Integrated Report (Annual Report & CSR Report)

2017

Design the Futurewith Financial ExpertiseThrough the steadfast pioneering of financial
frontiers, we aim to solve issues faced byour customers and society, and help realize
sustainable development in Japan andthe rest of the world.

Contents
2

A Top Runner in Sustainability Management

4 Section One About DBJ Group
4 DBJ Group’s Corporate Philosophy
6 Our History
8 Future Social Issues and DBJ Group’s Role
10 Sustainability Management

13 Section Two DBJ Group’s Strategy
14 Fourth Medium-Term Management Plan: Initiate Change, Create the Future
18 Business Strategy
18• Sector Strategy

28• Function Strategy

38• Area Strategy

44 Capital Strategy
44• Financial Capital48• Human Capital

50• Intellectual Capital52• Relationship Capital54• Social Capital

56 Fiscal 2016 Topics

57 Section Three Corporate Governance
66 Section Four Risk Management
71

Corporate Data

77

Data Section
78 The Development Bank of Japan Inc. Act
97 Financial Condition

Corporate Website
Latest news, financial services, case studies for investment, loans, various reports, information forinvestors, and details about CSR initiatives
Note: Detailed information in the main part can also be found on the DBJ corporate website.

Publication of Integrated Report (Annual Report & CSR Report) 2017
Development Bank of Japan Inc. (DBJ) was established in October 2008 in accordance with theDevelopment Bank of Japan Inc. Act.
DBJ Group, including its predecessors the Japan Development Bank and the Hokkaido-Tohoku
Development Finance Public Corporation, has provided specialized financial solutions while evolving its
own businesses to solve the constantly changing issues faced by its customers and society.
In the current fiscal year, DBJ launched its Fourth Medium-Term Management Plan: Initiate Change,
Create the Future. Marking the commencement of a new medium-term management plan, Integrated
Report (Annual Report & CSR Report) 2017 explains for stakeholders DBJ Group’s mission, vision, sharedvalues and other aspects of its corporate philosophy, in addition to sustainability management that aims tocreate both economic and social value.
We aim to enhance communications with stakeholders through iterative improvements to thisIntegrated Report based on the opinions we receive from everyone.
Editorial Policy
This report covers DBJ Group, which consists of DBJ and its 11 main subsidiaries. Through business activities that solve social
issues and through environmental, social and governance (ESG) initiatives, DBJ Group aims to further the development of asustainable society. DBJ makes a concerted effort to disclose this information to stakeholders. In compiling this report, we havereferred to the International Integrated Reporting Framework recommended by the International Integrated Reporting Council (IIRC).

Integrated Report 20171

A Top Runner in Sustainability Management

2

Integrated Report 2017

With the publication of Integrated Report (Annual Report & CSR Report) 2017, I would like to extend
a warm greetings to all of our stakeholders on behalf of DBJ Group.

Sustainability Management: Realizing a Sustainable Society
All of our executives and employees have taken to heart the importance of balancing economic value
with social value. Creating a future society that is sustainable for generations to come—this is thevision we share throughout DBJ Group, a vision that has not changed throughout our history and willremain steadfast in the future.
The sustainability management targeted by DBJ Group is an aim to perpetually improve the process of creating economic and social value with the goal of realizing a sustainable society while
engaging in dialogue with all stakeholders.

Corporate Philosophy: Design the Future with Financial Expertise
Since becoming a joint-stock company in 2008, Development Bank of Japan Inc. (DBJ) has moved
toward a more sophisticated business foundation by augmenting its integrated investment and loan
services and strengthening risk management.
A growing range of issues, however, are affecting our business foundation, such as humanresource development and workstyle reforms, in addition to our business issues including a squeeze
on financing margins due to monetary easing as well as greater volatility in returns on investments.
While looking back on the progress made by DBJ Group in the past, we are looking ahead to therole we should play in a rapidly changing society in the future. We have reconstructed the essence ofour corporate philosophy, embodied in our vision of our future (Vision 2030), while staying true to our
mission and core values.

Fourth Medium-Term Management Plan: Initiate Change, Create the Future
Under the Fourth Medium-Term Management Plan, which commenced in the current fiscal year,
we are aggressively pushing forward with measures to achieve sustained growth in line with Vision
2030, such as delving deeper into fields of strength, developing new fields, and fortifying the management foundation to support these businesses, while taking into account our past achievements
and problems.
While considering the opinions of all our stakeholders, we aim to help solve the issues faced byour customers and society as a top runner in sustainability management.
July 2017

President and CEO
Development Bank of Japan Inc.

Integrated Report 20173

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

Our unwavering purpose andour incessant determination toshape the future

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

Our vision for 2030, embodiedin our mission and strategies

Business strategy

Our strategy to reach our vision for 2030
Fourth Medium-Term Management Plan

Capital strategy

Sector strategy
Function strategy
Area strategy

Financial capital

Sustainability
management

Human andintellectual capital
Relationship capitalSocial capital

Our guidelines for taking
specific actions that
expresses our values

Execute strategy
based on values

Values put into
practice define
our strengths

Action Guideline
Our unwavering values sharedby management andemployees(base component)

4

Integrated Report 2017

ValuesCOLUMN

Creation of New Action Guideline

In fiscal 2016, a project involving about 200 middle managers was undertaken
to impart the meaning of our corporate philosophy and formulate a new action
guideline. Around 1,000 people (for reference, we have 1,546 employees on aconsolidated basis) participated in the discussion about changing our action
guideline, with opinions flowing freely between middle management and theirsubordinates, followed by a debate among the directors.

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

Further propagating and applying ourcorporate philosophy will improveawareness of our social responsibility,
enhance the sense of unity in DBJ
Group, lower communication costs,
and motivate our employees togrow with intention and a sense

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

of mission.

DBJ’s unique strengths assist with strategy execution
Our DNA: a long-term perspective, impartiality,
public-mindedness and reliability

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

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

Outstanding service• We review and enhance our services while improving productivity.

Commitment and cooperation• We work tirelessly to broaden frontiers and achieve best results.

neValues• We respect diversity and work together for greater shared value.

Initiative

Integrity

Integrated Report 20175

About DBJ GroupOur History
Our Mission and Values

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

Kawasaki Steel Corporation(currently JFE Steel Corporation): Constructionof Chiba Steelworks (Chiba)
Modernization of steelmaking throughconstruction of the first postwar blast furnace

New urban center in Shinjuku:
Shinjuku Mitsui Building and others (Tokyo)
New urban center formation throughredevelopment of purification plant site

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

1951–1955

1972–1984

1996–2000

Reconstruction and self-relianceof the economy

Improvements to quality of life andstable energy supply

Creation of a vibrant and affluent
society and stable economy

In 1951, JDB was established and commenced accommodation loans to facilitate thedevelopment of the power supply, which forms
the basis of the economy and industry, and therationalization, modernization, and cultivation ofcoal, steel, marine transportation, and othermajor industries.

JDB began antipollution measures, regional
and urban development, other social initiatives,and industrial development. During the first oilcrisis, it provided investment and loans forenergy alternatives to fossil fuels, as well as
efforts to conserve energy, to ensure stableenergy supplies. It also supported development of large-scale industrial sites.

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

Economic recovery

Rapid growth

Stable growth

Economic bubble

1951 The Japan Development
Bank Law enacted

1956–1965

1966–1971

1985–1995

High-growth infrastructure development

Strengthening of international
competitiveness and creation ofsocial development loans

Development of lifestyle and social
infrastructure and a smooth industrial
transformation

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

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

Sony Corporation:
Trinitron color television factory
Promotion of home-grown technologies throughcommercial application of new technologies

Yamagata JR Chokko Tokkyu Holdings:
Yamagata Shinkansen
Improvements to regional railway infrastructure

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

Kawasaki Kisen Kaisha, Ltd.:The Tonegawa Maru tanker
Built tanker that was indispensable for theimport of energy and raw materials

6

Integrated Report 2017

Mission

Through thee steadfa
ast pioneering
g off
financia
al frontiers, we aim too solve issues forr
our cuustomers an
nd society and help reallizeesustainable developme
entt in Japan and the worrld..

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

©TOKYO-SKYTREE

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

Post-bubble economy

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

Structural reform

2007 Enactment of the Development Bank of Japan Inc. Act

2001–2007
Financial solutions that support
communities, the environment,
and technology
In 1999, JDB and HTDFP were dissolved andthe Development Bank of Japan was established. It focused its operations in three areas:
community development, environmental
conservation and sustainable societies, andthe creation of new technologies and industries. In these ways, it contributed to thesustainable development of Japan’s economy.

The Former Niigata Tekkosho Co., Ltd.
Through debtor-in-possession financing, mergers
and acquisitions, and business revitalization funds,
the Development Bank of Japan supported
business revitalization to preserve employment
and local companies’ superior technologies.

Tobu Railway Co., Ltd.
DBJ provided assistance for urban development
through redevelopment projects, including
Tokyo Skytree.

The 2008 financial crisis / The Great East Japan Earthquake2015 Amendments to the Development Bank of Japan Inc. Act(see page 73)

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

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

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

Global financial crisis precipitated by the2008 financial crisis

Reinforcing the function of supplying
growth capital

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

The Act for Partial Amendment of theDevelopment Bank of Japan Inc. Act, which
was enacted on May 20, 2015, createdSpecial Investment Operations. This newinvestment scheme, a portion of the funding
for which is provided by the Japanese government, is a temporary measure to intensively
provide the growth capital needed to promote
the competitiveness of Japanese enterprises
and regional revitalization.

Integrated Report 20177

About DBJ Group

Future Social Issues and DBJ Group’s Role
Vision 2030

As before, DBJ Group continues to provide unique, creative solutions to various issues faced
by its customers and society amid rapid major changes in industry and finance caused by globalization andtechnological innovation.

Future Changes in the External Environment

Population problem

Climate change,
natural resources,and energy

GlobalizationAI, fintech, andother technologicalinnovations

Government
budgets, finances,and regulations

Realization of a Sustainable Economy and Society
Creation, conversion, andgrowth in industry

Self-reliance and revitalizationof local economies

Rebuild and reinforce
infrastructure

New technologies and businesses(promote innovation)

Solve issues specific toeach region

Rebuild energy andtransportation infrastructure,
upgrade public infrastructure

Reorganization

Overseas expansion

Environment

Play a role connecting
regions to Tokyo,
regions to regions, andregions to the world

Disaster prevention

Promote urban growth

HealthProvision of creative solutions that only DBJ Group can offer amid emerging risks andopportunities brought on by faster changes in industry, finance, and society
Roles of DBJ Group

Invigorate and stabilize financial markets throughpartnerships and collaboration
Crisis Response Operations

Risk Capital Finance

Providing Our Knowledge

8

Integrated Report 2017

Originating Diverse Financial
Deal Opportunities

Vision 2030

As professio
onals in the industria
al and infrastrructure field
ds, leverag
ging our ability
y to
o
add
dress diverse risks, taking the leadd in creating
g businessses and markeets,,and precisely respo
onding to suc
ch social deemands as crisis respon
nse,,
we aim to playy a unique rolee in the ecoono
omy andd society in 20
030..

Future Changes in the External Environment
In formulating Vision 2030, DBJ Group took into account changes in the external environment that would have a measurable
impact on its stakeholders, such as population problems, climate change, natural resources and energy, globalization, AI,
fintech, and other technological innovations, as well as government budgets, finances and regulations.

Realization of a Sustainable Economy and Society
Taking into account long-term changes in the external environment, DBJ contributes to the creation of a sustainable society
by providing professional, creative solutions to its regional customers’ industry- and infrastructure-related issues.
Industry

Regions

Infrastructure

Technological innovation and globalization,
also known as the Fourth
Industrial Revolution

More pronounced declines in populations,cuts in government budgets (concentrationof industrial and infrastructure
issues)nfra

Population declines,
cuts in government budgets,climate change,, natural resources

Commercialization of
new technologies, businessrestructuring to improve productivity
and hone competitiveness, businessdevelopment in global markets

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

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

Environment

Society
Climate change, natural resources,
population declines

Developing
social value

Realize a low-carbon society

Disaster prevention Promote industry and cities resilient tonatural disasters
HealthSupport health management

Invigorate and stabilize financial markets through partnerships and collaboration
While honing its ability to respond appropriately to diverse risks, DBJ Group helps invigorate and stabilize financial markets
as a participant through partnerships and collaboration with financial institutions and investors.

Crisis Response Operations
DBJ adequately prepares forfinancial Crisis Response Operations in
the event of a major natural disaster orturmoil in financial markets.

Risk Capital Finance
DBJ supplies the risk capital needed tostrengthen industrial competitiveness,
including Special Investment Operations,rebuild infrastructure, and invigorate
regional economies.

Originating Diverse Financial
Deal Opportunities
DBJ helps facilitate money flows
by originating diverse financial deal
opportunities in Japan and overseas.

Providing Our Knowledge
DBJ leverages its knowledge of industry and finance to build new financing platforms.

Integrated Report 20179

About DBJ Group

Sustainability Management
Creation of Both Economic and Social ValueIn accordance with its corporate philosophy, DBJ Group strives to solve issues faced byits customers and society, and, to this end, engages in sustainability management with the aimof realizing sustainable development for Japan and the rest of the world.
DBJ Group’s take on sustainability management entails the creation of both economic and social
value by enhancing tangible and intangible management resources that are invested in businessactivities based on business models designed to leverage the advantages of integrated investment
and loan services. Through engagement with stakeholders, DBJ Group contributes to the realizationof a sustainable society via ongoing initiatives to improve the value creation process.

DBJ Group’s Business Model

Industry
Sectorstrategy

Infrastructure

New technologies
and businesses

EnergyRestructuring

Urban development

Transportation

Overseas expansion

In
nve
estm
ment ofmanagemmen
nt resouurces
P18–27

Asset
management

Investments
and loans

Functionstrategy

Customers

Business activities
in tune with risk
appetites

Sustainability
management
Creation of both economic andsocial value

P28–37Advisory
services

Regional

Crisisresponse

Overseas

Outcome of busin
ness
ac
ctiv
vitie
es

Area
strategy

P38–43

DBJ Group’s Business Model

P18–43

DBJ Group’s business activities, including in regions and overseas, entail the provisionof syndication and asset management services to customers who are investors, aswell as the provision of consulting and advisory services alongside financial services
with integrated investments and loans in accordance with the risk appetites of customers in industrial and infrastructure fields.
DBJ Group also engages in financial Crisis Response Operations to flexibly assist
in the event of large-scale disasters or turmoil in financial markets, as stipulated by its
legal obligations under the Development Bank of Japan Inc. Act.

