Co-Creating a Bountiful Future
for Our Region

ANNUAL REPORT2020
For the year ended March 31, 2020

YMFG Profile (As of July 1, 2020)

Group Companies

Yamaguchi Financial Group
Holding Company

Yamaguchi Bank

Momiji Bank

Kitakyushu Bank

Banking businessBanking businessBanking businessNetworks in Japan:
131 (109 head office and branch offices,
22 sub-branch offices)
Networks in overseas:
4 (3 branch offices, 1 representative office)Networks in Japan:
111 (98 head office and branch offices,
13 sub-branch offices)

Networks in Japan:
37 (37 head office and branch offices)

YM Securities

HOKEN HIROBA

YM Life Planning

Securities businessInsurance and banking agency businesses

Insurance and banking agency businesses

YM Asset Management

Yamagin Card

Izutsuya Withcard

Investment management business

Credit-card business

Credit-card business

YM Consulting

YMFG Zone Planning

YM CareerConsulting businessResearch study of the region/
Consulting business

Job placement business

Data Qvic

YM Guarantee

YM Lease

Data consulting and media businesses

Credit guarantee businessLeasing business

Sanyu

Momiji Estate

YM Saison

Real estate leasing business

Real estate leasing business

Credit-card and other product planning andMomiji Carddeveloping business

Credit-card business

Contents
YMFG Profile .........................................................................1

Overseas Networks ..............................................................11

Message from the Management ............................................3

Corporate Governance.........................................................12YMFG Medium-Term Management Plan 2019........................4Internal Audits and Compliance System ...............................13

Business Model ......................................................................5

Risk Management System ....................................................14

Performance Highlights (YMFG) .............................................7

Business and Other Risks ......................................................15

Performance Highlights (Three Banks) ....................................9

Financial Section ..................................................................18

YMFG Forecast for the Fiscal Year Ending March 31, 2021 ...10
Disclaimer Regarding Forward-Looking Statements
The forward-looking statements in this Annual Report are based on management’s assumptions and beliefs in light of information available as of the date of
publication, and involve both known and unknown risks and uncertainties. Actual financial results may differ materially from those presented in this document,
being dependent on a number of factors.

1

YMFG Annual Report 2020

YMFG Financial Highlights (For the fiscal year ended March 31, 2020)¥10.6

trillion¥9.6

trillion

Total Assets

Net Income(Consolidated)(Consolidated)

Total assets on a consolidated Group basis amounted
to ¥10.6 trillion.

¥25.4

billion

Net income increased ¥2.2
billion year on year, to¥25.4 billion.

Deposit Balance

Balance of Loans(Three Banks)(Three Banks)

Liquid deposits and timeand savings deposits
were robust.

¥7.7

trillion

Principal contributors to theincrease were rises in housing loans and loans to small
and medium-sized enterprises.

Capital Ratio(Basel 3)

12.62

%

(Consolidated)
This represented a year-on-

Tier 1 Ratio(Basel 3)

12.44

%

year decrease of 1.00 per-(Consolidated)
This ratio was down 1.14
percentage point.

centage point.

Non-Performing
Loan Ratio

1.28

%

(Three Banks)
Our non-performing loan
ratio up 0.03 percentage
point.

Credit RatingA(Stable)R&I(YMFG)
Date of rating announcement: October 24, 2019

YMFG Annual Report 20202

Message from the Management

Co-Creatingea Bountiful Future
for Our Region

Takeshi Yoshimura

Keisuke Mukunashi
Kei

Chairman andGroup CEOPres
President
andGroup COO
Gro

hank you for your continued support of theTof further growth. Under the mission of “working

Yamaguchi Financial group (“YMFG”).

with intention to co-create a bountiful future for

The regional economy is affected by declining

our region,” we aim to go beyond the boundaries

childbirth and aging populations, the outflow ofof finance to address the social issues facing our

young people into urban areas and a shortage

region, maintaining an awareness closely attunedof workers to shoulder operations, as well as theto businesses. To convert into a company that adds

growing novel coronavirus disease (COVID-19)

value to the region, our basic goals are to “establish

pandemic. Amid these circumstances, expectationsa regional co-creation model” and “achieve ‘shinka’are mounting and regional financial institutionsof the financial model.”are being called upon to play an even greater role

Going forward, we will continue striving toin regional economic development by helping toprovide customers in the region we serve with theinvigorate local companies and industries, ensure

best possible value-added services. By fostering theemployment and bolster the sustainability of thedevelopment of the regional economy, we aim toregional economy.

enhance our corporate value. We will create a stable

Furthermore, the environment in which we operate

and highly effective corporate governance structure

as a regional financial institution is characterized byfor the Group and augment the transparency ofgrowing demand for new financial services. At theGroup management to ensure accountability to oursame time, we are exposed to risks in a host of areas

stakeholders. We remain unyielding in our aim tothat go beyond industry boundaries. These include

be a company that truly benefits and adds value

the emergence of fintech, further advances in AI andto the region. We look forward to your continued

other new technologies, and an ongoing move away

patronage and support.

from the use of cash.
In this environment, in the fiscal year ended March
31, 2019 we formulated YMFG’s 2019 medium-term
management plan, which we launched in the aim

3

YMFG Annual Report 2020

August 2020

YMFG Medium-Term Management Plan 2019Social trends
ESG
SDGs/Society 5.0

Regional environment

YMFG’s strengths

External environment

Declining populationand other social issues

Trust and trustworthinessAlternative methods forfinancial functions(Fintech, etc.)

Networks
Specialization

Further accelerate our initiatives to date,taking the regional environment and social trends into consideration

Through our business activities, we aim to address regional social issues.
In the process we aim for management focused on creating shared value (CSV),
which refers to both social value and economic value.
Goals
We aim to go beyond the boundaries of finance to address the social issues facing our region, maintaining
an awareness closely attuned to businesses. We strive to be a company that adds value to the region.
MissionWorking with intention to co-create a bountiful future for our region

Basic Goals
By achieving the three basic goals below, realize a CSV management model for YMFG.
Basic Goal 1

Basic Goal 2

Basic Goal 3

Establish a regional
co-creation model

Achieve “shinka” of
the financial model

Combine banking culture
and an entrepreneurial spiritWe will produce a regional
ecosystem for addressing
regional social issues, steadily
generating solutions.

From the perspectives of acting
on behalf of our customers andachieving customer optimization,
we will develop the businessmodel on two fronts: deepening
the model and extending it.

To create value—both economic
and social—we must achieve
fundamental changes in the way
our employees think and act.

We will configure an ecosystem
platform to create new value
by realizing numerous
ecosystems.

(Both are pronounced “shinka” in Japanese.)Meanwhile, to extend the model
we will pursue thorough digitization, and expand and increase
our sales area and scale ofoperation. As a result, we will
make our existing functions moreproductive.

 We will retain the best aspects ofthe banking culture and combinethat with an entrepreneurial
spirit, establishing a regional
co-creation model and afinancial model.

Financial Targets
Category (consolidated)

Fiscal Year Ended March 31, 2020
(Results)

ROE

3.97%

Dividend payout ratio

24.0%

Total capital ratio

12.62%

Fiscal Year Ending March 31, 2022
(Final Year of the Plan)

5.0% or more
30% or more
12% or more
YMFG Annual Report 20204

Business Model of the Medium-Term Management Plan

 Establish an original management model for creating shared value (CSV*) [the “YM-CSV Model”],
and work to simultaneously enhance regional social value and YMFG’s economic value.

YM-CSV Model
Establishment of a Regional Co-Creation Model
Regional ecosystem

YMFG

Providers ofsysteminfrastructure

Providers ofclient bases

Resolveregional issues
Providers ofgoods andservicesTechnology
providers We will take the lead inarranging a “regional
ecosystem” to resolve
social problems thecommunity faces andsteadily yield solutions.
 By implementing
numerous ecosystems, wewill create new regional
value, converting regional
weaknesses into strengths.

OrganicallyOther Leverage management resources in individual domains to generate
Relations withthe region

Regional
network

Human resource
network

DX

Regional data(integrated database)SupportCombination of banking culture*Creating shared value: A management strategy framework. By creating shared value, targets both the economic profit-seeking activities of corporations
and the generation of social value.

5

YMFG Annual Report 2020

Evolution and Deeper Focus in the Financial Model

Evolution

Banking model• Higher efficiency throughthorough digitalization• Greater scale

linkedConsulting

Digital data

Life planning

Deeper focus• Higher added value through existing functions • Permeation of a new financial model Thoroughly review the existing banking model from a customer perspective, andtarget evolution and a deeper focus

high levels of competitive advantage in the two models
Funds

Network withinvestee ventures

Ability to assess business feasibility(ability to evaluate organizations’ business models)and entrepreneurial spirit

YMFG Annual Report 20206

Performance Highlights (YMFG)
Performance during the fiscal year ended March 31, 2020
Business Profits from Core Operations/
Ordinary Profits/Net Income Attributable to
Owners of the Parent
Business profits from core operations increased ¥0.6 billion
year on year, to ¥29.2 billion.
Ordinary profits increased ¥3.2 billion, to ¥36.6 billion, andnet income attributable to owners of the parent amounted to¥25.4 billion.

international standard) under Basel III was 12.62%. The total
Tier 1 capital adequacy ratio was 12.44%, and consolidated
common equity Tier I capital adequacy ratio were 12.41%.
Capital Adequacy Ratio
Tier I Ratio

14(Billions of yen)

60

40

YMFG’s consolidated capital adequacy ratio (uniform

(%)

15

Business Profits from Core Operations
Ordinary Profits
Net income Attributable to Owners of the Parent

50

Capital Adequacy Ratio (YMFG)

38.5

30

13.29

13.62
13.58

12

47.8
32.9

13

13.29

33.4
28.6

0

29.2

12.44

11

36.6
25.4

23.1

12.62

2018

2019

2020
(Basel III)

20
10
0

Deposit Balance (Three Banks)
2018

2019

2020

The total deposit balance at term-end was ¥9,026.2 billion, or

Non-Performing Assets Based on the Financial
Revitalization Law (Three Banks)
Doubtful Assets
Bankrupt and Quasi-Bankrupt Assets
Sub-Standard Loans
Non-Performing Loan Ratio¥9,550.9 billion including Negotiable Certificates of Deposit(NCDs). This came about because of the expansion of products
and services and steady marketing efforts based on solidcommunity relationships.
Deposit Balance (Three Banks)(Billions of yen)

(%)

250

2.5

200

YMFG 2.0
1.30

8,000
6,000

10,000

150
100
50
0

7

1.24

1.25

1.28 YMFG 1.5

90.2

94.6

100.3

100.7

31.1

32.8

44.6

45.9

48.4

45.0

13.0
2018

YMFG Annual Report 2020

13.4
2019

10.7
2020

(Billions of yen)

12,0009,385.1

9,254.8

9,550.9

2018

2019

2020

4,000
1.0
0.5
0.0

2,000
0

Note: The deposit balance includes the NCD balance.

Balance of Loans/Balance of Personal Loans (Three Banks)
The balance of loans at term-end was ¥7,732.5 billion, as a result of active efforts to live up to the trust placed in us by ourcustomers by meeting healthy demand for funds.
Balance of Loans
Balance of Loans in Japan
Balance of Loans to Small and Medium-Sized Businesses(Billions of yen)

10,0007,500

7,178.4
7,149.8
4,201.7
58.8%

5,000

7,732.5

7,455.6
7,425.9

7,707.5

4,339.8
58.4%

4,462.4
57.9%

Balance of Personal Loans(Billions of yen)
1,500
1,200

1,407.4
18.9%

1,366.8
19.1%

1,421.0
18.4%

900
600

2,500
0

300
2018

2019

2020

0

2018

2019

2020

Note: The percentages of loans to small and medium-sized businesses and personal loans are calculated on the basis of the balance of loans in Japan.

Ratings for YMFG, Yamaguchi Bank andMomiji Bank

Dividend Policy (YMFG)

Ratings for the Group companies were A (stable) for YMFG,
A+ (stable) for Yamaguchi Bank and Momiji Bank.

shareholders while securing profits and reinforcing financial

We have continued to provide stable dividends to ourhealth to maintain our credit strength.
In the year ended March 31, 2020, the dividend per share at
term-end was ¥12. Combined with the interim dividend of ¥12

AAA

Rating and Investment Information, Inc.

AA

(As of October 24, 2019)

A
BBB
BB
B
CCC
CC
C

per share, the full-year dividend amounted to ¥24 per share.
2018

2019

2020

(Yen)
2021
(Forecast)

Annual dividend per share
20.0(Interim dividend) (10.0)

22.0(11.0)

24.0(12.0)

26.0(13.0)YMFG

A (stable)
Yamaguchi Bank

A+ (stable)
Momiji Bank

A+ (stable)

Expected Performance for the Fiscal YearEnding March 31, 2021 (YMFG)YMFG aims to achieve its consolidated ordinary profits of¥35.0 billion and net income attributable to owners of theparent of ¥23.0 billion.

YMFG Annual Report 20208

Performance Highlights (Three Banks)

Yamaguchi Bank (Non-consolidated) Gross Operating Income/Business Ordinary Profits/Net Income Capital Adequacy Ratio

Profits From Core Operations
Gross Operating Income
Business Profits From Core Operations(Billions of yen)

80

Capital Adequacy Ratio

Ordinary Profits
Net Income

Tier I Ratio(Billions of yen)

40

32.8
60

54.4

53.9

52.5

40

24.0

30.8
25.3

23.8

21.4

23.0

18.8

20

18
16

16.34

16.57

16.34

16.57

15.24
15.10

14

23.1

20

0

30

(%)

20

12
10

2018

2019

0

2020

2018

2019

2020

0

2018

2019

2020
(Basel III)

Momiji Bank (Non-Consolidated) Gross Operating Income/Business Ordinary Profits/Net Income Capital Adequacy Ratio

Profits From Core Operations
Gross Operating Income
Business Profits from Core Operations(Billions of yen)

40

33.5
30

30.2

31.7

Ordinary Profits
Net Income(Billions of yen)

15
12

12.1
9.1

9

9.86

9.6
7.7

7.7
6.3

10

2018

8.1

8.7

2019

2020

10.31

2019

2020
(Basel III)

8
6

3
0

10.37

10

6

13.0

(%)

14
12

20

0

Capital Adequacy Ratio

4
2018

2019

2020

2018

Kitakyushu Bank (Non-Consolidated) Gross Operating Income/Business Ordinary Profits/Net Income Capital Adequacy Ratio

Profits From Core Operations
Gross Operating Income
Business Profits from Core Operations(Billions of yen)

15
12

11.8

11.5

Ordinary Profits
Net Income(Billions of yen)

6.0

5.5
4.7

11.5

12

3.4
3.0

6

3.6

3.9

4.0

2018

2019

2020

YMFG Annual Report 2020

11.52

11.15

11.02

2019

2020
(Basel III)

11

3.3
2.5

10

1.5

3

9

(%)

13

4.1

4.5

9

0

Capital Adequacy Ratio

0.0

0
2018

2019

2020

2018

YMFG Forecast for the Fiscal Year Ending March 31, 2021

As the operating environment remain adverse, we expect profit categories to decreaseduring the fiscal year ending March 31, 2021.
In the second year of our Medium-Term Management Plan 2019, we expect consolidated
ordinary profits for the YMFG Group to amount to ¥35.0 billion, down 4.4% year on year.
We also anticipate net income attributable to owners of the parent of ¥23.0 billion,
down 9.4%.
(Billions of yen)

YMFG (Consolidated)
Fiscal Year Ending
March 31, 2021

Year-on-Year Change

Ordinary profits

35.0

(1.6)

Net income attributable to owners of the parent

23.0

(2.4)

Fiscal Year Ending
March 31, 2021

Year-on-Year Change

Ordinary profits

24.5

(6.3)

Net income attributable to owners of the parent

17.5

(5.5)

Fiscal Year Ending
March 31, 2021

Year-on-Year Change

Yamaguchi Bank (Non-Consolidated)

Momiji Bank (Non-Consolidated)

Ordinary profits

7.0

(0.7)

Net income attributable to owners of the parent

5.7

(0.6)

Kitakyushu Bank (Non-Consolidated)
Fiscal Year Ending
March 31, 2021

Year-on-Year Change

Ordinary profits

4.5

(1.0)

Net income attributable to owners of the parent

3.4

(0.7)

Note: Figures have been rounded off below the stated amounts.

YMFG Annual Report 202010

Overseas Networks (As of July 1, 2020)

Provide support to overseas business expansion by customers[China]-Yamaguchi Bank, Dalian Branchthrough our 3 branches in Dalian, Busan, and Qingdao and a
representative office in Hong Kong
Expand overseas business support[Korea]-Yamaguchi Bank, Busan Branch[China]-Yamaguchi Bank, Qingdao Branchservices through business allianceswith domestic and foreign financial
institutions and other companies

Mumbai[India]Business alliance:
State Bank of India

Dalian[Vietnam]Business alliance: Vietcombank

Qingdao[Thailand]Business Alliance: TMB Bank
Assigned employee: 1
Business Alliance: Japan FinanceCorporation (JFC)
Representative Office in Bangkok
Assigned employee: 1

YangonBusan[China]-Yamaguchi Bank
Hong Kong Representative Office

Hong
Kong

Taipei

Hanoi

Bangkok

Manila[Philippines]
Business alliance:
Metropolitan Bank & Trust Company

Ho Chi Minh
[Mexico]Business alliance:-State Government of Aguascalientes-State of Jalisco-State of Guanajuato-State of Nuevo Leon
-Banamex[Vietnam]Business alliance: HD Bank
Assigned employee: 1
Business Alliance: AGS
Joint Stock Company
Assigned employee: 1[Taiwan, Philippines, Myanmar, Vietnam]
Business alliance: Daiwa Securities Group

JakartaInternational Department
2-36, 4-chome Takezaki-cho, Shimonoseki, P.O. Box 24,
Shimonoseki 750-8603, Japan SWIFT Address: YMBKJPJT[Indonesia]
Business alliance:Bank Negara Indonesia

Loans of overseas branches (As of March 31)
40,000(Millions of yen)

34,39530,49830,000Overseas Offices
BUSAN BRANCH
4F, Postal Insurance Busan Bldg., Jungang-Dong 3-Ga, 63,
Jungang-Daero, Jung-Gu, Busan, Republic of Korea
SWIFT Address: YMBKKR2P
QINGDAO BRANCH
2F, Crowne Plaza Hotel Qingdao, 76 Hong Kong Central
Road, Qingdao, Shandong Province, The People’s Republic of
China
SWIFT Address: YMBKCNBQDALIAN BRANCH
14F Senmao Building No. 147, Zhongshan Road Xigang
District, Dalian, Liaoning Province, The People’s Republicof China
SWIFT Address: YMBKCNBDHONG KONG REPRESENTATIVE OFFICE
403, 4/F, Far East Finance Centre, 16 Harcourt Road,
Hong Kong
Fax: +852-28104902

11

YMFG Annual Report 2020

28,63829,68424,99620,00010,000

0

2016

2017

2018

2019

2020

Yamaguchi Bank: The first local bank that can deal with RMB
in ChinaCorporate Governance

Based on its management policy of maintaining a sound and proactive
enterprising spirit, YMFG aims for management transparency and fair,swift and bold decision-making that will lead to sustainable growth andincreases in corporate value over the medium to long term. To this end andrecognizing that creating an effective corporate governance system is an
important management priority, on an ongoing basis we are pursuing theinitiatives described below to enhance our corporate governance.
i. We strive to ensure the rights of shareholders and create an environmentthat facilitates the appropriate exercise of shareholders’ rights andsubstantive shareholder equality.
ii. We cooperate closely with our principal stakeholders, including
customers, the local community, shareholders and employees.
iii. We diligently disclose important management-related information to ourprincipal stakeholders.
iv. We endeavor to ensure the effectiveness of the business execution
supervisory and auditing function through the establishment of various
institutions, including the Board of Directors.
v. We create systems to promote constructive dialogue in order to build
long-term relationships with shareholders.
The Board of Directors, consisting of 10 directors (including six outside

directors), makes decisions about important matters related to the Group’s
management and supervises the directors. Furthermore, we have adopted
the chief officer (CXO) system and the executive officer system to fortify the
Board of Directors’ supervisory function and enhance the business executionfunction. The Nomination Committee discusses matters related to theappointment and dismissal of directors, and the Compensation Committee
discusses matters related to the compensation of the directors. Bothguarantee the objectivity and transparency of decision-making processes.
YMFG has adopted an audit and supervisory committee system. The
Audit and Supervisory Committee comprises three directors, of whom two
are outside directors. The committee audit the execution of operations bydirectors, configure, audit and verify the operation of internal control systems
at YMFG and its subsidiaries, and prepare audit reports. By having the Audit
and Supervisory Committee, which chiefly comprises outside directors, exercise
its voting rights at Board of Directors meetings, we endeavor to reinforce its
auditing and supervisory function with respect to the Board of Directors andenhance the transparency and speed of the decision-making process.
The Group Executive Management Meeting, the Group Asset and Liability
Management Committee, the Group Compliance Committee and the Group
Risk Management Committee discuss important management issues.

YMFG Corporate Governance Structure (As of July 1, 2020)
YMFG
General Meeting of Stockholders
Appointment/Dismissal

Appointment/Dismissal

Cooperation

Audit and Supervisory Committee

Board of Directors

3 Members

10 Directors

Auditors and Supervisory
Committee Office

Accounting Auditor

Appointment
Accounting Audit

Compensation
Committee

Command

Audit and Inspection Dept.

Reports andRecommendation

Internal Audit

Group Executive
Management MeetingGroup ALM Committee

Group CEOGroup Compliance Committee

Deliberative
organ

Report(including 6 outside directors)(including 2 outside directors)
Cooperation
ReportAppointment/Dismissal

Group Risk Management Committee

Nomination
Committee(Voluntary advisory body)Business Execution Structure

CEO: Chief Executive Officer
COO: Chief Operating officer
CIO: Chief Innovation/information and Strategic Investment officer
CSO: Chief Strategy Officer

Group COO

Head of CEO Office

Investment Project Consideration Committee
Unit COO
Regional Co-creation Unit

Unit COO
Financial Unit

Group CIO Strategic Innovation
Investment Business H.Q.

