Bank of Japan
Bonds (hereinafter in the following Item and Article 25,
Paragraph 2 referred to as the “Bond Certificates, Etc.”)
upon request for reissue which will be made after a decisionof nullification set forth in Article 699, Paragraph 2 of theCompanies Act; and(2) When the Corporation issues the Bond Certificates Etc. as
set forth in Article 5, Paragraph 3 or the immediately preceding Paragraph.

The Development Bank of Japan Inc. Act(7) Those stipulated by the Ministry of Finance Ordinance as
those who are similar to each of the foregoing.
Article 20 Amendment to the Articles of Incorporation, Etc.
1. Resolutions for amendment to the Articles of Incorporation of
the Corporation, disposition of surplus funds (other than disposition of losses) such as distribution, merger, corporate split, anddissolution shall not become effective without authorization of
the Minister of Finance.
2. If the Minister of Finance intends to grant the authorizationreferred to in the preceding Paragraph (limited to resolutions formerger, corporate split and dissolution), the Minister of Financeshall have a discussion with the Minister of Land, Infrastructure
and Transport.
Article 21 Submission of Balance Sheet and Other financial
Statements
For each fiscal year, the Corporation shall submit to the Ministerof Finance, as stipulated in the Ministry of Finance Ordinance, itsbalance sheet, profit and loss statement and business report for
the interim fiscal year (the period from April 1 to September 30of the current fiscal year) of the current fiscal year, and its balance sheet, profit and loss statement and business report for thecurrent fiscal year.
Article 22 Special Exemptions from Management of Fiscal
Loan Funds
Notwithstanding the provision of Article 10, Paragraph 1 of the
Fiscal Loan Funds Act (Act No. 100 of 1951), the fiscal loan
funds (the fiscal loan funds set forth in Article 2 of the Fiscal
Loan Funds Act; hereinafter the same) may be appropriated forloans (hereinafter in Article 24 referred to simply as the “Loans”)
to the Corporation when the Corporation borrows money for
appropriation for expenses required for its operations set forth in
Article 3, Paragraphs 1 and 2.
Article 23
1. Notwithstanding the provision of Article 10, Paragraph 1 of the
Fiscal Loan Funds Act, the fiscal loan funds may be appropriatedfor the Corporate Debentures and the Development Bank ofJapan Bonds (hereinafter in the following Paragraph, immediately following Article and Article 25, Paragraph 1 referred to as
the “Debentures, Etc.”) to be issued by the Corporation toappropriate the resulting proceeds for expenses required for its
operations set forth in Article 3, Paragraphs 1 and 2.
2. If the fiscal loan fund is invested in the Debentures, Etc. or the
Old Bank Debentures, the fiscal loan fund shall not be used tounderwrite, subscribe for or purchase (limited, in the case of the
Old Bank Debentures, to purchase; hereinafter in this Paragraphreferred to as the “Subscribe”) the Debentures, Etc. or the Old
Bank Debentures in excess of five-tenths (5/10) of the outstanding amount of the Debentures, Etc. and the Old Bank
Debentures or six-tenths (6/10) of the total amount of theDebentures, Etc. to be issued by the Corporation at a time. In
this case, the Debentures, Etc. or the Old Bank Debentures to be
Subscribed with the fiscal loan funds shall be the same as thoseotherwise Subscribed for with respect to the terms such as interest rate, collateral, method of redemption and maturity.
Article 24
For the purpose of application of the provisions of the Act
Concerning Special Measures for Long-term Management of
Fiscal Loan Funds (Act No. 7 of 1973) to the fiscal loan funds to
be invested in making loans as set forth in Article 22 or the fiscal
loan funds to be invested in the Debentures, Etc. as set forth inParagraph 1 of the immediately preceding Article, theCorporation shall be deemed as the corporation set forth in
Article 10, Paragraph 1, Item (7) of the Fiscal Loan Funds Act.
Article 25 Guarantee of Obligations
1. Notwithstanding the provision of Article 3 of the Act Concerning
Restrictions on Fiscal Assistance by the Government to
Corporations (Act No. 24 of 1946), the Government may enter
into a guarantee agreement for the obligations relating to theDebentures, Etc., to the extent of the amount approved by the
resolutions of the Diet.
2. In addition to the provision of the preceding Paragraph, theGovernment may enter into a guarantee agreement for the obligations relating to the Bond Certificates, Etc. to be issued by the
Corporation upon request for reissue to be made after a decision of nullification set forth in Article 699, Paragraph 2 of theCompanies Act, for delivery to those who have lost the Bond
Certificates, Etc., or for the obligations relating to the Bond
Certificates, Etc. to be issued by the Corporation as set forth in
Article 5, Paragraph 3 or Article 13, Paragraph 3.

Chapter III Miscellaneous Provisions
Article 26 Supervisory Measures
1. The competent minister shall oversee and supervise the
Corporation in accordance with the provisions of this Act.
2. Whenever the competent minister deems necessary to securesound and proper management of the Corporation in light ofthe condition of the business operations or properties of the
Corporation, or the properties of the Corporation and its subsidiaries (which are limited to those subsidiaries set forth in Article
2, Item (3) of the Companies Act, which fall within theSubsidiaries Subject to Authorization; hereinafter in Paragraphs 2
and 5 of the immediately following Article, and Article 33,
Paragraph 2, the same) or to otherwise effectuate this Act, thecompetent minister may request the Corporation to submit an
improvement plan to secure its sound management by indicating
those matters for which the Corporation should take measuresand the deadline for submission or direct the Corporation torevise the improvement plan once submitted, or direct, to theextent necessary, the Corporation to suspend its business operations in whole or in part during the designated period of time or
to deposit its properties to the competent deposit office, or giveother orders concerning business necessary for supervision.
Article 27 Reports and Inspections
1. If the competent minister deems necessary to secure sound and76

Integrated Report 2018

proper management of the Corporation and otherwise deems
necessary to effectuate this Act, the competent minister may
cause the Corporation to make a report, or have any of officialsof the competent ministry enter into premises of the
Corporation such as its office to inspect the condition of business or books, documents and other properties required.
2. If the competent minister deems especially necessary to securesound and proper management of the Corporation and otherwise deems especially necessary to effectuate this Act, thecompetent minister may, to the extent necessary, cause any of
the subsidiaries or entities engaged by the Corporation for any
services of the Corporation (hereinafter in this Paragraph,
Paragraph 5 and Article 33, Paragraph 2 referred to as the“Contractors”) to make reports relevant to the condition ofbusiness of the Corporation or have any officials of the competent ministry enter into offices or other premises of thesubsidiaries or the Contactors of the Corporation to inspect thecondition of business or books, documents and other properties
required which may serve as reference relating to the conditionof business of the Corporation.
3. When the officials conduct on-site inspection pursuant to theprovisions of the preceding two Paragraphs, those officials shallcarry a certificate showing their identities and present it to theparties concerned.

Article 32
1. The crime referred to in Article 30, Paragraph 1 shall comply
with Article 4 of the Criminal Code (Act No. 45 of 1907).
2. The crime referred to in Paragraph 1 of the immediately preceding Article shall comply with Article 2 of the Criminal Code.
Integrated Report 201877

Data Section

Article 31
1. Any person who gives, offers or promises to give a bribe referred
to in Paragraph 1 of the immediately preceding Article shall bepunished with imprisonment for not exceeding three (3) years ora fine not exceeding 1,000,000 yen.
2. If the person who committed the crime referred to in the immediately preceding Paragraph surrendered to justice, his/her penalty
may be reduced or he/she may be exempted from the punishment.

Corporate Data

Article 30
1. If any directors, executive officers (shikkoyaku), accounting
counsel (kaikei sanyo) (if an accounting counsel is a firm, its
members who should perform the duties as such), statutory
auditors, or employees accept, solicit or promise to accept abribe in connection with their duties, they shall be punished by
imprisonment with work for not exceeding three (3) years. Ifthey conduct improper activities or fail to conduct proper activities with the bribe, they shall be punished by imprisonment withwork for not exceeding five (5) years.
2. In the case of the immediately preceding Paragraph, the bribe
accepted by the criminal person shall be confiscated. If the bribein whole or in part cannot be confiscated, such amount shall becollected.

Risk Management

Chapter IV Penal Provisions

Corporate Governance

Article 29 Competent Ministers
1. The competent minister under this Act shall be the Minister ofFinance provided, however, that in the case that the Corporation
obtains the approval referred to in Article 9, Paragraph 1, thecompetent ministers for the following matters shall be the
Minister of Finance and the Prime Minister:(1) Matters regarding the provisions of the Banking Act which
are applied mutatis mutandis after changing to read in
Article 10;(2) Matters regarding the directions and orders under Article
26, Paragraph 2 (limited to those to be given when it isdeemed necessary to secure sound and proper management of the Corporation set forth in the said Paragraph);(3) Matters regarding the direction for report and on-site
inspections under Article 27, Paragraph 1 (limited to thoseto be made and conducted when it is deemed necessary tosecure sound and proper management of the Corporation
set forth in the said Paragraph); and(4) Matters regarding the direction for report and on-site
inspections under Article 27, Paragraph 2 (limited to thoseto be made and conducted when it is deemed especiallynecessary to secure sound and proper management of the
Corporation set forth in the said Paragraph).

DBJ Group’s Strategy

Article 28 Delegation of Authority
1. The Minister of Finance may delegate a part of the authority to
conduct on-site inspections pursuant to the provision of
Paragraphs 1 or 2 of the immediately preceding Article to thePrime Minister, as stipulated in the Cabinet Order.
2. If the Prime Minister has had the on-site inspections conductedpursuant to the provision of Paragraphs 1 or 2 of the immediately preceding Article based on the delegation of the authority
under the preceding Paragraph, the Prime Minister shall promptly
report the Minister of Finance on results of such inspections.
3. The Prime Minister shall delegate the authority delegated pursuant to the provision of Paragraph 1 and the authority pursuant
to the provision of the immediately preceding Paragraph to theCommissioner of the Financial Services Agency.
4. The Commissioner of the Financial Services Agency may delegate all or a part of the authority delegated pursuant to theprovision of the immediately preceding Paragraph to the directorof the competent local financial bureau or local finance branchbureau, as stipulated in the Cabinet Order.
5. If the Corporation obtains the approval referred to in Article 9,
Paragraph 1, each provision of the preceding Paragraphs shallnot apply.

2. The Minister of Finance or the Prime Minister shall not be precluded from individually exercising the authority relating to thematters referred to in Item (3) or (4) of the preceding Paragraphas set forth in the proviso of the preceding Paragraph.
3. If each minister referred to in each of the following Items
exercises his/her authority pursuant to the provision of theimmediately preceding Paragraph, he/she shall promptly informthe results thereof to the minister set forth opposite to him/herin each of the following Items:(1) Minister of Finance: Prime Minister(2) Prime Minister: Minister of Finance
4. In the cases stipulated in the proviso of Paragraph 1, reference tothe “Minister of Finance” in Article 3, Paragraph 2 shall bechanged to read the “Minister of Finance and the Prime
Minister”; reference to the “Minister of Finance” in Article 13,
Paragraph 2 shall be changed to read the “Minister of Finance(or, in relation to issue of the Development Bank of Japan Bonds,
the Minister of Finance and the Prime Minister)”; reference tothe “Minister of Land, Infrastructure and Transport” in Article
20, Paragraph 2 shall be changed to read the “Minister of Land,
Infrastructure and Transport and the Prime Minister”; reference
to the “, as stipulated in the Ministry of Finance Ordinance, itsbalance sheet, profit and loss statement and business report forinterim fiscal year (the period from April 1 to September 30 of
the current fiscal year) of the current fiscal year” in Article 21
shall be changed to read the “, as stipulated in the Ministry of
Finance Ordinance (or, in relation to the fiscal year and interim
fiscal year (the period from April 1 to September 30 of the current fiscal year; hereinafter in this Article the same) in and after
the fiscal year in which the date on which the approval referred
to in Article 9, Paragraph 1 is obtained is included, the Ministerof Finance Ordinance and the Cabinet Officer Ordinance), its balance sheet, profit and loss statement and business report forinterim fiscal year of the current fiscal year”, and reference tothe “Minister of Finance” in Article 21 shall be changed to readthe “Minister of Finance (or, in relation to the fiscal year andinterim fiscal year in after the fiscal year in which the date on
which the approval referred to in the said Paragraph is obtained
is included, the Minister of Finance and the Prime Minister).”
5. In the case of the proviso of Paragraph 1, if the Minister ofFinance intends to amend the Minister of Finance Ordinancereferred to in Article 3, Paragraph 1, Item (7) or (8) he/she shallobtain the prior consent of the Prime Minister.
6. The Prime Minister shall delegate the authorities under this Act(other than those authorities pursuant to the provisions ofParagraphs 1 through 3 of the immediately preceding Article,
and other authorities set forth in the Cabinet Order) to theCommissioner of the Financial Services Agency.
7. The Commissioner of the Financial Services Agency may delegate a part of the authorities delegated to him/her pursuant to
the provision of the immediately preceding Paragraph to thedirector of local finance bureau or local finance branch bureau.

DBJ Group’s Vision

4. The authority of the officials to conduct on-site inspections pursuant to the provisions of Paragraphs 1 and 2 shall not beinterpreted as that for a criminal investigation.
5. The subsidiaries and the Contractors of the Corporation may
reject the report or on-site inspection pursuant to the provisionof Paragraph 2, if there is any reasonable cause.

The Development Bank of Japan Inc. Act

Article 33
1. Any directors, executive officers (shikkoyaku), accounting counsel (kaikei sanyo) (if an accounting counsel is a firm, its members
who should perform the duties as such), statutory auditors, or
employees of the Corporation who fail to make reports, or makefalse reports on matters to be reported in accordance with theprovision of Article 27, Paragraph 1, or refuse, interrupt or avoid
inspection in accordance with the same paragraph, shall be punished with a fine not exceeding 300,000 yen.
2. Any directors, executive officers (shikkoyaku), accounting counsel (kaikei sanyo) (if an accounting counsel is a firm, its members
who should perform the duties as such), statutory auditors, or
employees of the subsidiaries of the Corporation or theContactors who fail to make reports, or make false reports on
matters to be reported in accordance with the provision of
Article 27, Paragraph 2, or refuse, interrupt or avoid inspectionin accordance with the same paragraph, shall be punished witha fine not exceeding 300,000 yen.
Article 34
In any of the following cases, any directors, executive officers(shikkoyaku), accounting counsel (kaikei sanyo) or its members
who should perform the duties as such, or statutory auditors of
the Corporation shall be punished with a non-penal fine notexceeding 1,000,000 yen:
(1) When he/she has conducted business activities in violationof the provision of Article 3, Paragraph 2;(2) When he/she has not notified of his/her concurrent positionin violation of the provision of Article 4, Paragraph 2;(3) When he/she has started acceptance of deposits or issue of
the Development Bank of Japan Bonds in violation of theprovision of Article 9, Paragraph 1;(4) When he/she has solicited those who will subscribe for
Shares Offered for Sale or Stock Acquisition Rights Offered,or delivered shares or stock acquisition rights in connection
with a share-for-share exchange in violation of the provisionof Article 12, Paragraph 1;(5) When he/she has not submitted a report on the delivery ofshares in violation of the provision of Article 12, Paragraph 2;(6) When he/she has not obtained authorization for its basic
policy in violation of the provision of Article 13, Paragraph 1;(7) When he/she has not submitted a report on issue of the
Corporate Debentures or the Development Bank of Japan
Bonds, or borrowing money in violation of the provision of
Article 13, Paragraph 2;(8) When he/she has exceeded the limit or the total referred toin Article 14, Paragraph 1 or Paragraph 2 in violation of theprovision thereof;(9) When he/she has not obtained authorization for his/her
concurrent position in violation of the provision of Article
16, Paragraph 1;(10) When he/she has not obtained authorization for its businessplan in violation of the provision of Article 17;(11) When he/she has not obtained authorization for its redemption plans in violation of the provision of Article 18;(12) When he/she has made Subsidiaries Subject to Authorization
its subsidiary in violation of the provision of Article 19;(13) When he/she has not submitted its balance sheet, profit
and loss statement or business report, or has submitted theone which includes false statements or records in violationof the provision of Article 21;(14) When he/she has violated the orders referred to in Article
26, Paragraph 2.
Article 35
Any person who violates the provision of Article 2, Paragraph 1 shallbe punished with a non-penal fine not exceeding 100,000 yen.

Supplementary Provisions (Extract)
Article 1 Enforcement Date
This Act shall come into force from the date of promulgation;
provided, however, that the provisions set forth in the following
Items shall take effect from the date set forth in each Item:(1) The provisions of Paragraph 1, Items (5), and (11) through(17), Paragraph 3, Paragraph 4, Item (2), Paragraph 5 of
Article 3, Article 4, Article 10, Article 14, Paragraph 2, Item(3), Article 19, Item (3), and Article 21 of the Supplementary
Provisions: Date on which the Act Concerning Amendment
to Parts of the Securities and Exchange Act (Act No. 65 of
2006) comes into force or the date on which this Act comes
into force, whichever is later.
(2) Provision of Article 19, Item (4): Date on which the Act
Concerning Amendment to Parts of the Act Concerning theRegulations on the Money Lending Business (Act No. 115 of2006) comes into force or the date on which this Act comes
into force, whichever is later.
(3) Provisions of Articles 26 through 60 and 62 through 65 of
the Supplementary Provisions: October 1, 2008.
Article 2 Disposition of Government-Owned Shares
1. Pursuant to the provision of Article 6, Paragraph 2 of the Act
Concerning Promotion of Administrative Reform for Realizing
the Simple and Effective Government (Act No. 47 of 2006), theGovernment shall make efforts to reduce the number of shares
held by it in the Corporation (hereinafter in the following
Paragraph and the Article 3 of the Supplementary Provisions
referred to as “Government-Owned Shares”), taking into
account the effect on the attainment of the objectives of the
Corporation, as well as the market situation, and shall dispose
all of them as soon as practicable.
2. For a period from the effectuation of this Act until theGovernment disposes of all of the Government-Owned Shares,
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Integrated Report 2018

the Government shall from time to time review matters, such as
matters regarding the method in which the Government-Owned
Shares should be disposed of and take the required measures
based on the result of such review, so that the foundation of the
Corporation’s investment and financing functions for long-termbusiness funds will be maintained.
Article 2-2 Capital Contribution by the Government
The Government may make capital contributions to the
Corporation, to the extent of the amount approved by thebudget, whenever the Government deems necessary, until
March 31, 2012.
Article 2-3 Issue of the Government Bonds
1. The Government may issue the government bonds to use forsecurement of capital that become necessary to secure soundnessof financial conditions of the Corporation in performing crisis
response business set forth in Article 2, Item (5) of the Japan
Finance Corporation Act (Act No. 57 of 2007) (hereinafter referred
to as the “crisis response business”), until March 31, 2012.
2. The Government, as set forth in the immediately preceding
Paragraph, shall issue the government bonds and deliver themto the Corporation, to the extent of the amount approved by
the budget.
3. The government bonds to be issued as set forth in Paragraph 1
shall be non interest-bearing.
4. The government bonds to be issued as set forth in Paragraph 1
may not be transferred, pledged as security, or otherwise
disposed.
5. In addition to those set forth in the preceding three Paragraphs,
other matters necessary for the government bonds to be issued
as set forth in Paragraph 1 shall be stipulated by the Ministry of
Finance Ordinance.

Integrated Report 201879

Data Section

Article 2-12 Special Investment Operations
1. The Corporation shall, in order to attain its objectives, conduct
special investment operations, in accordance with the provisions
set forth in this Article, Articles 2-15 to 2-20, and Articles 2-23
to 2-30 of the Supplementary Provisions.
2. In this Article and up to Article 2-20 of the Supplementary
Provisions, as well as in Articles 2-23, 2-25, 2-27 and 2-31 of the
Supplementary Provisions, “special investment operations”
means, among the investment businesses in special businessactivities, those that are deemed to particularly contribute to thefacilitation of supply of funds by financial institutions and others,
for the revitalization of business activities taking advantage ofregional characteristics that contribute to autonomous development of local economies, or for the enhancement ofcompetitiveness of Japanese companies that contribute to theimprovement of socioeconomic vitality and sustainable development of Japan, as well as for special business activities, andthose of which the business entities that will receive funds fromthe said investment business and the particulars of such supply
are decided during the period from the date on which theauthorization specified in Article 2-17, Paragraph 1 of the
Supplementary Provisions is obtained through March 31, 2021,
and any other businesses incidental thereto (including those
conducted on and after April 1, 2021).
3. “Special business activities” set forth in the immediately preceding Paragraph means the following business activities:(1) Business activities conducted by Japanese business entities
with the aim of improving productivity and profitability bycultivating new business through effective use of insufficiently its management resources not sufficiently used, or by

Corporate Data

Article 2-8 Government’s Holding of Shares with Regard to
Crisis Response BusinessWith a view to ensure proper conduct of crisis response businessby the Corporation, the Government shall, for an indefinite
period, hold more than one-third of the total number of issued
shares of the Corporation (excluding shares in respect of which

Article 2-11 Special Provisions, Etc. on Business Plan with
Regard to Crisis Response Business1. The Corporation shall include an implementation policy for itscrisis response business in its business plan provided for in Article
17, as stipulated in the Ministry of Finance Ordinance.
2. The Corporation shall include the implementation status of itscrisis response business, based on the implementation policy set
forth in the immediately preceding Paragraph, in its business
report provided for in Article 21, as stipulated in the Ministry of
Finance Ordinance.
3. In addition to matters set forth in each of the Items of Article 27of the Companies Act, matters regarding proper implementationof crisis response business shall be included or recorded in the
Articles of Incorporation of the Corporation.

Risk Management

Article 2-7 Corporation’s Obligation to Conduct Crisis
Response Business
The Corporation shall, in order to attain its objectives, in accordance with the provisions set forth in Articles 2-10, 2-11, 2-22
and Articles 2-24 to 2-30 of the Supplementary Provisions, beobligated to conduct crisis response business, for an indefinite
period, to secure a smooth supply of funds to those who needfunds to address the damages set forth in Article 2, Item (4) of
the Japan Finance Corporation Act.

Article 2-10 Implementation of Crisis Response Business1. The Corporation shall conduct crisis response business at thehead office or any other office designated by the Minister ofFinance (hereinafter in the following Paragraph and Article 2-31,
Paragraph 1, Item (1) of the Supplementary Provisions referred
to as the “designated office”).
2. The Corporation shall neither suspend nor cease to conduct
crisis response business at the designated office, except in cases
where crisis response business is temporarily suspended, inwhole or in part, at the designated office due to Acts of God orother reasons beyond control, as stipulated in the Ministry of
Finance Ordinance.

Corporate Governance

Article 2-6 S pecial Rules for Taxation of the Registration
License Tax
In case of the investment as set forth in Article 2-2 of the
Supplementary Provisions, or the redemption as set forth in Article
2-4, Paragraph 2 of the Supplementary Provisions, no registration
license tax shall be assessed on registration of the increase in theamount of the capital of the Corporation, limited to only thoseregistered as set forth in the Minister of Finance Ordinance.

Article 2-9 Capital Contribution by the Government with
Regard to Crisis Response Business
The Government may, for an indefinite period, make capital
contributions to the Corporation, to the extent of the amountapproved by the budget, whenever the Government deems necessary for proper implementation of crisis response business by
the Corporation.

DBJ Group’s Strategy

Article 2-5 Return of the Government Bonds
1. If there are any government bonds delivered as set forth in
Article 2-3, Paragraph 2 of the Supplementary Provisions, thosewhich are not redeemed as of July 1, 2012, the Corporation shallreturn the unredeemed government bonds to the Government.
2. The Government shall immediately cancel the government
bonds when the government bonds are returned as set forth in
the immediately preceding Paragraph.
3. In addition to those set forth in the preceding two Paragraphs,
other matters required for the return and the cancellation of thegovernment bonds delivered by the Government as set forth in
Article 2-3, Paragraph 2 of the Supplementary Provisions, shallbe stipulated in the Ministry of Finance Ordinance.

voting rights may not be exercised for all matters that may beresolved at a general meeting of shareholders; the same shallapply in Article 2-13 of the Supplementary Provisions).

DBJ Group’s Vision

Article 2-4 Redemption of the Government Bonds
1. The Corporation may request the redemption of the government
bonds delivered as set forth in Paragraph 2 of the immediately
preceding Article, only within the amount calculated as stipulated by the Ministry of Finance Ordinance that become
necessary as the amount of the capital in response to theincrease of assets related to its crisis response business (limited
to those conducted by March 31, 2012).
2. If the Government is requested by the Corporation to redeem allor a part of the government bonds delivered pursuant to theprovision of Paragraph 2 of the immediately preceding Article,
the Government shall promptly redeem them.
3. When the redemption has been made pursuant to the provisionof the immediately preceding Paragraph, the amount of the capital of the Corporation shall be the aggregate sum of theamount of the capital immediately preceding such redemption
and the amount of such redemption.
4. As for application of the provision of Article 445, Paragraph 1 of
the Companies Act in the case where the provision of the immediately preceding Paragraph applies, “Unless it is otherwise
provided for in this Act” therein shall be deemed to be changed
to read “Unless it is otherwise provided for in this Act and incases where the provision of Article 2-4, Paragraph 3 of the
Supplementary Provisions of the Development Bank of Japan Inc.
Act (Act No. 85 of 2007) applies.”
5. In addition to those set forth in each of the preceding
Paragraphs, other matters required for the redemption of thegovernment bonds delivered by the Government as set forth inParagraph 2 of the immediately preceding Article, shall be stipulated in the Ministry of Finance Ordinance.

The Development Bank of Japan Inc. Act

promoting management innovation mainly throughco-ordinated alignment with business entities in different fields
and effective combination of management resources; and(2) Business activities that provide funds to the business activities set forth in the preceding Item.
4. “Investment business” set forth in Paragraph 2 means the following businesses concerning supply of funds:(1) To lend money through subordinated loans (which means
loans made under loan agreements with special clause ofsubordinated contents with regard to the payment of principal and interest, and stipulated in the Ministry of FinanceOrdinance);(2) To make capital contributions;(3) To acquire subordinated corporate debentures (which means
corporate debentures with special clause of subordinatedcontents with regard to the payment of principal and interest, and stipulated in the Ministry of Finance Ordinance); and(4) In addition to those set forth in the preceding three Items,
to provide funds in the manner approved in advance by the
Minister of Finance.
Article 2-13 Government’s Holding of Shares with Regard toSpecial Investment Operations
With a view to ensure proper implementation of special investment operations by the Corporation, the Government shall holdone-half or more of the total number of issued shares of the
Corporation, until the Corporation completes the special investment operations.
Article 2-14 Capital Contribution, Etc. by the Government
with Regard to Special Investment Operations
1. The Government may make capital contributions to the
Corporation, to the extent of the amount approved by thebudget, whenever the Government deems necessary for proper
implementation of special investment operations by the
Corporation, until March 31, 2021.
2. The Corporation shall not appropriate money provided throughcapital contributions provided for in the preceding Paragraph toany funds other than funds for special investment operations.
Article 2-15 Supplement or Encouragement of Financing
Conducted by Financial Institutions, Etc. in Special
Investment Operations
The purpose of the Corporation in conducting special investment operations shall be to supplement or encourage financing
conducted by financial institutions and investment conducted byprivate sector.
Article 2-16 Special Investment Guidelines
1. Guidelines to be followed by the Corporation in conducting special investment operations (in the following Paragraph andParagraph 1 of the immediately following Article referred to as
the “special investment guidelines”) shall be established andissued by the Minister of Finance.
2. The special investment guidelines shall provide for the following
matters:(1) Standards to be followed in deciding the business entities
that will receive funds from the special investment operations and the particulars of such supply of funds;(2) Matters regarding appropriate financial management of thespecial investment operations;(3) Matters regarding securing of appropriate competitive relationships between the Corporation and other business entities;(4) Matters regarding the system to be established to evaluate
and supervise the implementation status of special investment operations;(5) Matters regarding reporting to the Minister of Finance on theimplementation status of special investment operations; and(6) Any other matters necessary to ensure proper implementation of special investment operations.

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Integrated Report 2018

Article 2-17 Special Investment Operations Rules
1. The Corporation shall set rules regarding special investment
operations (in the following Paragraph referred to as the “special investment operations rules”) in line with the special
investment guidelines, with respect to matters concerning implementation of special investment operations stipulated in the
Ministry of Finance Ordinance, and shall obtain authorization
therefor from the Minister of Finance. If the Corporation intends
to revise such rules, the same shall apply.
2. The Minister of Finance may order the Corporation to revise thespecial investment operations rules authorized pursuant to theprovision of the preceding Paragraph, if he/she deems that suchrules have become inappropriate for the proper implementationof special investment operations by the Corporation.
Article 2-18 Special Provisions, Etc. on Business Plan with
Regard to Special Investment Operations
1. The Corporation shall include the implementation policy for the
special investment operations in its business plans provided forunder Article 17, as stipulated in the Ministry of FinanceOrdinance, until the completion of the special investment
operations.
2. The Corporation shall include the implementation status of thespecial investment operations based on the implementation
policy provided for under the immediately preceding Paragraph,in its business reports provided for under Article 21 for eachfiscal year up to the fiscal year including the date of completionof the special investment operations, as stipulated in the Ministryof Finance Ordinance.
3. In addition to matters set forth in each of the Items of Article 27of the Companies Act, matters regarding proper implementationof special investment operations shall be included or recorded in
the Articles of Incorporation of the Corporation, until the completion of the special investment operations.
Article 2-19 Status of Income and Expenditure with Regard toSpecial Investment Operations, Etc.
For each fiscal year, the Corporation shall, as stipulated in the
Ministry of Finance Ordinance, submit to the Minister of Financeand publish documents stating the status of income and expenditure of the following businesses by category for each fiscal
year up to the fiscal year including the date of completion of thespecial investment operations:(1) Special investment operations; and(2) Businesses other than those listed in the preceding Item.
Article 2-20 Completion of Special Investment Operations
1. The Corporation shall, taking into account economic conditions,the state of business of the business entities that will receive
funds from special investment operations, and other circumstances, transfer or otherwise dispose of all of the securities(which means the securities listed in Article 2, Paragraph 1 of
the Financial Instruments and Exchange Act, and the rights
which are deemed as securities pursuant to the provision of
Article 2, Paragraph 2 of the Financial Instruments and ExchangeAct) and receivables held by it in the special investment operations, and seek to complete the special investment operations,by March 31, 2026.
2. When the special investment operations are completed, theCorporation shall promptly notify the Minister of Finance tothat effect.
3. The Minister of Finance shall, when notified pursuant to theprovision of the immediately preceding Paragraph, give public
notice to that effect.
Article 2-21 Securing of Appropriate Competitive
Relationships
1. The Corporation shall, for an indefinite period, pay special attention in conducting its business so that it will not upset its
appropriate competitive relationships with other business entities.