10

Integrated Report 2017

Communication withstakeholders

DBJ Group’s Management Capital

Financial
capitalShareholders’ equity
Borrowings

Creation offinancialvalue

P44–47

Increase andconversion ofcapital value

Human resources
Surveys and analysis
Organizations,processes, and ICTLong-term
impact on ability
to create
financial value

P48–51

RelationshipcapitalBrands, reputation
Relationships,
networking

Creation of
non-financial
value

Integrated reporting

Human andintellectual
capital

Stakeholders
Customers, communities,
employees, financial markets,
investors, shareholders,among others

P52–53Social capital

P54–55Natural environment
Industrial and regional
infrastructure
Financial systems
and markets

Corporate Governance and Risk Management
DBJ Group’s Management Capital

P57–70

P44–55

DBJ Group requires unique management capital to support the execution of its unique

Communication withstakeholders

business model. Having secured a sound financial position, DBJ Group takes an

Dialogue with stakeholders

integrated approach to raising the level of financial and non-financial capital, which it

reinforces the value creation

defines as the human and intellectual capital, relationship capital, and social capital

process for both economic

that have a long-term impact on its ability to create financial value.

and social value.

Integrated Report 201711

About DBJ Group

Sustainability Management
Creation of Both Economic and Social Value
DBJ Group contributes to the development of a sustainable

In the current fiscal year, DBJ Group will identify and exam-society through the provision of appropriate financial solutions

ine social issues in Japan and abroad that it should addressfor solving various social issues. With the intention of reinforc-

while referring to such international guidelines as the UN’s

ing this effort, in 2017 DBJ created Policy on Sustainability to

Sustainable Development Goals, GRI’s GRI Sustainability

promote continuous improvements in the value creation pro-

Reporting Standards and IIRC’s International Integrated

cess by advancing dialogue with stakeholders and generating

Reporting Framework. While taking into account discussions

both economic and social value through business activities

with stakeholders, the Sustainability Committee will advancebased on its unique business model.

debate on materiality (key issues) and shape future initiatives.

Policy on Sustainability (excerpt)

Contribution to a Sustainable Society
1. We work fairly and reliably to provide the solutions required
to create a sustainable society by identifying material
sustainability issues in our relevant fields based on trends
in government policy as well as legislation and norms
regarding environmental, social, and governance (ESG)
criteria in Japan and throughout the world and by incorporating a recognition of the need for a sustainable society
into our investing, lending, asset management and otherbusiness activities.
2. We exercise a leadership role in building the knowledge
required to create a sustainable society through ongoingsurveys, research and reporting on social issues.

3. We work to deepen our understanding of the impact of
our own business activities on society and consistently
improve them.
4. We are committed to meeting the legal and regulatory
responsibilities for human rights and give consideration
to the human rights of all people in each of our fields ofbusiness.
5. We work to consistently improve the process of value
creation, placing importance on communication with thestakeholders.

Engagement with Stakeholders
Sustainable Growth for Customers
We provide creative investment and lending solutions to ourcustomers in various industries and infrastructure sectors
both in Japan and overseas, thereby increasing our customers’ tangible and intangible value and contributing to theirsustainable growth.
Self-Reliant Development of Regional Society
We place importance on partnerships with regional communities, contributing to self-reliant development of regionalsociety through business activities conducted in cooperation with local authorities and financial institutions.
Cooperation with Employees
1. We work to promote the growth of each employee
through efforts to develop skills and raise motivation
while maintaining and enhancing our employees’ physicaland mental health.
2. We create a climate in which diverse employees, irrespective of gender, age, nationality, and physical ability,
can display their ability and expertise to the fullest extent,
and build an employee-friendly working environment asa necessary foundation.

Contribution toward a Developed and Stable Financial
Market
1. We play a part in vitalizing the financial markets throughthe supply of risk money and the expansion of financial
frontiers in partnership and coordination with other financial institutions. “DBJ’s Special Investment Operations”
will be among the instruments used for this purpose.
2. We provide highly qualified and responsible investment
opportunities and investment management services as
we pursue the best outcomes for our clients in our asset
management business. By doing so, we meet our clients’
diverse needs for funds management and stimulate thecirculation of capital.
3. We serve as a safety net and thus contribute to stablefinancial markets through our Crisis Response
Operations.
Communication with Investors
We work to consistently raise corporate value as weenhance the transparency of disclosure and pursue constructive communication with investors.

On April 1, 2017, DBJ created the Sustainability Management Office within the Corporate Planning & Coordination Department toadvance these initiatives.

12

Integrated Report 2017

Section Two DBJ Group’s Strategy

14

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

18

Business Strategy
18 Sector Strategy
28 Function Strategy
38 Area Strategy

44

Capital Strategy
44 Financial Capital
48 Human Capital
50 Intellectual Capital
52 Relationship Capital
54 Social Capital

56

Fiscal 2016 Topics

Integrated Report 201713

DBJ Group’s Strategy

Fourth Medium-Term Management Plan
Initiate Change, Create the Future
Since becoming a joint-stock company in 2008, DBJ has

advancing investments and overseas business under the

executed three medium-term management plans with theSecond Medium-Term Management Plan and strengthening

overarching objectives of augmenting financial services

asset management operations under the Third Medium-Termthrough integrated investments and loans while enhancing theManagement Plan.
In recent years, however, a number of managerial issues

sophistication of risk management for DBJ Group.

have surfaced—including difficulties in hiring and training

In addition to making preparations for flexibly responding in
the event of a crisis, such as turmoil in financial markets ornecessary personnel and business reforms such as changes

natural disasters, DBJ Group has made steady progress

in workstyles—in addition to such business issues as narrower

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

Business Strategy(1) Fields (Sectors)

Three infrastructure fields(2) Functions
Financing(including crisis response)
Investments(including special
investments)

Fees and commissions

EnergyTransportation

Industrial fields
Urban
development

New fields

Provide higher-value-added services, such as structured
financing and mezzanine financing

Promote long-term investments in infrastructure andgrowth investments in companies

Expand the asset management business in the infrastructure andprivate equity fields, in addition to arrangement and advisory services

Develop fields where
innovation is progressing
Aerospace
Communications
Healthcare
Other businessdevelopment

New functions

Develop new functions to complement financing, advisory, andasset management services(3) Areas

Regional and overseas

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

Results through Third Medium-Term Management Plan
Timeline since Establishment of DBJ

1999

The Development Bank of Japan established

Highlights until Third Medium-Term Management Plan
1. Carried out Crisis Response Operations
Rapidly responded to financial crisis and Great East Japan Earthquake

2008

Became a joint-stock company

2. Provided risk capital through integrated investment andloan services
Advanced mezzanine financing and investments

2008–2010

First Medium-Term Management Plan
CHALLENGE 20102011–2013

Second Medium-Term Management Plan
Endeavor 2013

3. Created diverse opportunities for investments and lending
Appropriately shared risks with financial institutions, offered asset
management opportunities

Having achieved success with the above initiatives and results thatexceeded targets, and in consideration of its track record providing
solutions to social issues, DBJ’s Special Investment Operations

Third Medium-Term Management Plan
2014–2016 Supporting Japan’s Sustainable Growth
as a Global Innovator
14

Integrated Report 2017

was institutionalized with the enactment of the revised DBJ Act in2015 (see page 30).

The slogan of the management plan—Initiate Change,

margins on senior loans amid monetary easing and greater

Create the Future—designates our intention to spend the next

volatility in returns on investments.
Amid greater uncertainties in the external environment,

three years creating a future foundation for DBJ Group that

under the Fourth Medium-Term Management Plan, DBJ Groupwill allow it to respond flexibly to changes in the external

will take aggressive steps toward sustainable growth byenvironment and take on the challenge of changing itself fordelving deeper into fields of expertise, develop new fields, andthe better.

strengthen the management foundation to support operations
while emphasizing its core values of initiative and integrity.

B

Management Foundation Strategy(1) Financial capital

Invest management
resources

Diversify capital procurement methods,
including SRI bonds
Increase sophistication of risk–return management

Vision 2030

Integrated
management

As a professional in the industrial
and infrastructure fields, DBJ Groupwill play a unique role in the economy and society in 2030, accurately
meeting the needs of society,including responding in the eventof a crisis, while leading in thecreation of businesses and markets
by leveraging its ability to addressa broad range of risks.

(2) Non-financial capital
Human and intellectual capital
Alignment of human resources with strategy
Development of stronger capability for enhanced
risk responsivenessResults ofbusiness activities

Reform of workstyle
Acceleration of decision-making

Relationship capital and social capital
Collaborate with other companies,
including financial institutions
Improve communication with stakeholders

Addressing Issues in the Fourth Medium-Term Management Plan
Monetary easing /low interest rates

Decline in profitability of investments, hardship in asset
management, risk of fluctuation in interest rates

Build a stable investment portfolio,
strengthen asset management

Growing problems
in regions

Reassess the role of regional finance to address regional
economic exhaustion

Make investments, including cooperation with regional
financial institutions, and contribute knowledge

Globalization /innovation

Rise of protectionism, faster changes in industry, finance,and society

Flexibly respond to change, increase sophisticationof risk–return management

Fourth Medium-Term Management Plan
A

Business Strategy(1) Sector strategy × (2) Function strategy × (3) Area strategy• Strengthen structured financing and long-term investments ininfrastructure, asset management• Respond to industrial innovation

B

Management Foundation Strategy(human, intellectual,(1) Financial capital × (2) Non-financial capital relationship, social)• Increase value of human capital• Thoroughly rationalize business, including workstyle reforms• Increase sophistication of analysis and risk management• Advance solutions for regions

Integrated Report 201715

DBJ Group’s Strategy

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

Invigorate and Stabilize Financial Markets via Collaboration and Cooperation
Under the Fourth Medium-Term Management Plan, DBJ Group will provide unique solutions through optimal partnerships with
an emphasis on collaboration and cooperation with other financial institutions and non-financial companies.

Industry

DBJ

New technologies
and businesses
Restructuring
Overseas expansion

Government
investments
and loansSpecial Investment Operations
Crisis Response Operations

SRI bonds
Financing

Infrastructure
EnergyTransportation
Urban development

Government

Investments

Consulting andadvisory services

Domestic andoverseas
institutional
investors

Bonds andloans

Risk capital andknowledge

Regional
financial
institutions

Asset management
Asset
management
Group companies

Leading financial
institutions
Creation ofRegional andoverseas

Collaboration

Cooperation financing

Collaborative
funds

opportunities

Financial institutions andnon-financial companies

Procurement and Management of Funds

Provision of Knowledge

DBJ receives funding in various formats, including the pro-

DBJ Group creates added value through the provision of

curement and management of funds from institutional inves-knowledge in such forms as surveys and analyses backed

tors and financial institutions in Japan and abroad, andby its experience in industrial and infrastructure fields and insupplies risk capital to customers in the domestic and over-risk analysis and structuring.

seas industrial and infrastructure fields.
Crisis Response Operations andSpecial Investment Operations
These operations are mandated by the DBJ Act and will beproperly undertaken as operations backed by the uniquestrengths of DBJ Group.

Financial Targets of the Fourth Medium-Term Management Plan
Over the time frame of the Fourth Medium-Term Managementbillion and ¥10 billion, respectively, from the targets of the Third

Plan, DBJ Group will increase the supply of risk capital, includ-Medium-Term Management Plan (see page 45).

ing Special Investment Operations, work diligently to secure a

DBJ aims to maintain robust levels of shareholders’ equity

stable earnings base for the long term, and strengthen over-and profitability in order to continue conducting Special

seas projects, such as infrastructure projects. The Fourth

Investment Operations, financial Crisis Response Operations,

Medium-Term Management Plan targets gross ordinary profits

and the supply of other risk capital.

of ¥190 billion and net income of ¥80 billion, increases of ¥30

16

Integrated Report 2017

C O LU M N

Process for Creating and Sharing the Fourth Medium-Term Management Plan
The following is an introduction to how DBJ created and distributed its medium-term management plan.

1Creation Process
Five directors and managing executive officers
participated in medium-term planning meetings

Off-site gathering
for department-level
managers(a total of 22 meetings held between August
2016 and March 2017) for face-to-face discussions with representative directors.
Off-site meetings were held at the department
and branch office levels, with managers andemployees participating in the creation process.
The Advisory Board (see page 59) also discussed the Fourth Medium-Term Management
Plan with outside experts and reflected theiropinions in the plan.

2

Sharing Process

After internal decisions were reached,
the Fourth Medium-Term Management

Head office briefings

A total of
10 briefings

About 800 participants

Branch office briefings

A total of
10 branch offices

About 120 participants

Major Group company briefings

A total of
11 companies

About 180 participants

Plan and the new corporate philosophy
were shared throughout DBJ Group.

A briefing at the head office

A briefing at a Group company

With managers and employees working in unison to lay a foundation for conducting operations, our philosophy and strategies
are shared through communications during this creation process.

Integrated Report 201717

DBJ Group’s Strategy

Business Strategy

Sector Strategy

Energy Sector

As of March 31, 2017

Balance of loans in the electricity, gas, heat,
and water sectors¥
Photo provided by Solar Frontier K.K.

3.2 trillion

Accomplishments and Initiatives to Date

VisionEver since the Japan Development Bank and Hokkaido-

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

Tohoku Development Finance Public Corporation era, DBJ has
contributed to the formation of energy infrastructure in Japan.
In recent years, DBJ has assisted with business restructuring
and overseas business development in the electricity, gas, andoil sectors against a backdrop of structural reforms in thedomestic energy industry. DBJ has provided optimal financial

Main Business Fields

solutions in tune with the needs of the times, concentrating on
the replacement of aging thermal power plants, the construc-

Financing and advisory services are provided tocompanies and projects in the following sectors:

tion of new thermal power plants in tandem with growing
demand amid the deregulation of power sources, and theconstruction of new renewable energy power plants, andassisting with capital recycling. As of March 31, 2017, ourElectricity

Gas

Oil

balance of loans in the electricity, gas, heat, and water sectors
totaled ¥3,252.1 billion, accounting for 24.9% of total loans,by industry.

18

Integrated Report 2017

Longer-Term External Environment and Social Issues

Strategy

Japan’s energy industry is at a major crossroads. With changes

While maintaining strong relationships with customers, DBJ willin the macroeconomic structure, including the population

focus on providing capital funding (risk money) and advisorydecline, and advances in energy conservation, DBJ must

services to facilitate industry restructuring. Furthermore, DBJ

promote the reduction of CO2 emissions while dealing withwill focus on the smooth supply of capital by collaborating with

deregulation in the electric power and gas markets at thea broad range of financial institutions to meet demand forsame time.

investments in the deregulated electric power market in Japan,

Under these conditions, issues related to financial support
for the energy industry entail the supply of capital funding tospur the spread of renewable energy and other new technolo-

in addition to strengthening initiatives in project financing withclarified risk allocation.
DBJ Group will reinforce its asset management operations

gies and to address growing risks. Moreover, risks in projectin the energy field with the aim of nurturing markets able tofinancing need to be clarified more clearly, and efforts should

recycle capital, thereby allowing more financial institutions to

be undertaken to allow market participation by a broader

participate in the domestic energy infrastructure market.

range of companies.