CommandCommandCommandGroup CSO
Corporate Staff Division
CommandOperation Departments

Yamaguchi Bank

Momiji Bank

Kitakyushu Bank

YM Securities YM Lease, YM Consulting, Izutsuya Withcard, Yamagin Card, YM Guarantee, Sanyu, YMFG Zone Planning, YM Asset

Company with an audit and supervisory committee

Management, Momiji Estate, YM Life Planning, Hoken Hiroba, YM Saison, Momiji Card, Data Qvic, YM Career

YMFG Board of Directors and Corporate Auditors (As of July 1, 2020)
Director

Masao Kusunoki*

DirectorTakeshi Yoshimura
President and Group COO

Director

Director

Yumiko Nagasawa*

Minako Suematsu*

Chairman and Group CEO

Keisuke Mukunashi
Vice President and Unit COO

Koichiro Kuno

Noriyuki Yanagawa*Director
Audit and Supervisory Committee Member

Susumu Fukuda

Director
Audit and Supervisory Committee Member

Kazuo Tsukuda*

Director
Audit and Supervisory Committee Member

Michiaki Kunimasa** Masao Kusunoki, Yumiko Nagasawa, Noriyuki Yanagawa, Minako Suematsu, Kazuo Tsukuda and Michiaki Kunimasa are outside directors under Article 15 of Section 2 of theCompanies Act.

YMFG Annual Report 202012

Internal Audits and Compliance System

Internal Audits
Principles of Internal Audits

Implementation of Internal Audits

We define an internal audit as a series of processes for

YMFG’s Audit and Inspection Dept. plans audit processes

objective verification of the appropriateness and effectivenessfor the whole Group, implements audits and supervises eachof internal controls (including risk management) and asGroup company’s internal audits.

making suggestions for necessary improvements.
YMFG has devised standard internal audit rules for the

The YMFG Audit and Inspection Dept. devises the rules
and medium-term plans for the Group’s internal audits,

whole Group. On the basis of these rules, the internal audit

implements audits of the Group companies’ compliance/risk

departments of each Group company implement audits.

management departments and checks the accuracy of the

Further, YMFG creates the Group’s medium-term internal
audit plan on the basis of its management policy andfinancial statements of the Group companies.
Internal audits of front-line sales outlets are performed toconditions. Internal audits by the auditing bodies of eachverify the status of compliance and risk management functions

Group company are conducted on the basis of this plan toand ensure their mutual effectiveness.

ensure their effectiveness and efficiency.

The department monitors and gives guidance and advice
to the Group companies’ audit and inspection departments.
On the basis of their audit reports, the department reports on
the internal audits of the Group to the Board of Directors andaudit and supervisory committee.

Compliance System
YMFG’s Attitude toward Compliancebody of YMFG. We also formulate compliance programs for

YMFG shares a common understanding of their responsibilities

each fiscal year, which equate to specific execution plans, andto fulfill their public mission and corporate social

monitor the status of program implementation.

responsibilities as a financial group. Accordingly, we accord
topmost management priority to thorough compliance, take

Efforts to Prevent Money Laundering

the seriousness of compliance seriously and consider earning

The Act on Punishment of Organized Crimes and Control of

the trust of a broad-based society our fundamental policy.

Crime Proceeds and the Law for Prevention of Transfer of
Criminal Proceeds prescribes heightened measures to prevent

Compliance Systemmoney laundering. The Group’s efforts are appropriate and in

To ensure appropriate compliance, YMFG has established theconformance with these regulations, in keeping with our aim

Compliance Management Department. In addition to ensuringof maintaining society’s trust in us as a financial institution.

the status of compliance, this department conducts related

Specifically, we have formulated a policy of controls andtraining for executives and employees. This department liaises

procedures reasonably designed to prevent and detect moneywith the compliance management department of YMFG’slaundering/terrorist financing activities. We have appointed

subsidiaries as part of its efforts to centralize compliancea senior officer to take charge of this policy and establishedmatters throughout the Group.

training programs on this topic for all management and staff.

The Group Compliance Committee acts as a deliberative

13

YMFG Annual Report 2020

Risk Management System

YMFG Risk Management System (AS of July 1, 2020)
YMFG
Board of Directors Audit and Supervisory Committee
Group Executive Management MeetingGroup ALM Committee

Committees
Control Headquarters

Compliance, Risk Control Headquarters

Risk Management
Control Department

Risk Administration Dept.

Risk Category

Audit

Risk
Administration Dept.

Risk
Administration Dept.

Yamaguchi Bank

Momiji Bank

Kitakyushu Bank

Audit andInspection Dept.

Rumor Risk

(Verification of
appropriate and effective
risk management)

Risk Administration Dept.
Corporate Planning
Compliance Administration Dept.
Dept.
Corporate Administration Dept.
IT Administration Dept.
Groupwide Risk Management
Directions on basic policies/
Report on risk
audit system/principles
management

Department in Chargeof Risk Management

Independent
Auditors

Audit

Operational Risk
• Processing risk
• System risk
• Information risk
• Legal risk
• Tangible asset risk
• Personnel risk
• Money laundering andTerrorism financing risksMarket Risk
Liquidity Risk

Credit Risk

ReportGroup Risk Management Committee

Audit

Board of Directors Audit and Supervisory Committee
Committees

YMFG

Group Executive Management MeetingGroup ALM Committee

Risk Management
Control Department
Risk Category

Department in Chargeof Risk Management
Related Departments
Operations

Report

Audit

Risk Administration Dept.
Market Risk
Liquidity Risk

Credit Risk

HQ departments
HQ departments

Independent
Auditors

Group Risk Management Committee

Operational Risk
• Processing risk
• System risk
• Information risk
• Legal risk
• Tangible asset risk
• Personnel risk
• Money laundering andTerrorism financing risks

Reputational Risk

Risk management departments
Sections related to risk management

Operations by HQ, branches, affiliates, etc.

Audit

Audit
Audit
Audit

YM Securities, YM Lease, Izutsuya Withcard, YM Consulting, Sanyu, Momiji Estate, Yamagin Card, YM Guarantee,
YMFG Zone Planning, YM Asset Management, YM Life Planning, Hoken Hiroba, Data Qvic, YM Saison, Momiji Card, YM Career

YMFG faces all kinds of risks that have become morecope with risks. Risk amounts are measured by a uniform

diversified and complex along with changes in the economy

method, capital is allocated on the basis of these methods,

and in society. Risk management is one of the most importantand risks are collectively managed.

issues facing the Group.
As part of our basic risk management policy, we have devised
standard risk management rules that apply to the Group.

YMFG’s risk management sections check risk management
conditions in the whole Group.
The Audit and Inspection Department, which is independent

The Group has organized risk management sections,of the operation departments, implements internal audits

risk management departments, Group Risk Management

to ascertain the appropriateness and effectiveness of risk

Committee and Group Executive Management Meeting tomanagement. This system applies both to the Group.
YMFG Annual Report 202014

Business and Other Risks

Of the matters related to business and economic conditions
outlined in the annual securities report, below are the majorrisks management recognizes as having the potential tomaterially affect the financial condition, operating performanceand cash flows status of YMFG (the Bank and its consolidated
subsidiaries). Recognizing this potential, YMFG strives to prevent
such risk from manifesting and to respond appropriately in theevent they do occur.
The forward-looking items described below are those of which
YMFG is aware as of the end of the fiscal year under review.
1. Credit Risk
(1) Non-Performing LoansYMFG maintains sufficient allowances against non-performing loans
to maintain the soundness of its assets. However, YMFG’s nonperforming loans and credit expenses could increase as the result of
economic movements in Japan and the local community, fluctuations
in real estate values and share prices, and the management status ofrecipients of YMFG’s financing. Such factors could have a negative
effect on operating performance and the financial condition, reducing
reduce equity capital.
To date, YMFG has worked diligently to move non-performing
loans off the balance sheet, to write off non-performing loans
appropriately, and to post sufficient allowances for doubtful accounts.
However, the Group could face larger-than-expected losses when
disposing of non-performing loans or incur higher-than-expected
amortization. Such factors could have a negative effect on operating
performance and the financial condition.
(2) Allowance for Doubtful Accounts
In accordance with predetermined standards, primarily, estimated loss
amounts for the next one year and next three years are calculated for
assets corresponding to normal assets and assets requiring caution.
For assets classed as potentially bankrupt assets, loss amounts
are stated by subtracting from lending amounts the amount ofrecoverable collateral or the expected amount recoverable fromguarantees. However, actual losses may differ from the amounts
expected when the allowance for doubtful accounts is posted. As
a result, actual losses could significantly exceed expected losses,
resulting in an insufficient allowance for doubtful accounts.
Furthermore, worsening overall economic conditions, declines incollateral values and other unexpected factors may require the Groupto revise its set standards and expected losses, resulting in the needto increase the allowance for doubtful accounts. This could have anegative effect on operating performance and the financial condition.
(3) Loans by Business Category, Geographic Region and Other Factors
From a risk management perspective, YMFG conducts credit
management of its portfolio by rating level, business category, scale,region and other factors.
However, large amounts of non-performing loans could be
generated in a specific business category and, if poor businessconditions in that business sector are prolonged, new corporatebankruptcies could arise. In such circumstances, YMFG’s credit
expenses could increase, having a negative impact on YMFG’soperating performance and financial condition.
Furthermore, as YMFG’s main bases of operation are in Yamaguchi
Prefecture, Hiroshima Prefecture and the city of Kitakyushu, theGroup’s operations tend to be particularly affected by regional
economies. Conditions in those regional economies could therefore

15

YMFG Annual Report 2020

have a negative impact on YMFG’s operating performance andfinancial condition.
(4) Response to Borrowers
In some cases, YMFG may not exercise its legal rights even whena borrower defaults on their financial obligations, after taking into
account the efficient and effective recovery of loans, among otherfactors. Furthermore, YMFG may support or cooperate with suchborrowers in their efforts to secure additional loans. YMFG’s credit
costs could rise as the result of a deterioration of the creditworthinessof such borrowers and its support, having a negative impact on
YMFG’s operating performance and financial condition.
(5) Impact of COVID-19
To prevent the spread of the novel coronavirus disease (COVID-19),
companies are being asked to suspend operations, and people arebeing asked to refrain from going outdoors. This situation is affecting
our region to an unprecedented degree. Given these circumstances,
YMFG is working to understand the conditions of individual borrowers
in a timely and appropriate manner and provide various types of
support to help customers with cash flow and other aspects ofbusiness continuity, including through the application various typesof support measures. However, if the operating environment were
to deteriorate, credit costs could rise, having a negative impact on
YMFG’s operating performance and financial condition.
2. Risks Related to the Capital Adequacy Ratio(1) Capital Adequacy Ratio
As YMFG has overseas bases, it calculates a consolidated capital
adequacy ratio according to uniform international standards asprovided by “standards for determining whether a bank holding
company’s equity capital is sufficient, after taking into account assets
held by the bank holding company and its subsidiary companies,
based on the provisions of Article 52-25 of the Banking Act” (Financial
Services Agency Notification No. 20 of 2016).
Accordingly, the consolidated capital adequacy ratio must be
maintained at 8% or higher, the Tier 1 ratio at 6% or higher and theTier 1 ratio on common shares at 4.5% or higher. YMFG’s capital
adequacy ratio currently exceeds these levels. However, changes inamounts of capital stock, retained earnings and valuation differenceson available-for-sales securities, as well as fluctuations in risk assets,
could affect the capital adequacy ratio.
Uniform international standards call for the setting of a capitalconservation buffer (2.5% above individual minimums). Currently, YMFG
exceeds these buffer levels. However, if it were to fall below these levels,
YMFG might limit dividends and other outflows, having a negative
impact on YMFG’s operating performance and financial condition.
Among consolidated banking subsidiaries of YMFG, Yamaguchi
Bank calculates its non-consolidated capital adequacy ratio
according to uniform international standards based on “standards
for determining whether a bank’s equity capital is sufficient, after
taking into account assets held by the bank, based on the provisionsof Article 14-2 of the Banking Act” (Financial Services Agency
Notification No. 19 of 2016). Momiji Bank and Kitakyushu Bank
calculate their non-consolidated capital adequacy ratios according todomestic standards, based on Financial Services Agency Notification
No. 19 of 2016.
(2) Deferred Tax Assets
As of the end of the consolidated fiscal year under review, Japaneseaccounting standards allow companies to record deferred tax assets as
expected tax benefits to be realized in the future.
Uniform international standards allow deferred tax assets related totemporary differences to be included in equity capital, up to a certain
limited amount, and YMFG includes in equity capital an amountcalculated in accordance with Financial Services Agency Notification
No. 28 of 2012.
As the balance sheet amount of deferred tax assets is based on
various forecasts and assumptions, including those related to futuretaxable income, YMFG may reduce deferred tax assets if it decides
that all or part of these deferred tax assets cannot be recovered.
Such a reduction would have a negative impact on YMFG’s operating
performance and financial condition and cause the capital adequacy
ratio to decrease.
3. Market Risks(1) Interest Rate Risk
YMFG, which engages mainly in banking operations, is affected byfluctuations in market interest rates through interest on loans—anasset investment method, yields on bond and other investments, andinterest rates on deposits—a funding method. Mismatches between
the amount and timing of asset investments and funding, as well as
unforeseen interest rate fluctuations, may have a negative effect on
YMFG’s operating performance and financial condition.
(2) Risk of Price Fluctuations on Holdings of Available-for-Sale
Securities
YMFG has substantial holdings of marketable, available-for-salesecurities for investment purposes. Broad-based and large-scale pricedeclines may engender impairments or valuation losses on holdingsof available-for-sale securities, which could have a negative effect on
YMFG’s operating performance and financial condition and lower thecapital adequacy ratio.
(3) Exchange transactions
YMFG’s operations are affected by exchange rate fluctuations.
Ongoing yen appreciation reduces the value of foreign currencytransactions when converted to yen. Also, certain assets and liabilities
are presented in foreign currencies. If it is not possible to offset assets
and liabilities denominated in foreign currencies by the same amountor hedge such differences effectively, YMFG’s operating performanceand the financial condition may be negatively affected.
(4) Impact of COVID-19
YMFG has in place a system to appropriately manage its holdings ofavailable-for-sale securities. However, if financial markets deteriorate,
the value of these holdings of available-for-sale securities could
decrease, having a negative impact on YMFG’s operating performanceand financial condition.
4. Liquidity Risks(1) Cash Flow Risk
YMFG raises the majority of its funds through deposits and istherefore able to manage funds provided through a stable source offunding. However, inconsistencies between investment and funding or
unexpected outflows of funds could hinder funding, rendering YMFG
unable to fulfill its payment obligations on their settlement dates.
Alternatively, YMFG may be compelled to raise funds at substantiallyhigher interest rates than usual, thereby generating losses.

(2) Market Liquidity Risk
Market confusion may make it impossible for YMFG to buy andsell available-for-sale securities or it may have no alternative but to
conduct such transactions at prices less favorable than usual, thereby
generating losses.
(3) Risk Related to Liquidity Regulations
Uniform international standards require the liquidity coverage ratio
to be maintained at 100% or higher. YMFG’s liquidity coverage ratio
currently exceeds this level. However, YMFG’s ratio could fall below
this level due to changes in the amount of eligible liquid assets or cash
outflows, having a negative impact on YMFG’s operating performanceand financial condition.
5. Operational Risks(1) Administrative Risk
Although its operations center on banking, YMFG also conducts
comprehensive, regionally focused financial services including
securities and credit card operations. If executives or employees wereto perform operations inaccurately or if accidents or instances offraud were to occur, in addition to direct losses YMFG could suffera loss among customers of the trust it has cultivated over many
years, consequently having a negative impact on YMFG’s operating
performance and financial condition.
(2) Risk of Information Leaks
YMFG retains significant information about customer deposits andloans that should not be leaked outside. The Group has in placemeasures to prevent outside incursions of its online and other systems.
However, unexpected circumstances could result in outflows of suchinformation. The Group stringently manages information printed on
paper or stored in electronic media in accordance with information
asset management regulations, but such information could be
leaked outside the Group by people with malicious intent or as theresult of the mishandling of information. Such situations could callinto question the Group’s social responsibility and result in claims ofcompensation for damages. In addition, such situations could have anegative effect on operating performance and the financial condition.
(3) System Risk
YMFG has measures in place to address system risk, such as computer
systems going down or malfunctioning, as well as against fraudulent
use and external cyberattacks. YMFG also has thorough security
measures in place and manages information stringently in line with
its security policy. However, the manifestation of system risk due toa disaster, the failure of equipment or telecommunication circuits orprogram failure could result damage or outflows of information. Thissituation could cause the suspension of payment functions and service
operations, as well as a loss in the trust of society, negatively affecting
YMFG’s operating performance and financial condition.
(4) Legal Risk
YMFG strives to ensure thorough compliance and is reinforcing its
systems to prevent legal violations. Nevertheless, YMFG could conduct
legal violations within its various business operations, resulting inlawsuits and negatively affecting YMFG’s operating performance andfinancial condition.
(5) Human Risk
YMFG endeavors to recruit and train competent human resources.
YMFG Annual Report 202016

However, the failure to recruit or train sufficient human resources
could result in a decrease in competitiveness and efficiency, negatively
affecting YMFG’s operating performance and financial condition.
(6) Reputational Risk
Negative news reports and rumors about YMFG and the financial
industry, whether true or not, could negatively affect YMFG’soperating performance, financial condition and share price.
6. Business-Related Risk
(1) Risk of Competition
The competitive environment within the financial sector has changed
substantially in recent years, due to extensive deregulation of financial
systems, the restructuring of regional financial institutions andentry into the financial sector of companies from other industries.
YMFG’s sales base could lose its competitive advantage against otherfinancial institutions as a result, negatively affecting YMFG’s operating
performance and financial condition.
(2) Risk of Unsuccessful Business Strategies
Although its operations center on banking, YMFG also conducts
comprehensive, regionally focused financial services including
securities and credit card operations and enacts business strategies
aimed to enhance corporate value. However, greater-than-expectedchanges in the operating environment could prevent YMFG fromgenerating the level of earnings it anticipates, or costs could be higher
than anticipated, negatively affecting YMFG’s operating performanceand financial condition.
Furthermore, YMFG could fall short of its expected results if it isunsuccessful in enacting management strategies for development
outlined in the YMFG Medium-Term Plan 2019, which commenced in
the fiscal year ended March 31, 2020.
(3) Holding Company Risk
Being a bank holding company, the majority of YMFG’s earnings
come from the dividends paid by its wholly owned subsidiaries,
Yamaguchi Bank, Momiji Bank and Kitakyushu Bank. Under certain
conditions, the Banking Act or the Companies Act may restrict theamounts that Yamaguchi Bank, Momiji Bank and Kitakyushu Bank
can pay as dividends to YMFG. In addition, Yamaguchi Bank, Momiji
Bank and Kitakyushu Bank may become unable to pay dividends to
YMFG due to the insufficient posting of earnings. Their inability to pay
dividends to YMFG could render YMFG unable to pay dividends.
(4) Risk of an Expanding Scale of Operations
In line with legislative changes and deregulation, YMFG has
expanded its scope of operations to take advantage of new earning
opportunities. This greater scale of operations exposes YMFG to newrisks. Also, these businesses may not progress as expected. As a result,
YMFG’s operating performance and financial condition could be
negatively affected.
7. Other Risks(1) Risk Related to Pension Obligations
Decreases in the market value or investment yield of YMFG’s pension
assets or changes in the base rate used for calculating retirement
benefit obligations can result in losses. Also, changes in pension
plans can incur amortization expenses on past service obligations. In
addition, changes in the interest rate environment and other factors
can have a negative impact on the unfunded portion of retirement
benefit obligations.

17

YMFG Annual Report 2020

(2) Risk Related to Impairment of Fixed Assets
YMFG applies the “Accounting Standard for Impairment of Fixed
Assets” to the fixed assets it owns. Changes in the purpose of useof these fixed assets, or decreases in profitability or asset values
could lead to valuation losses, having a negative impact on YMFG’soperating performance and financial condition.
(3) Risk of Financial Crimes
In the face of rampant crimes targeting financial institutions, suchas the forgery or theft of cash cards and remittance fraud, YMFG
is strengthening its security measures to prevent damages due tofinancial crimes. However, the advent of sophisticated financial crimes
could render YMFG unable to stop illegal or inappropriate transactions,leading to unexpected losses and credit losses, having a negative
impact on YMFG’s operating performance and financial condition.
(4) Risk of Regulatory Change
As a bank holding company, YMFG is subject to restrictions andsupervision under the Banking Act and is bound to operate within
the restrictions in place as of the end of the consolidated fiscal year
under review (including laws, regulations, policies and conventional
practices). Consequently, future regulatory changes could negatively
affect YMFG’s execution of operations, operating performance,
financial condition and capital adequacy ratio.
(5) Risk of Credit Rating Being Lowered
If rating agencies were to lower their ratings, YMFG could be required toengage in transactions under unfavorable conditions or become unable
to engage in certain transactions. This situation could have a negative
impact on YMFG’s operating performance and financial condition.
(6) Compliance Risk
To encourage all executives and employees to reinforce thecompliance system, each year YMFG formulates compliance program
practice items and undertakes a variety of initiatives. However, if acompliance-related problem were to arise, it could cause direct losses
as well as resulting in the loss of trust among customers cultivatedover many years. As a result, YMFG’s operating performance andfinancial condition could be negatively affected.
(7) Risks Related to External Factors
External factors such as natural disasters (including earthquakes, storm
and flood damage, and contagious diseases), man-made disasters(including terrorism and cybercrime) and technological disasters(including electrical outages and computer trouble), could resultin damage to YMFG’s head office, branches and other locations,threatening YMFG’s ability to continue all or part of its operations andsignificantly affecting YMFG’s operations.
In addition, to help prevent the recent COVID-19 pandemic fromspreading, YMFG has decentralized operations at headquarters
and sales branches, introduced teleworking, and adopted a timeshifted working schedule as part of its health maintenance anddisease-prevention efforts. However, if the pandemic fails to subside,
continues for a protracted period or increases in intensity, or if YMFG
employees were to become infected, ensuring business continuity
could become problematic. As a result, YMFG’s operations andfinancial condition could be negatively affected.

