YMFG Business Situation
Summary of Business Results

collaboration with the Sumitomo Life Insurance Company,
which has a high level of specialization in life planning

Performanceand the insurance business. Through YM Life Planning, inDuring the fiscal year ended March 31, 2017, the Japanese

October 2016 we acquired all shares in Hoken Hiroba andeconomy was characterized by modest recovery, despite

converted the company to a subsidiary. As a member ofweaknesses in some areas. In addition to signs of a rebound

YMFG, Hoken Hiroba will serve as a one-stop provider ofin production activity and capital expenditure, public-a wide range of financial products, including insurance,

sector investment remained robust. Personal consumption

investment trusts, deposits and loans, providing life

was also favorable, amid ongoing improvements in theplanning support for our customers.

employment and income environments.

In international operations, Yamaguchi BankIn February 2016, the Bank of Japan introduced acosponsored the “Eighth Hong Kong and South China

negative interest rate policy, aiming to stave off deflation

Business Networking Event for Japanese Companies” asthrough further monetary easing. As a result, bank lending

one of the 18 regional banks with offices in Hong Kong.

yields continued to fall.

In addition, in July 2016 Yamaguchi Bank, Momiji Bank

In this environment, the regional economy was marked byand Kitakyushu Bank held the “Business Networking

moderate ongoing recovery. Production activity was generally

Event 2016 in Qindao” in collaboration with Joyo

firm, although weakness was apparent in some sectors.

Bank, Hyakujushi Bank, Juroku Bank and Nanto Bank,

Personal consumption was also strong, amid improvements

which also use our shared regional bank computerin the employment and income environments.

system. YMFG is reinforcing the Asian network it has

Against this backdrop, in line with their mission of

constructed in order to facilitate overseas business efforts

contributing to regional economic development, regional

and will continue to support customers’ Asian businessfinancial institutions face requests to deliver stronger

developments going forward.

financial soundness and profitability, supply funding more
flexibly and further enhance their financial services.

Financial Results
YMFG’s consolidated operating performance for the year

YMFG Performance
Amid these financial and economic conditions, supported

Total income amounted to ¥163,818 million, decreased

by its shareholders and business partners all YMFG’s¥3,040 million from the preceding fiscal year. The main

officers and employees were united in their efforts toreasons for this decrease were declines in interest on loans

strengthen the Group’s management base, bolster

and a reversal of the allowance for loan losses.

operating performance and contribute to the region.

Total expenses, meanwhile, rose ¥1,020 million, toFiscal year ended March 31, 2017 marked YMFG’s¥117,019 million, due to such factors as an increase in10th anniversary of establishment and the start of theother operating expenses. As a result, income before“YMFG Medium-Term Management Plan 2016.” Based on

income taxes decreased ¥4,060 million, to ¥46,799 million,

this plan, we strengthened regional relations as a group

and net income attributable to owners of the parent

centered on three banks—Yamaguchi Bank, Momiji Bank

decreased ¥709 million, to ¥31,587 million.

and Kitakyushu Bank—and worked together with YM

19

ended March 31, 2017, is outlined below.

Although the expansion of products and services toSecurities, YM Consulting and other Group companies tomeet increasingly diverse customer needs and steadypursue comprehensive Group capabilities as “One YMFG.”

marketing efforts based on solid community relationships,

In June 2016, YMFG established YM Life Planning in

due to interest rates remained low, the Group decreased

YMFG Annual Report 2017

deposits ¥280 billion year on year, to ¥9,230 billion,international standard) was 13.91%. Our consolidated

including negotiable certificates of deposit (NCDs).

total Tier 1 capital adequacy ratio was 13.64%, and ourconsolidated common equity Tier I capital adequacy ratio

Loans and bills discounted increased ¥302 billion, to¥6,751 billion as of March 31, 2017, due to the Group’s
efforts to fulfill its role as a regional financial institution

was 13.64%.
Net cash used in operating activities was ¥472 billion,

through its function as a financial intermediary and aggressivea ¥494 billion difference from the cash provided by theseefforts to meet demand from business partners with whomactivities in the previous fiscal year. The main reasons for

the Group has developed trust-based relationships.

this change were an increase in loans and bills discounted
and decrease in deposit and negotiable certificates of

The Group’s holdings of securities came to ¥1,900
billion at year-end, down ¥220 billion, due to decreases indeposit. Net cash provided by investing activities was ¥254

Japanese bonds. This change reflected investment decisions

billion, up ¥32 billion, owing to investments in securities,

made in consideration of market fluctuations.

taking market movements into consideration. Net cash

Total assets amounted to ¥10,226 billion at fiscal

used in financing activities came to ¥3 billion, ¥25 billion

yearend, decreased ¥212 billion from one year earlier.

less than was used in the previous year. The main factor

This decrease was attributable to decline in loans andwas the absence of redemption of subordinated bonds

bills discounted, based on the decrease in deposits,

payable, which was present in the previous fiscal year.

including NCDs.

As a result of these cash flows, cash and cash equivalents

At the end of the fiscal year, the consolidated capital
adequacy ratio for the Yamaguchi Financial Group (uniform

at the end of the fiscal year came to ¥938 billion, down
¥221 billion.

Yamaguchi Financial Group, Inc., Management Indices (Consolidated)

Consolidated total income
Consolidated net income attributable to owners of
the parent
Consolidated comprehensive income
Consolidated total net assets
Consolidated total assets
Net assets per share
Current term net income per share
Current term net income per share (diluted)
Capital ratio*2
Earnings on equity - increase
Group price earnings ratio

Millions of yen2017

Millions of yen
2016

Millions of yen
2015

Millions of yen
2014

Thousands ofU.S. dollars*1
2017

163,818
31,587

166,858
32,296

161,437
30,523

161,180
31,242

1,460,184
281,549

37,676
617,053
10,225,782
2,486.35
yen
128.70yen
106.64yen
13.91%
5.31%
9.37 times

7,840
583,168
10,438,005
2,357.89
yen
132.43yen
109.39yen
13.37%
5.62%
7.72 times

75,211
578,388
10,195,184
2,346.56
yen
120.88yen
108.24yen
13.43%
5.61%
11.44 times

34,322
521,470
9,635,044
2,040.02
yen
120.68yen
116.57yen
12.69%
6.04%
7.70 times

335,8235,500,071
91,147,001
22.16
U.S. dollars
1.15
U.S. dollars
0.95
U.S. dollars*1 US dollar amounts have been translated, for convenience only, at the rate of ¥112.19 = US$1.00 as of March 31, 2017.
*2 YMFG calculated its capital ratio according to the uniform international standard (Basel 3).

YMFG Annual Report 201720