Overseas, DBJ aims to become more involved in markets
that have taken the lead in fostering deregulation, and thenreturn any knowledge gained to the domestic market toadvance its development, while proactively supporting
Japanese companies in their efforts to develop business overseas. Through these and other efforts, we aim to contribute to
the realization of a low-carbon society on a global basis.

Case Studies
Case Study 1 Fukushima Gas Power Co., Ltd.

Case Study 2 Japan Wind Development Joint Fund Co., Ltd.

DBJ was the lead arranger for a total of ¥140 billion in project
financing for the construction of a new natural gas power plantfor Fukushima Gas Power Co., Ltd. DBJ aims to contribute to
the development of the economy and industry in the areaaround the power plant through the reliable supply of inexpensive electricity with low environmental load.

In collaboration with Japan Wind Development Co., Ltd., DBJ
established Japan Wind Development Joint Fund Co., Ltd. forthe purpose of acquiring and operating wind power generation
facilities. The funds procured by the new company for the project
financing were assigned a BBB rating by Rating & Investment
Information, Inc., marking the first time a domestic wind power
generation project received an external rating.

Rendering of completed facility

Japan Wind Development Co., Ltd. facilities

Integrated Report 201719

DBJ Group’s Strategy

Business Strategy

Sector Strategy

Transportation Sector

As of March 31, 2017

Balance of loans in the transportation
infrastructure (transportation industry) sector¥

2.3 trillion

Accomplishments and Initiatives to Date

VisionSince the time of the Japan Development Bank and Hokkaido-

DBJ aims to lead in a financial aspect the growthof the transportation sector and advancement oftransportation networks in Japan. DBJ will also
act as a bridge between Japan’s financial market
and the global transportation finance market.

Tohoku Development Finance Public Corporation, DBJ has
focused on providing investments and loans for the development of the transportation sector in Japan, including for fleetsof ships in marine transportation, upgrading Haneda Airportand other airports, procuring aircraft in the aerospace industry,and expanding cargo capacity in the railway industry. More

Main Business Fields

recently, DBJ has provided optimized financial solutions tailored to the needs of the times, such as debtor-in-possession

Financing is provided to companies and projects in thefollowing sectors:

financing to a Japanese start-up airline company, participationin airport concessions, and aircraft financing with a focus onmaterial value. As of March 31, 2017, the balance of loans forthe transportation infrastructure sector (to transportation pro-Landtransportation

20

Integrated Report 2017

MarinetransportationAirtransportation

viders) was ¥2,312.1 billion, accounting for 17.7% of totalloans, by industry.

Longer-Term External Environment and Social Issues

Strategy

Around the world, growing populations will lead to the greater

While maintaining relations with customers in the transporta-

movement of people and goods and spur growth in the trans-

tion sector, we will refine our ability to respond flexibly toportation sector. In Japan, a country reliant on trade, it ischanges in the external environment and society. More specifi-

imperative to maintain the reliable transportation of goods andcally, DBJ will further strengthen its optimal financial solutions

address issues, such as the declining and aging population, as

for quality projects and assets in the land, marine, and air

well as the influx of overseas visitors. Accordingly, varioustransportation fields, as well as supply risk capital to Japaneseissues are waiting for solutions for sustaining growth in thecompanies for sharpening their international competitiveness.

transportation sector and increasing the sophistication of

Additionally, DBJ will provide financing opportunities totransportation networks. Keen to help its customers solve

Japanese regional banks and other financial institutions andthese issues, DBJ Group will provide financial solutions tailoredinvestors in the global transportation finance market throughto diverse needs while acting as a bridge between financial

improved syndicated loans and various investment and loan

markets in Japan and the global transportation finance market.

products that utilize investment and securities functions.

Case Studies
Case Study 1 Financing for integrating operationsat Kansai International Airport and Osaka
International Airport

Case Study 2 Financing for acquisition ofultralarge container ship by
Kawasaki Kisen Kaisha, Ltd.

As the lead arranger, DBJ put together project financing totaling ¥190 billion, one of the largest in Japan, for Kansai Airport
as it began to integrate the operations of Kansai International
Airport and Osaka International Airport, the first and largest
airport concession in Japan.

Kawasaki Kisen Kaisha, Ltd. is one of the world’s largest
marine transportation companies involved in the ocean-going
field. DBJ helped the company arrange financing to purchasean ultralarge container ship with the latest energy-conserving
technologies. The vessel provides high-quality services along
the Asia–Europe route as a flagship in the company’s container
ship business.

Photo provided by Kansai Airport

Container ship that was financed

Integrated Report 201721

DBJ Group’s Strategy

Business Strategy

Sector Strategy

Urban Development Sector

As of March 31, 2017

Balance of loans in the real estate sector¥

1.7 trillion

Accomplishments and Initiatives to Date

VisionSince the 1960s, DBJ has been involved in long-term financing

Our vision is to grow alongside cities by helping
with the maintenance, renewal, and expansion ofurban functions. We also aim to grow with thereal estate financing market as a market-stabilizing mechanism.

for real estate projects. DBJ has participated in Japan’s realestate securitization market since its earliest days, plying its
accumulated know-how and networks to invigorate themarket. We began administrating the DBJ Green Building
Certification system in fiscal 2011 and have financially supported efforts to help the environment and society. As of
March 31, 2017, the balance of loans extended to the real

Main Business Fields

estate sector was ¥1,749.0 billion, accounting for 13.4% ofLoans and investments in urban development projects
undertaken by developers, special-purpose companies
for owning real estate, loans and investments for REITs,
management of DBJ Green Building Certification (seepage 55) with the Japan Real Estate Institute.

Urban
development
business

22

Integrated Report 2017

Real estate
financing

Green Building
Certification

total loans, by industry.

Longer-Term External Environment and Social Issues

Strategy

Increasing the international competitiveness of cities in Japan

DBJ will facilitate urban development through the supply of risk

is key to enhancing the country’s overall competitiveness.

capital, including financing for developers and individual devel-

Urban infrastructure, built up since 1945, is coming due for an

opment projects. We also support the growth of real estate

upgrade. Seamlessly upgrading urban infrastructure without

investment trusts, which have become increasingly importantinterruption is important from the standpoint of creating com-

entities for the stable management of properties.

munities that take into account the environment and society.

DBJ will provide opportunities to invest in quality assets for

The real estate finance market, an essential part of creating

institutional investors around the world as well as regional

communities, is prone to instability due to international expo-

financial institutions. By engaging in collaborative financing

sure. The securitization market in particular was greatly

through proper risk-sharing agreements, we will create stableaffected by the global financial crisis, while the real estate

cash flows in the real estate finance market.

finance market was thrown into disarray. In spite of such con-

DBJ will continue to manage the DBJ Green Building

ditions, it is necessary to ensure a reliable supply of capital,

Certification system with the Japan Real Estate Institute,spur growth in the real estate finance market, and promote

focusing efforts on improving real estate assessments within

urban development.

the context of their impact on the environment and society.

Case Studies
Case Study 1 Kyobashi EdograndCase Study 2 Tokyo Skytree

In November 2016, Nippon Tochi-Tatemono Co., Ltd., acting
as a special business agent (representative company), opened
the Kyobashi Edogrand as a part of the urban redevelopment
project at Kyobashi 2-chome in collaboration with the land
rights holder. This facility is one of the largest high-rise officebuildings in the Kyobashi area, and is a part of the historic
Meijiya Kyobashi Building. Kyobashi Edogrand is attracting
attention as a new landmark in the area. DBJ supported theconstruction by
providing financing
from the development stage.

Tobu Railway Co., Ltd. undertakes large-scale projects, including the Narihirabashi Oshiage District Redevelopment Projectthat involved Tokyo Skytree. The project—one of the largest forthe company since its founding—contributed to local
development.
DBJ supported the project by providing a hybrid of loan andinvestment financing, thus strengthening the company’s financial foundation.

©TOKYO-SKYTREEExternal view of Kyobashi EdograndTokyo Skytree

Integrated Report 201723

DBJ Group’s Strategy

Business Strategy

Sector Strategy

Industrial Sectors

Accomplishments and Initiatives to Date

VisionIn the 1990s, DBJ was involved from an early stage in financ-

In industrial fields seeing changes brought about
by technological innovation, the creation of new
businesses, and restructuring, DBJ Group willtake a direct approach to solving issues faced bycustomers and society while searching for
growth opportunities for itself. As an incubatorthat creates new businesses and markets, DBJ
aims to play an essential role in strengthening thecompetitiveness of industry in Japan.

ing new businesses, utilizing its ability to survey industry andanalyze corporations derived from its track record of providing
long-term capital for capital investments. From the early
2000s, when business and industry restructuring came to theforefront, DBJ ramped up debtor-in-possession financing,
private equity investments, and M&A advisory services. Since
becoming a joint-stock company in 2008, DBJ has leveraged
its knowledge and experience in these fields to further improve
its ability to survey industries. At the same time, DBJ helped
companies enhance their competitiveness and clients solve

Main Business Fields

various problems through advisory services backed by loans
and investments to create new businesses and rebuild

Financing and advisory services are provided to companies and projects in the following sectors:

24

Manufacturing

Communications,broadcasting,media

Healthcare

Hotels,Japanese-styleinns, tourism,
etc.

Integrated Report 2017

Retail and foods

finances while they entered overseas markets and spun off
non-core businesses.

Longer-Term External Environment and Social Issues

Strategy

Amid changes in the external environment, including popula-

DBJ will offer solutions to the issues faced by customers—

tion problems, globalization, and such technological innova-

centered on the fields of business portfolio optimization, newtions as AI, customers are dealing with a variety of issues thatbusiness creation, overseas business development, financial

include the commercialization of new technologies and otherstrategy, and capital policy—by mobilizing its financing func-

innovations, business restructuring to enhance productivity

tions, knowledge, and unique networks while leveraging its

and competitiveness, and overseas business development

insight and expert knowledge of each industry. In 2017, DBJ

with an eye on new growth opportunities. Meanwhile, thehas created teams of experts focused on establishing solid

financial environment is likely to include diversification in capitalbusiness foundations in the fields of aerospace, telecommuni-

providers, considering the ongoing surplus capital conditions

cations, and healthcare. While delving deep into each industry,

and advances in fintech and other technologies. As it becomes

DBJ will monitor broader trends and changes in the economic

easier to access capital, providing unique added value will

and social landscape. We will increase our responsiveness to

become essential to helping customers solve their problems

innovation through cross-sector business development thaton the financial front.

steps beyond traditional boundaries (e.g., move toward ahydrogen society).

AerospaceTo further improve its standing, having gained ground throughCase Study

international joint development with Europe and the U.S.,
the Japanese airline industry must engage in strategic efforts
to increase mass production efficiency by developing nextgeneration technologies and strengthening supply chains;expand its scope both quantitatively and qualitatively, centeredon mid-tier and small and medium-sized companies andregions; and fortify maintenance operations and the finishedaircraft business. Additionally, the Japanese aerospace industry has begun to transition from government-directed develop-

Assistance for strengthening the competitivenessof the civilian aircraft engine industry
DBJ supplied risk capital to Mitsubishi Heavy Industries
Aero Engines, Ltd., which was spun out of Mitsubishi Heavy
Industries, Ltd.’s civilian aircraft engine business. The objective was to increase the profile of the company in international markets while improving its competitiveness bypartnering with IHI Corporation on manufacturing and byclustering together partner companies.

ment to a mass production model.
DBJ has increased loans and investments to the airline
industry for more than 30 years in line with national policy. We
established the Aerospace Office on April 1, 2017, putting inplace a structure to better support the aerospace industry withthe collective strengths of DBJ Group. We will contribute to thedevelopment of the aerospace industry in Japan by, among
other means, supplying risk capital via Special Investment
Operations.

The plant floor

Integrated Report 201725

DBJ Group’s Strategy

Business Strategy

Sector Strategy
Industrial Sectors

Communications
Communications networks handle massive communications
traffic as the volume of data increases daily. Ever since thetelecommunications sector was deregulated in the 1980s, DBJ
Group has financially supported the build-out of networks inJapan, which boasts some of the highest speeds and capacities in the world. As things become increasingly interconnected
over networks, communications networks need to be mademore resilient and sophisticated to fulfill a role as basic infrastructure underpinning society.
DBJ will continue supporting the build-out of next-generation
telecommunications infrastructure by supplying risk capitalwhile proactively participating in forward-looking initiatives
around the world.

Case Study

Financing for one of Europe’s largest
telecommunications infrastructure companies
From its base in Spain, Cellnex Telecom, S.A. leases communications towers to telecommunications providers in fiveEuropean countries. It boasts the largest number of communications towers in Europe.
DBJ provided the company with capital to acquire communications towers and expand its network, thereby contributing to the development of global telecommunications
infrastructure. The knowledge DBJ gained from helping rollout telecommunications infrastructure
overseas will be ofinvaluable use inJapan as well.

Communications tower

Healthcare
In the healthcare field, DBJ Group has been long involved in
the medical and nursing care fields and has launched new
initiatives in the life sciences field. Specifically, DBJ sees anurgent need to mimic in Japan the U.S. healthcare model,
whereby external parties, such as venture companies thathave proven track records as innovators, are entrusted withthe development of needed products and services and thenwith bringing them to the world via the respective companies’
sales capabilities. To this end, DBJ focuses its energies on
networking with venture capital firms in the U.S. DBJ leverages
this network to help Japanese medical equipment makers andpharmaceutical companies strengthen their business development capabilities.

Case Study

Investment in a cutting-edge medical equipment
fund in Silicon Valley
In September 2014, DBJ invested in Emergent Medical
Partners II, L.P., an investment fund for cutting-edge medical devices in Silicon Valley. In its report Silicon Valley’s“Ecosystem” for the Development of Medical Devices: What
are Its Lessons for Japan?, DBJ examined the U.S. ecosystem, which is a major reason for the country’s success indeveloping medical devices. Dr. Thomas Fogarty, a worldrenowned innovator and entrepreneur with long experiencein the region, established the fund. By investing in this fund,
DBJ acts a bridge to this ecosystem for Japanese industry,
extending this network to Japan.

Silicon Valley

26

Integrated Report 2017

Latching onto Innovation
The sudden rise of technology and innovation in IT, new mate-

as well as share new value systems and create rules throughrials, new energy, life sciences, and robotics has the potential

public–private cooperation. From its impartial position, DBJ

to greatly change the fabric of the industrial and social land-Group engages in collaboration with diverse players while

scape. For these new technologies to reach commercialization

shaping projects from a long-term perspective. We help solveand become a part of society, it is essential to promote col-issues faced by customers and society through the creation oflaboration across industry, companies, and geographic areas,

new businesses.

Case Studies
Case Study 1 Initiatives to realize a hydrogen society

Case Study 2 DBJ Capital Co., Ltd.