Data Section

81

Corporate Data

Integrated Report 2018

Risk Management

Article 2-25 Amount of Surplus Funds, Etc.
1. For the purpose of calculation of surplus funds, the Corporation
shall include the aggregate amount of the crisis response
reserve, the special investment reserve and the special investment surplus funds as of the last day of the most recent fiscal
year (the most recent fiscal year set forth in Article 2, Item (24)of the Companies Act; the same in the following Paragraph) in
the total amount of paid-in capital and reserves.
2. For the purpose of calculation of surplus funds, the Corporation
shall include the aggregate amount of the amounts set forth inItems (1) though (3) and the aggregate amount of the amounts
set forth in Items (4) through (6), in the aggregate amount of
the amounts set forth in Article 446, Items (1) through (4) of theCompanies Act and the aggregate amount of the amounts set
forth in Items (5) through (7) of the said Article, respectively:(1) The amount by which the amount of the crisis response
reserve has been reduced after the last day of the mostrecent fiscal year (excluding the amount of the crisis
response reserve provided for under Article 2-27, Paragraph
4, Item (1) of the Supplementary Provisions), if any;
(2) The amount by which the amount of the special investment
reserve has been reduced after the last day of the mostrecent fiscal year (excluding the amount of the special
investment reserve provided for under Article 2-27,
Paragraph 4, Item (1) of the Supplementary Provisions
which has been paid to the national treasury), if any;
(3) The amount by which the amount of the special investment
surplus funds has been reduced after the last day of themost recent fiscal year (excluding the amount of the special
investment surplus funds provided for under Article 2-27,
Paragraph 4, Item (1) of the Supplementary Provisions thathave been paid to the national treasury), if any;(4) The amount by which the amount of paid-in capital orreserves has been reduced after the last day of the mostrecent fiscal year to increase the amount of the special
investment reserve, if any;(5) The amount by which the amount of surplus funds has
been reduced after the last day of the most recent fiscal
year to increase the amount of the special investment
reserve, if any; and(6) In addition to those listed in the preceding two Items, thetotal amount of the amounts recorded to each account asprescribed in the Ministry of Finance Ordinance.

Corporate Governance

Article 2-23 Special Investment Reserve and Special
Investment Surplus Funds
1. The Corporation shall establish a special investment reserve andappropriate to such reserve an amount equal to the total of theamount contributed by the Government pursuant to the provision of Article 2-14, Paragraph 1 of the Supplementary
Provisions, the amount by which the amount of paid-in capital orreserves is reduced pursuant to the provision of Paragraph 3 ofthis Article and the amount reduced from the amount of surplus
funds pursuant to the provision of Paragraph 4 of this Article.
2. When the capital contributions have been made pursuant to theprovision of Article 2-14, Paragraph 1 of the Supplementary
Provisions, the Corporation shall, notwithstanding the provisionof Article 445, Paragraph 2 of the Companies Act, record thewhole of the amount contributed pursuant to the provision of
Article 2-14, Paragraph 1 of the Supplementary Provisions as theamount of the special investment reserve. For this purpose, reference to “this Act” in Article 445, Paragraph 1 of the said Act
shall be changed to read “this Act or the Development Bank ofJapan Inc. Act (Act No. 85 of 2007).”
3. The Corporation may reduce the amount of its paid-in capital orreserves and increase the amount of its special investment reserve,
whenever the Corporation deems necessary in order to implement
the special investment operations properly. For the purpose of
application of the provisions of Article 447 through Article 449 of
the Companies Act in this case, reference to “is to be appropriated to reserves” in Article 447, Paragraph 1, Item (2) of the said
Act shall be changed to read “is to be appropriated to reserves orto special investment reserve under Article 2-23, Paragraph 1 of
the Supplementary Provisions of the Development Bank of Japan
Inc. Act (Act No. 85 of 2007) (hereinafter referred to as the “special investment reserve” in this Item, Paragraph 1, Item (2) of thefollowing Article and Article 449, Paragraph 1),” reference to “theamount to be appropriated to reserves” in the same Item shall bechanged to read “the amount to be appropriated to reserves or
special investment reserve,” reference to “the paid-in capital” inArticle 448, Paragraph 1, Item (2) of the said Act shall be changed
to read “the paid-in capital or special investment reserve,” andreference to “is appropriated to paid-in capital” in Article 449,
Paragraph 1 of the said Act shall be changed to read “is appropriated to paid-in capital or special investment reserve.”
4. The Corporation may reduce the amount of surplus funds andincrease the amount of its special investment reserve, whenever
the Corporation deems this necessary in order to implement the

Article 2-24 Special Provisions on Limits on Borrowing and
Limitation on Extension of Credit
For the purpose of application of the provision of Article 14,
when the amount of the crisis response reserve, the amount of
the special investment reserve or the amount of the special
investment surplus funds is recorded, the total of the amounts
so recorded shall be included in the amount of paid-in capitaland reserves.

DBJ Group’s Strategy

Article 2-22 Crisis Response Reserve
1. The Corporation shall establish a crisis response reserve andappropriate to such reserve the amount contributed by theGovernment pursuant to the provision of Article 2-9 of the
Supplementary Provisions.
2. When the capital contributions have been made by theGovernment pursuant to the provision of Article 2-9 of the
Supplementary Provisions, the Corporation shall, notwithstanding the provisions of Article 445, Paragraph 2 of the Companies
Act, record the whole of the amount contributed pursuant to
the provision of Article 2-9 of the Supplementary Provisions as
the amount of the crisis response reserve. For this purpose, reference to “this Act” in Article 445, Paragraph 1 of the said Act
shall be changed to read “this Act or the Development Bank ofJapan Inc. Act (Act No. 85 of 2007).”

special investment operations properly. For this purpose, the following matters shall be determined:(1) The amount by which the amount of surplus funds will be
reduced; and(2) The date on which the increase in the amount of the special
investment reserve will become effective.
5. The determination of the matters referred to in each Item of theimmediately preceding Paragraph shall be made by resolution ofa shareholders’ meeting.
6. The amount provided for under Paragraph 4, Item (1) of this
Article may not exceed the amount of surplus funds as of thedate provided for under Item (2) of the said Paragraph.
7. The Corporation shall establish the special investment surplus
funds and record the amount of profit or loss resulting from thecalculation of profits and losses pertaining to the special investment operations for each fiscal year as stipulated in the Ministryof Finance Ordinance.

DBJ Group’s Vision

2. The Corporation shall, for an indefinite period, include, in its
business plans provided for under Article 17, a policy concerning
securing of appropriate competitive relationships with other business entities as stipulated in the Ministry of Finance Ordinance.
3. The Corporation shall, for an indefinite period, describe, in its
business reports provided for under Article 21, the state of
implementation of its business based on the policy mentioned in
the immediately preceding Paragraph as stipulated in the
Ministry of Finance Ordinance.

The Development Bank of Japan Inc. Act

3. If the Corporation calculates the distributable amount under
Article 461, Paragraph 2 of the Companies Act (which shall, in
Article 2-27, Paragraph 6 of the Supplementary Provisions, bereferred to as the “Distributable Amount”), the Corporation
shall deduct, from the total of the amounts set forth in Article
461, Paragraph 2, Items (1) and (2) of the said Act, the total of
the amounts recorded to each account as the amount of profit
pertaining to the special investment operations for the period
set forth in Article 441, Paragraph 1, Item (2) of the Companies
Act in the case where the Corporation obtains the approvalreferred to in Paragraph 4 of the said Article (or, in cases set
forth in the proviso to the said Paragraph, the approval underParagraph 3 of the said Article) of the temporary financial statements referred to in Paragraph 1 of the said Article and anyother amounts recorded to each account as prescribed in the
Ministry of Finance Ordinance.
Article 2-26 Reduction in Amount of Crisis Response Reserve,
Etc. When Deficit is Covered
1. If the amount of capital reserve and the amount of earned surplus reserve have become zero, the Corporation may reduce theamount of the crisis response reserve, the amount of the special
investment reserve or the amount of the special investment surplus funds (limited, as regards the amount of the special
investment surplus funds, to the case where such amountexceeds zero). For this purpose, the following matters shall be
determined by resolution of a shareholders’ meeting:(1) The amount by which the amount of the crisis response
reserve, the amount of the special investment reserve or theamount of the special investment surplus funds will be
reduced; and(2) The date on which the reduction of the amount of the crisis
response reserve, the amount of the special investment
reserve or the amount of the special investment surplus
funds will become effective.
2. The resolution provided for under the preceding Paragraphshall not become effective without authorization of the Ministerof Finance.
3. The amount of the crisis response reserve, the amount of thespecial investment reserve or the amount of the special investment surplus funds under Paragraph 1, Item (1) of this Article
may not exceed the amount of the crisis response reserve, theamount of the special investment reserve or the amount of thespecial investment surplus funds, respectively, as of the date set
forth in Item (2) of the said Paragraph.
4. The aggregate of the amount of the crisis response reserve, theamount of the special investment reserve and the amount of thespecial investment surplus funds as referred to in Paragraph 1,
Item (1) of this Article may not exceed the amount calculated by
the method prescribed by the Ministry of Finance Ordinance as
the amount of deficit as of the date of the shareholders’ meeting referred to in the said Paragraph.
5. If the amount of the special investment surplus funds is notexceeding zero, the amount of the special investment reserve as
referred to in Paragraph 1, Item (1) of this Article may notexceed the amount calculated by the method prescribed by the
Ministry of Finance Ordinance as the amount by which theamount of the special investment reserve may be reduced.
6. If the amount of surplus funds of the Corporation exceeds zeroafter a reduction of the amount of the crisis response reserve,
the amount of the special investment reserve or the amount of
the special investment surplus funds pursuant to the provision of
Paragraph 1 of this Article, the Corporation shall increase, in an
amount equivalent to such excess, the amount of the crisis
response reserve, the amount of the special investment reserveor the amount of the special investment surplus funds until thetime when the cumulative amount of the amounts of theincreases in the amount of the crisis response reserve, theamount of the special investment reserve or the amount of thespecial investment surplus funds pursuant to the provision of this82

Integrated Report 2018

Paragraph equals the cumulative amount of amounts of reductions, as prescribed by the Minister of Finance Ordinance.
Article 2-27 Payment to National Treasury
1. If it is deemed that the financial basis necessary for proper
implementation of the crisis response business has been sufficiently secured, the Corporation shall pay to the nationaltreasury an amount equivalent to all or a part of the amount of
the crisis response reserve. In that case, the Corporation shall
reduce the crisis response reserve by the amount equivalent tosuch amount to be paid to the national treasury.
2. If it is deemed unnecessary to maintain the current level of thespecial investment reserve for the proper implementation of thespecial investment operations taking into account the state of
implementation and the financial condition of the special investment operations, the Corporation may reduce the amount of
the special investment reserve in whole or in part. In that case,
the Corporation shall pay to the national treasury an amountcalculated as prescribed by the Ministry of Finance Ordinance as
the amount, out of the amount of such reduction, that should
belong to the national treasury on the basis of the proportion of
the amount of the capital contributions made by theGovernment pursuant to the provision of Article 2-14, Paragraph
1 of the Supplementary Provisions to the amount of the special
investment reserve.
3. If, in cases where the amount of the special investment surplus
funds exceeds zero, it is deemed unnecessary to maintain thecurrent level of the special investment surplus funds for theproper implementation of the special investment operations
taking into account the state of implementation and the financial condition of the special investment operations, theCorporation may reduce the amount of the special investment
surplus funds in whole or in part. In that case, the Corporation
shall pay to the national treasury an amount calculated as prescribed by the Ministry of Finance Ordinance as the amount, outof the amount of such reduction, that should belong to thenational treasury on the basis of the proportion of the amount of
the capital contributions made by the Government pursuant to
the provision of Article 2-14, Paragraph 1 of the Supplementary
Provisions to the amount of the special investment reserve.
4. In the case of the preceding three Paragraphs, the following matters shall be determined by resolution of a shareholders’ meeting:(1) The amount by which the amount of the crisis response
reserve, the amount of the special investment reserve or theamount of the special investment surplus funds is reduced; and(2) The date on which the reduction of the amount of the crisis
response reserve, the amount of the special investment
reserve or the amount of the special investment surplus
funds becomes effective.
5. The resolution provided for under the preceding Paragraphshall not become effective without authorization of the Ministerof Finance.
6. The aggregate of the amounts to be paid pursuant to the provision of Paragraphs 1 through 3 of this Article may not exceed
the Distributable Amount as of the date provided for underParagraph 4, Item (2) of this Article.
Article 2-28
1. If the Corporation goes into liquidation and there still remains any
residual property after performance of its obligations, theCorporation shall pay to the national treasury an amount equivalent to the total amount (if the amount of such residual property isless than the aggregate of the amount of the crisis response
reserve and the amount calculated as described below, anamount of such residual property) calculated as prescribed by the
Ministry of Finance Ordinance as the amount, out of the aggregateof the amount of the crisis response reserve as of the date of suchliquidation (if, after reductions of the amount of the crisis response
reserve pursuant to the provision of Article 2-26, Paragraph 1 of
the Supplementary Provisions, the cumulative amount of theCorporate Data
Data Section

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Risk Management

Integrated Report 2018

Corporate Governance

Article 2-30 M utatis Mutandis Application of theCompanies Act
1. The provisions of Article 449, Paragraph 6 (limited to the portions
relating to Item (1)) and Paragraph 7, and Article 828 (limited tothe portions relating to Paragraph 1, Item (5) and Paragraph 2,
Item (5)) of the Companies Act shall apply mutatis mutandis tocases where the amount of crisis response reserve, the amount ofspecial investment reserve or the amount of special investment
surplus funds is reduced as set forth in Article 2-26, Paragraph 1of the Supplementary Provisions. For this purpose, references to“paid-in capital” in Article 449, Paragraph 6, Item (1) of the said
Act shall be changed to read the amount of crisis response
reserve set forth in Article 2-26, Paragraph 1 of the
Supplementary Provisions of the Development Bank of Japan Inc.
Act (Act No. 85 of 2007) (crisis response reserve set forth in
Article 2-22, Paragraph 1 of the Supplementary Provisions of thesaid Act; hereinafter in Article 828, Paragraph 1, Item (5) thesame), the amount of special investment reserve (special investment reserve set forth in Article 2-23, Paragraph 1 of the
Supplementary Provisions of the said Act; hereinafter in this Itemthe same), or special investment surplus funds (special investment
surplus funds set forth in Article 2-23, Paragraph 7 of the
Supplementary Provisions of the said Act; hereinafter in this Itemthe same); “Article 447, Paragraph 1, Item (3)” shall be changed
to read “Article 2-26, Paragraph 1, Item (2) of the Supplementary
Provisions of the said Act”; references to “paid-in capital of” inArticle 828, Paragraph 1, Item (5) of the said Act shall bechanged to read “the amount of crisis response reserve, the

DBJ Group’s Strategy

Article 2-29 Special Rules of the Act Concerning Restrictions
on Fiscal Assistance by the Government to
Corporations
Notwithstanding the provision of Article 1 of the Act Concerning
Restrictions on Fiscal Assistance by the Government to
Corporations, the Corporation shall comply with the preceding
two Articles with respect to the dividend or distribution of profit
or surplus funds to the capital contributions under Article 2-9 of
the Supplementary Provisions or the capital contributions under
Article 2-14, Paragraph 1 of the Supplementary Provisions.

amount of special investment reserve, or special investment
surplus funds set forth in Article 2-26, Paragraph 1 of the
Supplementary Provisions of the Development Bank of Japan Inc.
Act concerning”; “on which the reduction in the amount of paidin capital” shall be changed to read “on which the reduction in
the amount of the said crisis response reserve, the amount ofspecial investment reserve, or the amount of special investment
surplus funds”; and references to “, the trustee in bankruptcy ora creditor, who did not give approval to the reduction in theamount of paid-in capital” in Paragraph 2, Item (5) of the said
Article shall be changed to read “or the trustee in bankruptcy.”
2. The provisions of Article 449 (other than the proviso of Paragraph
1 and Paragraph 6, Item (2)) and Article 828 (limited to the portions relating to Paragraph 1, Item (5) and Paragraph 2, Item (5))
of the Companies Act shall apply mutatis mutandis to cases
where the amount of crisis response reserve is reduced as set forthin Article 2-27, Paragraph 1 of the Supplementary Provisions. For
this purpose, references to “paid-in capital or reserves (hereinafterin this Article referred to as “Paid-In Capital, Etc.”)” in the mainclause of Article 449, Paragraph 1 of the said Act shall bechanged to read “crisis response reserve as set forth in Article
2-27, Paragraph 1 of the Supplementary Provisions of theDevelopment Bank of Japan Inc. Act (Act No. 85 of 2007) (crisis
response reserve set forth in Article 2-22, Paragraph 1 of the
Supplementary Provisions of the said Act; hereinafter in this
Article and Article 828, Paragraph 1, Item (5) and Paragraph 2,
Item (5) the same)”; “In cases where... (excluding cases where thewhole of the amount by which the reserves are reduced is appropriated to the paid-in capital)” shall be changed to read “In cases
where…”; “of Paid-In Capital, Etc.” shall be changed to read “ofcrisis response reserve”; references to “Paid-In Capital, Etc.” inParagraph 2, Item (1) of the said Article shall be changed to read“crisis response reserve”; references to “Ordinance of the Ministryof Justice” in Item (2) of the said Paragraph shall be changed toread the “Ministry of Finance Ordinance”; references to “Paid-In
Capital, Etc.” in Paragraph 4 and the proviso of Paragraph 5 ofthe said Article shall be changed to read “crisis response reserve”;
references to “paid-in capital” in Paragraph 6, Item (1) of the said
Article shall be changed to read “crisis response reserve set forthin Article 2-27, Paragraph 1 of the Supplementary Provisions of
the Development Bank of Japan Inc. Act”; “Article 447,
Paragraph 1, Item (3)” shall be changed to read “Paragraph 4,
Item (2) of the said Article”; references to “paid-in capital of” inArticle 828, Paragraph 1, Item (5) of the said Act shall be changed
to read “crisis response reserve set forth in Article 2-27, Paragraph
1 of the Supplementary Provisions of the Development Bank ofJapan Inc. Act concerning”; “on which the reduction in theamount of paid-in capital” shall be changed to read “on which
the reduction in the amount of the said crisis response reserve”;
and references to “paid-in capital” in Paragraph 2, Item (5) of thesaid Article shall be changed to read “crisis response reserve set
forth in Article 2-27, Paragraph 1 of the Supplementary Provisionsof the Development Bank of Japan Inc. Act.”
3. The provisions of Article 449 (other than the proviso of Paragraph
1 and Paragraph 6, Item (2)) and Article 828 (limited to the portions relating to Paragraph 1, Item (5) and Paragraph 2, Item (5))
of the Companies Act shall apply mutatis mutandis to cases
where the amount of special investment reserve is reduced as set
forth in Article 2-27, Paragraph 2 of the Supplementary
Provisions. For this purpose, references to “paid-in capital orreserves (hereinafter in this Article referred to as “Paid-In Capital,
Etc.”)” in the main clause of Article 449, Paragraph 1 of the said
Act shall be changed to read “special investment reserve as set
forth in Article 2-27, Paragraph 2 of the Supplementary
Provisions of the Development Bank of Japan Inc. Act (Act No. 85
of 2007) (special investment reserve set forth in Article 2-23,
Paragraph 1 of the Supplementary Provisions of the said Act;
hereinafter in this Article and Article 828, Paragraph 1, Item (5)and Paragraph 2, Item (5) the same)”; “In cases where... (excluding cases where the whole of the amount by which the reserves

DBJ Group’s Vision

amounts of increases in the amount of the crisis response reserve
pursuant to the provision of Paragraph 6 of the said Article is lessthan the cumulative amount of the amounts of such reductions, anamount after adding the shortfall) and the amount of the special
investment reserve and the special investment surplus funds as ofthe same date (if, after reductions of the amount of the special
investment reserve pursuant to the provision of Paragraph 1 of thesaid Article, the cumulative amount of the amounts of increases in
the amount of the special investment reserve pursuant to the provision of Paragraph 6 of the said Article is less than the cumulative
amount of such amounts of reductions, or if, after reductions of
the amount of the special investment surplus funds pursuant to
the provision of Paragraph 1 of the said Article, the cumulative
amount of the amounts of increases in the amount of the special
investment surplus funds pursuant to the provision of Paragraph 6of the said Article is less than the cumulative amount of suchamounts of reductions, an amount after adding the respective
shortfalls), that should belong to the national treasury on the basisof the proportion of the amount of the capital contributions madeby the Government pursuant to the provision of Article 2-14,
Paragraph 1 of the Supplementary Provisions to the amount of thespecial investment reserve.
2. The payment under the preceding Paragraph shall be made inadvance of the distribution of the residual property toshareholders.
3. The payment procedures or any other matters necessary inconnection with the payments to be made pursuant to the provisions of Paragraphs 1 through 3 of the immediately preceding
Article and Paragraph 1 of this Article shall be prescribed in the
Cabinet Order.

The Development Bank of Japan Inc. Act

are reduced is appropriated to the paid-in capital)” shall bechanged to read “In cases where…”; “of Paid-In Capital, Etc.”
shall be changed to read “of special investment reserve”; references to “Paid-In Capital, Etc.” in Paragraph 2, Item (1) of thesaid Article shall be changed to read “special investment
reserve”; references to “Ordinance of the Ministry of Justice” in
Item (2) of the said Paragraph shall be changed to read the“Ministry of Finance Ordinance”; references to “Paid-In Capital,
Etc.” in Paragraph 4 and the proviso of Paragraph 5 of the said
Article shall be changed to read “special investment reserve”; references to “paid-in capital” in Paragraph 6, Item (1) of the said
Article shall be changed to read “special investment reserve set
forth in Article 2-27, Paragraph 2 of the Supplementary
Provisions of the Development Bank of Japan Inc. Act”; “Article
447, Paragraph 1, Item (3)” shall be changed to read “Paragraph
4, Item (2) of the said Article”; references to “paid-in capital of”
in Article 828, Paragraph 1, Item (5) of the said Act shall bechanged to read “special investment reserve set forth in Article
2-27, Paragraph 2 of the Supplementary Provisions of theDevelopment Bank of Japan Inc. Act concerning”; “on which the
reduction in the amount of paid-in capital” shall be changed toread “on which the reduction in the amount of the said special
investment reserve”; and references to “paid-in capital” inParagraph 2, Item (5) of the said Article shall be changed to read
“special investment reserve set forth in Article 2-27, Paragraph 2of the Supplementary Provisions of the Development Bank ofJapan Inc. Act.”
4. The provisions of Article 449 (other than the proviso of Paragraph 1
and Paragraph 6, Item (2)) and Article 828 (limited to the portions
relating to Paragraph 1, Item (5) and Paragraph 2, Item (5)) of theCompanies Act shall apply mutatis mutandis to cases where theamount of special investment surplus funds is reduced as set forthin Article 2-27, Paragraph 3 of the Supplementary Provisions. For
this purpose, references to “paid-in capital or reserves (hereinafterin this Article referred to as “Paid-In Capital, Etc.”)” in the mainclause of Article 449, Paragraph 1 of the said Act shall be changed
to read “special investment surplus funds as set forth in Article
2-27, Paragraph 3 of the Supplementary Provisions of theDevelopment Bank of Japan Inc. Act (Act No. 85 of 2007) (special
investment surplus funds set forth in Article 2-23, Paragraph 7 of
the Supplementary Provisions of the said Act; hereinafter in this
Article and Article 828, Paragraph 1, Item (5) and Paragraph 2,
Item (5) the same)”; “In cases where... (excluding cases where thewhole of the amount by which the reserves are reduced is appropriated to the paid-in capital)” shall be changed to read “In cases
where…”; “of Paid-In Capital, Etc.” shall be changed to read “ofspecial investment surplus funds”; references to “Paid-In Capital,
Etc.” in Paragraph 2, Item (1) of the said Article shall be changed toread “special investment surplus funds”; references to “Ordinanceof the Ministry of Justice” in Item (2) of the said Paragraph shall bechanged to read the “Ministry of Finance Ordinance”; references
to “Paid-In Capital, Etc.” in Paragraph 4 and the proviso of
Paragraph 5 of the said Article shall be changed to read “special
investment surplus funds”; references to “paid-in capital” inParagraph 6, Item (1) of the said Article shall be changed to read
“special investment surplus funds set forth in Article 2-27,
Paragraph 3 of the Supplementary Provisions of the Development
Bank of Japan Inc. Act”; “Article 447, Paragraph 1, Item (3)” shallbe changed to read “Paragraph 4, Item (2) of the said Article”; references to “paid-in capital of” in Article 828, Paragraph 1, Item (5)of the said Act shall be changed to read “special investment surplus
funds set forth in Article 2-27, Paragraph 3 of the Supplementary
Provisions of the Development Bank of Japan Inc. Act concerning”;“on which the reduction in the amount of paid-in capital” shall bechanged to read “on which the reduction in the amount of thesaid special investment surplus funds”; and references to “paid-in
capital” in Paragraph 2, Item (5) of the said Article shall be changed
to read “special investment surplus funds set forth in Article 2-27,
Paragraph 3 of the Supplementary Provisions of the Development
Bank of Japan Inc. Act.”

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Integrated Report 2018

Article 2-31 Penal Provisions
1. In any of the following cases, any directors, executive officers(shikkoyaku), accounting counsel (kaikei sanyo) or its members
who should perform duties as such, or statutory auditors of the
Corporation shall be punished with a non-penal fine not exceeding 1,000,000 yen:
(1) When he/she has suspended or abolished crisis response
business at the designated office in violation of the provisionof Article 2-10, Paragraph 2 of the Supplementary
Provisions;(2) When he/she has appropriated money provided throughcapital contributions as set forth in Article 2-14, Paragraph1 to any fund other than the fund for special investment
operations, in violation of the provision of Article 2-14,
Paragraph 2 of the Supplementary Provisions;(3) When he/she has violated the order referred to in Article
2-17, Paragraph 2 of the Supplementary Provisions;(4) When he/she has not submitted or published documents
stating the status of income and expenditures for each category of business operations in each Item of Article 2-19 of
the Supplementary Provisions, or has submitted or published such documents containing false statements, inviolation of the provision of Article 2-19 of the
Supplementary Provisions;(5) When he/she has not submitted a report on the completionof special investment operations in violation of the provisionof Article 2-20, Paragraph 2 of the Supplementary Provisions.
2. With regard to the application of the provision of Article 34,
Item (8) in the case where the provision of Article 2-24 of the
Supplementary Provisions applies, references to “limit” in thesaid Item shall be changed to read “limit calculated by including
the aggregate amount of crisis response reserve, special investment reserve and special investment surplus funds in theamount of paid-in capital and reserves as set forth in the provisions of Article 2-24 of the Supplementary Provisions.”
3. With regard to the application of the provision of Article 34,
Item (10) in the case where the provision of Article 2-11,
Paragraph 1, Article 2-18, Paragraph 1 or Article 2-21,
Paragraph 2 of the Supplementary Provisions applies, references
to “Article 17” in the said Item shall be changed to read “Article
17, or Article 2-11, Paragraph 1, Article 2-18, Paragraph 1 or
Article 2-21, Paragraph 2 of the Supplementary Provisions.”
4. With regard to the application of the provision of Article 34,
Item (13) in the case where the provision of Article 2-11,
Paragraph 2, Article 2-18, Paragraph 2 or Article 2-21,
Paragraph 3 of the Supplementary Provisions applies, references
to “Article 21” in the said Item shall be changed to read “Article
21, or Article 2-11, Paragraph 2, Article 2-18, Paragraph 2 or
Article 2-21, Paragraph 3 of the Supplementary Provisions.”
Article 3 Abolition of This Act and Other Measures
If the Government disposes of all of the Government-Owned
Shares, the Government shall immediately take measures toabolish this Act, as well as measures necessary to smoothly
assign the business operations, functions, and rights and obligations of the Corporation to any organization to be formed as abearer of the functions commensurate with the investment andfinancing functions held by the Corporation.
Article 4 Special Rules for Business Operations during the
Preparatory Period
1. In order for the Corporation to smoothly start the business operations as soon as it is duly organized, The Development Bank ofJapan (hereinafter referred to as “DBJ”) may borrow Long-term
Loans, in addition to those set forth in Article 42, Paragraphs 1
and 2 of the Development Bank of Japan Act (Act No. 73 of
1999; hereinafter, except for Article 26 of the Supplementary
Provisions, referred to as the “DBJ Act”), during the Preparatory
Period (the period from the date on which this Act comes into
force up to September 30, 2008; the same in Paragraph 5).

Article 10 Organizational Meeting
For the purpose of application of the provision of Article 65,
Paragraph 1 of the Companies Act concerning the incorporationof the Corporation, reference to the “on and after either thedate under Article 58, Paragraph 1, Item (3) or the last day ofthe period under such item, whichever comes later,” shall bechanged to read “after allotment of shares set forth in Article 8,
Paragraph 1 of the Supplementary Provisions of theDevelopment Bank of Japan Inc. Act (Act No. 85 of 2007).”

Article 12 Registration of Incorporation
Notwithstanding the provision of Article 911, Paragraph 1 of theCompanies Act, the Corporation shall register its incorporation
without delay after the establishment of the Corporation.

Article 14 Exception from Application of the Companies Act
The provisions of Article 30 and Part II, Chapter 1, Section 3 of
the Companies Act shall not apply to the incorporation of the
Corporation.
Article 15 Dissolution of DBJ, Etc.
1. DBJ shall be dissolved at the time of establishment of the
Corporation, whereupon any and all rights and obligations of
DBJ shall be taken over by the Corporation, except for thoseassets to be assumed by the Government as set forth in the following Paragraph.
2. Of the rights actually held by DBJ at the time of establishment of
the Corporation, the assets which will be considered no longer
necessary for the Corporation to smoothly perform its futurebusiness operation shall be assumed by Japan at the time ofestablishment of the Corporation.
3. The scope of assets to be assumed by Japan pursuant to theprovision of the immediately preceding Paragraph, and othermatters required for transfer of those assets to Japan shall be

Integrated Report 201885

Data Section

Article 13 Transfer to the Government without Consideration
The shares to be acquired by DBJ through its capital contribution
shall be transferred to the Government without consideration at
the time of establishment of the Corporation.

Corporate Data

Article 11 Establishment of the Corporation
Contributions to be made by DBJ pursuant to the provision of
Article 9 of the Supplementary Provisions shall be made when
the provision of Article 26 of the Supplementary Provisions
becomes effective, and the Corporation shall be established, notwithstanding the provision of Article 49 of the Companies Act.

Risk Management

Article 7 Shares to Be Issued upon the Incorporation of
the Corporation
1. The following matters regarding the shares to be issued upon
the incorporation of the Corporation, and total number ofshares which the Corporation can issue shall be determined in
the Articles of Incorporation:(1) Number of shares (or, if the Corporation is to be organized
as a company issuing class shares, classes of those sharesand number of each class of shares);(2) Amount to be paid for shares (the amount of cash to be
paid or amount of non-cash property to be contributed in
exchange for each share); and(3) Matters relating to the amounts of paid-in capital and capital reserves.
2. Notwithstanding the provision of Article 445, Paragraph 2 of the

Article 9 Capital Contribution
Upon the incorporation of the Corporation, DBJ shall contributeall of its properties, except assets to be assumed by Japan pursuant to the provision of Article 15, Paragraph 2 of the
Supplementary Provisions, to the Corporation.

Corporate Governance

Article 6 Articles of Incorporation
The founding members shall prepare the Articles of Incorporationand have them authorized by the Minister of Finance.

Article 8 Subscription for Shares
1. DBJ shall subscribe for all shares to be issued by the Corporation
upon its incorporation, and the founding members shall allocate
them to DBJ.
2. The right as the subscriber for shares allocated pursuant to theprovision of the preceding Paragraph in connection with theincorporation of the Corporation shall be exercised by theGovernment.

DBJ Group’s Strategy

Article 5 Founding Members
The Minister of Finance shall appoint the founding members toserve as promoters for incorporation of the Corporation.

Companies Act, with respect to the shares to be issued by the
Corporation upon its incorporation, the Corporation may elect not
to account for the amount in excess of (, as well as the amountnot exceeding,) a half of the amounts of properties contributed by
DBJ upon the incorporation of the Corporation as paid-in capital.
For this purpose, reference to “this Act” in Article 445, Paragraph
1 of the Companies Act shall be changed to read “this Act or theDevelopment Bank of Japan Inc. Act (Act No. 85 of 2007).”