Financial Section

Financial Section
YMFG Business Situation........................................... 19
Consolidated Financial Statements ............................ 21
Notes to Consolidated Financial Statements .............. 25
Independent Auditor’s Report ................................... 54
Yamaguchi Bank Financial Statements ...................... 57
Momiji Bank Financial Statements ............................. 59
Kitakyushu Bank Financial Statements ....................... 61
YMFG Annual Report 2020

18

YMFG Business Situation
Summary of Business Results

our region, maintaining an awareness closely attuned tobusinesses. We strive to be a company that adds value to

The Regional Economy

the region.”In the fiscal year ended March 31, 2020, the Japanese

In international operations, in May 2019 the three

economy was on a path of modest recovery. Toward theGroup banks held the YMFG Overseas Business Seminar,

end of the fiscal year, however, conditions worsened

introducing the topics of “exchange rate market trends”

significantly due to the impact of the novel coronavirus

and “effective overseas development to address issues

disease (COVID-19) pandemic. Exports and production

facing corporate management.” Furthermore, in

weakened. The employment situation, which had been

September 2019 the three Group banks held the 2019improving, was also affected, which in turn led to weaker

Liaoning Province China–Japan Business Meeting inpersonal consumption.

Dalian, in China’s Liaoning Province. The meeting was

The regional economy enjoyed a slight recovery, but

held in conjunction with the Hokuhoku Financial Groupgrowing uncertainty toward the end of the fiscal year

(Hokuriku Bank and Hokkaido Bank) and the Department

brought the economy to a standstill. Bolstered by robustof Commerce of Liaoning Province. To promote overseas

domestic and overseas demand, production activity was

expansion, we will continue to support businessgenerally firm. In the second half, however, production

development in Asia by reinforcing our Asian network.

levels for export machinery and other items fell off as aresult of the COVID-19 pandemic. Personal consumption

Financial Results

weakened in the second half of the year, as demand fell

On a consolidated basis, total income rose ¥12,830 million

back following a surge ahead of the consumption tax

year on year, to ¥175,423 million, due to higher gains on

hike. Meanwhile, the manufacturing sector continued tothe sale of Japanese government bonds and gains on thedrive increases in capital investment, as major chemicalsale of shares. Total expenses expanded ¥9,789 million,

manufacturers invested to boost production capacity.

to ¥139,065 million, mainly because of losses on the

Against this backdrop, from the perspective of regional

redemption of Japanese government bonds and higher

invigoration and in line with their mission of contributing

credit costs. As a result, income before income taxes

to regional economic development, regional financial

rose ¥3,041 million, to ¥36,358 million, and net income

institutions face requests to deliver stronger financial

attributable to owners of the parent grew ¥2,242 million,

soundness and profitability, supply funding more flexibly

to ¥25,391 million.

and further enhance their financial services.

Deposit amounted to ¥9,525.9 billion, up ¥295.1 billion,
due to efforts to enhance products and services to meet

YMFG Performance
Amid these financial and economic conditions, supported

Loans and bills discounted increased ¥244.2 billion,

by its shareholders and business partners all YMFG’sto ¥7,652.6 billion as of March 31, 2020, due to due to

officers and employees were united in their efforts to

the Group’s efforts to fulfill its role as a regional financial

strengthen the Group’s management base, bolster

institution through its function as a financial intermediary

operating performance and contribute to the region.

and aggressive efforts to meet demand from business

During the year, we launched the YMFG Medium-

partners with whom the Group has developed trust-Term Management Plan 2019. We strove to realize the19

increasingly diverse customer needs.

based relationships.

goals of this plan, namely: “We aim to go beyond the

The Group’s holdings of securities came to ¥1,512.7

boundaries of finance to address the social issues facing

billion at year-end, up ¥114.7 billion, due to increases in

YMFG Annual Report 2020

Japanese national and regional government bonds. This

consolidated common equity Tier I capital adequacy ratiochange reflected investment decisions based on a polity of

was 12.41%.
Net cash provided by operating activities was ¥134.1

enhancing profitability for each fiscal year and across thebillion, a ¥381.9 billion difference from the previous year,

overall portfolio.
Total assets amounted to ¥10,605.4 billion at fiscal

mainly due to the rise in negotiable certificates of deposit.

year-end, up ¥301.3 billion from one year earlier. This

Net cash used in investing activities was ¥165.8 billion, aincrease was the result of growth in loans and greater¥505.5 billion difference from the previous year, and theholdings of securities.

result of purchases of securities. Net cash used in financing

Net assets came to ¥630.2 billion, down ¥30.7 billion

activities was ¥39.1 billion, ¥5.4 billion more than in thefrom a year earlier. The decline was due to a ¥36.0 billion

previous fiscal year, due to the redemption of bonds withdrop in unrealized gains on available-for-sale securities,

subscription rights to shares. As a result of these cash

despite a ¥19.6 billion contribution due to higher profit.

flows, cash and cash equivalents at the end of the fiscal
year came to ¥944.8 billion, down ¥70.8 billion.

At the end of the fiscal year, the consolidated capital
adequacy ratio for the Yamaguchi Financial Group (uniform
international standard) was 12.62%. Our consolidated
total Tier 1 capital adequacy ratio was 12.44% and our

Yamaguchi Financial Group, Inc., Management Indices (Consolidated)
Millions of yen
2020

Millions of yen
2019Millions of yen
2018

Millions of yen
2017

Thousands of
U.S. dollars*1
2020

Consolidated total income

175,423

162,593

162,072

163,818

1,611,899

Consolidated net income attributable to owners of
the parent

25,391

23,14932,91731,587233,308

Consolidated comprehensive income(25,204)652

47,26937,676(231,591)

Consolidated total net assets

630,245

660,958

660,451

617,053

5,791,096

10,605,416

10,304,140

10,366,548

10,225,782

97,449,380

2,458.73
yen

2,580.74
yen2,653.60
yen2,486.35
yen

22.59
U.S. dollars

Current term net income per share

100.07
yen

94.65
yen

133.65yen

128.70yen

0.92
U.S. dollars

Current term net income per share (diluted)

93.86
yen

83.27
yen

111.22yen

106.64yen

0.86
U.S. dollars

12.62%

13.62%

13.29%

13.91%

Consolidated total assets
Net assets per share

Capital ratio*2
Earnings on equity - increase
Group price earnings ratio

3.97%

3.53%

5.20%

5.31%

6.11 times

9.91 times

9.63 times

9.37 times*1 US dollar amounts have been translated, for convenience only, at the rate of ¥108.83 = US$1.00 as of March 31, 2020.
*2 YMFG calculated its capital ratio according to the uniform international standard (Basel 3).

YMFG Annual Report 202020

Consolidated Financial Statements
CONSOLIDATED BALANCE SHEETSMarch 31, 2020 and 2019

Millions of yen
2020

Millions of yen
2019

Thousands of
U.S. dollars (Note 1)
2020¥

971,777
1,088
5,487
1,542
48,412
1,512,748
7,652,626
20,693
19,763
234,539
92,30010,67935,042
18,42546,098(65,803)¥ 10,605,416¥ 1,043,994
39,042
7,055
1,465
30,565
1,398,014
7,408,387
18,55018,109205,258
93,233
10,927
38,675
1,367
46,547(57,048)¥ 10,304,140$ 8,929,312
9,997
50,418
14,169444,841
13,900,101
70,317,247
190,141
181,595
2,155,094
848,11298,126321,988
169,301
423,578(604,640)$ 97,449,380¥ 9,525,935
91,992
161,466742
27,999197—
101,336
2,765
3,930
294
10
1,029
70
389
28
53
10,83846,0989,975,171
50,00058,656508,212(14,321)602,547
9,689(10,657)
24,455(2,022)
21,465127
6,106630,245¥ 10,605,416¥ 9,230,773
133,466
67,711
568
29,553295
33,29775,448
2,590
2,906
293
15
1,281
71
300
28
7,171
10,86946,547
9,643,182
50,00058,685
488,620(14,795)
582,51045,710(1,270)24,526
3,009
71,975209
6,264
660,958¥ 10,304,140$ 87,530,414
845,282
1,483,653
6,818
257,273
1,810—
931,142
25,407
36,111
2,701
92
9,455
643
3,574
257
487
99,587423,578
91,658,284
459,432
538,969
4,669,779(131,591)
5,536,589
89,029(97,923)
224,707(18,579)
197,234
1,167
56,106
5,791,096$ 97,449,380

ASSETS
AssetsCash and due from banks (Notes 3, 4 and 9)
Call loans and bills purchased (Note 4)
Monetary claims bought
Trading assets (Notes 4 and 6)
Money held in trust (Notes 4 and 6)
Securities (Notes 4, 5, 6 and 9)
Loans and bills discounted (Notes 4, 7 and 8)
Foreign exchanges
Lease receivables and investment assets
Other assets (Notes 4, 6 and 9)
Tangible fixed assets (Notes 10, 11, 15 and 20)
Intangible fixed assets (Note 20)
Net defined benefit asset (Note 14)
Deferred tax assets (Note 21)
Customers’ liabilities for acceptances and guarantees (Note 16)
Allowance for loan losses
Total assets

LIABILITIES AND NET ASSETS
Liabilities

Net Assets(Notes 22
and 23)

Deposits (Notes 4 and 9)
Call money and bills sold (Note 9)
Payables under securities lending transactions (Note 9)
Trading liabilities (Notes 4 and 6)
Borrowed money (Notes 9 and 13)
Foreign exchanges
Bonds with warrants
Other liabilities (Notes 4 and 6)
Provision for bonuses
Net defined benefit liability (Note 14)
Provision for directors’ retirement benefits
Provision for loss on interest repayments
Provision for reimbursement of deposits
Provision for customers point services
Provision for directors’ stock benefits
Reserves under special laws
Deferred tax liabilities (Note 21)
Deferred tax liabilities for land revaluation (Notes 15 and 21)
Acceptances and guarantees (Note 16)
Total liabilities
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity
Unrealized gains on available-for-sale securities (Note 6)
Deferred losses on hedges
Revaluation reserve for land (Note 15)
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Stock options (Note 24)
Non-controlling interests
Total net assets
Total liabilities and net assets

See accompanying notes.

21

YMFG Annual Report 2020

CONSOLIDATED STATEMENTS OF INCOME
Years ended March 31, 2020 and 2019

Millions of yen
2020

IncomeInterest income:Interest on loans and discounts
Interest and dividends on securities
Other interest income
Trust fees
Fees and commissions
Trading income
Other operating income
Recoveries of written-off claimsCompensation for branch relocation
Other income (Note 17)
Total income
Expenses
Interest expense:
Interest on deposits
Interest on borrowings and rediscounts
Interest on bonds payable
Other interest expense
Fees and commissions
Other operating expenses
General and administrative expenses (Notes 18 and 24)
Impairment losses (Note 12)
Other expenses (Note 19)
Total expenses
Income before income taxes
Income taxes (Note 21):
Current
Deferred
Net income
Net income attributable to non-controlling interests
Net income attributable to owners of the parent
Amounts per share of common stock:
Net income attributable to owners of the parent (Note 29)¥¥

75,941
21,527899
123,0291,304
34,14615
418,557
175,423

Millions of yen
2019

¥

$

697,795
197,8048,261
9
211,605
11,982
313,755138
37
170,513
1,611,899

5,110
3,042
572
1,487
9,282
31,63969,272
144
18,517139,065
36,358

6,544
2,381
664
997
9,057
25,90971,32514
12,385
129,276
33,317

46,95427,952
5,256
13,66485,289290,719
636,516
1,323
170,146
1,277,819
334,080

13,250(2,137)25,245(146)
25,391

10,637(646)
23,326
177
23,149

121,750(19,636)
231,966(1,342)
233,308

¥

Yen
2020

¥

77,26419,9951,340
123,8982,316
24,58425—
13,170
162,593

Thousands of
U.S. dollars (Note 1)
2020

100.07

Yen
2019

¥

94.65

$

U.S. dollars (Note 1)
2020

$

0.92

See accompanying notes.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Years ended March 31, 2020 and 2019

Millions of yen
2020

Net income
Other comprehensive income (Note 26)
Unrealized gains (losses) on available-for-sale securities
Deferred gains (losses) on hedges
Remeasurements of defined benefit plans
Comprehensive income (Note 26)
Comprehensive income attributable to owners of the parent
Comprehensive income attributable to non-controlling interests¥¥

25,245(50,449)(36,031)(9,387)(5,031)(25,204)(25,049)(155)

Millions of yen
2019

¥

¥

23,326(22,674)(14,232)(1,102)(7,340)
652
489
163

Thousands of
U.S. dollars (Note 1)
2020

$

$

231,966(463,557)(331,075)(86,254)(46,228)(231,591)(230,166)(1,425)

See accompanying notes.

YMFG Annual Report 2020

22

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
Years ended March 31, 2020 and 2019
Millions of yen
Shareholders’ Equity

Balance at March 31, 2018
Changes of items during the year
Dividend paid
Net income attributable to ownersof the parent
Purchase of treasury stock
Disposal of treasury stockReversal of revaluation reserve for land
Effect to capital surplus resulting
from changes in ownershipinterest in a subsidiary
Net changes of items other thanshareholders’ equity
Total changes of items during the year
Balance at March 31, 2019
Changes of items during the year
Dividend paid
Net income attributable to ownersof the parent
Purchase of treasury stock
Disposal of treasury stockReversal of revaluation reserve for land
Effect to capital surplus resulting
from changes in ownershipinterest in a subsidiary
Net changes of items other thanshareholders’ equity
Total changes of items during the year
Balance at March 31, 2020

Accumulated other comprehensive income

Unrealized
Total
gains onTreasury
Shareholders’ availableStock
Equityfor-salesecurities

Total
Deferred Revaluation Remeasurements accumulated
losses on reserve forof definedotherhedgeslandbenefit plans comprehensive
income¥60,882 ¥470,697¥(22,107) ¥559,472¥(5,232)(5,232)(5,232)

23,149(20,161)
25,005
6

23,149(20,161)
25,0056

271

271

CapitalStock

CapitalSurplus¥50,000

Retained
Earnings

23,149(20,161)
27,473(2,468)6271—¥50,000¥ 59,927(168)(14,217)(1,102)(14,217)(1,102)¥ 45,710 ¥ (1,270)¥24,533(7)(7)¥24,526¥10,350¥ 94,642(7,341) (22,667)(7,341) (22,667)¥ 3,009 ¥ 71,975

Stock
options

NonTotal Net
controlling
AssetsInterests¥ 359¥5,978 ¥660,451

(150)
(150)
¥ 209

286
(22,531)286
507¥6,264 ¥660,958(2,197)
17,923¥58,685 ¥488,620

7,312
23,038¥(14,795) ¥582,510(5,870)(5,870)(5,870)25,391
(339)
784
71

25,391
(339)
784
71

25,391
(339)
813

(29)
71

—

—
¥50,000(29)
19,592¥58,656 ¥508,212

474
20,037¥(14,321) ¥602,547(36,021)(9,387)(36,021)(9,387)¥ 9,689 ¥(10,657)

(71)
(71)
¥24,455(5,031) (50,510)(5,031) (50,510)¥ (2,022) ¥ 21,465

(82)
(82)
¥ 127

(158) (50,750)(158) (30,713)¥6,106 ¥630,245

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

Balance at March 31, 2019
$459,432
Changes of items during the year
Dividend paid
Net income attributable to ownersof the parent
Purchase of treasury stock
Disposal of treasury stockReversal of revaluation reserve for land
Effect to capital surplus resulting
from changes in ownershipinterest in a subsidiary
Net changes of items other thanshareholders’ equity
Total changes of items during the year
Balance at March 31, 2020
$459,432
See accompanying notes.

23

YMFG Annual Report 2020

CapitalSurplusRetained
Earnings

Accumulated other comprehensive income

Unrealized
Total
gains onTreasury
Shareholders’ availableStock
Equityfor-salesecurities$539,235 $4,489,765 $(135,946) $5,352,486 $ 420,114(53,937)
233,308(3,115)
7,470

(266)
643

Total
Deferred Revaluation Remeasurements accumulated
losses on reserve forof definedotherhedgeslandbenefit plans comprehensive
income$(11,669) $225,360$ 27,649 $ 661,454

Stock
options

NonTotal Net
controlling
AssetsInterests$1,920$57,549 $6,073,409(53,937)(53,937)

233,308(3,115)
7,204
643

233,308(3,115)
7,204
643
0

(331,085)(266) 180,014
4,355
184,103 (331,085)$538,969 $4,669,779 $(131,591) $5,536,589 $ 89,029(86,254)(653)(86,254)(653)$(97,923) $224,707(46,228) (464,220)(46,228) (464,220)$(18,579) $ 197,234

(753)
(753)
$1,167(1,443) (466,416)(1,443) (282,313)$56,106 $5,791,096

CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended March 31, 2020 and 2019
Millions of yen
2020

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

Cash flows from investing activities:
Purchases of securities
Proceeds from sales of securities
Proceeds from maturity of securities
Purchases of money held in trust
Proceeds from sales of money held in trust
Purchases of tangible fixed assets
Proceeds from sales of tangible fixed assets
Purchases of intangible fixed assets
Net cash provided by investing activities
Cash flows from financing activities:
Payments for redemption of bonds with subscription rights to shares
Dividends paid
Dividends paid to non-controlling shareholders
Purchases of treasury stock
Proceeds from disposal of treasury stock
Proceeds from sales of shares of parent held by subsidiaries
Payments for acquiring additional shares of a subsidiary that do not result inchange in scope of consolidation
Proceeds from selling shares of a subsidiary that do not result in change in scopeof consolidation
Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net change in cash and cash equivalents
Cash and cash equivalents at the beginning of fiscal year
Cash and cash equivalents at the end of fiscal year (Note 3)¥

36,358
6,142
144
355
(3)
8,754
175
3,633
1,024
1
89
(5)
(252)
(1)
(98,367)
10,211(15,667)
(969)
5,869
105
(77)
174
(244,239)
128,682
166,480(1,554)
1,444
39,522(41,474)
93,755(2,143)(98)(1,654)
92,591(10,785)(35,671)
142,549(9,857)1,359
134,051

Thousands of
U.S. dollars (Note 1)
2020

Millions of yen
2019¥

33,318
6,472
14
353
(10)
5,358
(642)
6,029
1,109
14
48
(8)
(391)
(1)
(98,599)
10,586(11,485)
816
(676)
99
49
75
(250,551)
138,786(263,763)
(246)
(279)
39,744
71,17820,827(699)
168(2,075)
93,106(10,769)(17,623)(229,668)(18,200)—(247,868)$

334,081
56,437
1,323
3,262
(28)
80,437
1,608
33,382
9,409
9
818
(46)
(2,316)(9)(903,859)
93,825(143,958)(8,904)53,928
965
(708)
1,599
(2,244,225)
1,182,413
1,529,725(14,279)
13,268363,154(381,090)
861,481(19,691)(900)(15,198)
850,786(99,100)(327,767)
1,309,832(90,572)
12,4871,231,747(3,489,606)
3,221,245
126,090(64,810)
46,914(2,899)28(2,720)(165,758)(2,610,787)
2,779,979
166,812(10,260)
19,936(3,106)
8(2,849)339,733(32,064,743)
29,598,870
1,158,596(595,516)
431,076(26,638)
257(24,993)(1,523,091)(33,246)(5,870)
(3)
(339)
393
—
—

(9,034)(5,232)(3)(20,114)
395
1
(53)

(305,486)(53,937)(28)(3,115)
3,612
—
—

—

381

—

(39,065)(2)(70,774)
1,015,558
944,784(33,659)
7
58,213
957,345
1,015,558(358,954)(19)(650,317)
9,331,600
8,681,283¥$

See accompanying notes.

YMFG Annual Report 202024

Notes to Consolidated Financial Statements
Years ended March 31, 2020 and 2019

1. BASIS OF PRESENTATION

2. SIGNIFICANT ACCOUNTING POLICIESYamaguchi Financial Group, Inc. (“YMFG”) is a holding
company for The Yamaguchi Bank, Ltd. (“Yamaguchi
Bank”), Momiji Bank, Ltd. (“Momiji Bank”), The Kitakyushu
Bank, Ltd. (“Kitakyushu Bank”) and other subsidiaries.
YMFG and its consolidated subsidiaries (“the Group”)
maintain their accounts and records in accordance withthe provisions set forth in the Financial Instruments andExchange Law and its related accounting regulation andin conformity with accounting principles and practices
generally accepted in Japan (“Japanese GAAP”). Japanese
GAAP are different in certain respects as to applicationand disclosure requirements of International Financial
Reporting Standards.
The accompanying consolidated financial statements
are a translation of the audited consolidated financial
statements of YMFG which were prepared in accordancewith Japanese GAAP and were filed with the appropriate
Local Finance Bureau of the Ministry of Finance as requiredby the Financial Instruments and Exchange Law.
In preparing the accompanying consolidated financial
statements, certain restructuring and reclassifications havebeen made in the consolidated financial statements issued
domestically in order to present them in a form which ismore familiar to readers outside Japan.
The consolidated financial statements are stated inJapanese yen. The translations of the Japanese yenamounts into U.S. dollars are included solely for theconvenience of readers, using the prevailing exchange rate
at March 31, 2020, which was ¥108.83 to U.S.$1.00. Suchtranslations should not be construed as representations
that the Japanese yen amounts have been, could havebeen, or could in the future be, converted into U.S. dollars
at this or any other rate of exchange.

Consolidation and equity method(1) Scope of consolidation
Japanese accounting standards on consolidated
financial statements require a company to consolidate
any subsidiaries of which the company substantiallycontrols the operations, even if it is not a majority
owned subsidiary. Control is defined as the power togovern the decision-making body of an enterprise.
(i) 17 consolidated subsidiaries at March 31, 2020
and 2019.
The names of the main consolidated subsidiaries
are listed on page 1.
The scope of consolidation includes YM Career
Inc. due to its establishment in the fiscal year
ended March 31, 2020.
In addition, Kitakyushu Economics Institute, Inc.,
formerly a consolidated subsidiary, was excluded
from the scope of consolidation in the fiscal year
ended March 31, 2020 due to the merger between
Kitakyushu Economics Institute, Inc. and YMFG
Zone Planning Co., Ltd. (an absorption-type merger
in which YMFG Zone Planning Co., Ltd. was thesurviving company).
The scope of consolidation includes DATA QVIC
Inc. due to its establishment in the fiscal year
ended March 31, 2019.
(ii) One unconsolidated subsidiary at March 31, 2020
and 2019.
Name of major subsidiary:
Maple Funding Corporation
The unconsolidated subsidiary is excluded fromthe scope of consolidation because its total assets,ordinary income, net income (in proportion toownership), retained earnings (in proportion toownership) and accumulated other comprehensive
income are so immaterial that they do not hinder arational judgment of YMFG’s consolidated financial
position and results of operations when excluded
from the scope of consolidation.