Hydrogen fuel cells are expected to become a next-generation source of energy that contributes to energy security andthe alleviation of environmental problems. DBJ aims to
examine the development of a supply chain for overseasproduced hydrogen with the objective of improving costcompetitiveness on the supply side. In addition, DBJ will
participate in the creation of projects that lead to economies
of scale on the
demand side, suchas the rolling out ofhydrogen refuelingstations for fuel cellvehicles.

Regardless of business fields and scale, DBJ invests inequity as growth capital for venture firms with global competitiveness and growth potential that are utilizing newtechnologies and business models. DBJ Group offers thesecompanies its financial support and solutions that takeadvantage of its diverse networks. DBJ supports the commercialization of the excellent intellectual property andtechnology possessed by companies, research labs, anduniversities. In carving out this intellectual property andtechnology, DBJ supports the launch of venture capital firms
through hands-on assistance provided by teams focused onenhancing value.
DBJ Capital Co., Ltd.’s website:
https://www.dbj-cap.jp/english/

Photo provided by TOYOTA Global Newsroom

While advancing these initiatives, on April 1, 2017, DBJ created the Innovation Promotion Office in the Business Planning
Department for the purpose of developing new businesses that cross sectors and advancing industrial innovation.

Integrated Report 201727

DBJ Group’s Strategy

Business Strategy

Function Strategy

Integrated Investments and Loans (Supply of Risk Capital)

VisionAccomplishments and Initiatives to Date
Since its days as the Japan Development Bank and the

DBJ will provide optimal financing solutions tailored to customer needs, from loans to mezzanine financing and investments, while reinforcing
its ability to adequately evaluate various risks.

Hokkaido-Tohoku Development Finance Public Corporation,
DBJ has taken appropriate risks, backed by its deep insight
into industry and ability to analyze corporations, in the provision of long-term financing for capital investments. In addition
to its ability to examine corporations and businesses, DBJ has

Outlineproactively introduced sophisticated financing schemes, playing a leading role in project financing and debtor-in-possession

DBJ provides loans and investments after analyzing
business prospects, evaluating risks, and creating
financing schemes. Taking into consideration the traitsof each project and the intentions of participants, DBJ
specializes in an integrated investment and loan modelthat flexibly deploys loans, mezzanine financing, andinvestments.

28

Integrated Report 2017financing in Japan. Leveraging its ability to evaluate risks, DBJ
has broadened the scope of its involvement from loans tomezzanine financing and investments. DBJ has played a leading role in the provision of risk capital for supporting corporate
growth and infrastructure investments in Japan.

Longer-Term External Environment and Social Issues

Strategy

Amid surplus capital conditions, the value of capital itself has

From loans to mezzanine financing and investments, DBJ has

declined. However, it can also be said that there is a lack offlexibly provided financing optimized to the needs of its cus-

certain specific capital, especially risk capital, in areas where

tomers through a unique integrated investment and loan model.

industry is being created, transformed, and expanded; where

DBJ plans to make this model even more sophisticated. With

regions are becoming self-reliant and invigorated; and where

respect to providing loan services, DBJ is focusing on higher-

infrastructure is being rebuilt and reinforced. From the stand-value-added services, such as structured financing and mez-

point of regional revitalization, for example, the provision of notzanine financing. In investing, DBJ is encouraging long-term

only capital but also advice has led to the creation of revitaliza-

investments in infrastructure and investments in growth attion projects. We believe that there is considerable potential incorporations. With regard to long-term investments in infra-

investments and loans that create added value in this manner.

structure, DBJ is helping solve issues in Japan related to therebuilding and reinforcement of infrastructure by refining its
ability to evaluate asset value, increase value, and control risks.
As for investments in growth at corporations, DBJ is strengthening its ability to arrange projects from an impartial standpoint
and its ability to analyze industry and companies. At the sametime, DBJ is focusing on raising value post-investment as apart of its contribution to helping customers strengthen theircompetitiveness and to the creation and turnaround of industry.

Case Studies
Case Study 1

Investment with Yanmar Holdings Co., Ltd.
in Indian company

Yanmar Holdings Co., Ltd. is an industry pioneer highly
regarded by its customers worldwide for its clean diesel
engines. The company aims to expand sales in India, theworld’s largest market for tractors, by taking an additional stakein International Tractors Limited, a major manufacturer of tractors. Through its Special Investment Operations, DBJ arrangeda joint investment in this endeavor.

Tractor produced andsold by International
Tractors LimitedCase Study 2

DBJ Investment Advisory Co., Ltd. (DBJ-IA)

In addition to providing finance, DBJ-IA taps DBJ Group’s
domestic and international networks to support companies’
growth strategies revolving around M&A strategies, capital
strategies, and overseas strategies as well as their efforts tosecure the right personnel.
Investment and loan example: Dexerials Corporation
http://www.dbj.jp/case/dexerials.html

Lineup of functional material products

Integrated Report 201729

DBJ Group’s Strategy

Business Strategy

Function Strategy
Integrated Investments and Loans (Supply of Risk Capital)

DBJ’s Initiatives to Supply Risk CapitalSpecial Investment Operations
Special Investment Operations, established as an intensive but

private-sector enterprises and ensuring appropriate competi-

temporary scheme to supply growth capital* from the perspec-tive relationships. To improve the structure of Special

tive of promoting the competitiveness of Japanese enterprises

Investment Operations and thereby maintain objective evalua-along with regional revitalization, draws only a portion of thetion and supervision of activities, an advisory body to theinvestment (industrial investment) from the Japanese govern-

Board of Directors was established—the Special Investment

ment, enough to encourage the private sector to supply

Operations Monitoring Board—with participation from outside

growth capital. In June 2015, DBJ kicked off Special

experts in financial and capital markets, industry, and other

Investment Operations with risk capital for the overseas inde-

professional groups (see page 60).

pendent power producer business of Shizuoka Gas Company,
Ltd. As of March 31, 2017, a total of ¥167.0 billion in investments and loans had been extended to 33 projects.
Special Investment Operations follows policy objectives, in* According to the Japanese government’s Study Panel Concerning the Promotionof Expanding Growth Funding, certain financial institutions, including DBJ, areexpected to serve in a pump-priming capacity for the foreseeable future to
attract private-sector investment by cultivating new capital providers, markets,and investors, thereby fostering the development of an investment cycle led by
the private sector.

accordance with the law, complementing and encouraging

Special Investment Operations Scheme
Other financial
institutions

DBJ(megabanks,regional banks,
private funds, etc.)

Capital account(¥50 billion in
fiscal 2017)(¥50 billion in
fiscal 2017)

Japanesegovernment(industrial
investment)

Special Investment
Operations(Managing loans in special account)
Fiscal 2017: ¥100 billion

Loans, etc.

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

Evaluate/
inspect

Special Investment
Operations
Monitoring Board

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

Enhance risk capital supporting growth

Provision
Investment

Target company initiatives• Initiatives for effective useof management resources• Initiatives to promotemanagement innovation– Cultivate new business– Form alliances among
various sectors andgroupsConsidering the need to encourage the private sector to supply

regional economies and improve the competitiveness of Japanese

growth funds within a limited time frame, DBJ promotes the invigo-

companies, DBJ advances operations and makes investment andration of capital markets centered on private enterprises whileloan decisions while being careful to maintain appropriate partner-complementing and encouraging the private sector. To revitalize

ships and collaborative efforts with private financial institutions.

30

Integrated Report 2017

Results of Special Investment Operations (Fiscal 2016)
Loan and investment recipients(co-entities)

Project overview

AeroEdge Co., Ltd.
(Kikuchi Gear Co., Ltd.)

Invested in preferred shares of a new company established to supply parts to major aircraft
engine makers overseas utilizing the advanced technologies of Kikuchi Gear Co., Ltd.

JFE Holdings, Inc.

Arranged subordinated loans with several financial institutions to facilitate investments by
JFE Holdings, Inc. in its domestic manufacturing base and in support of its initiatives toreinforce its earnings foundation by steadily executing overseas growth investments.

DMG Mori Co., Ltd.

Helped by acquiring subordinated bonds for the purchase of shares in a European company
with the objective of increasing production efficiency and advancing the development ofhigh-value-added products.

Mercuria Japan Industrial Growth
Support Investment, LLC

Joint investment with private financial institutions in the fund, which supports initiatives tocreate new businesses through overseas development with local mid-tier companies.

Softbank Group Corporation

Acquired subordinated bonds for strengthening competitiveness in telecommunications
business through ARM Holdings in the U.K.

DSTI HOLDINGS, INC.
(Daiwa Steel Tube Industries Co., Ltd.)

Through an SPC, joint acquisition with Daiwa Steel Tube Industries Co., Ltd. of some sharesissued by U.S. engineering companies.

Shelter Co., Ltd.

Helped by investing in preferred shares issued for R&D spending to increase the performanceof wooden structure technologies used by building construction companies that process andsell parts and materials for wooden structures in Yamagata City.

Hanabi Creative Enterprise

Invested in common shares issued by Hanabi Creative Enterprise Co., Ltd., which wasestablished as a core company for the Daisen City Hanabi Industry Concept, thereby helping
promote efforts aimed at regional revitalization through the manufacture of fireworks, planningand operation of fireworks events, and overseas business development.

Dai-Ichi Hotel

By supplying growth capital for this project, contributed to efforts to improve local attractions,
including the complete renovation of the hotel’s deluxe hot springs facility, which uses natural
resources in the Tokachi area for open-air hot springs.

Yanmar Holdings Co., Ltd.

Joint investment for acquisition of additional shares in a major tractor manufacturer in India
with the aim of increasing sales in the country, the world’s largest tractor market.

Yokohama Reito Co., Ltd

Helped arrange subordinated loans with Bank of Yokohama, the company’s main bank,for growth investments to expand overseas operations and the construction of a new
distribution center.

IHI Corporation

Supplied risk capital for investments in international joint development project for civilian
aircraft engines.

UACJ Corporation

Arranged subordinated loans with the company’s main bank for capital investments in
Thailand and the U.S. that were essential for its growth strategy.

National Private Leasing Services, LLC

Supplied risk capital to the company so it could provide large-scale rental housing ataffordable prices across the country for broad segments of the population.

Integrated Report 201731

DBJ Group’s Strategy

Business Strategy

Function Strategy

Crisis Response Operations
Vision
DBJ’s Crisis Response Operations function as a stabilizing force during periods of instability in the economy,society, and markets.
Outline
Crisis Response Operations, on the basis of the Japan Finance Corporation Act (Act No. 57 of 2007, including later
revisions) consist of the provision of necessary funds during such crises as disruptions in domestic or overseas financial
markets or large-scale disasters. In response to crisis-related damage, Japan Finance Corporation provides two-step loans
as complementary risk and other measures to government-designated financial institutions (designated financial institutions) that supply necessary funds to address crisis damage.

Crisis Response Operations Scheme

Japanese Government• Capital contribution• Lending of funds• Interest subsidies

Japan Finance Corporation(Crisis Response Facilitation Account)

DesignatedTwo-steploans, etc.

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

Designated financial
institutions
Private financial institution

Private financial institution

Private financial institution
Defines a new scope for DBJ’s responsibilities,
making Crisis Response Operations obligatory for
an indefinite period• Extends the scope of Japanese government recapitalization securing
DBJ’s financial structure, etc.
• Establishes a new crisis response reserve account, reflecting this obligationin the Articles of Incorporation, and indicates mandatory Japanese government ownership of more than one-third of shares and other measures
Note: Capital increases related to Crisis Response Operations before the 2015 revisions
to the DBJ Act were transferred from capital to a crisis response reserve(¥206.5 billion). Capital increases for Crisis Response Operations after therevisions are to be added directly to the crisis response reserve.

DBJ• Designated financial institutions
conduct business in accordancewith the Crisis Response Operations
Rules (based on approval of thecompetent minister).
• Designated financial institutions
conduct business with complete
double checks of required compliance at their financing departments
and their departments responsible
for crisis response operations.

Provision offunds, etc.

Clients

32

Integrated Report 2017

Results and Strategies
2008/10

2008/12

Commenced Crisis
Response Operations
as a designatedfinancial institution

2011/3Financial Crisis Response Operations
and Earthquake Disaster Crisis
Response Operations

Main events that were
designated a crisis:• Turmoil in international
financial markets(Global financial crisis)• Great East Japan Earthquake• Damage from heavy rainfall
during typhoon #18 in 2015
• Kumamoto earthquakes
in 20162017/3

Earthquake Disaster Crisis Response Operations(through March 31,
1, 2011)20

Total funds raised by the government in Crisis Response Operations(as of March 31, 2017)¥206,529 million

Total crisis countermeasure loans, loans with loss guarantee agreements, andcommercial paper purchases as of March 31, 2017:• Loans: ¥6,130.6 billion (1,145 projects)• Loans executed with loss guarantee agreements: ¥268.3 billion(47 projects, including those slated for application to Japan Finance Corporation)• Commercial paper acquisitions: ¥361.0 billion (68 projects)

Case Studies
Case Study 1 Great East Japan Earthquake of 2011

Case Study 2 Kumamoto earthquakes in 2016

In the fiscal 2011 supplementary budget passed in the wake of
the Great East Japan Earthquake, ¥2.5 trillion was earmarked
for Japan Finance Corporation for Crisis Response Operations
targeting medium- and large-sized enterprises. DBJ proactively
provided assistance for clients affected both directly and indirectly by the disaster.
Along with designated financial institutions in the disasterarea, DBJ arranged the Great East Japan Earthquake
Reconstruction Fund, which has financed 47 reconstruction
projects to date.
In December 2014, in response to the shift of the stage ofearthquake reconstruction from the restoration of production
facilities (the “restoration stage”) to efforts to open up a newenterprise-based market that resumes production, collaborates
among multiple enterprises to boost industry competitiveness,builds infrastructure and reinforces functions (the “reconstruction and growth stage”), we have established a new reconstruction and growth support fund in collaboration with the Regional
Economy Vitalization Corporation of Japan. The new fund is
aimed at providing subordinated loans and preferred shares toenterprises whose businesses are contributing to the reconstruction and growth of the disaster-stricken region. We arepromoting forward-looking initiatives with a nationwide businessmodel, aiming to support regional growth and revitalization.