DBJ Group’s Vision

2. DBJ shall prepare its basic policy regarding the borrowing ofLong-term Loans to be made pursuant to the provision of thepreceding Paragraph which provides for the matters relating to
the borrowing of the Long-term Loans such as the amounts ofborrowing and currency in which the Long-term Loans aredenominated, and obtain authorization of the Minister ofFinance, without delay after the date on which this Act comes
into force in the case of the fiscal year during which such date isincluded, or prior to April 1, 2008 in the case of the fiscal year
beginning on April 1, 2008. If the Corporation intends to revise
it, the same shall apply.
3. If DBJ borrows a Long-term Loan as set forth in Paragraph 1, DBJ
shall notify the Minister of Finance thereof without delay as set
forth in the Minister of Finance Ordinance.
4. The Long-term Loans as set forth in Paragraph 1 shall bedeemed as the borrowed money under Article 42, Paragraph 1of the DBJ Act and the provisions of Article 44 of the DBJ Act
shall apply the said Long-term Loans.
5. If DBJ borrows a short-term borrowing during the Preparatory
Period as set forth in Article 42, Paragraph 2 of the DBJ Act, reference to “within the current fiscal year” in Paragraph 3 of thesaid Article shall be changed to read “within one year.”
6. If DBJ borrows a Long-term Loans as set forth in Paragraph 1,
reference to “this Act, in Article 13, Paragraph 2, Item (1) of the
DBJ Act shall be changed to read “this Act or the Development
Bank of Japan Inc. Act (Act No. 85 of 2007) or order under theseActs”, and reference to “this Act and the Cabinet Order under
this Act” in Article 48 of the DBJ Act shall be changed to read“this Act and the Development Bank of Japan Inc. Act, and the
Cabinet Orders under these Acts.” Reference to “this Act” inArticle 49, Article 50, Paragraph 1, and Article 52 of the DBJ Act
shall be changed to read “this Act and the Development Bank ofJapan Inc. Act,” and reference to “this Act” in Article 54, Items(1) and (2) of the DBJ Act shall be changed to read “this Act or
the Development Bank of Japan Inc. Act.”
7. “Long-term Loans” set forth in Paragraphs 1 through 4 and theimmediately preceding Paragraph mean the loans from financial
institutions such as banks, other than the short-term borrowings
set forth in Article 42, Paragraph 3 of the DBJ Act which isapplied after changing to read as set forth in Paragraph 5.
8. For the purpose of application of the provision of Article 22,
Paragraph 1 of the DBJ Act to the mid-term government policy
principles set forth in the said Paragraph for the period commencing on April 1, 2008, reference to the “three-year mid-term
government policy principles” shall be changed to read the “government policy principles for the term beginning on April 1, 2005.”

The Development Bank of Japan Inc. Act

prescribed in the Cabinet Order.
4. The fiscal year of DBJ commencing on April 1, 2008 shall end on
the day immediately preceding the date of dissolution of DBJ.
5. Settlement of accounts, and preparations, Etc. of list of properties,balance sheets, and profits and loss statements of DBJ for the
fiscal year commencing on April 1, 2008 shall be conducted by
the Corporation as previously conducted, except for the portions
relating to Article 38, Paragraph 1 (limited to the portions relating
to the Auditor’s opinions) and Article 40, Paragraph 1 (limited tothe portions relating to the Auditor’s opinions) of the Old DBJ Act.
For this purpose, the reference to “for each half-year from April to
September and from October to March of the following year”
and “for each half-year and for each fiscal year” in Article 38,
Paragraph 1 of the Old DBJ Act shall be deleted, and references to“within two months after the end of the relevant half-year or
three months after the end of the fiscal year” in the saidParagraph shall be changed to read “on or prior to December 31,
2008.” Reference to “the settlement of accounts for each fiscal
year not later than May 31 of the following fiscal year” in Article
39 of the Old DBJ Act shall be changed to read “the settlement ofaccounts for the fiscal year commencing on April 1, 2008 notlater than November 30, 2008.” Reference to “November 30 of
the following fiscal year” in Article 4, Paragraph 3 of the Old DBJ
Act shall be changed to read “November 30, 2009.”
6. Disposition of profits and payment into the national treasury by
DBJ under Article 41 of the Old DBJ Act for the fiscal year commencing on April 1, 2008 shall be conducted by the Corporation
as previously conducted. For this purpose, references to “eachfiscal year” and “May 31 of the following fiscal year” in Article
41, Paragraph 3 of the Old DBJ Act shall be changed to read“the fiscal year commencing on April 1, 2008” and “November
30, 2008,” respectively.
7. The matters regarding the registration of the dissolution in thecase that DBJ is dissolved pursuant to the provision of Paragraph
1, shall be prescribed in the Cabinet Order.
Article 16 Values of Properties Assumed
1. The values of assets and liabilities assumed by the Corporationfrom DBJ (in the immediately following Paragraph referred to as
the “Assumed Properties”) shall be as evaluated by evaluation
officers (hyoka iin).
2. If evaluation officers intend to make evaluations as set forth in
the preceding Paragraph, their evaluations shall be made basedon the market prices of the Assumed Properties as of the dateon which the Corporation is established; provided, however, that
if it is deemed inappropriate to use the market prices taking into
account the matters of the Assumed Properties such as the kinds
and purpose of use, their evaluations may be made not basedon the market prices of the Assumed Properties.
3. In addition to those set forth in the preceding two Paragraphs,
evaluation officers and other matters necessary for evaluations
shall be prescribed in the Cabinet Order.
Article 17 Transitional Measures in Connection with
Assumption of Rights and Obligations
1. With respect to the Old Bank Debentures and interest coupons
concerning the obligations to be assumed by the Corporation
pursuant to the provision of Article 15, Paragraph 1 of the
Supplementary Provisions, the provisions of Article 43,
Paragraphs 5 and 6 of the Old DBJ Act shall remain effective andin force even after the provision of Article 26 of the
Supplementary Provisions becomes effective.
2. With respect to the old Hokuto bonds (the Hokkaido-Tohoku
Development Finance Corporation Bonds issued pursuant to theprovision of Article 27, Paragraph 1 of the Hokkaido-Tohoku
Development Finance Corporation Act (Act No. 97 of 1956; hereinafter in this Paragraph referred to as the “Old HTDFC Act”)
before abolishment under Article 17, Item (2) of the
Supplementary Provisions of the Old DBJ Act) and interest coupons to be assumed by the Corporation pursuant to the provision

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Integrated Report 2018of Article 15, Paragraph 1 of the Supplementary Provisions, theprovisions of Article 27, Paragraphs 3 and 4 of the Old HTDFC Act
shall remain effective and in force even after the provision of
Article 26 of the Supplementary Provisions becomes effective.
3. The guarantee agreements executed by the Government pursuant to the provision of Article 45, Paragraph 1 or 3 of the Old
DBJ Act with respect to the obligations concerning the Old Bank
Debentures to be assumed by the Corporation pursuant to theprovision of Article 15, Paragraph 1 of the Supplementary
Provisions shall continue to be effective upon the previous terms
and conditions with respect to such obligations concerning the
Old Bank Debentures even after the assumption thereof by the
Corporation.
4. The guarantee agreements executed by the Government pursuant to the provision of Article 37-3, Paragraph 1 or 2 of the oldJapan Development Bank Act (Act No. 108 of 1951; hereinafterin this Paragraph referred to as the “Old JDB Act”) before abolishment under Article 17, Item (1) of the Supplementary
Provisions of the Old DBJ Act with respect to the obligations
concerning the foreign currency-denominated bonds set forth in
Article 37-2, Paragraph 1 of the Old JDB Act issued pursuant to
the provision of Article 37-2, Paragraph 1 or 2 of the Old JDB
Act to be assumed by the Corporation pursuant to the provisionof Article 15, Paragraph 1 of the Supplementary Provisions shallcontinue to be effective upon the previous terms and conditions
with respect to such obligations concerning the foreign currency-denominated bonds even after the assumption thereof by
the Corporation.
5. The guarantee agreements executed by the Government pursuant to the provision of Article 2, Paragraph 2 or 3 of the Act
Concerning Special Measures for Acceptance of Foreign Capitals
from the International Bank for Reconstruction andDevelopment and Other Organizations (Act No. 51 of 1953)
with respect to the obligations concerning the Old Bank
Debentures to be assumed by the Corporation pursuant to theprovision of Article 15, Paragraph 1 of the Supplementary
Provisions shall continue to be effective upon the previous terms
and conditions with respect to such obligations constituting the
Old Bank Debentures even after the assumption thereof by the
Corporation, and the public imposts such as taxes on interests
on and profits from redemption of the Old Bank Debenturesconcerning those guarantee agreements shall be the same as ineffect under the previous arrangements.
Article 18 Competent Ministers
The competent ministers under Article 26, Paragraph 2 andArticle 27, Paragraph 1 for management of assets to be
assumed by the Corporation pursuant to the provision of Article
15, Paragraph 1 of the Supplementary Provisions (hereinafter inthis Article referred to as the “Assumed Assets”) shall, notwithstanding the provision of Article 29, Paragraph 1, be as follows:(1) For management of the Assumed Assets set forth in the
Cabinet Order in the Hokkaido or the Tohoku Region (theareas of Aomori, Iwate, Miyagi, Akita, Yamagata,
Fukushima and Niigata prefectures): Minister of Finance andMinister of Land, Infrastructure and Transport; and(2) For management of the Assumed Assets other than the
Assumed Assets set forth in the preceding Item: Ministerof Finance.
Article 19 Transitional Measures for the Fiscal Year
Notwithstanding the provision of Article 11, the first fiscal yearof the Corporation shall commence on the date on which of the
Corporation is established and end on March 31, 2009.
Article 20 Transitional Measures for the Basic Policy
1. For the purposes of the basic policy, business plans and redemption plans for the first fiscal year of the Corporation, reference to“prior to the beginning of each fiscal year” in Article 13,
Paragraph 1, Article 17 and Article 18 shall be changed to read

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Risk Management

Article 23 Special Rules for Taxation of the Corporation Tax
1. Capital investment in the Corporation to be made by DBJ pursuant to the provision of Article 9 of the Supplementary Provisions(hereinafter in this Article referred to as the “Specified In-kind

Corporate Governance

Article 22 Special Rules for Taxation of the Registration
License Tax
1. No registration license tax shall be assessed on registration of
the incorporation of the Corporation pursuant to the provisionof Article 12 of the Supplementary Provisions, and registration orrecordation of the Corporation in connection with provisions ofproperties upon the capital contribution by DBJ pursuant to theprovision of Article 9 of the Supplementary Provisions.
2. With respect to the registration license tax for registration orrecordation of origination (hozen), creation (settei) or transfer(iten) of lien (sakidori token), pledge (shichiken) or mortgage(teitoken) to secure the claims concerning business operations
set forth in Article 20, Paragraph 1, Item (1) of the Old DBJ Act
which shall be assumed by the Corporation from DBJ pursuant
to the provision of Article 15, Paragraph 1 of the Supplementary
Provisions, or registration of transfer of movable properties ortransfer of claims, based on the agreements executed by DBJ
before the provision of Article 48 of the Supplementary
Provisions comes into force, the provision of Schedule III-22 of
the Registration Tax Act (Act No. 35 of 1967) before amendment
under Article 48 of the Supplementary Provisions shall still
remain effective and in force.

DBJ Group’s Strategy

Article 21 Special Rules for Operations ofRegistered Financial Institution
1. Within three (3) months of the date set forth in Article 1, Item(3) of the Supplementary Provisions (or, if the registration under
Article 33-5, Paragraph 1 of the Financial Instruments andExchange Act is rejected during such period or if abolition of theoperations of the registered financial institution (the operationsof registered financial institution set forth in Article 33-5,
Paragraph 1, Item (3) of the Financial Instruments and ExchangeAct, including the operations referred to in Article 3, Paragraph
1, Item (16) to be conducted pursuant to the provision of Article
33-8, Paragraph 1 of the same Act which is applied after changing to read as set forth in Article 4, Paragraph 1; the same in this
Article) is ordered pursuant to the provision of Article 52-2,
Paragraph 1 of the Financial Instruments and Exchange Act
which is applied after the changing to read as set forth in theimmediately following Paragraph, the period up to the date ofsuch rejection or the date of order of such abolition), theCorporation may, notwithstanding the provision of Article 33-2of the Financial Instruments and Exchange Act which is applied
after changing to read as set forth in Article 4, Paragraph 1,
conduct the operations of the registered financial institutions. If
the Corporation applies for registration under the said Article
during such period, the same shall apply until the date of receipt
of notice of registration or the date of receipt of notice of noregistration after the elapse of such period.
2. If the Corporation conducts the operations of registered financial
institution pursuant to the provision of the preceding Paragraph,the provisions of the Financial Instruments and Exchange Act(except for Article 33-6; Article 37, Paragraph 1, Item (2); Article
37-3, Paragraph 1, Item (2); Article 50-2, Paragraph 2; Article
52-2, Paragraph 1, Item (2) and Paragraph 3; Article 54; andArticle 64, Paragraph 2) shall apply by deeming the Corporation
as the registered financial institution (the Registered Financial
Institution set forth in Article 2, Paragraph 11 of the Financial
Instruments and Exchange Act). For this purpose, reference to“rescind the registration under Article 33-2” in Article 52-2,
Paragraph 1 (except for Item (2)) of the Financial Instruments andExchange Act shall be changed to read “order the abolition ofoperations of registered financial institution,” reference to“rescind the registration under Article 29 or 33-2 or the authorization under Article 30, Paragraph 1 pursuant to the provision of
Article 52, Paragraph 1 or Article 52-2, Paragraph 1” in Article
54-2, Item (1) of the same Act shall be changed to read “order
the abolition of operations of the registered financial institution
pursuant to the provision of Article 52-2, Paragraph 1 which isapplied after changing to read as set forth in Article 21,
Paragraph 2 of the Supplementary Provisions of theDevelopment Bank of Japan Inc. Act (Act No. 85 of 2007),” reference to “registration under Article 29 or 33-2 is rescindedpursuant to the provision of Article 52, Paragraph 1, Article

52-2, Paragraph 1, Article 53, Paragraph 3 or Article 54” inArticle 56, Paragraph 1 of the same Act shall be changed to readthe “abolition of operations of the registered financial institution
is ordered pursuant to the provision of Article 52-2, Paragraph 1
which is applied after changing to read as set forth in Article 21,
Paragraph 2 of the Supplementary Provisions of theDevelopment Bank of Japan Inc. Act,” and reference to “rescission of registration under Article 33-2 as set forth in Article 52-2,
Paragraph 1” in Article 194-3, Item (3) of the same Act and reference to “rescission of registration under Article 33-2 as set
forth in Article 52-2, Paragraph 1 or 3 or Article 54” in Article
194-4, Paragraph 1, Item (5) of the same Act shall be changed
to read “order of abolition of operations of the registered financial institution pursuant to the provision of Article 52-2,
Paragraph 1 which is applied after changing to read as set forthin Article 21, Paragraph 2 of the Supplementary Provisions of theDevelopment Bank of Japan Inc. Act” and other required technical changes to read shall be prescribed in the Cabinet Order.
3. For the purpose of application of the provision of Article 33-5,
Paragraph 1, Item (1) of the Financial Instruments and Exchange
Act in the event that the Corporation is ordered to abolish theoperations of the registered financial institution pursuant to theprovision of Article 52-2, Paragraph 1 of the same Act which isapplied after changing to read as set forth in the immediately
preceding Paragraph, the Corporation shall be deemed as theentity whose registration under Article 33-2 of the same Act isrescinded pursuant to the provision of Article 52-2, Paragraph 1of the same Act, and the date on which such abolition is orderedshall be deemed as the date of rescission of registration under
the said Article 33-2 pursuant to the provision of Article 52-2,
Paragraph 1 of the same Act.
4. For one year of the date set forth in Article 1, Item (3) of the
Supplementary Provisions, the Corporation may, notwithstanding the provision of Article 64, Paragraph 2 of the Financial
Instruments and Exchange Act, cause any persons other thanthose who are registered pursuant to the provision of Paragraph
1 of the said Article to conduct the duties of sales representatives (gaimu-in). If the Corporation applies for registration under
the said Paragraph during such period, the same shall apply until
the date of receipt of notice of registration with respect to suchapplication or the date of receipt of notice of no registration
after the elapse of such period with respect to such application.

DBJ Group’s Vision“without delay after the incorporation of the Corporation.”
2. For the purposes of the balance sheet, profit and loss statement
and business report for the first fiscal year of the Corporation,references to “For each fiscal year” and “the interim businessperiod (the period from April 1 to September 30 of the currentyear) of the current fiscal year, and its balance sheet, profit andloss statement and business report for the current fiscal year” inArticle 21 shall be changed to read “For the fiscal year in which
the date on which the Corporation is established is included”
and “the current fiscal year,” respectively.
3. For the purpose of application of the provision of the preceding
Paragraph when the Corporation obtains the approval under
Article 9, Paragraph 1, the “Ministry of Finance Ordinance” and“Minister of Finance” in Article 21 which are applied mutatis
mutandis after changing to read in the said Paragraph shall bechanged to read the “Ministry of Finance Ordinance and the
Cabinet Office Ordinance” and the “Minister of Finance and thePrime Minister,” respectively.

Contribution”) shall be deemed as qualified in-kind contribution
set forth in Article 2, Item (12-14) of the Corporation Tax Act(Act No. 34 of 1965), and the Corporation Tax Act and otherlaws and ordinances relating to the corporation tax shall beapplied on such basis.
2. With respect to assets and liabilities of DBJ to be transferred by
the Specified In-kind Contribution which shall be subject to the
Corporation Tax Act and other laws and ordinances relating to
the corporation tax pursuant to the provision of the immediately
preceding Paragraph, the value evaluated by evaluation officers
pursuant to the provision of Article 16, Paragraph 1 of the
Supplementary Provisions shall be deemed as the book value;
provided, however, that with respect to allowance for loan
losses, the amount purported to be assumed by the Corporation
pursuant to the provision of the immediately following
Paragraph shall be deemed as the book value, and the bookvalues of the amounts of allowances prescribed by the Cabinet
Order such as allowance for retirement payments shall be nil.
3. If it is determined to apply the provisions of Article 52 of the
Corporation Tax Act in the fiscal year in which the day prior to
the date of the Specified In-kind Contribution of the DBJ is
included (in the immediately following Paragraph referred to the“Final Fiscal Year”), the amount up to the upper limit of individual allowance for loan losses set forth in Article 52, Paragraph 1
as calculated in the said Paragraph or the amount up to theamount calculated as prescribed by the Cabinet Order as set
forth in Paragraph 2 of the said Article shall, notwithstanding
the provisions of Paragraph 7 of the said Article, be assumed by
the Corporation. For this purpose with respect to calculation of
the amount of income for the fiscal year in which the date of
the Specified In-kind Contribution of the Corporation is
included, the amount assumed by the Corporation shall be
included in the amount of profits.
4. The Corporation shall submit the financial statements of DBJ for
the Final Fiscal Year set forth in Article 38, Paragraph 1 of the
Old DBJ Act to the director of competent district tax officewithin three (3) months of the date of the Specified In-kindContribution.
Article 24 Special Rules for Taxation of Local Taxes
No real estate acquisition tax or vehicle acquisition tax can be
imposed on acquisition of real estate or vehicle in connection
with capital investment to be made by DBJ pursuant to the provision of Article 9 of the Supplementary Provisions.
Article 25 Delegation to the Cabinet Order
In addition to those set forth in Articles 2 to 24 of the
Supplementary Provisions, matters necessary for incorporation of
the Corporation and dissolution of DBJ, as well as other mattersnecessary for effectuation of these provisions shall be stipulated
in the Cabinet Order.
Article 26 Abolition of the Development Bank of Japan Act
The Development Bank of Japan Act shall be abolished.
Article 27 Transitional Measures for Abolition of theDevelopment Bank of Japan Act
1. Actions such as dispositions and procedures made, taken ordone pursuant to the provisions of the Old DBJ Act (except
Article 10 thereof) before the provision of the immediately preceding Article becomes effective shall be considered the actions
such dispositions and procedures made, taken, or done pursuant
to the corresponding provisions of this Act.
2. The provisions of Article 16, Paragraphs 5 and 6 of the
Supplementary Provisions of the Old DBJ Act shall still remain
effective even after the provisions of the immediately preceding
Article takes effect, with respect to the lending of funds by the
Corporation to the designated entities under Article 2,
Paragraph 5 of the Act Concerning Facilitation of the
Improvement, Etc. of Public Facilities, Etc. by Private Fund (Act88

Integrated Report 2018

No. 117 of 1999). For this purpose, reference to the “Bank” andreference to “, in accordance with the provision of Item (1),Paragraph 1, Article 20 hereof, to provide funds required forbusinesses deemed under Article 13 of the said Act” in Article
16, Paragraph 5 of the Old DBJ Act shall be changed to read
“Development Bank of Japan Inc.” and “to provide funds
required for business deemed under Article 13 of the said Act”,
respectively. References to “the interest-free loans made by the
Bank in accordance with the provisions of the preceding paragraph (excluding interest-free loans using money deposited by
the Private Urban Development Promotion Organization provided in Article 3 of the Special Measure Act concerning
Promotion of Private Urban Development (Act No. 62 of 1987)”
and “to the Bank” in Article 16, Paragraph 6 of the Old DBJ Act
shall be changed to read “the interest-free loans made by
Development Bank of Japan Inc. in accordance with the provisions of the preceding paragraph” and “to Development Bankof Japan Inc.,” respectively.
3. In addition to those set forth in the preceding two Paragraphs,
transitional measures necessary for the abolition of the DBJ Act
shall be prescribed by the Cabinet Order.
Article 28 Transitional Measures for Application of Penal
Provisions
Penal provisions which were applicable to acts conducted prior
to the implementation of the provision of Article 26 of the
Supplementary Provisions or acts conducted after the implementation of the provision of the said Article as to which theprovisions then in force remain applicable pursuant to the provisions of this Act shall remain applicable even after the
implementation of this Act.
Article 66 Examinations
On or prior to the date set forth in Article 1, Item (3) of the
Supplementary Provisions, the Government shall examine measures to secure the equal competitive conditions with otherbusiness entities, with respect to the systems for which theinvestment and financing functions of DBJ are utilized pursuant
to the provisions of relevant laws (including ordinances underthose laws), such as the Act Concerning Collaterals for
Borrowings of Electricity Companies from The Development
Bank of Japan (Act No. 145 of 1950), the Act Concerning the
Securement of Oil Reserves, Etc. (Act No. 96 of 1975), the Act
Concerning Promotion of Development and Promotion ofIntroduction of Alternative Energy to Oil (Act No. 71 of 1980),
the Special Measures Act Concerning Promotion of Private
Urban Development (Act No. 62 of 1987), the Extraordinary
Measures Act Concerning Promotion of Business Activities for
Rationalization of Usage of Energy and Effective Use of
Resources (Act No. 18 of 1993) and the Act Concerning
Facilitation of the Improvement, Etc. of Public Facilities, Etc. by
Private Fund, Etc. (Act No. 117 of 1999), while considering theconvenience of users of those systems, and take the required
measures based on the results of such examination.
Article 67 Utilization of the Corporation’s Investment and
Financing Functions for Long-term Business Funds
If the Government utilizes the Corporation’s investment andfinancing functions for long-term business funds on or after thedate set forth in Article 1, Item (3) of the Supplementary
Provisions, the Government shall take measures necessary tosecure the equal competition conditions, as well as other measures necessary for utilization of such investment and financing
functions, paying attention to the Corporation’s appropriatecompetitive relationships with other business entities.

Act for Partial Amendment of the Development Bank of Japan Inc. Act(Act No. 23 of May 20, 2015)

Article 1 Enforcement Date
This Act shall come into force as from the date of promulgation.

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Risk Management

Article 6 Delegation to Cabinet Order
In addition to the provisions of Article 2 through Article 5 ofthese Supplementary Provisions, transitional measures necessary
for the implementation of this Act shall be set forth in the
Cabinet Order.

Corporate Governance

Article 3 Transitional Measures for Return of Government Bonds
Notwithstanding the provision of Article 2-5, Paragraph 1 of the
Supplementary Provisions of the New Act applied under the provision of Article 36 of the Act for Extraordinary Expenditure andAssistance to Cope with the Great East Japan Earthquake, thereturn of government bonds delivered in accordance with theprovision of Article 2-3, Paragraph 2 of the Supplementary
Provisions of the Former Act shall be set forth separately inanother law.

Article 5 Transitional Measures for Rules Regarding Special
Investment Operations and others
1. The Corporation shall, without delay after this Act takes effect,
set rules regarding special investment operations provided in
Article 2-17, Paragraph 1 of the Supplementary Provisions of the
New Act, and obtain authorization from the Minister of Finance.
2. The Corporation shall, without delay after this Act takes effect,
revise the business plan provided in Article 17 of the New Act tocomply with the provisions of Article 2-11, Paragraph 1, Article
2-18, Paragraph 1 and Article 2-21, Paragraph 2 of the
Supplementary Provisions of the New Act, and obtain authorization from the Minister of Finance.
3. The Corporation shall, without delay after this Act takes effect,
revise the Articles of Incorporation thereof to comply with theprovisions of Article 2-11, Paragraph 3 and Article 2-18,
Paragraph 3 of the Supplementary Provisions of the New Act,and obtain authorization from the Minister of Finance.

DBJ Group’s Strategy

Article 2 Transitional Measures for Crisis Response Reserve
1. Development Bank of Japan Inc. (hereinafter referred to as the“Corporation”) shall, without delay after this Act takes effect,
reduce the amount of paid-in capital by the aggregate amountof the following amounts and record such reduced amount as
the amount of a crisis response reserve (the crisis response
reserve set forth in Article 2-22, Paragraph 1 of the
Supplementary Provisions of the Development Bank of Japan Inc.
Act after amendment under this Act (hereinafter referred to as
the “New Act”)); the same shall apply in Article 4, Paragraph 2of these Supplementary Provisions). For the purpose of application of the provision of Article 2-22, Paragraph 1 of the
Supplementary Provisions of the New Act in this case, reference
to “the amount” in the said Paragraph shall be changed to read“the amount and the amount by which the amount of paid-in
capital has been reduced pursuant to the provision of Article 2,
Paragraph 1 of the Act for Partial Amendment of theDevelopment Bank of Japan Inc. Act (Act No. 23 of 2015)”:(1)	the aggregate amount contributed to the Corporation by
the Government with a view to ensuring a proper conduct
of Corporation’s crisis response operations (the crisis
response operations set forth in Article 2, Item (5) of theJapan Finance Corporation Act (Act No. 57 of 2007); thesame shall apply in Article 4, Paragraph 1 and Article 9,
Paragraphs 1 and 3 of these Supplementary Provisions) pursuant to the provision of Article 2-2 of the Supplementary
Provisions of the Development Bank of Japan Inc. Act
before amendment under this Act (hereinafter referred to as
the “Former Act”) (including the application thereof under
Article 36 of the Act for Extraordinary Expenditure andAssistance to Cope with the Great East Japan Earthquake(Act No. 40 of 2011)); and(2)	the aggregate amount of the government bonds which had
been redeemed by the Government pursuant to the provision of Article 2-4, Paragraph 2 of the Supplementary
Provisions of the Former Act up to the previous day of theimplementation date of this Act (hereinafter referred to as
the “Implementation Date”).
2. For the purpose of application of the provision of Article 447 of
the Companies Act (Act No. 86 of 2005) with regard to the
reduction in the amount of paid-in capital pursuant to the provision of the preceding Paragraph, reference to “is to beappropriated to reserves” in the said Article, Paragraph 1, Item(2) shall be changed to read “is to be appropriated to reserves orto crisis response reserve under Article 2-22, Paragraph 1 of the
Supplementary Provisions of the Development Bank of Japan Inc.
Act (Act No. 85 of 2007) (hereinafter referred to as the “crisis
response reserve” in this Item),” and reference to “the amountto be appropriated to reserves” in the same Item shall bechanged to read “the amount to be appropriated to reserves orcrisis response reserve,”.

Article 4 Transitional Measures for Redemption ofGovernment Bonds and others
1.	Notwithstanding the provision of Article 2-4, Paragraph 1 of the
Supplementary Provisions of the New Act (including the application thereof under Article 36 of the Act for Extraordinary
Expenditure and Assistance to Cope with the Great East Japan
Earthquake), the Corporation may demand, for an indefinite
period, the redemption of government bonds delivered in accordance with the provision of Article 2-3, Paragraph 2 of the
Supplementary Provisions of the Former Act up to the amountcalculated pursuant to the provisions prescribed by the Ministerof Finance Ordinance as the necessary capital according to theincrease in the asset pertaining to the crisis response operations(in case of business whose implementation date is on or after
April 1, 2015, including the business implemented from April 1,2015 up to the previous day of such an implementation date).
2. Notwithstanding the provision of Article 2-4, Paragraph 3 of the
Supplementary Provisions of the New Act, the Corporation shallrecord the value redeemed in accordance with the provision of
Article 2-4, Paragraph 2 thereof on or after the above implementation date as the amount of the crisis response reserve. In
this case, for the application of the provisions of Article 2-22,
Paragraph 1 and Article 2-29 of the Supplementary Provisions of
the New Act, “Article 2-9 of the Supplementary Provisions” inthe above Paragraph shall be interpreted as “the value
redeemed in accordance with the provisions of Article 2-4,
Paragraph 2 of the Supplementary Provisions, and Article 2-9 of
the Supplementary Provisions”, and “Article 2-9 of the
Supplementary Provisions” in the above Article as “the capital
contribution by the redemption of the government bonds inaccordance with the provisions of Article 2-4, Paragraph 2 of the
Supplementary Provisions, and Article 2-9 of the Supplementary
Provisions”.
3. For the application of the provision of Article 2-4, Paragraph 5of the Supplementary Provisions of the New Act when the provision of the preceding paragraph is applied, “each preceding
Paragraph” in the Paragraph 5 shall be interpreted as“Paragraph 2 and Article 4, Paragraphs 1 and 2 of the Act for
Partial Amendment of the Development Bank of Japan Inc. Act(Act No. 23 of 2015)”.

DBJ Group’s Vision

Supplementary Provisions

The Development Bank of Japan Inc. Act

Article 7 Revision of part of the Act Concerning Promotion of
Administrative Reform for Realizing the Simplified
and Effective Government
The Act Concerning Promotion of Administrative Reform forRealizing the Simplified and Effective Government (Act No. 47 of2006) shall be partly amended as follows. In Article 6, Paragraph2, “the impact in achieving purposes of the agencies which willtake over the business of such institutions and” shall be added
after “With respect to capital contributions to The Shoko Chukin
Bank, Ltd. and Development Bank of Japan Inc. by theGovernment, taking into consideration”, and “for five (5) toseven (7) years commencing from April 1, 2015,” shall bechanged to read “as promptly as possible”.
Article 8 Adjustment Provisions
1. If the Implementation Date is on or prior to the implementation
date of the Act for Partial Revision of the Shoko Chukin Bank
Limited Act and the Act for Partial Revision of the Small andMedium-sized Enterprise Credit Insurance Act (Act No. 29 of2015, referred to as the “Partial Revision Act” in the following
Paragraph), for the purpose of application of the provision of
Article 6, Paragraph 2 of the Act Concerning Promotion of
Administrative Reform for Realizing the Simplified and Effective
Government after amendment under the immediately preceding
Article up to the previous day of the Implementation Date, reference to “The Shoko Chukin Bank, Ltd. and” in the said Paragraphshall be changed to read “With respect to capital contributions to
The Shoko Chukin Bank, Ltd. by the Government, theGovernment shall make efforts to reduce the number of shares
held by it in The Shoko Chukin Bank, Ltd., taking into consideration the market situation, and shall dispose all of them for five(5) to seven (7) years commencing from April 1, 2015,” and “suchinstitutions” shall be changed to read “such institution”.
2. If the Implementation Date is after the implementation date of
the Partial Revision Act, the provision of the immediately preceding Article shall not apply.
Article 9 Examination of Crisis Response Operations
1. The Government shall, at the appropriate time after this Act
takes effect, examine the Corporation’s crisis response operations and the Government’s involvement in the Corporation
based thereon, taking into consideration the implementation ofsystems pertaining to the designated financial institution (designated financial institution as provided in Article 11, Paragraph 2of the Japan Finance Corporation Act), the Corporation’s implementation of crisis response operations, the change of social andeconomic affairs and others, and in the prospective of a smoothfinancial supply to those who need capital to respond to such
related damage stipulated in Article 2, Item (4) of the Japan
Finance Corporation Act, and whenever the Government deems
necessary, the Government shall take the required measures
based on the results of such examination.
2. For the examination referenced in the preceding Paragraph, theGovernment shall listen to the opinions of representatives ofordinary financial institutions and other relevant persons.
3. When, as a result of the examination referenced in the above
Paragraph 1, the Government concludes that it does not need tocontinue measures related to the Government’s obligations tohold shares of the Corporation nor to take other measures necessary to ensure appropriate implementation of crisis response
operations of the Corporation, the Government shall promptly
take the required measures.