(2) Application of the equity method
Japanese accounting standards also require any
unconsolidated subsidiaries and affiliates with financial
and operating policies over which YMFG is able to25

YMFG Annual Report 2020

exercise material influence to be accounted for by theequity method.
(i) No unconsolidated subsidiary was accounted for by
the equity method at March 31, 2020 and 2019.
(ii) As at March 31, 2020 and 2019, two affiliates
were accounted for by the equity method.
Affiliates as at March 31, 2020 and 2019 wereas follows:
YM Saison Co., Ltd.
Momiji Card Co., Ltd.
(iii) As at March 31, 2020 and 2019, one
unconsolidated subsidiary was not accounted forby the equity method.
Name of major subsidiary:
Maple Funding Corporation
The unconsolidated subsidiary is also excluded
from the scope of application of equity method
because its net income (in proportion toownership), retained earnings (in proportion toownership) and accumulated other comprehensive
income (in proportion to ownership) are so
immaterial that they do not hinder a rational
judgment of YMFG’s consolidated financial position
and results of operations when excluded from thescope of equity method.
(iv) There were no affiliates that were not accounted
for by the equity method as at March 31, 2020
and 2019.

(3) The balance sheet dates of consolidated
subsidiaries
The balance sheet date of all of the consolidated
subsidiaries is March 31 every year.

(4) Accounting Policies
Trading assets, trading liabilities andtransactions for trading purposes
The valuation method of “Trading assets” and “Trading
liabilities” is as follows:
Balances incurred by transactions of which the purpose
is to earn a profit by taking advantage of short-term
fluctuations in a market or discrepancies in different
markets of interest rates, currency exchange rates, shareprices or other indices (hereinafter referred to as “trading
purposes”) are included in “Trading assets” or “Trading
liabilities” in the consolidated balance sheets as of thedate on which the transactions have been contracted.

The income or losses on these transactions are recorded
as “Trading income” and “Trading expenses” in the
consolidated statement of income.
Trading assets and trading liabilities are valued, in thecase of securities and commercial paper, at the market
value as of the date of the balance sheet and, in the caseof derivatives, including swaps, futures and options, at theamount due if the transactions were to be settled as of thedate of the balance sheet. “Trading income” and “Trading
expenses” include interest income and interest expense,
respectively, and gains and losses, respectively, resulting
from the valuation of securities, commercial paper,
derivatives, etc., which are included in “Trading assets” or“Trading liabilities.”

Securities
With regard to the valuation of securities, held-to-maturity
debt securities are stated at amortized cost (straight-line
method) using the moving-average method. Investments
in unconsolidated subsidiaries that are not accounted forby the equity method are stated at cost determined by themoving-average method. Available-for-sale securities are in
general stated at fair value (cost of sale calculated primarily
according to the moving-average method) indicatedaccording to market price at the consolidated balance
sheet date (for equity securities, the average market priceduring the one-month period ending on the consolidatedbalance sheet date). Available-for-sale securities having noreadily available market value are valued at cost using themoving-average method.
Unrealized gains (losses) on available-for-sale securities
are reported as a component of net assets.
Impairment loss is recognized if the value of securities isdeclined significantly and such decline is considered otherthan temporal.

Money in trust
Trust assets within money held in trust are valued using themarket value method.

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

YMFG Annual Report 202026

Method of hedge accounting
The subsidiaries that conduct banking business (“theBanks”) apply deferred hedge accounting in accordancewith “Treatments of Accounting and Audit on Applicationof Accounting Standard for Financial Instruments in
Banking Industry” (The Japanese Institute of Certified
Public Accountants (“JICPA”) Industry Audit Committee
Report No. 24, February 13, 2002). As for the hedge
to offset market fluctuation, the Banks assess theeffectiveness of the hedge by grouping the hedged items
such as deposits and loans and the hedging instruments
such as interest rate swaps by their maturity.
Also, the Banks apply deferred hedge accounting tohedge foreign exchange risks associated with various
foreign currency denominated monetary assets andliabilities as stipulated in “Treatment of Accounting and
Auditing Concerning Accounting for Foreign Currency
Transactions in Banking Industry” (JICPA Industry
Audit Committee Report No. 25, July 29, 2002). The
effectiveness of the currency swap transactions, exchange
swap transactions and similar transactions hedging theforeign exchange risks of monetary assets and liabilities
denominated in foreign currencies is assessed based oncomparison of the foreign currency position of the hedged
monetary assets and liabilities and the hedging instruments.
The Banks apply an exceptional accounting treatment,
as permitted if certain conditions are met, for certain
interest rate swaps utilized as hedging instrument. In thattreatment, the interest swap contracts are not recorded atfair values but the net interest to be paid or received under
the contracts is added or deducted to the interest arisingfrom their related hedged assets or liabilities.

Allowance for loan losses
The Banks provide allowance for loan losses according to
the following write-off and provisioning standards.
For loans to borrowers who are legally bankrupt (dueto bankruptcy, composition, suspension of transactions
with banks by the rules of clearinghouses, etc.) or
substantially bankrupt, an allowance is provided in
the amount of loans, net of amounts expected to becollected through disposition of collateral or throughexecution of guarantees.

27

YMFG Annual Report 2020

For loans to borrowers in danger of bankruptcy,
an allowance is provided in the amount considered
uncollectible based on the amount of loans, net of amounts
expected to be collected through disposition of collateral or
through execution of guarantees, and other sources.
Loans to normal borrowers and borrowers requiringcaution are classified into certain groups, and expected
losses are estimated for the upcoming one or three-year
periods. Expected loss amounts are calculated by using
average values for actual rates of losses from bad debts
and default probabilities during a specific period in thepast, based on actual amounts of bad debt or bankruptcy
over a one or three-year period, and adjusted as necessary
for future forecasts.
Each branch as well as the credit supervision
department evaluates all loans in accordance with the selfassessment rule.
Other consolidated subsidiaries provide an allowance foran amount calculated using the rate of collection losses in thepast for loans of normal borrowers in addition to amounts
estimated based on collectability analysis for borrowers indanger of bankruptcy and certain other borrowers.

Tangible fixed assets (excluding lease assets)
Depreciation of tangible fixed assets of YMFG and its
consolidated subsidiaries that conduct banking business arecomputed by using the declining-balance method except
for buildings (excluding fixtures) acquired after April 1, 1998
and fixtures and buildings acquired after April 1, 2016,
which are depreciated using the straight-line method.
The estimated useful lives of the assets are primarily
as follows:
Buildings: 7 to 50 years
Others: 2 to 15 years
Other consolidated subsidiaries depreciate their tangible
fixed assets using mainly the declining-balance method
over the useful lives of the respective assets provided by
the Corporation Tax Act in Japan.

Intangible fixed assets (excluding lease assets)
Amortization of intangible fixed assets is computed byusing the straight-line method. Software costs for internal
uses are amortized over the estimated useful life (5 years).

Lease assets

Provision for directors’ retirement benefits

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

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

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

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

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

Method of accounting for retirement benefits
When calculating retirement benefit obligations, thebenefit formula method is used for attributing expected
retirement benefits to the year-end. Actuarial gains orlosses are amortized on a straight-line basis over certain
years (10-11 years) within the employees’ averageremaining service period commencing from the next fiscal
year of incurrence.
Some consolidated subsidiaries employ the simplified
method for calculating retirement benefit obligations
and periodic benefit costs, stating retirement benefit
obligations at the amounts required as if all employees
voluntarily terminate their employment as of the year-end.

Provision for directors’ stock benefits
The provision for directors’ stock benefits is determinedaccording to the directors’ stock benefit regulations for
YMFG and its subsidiaries (banks within YMFG (Yamaguchi
Bank, Momiji Bank and Kitakyushu Bank) and YM
Securities; the same shall apply hereafter) in preparation
for the payment of stock benefits to directors (excluding
directors who are members of the Audit and Supervisory
Committee, part-time directors and outside directors ) and
executive officers (hereinafter, “Subject Directors, etc.”)
based on expected stock benefit obligations as of March
31, 2020.

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

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

YMFG Annual Report 202028

Provision for customer point services

Standards and guidance not yet adopted

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

The following standard and guidance were issued but not
yet adopted.
- “Accounting Standard for Revenue Recognition” (ASBJ
Statement No. 29, March 31, 2020)- “Implementation Guidance on Accounting Standard for
Revenue Recognition” (ASBJ Guidance No. 30, March
31, 2020)(1) Overview
The above standard and guidance provide comprehensive
principles for revenue recognition. Under the standard andguidance, revenue is recognized by applying following 5
steps:
Step 1: Identify contract(s) with customers.
Step 2: Identify the performance obligations in the contract.
Step 3: Determine the transaction price.
Step 4: Allocate the transaction price to the performanceobligation in the contract.
Step 5; Recognize revenue when (or as) the entity
satisfies a performance obligation.
(2) Effective date
Effective from the beginning of the fiscal year ending
March 31, 2022.
(3) Effects of the application of the standards
The Company and its consolidated domestic subsidiaries
are currently in the process of determining the effectsof these new standards on the consolidated financial
statements.
- “Accounting Standard for Management of Inventories”(ASBJ Statement No. 9, July 4, 2019)- “Accounting Standard for Financial Instruments” (ASBJ
Statement No. 10, July 4, 2019)- “Implementation Guidance on Disclosures about Fair
Value of Financial Instruments” (ASBJ Guidance No. 19,
March 31, 2020)(1) Overview
In order to enhance comparability with internationallyrecognized accounting standards, “Accounting Standard
for Fair Value Measurement” and “Implementation
Guidance on Accounting Standard for Fair Value
Measurement” (together, hereinafter referred to as “Fair
Value Accounting Standards”) were developed andguidance on methods measuring fair value was issued. Fair
Value Accounting Standards are applicable to the fair value
measurement of the following items:

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

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

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

Consumption taxes
YMFG and its consolidated subsidiaries employ thetax exclusion method for consumption tax and local
consumption taxes, meaning that transaction amounts
and consumption tax amounts are treated separately foraccounting purposes.
However, non-deductible consumption taxes forpurchase of property, plant and equipment are recognized
as expenses for the year of the purchase.

Adoption of consolidated tax payment system
YMFG and certain of its consolidated subsidiaries adopted
the consolidated tax payment system as provided under the
Corporation Tax Act.

29

YMFG Annual Report 2020

-Financial instruments in “Accounting Standard for
Financial Instruments”; and-Inventories held for trading purposes in “AccountingStandard for Measurement of Inventories.” and, under the“revised Implementation Guidance on Disclosures about
Fair Value of Financial Instruments,” with notes outlining
details of fair value of financial instruments for each level.
(2) Effective date
Fair Value Accounting Standards and guidance will beeffective from the beginning of the consolidated fiscal year
ending March 31, 2022.
(3) Effects of the application of the standards
The Company and its consolidated domestic subsidiaries are
currently in the process of determining the effects of these
new standards on the consolidated financial statements.
- “Accounting Standard for Accounting Policy Disclosures,
Accounting Changes and Error Corrections” (ASBJ
Statement No. 24, March 31, 2020)(1) Overview
The objective is to provide an overview of principles
for accounting treatment and procedures in the eventthese subjects are not clearly determined under related
accounting standards.
(2) Effective date
Effective from the beginning of the fiscal year ending
March 31, 2021.
- “Accounting Standard for Disclosure of Accounting
Estimates” (ASBJ Statement No. 31, March 31, 2020)(1) Overview
The objective is to disclose information that will contributeto the understanding by users of financial statements withregard to amounts stated in the financial statements forthe current fiscal year that involve accounting estimates
whose details present the risk of materially affecting
financial statements for the following fiscal year.
(2) Effective date
Effective from the beginning of the fiscal year ending
March 31, 2021.

Additional Information(ESOP Trust)
To enhance its welfare benefits, YMFG has introduced the
ESOP Trust for Group employees (hereinafter, “Employees”)
1. ESOP Trust for Employees introduced in March 2017
(1) Overview of Transactions
Of those Employees enrolled in YMFG’s ESOP, YMFG has
established the trust for those beneficiaries satisfying
certain conditions. This trust acquired as a lump sum
certain number of shares of YMFG corresponding to thenumber expected to be acquired by YMFG’s ESOP over the
five-year period beginning in March 2017. Thereafter, thetrust will sell YMFG’s shares to YMFG’s ESOP each monthon a specific date.
(2) Company Shares Residing in the Trust
YMFG’s shares residing in the trust are recorded in treasury
stock in the net assets section based on the book value ofthe trust (excluding ancillary expenses).
The book value and the number of shares of thistreasury stock amounted to ¥588 million ($5 million) and
456 thousand shares on March 31, 2020 and ¥1,274
million and 990 thousand shares on March 31, 2019.
(3) Book Value of Borrowings Recorded by Applying theGross Price Method
The book value of borrowings recorded by applying thegross price method was ¥929 million ($9 million) on March
31, 2020 and ¥1,321 million on March 31, 2019.
(Board Benefit Trust (BBT))YMFG has introduced a Board Benefit Trust (“BBT”) to raiseawareness among Subject Directors,etc. of YMFG and its
subsidiaries (banks within the Group (Yamaguchi Bank,
Momiji Bank and Kitakyushu Bank) and YM Securities; thefollowing shall apply hereinafter) toward raising operating
performance at YMFG over the medium to long term andcontributing to increases in corporate value.
(1) Overview of Transactions
Via the trust, YMFG acquires YMFG’s common sharesusing funds provided by YMFG. YMFG’s share and cash
equivalent to fair value of YMFG’s stock measured at thetime of retirement are granted to be distributed via the trust
to Subject Directors,etc. according to Subject Directors,etc.’
positions, and the level of achievement of operating
performance in accordance with directors’ stock benefit

YMFG Annual Report 202030

regulations established by YMFG and its subsidiaries.
(2) Company Shares Residing in the Trust
YMFG’s shares residing in the trust are recorded as treasury
stock in the net assets section based on the book value ofthe trust (excluding ancillary expenses).
The book value and the number of shares of this treasury
stock amounted to ¥878 million ($8 million) and 1,005
thousand shares on March 31, 2020 and ¥558 million and
578 thousand shares on March 31, 2019.
(Treatment Related to the Application of Tax EffectAccounting for the Transition from the Consolidated
Taxation System to the Group Tax Sharing System)
With regard to matters related to the transition to thegroup tax sharing system established by the “Act for thePartial Amendment of the Income Tax Act” (Act No. 8 of2020) and the revision of the single tax payment system
to coincide with the transition to the group tax sharing
system, YMFG and certain consolidated subsidiaries basetheir amounts of deferred tax assets and deferred tax
liabilities on tax law prior to revision without applying
No. 44 of the “Implementation Guidance on Tax EffectAccounting” (ASBJ Guidance No. 28, February 16,2018), in accordance with treatment under Paragraph 3of the “Practical Solution on the Treatment of Tax EffectAccounting for the Transition from the Consolidated
Taxation System to the Group Tax Sharing System” (PITF
No. 39, March 31, 2020).
(Impact of the COVID-19 Pandemic)
The spread of the novel coronavirus disease (COVID-19)
is expected to continue affecting the economy for sometime. The Group is working to understand the conditionsof individual borrowers in a timely and appropriate mannerand provide various types of support to help customers
with cash flow and other aspects of business continuity.
Based on such situations, calculations of allowance for
doubtful accounts assumed that the impact on loans andother credit costs would be limited.
However, these assumptions include uncertainties. If
the COVID-19 pandemic were to continue for a prolonged
period of time or to grow more serious rather thansubsiding, the operating environment could deteriorate
further. As a result, allowance for doubtful accounts could
be materially affected in upcoming fiscal years.

31

YMFG Annual Report 2020

3. CONSOLIDATED STATEMENTS OF CASHFLOWS AND CASH EQUIVALENTS
1. In preparing the consolidated statements of cash flows,
the Group considers cash and due from THE BANK OF
JAPAN as cash and cash equivalents.
The reconciliation of cash and due from banks in the
consolidated balance sheets and cash and cash equivalentsin the consolidated statements of cash flows at March 31,
2020 and 2019 were as follows:

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

Millions of yen
2020
2019
¥971,777 ¥1,043,994(15,873)(16,602)(11,120)(11,834)¥944,784 ¥1,015,558

Thousands of
U.S. dollars
2020$8,929,312(145,851)(102,178)$8,681,283

2. Details of important non-funding transactions
Details of important non-funding transactions throughthe exercise of share options to shares that took place
during the fiscal year ended March 31, 2020 and 2019were as follows:

Decrease in capital surplus
by exercise of share options
to shares
Decrease in treasury sharesby exercise of share options
to shares
Decrease in bonds with
subscription rights to sharesby exercise of share options
to shares

Millions of yen
2020
2019
¥—
¥ (2,625)

Thousands of
U.S. dollars
2020
$—

—

27,421—¥—¥24,796—

4. FINANCIAL INSTRUMENTS
Items pertaining to the status offinancial instruments(1) Policies on financial instruments
YMFG provides community-based integrated financial
services centered on the banking, securities and credit cardbusinesses. Accordingly, the Group is subject to a variety
of risks, including credit risk, market risk and liquidity
risk. Due to changes in economic, social and financial
conditions, these risks have grown more diverse andcomplex. Under these conditions, the Group considers
strengthening its risk management structure as a priority
issue. To maintain and enhance the soundness of its
operations, YMFG has created groupwide risk management

regulations, which clarify the Group’s fundamental stanceon risk management.

(2) Content and risks of financial instruments
Of financial assets held by the Group, principally loans andbills discounted extended to business partners are subject
to the credit risk from breach of contract. The Group holds
securities, principally debt securities, equity securities andinvestment trusts, for trading purposes, for holding tomaturity, for purely investment purposes or to promote
positive business relations. These securities are subject toissuer credit risk, interest rate fluctuation risk and market
price fluctuation risk.
The Group’s financial liabilities center on deposits
and negotiable certificates of deposit, and call moneythat it raises in the market. However, the Group is
subject to the liquidity risk of becoming unable tosecure necessary funding. The Group is also subject tointerest rate risk arising from fluctuations in financial andeconomic conditions.
The Group employs derivative transactions to hedge
underlying market risks on its assets and liabilities. The
Group also provides derivatives as financial products tomeet customers’ needs. Interest-related and securitiesrelated derivative transactions are employed to limit the
impact on income of future interest rate fluctuations andprice fluctuations for loans and bills discounted, deposits,
securities and other instruments bearing long-term interest
at fixed rates. Currency-related derivative transactions areused primarily to avoid fluctuations in income stemmingfrom future exchange rate fluctuations, stabilize funding
denominated in foreign currencies, as well as offered as
products to clients. With regard to transactions to secure
income through changes in market rates, which areconducted on a limited basis, the Group has establishedstringent standards that include risk limits and loss limits.
As market risk factors, interest rate related andsecurities-related derivative transactions are subject tothe risk of fluctuations in interest rates and prices, andcurrency-related derivative transactions are subject toexchange rate fluctuations. For transactions that are
not conducted on exchanges, the Group is subject tocredit risk, the risk of loss in the event a counterparty
becomes unable to fulfill its contractual obligations due todeteriorating financial conditions.
With regard to use of hedge accounting, the Groupapplies deferred hedge accounting after it ensured inadvance that the established conditions are satisfied. As forhedging methods, the Group employs the portfolio hedge
where certain group of assets with similar risk is identified
and such risk is hedged comprehensively. In addition, forcertain interest swap contracts, exceptional accounting
treatment are applied.

(3) Risk management structure related tofinancial instruments(i) Management of credit risk
Through the appropriate operation of a credit rating
system, the Group endeavors to determine the financial
conditions of business partners and accurately evaluate
their credit risk. The Group has enhanced the precisionof its credit evaluations, reviewing business partner credit
ratings swiftly and appropriately for each financial period
and each time their credit conditions change.
The Group conducts self assessments according tostringent standards that are consistent throughout theGroup. The Group performs write-off and provisions
based on the results of its self assessments. The Group’s
authentication departments verify the content of such self
assessments. Independence is maintained through internal
audits conducted by audit departments. In addition,
the Group undergoes external audits conducted by its
independent external auditors.
With regard to the screening of individual transactions,
the Group employs a screening system suited to eachsubsidiary bank’s size of the business and characteristics
to conduct detailed screenings that take individual sector
and regional characteristics into consideration. In terms of
portfolio management, the Group strives to enhance its
risk management by first measuring credit risk, and thenmanaging risk by category, sector and geographic area.
Risk management departments periodically obtain
credit information and fair value as a part of managing
credit risks on securities issuers and counterparty risks onderivative transactions.
(ii) Management of market risk
Qualitative information on the management of market risk
The Group has formulated a market risk management
process that identifies and quantitatively measures market
risks. An asset-liability management (ALM) system is
employed to control market risk within allowable limits,and the Group ALM Committee is periodically held torespond to such risks.
YMFG periodically evaluates market risk conditions andverifies the appropriateness of risk controls.