In 2016, DBJ established the Kumamoto Recovery Office within
the Kyushu Branch to better provide useful knowledge andfinancial expertise for the restoration and reconstruction ofregions affected by the Kumamoto earthquakes.
In July 2016, DBJ formed the Kumamoto Reconstruction
Support Fund jointly with The Higo Bank, Ltd. and theKagoshima Bank, Ltd., financial institutions in the disasterstricken area. The fund supplies risk capital, through such
schemes as senior loans (repayment in full on maturity, uncollateralized, non-guaranteed loans) and subordinated loans, tobusinesses affected by the disaster.
Additionally, DBJ provided beneficial information about
restoration and reconstruction through a cross-departmental
system, and offered
survey and planning
services in conjunction
with related local
governments, national
institutions, and economic groups, as well
as local financial
institutions.
Kumamoto Castle,
damaged by the earthquakes(photo from the Ninomaru Parking Lot)

Integrated Report 201733

DBJ Group’s Strategy

Business Strategy

Function Strategy

Asset Management

Accomplishments and Initiatives to Date

VisionDBJAM was established in November 2006 for the purpose of

Backed by the DBJ Group philosophy andcomprehensive financial expertise, DBJ AssetManagement Co., Ltd. (DBJAM) provides
investment and asset management services
which meet the clients’ best interests.
By appropriately addressing diverse investment
needs, DBJAM aims to spur the development of
capital markets in Japan by stimulating the flowof funds.

energizing the real estate finance market in Japan. Since then,
DBJAM has provided domestic real estate fund management
and asset management services. In 2016, it formed and beganasset management in DBJ Private REIT Co., Ltd., a private
unlisted REIT.
In addition, since 2013, DBJAM has begun to enhance its
wings into providing discretionary investment services andinvestment advisory services related to alternative investmentsin overseas / domestic private equity and infrastructure, andoverseas real estate.

OutlineAs a specialist in managing alternative investments, DBJAM
strives to meet the diverse needs of its clients. As of March 31,

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

Real estate

34

Integrated Report 2017

Private equity

Infrastructure

2017, it had ¥818.5 billion in assets under management.

Longer-Term External Environment and Social Issues

Strategy

Japan is a nation with considerable assets, including over

DBJAM, as a fiduciary investment manager, works in the best

¥1,700 trillion in household financial assets and ¥200 trillion ininterests of its institutional investor clients with the aim ofpension assets. With the Japanese economy confronted by aachieving longer-term growth in returns on each investments,

declining population and an aging society, it is imperative thatbeing aware of the profits flowing to the ultimate beneficiaries.

this wealth (financial assets) is steadily expanded.

DBJAM also works to help its clients increase their asset man-In realizing sustainable asset formation for the nation, it isan extremely important policy issue for Japan to have aagement capabilities.
To achieve these aims, DBJAM deeply understands financial

healthy and efficient capital market. Financial institutions,standings, investment policies, and risk/return preferences ofpension funds and other institutional investors must also

its clients through active, thorough and faithful engagement.

advance their investment capabilities in order to maintain a

DBJAM believes that such an attitude allows us to provide

vibrant capital market.

investment and asset management services which are truly

DBJAM acknowledges the importance of such policy

optimized for the client.

objectives and believes that its services are well aligned withthe public interest.

Through the provision of dedicated and qualified investment
management services, DBJAM contributes to the developmentof capital markets in Japan, as well as the transformation of thefunds flow into more diversified and longer-term minded one
which will ultimately lead to the promotion of the national wealth.

Case Study

DBJ Private REIT Co., Ltd.
From an unbiased position and long-term standpoint, DBJAM
provides qualified investment opportunities to clients such as
regional financial institutions and pension funds. Through its
services, DBJAM helps its clients diversify their investments
and invigorate the real estate finance market. With this objective in mind, DBJAM set up a private REIT in August 2016.

DBJ Private REIT Co., Ltd. invests in properties that havereceived the DBJ Green Building Certification or other environmental certifications, contributing to the spread of sustainable
real estate properties.

DBJ Private REIT Co., Ltd.

Subcontract

Loan
procurement

Financial institution
Outsourcing
Agency management
Accounting
Asset custody
Investment unit agent

Board meeting
Accounting auditor

100%
ownership

DBJ

Investors’ general meeting
Equityinvestment

Investors(limited to the qualified
institutional investors)

Asset management
contract

DBJ Asset Management Co., Ltd.

Integrated Report 201735

DBJ Group’s Strategy

Business Strategy

Function Strategy

Advisory Services

Strategy

VisionBacked by its experience supporting projects and industry

DBJ helps Japanese companies realize their
growth strategies and improve their international
competitiveness through support for M&A,
backed by its extensive experience and trackrecord around the world.

knowledge, DBJ takes an impartial approach to providing
advisory services to Japanese companies by utilizing its farreaching network with foreign companies and private equity
funds. DBJ also addresses needs for multifaceted support ininvestments and loans for capital needs related to acquisitions.

OutlineCase Study
DBJ offers expert advice related to corporate M&A—
ranging from the formulation of strategies, screeningof acquisition candidates, and assessment of corporate
value to negotiations, structure policy, and post-merger
integration assistance—for a variety of situations,
including industry restructuring, overseas businessdevelopment, business domain expansion, businesssuccession, as well as fund investments and exits.

Accomplishments and Initiatives to Date
Since it began offering advisory services in fiscal 2000, DBJ
has supported a diverse range of projects inside and outside
Japan. In fiscal 2015, DBJ created the Social Value andCapital Formation M&A Awards as a system for recognizing
excellent M&A deals that create social value. In April 2016,
DBJ established the Asia M&A Support Center in response to
growing needs for business development overseas, as well as
the Post-Merger Integration Support Center to assist withintegration after mergers.

36

Integrated Report 2017

ANA Holdings Inc.’s strategic investment in Vietnam
Airlines JSC
DBJ acted as the financial advisor to ANA Holdings Inc.
for its strategic investment in Vietnam Airlines JSC. Helping
the company execute its strategy in Asia, DBJ provided
comprehensive advice, including investment schemes,
calculations of corporate value, support for negotiatingwith the other party, and coordination of the drafting of
the agreement.

Research & Consulting

Strategy

VisionAmid accelerating change in industry, finance, and society that

DBJ helps its customers find solutions to problems through research and consulting services
using techniques it has accumulated over theyears, including far-sighted concept proposals
from an impartial and objective standpoint andfeasibility studies from a long-term standpoint.
OutlineUtilizing its extensive network of connections to universities, research institutions, experts, national governments, and local governments, DBJ provides support
through surveys and problem-solving ideas related tobusiness strategies and policy formation for urban
development, regional development, social capital
maintenance, energy, the economy, and industry.

creates new risks and opportunities, DBJ will provide valueadded research and consulting services that look beyond
stereotypes. At the same time, DBJ Group aims to create newknowledge platforms in tune with the latest trends, backed by
its ability to provide creative solutions.

Case Study

Support for Daisen City Hanabi Industry Concept
To support event commercialization and regional revitalization, Japan Economic Research Institute compiled a reporton Growth Strategies for the Fireworks Industry for the
Omagari Fireworks Festival in Akita, where Japan’s best
fireworks are on display in friendly competition. DBJ supplied
risk capital to Hanabi Creative Enterprise, the entity behind
the Daisen City Hanabi Industry Concept. DBJ Group willcontinue to provide new financial solutions through a
combination of research and financing.

Accomplishments and Initiatives to Date
Japan Economic Research Institute, Inc. is a comprehensive
think tank that conducts research in the public, solutions andinternational fields. In the public–private partnership and project finance initiative fields, it has a top-class track record inJapan backed by unparalleled experience and know-how.
Value Management Institute, Inc. is also a comprehensive
think tank that excels in analysis using proprietary economic
models and insight into cutting-edge technologies. Its highly
specialized knowledge encompasses a broad range of policy

Omagari Fireworks Festival “Kanki”

fields, including the formulation of integrated strategies for
local governments across Japan.

Integrated Report 201737

DBJ Group’s Strategy

Business Strategy

Area Strategy

RegionMarch 31, 2017

Total number of business alliances withfinancial institutions

107
Accomplishments and Initiatives to Date

VisionDBJ Group has worked to invigorate the economies of regions

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

dealing with various issues since the time it was the HokkaidoTohoku Development Finance Public Corporation and theJapan Development Bank. In recent years, DBJ has provided
financing tailored to the characteristics of each region throughits Regional Areas Genki Program (see page 40), co-investment
for overseas business development, risk capital through joint

Outlinefunds with regional financial institutions, and consulting serDBJ Group provides services tailored to the characteristics of each region in Japan from 10 branches andeight representative offices across the country.

vices to help create integrated regional strategies.
Through Crisis Response Operations, DBJ has also provided assistance for reconstruction in the wake of natural
disasters in various regions, including the Great East Japan

Investments
and
loans

38

Integrated Report 2017

Consulting
services

Planning
andresearch
services

Earthquake and the Kumamoto earthquakes.
As of March 31, 2017, DBJ has entered into business alliances with a total of 107 financial institutions.

Kushiro
Representative Office

Hokkaido Branch

Hakodate Representative Office
Aomori Representative OfficeNiigata Branch
Toyama Representative Office
Okayama Representative Office
Matsue Representative Office

Tohoku Branch

Hokuriku
BranchChugoku Branch
Kyushu Branch
Head Office
Tokai Branch
Kansai Branch
Shikoku Branch
Matsuyama Representative Office
Oita Representative Office

Head office
10 branches
Eight representative offices

Minami-Kyushu BranchLonger-Term External Environment and Social Issues

capital and consulting. More specifically, while taking into

The regional economic outlook is severe with declining house-entail improving the productivity and growth strategies ofhold spending and weaker demand for loans alongside aregional companies through business restructuring and over-long-term downtrend in their populations. As regional econo-seas business development, respectively, and cooperating

mies contract, regional enterprises need growth strategies thatwith regional financial institutions to create opportunities ininclude overseas business development, measures to improveasset management. As a part of these initiatives, DBJ createdcorporate value through business restructuring and succes-

the Regional Investment Promotion Office in the Strategic

sion, and ascertainment of good opportunities in asset

Finance Department under the chief investment officer on April

management.

1, 2017, for the purpose of facilitating the supply of risk capital

account regional characteristics, the themes of key objectives

to regional mid-tier companies and small and medium-sizedenterprises.

Strategy
DBJ will provide services with two objectives in mind—namely,
to create value by connecting regions throughout Japan toTokyo, domestic regions to those overseas, and regions theBy providing detailed solutions to regional problems, DBJ
Group strives to increase the value of its human capital (e.g.,
the skills and experience of its managers and employees), andrelationship capital (e.g., networks).

world over to each other, and to solve problems through risk

Integrated Report 201739

DBJ Group’s Strategy

Business Strategy

Area Strategy
RegionInnovative Initiatives at DBJ

Regional Areas Genki Program
Facing the challenges of population constraints, severe finan-

To further promote these initiatives, DBJ periodically revises

cial conditions, environmental restrictions and global competi-

the content of programs set by each of its branches and hastion, Japan’s regions must coordinate with one another andadopted nationwide the concepts of “enterprises that contrib-

implement diverse regional development schemes that capital-

ute to the region”*1 and “production bases that are vital to theize on their respective strengths, competitive advantages, andregion.”*2 DBJ is helping foster a virtuous circle of genki

latent potential.

between regions and enterprises.

In fiscal 2010, DBJ arranged a unique initiative, the Regional
Areas Genki Program, to support regional growth that capitalizes on each region’s respective strengths and potential frominformation and funding aspects. In addition, each DBJ branch
focuses on its region’s distinctive fields and businesses, basedon its industrial structure, and partners with regional financial*1 Enterprises that contribute to the region: Enterprises that create employment
opportunities and utilize the region’s personnel and resources, effectively
employing people, physical goods, and money for the benefit of the region,
including increasing its productivity. DBJ supports these enterprises by providing information and funding.
*2 Production bases that are vital to the region: Enterprises that support regions
by keeping major manufacturing plants and R&D bases in their regions, thereby
contributing to the creation of jobs, economic benefits, and brands in the region.
DBJ supports these enterprises through its Mother Factory Support Program.

institutions to offer financial support.

Areas Supported by DBJ’s Head Office (as of April 2017)
Hokkaido Area (Hokkaido)

40

Strengthening of the food value chain to drive growth
Development of the tourism industry by communicating the area’s attractions
Creation of an environment and the infrastructure to support sustainable growth

Tohoku Area

(Aomori, Iwate, Miyagi, Akita,
Yamagata, and Fukushima)“Creation of new business in Tohoku” program

Niigata Area

(Niigata)

Improvement of the area’s attractiveness by using regional resources
Advancement of innovation
Advancement of safety and security in regional development

Kanto-Koshin
Area(Ibaraki, Tochigi, Gunma,
Saitama, Chiba, Tokyo,
Kanagawa, Yamanashi,
and Nagano)Development of new market-creation businesses that fully leverage population and industry
concentrations
Construction and renovation of infrastructure based on regional conditions
Development of businesses in manufacturing regions that boost competitiveness in response
to globalization
Advancement of initiatives that contribute to higher labor productivity and an improved labor
participation rate

Hokuriku Area

(Toyama, Ishikawa, and Fukui)

Fostering of hospitable, technological and physical support for the Hokuriku area

Tokai Area

(Gifu, Shizuoka, Aichi,
and Mie)

Development of programs that advance the creation of next-generation industries
Development of programs that support efforts to make the Tokai area more appealing
Development of measures to prepare for a massive earthquake in the Nankai TroughKansai Area

(Shiga, Kyoto, Osaka, Hyogo,
Nara, and Wakayama)

Development of programs that support leading-edge manufacturers
Development of a program to support the invigoration of commerce and distribution
Development of a program that aids efforts to help the tourism industry thrive

Chugoku Area

(Tottori, Shimane, Okayama,
Hiroshima, and Yamaguchi)

Promotion of the “Three arrows” initiative to invigorate the Chugoku area

Shikoku Area

(Tokushima, Kagawa, Ehime,
and Kochi)

Development of a program for Shikoku enterprises evolving at the top of their niches
Development of programs that support efforts to reinforce industrial clusters
Development of measures to prepare for a massive earthquake in the Nankai TroughKyushu Area

(Fukuoka, Saga, Nagasaki,
Kumamoto, and Oita)

Enhancement of the competitiveness of the Kyushu area as the door to Asia
Creation of a new growth engine for the Kyushu region
Development of measures to increase the competitiveness of area enterprises that have uniquegrowth strategies

MinamiKyushu Area

(Miyazaki, Kagoshima,
and Okinawa)

Development of a project to promote Minami-Kyushu as an advanced region in terms of food,health, and the environment and energy

Integrated Report 2017

Case Studies
Case Study 1 Supply of growth capital to Dai-Ichi Hotel

Dai-Ichi Hotel is a major operator of Japanese-style inns in the
Tokachigawa hot springs area. With the aim of helping improve
the attractiveness of the region by renovating hospitality facilities, DBJ supplied risk capital through Special Investment
Operations by arranging syndicated loans to supply growth
capital with North Pacific Bank, Ltd., including subordinatedcapital loans.

Case Study 2 Support for world’s first university-affiliatedjoint-use medical facility dedicated to BNCTDBJ arranged syndicated loans for a project to prepare theKansai BNCT Medical Center (tentative name) with the
Educational Foundation of Osaka Medical and Pharmaceutical
University. The center is the world’s first university-affiliatedjoint-use medical facility dedicated to boron neutron capture
therapy (BNCT). It holds promise for leading the world in
advanced cancer treatments through collaboration withresearch networks including Kyoto University Research Reactor
Institute, Osaka University’s Graduate School of Medicine,and Osaka Prefecture University’s BNCT Research Center.