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Article 10 Examination of Special Investment Operations
1. The Government shall, at the appropriate time after this Act
takes effect, examine the Corporation’s special investment operations and the Government’s involvement in the Corporation
based thereon, taking into consideration the investment infinancial and private sectors by ordinary financial institutions, theCorporation’s implementation of special investment operations(special investment operations as provided in Article 2-12,
Paragraph 2 of the Supplementary Provisions of the New Act,
hereinafter in this Paragraph the same), the change of social andeconomic affairs and others, and in the perspective of further
promoting the long-term and other financial supply for the sustainable growth of the Japanese economy, and whenever theGovernment deems necessary, the Government shall takerequired measures based on the results of such examination.
2. For the examination referenced in the preceding Paragraph, theGovernment shall listen to the opinions of representatives ofordinary financial institutions and other relevant persons.

DBJ Group’s Vision

Financial Condition

92	Consolidated Financial Statements
137 Non-Consolidated Financial Statements
141 Capital Adequacy Ratio

DBJ Group’s Strategy
Corporate GovernanceRisk Management
Corporate Data
Data Section

Integrated Report 201891

Consolidated Balance Sheet

Development Bank of Japan Inc. and Consolidated Subsidiaries

Thousands of
U.S. Dollars (Note 1)

Millions of Yen

As of March 31,

2018

2017

2018

¥ 1,033,907
463,179
11,266
1,866,401
12,725,235
215,517432,344
37,1622,590
7,751
201,796(44,745)(176)¥16,952,230¥ 1,044,104—
15,5991,750,342
13,039,526
178,490396,982
18,7171,989
362
181,010(56,213)(414)¥16,570,496$ 9,731,806
4,359,744
106,052
17,567,787
119,778,192
2,028,590
4,069,508
349,796
24,38072,9591,899,437(421,173)(1,657)$159,565,421¥ 3,086,650——
8,574,170
1,846,332
97,951
4,931
13
8,057
100
—
22,104
201,796
13,842,110¥ 3,016,714
13,00055,1428,472,367
1,695,141
112,156
5,077
11
7,973
82
40
25,492
181,010
13,584,211$ 29,053,567——
80,705,673
17,378,887
921,979
46,421
127
75,845944—
208,066
1,899,437
130,290,947

1,000,424
206,529
330,000
3,099

1,000,424
206,529230,000
1,813

9,416,642
1,943,985
3,106,175
29,173

895,466
584,689

945,466
513,758

8,428,712
5,503,478

50,52027,955(1,285)45,01733,680(1,271)

475,531
263,139(12,096)(29)
3,097,369
12,7503,110,120¥16,952,230(484)
2,974,932
11,3522,986,284¥16,570,496(278)
29,154,460
120,015
29,274,475$159,565,421

AssetsCash and due from banks (Notes 2(c),11, 14 and 28)
Call loans and bills bought (Note 28)
Money held in trust (Notes 28 and 30)
Securities (Notes 3, 14, 28 and 30)
Loans (Notes 4, 5, 14 and 28)
Other assets (Notes 6, 11 and 14)
Tangible fixed assets (Notes 7, 11 and 14)
Intangible fixed assets (Notes 11 and 14)
Asset for retirement benefits (Note 23)
Deferred tax assets (Note 24)
Customers’ liabilities for acceptances and guarantees (Note 13)
Allowance for loan losses (Notes 8 and 28)
Allowance for investment losses
		Total assets
Liabilities and equity

Liabilities:
Debentures (Notes 9, 14 and 28)
Call money and bills sold (Note 28)
Payables under repurchase agreements (Notes 14 and 28)
Borrowed money (Notes 10, 11, 14, 28 and 31)
Corporate bonds (Notes 9, 11,14 and 28)
Other liabilities (Notes 12 and 31)
Accrued bonuses to employees
Accrued bonuses to directors
Liability for retirement benefits (Note 23)
Reserve for directors’ retirement benefits
Reserve for contingent losses
Deferred tax liabilities (Note 24)
Acceptances and guarantees (Note 13)
		Total liabilities
Equity:Common stock authorized, 160,000 thousand shares in 2018 and2017; issued, 43,632 thousand shares in 2018 and 2017 (Note 15)
Crisis response reserve (Note 16)
Special investment reserve (Note 17)
Special investment surplus (Note 17)
Capital surplus (Note 15)
Retained earnings (Note 15)
Accumulated other comprehensive income:Unrealized gain on available-for-sale securities (Note 30)
Deferred gain on derivatives under hedge accounting
Foreign currency translation adjustments
Accumulated adjustments for retirement benefits (Note 23)
		TotalNon-controlling interests
		Total equity
		 Total liabilities and equity
See notes to consolidated financial statements.
92

Integrated Report 2018

Consolidated Statement of Income
Development Bank of Japan Inc. and Consolidated Subsidiaries

For the year ended March 31,¥185,653¥190,060$1,747,494

Interest on loans

153,698

162,606

1,446,707

Interest and dividends on securities

23,223

19,138

218,590

Interest on call loans and bills bought

153

—

1,448

Interest on due from banks

29

15

278

8,553

8,164

80,515

(4)

136

(45)

Fees and commissions

14,517

13,605

136,644

Other operating income (Note 19)

6,198

6,327

58,341Other income (Note 20)

87,75775,669826,034

		Total income

294,126

285,662

2,768,513

IncomeInterest income:Interest on swaps
Other interest income

Expenses
Interest expense:

98,073

849,473

34,831

312,490

Interest on call money and bills sold

(27)

(11)

(259)

Interest on payables under repurchase agreements

(46)

(5)

(441)

Interest on borrowed money (Note 31)

51,89458,089488,463Interest on short-term corporate bonds

755

764

7,110

4,482

4,409

42,194

(8)

(3)

(84)

1,304

567

12,277

Interest on corporate bonds
Other interest expense
Fees and commissions
Other operating expenses (Note 21)

3,273

3,358

30,810General and administrative expenses

59,175

51,133556,998

10,70010,091

100,721

164,701

163,224

1,550,279

		

129,425

122,437

1,218,233

Current

38,07031,576358,343

Deferred(3,006)

3,100(28,300)

Total income taxes

35,06334,677330,042

Net income

94,36187,760888,191

Income before income taxes

Income taxes (Note 24):

Net income attributable to owners of the parent

2,422

121

22,805¥ 91,938¥   87,639$   865,386

Yen

U.S. Dollars (Note 1)

Per share of common stock (Note 18)
Basic net income
Cash dividend applicable to the year

¥2,092.38¥1,994.88$      
19.69

507

452

4.77

See notes to consolidated financial statements.

Integrated Report 201893

Data Section

Net income attributable to non-controlling interests

Corporate Data

Other expenses (Note 22)
		Total expenses

Risk Management

90,24833,198Interest on debentures

Corporate Governance

2018

DBJ Group’s Strategy

2017

DBJ Group’s Vision

Thousands of
U.S. Dollars (Note 1)

Millions of Yen

Consolidated Statement of Comprehensive Income
Development Bank of Japan Inc. and Consolidated Subsidiaries

Thousands of
U.S. Dollars (Note 1)

Millions of Yen

For the year ended March 31,

2018

2017

2018

Net income¥94,361¥ 87,760$888,191

Unrealized gain (loss) on available-for-sale securities

2,600(10,580)

24,476

Deferred loss on derivatives under hedge accounting(5,935)(1,467)(55,869)

Foreign currency translation adjustments

(74)

(486)

(698)

Adjustments for retirement benefits

463

(400)

4,363

3,174

(104)

29,881

228(13,039)

2,153¥94,590¥ 74,721$890,344

Owners of the parent¥92,159¥ 74,598$867,462

Non-controlling interests

2,430

123

22,882Other comprehensive Income (loss) (Note 26):

Share of other comprehensive income (loss) in affiliates
accounted for by the equity method
Total other comprehensive income (loss)
Comprehensive income
Total comprehensive income attributable to:

See notes to consolidated financial statements.

94

Integrated Report 2018

Consolidated Statement of Change in Equity
Development Bank of Japan Inc. and Consolidated Subsidiaries

DBJ Group’s Vision

Millions of Yen

For the year ended March 31, 2018

Crisis response
reserve¥1,000,424¥206,529

Special investment Special investment
reserve
surplus¥230,000
50,000¥1,813

CapitalsurplusRetainedearnings¥945,466¥513,758

50,000(50,000)(19,721)91,9381,285¥1,000,424¥206,529¥330,000¥3,099(1,285)0¥895,466¥584,689

Millions of Yen

DBJ Group’s Strategy

Balance at beginning of year
Investment from government
Transfer from capital surplus to special
	  investment reserve
Cash dividends
Net income attributable to owners of the parent
Transfer from retained earnings to special
	  investment surplus
Change in scope of consolidation
Net change during the year
Balance at end of year

Commonstock

Accumulated other comprehensive income
Foreigncurrencytranslation
adjustments

Accumulated
adjustments
for retirement
benefits¥45,017¥33,680¥(1,271)¥(484)

455¥ (29)

Noncontrollinginterests

Total¥2,974,932
50,000¥11,352

Total equity¥2,986,284
50,000(19,721)91,938—(19,721)91,9380
220¥3,097,369

—
0
1,618
¥3,110,120

5,503¥50,520(5,724)¥27,955(13)¥(1,285)

Commonstock

Crisis response
reserve

Special investment Special investment
reserve
surplus¥1,000,424¥206,529

1,398¥12,750

Millions of Yen

For the year ended March 31, 2017

¥130,000
50,000¥   618

Retainedearnings¥995,466¥456,591

50,000(50,000)(29,277)
87,6391,194¥1,000,424¥206,529¥230,000¥1,813(1,194)¥945,466¥513,758

For the year ended March 31, 2017

Balance at beginning of year
Investment from government
Transfer from capital surplus to special
	 investment reserve
Cash dividends
Net income attributable to owners of the parent
Transfer from retained earnings to special
	  investment surplus
Net change during the year
Balance at end of year

Deferred gain
on derivatives
under hedge
accounting

Foreigncurrencytranslation
adjustments

Accumulated
adjustments
for retirement
benefits¥55,074¥34,561¥   429¥ (83)

Noncontrollinginterests

Total¥2,879,611
50,000¥ 4,588

Total equity¥2,884,200
50,000—(29,277)
87,639(29,277)
87,639(10,057)¥45,017(880)¥33,680(1,701)¥(1,271)(401)¥(484)(13,041)¥2,974,932

6,763¥11,352—(6,277)¥2,986,284

Integrated Report 201895

Data Section

Millions of Yen
Accumulated other comprehensive income
Unrealized gain
on available-forsale securities

Corporate Data

Balance at beginning of year
Investment from government
Transfer from capital surplus to special
	 investment reserve
Cash dividends
Net income attributable to owners of the parent
Transfer from retained earnings to special
	  investment surplus
Net change during the year
Balance at end of year

Capitalsurplus

Risk Management

Balance at beginning of year
Investment from government
Transfer from capital surplus to special
	  investment reserve
Cash dividends
Net income attributable to owners of the parent
Transfer from retained earnings to special
	  investment surplus
Change in scope of consolidation
Net change during the year
Balance at end of year

Deferred gain
on derivatives
under hedge
accounting

Corporate GovernanceFor the year ended March 31, 2018

Unrealized gain
on available-forsale securities

Thousands of U.S. Dollars (Note 1)

For the year ended March 31, 2018

Balance at beginning of year
Investment from government
Transfer from capital surplus to special
	  investment reserve
Cash dividends
Net income attributable to owners of the parent
Transfer from retained earnings to special
	  investment surplus
Change in scope of consolidation
Net change during the year
Balance at end of year

Commonstock

Crisis response
reserve$9,416,642$1,943,985

Special investment Special investment
reserve
surplus$2,164,910
470,633$17,072

CapitalsurplusRetainedearnings$8,899,344$4,835,827

470,633(470,633)(185,635)
865,386
12,101$9,416,642$1,943,985$3,106,175$29,173(12,101)
0$8,428,712$5,503,478

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

For the year ended March 31, 2018

Balance at beginning of year
Investment from government
Transfer from capital surplus to special
	  investment reserve
Cash dividends
Net income attributable to owners of the parent
Transfer from retained earnings to special
	  investment surplus
Change in scope of consolidation
Net change during the year
Balance at end of year
See notes to consolidated financial statements.

96

Integrated Report 2018

Unrealized gain
on available-forsale securities

Deferred gain
on derivatives
under hedge
accounting

Foreigncurrencytranslation
adjustments

Accumulated
adjustments
for retirement
benefits$423,731$317,025$(11,971)$(4,565)

51,800$475,531(53,887)$263,139(124)$(12,096)4,287$   (278)

Total

Noncontrollinginterests

Total equity$28,002,000
470,633$106,855 $28,108,855
470,633(185,635)
865,386—(185,635)
865,386

0
2,076$29,154,460—
013,16015,235$120,015 $29,274,475

Consolidated Statement of Cash Flows
Development Bank of Japan Inc. and Consolidated Subsidiaries

For the year ended March 31,¥ 122,437$ 1,218,233

10,023
1,666—
31(4,193)(729)(185,653)
90,248(39,305)
(722)
1,244
(1,570)

6,761
442
(9)
11
(4,061)—(190,060)
98,073(42,447)(385)
10,56991

94,343
15,684—
293(39,468)(6,867)(1,747,494)
849,473(369,972)(6,797)
11,710(14,778)(11,468)
(238)
(146)
1
(600)
84
(40)
314,290
69,936
101,803
151,191
15,500(463,179)(13,000)(55,142)
180,705(91,092)(66,531)
132,536(21,696)
110,839(5,315)
(179)
312
—
468
(50)
24
(86,852)(205,156)
570,274
189,103(16,100)—
13,00055,142
196,692(98,528)(57,596)556,662(53,338)
503,323(107,948)(2,249)(1,376)16(5,653)796(385)
2,958,311
658,288958,239
1,423,109
145,896(4,359,744)(122,364)(519,041)
1,700,922(857,418)(626,239)
1,247,522(204,225)
1,043,297(338,751)
49,427220,110(3,401)
8,651(45,445)
20,402(5,920)——(323,917)
121,329
271,044(6,210)8,560(22,781)
14,614(5,011)
1(21,253)(3,188,545)
465,243
2,071,821(32,021)
81,433(427,767)
192,045(55,731)———(39,346)(134,274)

39—
36,416—(370,353)(1,263,877)

50,000(19,721)50,000(29,277)

470,633(185,635)

15(1,051)
29,242

6,810(416)
27,116150(9,896)275,251

(505)
5,302
989,724¥ 995,027(164)
566,691
423,032¥ 989,724(4,757)49,9159,315,928$ 9,365,842

See notes to consolidated financial statements.
Integrated Report 201897

Data Section¥ 129,425

Corporate Data

2018

Risk Management

2017

Corporate Governance

2018

DBJ Group’s Strategy

Cash flows from operating activities:
Income before income taxes
Adjustments for:
Depreciation
Amortization of goodwill
Gain on bargain purchase
Losses on impairment of long-lived assets
Equity in earnings of affiliates
Gain on change in equity
Interest income
Interest expense
Gain on securities—net
Gain on money held in trust—net
Foreign exchange losses(Gain) loss on sales of fixed assets—net
Changes in operating assets and liabilities:
		 Allowance for loan losses
		 Allowance for investment losses
		 Accrued bonuses to employees
		 Accrued bonuses to directors
		 Asset for retirement benefits
		 Liability for retirement benefits		 Reserve for contingent losses
		Loans
		Debentures
		Borrowed money
		Corporate bonds
		 Due from banks (excluding cash equivalents)
		 Call loans and bills bought		 Call money and bills sold		 Payables under repurchase agreements
Interest received
Interest paid
Other—net
		Sub-total
		 Payments for income taxes
Net cash provided by operating activities
Cash flows from investing activities:
Payments for purchases of securities
Proceeds from sales of securities
Proceeds from redemption of securities
Payments for increase of money held in trust
Proceeds from decrease of money held in trust
Payments for purchases of tangible fixed assets
Proceeds from sales of tangible fixed assets, etc.
Payments for purchases of intangible fixed assets
Proceeds from sales of intangible fixed assets
Payments for merger of subsidiaries
	Proceeds from purchases of stocks of subsidiaries resulting inchange in scope of consolidation
Payments for acquisition of businessNet cash (used in) provided by investing activities
Cash flows from financing activities:
Proceeds from investment from government
Payments for cash dividends
	Proceeds from issuance of securities to non-controllingshareholders of subsidiaries
Dividends paid to non-controlling shareholders of subsidiaries
Net cash provided by financing activities
Foreign currency translation adjustments on cash andcash equivalents
Net change in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year (Note 2(c))

DBJ Group’s Vision

Thousands of
U.S. Dollars (Note 1)

Millions of Yen

Notes to Consolidated Financial Statements
Development Bank of Japan Inc. and Consolidated Subsidiaries

1. Basis of Presentation
The accompanying consolidated financial statements have been prepared in accordance with the provisions set forth in
the Japanese Financial Instruments and Exchange Act and its related accounting regulations and Ministerial Ordinance for
Accounting of the Development Bank of Japan Inc. (“DBJ Inc.”) and in conformity with accounting principles generally
accepted in Japan (“Japanese GAAP”), which are different in certain respects as to application and disclosure requirements ofInternational Financial Reporting Standards.
In preparing these consolidated financial statements, certain reclassifications and rearrangements have been made to theconsolidated financial statements issued domestically in order to present them in a form which is more familiar to readers
outside Japan. In addition, certain reclassifications have been made in the 2017 consolidated financial statements to conformto the classifications used in 2018.
The amounts indicated in millions of yen are rounded down by omitting the figures less than one million yen.
Accordingly, the sum of each amount appearing in the accompanying financial statements and the notes thereto may not
be equal to the sum of the individual account balances. Amounts in U.S. dollars are presented solely for the convenience ofreaders outside Japan. The rate of ¥106.24=$1.00, the effective exchange rate prevailing as of March 31, 2018, has beenused in the conversion. The presentation of such amounts is not intended to imply that Japanese yen amounts have been or
could have been readily translated, realized or settled in U.S. dollars at that rate or any other rate.

2. Summary of Significant Accounting Policies(a) Principles of Consolidation(1) Scope of Consolidation
Under the control concept, those companies in which DBJ Inc., directly or indirectly, is able to exercise control over
operations are fully consolidated. On September 8, 2006, the Accounting Standards Board of Japan (“ASBJ”) issued
Practical Issues Task Force No. 20, “Practical Solution on Application of Control Criteria and Influence Criteria to
Investment Associations” which was effective for the period and the fiscal years ending on or after September 8,
2006. The practical solution clarifies how the control and influence concept should be practically applied to theconsolidation scope of collective investment vehicles, such as limited partnerships, Tokumei Kumiai (silent partnership)
and other entities with similar characteristics.
(i) Consolidated Subsidiaries
The number of consolidated subsidiaries as of March 31, 2018 is 30. The major consolidated subsidiaries as of March
31, 2018 are as follows:
DBJ Singapore Limited
Japan Economic Research Institute Inc.
DBJ Europe Limited
DBJ Real Estate Co., Ltd.
DBJ Investment Advisory Co., Ltd.
DBJ Capital Co., Ltd.
DBJ Securities Co., Ltd.
DBJ Asset Management Co., Ltd.
Value Management Institute, Inc.
DBJ Investment Consulting (Beijing) Co., Ltd.
Consist Inc.
In the year ended March 31, 2018, Tokumei Kumiai with the proprietor of Asset Investment LLC-IV and anothercompany and GRAPE, LLC and another company were newly consolidated due to capital investment and newincorporation, respectively. Tokumei Kumiai with the proprietor of Asset Investment LLC-III was excluded from thescope of consolidation due to termination of the partnership agreement in the year ended March 31, 2018.
(ii) Unconsolidated Subsidiaries
The number of unconsolidated subsidiaries as of March 31, 2018 is 55. The major unconsolidated subsidiary as ofMarch 31, 2018 was UDS II Corporate Mezzanine Limited Partnership.
Unconsolidated subsidiaries are excluded from the scope of consolidation because such exclusion has no material
impact on the consolidated financial statements in terms of total assets, income, net income, retained earnings andaccumulated other comprehensive income.
98

Integrated Report 2018

(ii) Affiliates accounted for by the equity method
The number of affiliates accounted for by the equity method as of March 31, 2018 was 26. One of the major affiliates
accounted for by the equity method as of March 31, 2018 was AIRDO Co., Ltd.

Integrated Report 201899

Data Section(iv) Entities not classified as affiliates where DBJ Inc. holds voting rights of between 20% and 50%
The following companies of which DBJ Inc. holding voting rights of between 20% and 50% are not affiliates
accounted for by the equity method, because the capital contributions were made for the purpose of incubatingthese companies, and not for the purpose of owning these investees under its control through operational, personnel,
capital or other form of transactions.
As of March 31, 2018
Shinwa Seiko Corporation
Socionext Inc.
KANTO-UNYU Co., Ltd.
Daisho-gun Co., Ltd.
PT. PETROTEKNOC&A Tool Engineering, Inc.
NATIONAL CAR PARKS LIMITEDVIETNAM DATA AND AERIAL SYSTEM COMPANY LIMITED

Corporate Data(iii) Affiliates not accounted for by the equity method
The number of affiliates not accounted for by the equity method as of March 31, 2018 was 110. One of the majoraffiliates as of March 31, 2018 was New Perspective One LLC.
Unconsolidated subsidiaries and affiliates that are not accounted for by the equity method have been excluded
from the scope of the equity method because their aggregate effect in terms of net income, retained earnings andaccumulated other comprehensive income has no material impact on the consolidated financial statements of DBJ Inc.

Risk Management

Changes in the scope of affiliates accounted for by the equity method:
Yokkaichi Kasumi Power Co., Ltd. was newly accounted for by the equity method due to an increase in its materiality
from the year ended March 31, 2018. Asuka DBJ Investment LPS was excluded from the scope of equity method
accounting due to decrease in its materiality from the year ended March 31, 2018.

Corporate Governance(i) Unconsolidated subsidiaries not accounted for by the equity method
The number of unconsolidated subsidiaries not accounted for by the equity method as of March 31, 2018 was 55.
The major unconsolidated subsidiary not accounted for by the equity method was UDS II Corporate Mezzanine
Limited Partnership.

DBJ Group’s Strategy(2) Application of the Equity Method
Under the influence concept, unconsolidated subsidiaries and affiliates over which DBJ Inc. has the ability to exercise
significant influence are accounted for by the equity method.

DBJ Group’s Vision(iii) Companies not classified as subsidiaries where DBJ Inc. holds the majority of voting rights
Kinugawa Rubber Industrial Co., Ltd.
ADVANIDE HOLDINGS PTE. LTD.
ABLIC Inc.
Value Planning co., ltd.
These companies were not treated as subsidiaries because the capital contributions were made for the purpose of
incubating these companies, and not for the purpose of owning these investees under its control through operational,
personnel, capital or other form of transactions.

(3) Balance Sheet Dates of Consolidated Subsidiaries
		 Balance sheet dates of consolidated subsidiaries are as follows:
Number of subsidiaries

2018

December 31
February 28 or 29
March 3122
1
7Consolidated subsidiaries are consolidated based on the financial statements that are prepared as of their year-end
balance sheet date.
The necessary adjustments are made in the consolidated financial statements to reflect material transactions that
occur between the year-end balance sheet date of the subsidiary and the consolidated balance sheet date.
(4) Elimination of Intercompany Balances and Transactions
All significant intercompany balances and transactions have been eliminated in consolidation. All material unrealized
profit and loss resulting from transactions between DBJ Inc. and its consolidated subsidiaries are eliminated.
(5) Amortization of Goodwill
The difference between the fair value of net assets and the cost of the acquired subsidiary is amortized on a straightline basis over the estimated useful lives not exceeding 20 years. Minor differences are charged to expense in the yearof acquisition. The excess of the fair value over the cost of acquired subsidiaries (bargain purchase) is recognized asincome immediately as incurred.
(b) Business Combinations
Business combinations are accounted for using the purchase method. Acquisition-related costs, such as advisory fees orprofessional fees, are accounted for as expenses in the periods in which the costs are incurred. If the initial accounting
for a business combination is incomplete by the end of the reporting period in which the business combination occurs,
an acquirer shall report in its financial statements provisional amounts for the items for which the accounting is
incomplete. During the measurement period, which shall not exceed one year from the acquisition, the acquirer shallretrospectively adjust the provisional amounts recognized at the acquisition date to reflect new information obtained
about facts and circumstances that existed as of the acquisition date and that would have affected the measurementof the amounts recognized as of that date. Such adjustments shall be recognized as if the accounting for the businesscombination had been completed at the acquisition date. A parent’s ownership interest in a subsidiary might change
if the parent purchases or sells ownership interests in its subsidiary. The carrying amount of non-controlling interests isadjusted to reflect the change in the parent’s ownership interest in its subsidiary while the parent retains its controllinginterest in its subsidiary. Any difference between the fair value of the consideration received or paid and the amount bywhich the non-controlling interests are adjusted is accounted for as capital surplus as long as the parent retains control
over its subsidiary.
(c) Cash and Cash Equivalents“Cash and Cash Equivalents” in the consolidated statement of cash flows are included in cash and due from banks. The
reconciliation between “Cash and cash equivalents” and “Cash and due from banks” in the consolidated balance sheet is
as follows:
Thousands of
U.S. Dollars

Millions of Yen

100

2018

2017

2018

Cash and due from banks¥1,033,907¥1,044,104$9,731,806

Time deposits with banks(38,880)(54,380)(365,964)

Cash and cash equivalents¥  995,027¥  989,724$9,365,842

Integrated Report 2018

Integrated Report 2018101

Data Section(4) Evaluation of Hedge EffectivenessAccording to the risk management policy, DBJ Inc. evaluates the effectiveness of the hedges by testing whether thederivatives are effective in reducing the risks associated with the hedged items.
In addition, with respect to portfolio hedging activities, for interest rate swaps used to hedge market interest
rate fluctuations, hedge effectiveness is assessed on a specifically identifiable group of hedged items and acorresponding group of hedging instruments, and for interest rate swaps used to hedge variability in cash flows,
hedge effectiveness is assessed based on the correlation between the base interest rate index of the hedged cash
flows and the hedging instrument.

Corporate Data

(3) Hedging Policy
DBJ Inc. utilizes hedging instruments to hedge interest rates and foreign currency fluctuations on its assets andliabilities. Individual or certain group contracts are drawn for each hedged item.

Risk Management(2) Hedging Instruments and Hedged Items• Hedging Instruments : Interest rate swaps
Hedged Items: Debentures, Borrowed money, Corporate bonds, Securities and Loans• Hedging Instruments : Foreign currency swaps
Hedged Items: Foreign currency denominated Debentures, Borrowed money, Corporate bonds, Securities
and Loans• Hedging Instruments : Forward liability denominated in foreign currency
Hedged Items: Foreign currency denominated equity investments in overseas subsidiaries and affiliates andforeign currency denominated available-for-sale securities (other than bonds)

Corporate Governance(f) Hedge Accounting(1) Hedge Accounting
DBJ Inc. applies the deferral method of hedge accounting or the accrual method (*1). The portfolio hedge isaccounted for by the method stipulated in “Accounting and Auditing Treatments on the Application of AccountingStandards for Financial Instruments in the Banking Industry,” issued by the Japanese Institute of Certified Public
Accountants (the “JICPA Industry Audit Committee Report No. 24” February 13, 2002). In addition, foreign
currency swaps which are used to hedge foreign currency fluctuations are not stated at market values but at
contractual rates, as the foreign currency swap contracts meet the hedging criteria under the Accounting Standards
for Financial Instruments.
In addition, DBJ Inc. applies portfolio hedges to hedge foreign currency fluctuations associated with equity
investments in overseas subsidiaries and affiliates and foreign currency denominated available-for-sale securities(other than bonds). The translation differences on hedging instruments are included in foreign currency translation
adjustments in the case of equity investments in overseas subsidiaries and affiliates; fair value hedges are applied toforeign currency denominated available-for-sale securities (other than bonds).

DBJ Group’s Strategy(e) Valuation Method for Derivative Financial Instruments
All derivative financial instruments are carried at market value. Except for certain derivatives that are designated as
hedging instruments as discussed below, gains or losses on derivative transactions are recognized in the statementof income.

DBJ Group’s Vision(d) Securities
Held-to-maturity debt securities are stated at amortized cost with amortization computed on a straight-line basis, using
the weighted average method. Available-for-sale securities are carried at fair value with the corresponding unrealized
gains and losses, net of applicable taxes, recorded directly in a separate component of equity, after deducting the amountcharged to profit or losses by applying fair value hedge accounting. The cost of these securities upon sale is calculated
principally using the weighted average method. Financial instruments whose fair value cannot be reliably determined arestated at cost using the weighted average method.
Investments in limited partnerships and other similar partnerships are accounted for at their original cost plus
DBJ Inc.’s interest in earnings since acquisition and less any dividends received, based on the investees’ most recent
financial statements.
Securities which are held as trust assets in money held in trust accounts are valued in the same way as other securities.

With respect to hedging activities against foreign exchange risk of equity investments in overseas subsidiaries
and affiliates and foreign currency denominated available-for-sale securities (other than bonds), the effectiveness is
assessed by confirming that the total foreign currency position of the hedged items is equal to or larger than that ofhedging instruments.
With respect to an individual hedge, for both interest rate swap contracts which meet the hedging requirementsof the accrual method (*1) and foreign currency swap contracts which meet the hedging requirements of theassignment method (*2), DBJ Inc. is not required to periodically evaluate hedge effectiveness.
*1.	If interest rate swap contracts are used as hedges and meet certain hedging criteria, the net amount to be paid or
received under the interest rate swap contract is added to or deducted from the interest on the assets or liabilities
for which the swap contract was executed.
*2.	In cases where foreign currency swaps are used as hedges and meet certain hedging criteria, foreign exchange
forward contracts and hedged items are accounted for in the following manner:(i) If a foreign currency swap is executed to hedge existing foreign currency assets or liabilities, a) the difference,
if any, between the Japanese yen amount of the hedged foreign currency asset or liability translated using the
spot rate at the inception date of the contract and the book value of the asset or liability is recognized in thestatement of income in the period since inception, and b) the discount or premium on the contract (that is,the difference between the Japanese yen amount of the contract translated using the contracted forward rate
and that translated using the spot rate at the inception date of the contract) is recognized over the term of
the contract.
(ii) If a foreign currency swap is executed to hedge a future transaction denominated in a foreign currency,
the future transaction is recorded using the contracted forward rate, and no gains or losses on the foreignexchange forward contract are recognized.
(g) Fixed Assets(1) Depreciation of Tangible Fixed Assets
Tangible Fixed Assets are stated at cost less accumulated depreciation. Tangible Fixed Assets of DBJ Inc. aredepreciated using the declining-balance method, except for buildings (excluding installed facilities) and installedfacilities and structures acquired on or after April 1, 2016 that are depreciated on a straight-line basis, anddepreciation of tangible fixed assets of consolidated subsidiaries is computed principally using the straight-line
method, based on the estimated useful lives of the assets.
The estimated useful lives are principally as follows:
Buildings : 3 years to 50 years
Others: 4 years to 20 years(2) Amortization of Intangible Fixed Assets
Intangible Fixed Assets are amortized using the straight-line method. Capitalized software for internal use is amortizedusing the straight-line method over the estimated useful lives (mainly 5 years).
(3) Lease Assets
Depreciation for lease assets is computed by the straight-line method with zero residual value over the lease term.
(h) Long-lived Assets
DBJ Inc. reviews its long-lived assets for impairment whenever events or changes in circumstance indicate the carrying
amount of an asset or asset group may not be recoverable. Impairment losses are recognized if the carrying amount ofan asset or asset group exceeds the sum of the undiscounted future cash flows expected to result from the continued use
and eventual disposition of the asset or asset group. The impairment losses would be measured as the amount by which
the carrying amount of the asset exceeds its recoverable amount, which is the higher of the discounted cash flows fromthe continued use and eventual disposition of the asset or the net selling price at disposition.
(i) Debentures and Corporate Bonds Issuance Costs“Debentures and Corporate Bonds Issuance Costs” are charged to expense as incurred.