YMFG Annual Report 202032

Quantitative information on the management of market risk
The market risk (estimated loss amount) of the loans,securities, deposits and derivatives transactions of Yamaguchi
Bank, Momiji Bank and Kitakyushu Bank of the Group arecalculated according to value at risk (VaR). Furthermore, thecovariance method is used to calculate VaR.
As of March 31, 2020, the market risk (estimated loss
amount) of Yamaguchi Bank was ¥41,387 million ($380
million), the market risk (estimated loss amount) of Momiji
Bank was ¥14,658 million ($135 million) and the market
risk (estimated loss amount) of Kitakyushu Bank was¥17,198 million ($158 million). Also, as of March 31, 2019,the market risk (estimated loss amount) of Yamaguchi
Bank was ¥62,679 million, the market risk (estimated loss
amount) of Momiji Bank was ¥15,373 million and themarket risk (estimated loss amount) of Kitakyushu Bankwas ¥21,883 million.
Assumptions used in calculating VaR include a holding
period of three months (however, one year for a holding
period for shares held for the purpose of strategic
investment), a confidence interval of 99.9% and an
observation period of five years.
Yamaguchi Bank, Momiji Bank and Kitakyushu Bank
conduct back-testing to compare the VaR calculated by
the model with the actual losses. However, because of
relatively large fluctuations in Japanese stock and foreignexchange market prices, instances arose in which they wereunable to capture the risk on Japanese stocks and foreign
bond funds. Consequently, from fiscal 2016, to determine
the amount of risk on Japanese stocks and foreign bondfunds, VaR is measured for observation periods of both one
year and five years, and the larger number is taken as therisk amount. As of March 31, 2020, the VaR observation
period was five years for both Japanese stocks and foreign
bond funds.
However, as the practice of measuring market risk
amount with a set risk probability calculated on the basisof historical market fluctuations remains unchanged evenafter revising the measurement method to appropriately
capture the market risk amount, in some cases it is notpossible to capture market risk in the event of suddenchanges in the market environment outside the normally
expected scope.
(iii) Management of liquidity risk related to fundraising
The majority of funds is raised through deposits, whichconstitute a stable base for procuring funds. The Groupmanages funds on the basis of elaborate forecasts,

33

YMFG Annual Report 2020

confirming cash flows primarily through the managementof financial balances using short-term financial markets.
For cash flow management, the Group strives tomanage the liquidity risk by ensuring stability, preparing forunexpected events, and maintaining highly liquid assets.

(4) Supplementary explanation of items
pertaining to the fair value of financial
instruments
The fair values of some financial instruments are basedon market prices. The fair values of other instruments, forwhich market prices are not readily available, are basedon rational calculation. However, as assumptions are usedin these calculations, different assumptions can yield
different values.

Items pertaining to the fair value of financial
instruments
The table below indicates the consolidated balance sheet
amounts of financial instruments, as well as their fair values
and the differences between the two. Line items with little
significance to balance sheet amounts have been omitted.
Unlisted equity securities and other instruments for which
fair value is not easily determinable are not included in thetable below. (Refer to (Note 2).)Millions of yen
2020
Consolidatedbalance sheet Fair value Difference
amount(i) Cash and due from banks¥ 971,777 ¥ 971,777¥—(ii) Call loans and bills purchased
1,088
1,088
—
(iii) Money held in trust
48,412
48,412—(iv) Securities
13,36013,528168
Held-to-maturity debt
securities
Available-for-sale securities
1,482,995
1,482,995—(v) Loans and bills discounted
7,652,626
Allowance for loan losses (* 1)(62,316)
7,590,310
7,705,683
115,373
Total assets¥10,107,942 ¥10,223,483¥115,541(i) Deposits¥ 9,525,935 ¥ 9,526,272¥
337(ii) Payables under securities
161,466
161,466—
lending transactions
Total liabilities¥ 9,687,401 ¥ 9,687,738¥
337
Derivative transactions (* 2)(31) ¥(31) ¥—
Hedge accounting not applied ¥Hedge accounting applied(16,330)(16,330)—
Total derivative transactions¥(16,361) ¥(16,361) ¥—Millions of yen
2019
Consolidatedbalance sheet Fair value Difference
amount¥1,043,994 ¥1,043,994¥—(i) Cash and due from banks(ii) Call loans and bills purchased
39,042
39,042—(iii) Money held in trust
30,56530,565—(iv) Securities
Held-to-maturity debt
8,273
8,438
165
securities
Available-for-sale securities
1,374,849
1,374,849—(v) Loans and bills discounted
7,408,387
Allowance for loan losses (* 1)(53,983)
7,354,404
7,450,478
96,074
Total assets¥9,851,127 ¥9,947,366¥96,239(i) Deposits¥9,230,773 ¥9,231,171¥ 398(iii) Call money and bills sold
133,466
133,466—
Total liabilities¥9,364,239 ¥9,364,637¥ 398
Derivative transactions (* 2)
1,577 ¥
1,577¥—
Hedge accounting not applied ¥Hedge accounting applied(2,115)(2,115)—
Total derivative transactions¥(538) ¥
(538)¥—

Thousands of U.S. dollars
2020
Consolidatedbalance sheet Fair value Difference
amount$ 8,929,312 $ 8,929,312 $—(i) Cash and due from banks(ii) Call loans and bills purchased
9,997
9,997
—
(iii) Money held in trust
444,841444,841—(iv) Securities
Held-to-maturity debt
122,760
124,304
1,544
securities
Available-for-sale securities 13,626,711 13,626,711—(v) Loans and bills discounted
70,317,247
Allowance for loan losses (* 1)(572,599)
69,744,648 70,804,769 1,060,121
Total assets$92,878,269 $93,939,934 $1,061,665(i) Deposits$87,530,414 $87,533,511 $
3,097(ii) Payables under securities
1,483,653
1,483,653—
lending transactions
Total liabilities$89,014,067 $89,017,164 $3,097
Derivative transactions (* 2)(285) $
(285) $—
Hedge accounting not applied $Hedge accounting applied(150,051)(150,051)—
Total derivative transactions$ (150,336) $ (150,336) $—(* 1) The general allowance for loan losses and specific allowance for loan losses are deducted.
(* 2) The amount collectively represents derivative transactions that are recorded as trading
assets and liabilities, and other assets and liabilities. This indicates the net amount ofrights and obligations under derivative transactions. Parentheses, ( ), indicate that the net
amount is negative.

(Note 1) Methods of calculating the fair value of financial
instruments(1) Assets(i) Cash and due from banks
As the settlement term of these instruments is short(within one year) and their fair values and book values areapproximately the same, their book values are taken as
their fair values.
(ii) Call loans and bills purchased
As the settlement term of these instruments is short(within one year) and their fair values and book values areapproximately the same, their book values are taken as
their fair values.
(iii) Money held in trust
As for the securities held as trusted assets in money held in
trust established independently for the purpose of investing
mainly in the securities, the value on stock exchanges istaken as fair value for the equity securities, and either thevalue on exchanges or a price indicated by other financial
institutions dealing with the specific instruments is taken asfair value.
Additional information related to money held in trust by
the purpose of holding are described in the note entitled“Money held in trust.”(iv) Securities
For equity securities, fair value is determined by stock
exchange prices; the fair value of debt securities isdetermined by exchange prices or prices received frominformation vendors. Fair values of investment trusts are
determined by exchange prices or standard prices disclosed
by investment trust management companies.
The fair value of private placement bonds guaranteedby Yamaguchi Bank and Momiji Bank is determined foreach internal rating category and period by discounting
the total amount of interest and principal to their present
value, using as the discount rate the risk-free rate plus thecredit cost determined for each internal rating category.
However, fair value of bonds of legally bankrupt debtors,
substantially bankrupt debtors and debtors in dangerof bankruptcy is determined by deducting the expectedamount of loss on the bond by using the same method
applied to loans from the bond’s face value.
(v) Loans and bills discounted
For loans and bills discounted with floating interest rates,
as in the short term their values reflect market interest
rates, unless the credit status of the obligor has changed
significantly since the loans were extended, their fair value
is similar to their book value, so their book value is taken as
their fair value.
For loans and bills discounted bearing fixed interest
rates, fair value is determined for each internal rating
category and period by discounting the total amountof interest and principal to their present value, using as

YMFG Annual Report 202034

the discount rate the risk-free rate for operating loans
and bills discounted plus the credit cost for each internalrating category. For consumer loans and bills discounted,
fair value is determined by discounting the total amountof interest and principal to their present value using theassumed interest rate on new loans of the same type. For
instruments having a short settlement period (within oneyear), as their fair values and book values are approximately
the same, their book value is taken as their fair value.
With regard to loans to legally bankrupt obligors,
substantially bankrupt obligors or obligors who are indanger of bankruptcy, the estimated collectible amountis based on either the present value of estimated future
cash flows or the expected amounts recoverable fromthe disposal of collateral and/or under guarantees. As
the fair value is essentially equivalent to the amount after
deducting the allowance for possible loan losses from thebook value as of the consolidated balance sheet date, thisamount is taken as fair value.
For loans that have no specific repayment period, as thefair value is assumed to be equivalent with the book value
according to the expected payment dates and interest
rates, book value is taken as the fair value.
(2) Liabilities(i) Deposits
The fair value of demand deposits is determined as
the payment amount if payment were required on the
consolidated balance sheet date (book value). The fairvalue of time deposits is determined by discounting future
cash flows to their present value by certain time periods.
The discount rate employed is the interest rate required for
newly accepted deposits. For deposits having a short period(within one year), as their fair values and book values areapproximately the same, their book value is taken as theirfair value.

35

YMFG Annual Report 2020(ii) Payables under security lending transactions and (iii) Callmoney and bills soldAs the contract period is short (within one year) and themarket value is similar to the book value, the book value istaken as the market value.
(3) Derivative transactions
The fair value of derivative transactions, comprisinginterest-rate-related transactions (such as interest rate
futures, interest rate options and interest rate swaps)
currency-related transactions (such as currency futures,
currency options and currency swaps), bond-relatedtransactions (such as bond futures and bond options) istaken as their value on exchanges, discounted present
value or price as calculated using option pricing models.
Interest rates swaps that employ exceptional accounting
treatment are accounted for as part of the loans and bills
discounted that are hedged. Therefore, their fair value isincluded in the fair value of loans and bills discounted.
(Note 2) The consolidated balance sheet amounts offinancial instruments for which market prices are notreadily available
Financial instruments for which market prices are notreadily available are not included in “Assets (4) Availablefor-sale securities.”

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

Thousands ofMillions of yen
U.S. dollars
2020
2019
2020
Consolidated balance sheet amount¥ 6,933¥ 6,918$ 63,705
9,459

7,974

86,925¥16,392¥14,892$150,630(*1) As unlisted equity securities have no market prices and their fair value is not readily
available, they are not included in the scope of fair value disclosures.
(*2) During the fiscal year ended March 31, 2020 and 2019, impairment losses of ¥47 million($432 thousand) and ¥7 million were recorded on unlisted equity securities.
(*3) Of investments in partnerships, those partnership assets comprising unlisted equity
securities, which have no readily available fair value, are not included in the scope of fairvalue disclosure.

(Note 3) Expected maturity amount of monetary claims andsecurities with maturities after the consolidated balance
sheet dateMillions of yen
2019More than More than More thanWithinone year three years five years More than
one year and within and within and within seven years
three years five years seven years¥ 875,998 ¥
— ¥
— ¥
— ¥
—

(1) Due frombanks(2) Call loans
1,088
—
—
—
—
and bills
purchased(3) Money held
48,412————in trust(4) Securities
65,968161,330
166,133
174,273
627,818
Held-to700
1,763
5,751
1,749
3,400
maturity debt
securities
Local
—
200
1,700
800
2,200
government
bond
Corporate
700
1,563
4,051
949
1,200
bond
Available-for65,268
159,567
160,382
172,524
624,418
sale securities
with maturities
Japanese
9,000
42,00023,10021,500234,600
government
bond
Local
6,725
22,15822,057
26,974
131,548
government
bond
Corporate
35,38573,29059,27386,13680,112bond
Others14,15822,11955,952
37,914
178,158(5) Loans and 1,693,152 1,047,647 1,065,149
856,915 2,989,763
bills discounted
(*)
Total
¥2,684,618 ¥1,208,977 ¥1,231,282 ¥1,031,188 ¥3,617,581

Millions of yen
2019More than More than More thanWithinone year three years five years More than
one year and within and within and within seven years
three years five years seven years¥ 942,716 ¥
— ¥
— ¥
— ¥
—

(1) Due frombanks(2) Call loans
39,042——and bills
purchased(3) Securities
144,598
224,574
134,442
Held-to326
909
2,158
maturity debt
securities
Local
—
100
700
government
bond
Corporate
326
809
1,458
bond
Available-for144,272
223,665
132,284
sale securities
with maturities
Japanese
57,00088,000
6,500
government
bond
Local
15,5089,826
9,424
government
bond
Corporate
56,48994,96347,462bond
Others15,27530,876
68,898(4) Loans and 1,721,944
991,035
962,930bills discounted
(*)
Total
¥2,848,300 ¥1,215,609 ¥1,097,371——

187,809
2,283

411,065
2,600

900

1,400

1,383

1,200

185,526

408,465

39,60058,25010,96570,77565,793

160,390

69,168
119,050
809,990 2,922,490¥997,799 ¥3,333,555

YMFG Annual Report 202036

Thousands of U.S. dollars
2020
More than More than More thanWithinone year three years five years More than
one year and within and within and within seven years
three years five years seven years$ 8,049,233 $
— $
— $
— $
—

(1) Due frombanks(2) Call loans
9,997
—
—
—
—
and bills
purchased(3) Money held
444,841————in trust(4) Securities
606,157 1,482,405 1,526,537 1,601,341 5,768,815
Held-to6,432
16,20052,844
16,071
31,241maturity debt
securities
Local
—
1,838
15,621
7,351
20,215government
bond
Corporate
6,432
14,36237,2238,720
11,026bond
Available-for599,725 1,466,205 1,473,693 1,585,270 5,737,574
sale securities
with maturities
Japanese
82,698385,923
212,258
197,556 2,155,656
government
bond
Local
61,794
203,602202,674
247,854 1,208,748
government
bond
Corporate
325,140
673,436544,638
791,473
736,121bond
Others130,093203,244514,123
348,387 1,637,049(5) Loans and 15,557,769 9,626,454 9,787,274 7,873,886 27,471,855
bills discounted
(*)
Total
$24,667,997 $11,108,859 $11,313,811 $9,475,227 $33,240,670(*) Loans and bills discounted for which no period is specified are included in “within one year.”(Note 4) Estimated repayment amounts of deposits,
negotiable certificates of deposit and other interest-bearing
liabilities to be repaid after the consolidated balance sheet dateMillions of yen
2020
More than More thanThree
Withinone year two years
or
one year and within and within years
more
two years three years¥8,410,285 ¥438,092 ¥129,083¥29,100
Deposits (*)
Negotiable certificates
510,864
8,481
30—
of deposit
Payables under securities
161,466———
lending transactions
Total¥9,082,615 ¥446,573 ¥129,113¥29,100

Millions of yen
2019More than More thanThree
Withinone year two years
or
one year and within and within years
more
two years three years¥8,076,897 ¥614,162 ¥158,059¥28,760
Deposits (*)
Negotiable certificates352,360535——
of deposit
Call money and bills sold
133,466———
Total¥8,562,723 ¥614,697 ¥158,059¥28,760

37

YMFG Annual Report 2020

Thousands of U.S. dollars
2020
More than More thanThree
Withinone year two years
years orone year and within and within
more
two years three years$77,279,105 $4,025,471 $1,186,098$267,388
Deposits (*)
Negotiable certificates
4,694,147
77,929276—
of deposit
Payables under securities 1,483,653———
lending transactions
Total$83,456,905 $4,103,400 $1,186,374$267,388(*) Within deposits, demand deposits are included in “within one year.”

5. SECURITIESSecurities held at March 31, 2020 include shares of
unconsolidated subsidiaries and affiliates amounting to ¥27
million ($248 thousand) and investments of ¥1 million ($ 9thousand). Corresponding figures at March 31, 2019, were
¥27 million and ¥1 million.
The amount of guarantee obligations for private
placement bonds (Financial Instruments and Exchange
Law, Article 2, Item 3), out of bonds included insecurities, amounted to ¥11,376 million ($105 million)and ¥8,751 million as of March 31, 2020 and March 31,
2019 respectively.
Bonds included in securities also include securities
lent through unsecured loan agreements (bond lendingtransactions) of ¥5,010 million, at March 31, 2019.

6. FAIR VALUE INFORMATION
Securities
The following tables summarize book values, fair value andacquisition cost of securities with available fair values as ofMarch 31, 2020 and 2019:(a) Trading securities
Amount of unrealized gain (loss) on trading securities
included in the consolidated statement of income— ¥(3) million ($28 thousand) and ¥2 million as at
March 31, 2020 and 2019, respectively.

(c) Available-for-sale securities(b) Held-to-maturity debt securities:
Type
Local
government
bonds
Corporate
bonds
Subtotal
Securities with fairLocalvalue not exceeding government
book value
bonds
Corporate
bonds
Subtotal
Total
Securities with fairvalue exceeding
book value

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

Millions of yen
2020
Book value Fair value Difference¥ 2,900 ¥ 2,947
¥ 47

8,225

8,349

124

11,1252,000

11,296
1,997

171
(3)

235

235

(0)

2,235
¥13,360

2,232¥13,528(3)¥168

Millions of yen
2019Book value Fair value Difference¥3,000¥3,061
¥ 61

5,144

5,248

104

8,144
100

8,309
100

165
—

29

29

(0)

129
¥8,273129¥8,438(0)¥165

Securities with book Sharesvalue exceeding
Japaneseacquisition costgovernment
bonds
Local
94,33894,077government
bonds
Corporate
242,770
240,383
bonds
Others
213,118
198,674
Subtotal
669,061
611,119
Securities with book Shares
11,832
15,250value not exceeding Japanese
293,589
300,872
acquisition costgovernment
bonds
Local
115,538
116,161
government
bonds
Corporate
94,33994,726bonds
Others298,636
330,612Subtotal
813,934
857,621
Total¥1,482,995 ¥1,468,740

Type

Thousands of U.S. dollars
2020
Book value Fair value Difference$ 26,647 $ 27,079
$ 432

Type
Local
government
bonds
Corporate
75,57776,716bonds
Subtotal
102,224 103,795
Securities with fair
Local
18,377
18,350value not exceeding government
book value
bonds
Corporate
2,159
2,159
bonds
Subtotal
20,536
20,509Total$122,760 $124,304
Securities with fairvalue exceeding
book value

Type

1,139
1,571
(27)

(0)
(27)
$1,544

Millions of yen
2020
Acquisition
Book value
Differencecost¥ 75,378 ¥ 34,954¥ 40,424
43,45743,031
426
261
2,387
14,44457,942(3,418)(7,283)(623)(387)(31,976)(43,687)¥ 14,255

Millions of yen
2019
Acquisition
Book value
Differencecost¥ 121,610¥ 48,812¥ 72,798
194,549
193,355
1,194

Securities with book Sharesvalue exceeding
Japaneseacquisition costgovernment
bonds
Local
112,188
111,315
government
bonds
Corporate
415,824410,561bonds
Others143,228
141,486
Subtotal
987,399905,529
Securities with book Shares
5,688
6,450
value not exceeding Japanese
60,84561,525acquisition costgovernment
bonds
Local
5,628
5,629
government
bonds
Corporate
16,145
16,179bonds
Others299,143314,311
Subtotal
387,449
404,094
Total¥1,374,848 ¥1,309,623

873
5,263
1,742
81,870
(762)
(680)
(1)
(34)
(15,168)(16,645)¥ 65,225

YMFG Annual Report 2020

38

Type

Thousands of U.S. dollars
2020
Acquisition
Book value
Differencecost$ 692,622 $ 321,180 $ 371,442
399,311395,396
3,915

Securities with book Sharesvalue exceeding
Japaneseacquisition costgovernment
bonds
Local
866,838
864,440government
bonds
Corporate
2,230,727 2,208,794
bonds
Others1,958,256 1,825,554
Subtotal
6,147,754 5,615,364
Securities with book Shares
108,720140,127
value not exceeding Japanese
2,697,684 2,764,605
acquisition costgovernment
bonds
Local
1,061,637 1,067,362
government
bonds
Corporate
866,847
870,403bonds
Others2,744,050 3,037,876
Subtotal
7,478,938 7,880,373
Total$13,626,692 $13,495,737

2,398
21,933
132,702532,390(31,407)(66,921)(f) Securities for which purpose of holding changed
There were no securities for which the purpose of holding
changed at March 31, 2020 and 2019.

(5,725)

Impairment losses on securities(3,556)(293,826)(401,435)$ 130,955(d) Held-to-maturity debt securities sold during the fiscal year
There were no held-to-maturity securities sold during
the fiscal year ended March 31, 2020 and 2019.
(e) Available-for-sale securities sold during the fiscal year

39

SharesJapanese government bonds
Local government bonds
Corporate bonds
Others
Total

Millions of yen
2020
Sale
Total gain Total loss
amounton saleon sale¥ 14,689¥10,229¥ 64
1,253,003
6,494
1,453
6,840
59
—
92,8101,263
101,256,723
16,3926,260¥2,624,065¥34,437¥7,787

SharesJapanese government bonds
Local government bonds
Corporate bonds
Others
Total

Millions of yen
2019
Sale
Total gain Total loss
amounton saleon sale¥9,519¥ 6,543¥ 367
1,233,253
2,763
1,368
1,656
—
2
282,929
6,018
166
808,359
7,320
4,063¥2,335,716¥22,644¥5,966YMFG Annual Report 2020

SharesJapanese government bonds
Local government bonds
Corporate bonds
Others
Total

Thousands of U.S. dollars
2020
Sale
Total gain Total loss
amounton saleon sale$ 134,972$ 93,991$ 588
11,513,397
59,671
13,35162,850542—
852,798
11,60592
11,547,579
150,620
57,521$24,111,596$316,429$71,552

Regarding securities (excluding those for which market
prices are not readily available) other than trading securities,
if their market values have fallen substantially below theiracquisition price and are not expected to recover to theacquisition price, such market values are recorded as
the consolidated balance sheet amounts. The valuationdifference is recorded as a loss for the fiscal year in whichsuch difference is realized (hereinafter, “impairment losses”).
During the fiscal year ended March 31, 2020, impairment
losses were ¥771 million ($7,084 thousand) on equity
securities and during the fiscal year ended March 31, 2019,
impairment losses totaled ¥27 million on equity securities.
The basis for determining whether the market value has
fallen significantly is as follows.
If the market value of the securities in general has
fallen by 30% or more compared with the acquisition
cost, the value of the securities is determined to have“fallen significantly.” However in the case of shares andequivalent securities, if their market value has fallen
by 30% or more but less than 50% of the acquisition
cost, the determination of whether the value has “fallen
significantly” takes into consideration other factors suchas the issuing company’s credit risk (independent debtor
classification, external ratings, etc.) and previous percentage
decreases over a specific period of time in the past.