Garden-themed, outdoor hot spring bathRendering of completed facility

Case Study 3 Be Smile Project Co., Ltd. (Kamichiku Group)

Case Study 4 Initiatives to promote Setouchi brands

Be Smile Project Co. Ltd. aims to move Kyushu’s livestock
sector to the sixth industrial tier (tier characterized by the added
value resulting from vertical integration) by invigorating andsharpening the sector’scompetitiveness throughexpansion into the restaurant business. DBJ supports
this effort by supplying risk
capital through Special
Investment Operations
in cooperation with theAgriculture, Forestry and
Fisheries Fund Corporation
for Innovation, Value Chain
and Expansion in Japan,
livestock feed producers,
trading companies, andlocal financial institutions.

DBJ set up the Setouchi Kanko Kasseika Fund and financing
for Setouchi Brand Corporation to create a system for promoting Setouchi brands in collaboration with the Setouchi Tourism
Authority as well as seven financial institutions in the region(Chugoku Bank, Hiroshima Bank, Yamaguchi Bank, Awa Bank,
Hyakujushi Bank, Iyo Bank, and Minato Bank). This fund provides financial support to tourism-related businesses as thebearer of growth capital.

Integrated Report 201741

DBJ Group’s Strategy

Business Strategy

Area Strategy

Overseas

DBJ Europe Limited

DBJ Investment
Consulting (Beijing)Co., Ltd.

DBJ Investment
Consulting (Beijing) Co., Ltd.’sShanghai Office
DBJ Singapore
Limited

VisionAccomplishments and Initiatives to Date
When it first became a joint-stock company, DBJ began to

Positioning overseas operations within its sector
strategies and function strategies, DBJ Group
engages in global operations in sectors providing
high added value.

extend corporate loans in advanced countries where it could
ply its knowledge of industries in Japan. DBJ then gradually
diversified into project finance, asset finance, and investment
operations as business foundations were laid overseas inaccordance with DBJ Group’s sector strategies and function

Outlinestrategies.
In Singapore and China, DBJ set up an M&A advisory team

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

42

Integrated Report 2017

to coordinate with the head office’s Business Development
Department in meeting the M&A needs of customers in the
Asia region.

Longer-Term External Environment and Social Issues

sectors against a backdrop of population growth and theincreasing volumes of movement in people and physicalBased on projections for continued growth in the world econ-

goods. It is imperative that Japan’s economy and industry

omy, DBJ Group is likely to see continued needs for global

sustain growth by effectively tapping into these overseas

business development from its core customers in domestic

growth opportunities.

industries. At the same time, demand for capital should
increase strongly from the infrastructure and transportation

Strategy
DBJ will continue to engage in overseas operations in line with
its sector strategies and function strategies.
1) In infrastructure fields such as energy and transportation,
DBJ will provide investments and loans for the overseas
development of Japanese industry and for projects thatbring overseas knowledge to domestic markets.

New York Representative Office2) DBJ will provide investment and advisory services to support the overseas industrial expansion needs of its customers, including customers headquartered regionally in Japan.
3) Group companies will manage investments in infrastructure
assets and corporate assets for the purpose of providing
Japanese investors with investment opportunities overseas.

One overseas
representative office
Three overseas
subsidiaries

Case Studies
Case Study 1 Participation in natural gas power plant

project in New York State

Case Study 2 Participation in biomass power plant projectin the U.K.

DBJ participated in the financing of a project to construct andoperate a natural gas power generation plant (output about
1.1 million kW) in New York, U.S.A., being promoted by lead
investor JERA Co., Inc. We aim to acquire knowledge offinance in deregulated markets in the U.S., a pioneer in electric
power deregulation, and bring this knowledge back to help
Japan’s deregulated
electricity market.

DBJ participated in project financing for one of the largest
biomass power plants (output about 300,000 kW) in the U.K.,
which is scheduled to be constructed near Middlesbrough incentral England. By acquiring knowledge in the financing andoperation of the biomass power plant project, we will contributeto the spread of renewable energy in Japan.

Rendering of completed facility

Rendering of completed facility

Integrated Report 201743

DBJ Group’s Strategy

Capital Strategy

Financial Capital

Vision
We target sustainable growth byconstructing an optimal risk–return
portfolio while maintaining andstrengthening a robust financial basethat supports our unique businessactivities, including integrated investment and loan services.

Basic Policy
Financial capital is a vital element of our business foundation

maintain and strengthen our financial capital by managing it

implementing advanced business strategies centered on our

within the context of a risk appetite framework based on

sector strategy (see page 18) and function strategy (see pagesophisticated analysis of risks and returns with due consider-28) under the Fourth Medium-Term Management Plan. A

ation paid to regulatory capital (management focused on

robust financial foundation of funds and capital is necessary forshareholders’ equity ratios) and economic capital (manage-

DBJ Group to execute its sector strategy, supply risk capital,

ment of capital using stress tests).

and engage in Crisis Response Operations. We aim toBusinessstrategy
External
environment
Scenarioplanning

Stress test

Strategy for
financial capital

44

Integrated Report 2017

Business plan

Execution

Monitoring

Specific Initiatives to Improve Value of Financial Capital
A pillar of DBJ Group’s business strategy is to provide long-fund procurement activities with diversified maturities andterm financing for infrastructure projects. To do so, DBJ Groupmethods. In fiscal 2015, DBJ was the first Japanese issuer toprocures long-term funds through corporate bonds and theissue sustainability bonds (see page 55), and it plans to

Fiscal Investment and Loan Program (FILP).

strengthen efforts in this area. We intend to help invigorate thesocially responsible investing bond market while diversifying

In recent years, DBJ has stably procured funds through FILP

our fund procurement base.

as well as by issuing corporate bonds, thereby augmenting its

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

Fiscal 2014

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

Fiscal 2015

2,544.2
661.6
300.0
200.0
161.6
374.8
378
1,129.9

Fiscal 2016

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

4,012.6
1,127.7
800.0
150.4
177.3
497.1
861.5
1,526.1* Borrowings from FILP in fiscal 2016 included ¥500 billion in the supplementary budget for “economic stimulus measures for investments in the future.”

Injections of financial capital are periodically monitored and assessed, and are reflected in operational plans and financial capital plans.
Financial Soundness Indicators
Issuer ratings
Common equity Tier 1 risk-weighted capital ratio

A1 (Moody’s), A (S&P), AA (R&I), AAA (JCR)
17.2%(As of March 31, 2017)(As of March 31, 2017)

Financial Targets of Fourth Medium-Term Management Plan
DBJ has set the following numerical targets and is keen to strengthen profitability further over the longer term.
(In the Third Medium-Term Management Plan, our target for net income was ¥70 billion in the final fiscal year.)
Third Medium-Term Management Plan

(Consolidated)

Gross ordinary income*1
Current net income
Of which, credit costs (negative = cost)*
Profitability

2

Expense ratio*3

Actual(Average for fiscal
2014–2016)

Actual(Fiscal 2016)

Target(Fiscal 2019)¥182.6 billion¥171.1 billion¥190 billion¥103 billion¥87.6 billion¥80 billion¥19.2 billion¥4.5 billion

—

26%

30%

About 35%—

¥16.5 trillion¥16 trillion

ROA*3 *4

1.1%

1.1%

About 1%

ROE*3 *4

3.7%

3.0%

About 3%—17.2%

At least 14%

Total assets

Soundness

Fourth Medium-Term
Management Plan

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

Integrated Report 201745

DBJ Group’s Strategy

Capital Strategy

Financial Capital

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

2008–2010

Became ajoint-stock company

First Medium-Term Management Plan
CHALLENGE 2010

Fiscal 2008

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

Fiscal 2009

Fiscal 2010

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

Total income

151.2

347.9

345.1

Income before income taxes(121.6)

51.9

95.0

N/A

(26.7)

(2.9)

3.5

(0.8)

9.3

Income before income taxes and minority interests(118.1)

51.1

104.3

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

Net income attributable to owners of the parent(128.3)

39.8

101.5

—

10.0

50.0

Total assets

14,028.0

15,595.7

14,845.2

Loans

12,008.8

13,514.6

13,031.4

Securities

1,246.5

1,289.4

1,165.5

Total liabilities

11,941.6

13,268.2

12,435.2

Borrowed money

8,067.8

9,082.4

8,576.4

Debentures and corporate bonds

3,513.0

3,746.3

3,629.3

Total equity

2,086.4

2,327.5

2,409.9

Common stock

1,000.0

1,181.1

1,181.1

Total capital ratio (Basel II, BIS standard)

18.87%

19.13%

20.50%

Total capital ratio (Basel III, BIS standard)

—

—

—

Ratio of risk-monitored loans (Banking Act basis)

1.60%

5.07%

1.28%

Return on assets (ROA)(0.92)%

0.27%

0.67%

Return on equity (ROE)(6.06)%

1.82%

4.31%

Number of employees

1,096

1,181

1,203

1,733.4

3,793.1

2,116.6

1,670.3

3,682.0

2,034.4

Investments

63.1

111.1

82.2

Funds raised (flow)

1,733.4

3,793.1

2,116.6

184.3

840.9

1,212.8

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

Total dividend amount

Investment and fundraising flow (non-consolidated)
Loans and investments (flow)
Loans

Of which, recovery, etc.

46

Integrated Report 2017

(¥100 million)

2011–20132014–2016

Second Medium-Term Management Plan
Endeavor 2013

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

Fiscal 2011

Fiscal 2012

Fiscal 2013

Fiscal 2014

Fiscal 2015

Fiscal 2016

(April 1, 2011 toMarch 31, 2012)(April 1, 2012 toMarch 31, 2013)(April 1, 2013 toMarch 31, 2014)(April 1, 2014 toMarch 31, 2015)(April 1, 2015 toMarch 31, 2016)(April 1, 2016 to
March 31, 2017)

318.7

340.0

361.6

339.0

358.6

285.4

99.2

115.6

165.7

153.0

185.1

122.5

(1.3)

30.0

30.3

32.1

70.8

41.1

10.9

0.6

0.2

0.6

1.5

(0.0)

110.2

116.2

166.0

153.6

186.7

122.4

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

77.3

71.3

124.3

92.7

128.9

87.6

37.3

35.2

30.8

22.5

29.2

19.7

15,579.8

16,248.7

16,310.7

16,360.6

15,907.1

16,570.4

13,645.4

13,918.2

13,838.4

13,261.3

12,952.5

13,039.5

1,176.6

1,357.0

1,637.5

1,887.9

1,803.0

1,750.3

13,118.8

13,710.1

13,682.9

13,613.3

13,022.9

13,584.2

9,170.5

9,448.3

9,182.6

8,598.2

7,892.1

8,472.3

3,671.8

3,924.5

4,237.4

4,569.3

4,727.9

4,711.8

2,461.0

2,538.5

2,627.7

2,747.2

2,884.2

2,986.2

1,187.7

1,206.9

1,206.9

1,206.9

1,000.4

1,000.4

18.56%

—

—

—

—

—

—

15.52%

15.83%

16.80%

17.87%

17.47%

1.47%

1.23%

0.99%

0.77%

0.64%

0.54%

0.51%

0.45%

0.76%

0.57%

0.80%

0.54%

3.18%

2.86%

4.83%

3.47%

4.60%

2.99%

1,270

1,315

1,391

1,407

1,435

1,546

2,927.0

2,652.4

2,943.3

2,544.2

3,027.7

4,012.6

2,849.0

2,524.5

2,805.1

2,262.7

2,861.3

3,805.8

78.0

127.8

138.2

281.4

166.3

206.7

2,927.0

2,652.4

2,943.3

2,544.2

3,027.7

4,012.6

691.7

502.2

1,307.5

1,129.9

1,639.7

1,526.1

Integrated Report 201747

DBJ Group’s Strategy

Capital Strategy

Human Capital

VisionAs of March 31, 2017

We aim to become a “humanresource development bank” withdiverse human resources, and help
employees develop skills whileraising their motivation.

Number of employees(consolidated)
Number of employees(non-consolidated)
Average length of service(non-consolidated)

1,546
1,192
14.3
years

Basic Policy
We believe the sustained creation of economic and social

a framework where diverse personnel can engage in work withvalue hinges on the hiring and training of talented personnel

high levels of motivation. Under the Fourth Medium-Term

who can put into practice our unique business model of inte-

Management Plan, we are advancing specific initiatives tograted investment and loan services, while sharing DBJ

improve the value of human capital as a high-priority issue.

Group’s corporate philosophy. It is also vital that we create

Specific Initiatives to Improve Value of Human Capital(1) Intensification of Hiring
DBJ will secure the personnel necessary across the entire
Group to implement its sector strategy, function strategy, andarea strategy.

• Provide abundant opportunities for training through combinations of rank-based training, business-related training,and self-improvement training• Augment study abroad program at overseas universities
and international training programs to nurture globally aware(2) Skills Development
DBJ prioritizes human resource development across the Group.

employees• Implement measures to strengthen management abilities• Help employees shape career paths for personalized growth• Strategically rotate employees so they steadily develop
highly specialized skills by gaining practical experience in

We focus efforts on promoting employee motivation andmultiple departmentssound physical and mental health.

• Develop skills through practical on-the-job training• Dispatch employees to central government agencies, Group
companies inside and outside Japan, and companies thathave received investments• Enhance quality and quantity of spending on human48(3) Motivation and Health Management• Maintain an optimal human resource system, share ourcorporate philosophy, and focus on improving productivity
as factors that affect motivation• In addition to periodic health checkups, introduce counseling services staffed by external professionals as a part ofresource development (career development, management

management that cares for the physical and mental well-ability, global awareness, etc.)

being of employees

Integrated Report 2017

DBJ’s Human Resource Development System
Training by Rank

Business-Related Training

External
Assignments, etc.

Business-Related(Self-Training)

Domestic andoverseas exchange
students, trainees,
seconding, etc.

Common skill areas• Communication• Logical thinking• Facilitation• Presentation• Design thinking• English
conversation, etc.

Leadership program
Life plan training

Management training

Manager training• Financial skill-related training(Valuation, corporate reorganization, real estate finance, accounting,monetary policy, corporate finance, etc.)

Career development
plan training

Position• Compliance training• Training on finance-related laws

• Accounting standards training• Tax basics training, etc.