102

Integrated Report 2018

Corporate Data
Data Section(n) Employees’ Retirement Benefits
DBJ Inc. has defined benefit pension plans, which consist of a defined benefit corporate pension plan and a lump-sum
severance indemnity plan, as well as a defined contribution pension plan. Some domestic consolidated subsidiaries havea lump-sum severance indemnity plan and defined contribution plans, and some overseas consolidated subsidiaries haveretirement benefit plans which are typically defined contribution plans. The projected benefit obligations are attributed toperiods on a straight-line basis. Actuarial gains and losses and service costs that are yet to be recognized in profit or loss
are recognized with in equity (accumulated other comprehensive income), after adjusting for tax effects and are recognizedin profit or loss over ten years no longer than the expected average remaining service period of the employees.
(o) Reserve for Directors’ Retirement Benefits“Reserve for Directors’ Retirement Benefits” is accrued based on the amount that would be required if all directors retired
at the balance sheet date.

Integrated Report 2018

Risk Management(m) Accrued Bonuses to Employees and Directors“Accrued Bonuses to Employees and Directors” are provided for in the amount of the estimated bonuses which are
attributable to the years ended March 31, 2018 and 2017.

Corporate Governance(l) Allowance for Investment Losses“Allowance for Investment Losses” is provided for based on the estimated losses on certain investments based on anassessment of the issuers’ financial condition.

DBJ Group’s Strategy(k) Allowance for Loan Losses
DBJ Inc. provides for “Allowance for Loan Losses” as detailed below pursuant to the internal policies for self-assessmentof credit quality and loan losses. The allowance for claims on debtors who are legally bankrupt, in special liquidation oreffectively bankrupt is provided for based on the amount of claims, after the write-off described below, net of amounts
expected to be recovered through disposal of collateral or execution of guarantees. The allowance for claims on debtors
who are not legally bankrupt, but are likely to become bankrupt, and for which future cash flows cannot reasonably be
estimated (possibly bankrupt), is provided for at the amount considered to be necessary based on an overall solvency
assessment performed on the claims, net of amounts expected to be recovered through disposal of collateral or executionof guarantees. With respect to the claims on debtors who are likely to become bankrupt or to be closely monitored,
and for which future cash flows can reasonably be estimated, the allowance is provided for as the difference between
the present value of expected future cash flows discounted at the contracted interest rate and the carrying value of theclaims. The allowance for claims on debtors other than those described above is provided based on the historical default
rate, which is calculated based on the actual defaults over a certain historical period. All claims are assessed initiallyby the investment and lending departments and then by the Credit Analysis Department, which is independent of theinvestment and lending departments based on internal policies for self-assessment of credit quality. The allowance isprovided for based on the results of the self-assessment.
With respect to the claims on debtors who are legally or substantially bankrupt with collateral or guarantees, theamount of claims exceeding the estimated market values of collateral or guarantees which are deemed uncollectible
were written-off, and totaled ¥15,600 million ($146,842 thousand) and ¥22,138 million for the years ended March 31,2018 and 2017, respectively. The consolidated subsidiaries calculate the general reserve for “normal” categories basedon the specific actual historical loss ratio, and the specific reserve for the “possibly bankrupt,” “effectively bankrupt” and“legally bankrupt” categories based on estimated losses, considering the recoverable value.

DBJ Group’s Vision(j) Foreign Currency Translation and Revaluation Method
Assets and liabilities denominated in foreign currencies held by DBJ Inc. have been translated at the exchange rates
prevailing as of the balance sheet date. Foreign currency accounts held by consolidated foreign subsidiaries are translated
into the currency of the subsidiaries at the respective year-end exchange rates. The foreign exchange gains and losses
from transactions are recognized in the statement of income to the extent that they are not hedged by forward exchange
contracts. The balance sheet accounts of the consolidated foreign subsidiaries are translated into Japanese yen at thecurrent exchange rate as of the balance sheet date except for equity, which is translated at the historical rate. Differences
arising from such translation are shown as “Foreign Currency Transaction Adjustments” in a separate component ofequity. Income and expense accounts of consolidated foreign subsidiaries are translated into yen at the exchange rate
prevailing as of the balance sheet date.

103

(p) Reserve for Contingent Losses
Reserve for contingent losses is provided for possible contingent losses on loan commitment limits based on individuallyestimated losses.
(q) Lease Transactions
Finance Lease transactions are capitalized by recognizing lease assets and lease obligations in the consolidatedbalance sheet.
(r) Consumption Taxes
Income and expenses subject to consumption taxes are presented net of related consumption taxes paid or received.
(s) Income Taxes
The provision for income taxes is computed based on the pretax income included in the consolidated statement ofincome. The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax
consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. Deferredtaxes are measured by applying currently enacted tax rates to the temporary differences.
(t) Capitalization of Interest Costs on Real Estate Development Business
Interest costs arising in the normal course of development related to the real estate development business of certain
domestic consolidated subsidiaries are capitalized and included in the acquisition cost of assets.
(u) Per Share Information
Basic net income per share is computed by dividing net income available to owners of the parent related to common
stock by the weighted-average number of shares of common stock outstanding for the period, retroactively adjusted forstock splits. Diluted net income per share for the years ended March 31, 2018 and 2017 is not disclosed because there
are no dilutive securities.
Cash dividends per share presented in the accompanying consolidated statement of income are dividends applicableto the year including dividends to be paid after the end of the year.

3. Securities
Securities as of March 31, 2018 and 2017 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2018

2017

2018

¥  145,512¥  193,190$ 1,369,658

Corporate bonds*2

734,391

648,077

6,912,568

Equities

406,229

381,715

3,823,693

Japanese government bonds*3

Other securities
Total

580,268

527,359

5,461,868¥1,866,401¥1,750,342$17,567,787*1. Investments in unconsolidated subsidiaries and affiliates included in “Equities” as of March 31, 2018 and 2017, are ¥41,691 million($392,423 thousand) and ¥37,716 million, respectively. Investments in unconsolidated subsidiaries and affiliates included in “Other
securities” as of March 31, 2018 and 2017, are ¥163,194 million ($1,536,088 thousand) and ¥105,525 million, respectively.
*2. DBJ Inc. has contingent liabilities for guarantees of corporate bonds among securities which were issued by private placement (Article 2,
Paragraph 3 of Financial Instruments and Exchange Act), which amount to ¥6,438 million ($60,599 thousand) and ¥6,982 million as ofMarch 31, 2018 and 2017, respectively.
*3. Japanese government bonds include securities lent in accordance with the unsecured securities lending agreement in the amount of¥28,480 million ($268,075 thousand) and ¥25,000 million as of March 31, 2018 and 2017, respectively.
*4. Securities available-for-sale (excluding those securities those fair value cannot be reliably determined), whose fair value significantly
declined compared with the acquisition cost, and is considered to be other than recoverable decline, were written down to the respective
fair value which is recorded as the carrying amount on the consolidated balance sheets.
The criterion for determining whether the fair value is “significantly declined” are as follows:
Fair value declined by 50% or more of the acquisition cost.
Fair value declined by 30% or more of the acquisition cost, and such decline is not considered as recoverable.

104

Integrated Report 2018

Thousands of
U.S. Dollars

Millions of Yen

2018

2017

2018

Equities

¥ —

¥—

Bonds

135

65

$

—
1,271

—

—

—

Total

¥135

¥65

$1,271

4. Non-Performing Loans
The amounts of non-performing loans included in “Loans” as of March 31, 2018 and 2017 are as follows:
Thousands of
U.S. Dollars

Millions of Yen¥

Delinquent loans*3

43,75046,035

411,808———

Loans past due three months or more*4

¥

2018

Loans to bankrupt debtors*2

—

$

—

Restructured loans*5

16,634

24,860156,576

Total¥60,385¥70,896$568,384

Risk Management*1. The amounts of loans indicated above are stated at gross amounts, before reduction of the allowance for loan losses.
*2. “Loans to bankrupt debtors” represent non-accrual loans to debtors who are legally bankrupt as defined in Article 96-1-3 and 4 of theJapanese Tax Law Enforcement Regulation.
*3. “Delinquent loans” represent non-accrual loans other than (i) Loans to bankrupt debtors and (ii) Loans whose interest payments aredeferred in order to assist or facilitate the restructuring efforts of borrowers in financial difficulty.
*4. “Loans past due three months or more” are loans whose principal or interest payment is three months or more past due and do not fallunder the category of “Loans to bankrupt debtors” or “Delinquent loans.”*5. “Restructured loans” are loans whose repayment terms have been modified to the advantage of debtors through means such as a
reduction or exemption of interest rates, postponement of principal and interest payments, and forgiveness of loans to support or
restructure the debtors’ businesses, and do not fall under the category of “Loans to bankrupt debtors,” “Delinquent loans,” or “Loanspast due three months or more.”

Corporate Governance

2017

—

DBJ Group’s Strategy

Other

2018

DBJ Group’s Vision

Impairment losses for the years ended March 31, 2018 and 2017 are as follows:

Corporate Data
Data Section

Integrated Report 2018105

5. Commitments
Loan commitment limits are contracts under which DBJ Inc. lends to customers up to the prescribed limits in response tocustomers’ applications for loans as long as there is no violation of any terms and conditions in the contracts. As of March
31, 2018 and 2017, the amounts of unused commitments are ¥755,609 million ($7,112,291 thousand) and ¥662,751
million, respectively. As of March 31, 2018 and 2017, the amounts of unused commitments with remaining contract term
within one year are ¥416,683 million ($3,922,092 thousand) and ¥385,266 million, respectively.
Since many of these commitments expire without being drawn down, the unused amount does not necessarily
represent a future cash requirement. Most of these contracts have terms and conditions whereby DBJ Inc. and its
subsidiaries can reject customers’ applications for loans or decrease the contract limits with proper reason (e.g., changes
in financial situation, deterioration in customers’ credit worthiness). At the inception of contracts, DBJ Inc. and its
consolidated ­subsidiaries obtain liens on customers’ real estate, securities or other assets as collateral as deemed­necessary. Subsequently, DBJ Inc. and its consolidated subsidiaries perform periodic reviews of the customers’ businessresults based on internal rules, and take necessary measures to reconsider the terms and conditions of contracts and/or
require additional collateral and guarantees.

6. Other Assets
Other assets as of March 31, 2018 and 2017 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

Prepaid expenses

2018

2017

2018

¥  3,846¥  3,771$   36,206

Accrued income

26,54826,967

249,894

Derivatives

54,33755,077

511,464

Cash collateral paid for financial instruments

59,26225,197557,819

Margin deposits with the central clearing house

31,14028,502

293,117

Other

40,38038,973380,089

Total¥215,517¥178,490$2,028,590

7. Tangible Fixed Assets
Tangible fixed assets as of March 31, 2018 and 2017 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

Buildings
Land

2018

2017

2018

¥ 18,682¥ 18,513$   175,850

91,214

91,252858,573

Leased assets

325

188

3,062

Construction in progress

250

5,094

2,362

Other

321,871

281,933

3,029,661

Total¥432,344¥396,982$4,069,508

Note: Accumulated depreciation of tangible fixed assets as of March 31, 2018 and 2017, is ¥24,495 million ($230,571 thousand) and¥17,455 million, respectively.

8. Allowance for Loan Losses
Allowance for loan losses as of March 31, 2018 and 2017 is as follows:
Thousands of
U.S. Dollars

Millions of Yen

General allowance for loan losses

2018

2017

2018

¥21,782¥36,657$205,030

Specific allowance for loan losses

22,963

19,556

216,143

Total¥44,745¥56,213$421,173106

Integrated Report 2018

DBJ Group’s Vision

9. Debentures and Corporate Bonds
Debentures and corporate bonds as of March 31, 2018 and 2017 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

Issue date

Maturity date

2018

2017

2018

¥   359,988$ 2,447,339¥   260,005

2.2

Jun. 2023[49,994]

Japanese governmentguaranteed bonds 1-7,9-47

Nov. 2008–
Mar. 2018

0.001–
2.1

Jun. 2017–
Mar. 2028

1,490,269[159,980]

1,319,698

14,027,389[1,505,836]

Japanese governmentguaranteed foreign bond 67*2,7Sep. 1998

1.81

Sep. 2028

25,042

25,046

235,716

Japanese governmentguaranteed foreign bonds
5-7,10,11,14*1,7Dec. 2002– 1.05–
Nov. 2007 4.75

Sep. 2022–
Nov. 2027

369,019

369,020

3,473,449

Japanese governmentguaranteed Euro MTN bonds
6-16*3

Sep. 2012–
Sep. 2017

1.0–
2.875

Jan. 2018–
Sep. 2027

795,349[102,575]

716,004

7,486,351[965,506]

FILP agency domestic bonds
11,20,30,31,34-36,39,
41,42,44,46,49,51*4,7Dec. 2003– 1.63–
Jul. 2008 2.74

Sep. 2017–
Mar. 2047

144,964[49,999]

224,956

1,364,498[470,629]

Euro MTN FILP agency bond
2*4,5,7

Sep. 2008

Sep. 2023

2,000

2,000

18,825

1,144,400

10,813,257

Corporate bonds
Corporate bonds through

2.032

Apr. 2009– 0–[470,578]

Jun. 2017–

1,148,800

public placement 5,17,23,25,26, Jan. 2018
28,30,31,33,35,37,39,40,42-89

1.745

Jun. 2047[255,600]

Corporate bonds throughprivate placement
3-25,27-37,39-71

Feb. 2015–
Jan. 2018

0–
0.843

May 2019–
Sep. 2042

304,000

207,000

2,861,447

Corporate bonds Euro MTN
29-32,34,36,37,39,40,
42,43,45-49,51-71*6

Jul. 2011–
Feb. 2018

0–
3.64

Apr. 2017–
Feb. 2028

388,782338,991

3,659,473(Issuer: Green Asset Investment TMK)
Dec. 2012
Specified corporate bond 1*8

5.53

May 2018[2,405,873][303,712]

Total

Sep. 20140.13727

Sep. 2019250¥4,932,983

42,357[42,357]

250

2,353

¥4,711,856$46,432,454*1. These bonds are government-guaranteed bonds issued by the Development Bank of Japan.
*2. This bond is a government-guaranteed bond issued by the Japan Development Bank.
*3. These bonds are unsecured guaranteed bonds issued based on Medium Term Note program (“MTN program”).
*4. Fiscal Investment and Loan Program (FILP) agency bonds (“FILP bonds”) are not government-guaranteed. These bonds are issued by theDevelopment Bank of Japan.
*5. This bond is a FILP bond issued based on MTN program.
*6. These bonds are unsecured corporate bonds issued based on MTN program.
*7. General mortgage under the DBJ Inc. Act (17 of the Supplementary Provisions) and the DBJ Act (Article 43)*8. These bonds are non-recourse debts.
*9. Figures indicated in brackets [ ] indicate the amounts to be redeemed within one year.

Integrated Report 2018107

Data Section

4,500[4,500](Issuer: Hiratsuka Holding TMK)
Specified corporate bond 4*8

Corporate Data

[32,266]

4,500

Risk Management

Aug. 2017–

Aug. 2008

Corporate GovernanceJun. 2006– 1.6–

guaranteed bonds
12,14,15,17-23*1,7

DBJ Group’s Strategy(Issuer: DBJ Inc.)
Debentures
Japanese government-Interest rate(%)

Scheduled redemptions of above debentures and corporate bonds for the following 5 years subsequent to March 31, 2018
are as follows:
Millions of Yen

Thousands of U.S. Dollars

Debentures/
corporate bonds

Non-recourse
corporate bonds

Debentures/
corporate bonds

Non-recourse
corporate bonds

The fiscal year ending March 31, 2019

¥650,415¥4,500$6,122,134$42,3572020

613,180250

5,771,655

2,353

2021

557,737—

5,249,787—

2022

538,114—

5,065,088—

2023

743,294—

6,996,375—

10. Borrowed Money
Borrowed money as of March 31, 2018 and 2017 is as follows:
Thousands of
U.S. Dollars

Millions of Yen

Average interest rate (%)

Due date of repayment

2018

2017

2018

Borrowings

0.58

May 2018–Feb. 2038

¥8,432,199¥8,383,916$79,369,346

Non-recourse borrowings

0.65

May 2018–Feb. 2033

141,971

88,451

1,336,327

Total

0.58

¥8,574,170¥8,472,367$80,705,673

Scheduled repayments of above borrowings and non-recourse borrowings for the following 5 years subsequent to March 31,2018 are as follows:
Millions of Yen

Borrowings

Thousands of U.S. Dollars

Borrowings

Non-recourse borrowings

The fiscal year ending March 31, 2019¥1,252,934

Non-recourse borrowings¥65,352$11,793,434$615,137

2020

964,622

16,547

9,079,653

155,7532021

961,085

4,581

9,046,366

43,1262022

1,298,047

4,635

12,218,069

43,6302023

825,891

4,663

7,773,827

43,899

11. Non-Recourse Debts
Non-recourse debts in consolidated special purpose companies as of March 31, 2018 and 2017 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2018

2017

2018

Borrowed money¥141,971¥ 88,451$1,336,327

Corporate bonds

4,750

4,750

44,710Cash and due from banks

9,016

3,851

84,869Other assets

1,859

682

17,499151,021

115,813

1,421,517

88

97

831

Non-recourse debts:

Assets corresponding to non-recourse debts:

Tangible fixed assets
Intangible fixed assets

108

Integrated Report 2018

DBJ Group’s Vision

12. Other Liabilities
Other liabilities as of March 31, 2018 and 2017 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2018

Accrued expenses

2017

2018

¥ 21,675

Unearned income

1,249

1,143

11,757

Accrued income taxes

18,707

5,490

176,089

Derivatives

20,72823,555

195,110

196

37

1,846

Lease obligations$195,166

Asset retirement obligations

3,567

2,630

33,579Other

32,76757,623

308,432

Total¥97,951¥112,156$921,979

Corporate Governance

13. Acceptances and Guarantees
Acceptances and guarantees as of March 31, 2018 and 2017 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

Guarantees

2018

2017

2018

¥201,796¥181,010$1,899,437

Data Section

109

Corporate Data

Cash and due from banks of ¥9,016 million ($84,869 thousand), other assets of ¥1,859 million ($17,499 thousand), tangible
fixed assets of ¥151,021 million ($1,421,517 thousand) and intangible fixed assets of ¥88 million ($831 thousand) arepledged as collateral for borrowed money of ¥141,971 million ($1,336,327 thousand) and corporate bonds of ¥4,750 million($44,710 thousand) as of March 31, 2018.
Cash and due from banks of ¥3,851 million, securities of ¥54,573 million, other assets of ¥682 million, tangible fixed
assets of ¥115,813 million intangible fixed assets of ¥97 million are pledged as collateral for payables under repurchaseagreements of ¥55,142 million, borrowed money of ¥88,451 million and corporate bonds of ¥4,750 million as of March
31, 2017.
Securities and loans pledged as collateral in Real Time Gross Settlement for bank deposits at the Bank of Japan are¥200,470 million ($1,886,957 thousand) and ¥969,934 million ($9,129,654 thousand), respectively, as of March 31, 2018,
which are deposited as collateral for transactions, including exchange settlements as of March 31, 2018. On behalf of theinvestees who borrow from third parties, ¥27,030 million ($254,424 thousand) of securities are deposited as security as ofMarch 31, 2018. Additionally, ¥59,262 million ($557,819 thousand) of cash collateral paid for financial instruments, etc. and¥31,140 million ($293,117 thousand) of margin deposits with the central clearing house are included in other assets as ofMarch 31, 2018. Under the DBJ Inc. Act (Article 17 of the Supplementary Provisions) and the DBJ Act (Article 43), obligations
created by the bonds issued by DBJ are secured by a statutory preferential right over the property of DBJ Inc. The face valueof these debentures amounts to ¥801,289 million ($7,542,253 thousand) as of March 31, 2018.
Securities and loans pledged as collateral in Real Time Gross Settlement for bank deposits at the Bank of Japan are¥80,529 million and ¥342,883 million, respectively, as of March 31, 2017, which are deposited as replacement of margin
money for future trading, cash collateral paid for financial instruments, etc. and collateral for transactions, including
exchange settlements as of March 31, 2017. On behalf of the investees who borrow from third parties, ¥34,425 millionof securities are deposited as security as of March 31, 2017. Additionally, ¥937 million of margin deposits for futurestransactions, ¥25,197 million of cash collateral paid for financial instruments, etc. and ¥28,502 million of margin deposits
with the central clearing house are included in other assets as of March 31, 2017. Under the DBJ Inc. Act (Article 17 of the
Supplementary Provisions) and the DBJ Act (Article 43), obligations created by the bonds issued by DBJ Inc. are secured by astatutory preferential right over the property of DBJ Inc. The face value of these debentures amounts to ¥981,289 million asof March 31, 2017.

Risk Management

14. Assets Pledged as Collateral

Integrated Report 2018

DBJ Group’s Strategy¥20,734

15. Equity
Japanese companies including DBJ Inc. are regulated by the Companies Act. In addition, DBJ Inc. is regulated by the DBJ Inc.
Act. The significant provisions in the Companies Act and the DBJ Inc. Act that affect financial and accounting matters are
summarized as follows:(a) Dividends
Under the Companies Act, companies can distribute dividends at any time during the fiscal year, in addition to theyear-end dividend, upon resolution at the shareholders meeting. Additionally, for companies that meet certain criteriasuch as (1) having a Board of Directors, (2) having independent auditors, (3) having a Board of Corporate Auditors,and (4) the term of service of the directors is prescribed as one year rather than two years of normal term in its articles
of incorporation. With respect to the third condition above, the Board of Directors may declare dividends (except for
dividends in kind) at any time during the fiscal year, if the Board of Directors can declare dividends as prescribed in thecompany’s articles of incorporation. DBJ Inc., however, shall not distribute such dividends based on resolution of theBoard of Directors, since its articles of incorporation do not prescribe that the Board of Directors can take such action.
The Companies Act provides certain limitations on the amounts available for dividends or the purchase of treasury
stock. Article 20 of the DBJ Inc. Act provides that the timing and amounts for dividends shall be authorized by the
Finance Minister.
(b) Increases/Decreases and Transfer of Common Stock, Reserve and Surplus
The Companies Act requires that an amount equal to 10% of dividends must be set aside as a legal reserve (a componentof retained earnings) or as additional paid-in capital (a component of capital surplus), depending on the equity accountcharged for dividends, until the total aggregate amount of legal reserve and additional paid-in capital equal 25% ofCommon stock. Under the Companies Act, the total amount of additional paid-in capital and legal reserve may bereversed without limitation. The Companies Act also provides that common stock, legal reserve, additional paid-in capital,
other capital surplus and retained earnings can be reclassified among the accounts under certain conditions and upon
resolution by the shareholders.
(c) Treasury Stock and Treasury Stock Acquisition Rights
The Companies Act also provides for companies to purchase treasury stock and dispose of the treasury stock based on
resolution of the Board of Directors. The amount of treasury stock purchased cannot exceed the distributable amount tothe shareholders which is determined by specific formula.
Under the Companies Act, stock acquisition rights are presented as a separate component of equity.
The Companies Act also provides that companies can purchase both treasury stock acquisition rights and treasury
stock. The treasury stock acquisition rights are presented as a separate component of equity or deduction of stockacquisition rights.
(d) Solicitation and Delivery of Shares or Stock Acquisition Rights
Article 12 of the DBJ Inc. Act regulates that, if DBJ Inc. intends to solicit those who will subscribe for shares or stockacquisition rights offered, or to deliver shares or stock acquisition rights in connection with a share-for-share exchange,
DBJ Inc. shall obtain an authorization from the Finance Minister.

16. Crisis Response Reserve
DBJ Inc. recorded the accumulated amounts of the government’s contribution to implement the crisis response operations inaccordance with the provision of Article 2-22 of the supplementary provision of the DBJ Inc. Act (hereinafter the “Act”) as“Crisis response reserve.”
The reserve is characterized as follows:(a)	For the purpose of calculating the amount of surplus, the amount of crisis response reserve is included in the total amountof common stock and capital surplus based on the provision of Article 2-25 of the supplementary provision of the Act.
(b)	In case of compensation for deficit, the amount of crisis response reserve may be decreased when the capital surplus
and legal retained earnings become nil based on the provision of Article 2-26 of the supplementary provision of theAct. When the surplus becomes positive after the decrease in the amount of crisis response reserve, the amount of crisis
response reserve shall be increased based on the provision of Article 2-26 of the supplementary provision of the Act.
110

Integrated Report 2018

DBJ Inc. recorded the amounts transferred from the government’s investment and capital surplus to implement the special
investment operations in accordance with the provision of Article 2-23 of the supplementary provision of the Act as “Special
investment reserve”. In addition, profit or loss arising from special investment operations is transferred from retained earnings
to “Special investment surplus.”

Corporate Data

Basic net income per common share (“EPS”) for the years ended March 31, 2018 and 2017 is as follows:
Millions of Yen

Thousands of Shares

Yen

U.S. Dollars

Net income attributable toowners of the parent

Weighted average shares

EPS

EPS

Data Section

Basic EPS
Net income attributable to ownersof the parent
Net income not attributable to common
	 shareholders (Amount attributable to
the National Treasury related to special
investment operations)
Net income attributable to owners of	 the parent relating to common stock¥ 91,938

642¥ 91,295

43,632¥2,092.38

43,632¥1,994.88$19.69Year ended March 31, 2017

Basic EPS
Net income attributable to ownersof the parent
Net income not attributable to common
	 shareholders (Amount attributable to
the National Treasury related to special
investment operations)
Net income attributable to owners of	 the parent relating to common stock¥ 87,639

597¥ 87,041

Risk Management

18. Per Share Information

Year ended March 31, 2018

Corporate GovernanceSpecial Investment Reserve and Special Investment Surplus are characterized as follows:(a)	For the purpose of calculating the amount of surplus, the amounts of special investment reserve and special investment
surplus are included in the total amount of common stock and capital surplus based on the provision of Article 2-25 of
the supplementary provision of the Act.
(b)	In case of compensation for deficit, the amounts of special investment reserve or special investment surplus may bedecreased when the capital surplus and legal retained earnings become nil based on the provision of Article 2-26 of the
supplementary provision of the Act. When the surplus becomes positive after the decrease in the amounts of special
investment reserve or special investment surplus, the amounts of special investment reserve or special investment surplus
shall be increased based on the provision of Article 2-26 of the supplementary provision of the Act.
(c)	In case that DBJ Inc. determined that these amounts became unnecessary to implement special investment operations
properly, DBJ Inc. may pay the full or partial amount of special investment reserve or special investment surplus to the
National Treasury according to the resolution of the shareholders meeting and authorization of the Minister of Finance, in
accordance with the provision of Article 2-27 of the supplementary provision of the Act.
(d)	If DBJ Inc. were to be liquidated, DBJ Inc. shall pay the amounts of special investment reserve and special investment
surplus corresponding to the amount attributable to the National Treasury to the National Treasury based on theprovision of Article 2-28 of the supplementary provision of the Act when residual assets exist after discharging debts.

DBJ Group’s Strategy

17. Special Investment Reserve and Special Investment Surplus

DBJ Group’s Vision(c)	In case DBJ Inc. determined that a sufficient financial base required for the proper implementation of crisis response
operations has been secured, DBJ Inc. shall pay the full or partial amount of crisis response reserve to the National
Treasury according to the resolution of the shareholders meeting and authorization of the Minister of Finance, in
accordance with the provision of Article 2-27 of the supplementary provision of the Act.
(d)	If DBJ Inc. were to be liquidated, DBJ Inc. shall pay the amount of crisis response reserve to the National Treasury based on
the provision of Article 2-28 of the supplementary provision of the Act when residual assets exist after discharging debts.

Note: Diluted net income per share for the years ended March 31, 2018 and 2017 is not disclosed because there are no dilutive securities.
Integrated Report 2018111

19. Other Operating Income
Other operating income for the years ended March 31, 2018 and 2017 is as follows:
Thousands of
U.S. Dollars

Millions of Yen

2018

Foreign exchange gains
Gains on sales of bonds
Gains on derivatives

2017

2018

—

¥5,236

$

286

257

2,695

4,980

—

46,879

¥

—

Other

931

833

8,767

Total

¥6,198¥6,327$58,341

20. Other Income
Other income for the years ended March 31, 2018 and 2017 is as follows:
Thousands of
U.S. Dollars

Millions of Yen

Reversal of allowance for loan losses
Gains on sales of equities and other securities

2018

2017

¥ 8,897¥ 2,904$ 83,754

7,136

25,656

67,175

Reversal of reserve for contingent losses

2018

40

—

385

Equity in earnings of affiliates

4,193

4,061

39,468

Gains on sales of fixed assets

1,604

176

15,106

Collection of written-off claims

3,670

1,743

34,545other similar partnerships

36,185

21,410340,604

Gain on bargain purchase

—

9

—

Rental income on land and buildings

9,953

8,793

93,690

Sales of electric power

8,508

2,219

80,088

Gains on investments in limited partnerships andGain on change in equity

729

—

6,867

Other

6,836

8,694

64,352

Total¥87,757¥75,669$826,034

21. Other Operating Expenses
Other operating expenses for the years ended March 31, 2018 and 2017 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2018

2017

Losses on sales of bonds¥    1¥

Foreign exchange losses
Write-off of bonds
Debenture issuance costs
Corporate bonds issuance costs
Losses on derivatives

2018

—

$    15

1,180—

11,111

135

65

1,271

870

709

8,195

1,079

935

10,162

—

1,639

—

Other

6

9

57

Total

¥3,273¥3,358$30,810112

Integrated Report 2018

DBJ Group’s Vision

22. Other Expenses
Other expenses for the years ended March 31, 2018 and 2017 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2018

2017

2018

¥    3431¥   26811$    328
293

3,786
6,005
8
833
¥10,700

4,153
3,023
—
2,634
¥10,091

35,64556,52879
7,849$100,721

Corporate Governance

23. Employees’ Retirement Benefits
Employees whose service with DBJ Inc. is terminated are, under most circumstances, entitled to retirement and pension
benefits determined by reference to basic rates of pay at the time of termination, length of service and conditions underwhich the termination occurs. If the termination is involuntary, caused by retirement at the mandatory retirement age or
caused by death, the employee is entitled to greater payment than in the case of voluntary termination.