Money held in trust
Information on money held in trust as of March 31, 2020
and 2019 was as follows:(a) Money held in trust classified as trading purposes

Money held in trust classified as
trading purposes

Money held in trust classified as
trading purposes

Money held in trust classified as
trading purposes

Millions of yen
2020
Unrealized gains
Consolidated(losses) included
balance sheet
in profit (loss) for
amountthe fiscal year
¥4,714¥—

Millions of yen
2019
Unrealized gains
Consolidated(losses) included
balance sheet
in profit (loss) for
amountthe fiscal year
¥4,730¥—Thousands of U.S. dollars
2020
Unrealized gains
Consolidated(losses) included
balance sheet
in profit (loss) for
amountthe fiscal year
$43,315$—(b) Money held in trust classified as held-to-maturity
There are no corresponding transactions as at March
31, 2020 and 2019.
(c) Available-for-sale money held in trust

Available-for-sale money heldin trust

Available-for-sale money heldin trust

Millions of yen
2020
Consolidated
Unrealized
Acquisition
balance sheet
gains
cost
amount(losses)¥43,698¥44,695¥(997)

Millions of yen
2019
Consolidated
Unrealized
Acquisition
balance sheet
gains
cost
amount(losses)¥25,835¥25,821¥14

Available-for-sale money heldin trust

Thousands of U.S. dollars
2020
Consolidated
Unrealized
Acquisition
balance sheet
gains
cost
amount(losses)$401,526 $410,686$(9,160)

Unrealized gains (losses) on available-for-salesecurities
Information on unrealized gains (losses) on available-forsale securities and available-for-sale money held in trust
was as follows:
Millions of yen
2020
2019
¥13,501 ¥65,286
14,49865,271(997)
15

Net unrealized gains
Available-for-sale securities
Available-for-sale money heldin trust
Deferred tax liabilities
Unrealized gains on availablefor-sale securities before
following adjustment
Equivalent to non-controllinginterests
YMFG’s interest in net
unrealized gains on valuationof available-for-sale securities
held by affiliates accounted forby the equity method
Unrealized gains on availablefor-sale securities

Thousands of
U.S. dollars
2020$124,056
133,217(9,161)

3,821
9,680

19,57645,71035,11088,946

(9)

(0)

(83)

—

—

—

¥ 9,689¥45,710$ 89,029

Valuation differences on investments in partnerships,
etc., of ¥244 million ($2,242 thousand) at March 31, 2020and ¥44 million at March 31, 2019, for which market
values are extremely difficult to determine, are recorded inavailable-for-sale securities of net unrealized gains in thelist above.

Derivatives(1) Derivative transactions at March 31, 2020 and 2019, towhich hedge accounting is not applied(a) Interest-rate-related:
Millions of yen
2020
Type
Over-the-counter:
Interest rate swaps:
Receivable fixed,
payable floating
Receivable floating,payable fixed
Total

Contract
amounts

Over oneyear

Fair value

Realized
gains(losses)¥22,108¥20,751

¥ 561

¥ 561

22,10920,752

(352)

(352)

¥

¥

¥ 209

¥ 209

—

—

YMFG Annual Report 202040

Millions of yen
2019
Type
Over-the-counter:
Interest rate swaps:
Receivable fixed,
payable floating
Receivable floating,payable fixed
Total

Realized
gains(losses)

Contract
amounts

Over oneyear

Fair value¥21,570¥18,642

¥ 454

¥ 454

21,57018,643

(308)

(308)

—

¥ 146

¥ 146

¥

—

¥

Thousands of U.S. dollars
2020
Type
Over-the-counter:
Interest rate swaps:
Receivable fixed,
payable floating
Receivable floating,payable fixed
Total

Contract
amounts

Over oneyear

Fair value

Realized
gains(losses)$203,143 $190,674$ 5,155$ 5,155

203,152(3,234)(3,234)$ 1,921$ 1,921$

190,683— $—(b) Currency-related:Thousands of U.S. dollars
2020

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

Contract
amounts

Over oneyear

Fair value

Realized
gains(losses)$2,594,027$954,020$(14,546)$ (3,611)

1,178,857
1,258,780

359,809332,197(21,906)
34,127(21,906)
34,1271,226,381
1,226,381$—

905,642905,642$—(27,015)
27,134$ (2,206)

5,568
6,836
$ 21,014(c) Stock-related:
There were no stock-related transactions as at March 31,
2020 and 2019.
(d) Bond-related:
There were no bond-related transactions as at March
31, 2020.

Millions of yen
2020

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

Contract
amounts

Over oneyear¥282,308 ¥103,826

128,295
136,993

Fair value¥(1,583)

Realized
gains(losses)¥ (393)39,15836,153(2,384)
3,714(2,384)
3,714

133,467
98,561
133,467
98,561¥— ¥—(5,020)5,034¥ (239)606744¥ 2,287

Millions of yen
2019

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

41

YMFG Annual Report 2020

Contract
amounts

Over oneyear¥379,563 ¥104,863

Fair value239¥ (945)

14,91914,373

1,014
177

1,014
177

122,01285,952122,01285,952¥— ¥—(4,316)
4,319¥ 1,433

1,246
54¥1,54692,353160,858¥

Realized
gains(losses)Millions of yen
2019

Type
Listed:Bond futures
Sold
Total

Contract
amounts

Over oneyear

Fair value

¥765
¥ —

¥—
¥—

¥(1)
¥(1)

Realized
gains(losses)

¥(1)
¥(1)

(e) Commodity-related:
There were no commodity-related transactions as at March
31, 2020 and 2019.
(f) Credit-derivatives:
There were no credit related transactions as at March 31,
2020 and 2019.

(2) Derivative transactions as at March 31, 2020 and 2019,
to which hedge accounting is applied(a) Interest-rate-related:
Millions of yen
2020
Contract Over one
Fair value
amountsyear

Type
Principal accounting procedure:Interest rate swaps
Receive floating, payable fixed¥225,994 ¥225,994
Interest rate swaps employing
exceptional accounting treatment:Interest rate swaps
Receive floating, payable fixed
168
108
Total
¥
— ¥
—

(b) Currency-related:

Type
Principal accounting procedure:
Currency swaps
Total¥(14,933)*¥(14,933)

Type
Principal accounting procedure:
Currency swaps
Total

Millions of yen
2019
Contract Over one
Fair value
amountsyear

Type
Principal accounting procedure:Interest rate swaps
Receive floating, payable fixed¥127,166 ¥120,000
Interest rate swaps employing
exceptional accounting treatment:Interest rate swaps
Receive floating, payable fixed
382
288
Total
¥
— ¥
—

¥(1,910)*¥(1,910)

Thousands of U.S. dollars
2020
Contract Over one
Fair value
amountsyear

Type
Principal accounting procedure:Interest rate swaps
Receive floating, payable fixed$2,076,578 $2,076,578
Interest rate swaps employing
exceptional accounting treatment:Interest rate swaps
Receive floating, payable fixed
1,544
992
Total
$
— $
—

$(137,214)*$(137,214)(*) Of interest rate swaps employing exceptional accounting treatment, as these instruments
are accounted for together with the hedged loans and bills discounted and borrowings,
their fair value is included in the fair value of said loans and bills discounted within“Financial instruments.”

Type
Principal accounting procedure:
Currency swaps
Total

Millions of yen
2020
Contract Over one
Fair value
amounts
year¥133,852¥—¥22,602¥—¥(1,397)¥(1,397)

Millions of yen
2019
Contract Over one
Fair value
amounts
year¥20,994¥—¥4,900¥ —¥(205)¥(205)

Thousands of U.S. dollars
2020
Contract Over one
Fair value
amounts
year$1,229,918$—$207,682$—$(12,837)$(12,837)(c) Stock-related:
There were no stock-related transactions at March 31,
2020 and 2019.
(d) Bond-related:
There were no bond-related transactions at March 31,
2020 and 2019.

7. LOANS AND BILLS DISCOUNTED
Loans at March 31, 2020 and 2019 include “Risk-Managed
Loan Amounts” as follows:(1) Loans to borrowers in bankruptcy amounting to¥16,372 million ($150 million) and ¥14,168 million
denote loans subject to Article 96-1-3 and 96-1-4 of“Order for Enforcement of the Corporation Tax Act”
(Cabinet Order No. 97 of 1965) on which interest
accrual has stopped as there is doubt about thecollectability of either principal or interest because they
have been contractually past due for a considerable
period of time or for other reasons.

YMFG Annual Report 202042

(2) Other delinquent loans amounting to ¥71,435 million($656 million) and ¥65,253 million denote loans
on which the Banks have stopped accruing interest
excluding loans to borrowers in bankruptcy and loans
on which interest payments are deferred in order topromote recovery of borrowers in economic difficulty.
(3) Loans past due for three months or more amounting
to ¥767 million ($7 million) and ¥1,192 million denoteloans where payment of interest or principal has been
delayed for three months or more excluding loans toborrowers in bankruptcy and other delinquent loans.
(4) Restructured loans amounting to ¥9,931 million($92 million) and ¥12,203 million denote loans toborrowers for which the repayment terms have been
modified to more favorable terms including reductionof interest rate, deferral of interest payments, extensionof principal payments and debt forgiveness withthe objective of promoting recovery of borrowers ineconomic difficulty excluding loans to borrowers inbankruptcy, other delinquent loans, and past-due loans.
(5) The total of loans to borrowers in bankruptcy, otherdelinquent loans, past-due loans, and restructuredloans amounted to ¥98,505 million ($905 million) and¥92,816 million.
The loan amounts disclosed from (1) to (5) above areamounts before deducting an allowance for loan losses.

Commercial bills
Bills discounted are accounted for as financing transactionsin accordance with the Industry Audit Committee Report
No. 24, February 13, 2002, of the JICPA, although theBanks have the right to sell or pledge them without
restrictions. The total face value of commercial bills andpurchased foreign exchange bills obtained as a result of
discounting was ¥32,049 million ($294 million) at March
31, 2020 and ¥41,462 million at March 31, 2019.

Loan Participation
Based on “Accounting Treatment and Presentation ofLoan Participation,” (Japanese Institute of Certified Public
Accountants Accounting System Committee Report No.
3, November 28, 2014), the consolidated balance sheet
amount of loan participation agreements in which theBanks have acquired the economic benefits and risks of
the underlying loans from the original lender was ¥2,694
million ($25 million) at March 31, 2020 and ¥7,015 million
at March 31, 2019.

43

YMFG Annual Report 2020

8. COMMITMENT LINES
Loan agreements and commitment line agreements
relating to loans are agreements that oblige theconsolidated subsidiaries to lend funds up to a certain limit
agreed in advance. The consolidated subsidiaries makethe loans upon the request of an obligor to draw down
funds under such loan agreements as long as there is nobreach of the various terms and conditions stipulated in therelevant loan agreement. The unused commitment balance
relating to these loan agreements amounted to ¥907,251
million ($8,336 million) at March 31, 2020 and ¥920,674
million at March 31, 2019. Of this amount, ¥751,011
million ($6,901million) at March 31, 2020, and ¥776,530
million at March 31, 2019, relates to loans for which theterm of the agreement is one year or less, or unconditional
cancellation of the agreement is allowed at any time.
In many cases the term of the agreement runs its course
without the loan ever being drawn down. Therefore,
the unused loan commitment will not necessarily affectfuture cash flows. Conditions are included in certain loan
agreements that allow the consolidated subsidiaries either
to decline the request for a loan draw-down or to reduce
the agreed limit amount when there is due cause to doso, such as when there is a change in financial condition
or when it is necessary to protect the consolidated
subsidiaries’ credit. Consolidated subsidiaries take various
measures to protect their credit. Such measures include
having the obligor pledge collateral to the consolidated
subsidiaries in the form of real estate, securities, etc., atentering into a loan agreement or in accordance with theconsolidated subsidiaries’ established internal proceduresfor confirming the obligor’s financial condition, etc., atregular intervals.

9. PLEDGED ASSETS

11. ADVANCED DEPRECIATION AMOUNTOF TANGIBLE FIXED ASSETSAt March 31, 2020 and 2019, the following assets were
pledged as collateral for certain liabilities of the Banks.

Cash and due from banks
Securities

Millions of yen
2020
2019
¥
14 ¥
14
373,158
272,155

Thousands of
U.S. dollars
2020
$
129
3,428,816

The collateral was pledged to secure the following:

Deposits
Call money
Payables under securities
lending transactions

Millions of yen
2020
2019
¥ 42,258¥28,693
21,222—
161,466
67,711Thousands of
U.S. dollars
2020$ 388,294
195,001
1,483,653

12. IMPAIRMENT LOSSES
During the fiscal year ended March 31, 2020 and 2019,
impairment losses were recorded on the following assets.
Location

In addition, securities not included in the aboveschedules were pledged as collateral for operatingtransactions, such as foreign exchange contracts andforward exchange contracts. These securities amounted
to ¥6,223 million ($57 million) at March 31, 2020 andsecurities amounted to ¥9,045 million at March 31, 2019.
Also, other assets included security deposits, collateralpledged for transactions involving public funds, collateralpledged for financial instruments, collateral pledged forexchange settlements, the financial futures margin andmargin on bond futures transactions, as indicated below.

Deposits
Collateral pledged fortransactions involving
public funds
Collateral pledged forfinancial instruments
Collateral pledged forexchange settlements
Financial futures margin
Margin on bondfutures transactions

At March 31, 2020 and 2019, accumulated advanced
depreciation amount of tangible fixed assets were ¥8,175
million ($75 million) and ¥8,178 million. There were nosuch advance depreciation expenses in fiscal year ended
March 31, 2020 and 2019.

Millions of yen
2020
2019
¥ 2,552¥ 2,858
1,199
1,188

Thousands of
U.S. dollars
2020$ 23,449
11,01730,587

6,267

281,053

75,60070,000694,661

10
1,000

10
—

92
9,189

10. ACCUMULATED DEPRECIATION
Accumulated depreciation of tangible assets was ¥78,245
million ($719 million) at March 31, 2020, and ¥76,231
million at March 31, 2019.

PrimaryuseTypeWithinAssets for Land,
Yamaguchi leasebuildings,
Prefecture
movableproperty
WithinBusiness- Movable
Hiroshima use assets property
Prefecture
WithinBusiness- Buildings,
Fukuokause assets movable
Prefecture
property
WithinIdle assets Land,
Ehime
for salebuildings
Prefecture
Within Tokyo Business- Buildings,
Metropolitan use assets movable
property
Other
Business- Buildings,
use assets movable
property
Total

Impairment loss
Thousands ofMillions of yen
U.S. dollars
2020
2019
2020
¥ —
¥11
$
—

¥ —

¥0

$

—

¥ 12

¥2

$ 110

¥ 93

¥—

$ 864

¥ 28

¥—

$ 257

¥ 11

¥—

$

¥144

¥14

$1,32392

YMFG and its consolidated subsidiaries that engage in thebanking and securities business group their business-use
assets into the smallest units possible from the standpoint ofmanagement accounting, which is the branch. Idle assets are,in principle, grouped as units of individual assets. In addition,
corporate headquarters, administrative centers, training
facilities, company housing and dormitories are considered
corporate assets, as these are related to all the consolidated
subsidiaries which are engaged in the banking businesses.
Consolidated subsidiaries that do not engage in thebanking and securities business group their assets, inprinciple, on an individual company basis.
In the fiscal year ended March 31, 2020 and 2019, thebook values of the business-use and idle assets, which were

YMFG Annual Report 202044

determined not to create sufficient operating cash flow
are reduced to their recoverable values, and recognized
the reduction of ¥144 million ($1,323 thousand) and ¥14
million as impairment losses. This amount includes landof ¥88 million ($817 thousand), buildings of ¥46 million($414 thousand) and movable property of ¥10 million ($92
thousand) in fiscal year ended March 31, 2020, and land of¥6 million, buildings of ¥5 million and movable property of¥3 million in fiscal year ended March 31, 2019.
The recoverable amount used to estimate theimpairment loss for the fiscal year ended March 31, 2020
and 2019, is the net selling price, which is calculated bydeducting the expected disposal cost from the expected
disposal value.

Payment schedule of borrowed money as of March 31,
2020 is as follows:
Millions of yen¥ 9,232
5,917
4,215
2,890
1,457
4,288
¥27,999

Thousands of
U.S. dollars$ 84,830
54,36938,73026,555
13,38839,401$257,273

14. PROVISION FOR EMPLOYEERETIREMENT BENEFITS
Overview of severance payments and pension plans
YMFG and some consolidated subsidiaries employ funded
and unfunded defined benefit and defined contributionplans as employee retirement benefits.
Defined benefit plans include defined benefit corporate
pension plans and lump-sum retirement plans. Also, someare established as retirement benefit trusts.
Some consolidated subsidiaries employ the simplified
method for calculating retirement benefit obligations.

45

YMFG Annual Report 2020

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

Millions of yen
2020
2019
¥60,535¥59,819
1,784
99
2,257
(2,995)(4)¥61,676

1,728
152
1,895
(3,061)
2¥60,535

Thousands of
U.S. dollars
2020$556,225
16,393910
20,739(27,520)(28)$566,719(2) Reconciliation of plan asset balances at the
beginning and the end of the fiscal year ended
March 31, 2020 and 201913. BORROWED MONEY

2020
2021
2022
2023
2024
Thereafter
Total

Defined benefit plans(1) Reconciliation of retirement benefit obligation
balances at the beginning and the end of the
fiscal year ended March 31, 2020 and 2019

Balance of plan assets at the
beginning of the fiscal year
Expected return on plan assets
Actuarial differences
Contribution from employer
Retirement benefit payments
OthersBalance of plan assets at theend of the fiscal year

Millions of yen
2020
2019
¥96,302 ¥102,726

Thousands of
U.S. dollars
2020$884,894

2,137
2,033
(4,561)(8,680)759
2,125(2,150)(2,203)301
301¥92,788 ¥ 96,302

19,636(41,909)
6,974(19,756)
2,757$852,596(3) Reconciliation of the balances of retirement
benefit obligations and plan assets at the end of
the fiscal year ended March 31, 2020 and 2019,
and the carrying amounts of net defined benefit
liability and net defined benefit asset

Retirement benefit obligationsof funded plans
Plan assets
Retirement benefit obligationsof unfunded plans
Net carrying amount of
obligations and assets

Millions of yen
2020
2019
¥ 61,588 ¥ 60,449

Thousands of
U.S. dollars
2020$ 565,910(92,788)(31,200)
88(96,303)(35,854)85(852,596)(286,686)
809¥(31,112)¥(35,769)$(285,877)

Net retirement benefit liability
Net retirement benefit asset
Net carrying amount of
obligations and assets

Millions of yen
2020
2019
¥ 3,930 ¥ 2,906(35,042)(38,675)¥(31,112) ¥(35,769)

Thousands of
U.S. dollars
2020$ 36,111(321,988)$(285,877)(4) Retirement benefit costs and their breakdowns
Thousands ofMillions of yen
U.S. dollars
2020
2019
2020
¥ 1,784¥ 1,728$ 16,393
99
152
910(2,137)(2,033)(19,636)(418)
25(3,841)7180643¥ (601)¥ (48)$ (5,531)(7) Plan assets(i) Percentages of major asset categories to total plan assets
are as follows.
2020
30%
47%
23%
100%

Bonds
SharesOthers
Total

2019
29%
49%
22%
100%

(Note) Plan assets include 45% of corporate pension plans established as retirement benefit
trusts at the end of the fiscal year ended March 31, 2020, and 45% at March 31, 2019.

(5) Remeasurements of defined benefit plans(ii) Method of establishing expected long-term return onplan assets(Corporate pensions)
Based on the weighted average rate according to the policy
asset mix (medium- to long term portfolio) of the expected
rate of return for individual investment fiduciary institutions,net of investment cost
(Retirement benefit trusts)
Past dividend performance is converted to yield.

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

(8) Basis of actuarial calculation

Service cost*
Interest cost
Expected return on plan assets
Recognized actuarial loss
OthersRetirement benefit costs on
defined benefit plans* Excludes employee contribution portion of defined benefit corporate pensions

Actuarial gain (loss)
Total

Thousands ofMillions of yen
U.S. dollars
2020
2019
2020
¥(7,235) ¥(10,550)$(26,721)¥(7,235) ¥(10,550)$(26,721)(6) Cumulative remeasurements of defined
benefit plans
Items posted as cumulative remeasurements of defined
benefit plans (before tax-effect exclusions) break down
as follows.

Unrecognized actuarial gain
(loss)
Total

Millions of yen
2020
2019
¥2,908¥(4,328)¥2,908¥(4,328)

Thousands of
U.S. dollars
2020$(26,721)

The basis of actuarial calculations as of March 31, 2020
and 2019
Discount rate

2020
2019
0.00%—0.51% 0.00%—0.77%

Expected long-term rate of returnon plan assets

1.50%—2.60% 1.20%—2.60%

Expected rate of salary increase

0.63%—3.84% 0.65%—4.26%

Defined contribution plans
The required contribution to the consolidated subsidiaries’
defined contribution plans at the end of the fiscal year
ended March 31, 2020 and 2019 were ¥279 million ($3million) and ¥282 million, respectively.

$(26,721)

YMFG Annual Report 202046

15. REVALUATION RESERVE FOR LAND
Pursuant to the Law concerning Revaluation of Land
(Law No. 34, promulgated March 31, 1998, the “Law”),
YMFG revalued certain land used for banking operations
by consolidated subsidiaries. The tax-equivalent portion ofthis revaluation amount was recorded in liabilities under“deferred tax liabilities for revaluation reserve for land,”and the reminder under net assets as “revaluation reserve
for land.”
Revaluation date: March 31, 1998
Item 3, Article 3, of the Law establishes the evaluation
method as that prescribed by Article 2-4 of the Order for
Enforcement of Law on Revaluation of Land (Enforcement
Order No. 119, promulgated March 31, 1998), and theamount of land tax is calculated on the basis of the land
tax amount specified under Article 16 of the Land-holding
Tax Act, adjusted rationally in accordance with the basis of
calculation announced officially by the Director General of
the National Tax Administration Agency.
Total difference between market value of land forbusiness use revalued in accordance with Article 10 of the
Law and the total post-revaluation book value of land at
March 31, 2020 and 2019 were ¥18,369 million ($169
million) and ¥20,113 million, respectively.