Financial analysis training• Bookkeeping and accounting
knowledge• Corporate analysis• Individual company analysis
Case studies

Introductory training
for new employees
Contract
writing

Autonomous
career track

Cultivation ofmanagement andleadership skills

Basic legal
training

Basic finance training• Interest rate basics• Basics of derivatives
Cultivation ofbusiness-related
knowledge, acquisitionof specialized
knowledge, humanresource training

Acquisition of financial skills, legal andfinancial accounting knowledge

Planned and ongoing HR development

Mastery of knowledge
and skills needed
for work

DBJ’s Work-Life Balance Systems
Pregnancy, Childbirth, and Child-Rearing
Pregnancy and childbirthBalancesupportsystems• Maternity leave before
and after childbirth• Special leave when
spouse gives birthChild-rearing
Leave for child-rearing
Shortened working hours for childcare
Flextime system for childcare
Special vacation for helping with childcare
Exemption from or reduction of overtime
Time off for nursing babies

Caring for Family Members
Leave to care for the elderly
Shortened working hours to care for the elderly
Balancesupportsystems

Flextime system to care for the elderly
Exemption from or reduction in overtime
Nursing care leave
Accumulation of unused paid vacation
Nursing care seminars

Advice for returning to work after taking leave
Training andsupport

Preparation seminars for returning to work
Seminars for managers with subordinates raising children

Training andsupportReturn entry system
System for rehiring retired employees

Return entry system (registration system for employees returning to work)(4) Workstyle Reforms and Employee Diversity(5) Worry-Free Work Environments

The way people work has continued to evolve as productivity

We take proactive steps to maintain worry-free work

improves through business reforms, work-life balanceenvironments.

becomes more important, and diverse human resources• Proactively hire people with disabilities, maintain work envi-

work together.
• Create Work Reform Project to improve productivity

ronments for diverse human resources• Raise awareness of measures to prevent sexual harassment• Enhance work and leave systems for childcare and elderly

and power harassment, set up a consultation service

care (flextime system, leave for helping with childcare)• Mandate human rights training to deepen understanding of• Career training for supporting women in management posi-

human rights issues, compliance training, and information

tions, training for managers to support subordinates withsecurity training, and focus on improving morale

childbirth and childcare issues, and seminars aimed atworkstyle reforms for employees preparing to return to work
after taking leave• Set targets for empowering women, specifically for hiring
women and promoting them to management positions
Note: Ratio of women in management positions: Target a 50% increase in thenumber of women in management positions by the end of fiscal 2018
compared with April 1, 2014, and target a ratio of 5% for women in
management positions by the end of fiscal 2020
Integrated Report 201749

DBJ Group’s Strategy

Capital Strategy

Intellectual Capital

Vision
DBJ aims to build on strengths inknowledge, the wellspring for valueadded operations such as research,
analyses, and risk management, as
well as strengths in frameworks,
including processes, informationand communication technology (ICT)systems, and organizations.

Basic Policy(1) Knowledge(2) Processes

We strive to improve skills as a core element of operations

We will improve operations, including via investments in ICT,

necessary to differentiate our business model through surveys,

by clarifying and simplifying business processes from the cus-

research, analyses, and risk management centered on industry.

tomer’s standpoint in order to rapidly and properly address
customer needs.

Specific Initiatives to Improve Value of Intellectual Capital(1) Knowledge
Industry analysis

cooperation and collaboration between DBJ and external

In April 2017, DBJ established the Chief Research Officer andexperts at universities and other organizations. Research

placed under it the Economic & Industrial Research

focuses on the formation of a sustainable economy and soci-Department and the Sustainability Planning & Support

ety from an academic and liberal standpoint. The outcomes

Department (formerly the Environmental Initiative & Corporateof this research are reflected back in the operations of DBJ

Social Responsibility–Support Department). We provide knowl-

Group and shared with the general public with the aim of cre-edge-based solutions to customers in various industries,

ating both economic and social value. RICF, a pioneer in iden-

including from an ESG perspective, based on our broad

tifying issues, is highly regarded by academia for its impartiality

knowledge of industry.

and the robustness of its research. It is well known as a center
for industry, academia, and government knowledge. In recent

Research Institute of Capital Formation

years, the institute has expanded the means for creating intel-

The Research Institute of Capital Formation (RICF) was estab-lectual capital by establishing new committees for researchinglished in 1964 with Dr. Osamu Shimomura, who advocated forsustainability, publishing research papers through Springer, an

the principles behind Japan’s stage of high economic growthinternational academic publishing company, and holding inter-

after the 1940s, as its first executive director. The institutenational academic conferences in conjunction with foreign

serves as a venue for creating intellectual capital throughacademic journals and think tanks.

50

Integrated Report 2017

Screening(2) Processes, etc.

While engaging in high-risk operations, such as integrated

Business processes

investment and loan services and crisis response, DBJ GroupDBJ established the Work Reform Project in fiscal 2016 tomust have excellent screening capabilities to evaluate corpora-look into measures to enhance productivity and increasetions and businesses, in addition to economic and industry

added value for customers, including reforming workstyles,

analysis, in order to continue carrying out its mission. To

streamlining how meetings are run, and reviewing theenhance the value of this intellectual capital, arguably thedecision-making process.

biggest distinguishing factor for a financial institution, DBJ
offers a variety of training programs for new employees, includ-

Rebuilding of backbone systems

ing financial analysis training. As employees gain experience

DBJ is advancing projects to rebuild backbone systems,

in financing deals and share it with others, they become theincluding core systems for financing and decision-making.

screening ability of DBJ as it addresses social issues.

Case Studies
Case Study 1 Analysis of economic andindustrial trends
In addition to analyzing macroeconomic and financial trends
around the world, DBJ conducts industry surveys andresearch about market trends inside and outside Japanthrough its network of contacts in the industry, as well as
surveys about the latest technological developments andthe international competitive landscape. DBJ puts its findings in research reports and disseminates them to customers as well as investment and loan departments and offices.
Research about the aerospace industry, the IoT,
“Industry 4.0”
Lately, we have been following the latest trends in the aerospace industry, which shows promise as a growth field,
while publishing reports containing the entire Group’s cumulative knowledge of the aerospace industry. We have also
conducted field research on the latest IoT trends and the“Industry 4.0” initiative, and shared this information with ourcustomers and the general public through discussions,study sessions, and lectures. In May 2017, DBJ set up the
Cross-Sector Conference as a platform for sharing information about the entire industry, including our periodical
reports on industry trends and sector analysis.
These reports are available
on DBJ’s website.

Case Study 2 Capital Investment Planning Survey

With a history of more than 60 years (since 1956), DBJ’s
Capital Investment Planning Survey looks at trends in corporate capital investment in Japan, capital investment overseas, and spending on R&D. The results of the survey areused for many purposes, such as furthering education atuniversities and research at R&D organizations, in addition
to serving as a reference for national economic policy andcorporate planning.
Fiscal 2016 Capital Investment Planning Survey,
60th anniversary symposium
In fiscal 2016, the survey was designed to illuminate corporate activities based on the “broad definition of investment,”
covering intangible fixed asset investment in Japan andoverseas, as well as spending on R&D, M&A, and humanresources. This was a new trial aligned with current corporate activities that split budgets between investments andcorporate acquisitions flexibly—that is, without setting
specific amounts. The results of the survey will be reflectedin future surveys after a frank exchange of opinions between
management at DBJ and corporate managers.
On September 16, 2016, in celebration of the 60th
anniversary of the Capital Investment Planning Survey, DBJ
and Nihon Keizai Shimbun sponsored the “How Investment
for the Future Is Changing the Japanese Economy” symposium, with this “broad definition of investment” as themain topic.

Integrated Report 201751

DBJ Group’s Strategy

Capital Strategy

Relationship Capital

Vision
DBJ aims to create value bycooperating with other parties toenhance the value of its networkand brand.

Basic Policy(1) Networks and Relationships
DBJ Group has built diverse networks with customers, financial institutions, investors, and national and local government

Customers

Regions

agencies for the purpose of exchanging information and avoiding conflicts of interest. DBJ Group utilizes its unique networks
to identify issues affecting the economy and society and to
conduct investment and loan operations.
(2) Brand and Reputation

Universities
and researchorganizations

DBJ
Group

Financial
institutions

We aim to maintain our reputation and improve our brandvalue through the services DBJ Group provides to customers.
National
and local
governments

Investors

Specific Initiatives to Improve Value of Relationship Capital
Regional Financial Institutions

collaborative funds and introducing investment products such

In fiscal 2007, DBJ began borrowing money from local finan-

as syndicated loans. As a part of initiatives to revitalize regions,cial institutions as a part of its credit-raising activities. In addi-

DBJ creates M&A opportunities for local companies through itstion to its fund-raising relationships, DBJ has enhanced andnetwork of regional banks (75 regional banks as of March 31,

diversified its network of relationships by establishing2017). DBJ also helps local companies get a toehold in Asian

52

Integrated Report 2017

markets through its Asia Financial Support Center (67 regional

iHub (innovation Hub)banks as of March 31, 2017). Moreover, DBJ has formed a

Along with Japan Economic Research Institute, DBJ engages

total of 20 funds with regional financial institutions throughin management of technology training and innovation Hubinitiatives to supply risk capital to regions. Lately, DBJ has(iHub) activities. Using its impartial position and broad network,

promoted new money flows by creating diverse investment

DBJ aims to resolve social issues through logical and innova-

opportunities for regional financial institutions, jointly investingtive business solutions.

in overseas private equity funds along with six regional financial
institutions through its overseas private equity investment
program.
National and Local Governments
With the aim of solving regional issues, DBJ has deepened its
relationships with leading organizations and broadened thescope of its relationships by planning and holding seminars at
its PPP/PFI Academy for local governments and regional financial institutions, as well as by putting in place platforms for
local industry, government, and academia collaboration with
the national government. In its fifth year, the PPP/PFI Academy

DBJ Women Entrepreneurs Center (DBJ-WEC)

counts 63 local governments and 125 people as participants

DBJ provides comprehensive support, including entrepreneur-(as of March 31, 2017). DBJ also supports the public asset

ial know-how and networking opportunities, to nurture growth

management functions of a number of local governments

businesses led by women from new vantage points that could

through advisory services and help creating PPP/PFI projects.

change society and the economy for the better. As a part ofthese efforts, DBJ holds a business plan competition every

Universities and Research Organizations

year for women entrepreneurs. New business ideas that evince

Our network of over 430 academics at 115 universities aroundexcellent business potential and innovativeness are awarded

the world, centered on the social science field, helps with ourbusiness grants of up to ¥10 million. After the competition

research activities and human resource training. From an earlyfinishes, the winners are connected with outside experts andstage, we have worked to internationalize our network. Our

venture capitalists who help them turn their business plans into

guest foreign researcher system, which began in 1991, hasreality by supporting the growth and development of theirwelcomed 34 researchers from the U.S., Canada, the U.K.,

business ideas. More than 1,800 business plans have been

Germany, Denmark, Singapore, Malaysia, Thailand, China,

submitted over the past five competitions, expanding theSouth Korea, Taiwan, Australia, and New Zealand. Leveraging

scope of opportunity for women entrepreneurs.

this diverse relationship capital, DBJ invited around 50 foreign
professors from over 20 universities in six countries andregions, including Japan, to give lectures at seminars andMore information is on the Women Entrepreneurs Center
website (https://www.jeri.or.jp/wec/).

conferences held in fiscal 2016. The events were uniformly
hailed as excellent venues for sharing research outside theuniversity setting. The DBJ Financial Academy is a part of ourhuman resource training program that focuses on advanced
financial operations for DBJ employees as well as students
accepted from outside the Bank. Over the past 10 years, theDBJ Financial Academy has welcomed over 550 students fromoutside the Bank and 20 guest professors from 11 universities
who represent their respective fields.

Integrated Report 2017

53

DBJ Group’s Strategy

Capital Strategy

Social Capital

VisionDBJ Group aims to achieve sustainable growth in business and corporate value while developing social
capital for society as a whole.

Basic Policy
DBJ Group defines social capital as a resource

Social capital

Details

Example of initiatives

shared across society that underpins the foundations of market economics. Increasing thevalue of social capital is a basic tenet for realizing a sustainable society. DBJ specificallyengages in unique initiatives within the context

Environmentally Rated
Loan Program(1) Naturalenvironment

Forests, mountains, rivers,
lakes, soil, air(2) Social
infrastructure

Energy, transportation,
urban infrastructure, industrial
value chains

Loans and investments for infrastructure and industrial projects

Crisis Response Operations(3) System capital

Stabilization and stimulationof the financial system, development and invigoration offinancial marketsof (1) the natural environment, (2) social infrastructure, and (3) system capital.

DBJ Green Building Certification

BCM Rated Loan Program

Supply of risk capitalSocially responsible investingbond issuanceSpecific Initiatives to Improve Value of Social Capital
DBJ undertakes the following unique initiatives to support

improve the productivity of its employees through workstylea sustainable society through loan and investments for infra-

reforms and measures to raise employee awareness of healthstructure and industrial projects and its legally mandated Crisis

issues. Our screening sheet for rating loans was created with

Response Operations and Special Investment Operations.

the cooperation of public institutions, experts, and top runnercompanies. This screening sheet is revised every year by a

DBJ Certification Programs

panel of advisors consisting of external experts with due atten-

DBJ has more than 40 years of experience facilitating overtion paid to the latest issues and trends around the world.

¥3 trillion in financing for environmental conservation projects.
Using this knowledge, we launched the Environmentally Rated
Loan Program in 2004, the first such program in the world.