Thousands of
U.S. Dollars

2017¥34,111
1,555
372
57
(1,620)¥34,476¥33,413
1,576
364
568
(1,811)¥34,1112018$321,081
14,644
3,502
543(15,251)$324,519(2) The changes in plan assets for the years ended March 31, 2018 and 2017 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2018

2017

¥28,128
140
532
1,019
(810)
¥29,009¥27,874
139
(130)
1,026
(781)
¥28,1282018$264,759
1,324
5,011
9,593
(7,634)$273,054

Integrated Report 2018113

Data Section

Balance at beginning of year
Expected return on plan assets
Actuarial gains (losses)
Contributions from the employer
Benefits paid
Balance at end of year

Corporate Data

Balance at beginning of year
Service cost
Interest cost
Actuarial losses
Benefits paid
Balance at end of year

2018

Risk Management(a) Defined Benefit Pension Plan
(1) The changes in retirement benefit obligation for the years ended March 31, 2018 and 2017 are as follows:
Millions of Yen

DBJ Group’s Strategy

Losses on sales of fixed assets
Impairment losses
Losses on investments in limited partnerships andother similar partnerships
Depreciation
Provision of allowance for investment losses
Other
Total

(3)	Reconciliation between the liability for retirement benefits recorded in the consolidated balance sheet and the balancesof retirement benefit obligations and plan assets for the years ended March 31, 2018 and 2017 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2018

2017

Funded retirement benefit obligations¥ 26,419¥ 26,138$ 248,674

Plan assets(29,009)(28,128)(273,054)(2,590)(1,989)(24,380)

8,057

7,973

75,845Net liability for retirement benefits recorded in
the consolidated balance sheet¥   5,467¥  5,983$   51,465

Liability for retirement benefits¥   8,057¥  7,973$   75,845

Asset for retirement benefits(2,590)(1,989)(24,380)¥   5,467¥  5,983$   51,465

Unfunded retirement benefit obligations

Net liability for retirement benefits recorded in
the consolidated balance sheet

2018(4) The components of net periodic retirement benefit costs for the years ended March 31, 2018 and 2017 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2018

2017

2018

Service cost

¥1,555¥1,576$14,644

Interest cost

372

364

3,502

Expected return on plan assets

(140)

(139)

(1,324)

Amortization of net actuarial losses

180

110

1,701

Amortization of prior service cost
Net periodic retirement benefit costs

12

12

119

¥1,980¥1,925$18,642(5)	Amounts recognized in other comprehensive income (before income tax effect) in respect of adjustments for
retirement benefit for the years ended March 31, 2018 and 2017 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2018

Prior service cost

2017

¥ 12

¥  12

2018

$   119

Actuarial gains (losses)

655

(588)

6,169

Total

¥668

¥(575)$6,288(6)	Amounts recognized in accumulated other comprehensive income (before income tax effect) in respect of adjustment
for accumulated retirement benefit as of March 31, 2018 and 2017 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2018

Unrecognized prior service cost
Unrecognized actuarial gains (losses)
Total

114

Integrated Report 2018

2017

¥(31)

¥ (44)

2018$(299)

9

(646)

86

¥(22)

¥(690)$(213)

2018

89%

86%

Equity10%

12%

Others

1%

2%

Total

100%

100%

(ii) Method of determining the expected rate of return on plan assets
The expected rate of return on plan assets is determined considering the long-term rates of return which are expectedcurrently and in the future from the various components of the plan assets.

DBJ Group’s Strategy

		

2017

Debentures

DBJ Group’s Vision(7) Plan assets
		 (i) Components of plan assets
		 Plan assets as of March 31, 2018 and 2017 consisted of the following:(8) Assumptions used for the years ended March 31, 2018 and 2017 were set forth as follows:
Discount rate
Expected salary increase rate
Expected rate of return on plan assets

2017

1.1%

1.1%

1.7%–5.3%

1.7%–5.3%

0.5%

0.5%

Risk Management(b) Defined Contribution Plans
The amounts of the required contribution to the defined contribution plans of DBJ Inc. and its consolidated subsidiaries forthe years ended March 31, 2018 and 2017 are ¥231 million ($2,176 thousand) and ¥220 million, respectively.

Corporate Governance2018

24. Income Taxes
DBJ Inc. and its domestic consolidated subsidiaries are subject to Japanese national and local income taxes which, in theaggregate, resulted in a normal effective statutory tax rate of approximately 30.86% for the years ended March 31, 2018and 2017.

Corporate Data

A reconciliation of the normal effective statutory tax rate with the actual effective tax rate for the years ended March 31,2018 and 2017 is as follows:
2018

2017

30.86%

30.86%

Change in valuation allowance(3.11)%(1.87)%

Equity in earnings of affiliates(1.00)%(1.02)%

Normal effective statutory tax rate
Increase (decrease) in taxes resulting from:

0.34%

0.35%

27.09%

28.32%

Integrated Report 2018115

Data Section

Other
Actual effective tax rate

The tax effects of significant temporary differences and loss carryforwards which resulted in deferred tax assets and liabilities
as of March 31, 2018 and 2017 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2018

2017

2018

Deferred tax assets:
Allowance for loan losses¥ 17,137¥ 21,300$ 161,307

Losses from revaluation of securities

11,516

11,845

108,404

Excess of fair value over assets of consolidated subsidiaries

4,538

4,538

42,720Liability for retirement benefits

2,010

1,985

18,925

Tax goodwill

8,160

—

76,812

Tax loss carryforwards

5,121

5,037

48,211

Other

13,558

9,381

127,621

Sub-total

62,04454,088584,000(40,763)(44,798)(383,695)

21,2809,289

200,306

Unrealized gain on available-for-sale securities(19,767)(17,491)(186,060)

Deferred gain on derivatives under hedge accounting(12,500)(14,783)(117,665)

Less-valuation allowance

Total
Deferred tax liabilities:(3,366)(2,143)(31,687)

Total

Other

(35,634)(34,418)(335,413)

Net deferred tax assets (liabilities)¥(14,353)¥(25,129)$(135,107)

25. Lease Transactions(a) Finance Leases
Information about finance leases is omitted since there is no materiality.
(b) Operating Leases(As lessee)
The minimum lease commitments under non-cancelable operating leases as of March 31, 2018 and 2017 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2018

2017

2018

Due within 1 year

¥1,521¥1,472$14,321

Due after 1 year

4,615

3,959

43,446Total¥6,137¥5,432$57,767(As lessor)
The minimum lease commitments under non-cancelable operating leases as of March 31, 2018 and 2017 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2018

2017

Due within 1 year

¥ 5,972¥ 3,394$ 56,213

Due after 1 year

27,0507,375

254,620

Total¥33,022¥10,769$310,833

116

Integrated Report 2018

2018

DBJ Group’s Vision

26. Other Comprehensive Income (Loss)
The components of other comprehensive income (loss) for the years ended March 31, 2018 and 2017 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2018

2017

2018

¥13,053¥ (3,890)$122,866(9,248)(11,177)(87,057)

Unrealized gain (loss) on available-for-sale securities:
Gain (loss) arising during the year		Amount before income tax effect

3,804(15,067)

35,809		

Income tax effect(1,204)

4,486(11,333)

2,600(10,580)

24,476

		TotalDeferred loss on derivatives under hedge accounting:
Gain arising during the year
Reclassification adjustments to profit or loss
Amount before income tax effect		

Income tax effect		Total

6,465

2,231

(8,871)(8,755)(83,505)(8,634)(2,290)(81,275)

2,699

822

25,406(5,935)(1,467)(55,869)

(74)

(486)

(698)

Foreign currency translation adjustments:
Adjustments arising during the year
Reclassification adjustments to profit or loss
Amount before income tax effect		

Income tax effect

—

—

—

(74)

(486)

(698)

—

—

—

(74)

(486)

(698)

Adjustments arising during the year

474

(699)

4,468

Reclassification adjustments to profit or loss

193

123

1,820

		TotalAdjustments for retirement benefits:

Amount before income tax effect

668

(575)

6,288

		

Income tax effect

(204)

175

(1,925)

463

(400)

4,363

3,261

(341)

30,700		TotalShare of other comprehensive income (loss) in affiliates accounted
for by the equity method:Gain (loss) arising during the year
Reclassification adjustments to profit or loss		Amount before income tax effect		

Income tax effect

(87)

237

(820)

3,174

(104)

29,881

—

—

3,174

(104)

29,881

Total other comprehensive income (loss)¥   228¥(13,039)$  2,153

Integrated Report 2018117

Data Section—

		TotalCorporate Data		

Risk Management		

Corporate Governance

		

236

DBJ Group’s Strategy

Reclassification adjustments to profit or loss

27. Segment Information
DBJ Inc. consists of only one business segment of long-term financing and accordingly, the disclosure of the reportablesegment information is omitted.
Related Information:
Segment information by service for the years ended March 31, 2018 and 2017 is following:
Millions of Yen
Year ended March 31, 2018

Loan business

Securities investment

Other

Total

Ordinary income from external customers¥166,266¥66,919¥58,606¥291,792

Year ended March 31, 2017

Loan business

Securities investment

Other

Total

Ordinary income from external customers¥167,254¥68,077¥50,144¥285,476

Year ended March 31, 2018

Loan business

Securities investment

Other

Total

Ordinary income from external customers$1,565,006$629,888$551,646$2,746,540

Millions of Yen

Thousands of U.S. Dollars

28. Financial Instruments and Related Disclosures(a) Financial Instruments(1) Policy for Financial Instruments
DBJ Inc. provides investment and loan services that are aimed to provide long-term stable funding. As the main
methods of acquiring funds, in addition to issuing corporate bonds and long-term borrowings, DBJ Inc. relies on thestable procurement of long-term funds from the government’s Fiscal Investment and Loan Program (FILP). Since themajority of its assets are long-term with a fixed rate, DBJ Inc. raises its funds mainly with long-term, fixed rate liabilities.
From both funding and investment aspects, DBJ Inc. implements comprehensive asset/liability management inorder to mitigate the risk of capital shortfall and losses from fluctuations of interest rate and exchange rate. DBJ Inc.
utilizes derivative financial instruments in order to hedge or manage the risks related to interest and currency.
(2) Nature and Extent of Risks Arising from Financial Instruments
The financial assets of DBJ Inc. are mainly investments and loans in domestic customers, which are exposed to credit
risk that stems from customers’ default of contracts or decline of their creditworthiness. Main categories of industriesof debtors are electricity, gas, thermal supply, water supply, real estate, rental and leasing, manufacturing and others
as of March 31, 2018. The changes of economic circumstances surrounding these industries may influence thefulfillment of their obligations. DBJ Inc. holds securities such as bonds, equities and investments in limited partnerships
and other similar partnerships, which are exposed to issuer’s credit risk, interest rate risk, price volatility risk and otherrisks. DBJ Inc. does not have any trading-related risk because it does not engage in trading (specified transactions).
Although corporate bonds and borrowings are exposed to cash liquidity risk and interest rate risk, these risks
are hedged or controlled by matching of financing and investing activities, interest-rate swap agreements and othertransactions.
Foreign currency denominated loans, debentures and corporate bonds are exposed to exchange rate risk. DBJ Inc.
mitigates this risk by matching foreign currency investments and loans with foreign currency corporate bonds andcurrency-related transactions.
DBJ Inc. utilizes derivative financial transactions such as interest-rate swap agreements and currency swap
agreements in order to hedge or manage the risks related to interest and currency. DBJ Inc. applies hedge accounting
as necessary. Details for hedging instruments, hedged items, hedging policy and assessment of effectiveness of thehedges are described in Note 2 (f) “Hedge Accounting.”

118

Integrated Report 2018

Integrated Report 2018

119

Data Section5) Quantitative Information about Market Risk
DBJ Inc. has not been engaged in trading activities, and all the assets and liabilities are financial instruments
for the purposes other than trading.
Market risk exposure (estimated loss) is based on VaR (holding period of 1 year, observation period of 5
years or more, and confidence interval of 99.9%). The amount of market risk (risks pertaining to the changes

Corporate Data

4) Derivative Transactions
In conducting derivative transactions, segregation of duties is maintained in the front office, the back officeand the risk management department based on in-house regulations.

Risk Management

3) Price Volatility Risk Management
When DBJ Inc. acquires financial assets entailing price volatility risk such as securities with readily available
market quotations, it follows in-house regulations and policies which have been developed taking into accountmarket fluctuation risks, and the risk management department is involved in decision-making, as necessary.
Through regular monitoring, price volatility risks are reviewed on a timely basis and reported to ALM & Risk
Management Committee periodically.

Corporate Governance2) Foreign Exchange Risk Management
Foreign currency investments, loans and bonds are exposed to exchange rate risk, therefore those risks
are hedged or managed not only by offsetting some foreign currency denominated investments and loans
with foreign currency denominated corporate bonds and debentures but also by making currency-related
hedging transactions.

DBJ Group’s Strategy(ii) Market Risk Management
1) Interest Rate Risk Management
DBJ Inc. manages interest rate risk by asset/liability management. Details of risk management methods andprocedures are determined on internal rules, and Management Committee and ALM & Risk Management
Committee determine policies related to asset/liability management, monitoring of implementation and futureplans. In addition, the risk management department monitors the interest rate and term of financial assets/
liabilities overall. ALM & Risk Management Committee conducts regular monitoring with cash flow ladderanalyses (gap analysis), value at risk (VaR), interest rate sensitivity analyses (basis point value), and other methods.
As part of asset/liability management, interest-rate swaps are used to avoid or hedge interest rate risk.

DBJ Group’s Vision(3) Risk Management for Financial Instruments(i) Credit Risk Management
In accordance with the internal guidelines, DBJ Inc. utilizes credit exposure management and portfolio
management for investments and loans. When making an investment or loan, DBJ Inc. examines the entity’s
viability and the entity’s project’s profitability. After that, DBJ Inc. sets ratings along with an internal rating system,
grants credit amount, sets collateral and guarantee. The sales and credit analysis departments hold separate rolesin the screening and administering of credit for individual loans and each department keeps the operations of theother in check. The Committee on Investment and Loan Decisions meets as needed to deliberate important issues
concerning the management and governance of individual loans. DBJ Inc. performs a comprehensive analysisof data based on borrower ratings, and calculates the loan portfolio’s overall exposure to credit risk, which ismeasured regularly to ensure that such risk remains within specified range of capital.
The credit risk of securities is managed in the same way as that of loans. In addition, DBJ Inc. regularly
examines total risk which takes into account the market value of the securities. As for counterparty risk arisingfrom derivative transactions, DBJ Inc. manages derivative transactions by setting a limit after continuallymonitoring the cost of restructuring its transactions and the creditworthiness of each counterparty and also
manages risk by utilizing central clearance organization and through receipt/payment of margin money based on
Credit Support Annex (CSA) between counterparties.

in interest rates, foreign exchanges and market prices) as of March 31, 2018 and 2017 was ¥43,107 million($405,755 thousand) and ¥17,511 million, respectively. Effective from the year ended March 31, 2018, themeasurement method of VaR has been changed from the historical simulation method to the variancecovariance method. Such measurements are conducted by the risk management department on a regular basis
and reported to the ALM & Risk Management Committee to utilize for establishing ALM operating policies.
VaR measures the market risk volume under a definite probability of incidence calculated statistically basedon the historical market movements and therefore, it may fail to capture risks which arise under exceptional
market conditions affected by drastic change.
DBJ Inc. recognizes that rigid risk management is being conducted as risks that cannot be captured by
VaR alone are identified in detail by conducting backtesting to compare the VaR calculated by the modelwith hypothetical performances calculated based on the actual market movements as well as performing
measurement using other risk indices and stress tests.
(iii) Liquidity Risk Management on Financing
The risk management department monitors the possession level of cash liquidity and reports it to the ALM & Risk
Management Committee periodically in line with in-house regulations of liquidity risk management on financing.
The ALM & Risk Management Committee manages liquidity risk by appropriate operations of financing andinvesting activities based on the risk situation.
(4) Supplementary Explanation on Fair Value of Financial Instruments
The fair value of financial instruments is measured at quoted market prices. If a quoted price is not available,
DBJ Inc. measures fair value based on a reasonably assessed price. Because an assessed price is computed using
certain assumptions, price could differ if different assumptions are used.
(b) Fair Values Information of Financial Instruments
The following are the carrying amount, fair value and differences between them as of March 31, 2018 and 2017.
Unlisted equities and others, whose fair value cannot be reliably determined, are excluded from the table below (see (2)).
Millions of Yen

2018
Carrying amount

Fair value

Difference

Cash and due from banks¥1,033,907

Call loans and bills bought

463,179¥1,033,907
463,179

9,411

10,166755

Held-to-maturity debt securities

629,541

641,881

12,339Available-for-sale securities

525,697525,697

—

2,077

4,645

2,568

12,683,708

13,199,192

515,484

Total assets¥15,347,522¥15,878,669¥531,146

Debentures

3,086,650—

3,196,425—

109,774—

Money held in trust¥——

Securities

Investments in affiliates
Loans
Allowance for loan losses*1

Call money and bills sold

12,725,235(41,526)———

Corporate bonds

8,495,170
1,846,332

8,551,765
1,849,307

56,594
2,974

Total liabilities¥13,428,154¥13,597,497¥169,343

31,54831,548—2,048¥    33,596

2,048¥    33,596——

Payables under repurchase agreements
Borrowed money

Derivative transactions*2
Derivative transactions not qualifying for	  hedge accounting
Derivative transactions qualifying for	  hedge accounting
Total derivative transactions

120

Integrated Report 2018¥

DBJ Group’s Vision

Millions of Yen

2017¥ 1,044,104——¥ 1,044,104——

694,354460,222
1,055
13,039,526(53,451)
12,986,074¥15,185,811
3,016,714
13,00055,142
8,393,367
1,695,141¥13,173,366

708,226
460,222
6,778

13,871—
5,723

13,522,246¥15,741,578
3,143,805
13,00055,1428,484,914
1,697,995¥13,394,858

536,172¥555,767
127,090——
91,5462,853¥221,491

32,47532,475—(953)
31,521¥¥(953)
31,521———

Risk Management¥

Difference

Corporate GovernanceTotal assets
Debentures
Call money and bills soldPayables under repurchase agreements
Borrowed money
Corporate bonds
Total liabilities
Derivative transactions*2
Derivative transactions not qualifying for	  hedge accounting
Derivative transactions qualifying for	  hedge accounting
Total derivative transactions

Fair value

DBJ Group’s Strategy

Cash and due from banks
Call loans and bills bought
Money held in trust
Securities
Held-to-maturity debt securities
Available-for-sale securities
Investments in affiliates
Loans
Allowance for loan losses*1

Carrying amount——¥Thousands of U.S. Dollars

2018
Difference$  9,731,806
4,359,744
88,583$  9,731,806
4,359,744
95,6905,925,657
4,948,208
19,551
119,778,192(390,874)
119,387,318$144,460,868
29,053,567——
79,962,074
17,378,887$126,394,528

6,041,803
4,948,208
43,724

116,146—
24,173

124,239,390$149,460,365
30,086,832——
80,494,779
17,406,886$127,988,497

4,852,072$4,999,498
1,033,265——
532,705
27,999$1,593,969

296,952

296,952—

19,279$    316,231

19,279$    316,231

$

—
—
7,107

$

Data Section

Total assets
Debentures
Call money and bills soldPayables under repurchase agreements
Borrowed money
Corporate bonds
Total liabilities
Derivative transactions*2
Derivative transactions not qualifying for	  hedge accounting
Derivative transactions qualifying for	  hedge accounting
Total derivative transactions

Fair value

Corporate Data

Cash and due from banks
Call loans and bills bought
Money held in trust
Securities
Held-to-maturity debt securities
Available-for-sale securities
Investments in affiliates
Loans
Allowance for loan losses*1

Carrying amount——*1. General and specific allowances for loan losses are deducted.
*2. Assets and liabilities arising from derivative transactions are presented on a net basis.
Integrated Report 2018121

(1) Following are the methods used to calculate the fair values of financial instruments:
Assets(i) Cash and due from banks
For deposits without maturity, the carrying amount is presented as the fair value, as such carrying amountapproximates the fair value. For deposits with maturity, the carrying amount is presented as the fair value, assuch carrying amount approximates the fair value because the remaining maturity period of the majority of suchdeposits is short (maturity within 1 year).
(ii) Call loans and bills bought
For each of these items, the majority of transactions have short contract terms (1 year or less). Thus, the carrying
amount is presented as the fair value, as such carrying amount approximates the fair value.
(iii) Money held in trust
The fair value of financial assets that are the components of money held in trust is measured in the same manneras (v) “Loans.”
Notes on money held in trust by holding purpose are described in Note 30.
(iv) Securities
The fair value of marketable equity securities is measured at the market price. The fair value of bonds is measured
at the market price or the quoted price from third party. For bonds without such price, the fair value is determinedby discounting contractual cash flows at the rates that consist of the risk free rate and the credit risk premium
based on types of securities, internal ratings and tenor.
Notes on securities by holding purpose are described in Note 30.
(v) Loans
The fair value of loans is determined by discounting contractual cash flows at the rates that consist of the risk
free rate and the credit risk premium that is based on types of loans, internal ratings and tenor. Foreign currency
swap contracts which meet the hedging requirements of the assignment method is limited to loans for which thecontractual cash flows are matched with the interest rate swap and foreign currency swap. For loans which areshort contract terms (1 year or less), the carrying amount is presented as the fair value, as such carrying amountapproximates the fair value. With respect to the claims on debtors who are likely to become bankrupt or to beclosely monitored, and for which future cash flows can reasonably be estimated, the fair values are determinedby discounting expected cash flows that reflect expected loss at the risk free rate. For loans to obligors whoare “legally bankrupt,” “effectively bankrupt” and “possibly bankrupt,” the reserve is provided based on the
discounted cash flow method, or based on amounts expected to be collected through the disposal of collateralor execution of guarantees. Carrying value net of the reserve as of the consolidated balance sheet date is areasonable estimate of the fair value of those loans.

122

Integrated Report 2018

123

Data Section

Integrated Report 2018

Corporate Data

Derivatives
Derivatives consist of interest rate related derivatives (interest rate swaps), currency related derivatives (currency
swaps, forward foreign exchange contracts) and credit derivatives. Fair value of these derivatives is determinedbased on the discounted present value, quoted prices presented by the financial institutions, etc.

Risk Management(v) Corporate bonds
For floating rate corporate bonds issued by DBJ Inc. and its consolidated subsidiaries, the carrying amount ispresented as the fair value, as such carrying amount approximates the fair value. This is on the basis that themarket interest rate is reflected in the interest rate set within a short time period and that there has been no
significant change in the creditworthiness of DBJ Inc. or its consolidated subsidiaries before and after the issuance.
For fixed rate corporate bonds with market prices, the fair value is determined based on their market price.
For fixed rate corporate bonds without market prices, the fair value is determined by discounting contractual
cash flows based on types of maturity lengths (when interest rate swap contracts which meet the hedging
requirements of the accrual method is qualified to corporate bonds, the contractual cash flows are based on
the interest rate swap) at the rates that consist of the risk free rate and the rate of certain costs applicable to
DBJ Inc. or its consolidated subsidiaries. Certain foreign currency denominated corporate bonds are translatedusing the forward contract rates and the present value of the contractual cash flows is computed regarding themas Japanese yen denominated corporate bonds.

Corporate Governance(iv) Borrowed money
For floating rate borrowed money, the carrying amount is presented as the fair value, as such carrying amountapproximates the fair value. This is on the basis that the market interest rate is reflected in the fair value of suchborrowed money because the terms of these were set within a short time period for such variable rate borrowings
and that there has been no significant change in the creditworthiness of DBJ Inc. nor consolidated subsidiaries
before and after such borrowings were made. For fixed rate borrowed money, the fair values are determinedby discounting contractual cash flows based on types of maturity lengths (when interest rate swap contracts
which meet the hedging requirements of the accrual method is qualified to borrowings, the contractual cash
flows are based on the interest rate swap) at the rates that consist of the risk free rate and the rate of certain
costs applicable to DBJ Inc. or consolidated subsidiaries. Certain foreign currency denominated borrowed money
is translated using the forward contract rates and the present value of the contractual cash flows is computed
regarding them as Japanese yen denominated borrowed money.

DBJ Group’s Strategy(ii) Call money and bills sold and (iii) Payables under repurchase agreements
For each of these items, the majority of transactions have short contract terms (1 year or less). Thus, the carrying
amount is presented as the fair value, as such carrying amount approximates the fair value.

DBJ Group’s Vision

Liabilities(i) Debentures
For floating rate debentures issued by DBJ Inc., the carrying amount is presented as the fair value, as such carrying
amount approximates the fair value. This is on the basis that the market interest rate is reflected in the fair valueof such debentures because the terms of these were set within a short time period and that there has been no
significant change in the creditworthiness of DBJ Inc. before and after the issuance. For fixed rate debentures withmarket prices, the fair value is determined based on their market price. For fixed rate debentures without market
prices, the fair value is determined by discounting contractual cash flows based on types of maturity lengths(when interest rate swap contracts which meet the hedging requirements of the accrual method is qualified todebentures, the contractual cash flows are based on the interest rate swap) at the rates that consist of the risk
free rate and the rate of certain costs applicable to DBJ Inc. Certain foreign currency denominated debentures
are translated using the forward contract rates and the present value of the contractual cash flows is computed
regarding them as Japanese yen denominated debentures.

(2)	Following are the financial instruments whose fair value cannot be reliably determined as of March 31,2018 and 2017:
		These securities are not included in the amount in the table summarizing fair values of financial instruments.
Carrying amountThousands of
U.S. Dollars

Millions of Yen

2018

2017

2018

Money held in trust*1¥  1,855¥ 15,599$   17,467

Unlisted equities*2,3
Investments in limited partnerships and othersimilar partnerships*1
Unlisted other securities*2,3
Industrial investment borrowed money(Special Account for FILP)*4

318,670

298,396

2,999,533

247,593
175,373

218,510111,325

2,330,512
1,650,726

79,00079,000743,599

Total¥822,492¥722,832$7,741,837*1.	Assets in trust and partnership assets which consist of financial instruments, whose fair value cannot be reliably determined, suchas unlisted equities and other securities, are not subject to fair value disclosures.
*2.	Financial instruments for which the quoted price is not available and fair value cannot be reliably determined, are not subject tofair value disclosures.
*3.	Impairment loss on financial instruments whose fair value cannot be reliably determined for the year ended March 31, 2018 and2017 was ¥466 million ($4,395 thousand) and ¥2,080 million, respectively, which consist of unlisted equities of ¥236 million($2,222 thousand) and ¥808 million and unlisted other securities of ¥230 million ($2,172 thousand) and ¥1,272 million for theyears ended March 31, 2018 and 2017, respectively.
*4.	For the industrial investment borrowed money (Special Account for FILP), the interest rate is not determined at the time ofborrowing, but total amount of interest expense will be determined at the time of final repayment. Accordingly, since the future
cash flows cannot be reasonably estimated and the fair value is extremely difficult to determine, it is not subject to the fair value
disclosure requirement.

(3) 	Maturity analysis for financial assets and securities with contractual maturities as of March 31, 2018 and2017 are as follows:
Millions of Yen

2018

Due from banks

Due after
3 years through5 years

Due after
5 years through7 years

Due after
7 years through10 years

Due after
10 years¥1,033,900

¥

¥

¥

¥

¥

—

—

—

—

—

Call loans and bills bought

463,179

—

—

—

—

—

Securities
Held-to-maturity debt securities	  with market values

112,302

246,272

155,462

22,52981,54011,434

		 Japanese government bonds

20,031

20,035

15,162

10,08915,09910,034

		 Japanese local government bonds

—

—

—

—

—

—

		 Short-term corporate bonds

—

—

—

—

—

—

		Corporate bonds

61,475130,390

99,9785,914

56,0001,400

		Other
Available-for-sale securities with
	  contractual maturities

30,794

95,84640,322

6,526

10,441—

19,13091,01095,03555,887

68,199108,484

		 Japanese government bonds

—

5,211

26,057

18,626

5,165—

		 Japanese local government bonds

—

—

—

—

—

—

		 Short-term corporate bonds

—

—

—

—

—

—

19,13085,79868,97833,80663,034

108,484

—

—

—

3,454

—

—

		Corporate bonds
		Other124

Due in1 year or lessDue after
1 year through3 years

Loans*1

2,369,399

3,360,099

2,655,908

1,719,584

1,901,780

674,712

Total¥3,997,911¥3,697,381¥2,906,407¥1,798,001¥2,051,520¥794,630

Integrated Report 2018

2017

Due from banks
Call loans and bills bought

Due in1 year or lessDue after
1 year through3 years

Due after
3 years through5 years

Due after
5 years through7 years

Due after
7 years through10 years¥1,044,098

¥

¥

¥

¥

—

—

—

—

Due after
10 years

¥

—

—

—

—

—

—

125,071

243,240

170,635

63,80474,85916,742

		 Japanese government bonds

45,101

40,153

10,20910,034

15,17015,042

—

—

—

—

—

—

		 Japanese local government bonds
		 Short-term corporate bonds

—

—

—

—

—

26,906

117,095

104,671

29,47453,7001,700

		Other
Available-for-sale securities with
	  contractual maturities

53,06485,99155,75524,295

5,989—

10,66069,508107,127

41,85854,896

91,402

		 Japanese government bonds——

31,6685,230

18,5891,991

		 Japanese local government bonds

—

—

—

—

—

—

		 Short-term corporate bonds
		Corporate bonds

—

—

—

—

—

—

10,66069,50875,45936,62732,862

89,410

—

—

—

—

3,445

—

2,366,164

3,536,702

2,864,175

1,643,378

1,822,873

760,196

Total¥3,545,995¥3,849,451¥3,141,938¥1,749,040¥1,952,630¥868,341

Thousands of U.S. Dollars

2018
Due in1 year or lessDue from banks$ 9,731,744

Due after
1 year through3 years

Due after
3 years through5 years

Due after
5 years through7 years

Due after
7 years through10 years

Due after
10 years

$

$

$

$

$

—

—

—

—

—

—

—

—

—

—

Securities
Held-to-maturity debt securities	  with market values

1,057,061

2,318,073

1,463,318

212,063

767,513

107,629

		 Japanese government bonds

188,549

188,585

142,718

94,966142,122

94,451

		 Japanese local government bonds

—

—

—

—

—

—

		 Short-term corporate bonds

—

—

—

—

—

—

		Corporate bonds

578,651

1,227,321

941,062

55,671

527,108

13,178		Other
Available-for-sale securities with
	  contractual maturities

289,861

902,167

379,538

61,427

98,283—

180,067

856,646894,540

526,048

641,937

1,021,123

		 Japanese government bonds—

49,054245,270

175,327

48,616—

		 Japanese local government bonds

—

—

—

—

—

—

		 Short-term corporate bonds

—

—

—

—

—

—

180,067

807,592

649,270

318,205

593,321

1,021,123———

32,516——

		Other
Loans*1

22,302,328

31,627,443

24,999,143

16,185,845

17,900,794

6,350,831

Total$37,630,944$34,802,162$27,357,001$16,923,956$19,310,244$7,479,582*1. Obligations to “Legally Bankrupt,” “Effectively Bankrupt” and “Possibly Bankrupt” amounting to ¥43,750 million ($411,808
thousand) are not included as of March 31, 2018.
*2. Obligations to “Legally Bankrupt,” “Effectively Bankrupt” and “Possibly Bankrupt” amounting to ¥46,035 million are notincluded as of March 31, 2017.