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

17. OTHER INCOME
Other income included the gains on sale of stock of¥13,840 million ($127 million), income from investment
partnership of ¥1,574 million ($14 million) and gains on

47

YMFG Annual Report 2020

investment in money held in trust of ¥984 million ($9million) for the fiscal year ended March 31, 2020 and thegains on sale of stock of ¥9,684 million, income frominvestment partnership of ¥922 million and gains on
investment in money held in trust of ¥4 million for the
fiscal year ended March 31, 2019.

18. GENERAL AND ADMINISTRATIVE
EXPENSES
Items included operating expenses for the year ended
March 31, 2020 and 2019 were as follows:

Salary and allowance
Depreciation

Millions of yen
2020
2019
¥31,328¥31,302¥ 6,142¥ 6,472

Thousands of
U.S. dollars
2020$287,862$ 56,437

19. OTHER EXPENSES
Items included other expenses for the year ended March
31, 2020 and 2019 were as follows:

Loss on sale of stock
Losses on devaluation ofstocks and other securities
Loss on investment in money
held in trust

Millions of yen
2020
2019
¥4,408¥2,408
¥ 818
¥ 33
¥

16

¥ 821

Thousands of
U.S. dollars
2020$40,504$ 7,516$147

20. LEASE TRANSACTIONS
1. Finance lease transactions
Finance lease transactions that do not transfer ownership(i) Content of lease assets
Tangible fixed assets
Mainly vehicles and office equipment
Intangible fixed assets
Software(ii) Depreciation method for lease assets
As described in “Lease assets under” (5) Accounting
Policies, in “2. SIGNIFICANT ACCOUNTING POLICIES.”

2. Operating leases
Future minimum lease payments at March 31, 2020 and2019 were as follows:
Borrower

Within one year
More than one year
Total minimum lease payments

Millions of yen
2020
2019
¥123
¥111
726
827
¥849
¥938

Thousands of
U.S. dollars
2020$1,1306,671$7,801Millions of yen
2020
2019
¥1
¥—
7
—
¥8
¥—

Thousands of
U.S. dollars
2020
$ 9
64
$73

2. Significant differences between the statutory effective
tax rate and the actual income tax rate after applicationof deferred income tax accounting for the year ended
March 31, 2020 and 2019 were omitted, as thedifference between the effective statutory tax rate andthe actual tax rate after application of deferred income
tax accounting were 5% or less of the effective statutory
tax rate.

LenderWithin one year
More than one year
Total minimum lease payments

21. INCOME TAXES
1. Significant components of the deferred tax assets andliabilities as of March 31, 2020 and 2019 were as follows:
Millions of yen
2020
2019
Deferred tax assets:
Allowance for loan losses
Deferred gains or losses
on hedges
Net defined benefit liability
Provision for bonuses
Unrealized gains onavailable-for-sale securities
Depreciation
Net operating losses
carryforwards
Losses on devaluation of
securities
Other
Deferred tax assets
Valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Unrealized gains onavailable-for-sale securities
Securities contributed toretirement benefit trusts
Net defined benefit asset
Other
Total deferred tax liabilities
Net deferred tax assets(liabilities)

Thousands of
U.S. dollars
2020¥17,174
4,672¥14,639560$157,806
42,929

1,474
867
664

433
844
—

13,544
7,967
6,101

642
511

699
296

5,899
4,695

505

668

4,640

2,376
28,885(1,501)
27,384

2,306
20,445(1,479)18,966

21,832
265,413(13,792)
251,621(4,486)(19,576)(41,220)(3,045)(3,067)(1,185)(129)(1,352)(9,012)¥18,372(766)(1,361)(24,770)¥ (5,804)(27,979)(12,414)(82,798)$168,823

22. NET ASSETS
Under the Companies Act of Japan (“the Act”), the entire
amount paid for new shares is in principle required to be
designated as common stock. However, a company may,by a resolution of the Board of Directors, designate an
amount not exceeding one-half of the price of the newshares as additional paid-in capital, which is included incapital surplus.
Under the Act, in cases where dividend distribution of
surplus is made, the smaller of an amount equal to 10%of the dividend or the excess, if any, of 25% of common
stock over the total of additional paid-in capital and legal
earnings reserve must be set aside as additional paid-in
capital or legal earnings reserve. Legal earnings reserve
is included in retained earnings in the accompanying
Consolidated Balance Sheets.
Under the Act, legal earnings reserve and additional
paid-in capital may be used to eliminate or reduce a
deficit, or may be capitalized, by a resolution of theshareholders’ meeting.
Under the Act, additional paid-in capital and legal
earnings reserve may not be distributed as dividends,
however all of these may be transferred to other capitalsurplus and retained earnings, respectively, which arepotentially available for dividends.
The maximum amount that YMFG can distribute as
dividends is calculated based on the Non-Consolidated
Financial Statements of YMFG in accordance with the Act.
At the annual shareholders’ meeting, held on June 25,
2020, the shareholders approved cash dividends amounting
to ¥3,063 million ($28 million). Such appropriations havenot been accrued in the Consolidated Financial Statements

YMFG Annual Report 202048

as of March 31, 2020 and to be recognized in the period inwhich they are approved by the shareholders.
At the annual shareholders’ meeting, held on June25, 2019, the shareholders approved cash dividends
amounting to ¥2,807 million. Such appropriations have notbeen accrued in the Consolidated Financial Statements asof March 31, 2019 and to be recognized in the period inwhich they are approved by the shareholders.

23. CHANGES IN NET ASSETS
1. Type and number of shares issued and treasury shareswere as follows:
Number of shares (in thousand)March 31,
March 31,
Increase Decrease
2019
2020
Shares issued
Common stock
Total
Treasury stock
Common stock*1, *2, *3
Total

264,353
264,353————

264,353
264,353

10,74910,749

445
445

635
635

10,55910,559*1 The increase in the number of treasury stock is due to additional increase of Board Benefit
Trust (BBT) of 443 thousand shares, and purchases of shares constituting less than one
trading unit, totaling 1 thousand shares.
The decrease of treasury stock included the sale of 533 thousand shares from the ESOP
Trust for Group employees to the YMFG stock ownership plan, the 85 thousand shares forthe exercise of share options, 16 thousand shares due to the exercise of rights of the Board
Benefit Trust (BBT) and purchases of shares constituting less than one trading unit, whichamounted to 0 thousand shares.
*2 Treasury stock as of beginning and ending of fiscal year ended March 31, 2020 include 990
thousand shares and 456 thousand shares held by the ESOP Trust for employee shareholders.
*3 Treasury stock as of beginning and ending of fiscal year ended March 31, 2020 include
578 thousand shares and 1,005 thousand shares held by the Board Benefit Trust (BBT).

Number of shares (in thousand)March 31,
March 31,
Increase Decrease
2018
2019
Shares issued
Common stock
Total
Treasury stock
Common stock*1, *2, *3
Total

264,353
264,353————

264,353
264,353

17,853
17,853

14,653
14,65321,756
21,756

10,75010,750*1 The increase in the number of treasury stock is due to market purchases of 14,644
thousand shares, and purchases of shares constituting less than one trading unit, totaling
8 thousand shares.
The decrease of treasury stock included 21,184 thousand shares stemming from theexercise of convertible bond-type share options to shares denominated in euros and
US dollars that matured in 2018, the sale of 332 thousand shares from the ESOP Trustfor Group employees to the YMFG stock ownership plan, the 167 thousand sharesfor the exercise of share options, 52 thousand shares due to the exercise of rights of
the Board Benefit Trust (BBT), the sale of 17 thousand shares to the parent company
of a consolidated subsidiary and an equity-method affiliate and purchases of sharesconstituting less than one trading unit, which amounted to 0 thousand shares.
*2 Treasury stock as of beginning and ending of fiscal year ended March 31, 2019 include 1,323
thousand shares and 990 thousand shares held by the ESOP Trust for employee shareholders.
*3 Treasury stock as of beginning and ending of fiscal year ended March 31, 2019 include
631 thousand shares and 578 thousand shares held by the Board Benefit Trust (BBT).

2. Stock options
Stock options at March 31, 2020 and 2019 were ¥127
million ($1 million) and ¥209 million, respectively.
3. Information on dividends is as follows:(a) Dividends paid in the fiscal year ended March 31, 2020
and 2019.

Type of shares
Resolved at the boardof directors meetingon May 11, 2019
Common stock
Resolved at the boardof directors meeting on
November 7, 2019
Common stock

Aggregate
amount ofdividends(Millionsof yen)Cashdividends
per share(Yen)

Recorddate

Effective
date¥2,807*1¥11.00 Mar. 31, Jun. 26,
2019
2019

¥3,063*2¥12.00 Sep. 30, Dec. 10,
2019
2019

*1 The total amount of dividend on common stock includes ¥17 million in dividends to ESOP
Trust for employee shareholders and Board Benefit Trust (BBT).
*2 The total amount of dividend on common stock includes ¥15 million in dividends to ESOP
Trust for employee shareholders and Board Benefit Trust (BBT).

Type of shares
Resolved at the boardof directors meetingon May 11, 2018
Common stock
Resolved at the boardof directors meeting on
November 9, 2018
Common stock

Aggregate
amount ofdividends(Millionsof yen)Cashdividends
per share(Yen)

Recorddate

Effective
date¥2,488*1¥10.00 Mar. 31,
2018

Jun. 27,2018¥2,751*2¥11.00 Sep. 30,
2018

Dec. 10,2018*1 The total amount of dividend on common stock includes ¥20 million in dividends to ESOP
Trust for employee shareholders and Board Benefit Trust (BBT).
*2 The total amount of dividend on common stock includes ¥19 million in dividends to ESOP
Trust for employee shareholders and Board Benefit Trust (BBT).

Type of shares
Resolved at the boardof directors meetingon May 11, 2019
Common stock
Resolved at the boardof directors meeting on
November 7, 2019
Common stock

AggregateCashamount ofdividends
dividends
per share(Thousands of(U.S. dollars)
U.S. dollars)

Recorddate

Effective
date$25,792*1$0.10 Mar. 31, Jun. 26,
2019
2019

$28,145*2$0.11 Sep. 30, Dec. 10,
2019
2019

*1 The total amount of dividend on common stock includes $156 thousand in dividends to
ESOP Trust for employee shareholders and Board Benefit Trust (BBT).
*2 The total amount of dividend on common stock includes $138 thousand in dividends to
ESOP Trust for employee shareholders and Board Benefit Trust (BBT).

49

YMFG Annual Report 2020

(b) Dividends to be paid in the fiscal year ending March 31,
2020 and 2019 are as follows:

Type of shares
Common stock(Millions of yen, except per share amount)
AggregateCashamount of Source
dividends Record
Effective
dividendsof
per share
datedate(Millions of dividends
(Yen)
yen)
¥3,063* Retained
earnings¥12.00 Mar. 31,
2020

Jun. 26,
2020* The total amount of dividend on common stock includes ¥18 million in dividends to ESOP
Trust and for employee shareholders and Board Benefit Trust (BBT).

(Millions of yen, except per share amount)
AggregateCashamount of Source
dividends Record
Effective
dividendsof
per share
datedate(Millions of dividends
(Yen)
yen)

Type of shares
Resolved at theboard of directors
meeting on
May 10, 2019
¥2,807*
Common stock

24. STOCK OPTIONS
At a Board of Directors meeting, resolutions were passedwith regard to subscription requirements for the allotmentof stock options as compensation to directors of YMFG’s
banking subsidiaries, Yamaguchi Bank, Momiji Bank andKitakyushu Bank. The details of these resolutions aredescribed below.
1. Recording of expenses related to stock options and thename of line items.
There were no expenses in the fiscal year ended March 31,
2020 and 2019.
2. The contents of the stock options are outlined as below.
Category and number of
persons to be granted
stock options

Retainedearnings¥11.00 Mar. 31,
2019

Jun. 26,
2019* The total amount of dividend on common stock includes ¥17 million in dividends to ESOP
Trust and for employee shareholders and Board Benefit Trust (BBT).

(Thousands of U.S. dollars, except per share amount)
Aggregate
amount ofCashdividends
Source dividends
RecordEffective(Thouofper sharedatedatesands of dividends (U.S. dolU.S. dollars)
lars)Type of shares
Resolved at theboard of directors
meeting on
May 15, 2020
Common stock$28,145* Retained
earnings$0.11 Mar. 31,
2020

Jun. 26,
2020* The total amount of dividend on common stock includes $165 thousand in dividends to
ESOP Trust and for employee shareholders and Board Benefit Trust (BBT).

Number of stock options
by class of stock*2016
27 directors (excluding directors who
are members of the Audit and Supervisory Committee, part-time directors andoutside directors) of YMFG’s subsidiaries, Yamaguchi Bank, Momiji Bank andKitakyushu Bank.
122,000 shares of YMFG’s common
stock

Grant dateAugust 25, 2015

Vesting conditions

No vesting conditions set

Target length of service
periodNo target length of service period set

Period for exercise of rights August 26, 2015—August 25, 2045

Category and number of
persons to be granted
stock options

2015
27 directors (excluding outside directors)of YMFG’s subsidiaries, Yamaguchi Bank,
Momiji Bank and Kitakyushu Bank.

Number of stock options
by class of stock*

182,900 shares of YMFG’s common
stock

Grant dateJuly 29, 2014

Vesting conditions

No vesting conditions set

Target length of service
periodNo target length of service period set

Period for exercise of rights July 30, 2014—July 29, 2044

YMFG Annual Report 2020

50

Category and number of
persons to be granted
stock options

2014
27 directors (excluding outside directors)of YMFG’s subsidiaries, Yamaguchi Bank,
Momiji Bank and Kitakyushu Bank.

Number of stock options
by class of stock*

225,100 shares of YMFG’s common
stock

Grant dateJuly 23, 2013

Vesting conditions

No vesting conditions set

Target length of service
periodNo target length of service period set

Period for exercise of rights July 24, 2013—July 23, 2043

Category and number of
persons to be granted
stock options

2013
27 directors (excluding outside directors)of YMFG’s subsidiaries, Yamaguchi Bank,
Momiji Bank and Kitakyushu Bank.

Number of stock options
by class of stock*294,900 shares of YMFG’s common
stock

Grant dateJuly 30, 2012

Vesting conditions

No vesting conditions set

Target length of service
periodNo target length of service period set

Period for exercise of rights July 31, 2012—July 30, 2042

Category and number of
persons to be granted
stock options

2012
27 directors (excluding outside directors)of YMFG’s subsidiaries, Yamaguchi Bank,
Momiji Bank and Kitakyushu Bank.

Number of stock options
by class of stock*

192,600 shares of YMFG’s common
stock

Grant date

October 31, 2011

Vesting conditions

No vesting conditions set

Target length of service
periodNo target length of service period set

Period for exercise of rights November 1, 2011—October 31, 2041
Note: Stated as the equivalent number of shares.

From the fiscal year ended March 31, 2016, the issuanceof stock options to directors of the YMFG subsidiaries
Yamaguchi Bank, Momiji Bank and Kitakyushu Bank
(excluding directors who are Audit and Supervisory
Committee members, part-time directors and outside
directors) was discontinued.

3. The summary of stock option activity is as indicated below.
(a) Number of stock options
2016
Prior to vesting
As of the endof the previous
consolidated
fiscal year
GrantedExpired
VestedRights not yet
determined
After vesting
As of the endof the previous
consolidated
fiscal year
Rights determined
Rights exercised
ExpiryAmountunexercised

2015

2014

2013

2012

—

—

—

—

—

—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

52,60060,00041,30036,70018,700—17,600—35,000—20,700—39,300—19,400—21,900—16,500—20,200—10,900
—
7,800

2016
¥
1
759

2015
¥
1
759

Yen
2014
¥ 1
759

2013
¥ 1
759

2012
¥ 1
759

1,377

1,015

973

619

660

(b) Price information
Exercise price
Average share priceat time of exercise
Fair value on dategranted

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

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

51

YMFG Annual Report 2020

26. CONSOLIDATED STATEMENTS OFCOMPREHENSIVE INCOME

28. RELATED PARTY TRANSACTIONS

Amounts of reclassification adjustments and tax effectamounts related to other comprehensive income in the
consolidated fiscal year ended March 31, 2020 and 2019were as follows.
Millions of Yen
2020
2019
Unrealized gains (losses) on
available- for-sale securities
Amount generated during
the year
Reclassification adjustments
Before tax effect adjustment
Tax effect amount
Unrealized gains (losses) on
available-for-sale securities
Deferred gains (losses)on hedges
Amount generated during
the year
Reclassification adjustments
Before tax effect adjustment
Tax effect amountDeferred gains (losses)on hedges
Remeasurements of defined
benefit plans
Amount generated during
the year
Reclassification adjustments
Before adjustment for
tax effects
Tax effect amountRemeasurements of defined
benefit plans
Total other comprehensive
incomeThousands of
U.S. dollars
2020¥(25,811)¥ (3,090)$(237,168)(25,959)(51,770)
15,739(36,031)(17,133)(20,224)
5,992(14,232)(238,528)(475,696)
144,629(331,067)(14,259)(2,547)(131,021)

760(13,499)
4,112(9,387)963(1,584)482(1,102)

6,983(124,038)
37,784(86,254)(6,818)(10,575)(62,648)(418)(7,236)25(10,550)(3,841)(66,489)

2,205(5,031)

3,210(7,340)20,253(46,236)¥(50,449)¥(22,674)$(463,557)

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

Details of the transactions between the consolidated
subsidiaries of YMFG submitting the consolidated financial
statements and related parties are as follows:
Executives and major shareholders of YMFG submitting theconsolidated financial statements (only for individuals), etc.
For the year ended March 31, 2020
Category:
Executive
Name:
Kazuo Tsukuda
Occupation or title:
Director and Audit andSupervisory Committee
Member of YMFG
Relationship with related party: Lender of funds
Content of transaction:
Lending of funds*
Transaction amount:¥223 million ($2 million)(average balance)
Account name:Loan
Year-end balance:¥223 million ($2 million)* Conditions for this transaction and for method of deciding this transaction conditions were
the same as general transactions.

For the year ended March 31, 2019
Category:
Executive
Name:
Kazuo Tsukuda
Occupation or title:
Director and Audit andSupervisory Committee
Member of YMFG
Relationship with related party: Lender of funds
Content of transaction:
Lending of funds*
Transaction amount:¥223 million (averagebalance)
Account name:Loan
Year-end balance:¥223 million* Conditions for this transaction and for method of deciding this transaction conditions were
the same as general transactions.

YMFG Annual Report 202052

29. PER SHARE DATA

Diluted net income per share is calculated based on
the following:
Yen

2020
2019
Net assets per share¥2,458.73 ¥2,580.74
Net income per share
100.0794.65
Net income per share (diluted) ¥ 93.86 ¥ 83.27

U.S. dollars
2020$22.590.92$ 0.86

Net assets per share are calculated based on the following:

Net assets
Amounts excluded fromnet assets
Stock options
Non-controling interests
Net assets attributable tocommon stock at the fiscal
year-end
Number of common stock at
the fiscal year-end used forthe calculation of net assets
per share (in thousands)*

Thousands of
U.S. dollars
2020$5,791,096$ 57,273

127
6,106
624,012209
6,264
654,485

1,167
56,106
5,733,823

253,794

253,603—

Thousands of
U.S. dollars
2020$3,657

398

462

3,657

21,00338,980—20,852150—

38,719
260
—

—
—
—

* Shares of YMFG held by the ESOP trust and the Board Benefit Trust (BBT) are shown on thebalance sheets as treasury stock, so are not included in the above average shares of common
stock during the year. The average number of shares was 1,487 thousand in the fiscal year
ended March 31, 2020 and 1,734 thousand in the fiscal year ended March 31, 2019.

30. SUBSEQUENT EVENTS* Shares of YMFG held by the ESOP trust and the Board Benefit Trust (BBT) are shown on thebalance sheets as treasury stock, so are not included in the above number of common stockat the fiscal year-end used for the calculation of net assets per share. This number of shares
held by the ESOP and the Board Benefit Trust (BBT) was 1,568 thousand as of March 31,
2019, and 1,461 thousand as of March 31, 2020.

For the year ended March 31, 2020
There were no significant subsequent events. Dividends
were made in June 2020. Please refer to “22. NET ASSETS.”

Net income per share is calculated based on the following:

For the year ended March 31, 2019
There were no significant subsequent events. Dividends
were made in June 2019. Please refer to “22. NET ASSETS.”