Integrated Report 2018125

Data Section

4,359,744

Corporate Data

Call loans and bills bought

		Corporate bonds

Risk Management

		Other
Loans*2

Corporate Governance—		Corporate bonds

DBJ Group’s Strategy—

Securities
Held-to-maturity debt securities	  with market values

DBJ Group’s Vision

Millions of Yen

(4) 	Maturity analysis for Debentures, Borrowed money and Other Interest-Bearing Liability as of March 31,2018 and 2017 are as follows:
Millions of Yen

2018
Due in1 year or lessDue after
1 year through3 years

Due after
3 years through5 years

Due after
5 years through7 years

Due after
7 years through10 years

Call money and bills sold

¥

¥

¥

¥

¥

Borrowed money

1,318,286

Debentures and Corporate bonds
Total

—

—

1,946,837—

2,133,238—

Due after
10 years—

957,463¥

976,477—

1,241,868

654,915

1,171,168

1,281,409

585,776

1,077,900

161,813¥1,973,202¥3,118,005¥3,414,647¥1,543,240¥2,054,377¥1,403,681

Due after
10 yearsMillions of Yen

2017
Due in1 year or lessDue after
1 year through3 years

Due after
3 years through5 years

Due after
5 years through7 years

Due after
7 years through10 years

Call money and bills sold

¥

¥

¥

¥

¥

Borrowed money

1,291,705

2,124,948

1,967,458

1,010,326

962,438

1,115,489

729,155

1,269,981

872,867

674,010

908,545257,296¥2,033,861¥3,394,929¥2,840,325¥1,684,337¥1,870,983¥1,372,785

Due after
7 years through10 years

Due after
10 years

Debentures and Corporate bonds
Total

13,000

—

—

—

—

¥

—

Thousands of U.S. Dollars

2018
Due in1 year or lessDue after
1 year through3 years— $Due after
5 years through7 years

Call money and bills sold$Borrowed money

12,408,571

18,324,899

20,079,425

9,012,267

9,191,240

11,689,271

Debentures and Corporate bonds

6,164,491

11,023,795

12,061,463

5,513,713

10,145,902

1,523,091

Total

— $

Due after
3 years through5 years

— $

— $

— $

—

$18,573,062 $29,348,694 $32,140,887 $14,525,980 $19,337,142 $13,212,362

29. Derivative Transactions(a) Derivative Transactions to which Hedge Accounting is not applied(1) Interest rate-related transactions
Millions of Yen

2018
Contract amountTotal

Due after 1 year

Fair value

Unrealized gains(losses)Over-the-counter
Swaps
		

Receive fixed/ Pay float¥951,878¥850,297¥ 47,842¥ 47,842

		

Receive float/ Pay fixed

938,817

841,032(16,894)(16,894)——¥ 30,948¥ 30,948

Total

Millions of Yen

2017
Contract amountTotal

Due after 1 year

Fair value

Unrealized gains(losses)¥ 52,075¥ 52,075

Over-the-counter
Swaps
		

Receive fixed/ Pay float¥1,013,253¥856,257

		

Receive float/ Pay fixed

995,749

839,565(19,689)(19,689)——¥ 32,385¥ 32,385

Total

126

Integrated Report 2018

2018
Contract amountTotal

Due after 1 year

Fair value

Unrealized gains(losses)$ 450,326$ 450,326

Over-the-counter

DBJ Group’s Vision

Thousands of U.S. Dollars

Swaps
Receive fixed/ Pay float$8,959,701$8,003,549

		Receive float/ Pay fixed

8,836,764

7,916,346(159,019)(159,019)——$ 291,307$ 291,307

Total*1. The above transactions are marked to market and changes in unrealized gains (losses) are included in the consolidated statementof income.
*2. Fair values for the over-the-counter transactions are based primarily on discounted present values.

(2) Currency-related transactions

DBJ Group’s Strategy		Millions of Yen

2018
Total

Fair value

Unrealized gains(losses)¥  4,924¥4,924¥     73¥     73

121,307
41,993
—

—
—

2,120
(1,639)¥    554

2,120(1,639)¥    554—
Millions of Yen

2017
Contract amount
Total

¥

—

¥—

136,290108,747———

Fair value

¥

—

1,518
(1,469)¥48—

Unrealized gains(losses)

¥

—

1,518
(1,469)¥48

Corporate Data

Over-the-counter
Swaps
Forwards
		Sold		Bought
Total

Due after 1 year

Risk Management

Over-the-counter
Swaps
Forwards
		Sold		Bought
Total

Due after 1 year

Corporate GovernanceContract amountThousands of U.S. Dollars

2018
Contract amountTotal

Due after 1 year

Fair value

Unrealized gains(losses)

Swaps

Data Section

Over-the-counter$   46,354$46,354$     694$     694

		Sold1,141,825—

19,955

19,955

		Bought

395,271—(15,433)(15,433)$  5,216$   5,216

Forwards

Total

—

—

*1. The above transactions are marked to market and changes in unrealized gains (losses) are included in the consolidated statementof income.
*2. Fair values are based primarily on discounted present values.

Integrated Report 2018127

(3) Equity-related transactions
		Not applicable.
(4) Bond-related transactions
		Not applicable.
(5) Commodity-related transactions
		Not applicable.
(6) Credit Derivative transactions
Millions of Yen

2018
Contract amount
Total

Over-the-counter
Credit default options
		Sold		Bought
Total

Due after 1 year

¥7,5007,500—

Fair value¥7,500
4,500
—

¥ 147
(102)
¥   45

Unrealized gains(losses)

¥ 147
(102)
¥   45

Millions of Yen

2017
Contract amount
Total

Over-the-counter
Credit default options
		Sold		Bought
Total

Due after 1 year

¥7,5007,500—

Fair value¥7,500
7,500
—

¥ 202
(161)
¥ 40

Unrealized gains(losses)

¥ 202
(161)
¥ 40

Thousands of U.S. Dollars

2018
Contract amount
Total

Over-the-counter
Credit default options
		Sold		Bought
Total$70,595
70,595—Due after 1 year

$70,595
42,357—

Fair value$1,389(961)$  428

Unrealized gains(losses)$1,389(961)$  428*1. The above transactions are marked to market and changes in unrealized gains (losses) are included in the consolidated statementof income.
*2. Fair values are based on discounted present values or the counterparties’ tendered price.
*3. ‘Sold’ means the underwriting of credit risk and ‘Bought’ means the transferring of credit risk.

128

Integrated Report 2018

DBJ Group’s Vision(b) Derivative Transactions to which Hedge Accounting is Applied(1) Interest rate-related transactions
Millions of Yen

2018
Contract amount
Hedged item

Deferral method
		Receive float/ Pay fixed

Accrual method
Swaps
		

Receive fixed/ Pay float

		

Receive float/ Pay fixed

Borrowed money
and Loans
Debentures,
Borrowed money,
Corporate bonds and Loans

Total

Due after 1 year

Fair value¥   61,663¥   21,502¥(35)

1,582,096

1,464,188*3

40,86038,868——

DBJ Group’s Strategy

Swaps

Total

¥(35)
Corporate GovernanceMillions of Yen

2017
Contract amount
Hedged item

Total

Due after 1 year

Fair value¥ 98,700¥ 53,892¥(707)

897,401

825,638*3

10,525

8,948

—

—

Deferral method
Swaps
		

Borrowed money and Loans

Receive float/ Pay fixed

Swaps
		

Receive fixed/ Pay float

		

Receive float/ Pay fixed

Debentures,
Borrowed money,
Corporate bonds,
Securities and Loans

Total

Risk Management

Accrual method¥(707)

Thousands of U.S. Dollars

2018

Hedged item

Deferral method
Swaps
		

Receive float/ Pay fixed

Accrual method
Swaps
Receive fixed/ Pay float

		

Receive float/ Pay fixed

Total

Debentures,
Borrowed money,
Corporate bonds and Loans

Fair value$   580,421$   202,398$(338)

14,891,719

13,781,892*3

384,605

365,860——

Data Section

		

Borrowed money
and Loans

Due after 1 year

Total

Corporate Data

Contract amount$(338)*1. DBJ Inc. applies the deferral method of hedge accounting primarily stipulated in “Accounting and Auditing Treatments on the
Application of Accounting Standards for Financial Instruments in Banking Industry” (JICPA Industry Audit Committee Report
No. 24, February 13, 2002).
*2. Fair values for the over-the-counter transactions are based primarily on discounted present values.
*3. The above interest rate swap contracts which qualify for the hedging requirements of the accrual method are not remeasured atfair value but the differential paid or received under the swap agreements are recognized and included in interest expense
or income. In addition, the fair value of such interest rate swaps in Note 28 “Financial Instruments and Related Disclosures”
is included in that of hedged items such as debentures, borrowed money, corporate bonds, securities and loans.

Integrated Report 2018129

(2) Currency-related transactions
Millions of Yen

2018
Contract amountTranslated at contractual rates
Swaps
Forwards

Hedged item

Total

Due after 1 year

Foreign-currency debentures, Borrowed money, andCorporate bonds¥296,126¥296,126*2

65,307—¥2,084Foreign-currency
available-for-sale securities

Total

—

—

Fair value¥2,084

Millions of Yen

2017
Contract amountTranslated at contractual rates
Swaps
Forwards

Hedged item

Total

Due after 1 year

Foreign-currency debentures, Borrowed money, andCorporate bonds¥392,596¥281,012*2

32,096—¥(245)

Foreign-currency
available-for-sale securities

Total

—

—

Fair value¥(245)

Thousands of U.S. Dollars

2018
Contract amount
Hedged item

Translated at contractual rates
Swaps
Forwards
Total

Foreign-currency debentures, Borrowed money, andCorporate bonds
Foreign-currency
available-for-sale securities

Total

Due after 1 year

Fair value$2,787,334$2,787,334*2

614,716—$19,618——$19,618*1. Fair values are based primarily on discounted present values.
*2. The above currency swaps which qualify for the hedging requirements of assignment method are not subject to the disclosure offair value information. In addition, the fair value of such foreign currency swaps in Note 28 “Financial Instruments and Related
Disclosures” is included in that of hedged items such as foreign-currency debentures, borrowed money and corporate bonds.

(3) Equity-related transactions
		Not applicable.
(4) Bond-related transactions
		Not applicable.

130

Integrated Report 2018

Fair value of securities, money held in trust and negotiable certificate of deposit classified as “Cash and due from banks” asof March 31, 2018 and 2017 is summarized below.
(a) Securities(1) Held-to-Maturity Debt Securities as of March 31, 2018 and 2017 are as follows:

DBJ Group’s Vision

30. Fair Value of Securities and Money Held in Trust

Millions of Yen

Fair value exceeds­carrying amount

Difference¥ 90,451——
251,591
152,230
494,274———
103,567
31,700135,267¥629,541¥ 98,063——
254,494
154,454507,013———103,21431,653
134,867¥641,881¥ 7,611
—
—
2,903
2,224
12,738
—
—
—
(353)
(46)
(399)
¥12,339

Japanese government bonds
Japanese local government bonds
Short-term corporate bonds
Corporate bonds
Other

Sub-total
Fair value does not
Japanese government bonds
exceed carrying amount Japanese local government bonds
Short-term corporate bonds
Corporate bonds
Other
Sub-total
Total

Corporate GovernanceFair value

DBJ Group’s Strategy

2018
Carrying amountMillions of Yen

Fair value exceeds­carrying amount

Difference¥135,711——
181,112167,165
483,988———
152,435
57,930210,366¥694,354¥144,901——
184,569
169,497498,968———
151,399
57,857
209,257¥708,226¥ 9,190
—
—
3,457
2,332
14,979———(1,035)(72)(1,108)¥13,871

Japanese government bonds
Japanese local government bonds
Short-term corporate bonds
Corporate bonds
Other

Sub-total
Fair value does not
Japanese government bonds
exceed carrying amount Japanese local government bonds
Short-term corporate bonds
Corporate bonds
Other
Sub-total
Total

Corporate Data

Fair value

Risk Management

2017
Carrying amountThousands of U.S. Dollars

Fair value exceeds­carrying amountJapanese government bonds
Japanese local government bonds
Short-term corporate bonds
Corporate bonds
Other

Sub-total
Fair value does not
Japanese government bonds
exceed carrying amount Japanese local government bonds
Short-term corporate bonds
Corporate bonds
Other
Sub-total
Total

Fair value

Difference$  851,391——
2,368,146
1,432,895
4,652,431———
974,845
298,381
1,273,226$5,925,657$  923,037——
2,395,471
1,453,830
4,772,338———
971,521297,943
1,269,465$6,041,803$ 71,647——
27,32520,935
119,907———(3,324)(438)(3,761)$116,146

Note: Fair value is based on the closing price at the consolidated balance sheet date.

Integrated Report 2018131

Data Section

2018
Carrying amount(2) Available-for-sale Securities as of March 31, 2018 and 2017 are as follows:
Millions of Yen

2018

Carrying amountexceeds cost

Carrying amount(Fair value)

Acquisition cost

Difference

Equities¥ 76,839¥ 28,686¥48,153

Bonds

357,783

352,775

5,007

55,06053,658

1,402

—

—

—

Japanese government bonds
Japanese local government bonds
Short-term corporate bonds
Corporate bonds
Other
Sub-total
Carrying amount does
not exceed cost

—

—

—

302,722

299,116

3,605

5,923

3,611

2,311

440,546

385,073

55,472Equities

8,641

9,499

(857)

Bonds

76,50976,761(251)

Japanese government bonds

—

—

—

Japanese local government bonds

—

—

—

Short-term corporate bonds

—

—

—

76,50976,761(251)

35,00035,000—

Corporate bonds
Other
Sub-total

120,151

121,260(1,109)

Total¥560,697¥506,334¥54,363

Millions of Yen

2017

Carrying amountexceeds cost

Carrying amount(Fair value)

Acquisition cost

Difference

Equities¥ 74,336¥ 30,436¥43,900

Bonds

288,652

284,154

4,498

57,47955,846

1,632

—

—

—

Japanese government bonds
Japanese local government bonds
Short-term corporate bonds
Corporate bonds
Other
Sub-total
Carrying amount does
not exceed cost——

228,307

2,865

5,950

3,581

2,369

368,939

318,171

50,768Equities

7,926

8,394

(468)

Bonds

83,356

84,205(848)

Japanese government bonds

—

—

—

Japanese local government bonds

—

—

—

Short-term corporate bonds

—

—

—

83,356

84,205(848)

50,00050,000—

Corporate bonds
Other

132

—
231,173

Sub-total

141,282

142,599(1,317)

Total¥510,222¥460,771¥49,451

Integrated Report 2018

2018

Carrying amountexceeds cost

Carrying amount(Fair value)

Acquisition cost

Difference

Equities$  723,268$  270,020$453,248

Bonds

3,367,687

3,320,549

47,138518,267

505,069

13,198Japanese government bonds

—

—

—

Short-term corporate bonds

—

—

—

2,849,420

2,815,480

33,94055,75433,996

21,759Corporate bonds
Other
Sub-total
Carrying amount does
not exceed cost

3,624,564

522,144

81,342

89,414(8,072)

Bonds

720,158

722,526(2,368)Japanese government bonds

—

—

—

Japanese local government bonds

—

—

—

Short-term corporate bonds
Corporate bonds
Other

—

—

—

720,158

722,526(2,368)329,443

329,443—

Sub-total

1,130,943

1,141,383(10,440)

Total$5,277,651$4,765,947$511,704
Risk Management

Note: Carrying amount above represents the fair values determined based on the closing price at the fiscal year-end.

(3) Available-for-sale Securities sold during the year ended March 31, 2018 and 2017 are as follows:
Millions of Yen

2018

Equities¥12,184¥6,962

Bonds

Total amount oflosses on sales¥—

32,169286

1Japanese government bonds

—

—

—

Japanese local government bonds

—

—

—

Short-term corporate bonds

—

—

—

32,169

286

1

Other

Corporate bonds

5,172

174

—

Total

¥49,527¥7,422¥ 1

Corporate Data

Proceeds from sales

Total amount ofgains on sales

Data Section

Millions of Yen

2017
Proceeds from sales

Total amount ofgains on sales

Total amount oflosses on sales

Equities¥ 86,415¥22,147

¥  5

Bonds

23,861

257—

Japanese government bonds

—

—

—

Japanese local government bonds

—

—

—

Short-term corporate bonds

—

—

—

Corporate bonds

Corporate Governance

4,146,709
Equities

DBJ Group’s Strategy

Japanese local government bonds

DBJ Group’s Vision

Thousands of U.S. Dollars

23,861

257

—

Other

22,143

3,509

117

Total

¥132,420¥25,914¥122

Integrated Report 2018133

Thousands of U.S. Dollars

2018
Proceeds from sales

Total amount ofgains on sales

Total amount oflosses on sales

Equities$114,692$65,535$—

Bonds

302,801

2,695

15Japanese government bonds

—

—

—

Japanese local government bonds

—

—

—

Short-term corporate bonds

—

—

—

302,801

2,695

15

Other

Corporate bonds

48,691

1,641

—

Total

$466,184$69,870$15(b) Money Held in Trust(1) Money Held in Trust for the Purpose of Investment and Held to Maturity
Not applicable.
(2) Other (other than for the purpose of investment and held to maturity)
Millions of Yen

2018
Unrealized gains (losses)

Other money held in trust

Carrying
amountAcquisition
cost

Net

¥11,266¥10,433   ¥833

Carrying amount (Carrying amount
does not exceed cost)exceeds cost   ¥878¥44

Millions of Yen

2017
Unrealized gains (losses)

Other money held in trust

Carrying
amountAcquisition
cost

Net

¥15,599¥14,908   ¥690

Carrying amount (Carrying amount
does not exceed cost)exceeds cost   ¥690¥—

Thousands of U.S. Dollars

2018
Unrealized gains (losses)

Other money held in trust

Carrying
amountAcquisition
cost

Net

$106,052$98,204$7,848Carrying amount (Carrying amount
does not exceed cost)exceeds cost

$8,266$418(c) Unrealized Gain on Available-for-sale Securities
The breakdown of unrealized gain on available-for-sale securities is as follows:
Thousands of
U.S. Dollars

Millions of Yen

2018

2017

2018

¥ 58,372¥ 54,756$ 549,445

Unrealized gain on
Available-for-sale securities

878

690

8,266

Deferred tax liabilities(17,113)(15,909)(161,080)

Unrealized gain on available-for-sale securities before interest
adjustments

42,13839,537

396,631

—

—

—

8,382

5,479

78,900¥ 50,520¥ 45,017$ 475,531

Other money held in trust

Amount corresponding to non-controlling interests
DBJ Inc.’s interest in net unrealized gain on available-for-sale securities
held by affiliates accounted for by the equity method

Unrealized gain on available-for-sale securities, net of taxes

134

Integrated Report 2018

DBJ Group’s Vision*1. The loss of ¥2,250 million ($21,182 thousand) and the profit of ¥2,350 million recognized by applying the fair value hedge accounting,which were reflected in profit or loss, are deducted from the above unrealized gains and losses, net of taxes, as of March 31, 2018 and2017, respectively.
*2.	Unrealized gain includes foreign currency translation adjustments on available-for-sale securities and other money held in trust
denominated in foreign currency whose fair value cannot be reliably determined as of March 31, 2018 and 2017.

31. Related Party Transactions
2018
Transaction Amount
Related party

Finance
MinisterCategory

Description

Shareholder Receipt ofcontribution*1
Borrowings*2

Account item—

Payment forinterest
Guarantees*3¥

50,000Millions of Yen

Thousands of
U.S. Dollars

470,633——¥4,524,459$42,587,159$

580,000

5,459,337

380,492

3,581,447

Accruedexpenses

31,779299,131

11,243

105,834—

2,949,210

27,759,888

—

—

2017
Related party

Finance
MinisterCategory

Description

Shareholder Receipt ofcontribution*1—

Balance at March 31, 2017

Millions of Yen

Millions of Yen¥

50,000—

Repayments

Borrowed
money

Payment forinterest

Accruedexpenses

36,438

12,587

Guarantees*3—

2,799,265—

800,000

Corporate Data

Borrowings*2

Account item

Transaction Amount¥4,324,952

404,138

Data Section

According to Article 2, item 5 of the Japan Finance Corporation Act, DBJ Inc. has borrowed ¥2,672,621 million from Japan FinanceCorporation relating to the crisis response operations.
*1. Receipt of contribution is related to the special investment operations.
*2. DBJ Inc. has borrowed from the fiscal investment and loan program funds, and applied interest rates for fiscal investment and loan.
The last redemption period is February 20, 2037 without posting collateral.
*3. The guarantees are for debentures issued by DBJ Inc. free of guarantee charge.

32. Subsequent Event
On June 28, 2018, the shareholders approved the following appropriations of retained earnings. On the same day, theFinance Minister authorized becoming effective of the timing and amounts for dividends as of June 29, 2018:
Appropriations of Retained earnings as of March 31, 2018

Year-end cash dividends-Common stock (¥507-$4.77 per share)

Risk Management

According to Article 2, item 5 of the Japan Finance Corporation Act, DBJ Inc. has borrowed ¥2,303,344 million ($21,680,572 thousand)from Japan Finance Corporation relating to the crisis response operations.
*1.	Receipt of contribution is related to the special investment operations.
*2.	DBJ Inc. has borrowed from the fiscal investment and loan program funds, and applied interest rates for fiscal investment and loan.
The last redemption period is February 20, 2038 without posting collateral.
*3.	The guarantees are for debentures issued by DBJ Inc. free of guarantee charge.

Corporate GovernanceRepayments

Borrowedmoney

Millions of Yen

Balance at March 31, 2018

Thousands of
U.S. Dollars

DBJ Group’s Strategy

Related party transactions for the years ended March 31, 2018 and 2017 are as follows:

Millions of Yen

Thousands of
U.S. Dollars¥22,121$208,223

Integrated Report 2018135

Independent Auditor’s Report

136

Integrated Report 2018

Non-Consolidated Balance Sheet (Unaudited)
Development Bank of Japan Inc.

As of March 31,

2018

2017

2018

AssetsCash and due from banks
Call loans
Money held in trust¥

996,990¥987,258$

9,384,326

463,179—

4,359,744

9,411

14,037

88,585

1,905,546

1,789,322

17,936,246

12,874,274

13,210,171

121,181,044

174,607

1,960,513

111,916

1,051,382

Intangible fixed assets

13,3699,831

125,844

Prepaid pension costs

1,210

1,268

11,392Customers’ liabilities for acceptances and guarantees

201,796

181,010

1,899,437

Allowance for loan losses(44,895)(56,441)(422,587)

(176)

(414)

(1,657)¥16,740,690¥16,422,568$157,574,269

Debentures¥ 3,086,650¥ 3,016,714$ 29,053,567

Call money—

13,000—Allowance for investment losses
Total assets
Liabilities and equity
Liabilities:—

55,142—

Borrowed money

Payables under repurchase agreements

8,429,149

8,383,916

79,340,637

Corporate bonds

1,841,582

1,690,391

17,334,177

Other liabilities

88,586

106,304

833,836

Accrued bonuses to employees

4,592

4,789

43,231

Accrued bonuses to directors

11

127

6,470

6,389

60,908Reserve for directors’ retirement benefits

87

71

827

Reserve for contingent losses

—

40

—

Deferred tax liabilities

22,07725,444

207,807

Acceptances and guarantees

201,796

181,010

1,899,437

13,681,008

13,483,227

128,774,554

1,000,424

Total liabilities

Corporate Data

13

Reserve for employees’ retirement benefits

Risk Management

208,284
111,698

Corporate Governance

Other assets
Tangible fixed assets

DBJ Group’s Strategy

Securities
Loans

DBJ Group’s Vision

Thousands of
U.S. Dollars (Note)

Millions of Yen

Equity:Crisis response reserve

206,529

1,000,424
206,529

9,416,642
1,943,985

Special investment reserve

330,000

230,000

3,106,175

Special investment surplus

3,099

1,813

29,173

Capital surplus

895,466

945,466

8,428,712

Retained earnings

548,371479,443

5,161,629

Unrealized gain on available-for-sale securities

47,77342,233449,671

Deferred gain on derivatives under hedge accounting
Total equity
Total liabilities and equity

28,01833,430263,730

3,059,681

2,939,340

28,799,716¥16,740,690¥16,422,568$157,574,269

Note: Amounts in U.S. dollars are presented solely for the convenience of readers outside Japan. The rate of ¥106.24=$1.00, the effective
exchange rate prevailing as of March 31, 2018, has been used in the conversion.

Integrated Report 2018137

Data Section

Common stock authorized, 160,000 thousand shares in 2018 and2017; issued, 43,632 thousand shares in 2018 and 2017

Non-Consolidated Statement of Income (Unaudited)
Development Bank of Japan Inc.

Thousands of
U.S. Dollars (Note)

Millions of Yen

For the year ended March 31,

2018

2017

2018

¥189,537¥193,678$1,784,050

Interest on loans

156,192

165,276

1,470,181

Interest and dividends on securities

24,62020,089231,743

IncomeInterest income:Interest on call loans

153

—

1,448

Interest on due from banks

22

11

207

8,553

8,164

80,515

(4)

136

(45)

Fees and commissions

11,684

12,682

109,983

Other operating income

6,259

5,896

58,917

Other income

59,57757,598560,783

267,058

269,856

2,513,732

Interest on swaps
Other interest income

Total income
Expenses

89,30398,097

840,582

Interest on debentures

33,19834,831

312,490

Interest on call money

(27)

(11)

(259)

Interest on payables under repurchase agreements

(46)

(5)

(441)

51,097

58,113

480,966

755

764

7,110

4,335

4,408

40,811

(10)

(3)

(94)

245

183

2,311

Interest expense:

Interest on borrowed money
Interest on short-term corporate bonds
Interest on corporate bonds
Other interest expense
Fees and commissions
Other operating expenses

3,515

3,357

33,088General and administrative expenses

48,00745,207

451,874

5,699

9,310

53,650Total expenses

146,771

156,156

1,381,505

Income before income taxes

120,287

113,699

1,132,228

Current

33,59630,703

316,233

Deferred(3,244)

2,832(30,540)

Other expenses

Income taxes:

Total income taxes
Net income

30,35233,535

285,693¥ 89,935¥ 80,163$  846,534

Note: Amounts in U.S. dollars are presented solely for the convenience of readers outside Japan. The rate of ¥106.24=$1.00, the effective
exchange rate prevailing as of March 31, 2018, has been used in the conversion.

138

Integrated Report 2018

Non-Consolidated Statement of Changes in Equity (Unaudited)
Development Bank of Japan Inc.

For the year ended March 31, 2018

Balance at beginning of year

Crisis response
reserve¥1,000,424¥206,529

Special investment Special investment
reserve
surplus¥230,000

Investment from government

50,000Transfer from capital surplus to special investment reserve

50,000¥1,813

Capitalsurplus¥945,466

DBJ Group’s Vision

Millions of Yen
Commonstock(50,000)

Cash dividends
Net income
1,285

Net change during the year
Balance at end of year

¥1,000,424¥206,529¥330,000¥3,099¥895,466

Millions of Yen

For the year ended March 31, 2018

Balance at beginning of year

Retained earnings

Unrealized gain on
available-for-salesecurities

Deferred gain onderivatives underhedge accounting

Total equity¥479,443¥42,233¥33,430¥2,939,340
50,000Transfer from capital surplus to special investment reserve—

Cash dividends(19,721)(19,721)

Net income

89,93589,935

Transfer from retained earnings to special investment surplus(1,285)—

Net change during the year
Balance at end of year

¥548,371

5,539(5,411)

127¥47,773¥28,018¥3,059,681

Corporate Governance

Investment from government

DBJ Group’s Strategy

Transfer from retained earnings to special investment surplus

Millions of Yen

Balance at beginning of year

Crisis response
reserve¥1,000,424¥206,529

Special investment Special investment
reserve
surplus¥130,000

Investment from government

50,000Transfer from capital surplus to special investment reserve

50,000¥ 618

Capitalsurplus¥995,466(50,000)

Risk Management

For the year ended March 31, 2017

Commonstock

Cash dividends
Net income
Transfer from retained earnings to special investment surplus

1,194

Balance at end of year

¥1,000,424¥206,529¥230,000¥1,813¥945,466

Millions of Yen

For the year ended March 31, 2017

Balance at beginning of year

Retained earnings

Unrealized gain on
available-for-salesecurities

Deferred gain onderivatives underhedge accounting

Total equity¥429,751¥52,206¥35,045¥2,850,042

Investment from government

50,000Transfer from capital surplus to special investment reserve—(29,277)(29,277)

Net income

80,16380,163

Transfer from retained earnings to special investment surplus(1,194)—

Net change during the year
¥479,443(9,972)(1,615)(11,587)¥42,233¥33,430¥2,939,340

Integrated Report 2018139

Data Section

Cash dividends

Balance at end of year

Corporate Data

Net change during the year

Thousands of U.S. Dollars (Note)

For the year ended March 31, 2018

Commonstock

Crisis response
reserve

Balance at beginning of year

$9,416,642$1,943,985

Special investment Special investment
reserve
surplus$2,164,910

Investment from government

470,633

Transfer from capital surplus to special investment reserve

470,633$17,072

Capitalsurplus$8,899,344(470,633)

Cash dividends
Net income
Transfer from retained earnings to special investment surplus

12,101

Net change during the year
Balance at end of year

$9,416,642$1,943,985$3,106,175$29,173$8,428,712

Thousands of U.S. Dollars (Note)

For the year ended March 31, 2018

Balance at beginning of year

Retained earnings

Unrealized gain on
available-for-salesecurities

Deferred gain onderivatives underhedge accounting

Total equity$4,512,830$397,534$314,668$27,666,985

Investment from government

470,633

Transfer from capital surplus to special investment reserve—

Cash dividends(185,635)(185,635)

Net income

846,534

846,534

Transfer from retained earnings to special investment surplus(12,101)

Net change during the year
Balance at end of year

$5,161,629—
52,137(50,938)

1,199$449,671$263,730$28,799,716

Note: Amounts in U.S. dollars are presented solely for the convenience of readers outside Japan. The rate of ¥106.24=$1.00, the effective
exchange rate prevailing as of March 31, 2018, has been used in the conversion.

140

Integrated Report 2018

Capital Adequacy Ratio

Capital
Structure Information (Consolidated)(Unit: Millions of yen, %)Items

March 31, 2017

March 31, 2018

Basel III
Template No.

DBJ Group’s Strategy[1] Capital Structure Information

DBJ Group’s Vision

Although DBJ is not subject to Article 14-2 of the Banking Act of Japan, capital adequacy ratios have been calculated inaccordance with “Standards for Bank to Examine the Adequacy of Its Capital Based on Assets, etc. under the Provision of
Article 14-2 of the Banking Act” (2006, Financial Services Agency Notification No. 19, hereinafter, the “Capital Adequacy
Ratio Notification”), and therefore effectively conform to this act.
(Reference)
In addition to the application of uniform international standards, credit risk assets were calculated using the standardized
approach, and the operational risk equivalent amount was calculated using the basic indicator approach. The DBJ Group has
not introduced procedures in line with market risk regulations.

Common Equity Tier 1 capital: instruments and reserves (1)2,439,927

2,458,458 1a+2–1c–26 of which: common stock and capital surplus

1,945,890

1,895,890

1a513,758

584,6892 of which: retained earnings of which: treasury stock of which: planned distribution of income of which: other than the above

—

—

1c

19,721

22,121

26

—

—
—

1b

499,895

616,7893

Adjusted non-controlling interests, etc. (amount allowed to be included in group Common Equity Tier 1)

—

—

5

(A)

2,941,661

3,075,247

6

Total intangible assets (excluding those relating to mortgage servicing rights)

12,54532,977

8+9 of which: goodwill (including those equivalent)

6,969

23,611

8

5,575

9,366

9

144

—

10

26,94427,955 11

Common Equity Tier 1 capital: instruments and reserves

Risk Management—

Accumulated other comprehensive income and other disclosed reserves

Rights to acquire new common shares

Common Equity Tier 1 capital: regulatory adjustments (2)Deferred gains or losses on derivatives under hedge accounting

Corporate Data

 of which: other intangible assets other than goodwill and mortgage servicing rights
Deferred tax assets that rely on future profitability excluding those arisingfrom temporary differences (net of related tax liability)—

12

Capital increase due to securitization transactions

—

—

13

Gains and losses due to changes in own credit risk on fair valued liabilities

—

—

14

1,102

1,797

15

Investments in own shares (excluding those reported in the Equity section)

—

—

16

Reciprocal cross-holdings in common equity

—

—

17

Investments in the capital of banking, financial and insurance entities that are outside the scope of regulatory consolidation (“Other Financial
Institutions”), net of eligible short positions, where the bank does not own
more than 10% of the issued share capital (amount above the 10%threshold)

—

—

18

Amount exceeding the 10% threshold on specified items——

19+20+21 of which: significant investments in the common stock of Other Financial
Institutions, net of eligible short positions

—

—

19

 of which: mortgage servicing rights

—

—

20

 of which: deferred tax assets arising from temporary differences (net of
related tax liability)

—

—

21

Assets for retirement benefits

Integrated Report 2018

Data Section—

Shortfall of eligible reserves to expected losses

Corporate GovernanceDirectly issued qualifying common share capital plus related capital surplus
and retained earnings

141



(Unit: Millions of yen, %)Items

March 31, 2017

March 31, 2018

Basel III
Template No.