Net income attributable toowners of the parent
Amount not attributable tocommon shareholders
Net income attributable toowners of the parent forcommon stock
Average shares of common
stock during the year*(in thousands)

53

Millions of yen
except number ofshares2020
2019¥630,245 ¥660,958¥ 6,233 ¥ 6,473

Net income adjustment
attributable to owners of
the parent
Interest expenses(excluding tax amount)
Increase of shares ofcommon stock
Bonds with warrant
Warrant
Dilutive shares not including
calculation due to no
dilutive effectMillions of yen
except number ofshares
2020
2019
¥ 398
¥ 462

YMFG Annual Report 2020

Millions of yen
except number ofshares2020
2019¥ 25,391 ¥ 23,149

Thousands of
U.S. dollars
2020$233,309———

25,391

23,149233,309

253,747

244,575—         !&!$!$&!$%!'    $!'" " ! !(+$9($8',7('7+($&&203$1<,1*&2162/,'$7('),1$1&,$/67$7(0(1762)"$0$*8&+,,1$1&,$/
52831&$1',76&2162/,'$7('68%6,',$5,(6&2//(&7,9(/<5()(55('72$6=7+(5283:+,&+&2035,6(
7+(&2162/,'$7('%$/$1&(6+((76$6$7$5&+   $1'  7+(&2162/,'$7('67$7(0(1762),1&20(
7+(&2162/,'$7('67$7(0(1762)&2035(+(16,9(,1&20(7+(&2162/,'$7('67$7(0(1762)&+$1*(6,11(7$66(76$1'7+(&2162/,'$7('67$7(0(1762)&$6+)/2:6)257+(<($567+(1(1'('$1'127(6&2035,6,1*$
6800$5<2)6,*1,),&$17$&&2817,1*32/,&,(627+(5(;3/$1$725<,1)250$7,21
128523,1,217+($&&203$1<,1*&2162/,'$7('),1$1&,$/67$7(0(17635(6(17)$,5/<,1$//0$7(5,$/
5(63(&767+(&2162/,'$7('),1$1&,$/326,7,212)7+(5283$6$7$5&+   $1'  $1',76
&2162/,'$7('),1$1&,$/3(5)250$1&($1'&$6+)/2:6)257+(<($567+(1(1'(',1$&&25'$1&(:,7+
$&&2817,1*35,1&,3/(6*(1(5$//<$&&(37(',1$3$1
%%!$" ! !(&21'8&7('285$8',7,1$&&25'$1&(:,7+$8',7,1*67$1'$5'6*(1(5$//<$&&(37(',1$3$185
5(63216,%,/,7,(681'(57+26(67$1'$5'6$5()857+(5'(6&5,%(',17+(             6(&7,212)2855(3257!($5(,1'(3(1'(172)7+(5283
,1$&&25'$1&(:,7+7+((7+,&$/5(48,5(0(1767+$7$5(5(/(9$1772285$8',72)7+(&2162/,'$7('),1$1&,$/
67$7(0(176,1$3$1$1':(+$9()8/),//('28527+(5(7+,&$/5(63216,%,/,7,(6,1$&&25'$1&(:,7+7+(6(5(48,5(0(176!(%(/,(9(7+$77+($8',7(9,'(1&(:(+$9(2%7$,1(',668)),&,(17$1'$335235,$7(72
3529,'($%$6,6)2528523,1,21
%"! %&%!   & &'& '"$(%!$)!&&!$&! %!&  && &%
$1$*(0(17,65(63216,%/()257+(35(3$5$7,21$1')$,535(6(17$7,212)7+(&2162/,'$7('),1$1&,$/
67$7(0(176,1$&&25'$1&(:,7+$&&2817,1*35,1&,3/(6*(1(5$//<$&&(37(',1$3$1$1')2568&+,17(51$/
&21752/$60$1$*(0(17'(7(50,1(6,61(&(66$5<72(1$%/(7+(35(3$5$7,212)&2162/,'$7('),1$1&,$/
67$7(0(1767+$7$5()5(()5200$7(5,$/0,667$7(0(17:+(7+(5'8(72)5$8'25(5525135(3$5,1*7+(&2162/,'$7('),1$1&,$/67$7(0(1760$1$*(0(17,65(63216,%/()25$66(66,1*7+(5283>6$%,/,7<72&217,18($6$*2,1*&21&(51$1'',6&/26,1*$6$33/,&$%/(0$77(565(/$7('72*2,1*&21&(51,1$&&25'$1&(:,7+$&&2817,1*35,1&,3/(6*(1(5$//<$&&(37(',1$3$1
+($8',7$1'683(59,625<&200,77((,65(63216,%/()2529(56((,1*7+(',5(&7256>3(5)250$1&(2)7+(,5'87,(6,1&/8',1*7+('(6,*1,03/(0(17$7,21$1'0$,17(1$1&(2)7+(5283>6),1$1&,$/5(3257,1*
352&(66
YMFG Annual Report 202054

'&!$*%%"! %&%!$&'&!&! %!&   && &%
852%-(&7,9(6$5(722%7$,15($621$%/($6685$1&($%287:+(7+(57+(&2162/,'$7('),1$1&,$/67$7(0(176$6$:+2/($5()5(()5200$7(5,$/0,667$7(0(17:+(7+(5'8(72)5$8'25(5525$1'72,668($1$8',725>6
5(32577+$7,1&/8'(628523,1,21($621$%/($6685$1&(,6$+,*+/(9(/2)$6685$1&(%87,6127$
*8$5$17((7+$7$1$8',7&21'8&7(',1$&&25'$1&(:,7+$8',7,1*67$1'$5'6*(1(5$//<$&&(37(',1$3$1
:,//$/:$<6'(7(&7$0$7(5,$/0,667$7(0(17:+(1,7(;,676,667$7(0(176&$1$5,6()520)5$8'25(5525
$1'$5(&216,'(5('0$7(5,$/,),1',9,'8$//<25,17+($**5(*$7(7+(<&28/'5($621$%/<%((;3(&7('72,1)/8(1&(7+((&2120,&'(&,6,2162)86(567$.(1217+(%$6,62)7+(6(&2162/,'$7('),1$1&,$/67$7(0(176
63$572)285$8',7,1$&&25'$1&(:,7+$8',7,1*67$1'$5'6*(1(5$//<$&&(37(',1$3$1:((;(5&,6(352)(66,21$/-8'(*0(17$1'0$,17$,1352)(66,21$/6.(37,&,607+528*+2877+($8',7!($/62 '(17,)<$1'$66(667+(5,6.62)0$7(5,$/0,667$7(0(172)7+(&2162/,'$7('),1$1&,$/67$7(0(176
:+(7+(5'8(72)5$8'25(5525'(6,*1$1'3(5)250$8',7352&('85(65(63216,9(727+26(5,6.6$1'
2%7$,1$8',7(9,'(1&(7+$7,668)),&,(17$1'$335235,$7(723529,'($%$6,6)2528523,1,21+(5,6.
2)127'(7(&7,1*$0$7(5,$/0,667$7(0(175(68/7,1*)520)5$8',6+,*+(57+$1)2521(5(68/7,1*)520
(5525$6)5$8'0$<,192/9(&2//86,21)25*(5<,17(17,21$/20,66,2160,65(35(6(17$7,216257+(29(55,'(2),17(51$/&21752/

%7$,1$181'(567$1',1*2),17(51$/&21752/5(/(9$17727+($8',7,125'(572'(6,*1$8',7352&('85(6
7+$7$5($335235,$7(,17+(&,5&8067$1&(6:+,/(7+(2%-(&7,9(2)7+($8',7,612772(;35(66$1
23,1,21217+(())(&7,9(1(662)7+(5283>6,17(51$/&21752/

9$/8$7(7+($335235,$7(1(662)$&&2817,1*32/,&,(686('$1'7+(5($621$%/(1(662)$&&2817,1*
(67,0$7(6$1'5(/$7('',6&/2685(60$'(%<0$1$*(0(1721&/8'(217+($335235,$7(1(662)0$1$*(0(17>686(2)7+(*2,1*&21&(51%$6,62)$&&2817,1*
$1'%$6('217+($8',7(9,'(1&(2%7$,1(':+(7+(5$0$7(5,$/81&(57$,17<(;,6765(/$7('72(9(17625
&21',7,2167+$70$<&$676,*1,),&$17'28%7217+(5283>6$%,/,7<72&217,18($6$*2,1*&21&(51)
:(&21&/8'(7+$7$0$7(5,$/81&(57$,17<(;,676:($5(5(48,5('72'5$:$77(17,21,1285$8',725>6
5(3257727+(5(/$7('',6&/2685(6,17+(&2162/,'$7('),1$1&,$/67$7(0(17625,)68&+',6&/2685(6$5(,1$'(48$7(7202',)<28523,1,2185&21&/86,216$5(%$6('217+($8',7(9,'(1&(2%7$,1('8372
7+('$7(2)285$8',725>65(32572:(9(5)8785((9(17625&21',7,2160$<&$86(7+(528372
&($6(72&217,18($6$*2,1*&21&(51



9$/8$7(:+(7+(57+(35(6(17$7,21$1'',6&/2685(6,17+(&2162/,'$7('),1$1&,$/67$7(0(176$5(,1$&&25'$1&(:,7+$&&2817,1*67$1'$5'6*(1(5$//<$&&(37(',1$3$17+(29(5$//35(6(17$7,21
6758&785($1'&217(172)7+(&2162/,'$7('),1$1&,$/67$7(0(176,1&/8',1*7+(',6&/2685(6$1':+(7+(57+(&2162/,'$7('),1$1&,$/67$7(0(1765(35(6(177+(81'(5/<,1*75$16$&7,216$1'(9(176,1$
0$11(57+$7$&+,(9(6)$,535(6(17$7,21



%7$,168)),&,(17$335235,$7($8',7(9,'(1&(5(*$5',1*7+(),1$1&,$/,1)250$7,212)7+((17,7,(625
%86,1(66$&7,9,7,(6:,7+,17+(528372(;35(66$123,1,21217+(&2162/,'$7('),1$1&,$/67$7(0(176
!($5(5(63216,%/()257+(',5(&7,21683(59,6,21$1'3(5)250$1&(2)7+(*5283$8',7!(5(0$,1
62/(/<5(63216,%/()25285$8',723,1,21!(&20081,&$7(:,7+7+($8',7$1'683(59,625<&200,77((5(*$5',1*$021*27+(50$77(567+(
3/$11('6&23($1'7,0,1*2)7+($8',76,*1,),&$17$8',7),1',1*6,1&/8',1*$1<6,*1,),&$17'(),&,(1&,(6,1,17(51$/&21752/7+$7:(,'(17,)<'85,1*285$8',7!($/623529,'(7+($8',7$1'683(59,625<&200,77((:,7+$67$7(0(177+$7:(+$9(&203/,(':,7+
5(/(9$17(7+,&$/5(48,5(0(1765(*$5',1*,1'(3(1'(1&($1'&20081,&$7(:,7+7+(0$//5(/$7,216+,36$1'
27+(50$77(567+$70$<5($621$%/<%(7+28*+772%($521285,1'(3(1'(1&($1':+(5($33/,&$%/(5(/$7('6$)(*8$5'6


55

YMFG Annual Report 2020! (  $ %&! +( '2//$5$028176,17+($&&203$1<,1*&2162/,'$7('),1$1&,$/67$7(0(176:,7+5(63(&7727+(<($5(1'('$5&+   $5(35(6(17('62/(/<)25&219(1,(1&(85$8',7$/62,1&/8'('7+(75$16/$7,212)
<(1$028176,172 '2//$5$028176$1',128523,1,2168&+75$16/$7,21+$6%((10$'(217+(%$6,6
'(6&5,%(',127(727+(&2162/,'$7('),1$1&,$/67$7(0(176
&$%&$#'$&!%!%)&$&'!' & &%&! " !('2127+$9($1<,17(5(67,17+(5283:+,&+,65(48,5('72%(',6&/26('38568$17727+(3529,6,2162)
7+((57,),('8%/,&&&2817$176&72)$3$1
,'(<8.,$<$6+,
(6,*1$7('1*$*(0(17$571(5(57,),('8%/,&&&2817$17
"26+,1$2%((6,*1$7('1*$*(0(17$571(5(57,),('8%/,&&&2817$17

25,<8.,.,<$0$
(6,*1$7('1*$*(0(17$571(5(57,),('8%/,&&&2817$17
#
2.<2)),&($3$1
8*867    !&%&!&$! "  &'&!$*%"!$& +,6,6$&23<2)7+(1'(3(1'(178',725>6(3257$1'7+(25,*,1$/&23,(6$5(.(376(3$5$7(/<%<7+(203$1<$1'#

YMFG Annual Report 202056

Yamaguchi Bank Financial Statements
NONCONSOLIDATED BALANCE SHEETS (UNAUDITED)March 31, 2020 and 2019

Millions of yen
2020

ASSETS
AssetsCash and due from banks
Call loans and bills purchased
Monetary claims bought
Trading assets
Money held in trust
Securities
Loans and bills discounted
Foreign exchanges
Other assets
Tangible fixed assets
Intangible fixed assets
Prepaid pension cost
Deferred tax assets
Customers’ liabilities for acceptances and guarantees
Allowance for loan losses
Total assets

Millions of yen
2019

Thousands of
U.S. dollars
2020¥

616,575
33,168
5,487
990
40,738945,873
4,234,787
10,367
118,689
44,273
3,570
19,0386,917
25,438(30,420)¥ 6,075,490¥

608,108
83,137
6,941
886
23,275
896,686
4,043,045
9,726
109,267
44,554
3,771
17,626—23,788(26,801)¥ 5,844,009$ 5,665,487
304,769
50,4189,097
374,327
8,691,289
38,911,945
95,2591,090,592
406,80932,803
174,933
63,558
233,741(279,519)$ 55,825,508¥ 5,358,972
85,701
115,421
742
4,844
4,082
65,437
41
106
137
622
43
—
7,380
25,4385,668,966
10,006
380
379,841
390,227
8,891(9,283)
16,68916,297
406,524¥ 6,075,490¥ 5,135,626
133,61750,173
570
5,584
2,119
53,902
8
113
104
796
41
7,210
7,410
23,7885,421,061
10,006380
364,850
375,236
32,208(1,255)
16,75947,712422,948¥ 5,844,009$ 49,241,680
787,476
1,060,562
6,818
44,51037,508601,277
377
974
1,259
5,715
395
—
67,812
233,741
52,090,104
91,942
3,492
3,490,223
3,585,657
81,696(85,298)
153,349
149,747
3,735,404$ 55,825,508

LIABILITIES AND NET ASSETS (SHAREHOLDERS’ EQUITY)
Liabilities:

Net assets:

57

Deposits
Call money and bills soldPayables under securities lending transactions
Trading liabilities
Borrowed money
Foreign exchanges
Other liabilities
Provision for bonuses
Provision for retirement benefits
Provision for directors’ stock benefits
Provision for reimbursement of deposits
Provision for customers point services
Deferred tax liabilities
Deferred tax liabilities for land revaluation
Acceptances and guarantees
Total liabilities
Capital stock
Capital surplus
Retained earnings
Total shareholders’ equity
Net unrealized gains on securities
Deferred gains or losses on hedges
Revaluation reserve for land
Total valuation and translation adjustments
Total net assets
Total liabilities, and net assets

YMFG Annual Report 2020

NONCONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Years ended March 31, 2020 and 2019

Millions of yen
2020

IncomeInterest income:Interest on loans and discounts
Interest and dividends on securities
Other interest income
Fees and commissions
Trading income
Other ordinary income
Other income
Total income
Expenses
Interest expense:
Interest on deposits
Interest on borrowings and rediscounts
Other interest expense
Fees and commissions payments
Other operating expenses
General and administrative expenses
Impairment losses
Other expenses
Total expenses
Income before income taxes and minority interests
Income taxes:
Current
Deferred
Net income

Amounts per share of common stock:
Net income
Cash dividends applicable to the year¥¥

42,19915,704
1,039
9,889
63
15,95513,026
97,875¥43,03913,4591,486
10,56524
10,376
8,916
87,865$

387,752
144,298
9,547
90,866579
146,605
119,691
899,338

4,006
2,596
1,008
4,815
18,57926,952
121
9,231
67,30830,567

5,078
1,842
324
4,719
14,52528,13711
8,010
62,64625,21936,81023,854
9,262
44,243
170,716
247,652
1,112
84,820618,469
280,869

8,154
(588)
23,001

7,387(956)
18,78874,924(5,403)211,348

¥

Yen
2020

¥

Thousands of
U.S. dollars
2020

Millions of yen
2019

115.01
43.14

$

Yen
2019

¥

93.94
37.44

U.S. dollars
2020

$

1.06
0.40

YMFG Annual Report 2020

58

Momiji Bank Financial Statements
NONCONSOLIDATED BALANCE SHEETS (UNAUDITED)March 31, 2020 and 2019

Millions of yen
2020

ASSETS
AssetsCash and due from banks
Call loans and bills purchased
Monetary claims bought
Trading assets
Money held in trust
Securities
Loans and bills discounted
Foreign exchanges
Other assets
Tangible fixed assets
Intangible fixed assets
Prepaid pension cost
Deferred tax assets
Customers’ liabilities for acceptances and guarantees
Allowance for loan losses
Total assets

Millions of yen
2019

Thousands of
U.S. dollars
2020¥

273,147
1,088
—
590
4,714
527,7422,316,966
7,983
87,92735,174
2,258
15,949
11,191
7,515(23,688)¥ 3,268,556¥

358,475
1,110
114
579
4,730
458,733
2,253,369
5,286
70,29835,662
2,368
14,672
5,557
8,453(18,933)¥ 3,200,473$ 2,509,850
9,997
—
5,421
43,315
4,849,233
21,289,773
73,353807,930
323,201
20,748
146,550
102,830
69,053(217,661)$ 30,033,593¥ 3,010,767
6,530
46,0457,624
31
23,796
7
80
352
4,419
7,515
3,107,166
10,00059,53392,317
161,850(7,481)(1,384)
8,405(460)
161,390¥ 3,268,556¥ 2,982,359—
17,538
7,638
25
10,798
1
84
415
4,419
8,453
3,031,730
10,00059,53390,012
159,545
816
(23)
8,405
9,198
168,743¥ 3,200,473$ 27,664,863
60,002423,091
70,054285
218,653
64
735
3,234
40,60569,05328,550,639
91,886547,027
848,268
1,487,181(68,741)(12,717)
77,231(4,227)
1,482,954$ 30,033,593

LIABILITIES AND NET ASSETS (SHAREHOLDERS’ EQUITY)
Liabilities:

Net assets:

59

Deposits
Call money and bills soldPayables under securities lending transactions
Borrowed money
Foreign exchanges
Other liabilities
Provision for bonuses
Provision for directors’ stock benefits
Provision for reimbursement of deposits
Deferred tax liabilities for land revaluation
Acceptances and guarantees
Total liabilities
Capital stock
Capital surplus
Retained earnings
Total shareholders’ equity
Net unrealized gains on securities
Deferred gains or losses on hedges
Revaluation reserve for land
Total valuation and translation adjustments
Total net assets
Total liabilities, and net assets

YMFG Annual Report 2020

NONCONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Years ended March 31, 2020 and 2019

Millions of yen
2020

IncomeInterest income:Interest on loans and discounts
Interest and dividends on securities
Other interest income
Fees and commissions
Other ordinary income
Other income
Total income
Expenses
Interest expense:
Interest on deposits
Interest on borrowings and rediscounts
Other interest expense
Fees and commissions payments
Other operating expenses
General and administrative expenses
Other expenses
Total expenses
Income before income taxes and minority interests
Income taxes:
Current
Deferred
Net income

Amounts per share of common stock:
Net income
Cash dividends applicable to the year¥¥

22,862
5,167
177
5,697
6,391
3,378
43,672¥

23,310
5,901
217
5,983
3,182
3,335
41,928$210,071
47,478
1,626
52,34858,72531,038401,286

651
338
478
3,918
3,231
19,2878,135
36,038
7,634

1,030
459
672
3,835
2,353
20,905
3,085
32,339
9,589

5,982
3,106
4,392
36,001
29,689177,22174,749331,140
70,146

2,632(1,285)
6,287

1,065
817
7,707

24,185(11,808)
57,769

¥

Yen
2020

¥

Thousands of
U.S. dollars
2020

Millions of yen
2019

14.43
9.83

$

Yen
2019

¥

17.69
8.39

U.S. dollars
2020

$

0.13
0.09

YMFG Annual Report 2020

60

Kitakyushu Bank Financial Statements
NONCONSOLIDATED BALANCE SHEETS (UNAUDITED)March 31, 2020 and 2019

Millions of yen
2020

ASSETS
AssetsCash and due from banks
Call loans and bills purchased
Securities
Loans and bills discounted
Foreign exchanges
Other assets
Tangible fixed assets
Intangible fixed assets
Prepaid pension cost
Customers’ liabilities for acceptances and guarantees
Allowance for loan losses
Total assets

Thousands of
U.S. dollars
2020

Millions of yen
2019¥

81,689238
36,484
1,180,763
6,310
8,576
19,355960
847
13,145(9,437)¥ 1,338,930¥

76,160151
41,191
1,159,186
5,442
3,725
19,530977
831
14,307(9,393)¥ 1,312,107$

750,6112,187
335,238
10,849,609
57,98078,803
177,846
8,821
7,783
120,785(86,713)$ 12,302,950¥ 1,181,146
33,168
700
50
4,897
15
1,199
95
56
1,071
3,458
13,145
1,239,000
10,00073,67583,675
8,488
7,767
16,25599,930¥ 1,338,930¥ 1,136,787
45,206
790
55
4,763
1
1,161
70
71
3,102
3,458
14,307
1,209,771
10,00071,57881,57812,991
7,767
20,758102,336¥ 1,312,107$ 10,853,129
304,769
6,432
459
44,997138
11,017
873
515
9,841
31,774
120,785
11,384,729
91,886
676,973
768,859
77,99471,368149,362
918,221$ 12,302,950

LIABILITIES AND NET ASSETS (SHAREHOLDERS’ EQUITY)
Liabilities:

Net assets:

61

Deposits
Call money and bills soldBorrowed money
Foreign exchanges
Other liabilities
Provision for bonuses
Provision for retirement benefits
Provision for directors’ stock benefits
Provision for reimbursement of deposits
Deferred tax liabilities
Deferred tax liabilities for land revaluation
Acceptances and guarantees
Total liabilities
Capital stock
Retained earnings
Total shareholders’ equity
Net unrealized gains on securities
Revaluation reserve for land
Total valuation and translation adjustments
Total net assets
Total liabilities, and net assets

YMFG Annual Report 2020

NONCONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Years ended March 31, 2020 and 2019

Millions of yen
2020

IncomeInterest income:Interest on loans and discounts
Interest and dividends on securities
Other interest income
Fees and commissions
Other ordinary income
Other income
Total income
Expenses
Interest expense:
Interest on deposits
Interest on borrowings and rediscounts
Other interest expense
Fees and commissions payments
General and administrative expenses
Other expenses
Total expenses
Income before income taxes and minority interests
Income taxes:
Current
Deferred
Net income

Amounts per share of common stock:
Net income
Cash dividends applicable to the year¥¥

11,228
627
46
1,535
171
2,123
15,730Thousands of
U.S. dollars
2020

Millions of yen
2019¥

11,329
609
52
1,444
119
418
13,971$

103,1705,761
423
14,105
1,571
19,507
144,537

456
365
6
1,247
7,591
608
10,273
5,457

471
413
8
1,116
7,794
890
10,692
3,279

4,190
3,354
55
11,45869,751
5,587
94,39550,142

1,423
(77)
4,111

836
(92)
2,535

13,075(708)
37,775

¥

Yen
2020

Yen
2019

¥ 4,110,771.21¥ 2,148,141.73¥ 2,534,656.75¥ 1,869,750.48$

U.S. dollars
2020

$
$

37,772.41
19,738.51

YMFG Annual Report 202062

Yamaguchi Financial Group, Inc.
Corporate Planning Dept.