Amount exceeding the 15% threshold on specified items

—

—

22

 of which: significant investments in the common stock of Other Financial Institutions, net of eligible short positions

—

—

23

 of which: mortgage servicing rights

—

—

24

—

—

25

593

—

27

(B)

41,33062,73028(C)2,900,330

3,012,516

29

Directly issued qualifying Additional Tier 1 instruments plus related capital surplus of which: classified as equity under applicable accounting
standards and the breakdown

—

—

31a

Rights to acquire new shares in relation to Additional Tier 1 instruments

—

—

31b

—

—

32

—

—

1,356

1,552

34–35

—

—

33+35

—

—

33

 of which: deferred tax assets arising from temporary differences (net of related tax liability)
Regulatory adjustments applied to Common Equity Tier 1 due to insufficient Additional Tier 1 and Tier 2 to cover deductions
Common Equity Tier 1 capital: regulatory adjustments
Common Equity Tier 1 capital (CET1)
Common Equity Tier 1 capital (CET1) ((A)-(B))
Additional Tier 1 capital: instruments (3)Directly issued qualifying Additional Tier 1 instruments plus related capital surplus of which: classified as liabilities under applicable accounting standards
Qualifying Additional Tier 1 instruments plus related capital surplus issued by special purpose vehicles and other equivalent entities
Adjusted non-controlling interests, etc. (amount allowed to be included in group Additional Tier 1)
Eligible Tier 1 capital instruments subject to transitional arrangements included in Additional Tier 1 capital: instruments of which: instruments issued by banks and their special purpose vehicles of which: instruments issued by subsidiaries (excluding banks’ special
purpose vehicles)

—

—

35

1,198

1,552

36

Investments in own Additional Tier 1 instruments

—

—

37

Reciprocal cross-holdings in Additional Tier 1instruments

—

—

38

Investments in the capital of banking, financial and insurance entities that are outside the scope of regulatory consolidation, net of eligible shortpositions, where the bank does not own more than 10% of the issued
common share capital of the entity (amount above the 10% threshold)
Significant investments in the Additional Tier 1 capital of Other Financial Institutions (net of eligible short positions)

—

—

39

49

63

40

(E)

1,792

63

43

(F)

—

(G)

2,900,330

3,014,005

Directly issued qualifying Tier 2 instruments plus related capital surplus of which: classified as equity under applicable accounting standards and its
breakdown——

Rights to acquire new shares in relation to Tier 2 instruments

—

—

—

—

—

—

318

365

Additional Tier 1 capital: instruments

(D)

Additional Tier 1 capital: regulatory adjustments

Additional Tier 1 capital: regulatory adjustments
Additional Tier 1 capital (AT1)
Additional Tier 1 capital ((D)-(E))

1,489 44

Tier 1 capital (T1 = CET1 + AT1)
Tier 1 capital (T1 = CET1 + AT1) ((C)+(F))

45

Tier 2 capital: instruments and reserves (4)Directly issued qualifying Tier 2 instruments plus related capital surplus of which: classified as liabilities under applicable accounting standards
Tier 2 instruments plus related capital surplus issued by special purpose vehicles and other equivalent entities
Adjusted non-controlling interests, etc. (amount allowed to be included in group Tier 2)

142

Integrated Report 2018

46

48–49

30

(Unit: Millions of yen, %)Items

March 31, 2017

March 31, 2018

Basel III
Template No.

Eligible Tier 2 capital instruments subject to transitional arrangements included in Tier 2: instruments and reserves

—

—

47+49

 of which: instruments issued by banks and their special purpose vehicles

—

—

47

—

—

49

36,657

21,78250 of which: general allowance for loan losses

36,657

21,782

50a

—

—

50b

42,45922,147

51

Investments in own Tier 2 instruments

—

—

52

Reciprocal cross-holdings in Tier 2 instruments

—

—

53

—

—

54

 of which: eligible reserves
Tier 2 capital: instruments and reserves

(H)

DBJ Group’s Strategy of which: instruments issued by subsidiaries (excluding banks’ special purpose vehicles)
Total of general allowance for loan losses and eligible reserves included in Tier 2Tier 2 capital: regulatory adjustments

—

—

55

(I)

—

—

57

(J)

42,45922,14758(K)

2,942,790

3,036,152

59(L)

16,840,640

17,916,072

60

Tier 2 capital: regulatory adjustments

Corporate GovernanceNon-significant Investments in the Tier 2 capital of Other Financial Institutions, net of eligible short positions (amount above the 10% threshold)
Significant investments in the Tier 2 capital of Other Financial Institutions (net of eligible short positions)Tier 2 capital (T2)
Tier 2 capital (T2) ((H)-(I))

Risk Management

Total capital (TC = T1 + T2)
Total capital (TC = T1 + T2) ((G) + (J))
Risk weighted assets (5)Risk weighted assets
Capital ratio (consolidated)
17.22%

16.81%

61

17.22%

16.82%

62

Total risk-weighted capital ratio (consolidated) ((K)/(L))

17.47%

16.94%

63

72,820109,974

72

5,635

2,943

73

—

—

74

3,217

11,93575

General allowance for loan losses

36,657

21,78276

Cap on inclusion of general allowance for loan losses

207,729

221,279 77

Corporate Data

Common Equity Tier 1 risk-weighted capital ratio (consolidated) ((C)/(L))
Tier 1 risk-weighted capital ratio (consolidated) ((G)/(L))
Regulatory adjustments (6)Data Section

Non-significant Investments in the capital of Other Financial Institutions that are below the thresholds for deduction (before risk weighting)Significant investments in the common stock of Other Financial Institutions that are below the thresholds for deduction (before risk weighting)Mortgage servicing rights that are below the thresholds for deduction (before risk weighting)Deferred tax assets arising from temporary differences that are below the thresholds for deduction (before risk weighting)Reserves included in Tier 2 capital: instruments and reserves (7)Eligible reserves for inclusion in Tier 2 in respect of exposures subject to internal ratings-based approach (prior to application of cap)

—

—

78

Cap for inclusion of reserves in Tier 2 under internal ratings-based approach

—

—

79

—

—

82

—

—

83

Current cap on Tier 2 instruments subject to transitional arrangements

—

—

84

Amount excluded from Tier 2 due to cap (excess over cap after redemptions and maturities)

—

—

85

Capital instruments subject to transitional arrangements (8)Current cap on Additional Tier 1 instruments subject to transitional arrangements
Amount excluded from Additional Tier 1 due to cap (excess over cap after redemptions and maturities)

Integrated Report 2018

DBJ Group’s Vision143

[2] Qualitative Disclosure
1. Scope ofConsolidation(1)	Differences and the reasons for those differences at companies included in the scope of
consolidation based on the regulation (Ministry of Finance Regulation No. 28, 1976) related tothe companies belonging to the group of companies included in the scope of calculation of theconsolidated capital adequacy ratio as provided in Article 3 of the Notification (hereinafter, the“Consolidated Group”), and the language, format and preparation method of theirconsolidated financial statements (hereinafter, the “Scope of Accounting Consolidation”)
No differences.
(2)	Within the Consolidated Group, the number of consolidated subsidiaries and the names andmain businesses of principal consolidated subsidiaries.
	The number of consolidated subsidiaries as of March 31, 2018 is 30.
	Please refer to page 165, “Group Companies” in “Corporate Information” section for major
consolidated subsidiaries.
(3)	Number of affiliated companies that conduct financial business to which Article 9 of the
Notification applies, the names of affiliated companies conducting such related financial
business and their primary businesses	Not applicable.
(4)	Companies that belong to the Consolidated Group but are not included in the Scope of
Accounting Consolidation and companies that do not belong to the Consolidated Group but
are included in the Scope of Accounting Consolidation, as well as the amount of total assets
and net assets on their balance sheets, and their primary businesses	Not applicable.
(5)	Overview of limitations related to the transfer of funds or capital within the Consolidated Group	Not applicable.


2. Overview of Methods
for Evaluating the
Degree of Capital
Adequacy

Please refer to page 64, “Comprehensive Risk Management” in “Risk Management.”

3. Overview of Risk
Characteristics andRisk Management
Policies, Procedures
and Structure of theConsolidated Group

Please refer to pages 64 to 67, “Risk Management.”

4. Credit Risk(a) Overview of Risk Management Policies and Procedure	Please refer to pages 64, “Comprehensive Risk Management: 1. Credit Risk” in “RiskManagement.”(b) Rating Agencies Eligible to Weight Risks
	The rating agencies that DBJ uses for weighting risk are among the four that the FSA has
named eligible to perform such weighting. Eligible rating agencies are not selected according totype of exposure.
	  The rating agencies are Rating and Investment Information, Inc. (R&I), Japan Credit Rating
Agency, Ltd. (JCR), Moody’s Investors Service, Inc. (Moody’s), and Standard & Poor’s Corp. (S&P).



5. Overview of Risk
Management Policies
and Procedures for
Reducing Credit Risk

144

DBJ obtains collateral or guarantees as necessary based on changes in the borrower’s
creditworthiness. If required, the effectiveness of collateral is determined from the perspective of
the amount certain to be recovered based on a reasonable evaluation of the collateral.
In principle, collateral valuation is performed by the Credit Analysis Department, based on therequest of investment and loan departments/offices. Investment and loan departments/offices andthe Credit Analysis Department manage credit risk based on valuation results. In principle, thevaluation of all collateral property is reviewed once or twice each year to ensure DBJ is aware of thecurrent status of its collateral property.
Integrated Report 2018





8. Market Risk

DBJ includes in its calculation method no market risk equivalent amount.

9. Operational Risk(a)	Overview of Risk Management Policies and Procedures
	Please refer to pages 69, “Comprehensive Risk Management: 5. Operational Risk” in“Risk Management.”(b)	Method Used to Calculate Operational Risk Equivalent AmountDBJ uses the basic indicator approach to calculate this risk.









Integrated Report 2018145

Data Section(a) Overview of Risk Management Policies and Risk Characteristics
	Excluding credit derivatives, the majority of DBJ’s securitization exposure falls into the categoryof specialised lending (Item 47, Article 1, of the Capital Adequacy Ratio Notification) employing
internal rating methods. Different from the internal ratings that are applied to standard
corporate credit, this exposure is given a rating by using a grading system applied to match thecharacteristics of specialised lending. DBJ conducts risk management in line with changes inrating level. In addition to rating its exposure when making new acquisitions, DBJ reviews theseratings periodically.
	  DBJ’s involvement in securitized and resecuritized transactions is typically that of an investor,and in principle the exposure acquired through such transactions continues until the
instrument’s maturity.
(b)	Overview of status of implementation and operation of systems stipulated in Article
249, Paragraph 4, Items 3-6, of the Capital Adequacy Ratio Notification (including
application with modifications in Capital Adequacy Ratio Notification Article 254,
Paragraph 2, and Article 302-4, Item 1)	DBJ has created the systems necessary for operating within its credit risk management
framework. Specifically, as one aspect of our credit risk management, our sales department
endeavors to appropriately collect information related to comprehensive risk characteristics andperformance, and DBJ monitors conditions to determine any changes in the borrower’s
creditworthiness. Related information is also provided to the credit analysis department, which
may revise borrower ratings or make other adjustments on the basis of this related information
as necessary.
(c)	Name of Special Purpose Entity and its securitization exposure status in case DBJ
securitizes third party’s assets through Special Purpose Entity and, of subsidiaries andaffiliated companies of the Consolidated Group, name of those which holdsecuritization exposure implemented by the Consolidated Group and whose
management are involved or advised by the Consolidated Group.
Not applicable.
(d)	Name of Special Purpose Entity providing credit enhancement other than anagreement, and effect of the credit enhancement other than the agreement on Capital
Adequacy by Special Purpose Entity
Not applicable.
(e)	Method of Accounting for Securitized Transactions
	DBJ’s involvement in securitized transactions is that of an investor. DBJ adequately accounts forthese transactions in accordance with the “Accounting Standard for Financial Instruments.”(f)	Rating Agencies Eligible to Weight Risks by Type of Securitization Exposure	The rating agencies that DBJ uses for weighting risk are among the four that the FSA has
named eligible to perform such weighting. Eligible rating agencies are not selected according totype of securitization exposure.
	  The rating agencies are Rating and Investment Information, Inc. (R&I), Japan Credit Rating
Agency, Ltd. (JCR), Moody’s Investors Service, Inc. (Moody’s), and Standard & Poor’s Corp. (S&P).

Corporate Data

7. Securitization
Exposure

Risk Management

Corporate Governance

DBJ regularly refers to the ratings and credit amounts of transaction counterparties to determine
the advisability of entering a transaction or to understand the risks of existing transactions.

DBJ Group’s Strategy



6. Overview of Risk
Management Policies
and Procedures
Related to Risk
InvolvingCounterparties in
Derivative ProductTransactions andTransactions with Long
Settlement Periods

DBJ Group’s Vision







10. Overview of Risk
Management Policies
and Procedures
Regarding Exposure
to Shares and Other
Equity Investments
and Capital Injections

Please refer to page 65, “Comprehensive Risk: 2. Investment Risk Management” in“Risk Management.”

11. Interest Rate Risk(a) Overview of Risk Management Policies and Procedures
	Please refer to page 66, “Comprehensive Risk Management: 3. Market Risk, i. Interest Rate
Risk” in “Risk Management.”(b) Overview of Methods for Calculating Interest Rate Risk
	The quantitative disclosure items, ΔEVE (changes in Economic Value of Equity) and ΔNII
(changes in Net Interest Income), are calculated as stated below.
	  First, as stipulated in the FSA Notification No. 7 in 2014, the changes in economic value ofequity and annual net interest income caused by the interest rate shocks are measured for eachcurrency. Then, ΔEVE and ΔNII are calculated by adding up the amounts of such changes only if
the changes for the currency result in loss.
	  In addition, DBJ measures interest rate risks using the following methods.
(1) VaR: Holding period- one year, Observation period- 10 years, Confidence interval-99.9%,
using Delta method,(2) 100BPV: changes in economic value when interest rates are shifted by 1% (parallel up)

146

Integrated Report 2018

Quantitative Disclosure (Consolidated)
1. Overview of Risk Weighted Assets
(Unit: Millions of yen)
Risk Weighted Assets
March 31, 2017

DBJ Group’s Vision[3] Quantitative Disclosure

Capital Requirement

March 31, 2018

March 31, 2017

March 31, 2018

10,654,594/

852,367 Of which, exposure to which standardized approach applied/

10,147,427/

811,794 Other/

507,167/

40,573

Counterparty Credit Risk/

90,542/

7,242 Of which, exposure to which current exposure method applied/

22,190/

1,775 Of which, CVA risk/

68,174/

5,453 Of which, exposure for central counterparty clearing house

/

178

/

14

 Other

/

—

/

—

Exposure of assets with underlying multiple assets and transactions/

3,828,275/

306,262

—

/

—

/

3,091,764/

247,340 Of which, exposure to which standardized approach applied/

971,578/

77,726 Of which, exposure with a risk weight of 1,250%/

2,120,186/

169,614

Operational risk/

213,700/

17,096 Of which, exposure to which basic indicator approach applied/

213,700/

17,096

Exposure with related to specified items not included in adjustments/

37,197/

2,975

Amount of items included in risk weighted assets subject to transitional arrangements

/

—

/

—

Total

/

17,916,072/

1,433,282

Corporate Data/

Risk Management

Unsettled transactions
Securitization exposure subject to calculation of credit risk assets

Corporate Governance/

DBJ Group’s Strategy

Credit Risk

Data Section

Integrated Report 2018147

2. Items Related to Credit Risk(a) Fiscal year-end credit risk exposure, broken down as follows:		 (1) By region

(Unit: Millions of yen)March 31, 2018

Domestic

16,059,101

Overseas

19,487

Total

16,078,588

Note: “Overseas” refers to overseas consolidated subsidiaries. DBJ has no overseas branches.

		(2) By industry and transaction counterparty

(Unit: Millions of yen)March 31, 2018

Manufacturing

2,944,784

Agriculture and forestry

400

Fisheries

65

Mining, quarrying and gravel extraction

72,918Construction

68,479

Electrical, gas, heat supply and water

3,451,728

Information and communications

384,286

Transportation and postal		

2,336,980

Wholesale and retail

911,790

Finance and insurance

2,352,862

Real estate and leasing of goods

2,413,770

Services

302,237

Municipal government

15,521

Other

822,768

Total

16,078,588(3) By period to maturity

(Unit: Millions of yen)March 31, 2018

Five years or less

8,263,024

More than five years, up to 10

4,562,862

More than 10 years, up to 15

1,261,755

More than 15 years

876,913

No maturity date

1,114,034

Total

16,078,588(b) Credit Risk Mitigation Techniques(Unit: Millions of yen)March 31, 2018
Exposure notsecured

Loans
Securities (debt securities)
Other on-balance sheet assets(debt instruments)
Total
Of which, default items

148

Integrated Report 2018

Exposure
secured

Exposure secured
by collateral

Exposure secured
by guarantee

Exposure secured
by credit
derivatives

11,003,007

980,708—

840,515—880,065

29,324—29,324—463,322

—

—

—

—

12,346,394

1,010,032—

869,839

—

55

—

—

—

—

(Unit: Millions of yen)March 31, 2018
Amounts of credit risk exposure (after applying CCF and credit risk mitigation techniques)

Asset Class / Risk Weight
Cash
Japanese government and Bank of Japan

Bank for International Settlements and other

10%

20%

50%

100%

150%

250%

1250%

Total

5

—

—

—

—

—

—

—

5

942,819

—

—

—

—

—

—

—

942,819

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

18,235

Foreign public bodies other than central banks

—

—

500

—

—

—

—

—

500

Multilateral Development Bank

—

—

—

—

—

—

—

—

—

Japan Finance Organization for Municipalities

—

—

—

—

—

—

—

—

—

Japanese government agencies

—

—

—

—

—

—

—

—

—

Three local public corporations

—

—

100

—

—

—

—

—

100

Financial institutions and Type I Financial Instruments Business
Operators——

743,980

66,59031,369———841,939

Corporations

6,362,882

5,222,027

43,615—— 12,353,078

—

—

—

—

—

—

—

—

—

Mortgage loans (loans secured by residential properties)

—

—

—

—

—

—

—

—

—

Real estate investment business

—

—

—

—

780,117———780,117

Delinquent for 3 months or more (excluding mortgage
loans)

—

—

—

55

—

—

—

—

55

Mortgage loans that are delinquent for 3 months or
more

—

—

—

—

—

—

—

—

—

Bills and checks in process of collection

—

—

—

—

—

—

—

—

—

Guaranteed by Credit Guarantee Associationand other

—

—

—

—

—

—

—

—

—

Guaranteed by Regional Economy Vitalization
Corporation of Japanand other

—

—

—

—

—

—

—

—

—
548,281

Investments (excluding significant investments)
Total

—

—

—

—

548,281———1,002,870

209

1,427,114

6,429,527

6,581,794

43,615—— 15,485,129

Integrated Report 2018149

Data Section

682,534

Corporate Data

209

Risk Management

41,811

Small and medium-sized enterprises and individuals

Corporate Governance—
18,235

Municipal governments in Japan

DBJ Group’s Strategy

Foreign central governments and central banks

0%

DBJ Group’s Vision(c) Standardized Approach - Credit risk exposure by asset class and risk weight3. Transaction Counterparties' Risk on Derivative Product Transactions and Transactions with Long Settlement Periods(a) Counterparty credit risk		 (1) Counterparty credit risk exposure by technique(Unit: Millions of yen)March 31, 2018
Exposure after applying acredit risk mitigation
technique

Current exposure method
		Amount ofrisk weighted assets

64,46822,190(2) Counterparty credit risk exposure by industry and risk weight

(Unit: Millions of yen)March 31, 2018

Credit equivalent amount (after taking credit risk mitigations into account)
0%

10%

20%

50%

75%

100%

150%

Other

Total

Japanese government and Bank of Japan

—

—

—

—

—

—

—

—

—

Foreign central governments and central banks

—

—

—

—

—

—

—

—

—

Bank for International Settlements and others

—

—

—

—

—

—

—

—

—

Municipal governments in Japan

117

—

—

—

—

—

—

—

117

Foreign public bodies other than central banks

—

—

—

—

—

—

—

—

—

Multilateral Development Bank

—

—

—

—

—

—

—

—

—

Japan Finance Organization for Municipalities

—

—

—

—

—

—

—

—

—

Japanese government agencies

—

—

—

—

—

—

—

—

—

Three local public corporations

—

—

—

—

—

—

—

—

—

Financial institutions and Type I Financial Instruments Business
Operators——

48,085

—

—

—

—

—

48,085

Corporations

—

—

1,397

5,153

—

9,585

—

—

16,135

Small and medium-sized enterprises and individuals

—

—

—

—

—

—

—

—

—

Other

—

—

—

—

—

131

—

—

131

Total

117

—

49,482

5,153

—

9,716

—

—

64,468(b) Capital Requirement for CVA Risk

(Unit: Millions of yen)March 31, 2018
Exposure after applying acredit risk mitigation
technique

Total portfolio subject to the standardized risk measurement approach

150

Integrated Report 2018

66,210

Amount ofrisk weighted assets(Amount calculated by
dividing CVA risk
equivalent by 8%)

68,174

(Unit: Millions of yen)March 31, 2018
Protection purchased

Protection provided

Notional amountSingle-name credit default swaps

7,500

6,000

Index credit default swaps

—

1,500

Total return swaps

—

—

—

—

Other credit derivatives

100

66,150Total notional amount

7,600

73,650

Positive fair value (Assets)—

147

Negative fair value (Liabilities)102—

DBJ Group’s Strategy

Credit options

Fair value(Unit: Millions of yen)March 31, 2018
Exposure for central
clearing house(after applying a credit risk
mitigation technique)

Exposure for Qualified Central Counterparty Clearing House (Total)

Amount ofrisk weighted assets

178 Trade exposure for Qualified Central Counterparty Clearing House (excluding initial margin)

8,910

178

   (i)	Derivative product transactions (other than listed transactions)

8,910

178

   (ii) Derivative product transactions (listed transactions)——   (iii) Repurchase/ reverse repurchase transactions——   (iv)	Netting set in case where cross-product netting is approved—/

Initial margin not maintained in segregated accounts——

Pre-contributed Clearing Fund——

Uncontributed Clearing Fund——

Corporate Data—
40,000Initial margin maintained in segregated accounts

Risk Management/

Corporate Governance(d) Exposure for Central Counterparty Clearing House

DBJ Group’s Vision(c) Exposure for Credit Derivative Transactions

Data Section

Integrated Report 2018151

4. Securitization Exposure(1)	Securitization Exposure by Underlying Asset Type (limited to the securitization exposure subject to calculation of credit risk assets)
(Unit: Millions of yen)March 31, 2018
DBJ as theoriginator

DBJ as an investor

DBJ as thesponsor

Traditional
securitization

Synthetic
securitization

Subtotal

Retail (Total)

—

—

—

—

—

Wholesale (Total)——

1,246,772—

1,246,772

Structured Finance——1,246,772—

1,246,772

Other

—

—

—

—

—

Resecuritization

—

—

—

—

—

(2) Securitization exposure subject to calculation of credit risk assets and required capital amounts

(Unit: Millions of yen)March 31, 2018

Amount of exposure (by risk weight)
Securitization exposure by risk weight of 20% or less

82,714

Securitization exposure by risk weight of over 20% and 50% or less

58,889Securitization exposure by risk weight of over 50% and 100% or less

935,555

Securitization exposure by risk weight of over 100% and below 1,250%—

Securitization exposure by risk weight of 1,250%

169,614Required capital amounts (by calculation method) Required capital amounts for securitization exposure to which the standardized approach is applied

77,726 Required capital amounts for securitization exposure to which 1250% risk weight is applied in accordance with Article 247, Paragraph 1 of the Capital Adequacy Ratio Notification or Article
225, Paragraph 1 of the Holding Company Capital Adequacy Ratio Notification

169,614

5. Interest Rate Risk (Non-consolidated)(Unit: Hundred Millions of yen)March 31, 2018
ΔEVE

Parallel up

477

25

Parallel down

90

Steepener

311/

Flattener1/

Short rate up

91/

Short rate down

16/

Maximum

477

25

Tier 1 capital

152

ΔNII

Integrated Report 2018

29,993

Item(Unit: Millions of yen)March 31, 2017

March 31, 2018

Corresponding Line No.
on Basel III Disclosure Template
Table 2

Table 1On-balance sheet exposures (1)16,308,273

16,636,833 1

Total assets reported in the consolidated balance sheet

16,570,496

16,952,230

1a

1The amount of assets of subsidiaries that are not included in the scope of the leverage ratio on a consolidated basis (–)

—

—

1b

2

The amount of assets of subsidiaries that are included in the scope of the leverage ratio on a consolidated basis (except those includedin the total assets reported in the consolidated balance sheet)

—

—

1c

7

The amount of assets that are deducted from the total assets reported in the consolidated balance sheet (except adjustment
items) (–)

262,223

315,3961d

3

The amount of adjustment items pertaining to Tier1 capital (–)

15,584

34,8382

16,292,688

16,601,994

3

Replacement cost associated with derivatives transactions, etc.

66,763

41,5804Add-on amount associated with derivatives transactions, etc.

39,79546,9895

The amount of receivables arising from providing cash margin in relation to derivatives transactions, etc.

26,13559,262

The amount of receivables arising from providing cash margin, provided where deducted from the consolidated balance sheet
pursuant to the operative accounting framework

—

—

6

The amount of deductions of receivables (out of those arising from providing cash variation margin) (–)

—

—

7

The amount of client-cleared trade exposures for which a bank or bank holding company acting as clearing member is not obliged
to make any indemnification (–)

—

—

8

7,500

7,500

9

—

—

10

140,194

155,332

11

The amount of assets related to repo transactions, etc.

—

—

12

The amount of deductions from the assets above (line 12) (–)

—

—

13

The exposures for counterparty credit risk for repo transactions, etc.

——

14

The exposures for agent repo transactions

—

—

15

—

—

16

1,223,575

1,441,872

17

297,157

399,91618(d)926,418

1,041,956

19

The amount of capital (Tier1 capital)

(e)

2,900,330

3,014,005

20

Total exposures ((a)+(b)+(c)+(d))

(f)17,359,301

17,799,283

21

16.93%

22(a)7

Corporate GovernanceTotal on-balance sheet exposures

DBJ Group’s Strategy

On-balance sheet exposures before deducting adjustments items

Exposures related to derivatives transactions (2)Total exposures related to derivative transactions(b)

Corporate Data

The amount of deductions from effective notional amount of written credit derivatives (–)

Risk Management

Adjusted effective notional amount of written credit derivatives

4

Exposures related to repo transactions (3)(c)

Data Section

Total exposures related to repo transactions, etc.

5Exposures related to off-balance sheet transactions (4)Notional amount of off-balance sheet transactions
The amount of adjustments for conversion in relation to off-balance sheet transactions (–)
Total exposures related to off-balance sheet transactions6

Leverage ratio on a consolidated basis (5)Leverage ratio on a consolidated basis ((e)/(f))

16.70%DBJ Group’s Vision

Composition of Leverage Ratio Disclosure (Consolidated)

8

Integrated Report 2018

153

Key Indicators (Consolidated)

(Unit: Millions of yen, %)March 31, 2017

September 30, 2017

March 31, 2018

Common Equity Tier 1 capital

2,900,330

2,940,979

3,012,516

Tier 1 capital

2,900,330

2,940,979

3,014,005

Total capital

2,942,790

2,973,785

3,036,152

16,840,640

17,822,338

17,916,072 Common Equity Tier 1 risk-weighted capital ratio (consolidated)

17.22%

16.50%

16.81% Tier 1 risk-weighted capital ratio (consolidated)

17.22%

16.50%

16.82% Total risk-weighted capital ratio (consolidated)

17.47%

16.68%

16.94%

17,359,301

17,707,410

17,799,283

16.70%

16.60%

16.93%

CapitalRisk weighted assets
Risk weighted assets
Capital ratio

Leverage ratio (consolidated)
Total exposures
Leverage ratio (consolidated)

154

Integrated Report 2018

Corporate Information

Established

October 1, 2008

Head office

Otemachi Financial City South Tower, 9-6, Otemachi 1-chome, Chiyoda-ku, Tokyo 100-8178, Japan
Tel: +81-3-3270-3211

Capital¥1,000,424 million (All capital is funded by the government of Japan)

Number of employees

1,631 (non-consolidated 1,182)

(As of March 31, 2018)

Group Companies

DBJ Group’s Strategy

Development Bank of Japan Inc.

DBJ Group’s VisionName

The DBJ Group provides diverse services that satisfy the needs of its customers.

DBJ Singapore Limited

DBJ Investment Consulting (Beijing) Co., Ltd.

DBJ Singapore Limited is a Singapore-based subsidiary established in December 2008. It mainly provides support for investments and loans as well as advisory services in the Asia-Pacificregion, and also collects and disseminates information locally.

DBJ Investment Consulting (Beijing) Co., Ltd. became a wholly
owned subsidiary in June 2014 and is based in Beijing andShanghai. It mainly offers support for investment and loan
services in China, and also collects and disseminates information locally.

Risk Management

DBJ Europe Limited
DBJ Europe Limited is a London-based subsidiary established in
November 2009. It mainly provides support for investment
and loan services in Europe, and also collects and disseminates
information locally.

Investments
and loans,Assetmanagement

DBJ Investment Advisory Co., Ltd.

DBJ Capital Co., Ltd. is the venture capital arm of DBJ Group. It
mainly makes early-stage equity
investments in venture firms, and supports their growth throughhands-on management.

DBJ Investment Advisory Co., Ltd. provides advice related to
DBJ’s VG (Value for Growth) Investment Program*.

DBJ Securities Co., Ltd.

DBJ Asset Management Co., Ltd.

DBJ Securities Co., Ltd. is a securities subsidiary that assists DBJ
Group with investment and loan
services.
It supports optimal capital procurement, provides asset
management opportunities, and flexibly fulfills diverse needs.

DBJ Asset Management Co.,
Ltd. is an asset managementcompany focused on real estate,
private equity, and infrastructure investments. It provides quality investment opportunities to investors with the comprehensive financial backing of DBJ Group.

Japan Economic Research Institute, Inc.

Value Management Institute, Inc.

Japan
EconomicResearch
Institute, Inc. is a comprehensive think tank that primarily
conducts surveys and consulting. It meets customer needsfrom a comprehensive viewpoint, leveraging synergies in its
three survey fields: public, solutions, and international.

Value Management Institute,
Inc. is a comprehensive thinktank with strengths derived
from its insight into advanced technologies and analysis using
proprietary economic models. It provides tailor-made solutions
to a broad range of government policy issues.

DBJ Real Estate Co., Ltd.

Consist, Inc.

DBJ Real Estate Co., Ltd. handles
administrative functions for DBJ
Group for office building leasing, rental conference rooms, and business libraries.

Consist, Inc. provides one-stop
consulting services for developing, maintaining, and operating
IT, using technology to help solve social issues.

* Value-added equity investment that supports growth strategies

Integrated Report 2018155

Data Section

Real estate
management /IT services

DBJ Capital Co., Ltd.

Corporate Data

Research,
Consulting

Corporate GovernanceOverseas
locationsIntegrated Reporthttps://www.dbj.jp/en

2018

Printed in Japan

Development Bank of Japan Inc.

In consideration of the environment, this report is printed
on FSC-certified paper using vegetable oil ink.