Environmental
RatingUsing an independently developed screening system, DBJ(Environmental risk)

evaluates companies’ track records in environmental management. The environmental rating system entails the setting ofloans’ terms and conditions based on their environmental
ratings. In 2006, DBJ launched the BCM Rated Loan Program

BCM Rating

to evaluate disaster preparedness and measures to ensure(Business
continuation risk)business continuation. We help companies devise comprehensive crisis management policies in addition to providing loans
for disaster prevention measures and disaster recovery forcritical social infrastructure. In 2012, DBJ began to offer the
Employees’ Health Management Rated Loan Program, whichassesses a company’s efforts at health management to54

Integrated Report 2017

Health Management
Rating(Human productivity risk)

Total number of
rated loans:

960¥1,663 billion(As of March 31, 2017)

DBJ Rated Loans(Number)(¥100 million)

150

2,000

(Left axis)(Right axis)

Environmental rating
Cumulative amount

BCM rating

Health management rating
28

120

30

3

32

1,600

44

1,200

48
90

60
5
11
30

33

35

2

33

5

4

36

36

2008

2009

1

13

27

42

45

44

55

53

800

64
61
46

46

51
400

27

0

(Fiscal year) 2004

2005

2006

2007

DBJ has provided over 900 rated loans to customers while

2010

2011

2012

2013

2014

2015

2016

0

DBJ Socially Responsible

engaging in dialogue with them to broadly support their envi-

Investment Bond (SRI Bond)ronmental, social, and governance (ESG) initiatives. These loans

In 2014, DBJ became the firsthave contributed to increasing the value of social infrastructure

issuer in Japan to issue a green

Issuance of SRI bonds

and natural capital through sustainable corporate activities.

bond. Also, DBJ has issued(As of March 31, 2017)

DBJ certification programs facilitate dialogue and coordina-

DBJ Sustainability Bond eachtion between companies and their stakeholders with the aim ofyear since 2015. The raised

encouraging financial markets to appreciate companies based

funds are allocated toward the$500 million in 2016€300 million in 2015€250 million in 2014

on their long-term growth potential.

creation of a sustainable society through DBJ Green Building Certification and the

DBJ Green Building Certification

Environmentally Rated Loan Program. DBJ has contributed to

Applying the expertise and networks

the development of the SRI bond market in various ways. In

accumulated over many years of real

January 2017, DBJ became an issuer member, the firstestate financing, DBJ inaugurated

Japanese firm with an issuer status, of the Green BondDBJ Green Building Certification in

Principles* and in March participated on a committee createdby the Ministry of the Environment to draw up the Green Bondfiscal 2011. Real estate that takes
environmental and societal considerations (green buildings) is comprehen-

Number of certified
properties: 379(As of March 31, 2017)

Guidelines, 2017. DBJ will continue to support the sustainablegrowth of this market by continuing to issue SRI bonds as well

sively evaluated for its environmental

as proactively engaging in the international and/or domestic

performance, disaster preparedness, and community consid-

initiatives.

erations, including engagement with various stakeholders. The* Green Bond Principles
The Green Bond Principles (GBP) are voluntary process guidelines that recommend transparency and disclosure and promote integrity in the development of
the Green Bond market by clarifying the approach for issuance of a Green
Bond. Members consist of the International Capital Market Association, investors, issuers, and underwriters across the globe. The GBP are updated annuallyand intended for broad use by the market. The official link is https://www.
icmagroup.org/Regulatory-Policy-and-Market-Practice/green-social-andsustainability-bonds/green-bond-principles-gbp/.

real estate is assessed and certified based on this evaluation
within the context of social and economic needs. Along withJapan Real Estate Institute, DBJ currently certifies four types ofproperties comprising office buildings, logistics centers, retailfacilities, and residences. Moreover, in 2014 DBJ became aninvestor member in the Global Real Estate Sustainability

Details about these initiatives are available on DBJ’s website.

Benchmark (GRESB),* a first in Japan, and was appointed to
GRESB’s Real Estate Advisory Board in 2016. Through its
Green Building Certification system, DBJ will promote sustainability and ESG investment in the real estate industry.
* GRESB is a benchmark for assessing the sustainability performance of realestate firms and asset managers. It was created by major pension funds in
Europe in 2009. GRESB’s Real Estate Advisory Board provides diverse information to GRESB management that is pertinent to strategy formulation andproduct development.

Integrated Report 201755

DBJ Group’s Strategy

Fiscal 2016 Topics

October

2016

Issued second DBJ Sustainability Bond
Held Invest in Japan 2030–2050 at annual conference ofYoung Global Leaders at World Economic Forum

April
Established the Kumamoto Recovery Office within the Kyushu
Branch to support the restoration and reconstruction ofregions affected by the Kumamoto earthquakes

December
Became signatory of Principles for
Responsible Investment

May
Former President Toru Hashimoto awarded the ADFIAP
Distinguished Person Award in the individual category of the
ADFIAP Awards 2016, which took place at the annual meetingof the Association of Development Financing Institutions in
Asia and the Pacific

Participated in Eco-Products 2016, one of the largest environmental exhibitions in Japan (16 years running)

Ceremony for Second Social Value andCapital Formation M&A Awards
Winner:Shizuoka Gas Co., Ltd.
Special mention: Sekishinkai

June
Held Fifth DBJ Women Entrepreneurs New Business Plan
Competition award ceremony

2017
January
Became an issuer member of the Green Bond Principles

July
Created Kumamoto Reconstruction Assistance Fund

AugustReleased survey results for 60th Capital Investment Planning
Survey (national and by region)

September
Appointed to Global Real Estate Sustainability Benchmark’s
Real Estate Advisory Board
Held “How Investment for the Future Is Changing theJapanese Economy” symposium to commemorate 60th anniversary of the DBJ Capital Investment Planning Survey

56

Integrated Report 2017

Received two awards as an exemplary financial institution that
contributes to regional revitalization from the Cabinet Office’s
Creation of Towns, Human Resources, and Employment
Secretariat• Support for PPP/PFI and public asset management• Creation of a collaboration framework for invigorating the
tourism industry in the Setouchi region

Section Three Corporate Governance58

Basic Position on
Corporate Governance

61

Messages from Outside Directors

62Internal Control System Basic Policy /Compliance

63

Client Protection Management
Basic Policy
Declaration on Personal Information
Protection
Policy for Managing Conflictsof Interest
Responses to Japan’s
Stewardship Code64

Directors, Audit & Supervisory
Board Members,
and Executive Officers

Integrated Report 201757

Corporate Governance

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

Article 1
Development Bank of Japan Inc. (hereinafter referred to as the “Corporation”) shall be a joint-stock company (kabushiki-kaisha)
whose objective is to contribute to the smooth supply of funds to those needing long-term business funds, as well as to the sophistication of financial functions.

DBJ is working to enhance its unique governance system indeliberate and evaluate business results, including consistency

addition to usual management supervision as a company with

with the policy objectives of Special Investment Operations,a board of directors and company auditors (Audit & Supervisory

ensuring that appropriate competitive relations are maintained

Board) through a business model built upon features such aswith private financial institutions.

integrated investments and loans and proper execution of thepreceding objective in order to raise the value of tangible andDBJ’s Corporate Governance System

intangible management resources to be invested and to realize

A company with a board of
directors and company auditors(Audit & Supervisory Board)

Institutional design configuration

sustainable management that aims for both economic andNumber of directors

10Specifically, the 2015 revisions to the DBJ Act established

Of whom are outside directors

2

the creation of Special Investment Operations and obligatory

Monitoring Board, composed of outside experts, which func-

Number of Board of Directors’
meetings this fiscal year
Number of Audit & Supervisory
Board members
Of whom are outside Audit &Supervisory Board members
Number of Audit & Supervisory
Board meetings this fiscal year
Adoption of executive officer
systemtion as advisory bodies to the Board of Directors. These

Accounting auditorsocial value.

measures to be considered, requiring that DBJ conduct its
operations in a manner that does not obstruct appropriatecompetitive relations with other entities, in particular, applying
these requirements to the Advisory Board, made up of outside
experts and directors, and the Special Investment Operations

13
5
3
14
Yes
Deloitte Touche Tohmatsu Limited

bodies provide advice on DBJ’s overall management andOverview of DBJ’s Corporate Governance System
General Meeting of
Shareholders

Matters requiring authorization ofcompetent minister• Appointment and dismissal of representative
directors and Audit & Supervisory
Board members• Concurrent positions as directors• Amendments to Articles of Incorporation• Disposition of surplus funds• Merger, corporate split, and dissolution• Basic policy on business plans,
redemption plans, and fund procurement

Audit & Supervisory Board members,
Audit & Supervisory Board
Operations Audit
Committee

Board of Directors

Accounting auditor

Compensation Committee
Personnel Evaluation
Committee

Reporting

Cooperation
ReportingInternal Audit
Department

Advisory Board

Executive Committee

AuditsSpecial Investment Operations
Monitoring Board

Decision-making bodies
Deliberative bodies

ALM & Risk
Management
Committee

Departments
Subsidiaries

58

Integrated Report 2017

General Risk
Management
Committee

Committee on
Investment and
Loan Decisions

New Operation
Screening
Committee

Advisory Panel on
Investments andLoans

Sustainability
Committee(new)Core Business
SystemRestructuring
Committee

AuditsAudit & Supervisory Board Members, Audit & Supervisory Board
The Audit & Supervisory Board comprises five members. The

Audit & Supervisory Board and Audit & Supervisory Board

Companies Act prescribes that a majority of Audit &members audit the execution of duties by directors, based on

Supervisory Board members be outside members (in DBJ’s

their audit policy and audit plans.

case, three of the five). DBJ offices contribute three members

Audit & Supervisory Board members attend Board of(two members proper to DBJ and one an outside member).

Directors’ and other important meetings and may query theAlso, DBJ has created the Audit & Supervisory Board Office,execution of business by directors, peruse documents, andwhich under the board’s direction, assists board members,

conduct branch audits.

including outside members, in performing their duties. The

Advisory Bodies to the Board of Directors
In pursuit of sustainability management and DBJ’s corporate

Advisory Board

objectives, the following committees have been established as

Since DBJ’s establishment as a joint-stock company inadvisory bodies to the Board of Directors for the purpose of

October 2008, the Advisory Board has been in place as an

maintaining transparency in management and to reflect theadvisory body to advise the Executive Committee, providing

knowledge of outside experts.

advice on overall management. Revisions in 2017 to the DBJ
Act stipulate for an indefinite period obligatory measures to beOperations Audit Committee

considered, in particular, requiring that DBJ conduct its opera-

The Board of Directors has established the Operations Audit

tions in a manner that would not obstruct appropriate com-Committee, delegating to this body the authority to deliberate

petitive relations with other entities. Accordingly, this board isimportant matters related to internal audits. This committee

positioned anew as an advisory body to the Board of

met two times during the fiscal year ended March 31, 2017.

Directors. As one of its roles, even more than before, theAdvisory Board is tasked with deliberating and evaluating

Compensation Committee

important affairs related to ensuring that appropriate competi-

The Compensation Committee, whose members include out-

tive relations are maintained with private financial institutions.

side directors, considers the type of executive compensation

This board convened twice during the fiscal year ended Marchstructure that befits DBJ from the standpoint of ensuring trans-

31, 2017. This board is composed of the following outside

parency and objectivity regarding compensation.

directors and experts in fields including manufacturing, infrastructure, regional communities, and finance.

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

Outside Experts
Reiko Akiike, Senior Partner and Managing Director,
The Boston Consulting Group

Masayuki Oku, Honorary Advisor of
Sumitomo Mitsui Financial Group, Inc.

Kazuaki Kama, Executive Corporate Advisor, IHI Corporation
Katsunori Nakanishi, Chairman and CEO,The Shizuoka Bank Ltd.

Yoshizumi Nezu, President, Tobu Railway Co., Ltd.
Note: Sakie Fukushima-Tachibana, president of G&S Global Advisors Inc., left theAdvisory Committee on June 29, 2017, to be replaced by Reiko Akiike on
the same day.

Outside Directors
Akio Mimura, Senior Advisor, Honorary Chairman of
Nippon Steel & Sumitomo Metal Corporation

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

Integrated Report 201759

Corporate GovernanceSpecial Investment Operations Monitoring Board

entities’ private financial institution members. Each group met

One of the measures of the 2015 revisions to the DBJ Act was

twice in fiscal 2016, for a total of six meetings. Disputes andin regard to Special Investment Operations. The act stipulates

opinions raised in these meetings are reported to and deliber-

the establishment of a Special Investment Operations

ated by the Advisory Board and the Special Investment

Monitoring Board as an advisory body to the Board of

Operations Monitoring Board.

Directors. This monitoring board is tasked with deliberating
projects and evaluating their performance in terms of appropriateness against policy objectives and with emboldening pri-

Outside Experts
Masayuki Oku, Honorary Advisor of
Sumitomo Mitsui Financial Group, Inc.

vate-sector enterprises and complementing their operations
while maintaining appropriate competitive relations. This board,

Shin Takagi, Vice Chairman & Senior Executive Director ofJapanese Bankers Association

whose members include outside experts in fields such as manufacturing, infrastructure, regional communities, and finance,

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

convened twice during the fiscal year ended March 31, 2017.
In order to examine whether appropriate competitive relations with other entities are being maintained, roundtable dis-Takashi Yamanouchi, Advisor, Mazda Motor Corporation
Keisuke Yokoo, Vice Chairman & President of Japan Association ofcussions are held regularly with the Japanese Bankers
Association, the Regional Banks Association of Japan, and the

Corporate Executives

Fumiaki Watari, Honorary Executive Consultant of JXTG Holdings, Inc.

Second Association of Regional Banks, including these

Executive Committee
The Board of Directors has vested in the Executive Committee decision-making authority regarding the execution of business.
Accordingly, the Executive Committee makes important management decisions. The committee met 36 times during the fiscal year
ended March 31, 2017.
Committees under the Executive Committee
Name

Role

ALM & Risk Management
Committee

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

General Risk Management
Committee

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

Committee on Investment
and Loan Decisions

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

New Operation Screening
Committee

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

Advisory Panel on
Investments and Loans

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

Sustainability Committee

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

Core Business System
Restructuring Committee

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

DBJ established the Sustainability Committee, which will oper-

Matters Requiring Authorization of Competent Ministerate from fiscal 2017 onward, as part of efforts to contribute to

The DBJ Act prescribes matters for which Minister of Financea sustainable society, in accordance with DBJ’s Basic Policy

authorization is required. Major items requiring such authoriza-

on Sustainability (please refer to page 12). This committee willtion are as follows:

approach important social issues from an ESG perspective• Appointment and dismissal of representative directors andand incorporate this attitude into business activities, including
investments and loans as well as asset management.

Audit & Supervisory Board members• Amendments to Articles of Incorporation• Disposition of surplus funds; Merger, corporate split,
and dissolution; Basic policy on business plans,
redemption plans, and fund procurement

60

Integrated Report 2017

Messages from Outside Directors

Akio Mimura

Outside Director
April
April

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

Strengthening Corporate Governance in Pursuit of
DBJ’s Fourth Medium-Term Management Plan
I have served as an outside director for DBJ since it madeeffective for the goal of creating both economic and social

a new start as a joint-stock company in 2008. I have also

value from a third-party perspective. For fulfilling the DBJ’s

recently become a member of the Advisory Board, a part ofrole in this time of drastically changing economic and social

DBJ’s own corporate governance, tasked with incorporat-

environments, I believe that it is dispensable for the DBJ

ing the knowledge of outside experts into management.

management to adequately incorporate the knowledge of

The Advisory Board has played an important role of notoutside experts—who are also stakeholders in DBJ—in the

only evaluating whether appropriate competition withfields of manufacturing, infrastructure, regional

private financial institutions are maintained, but also check-

communities, and finance.

ing if the management and the governance system are

Kazuo Ueda

Outside Director
July
April
April
March
April
April
OctoberApril

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

Strengthening Corporate Governance in Pursuit of
Sustainability Management
DBJ operates under the belief that to realize a modern,

DBJ undertakes said initiatives with an eye to continuous

sustainable society, corporations will have to establish

economic and social development over the medium to longhelpful stances and initiatives. Examples of such initiatives

term. To support these goals, DBJ has included a Monitoringthat DBJ has pursued to promote ESG activities from a

Board and an Advisory Board in its corporate governancefinancial perspective include building cutting-edge financial

system. As a member of the latter, I provide advice on overall

platforms, such as financial systems based on evaluations

management together with outside experts.

and certifications, and offering risk management via Special

I will do my part in pursuit of sustainable social develop-

Investment Operations conducted thanks to complemen-ment and the sustainability management that DBJ strives for.

tary relationships with private financial institutions.

Integrated Report 201761

Corporate GovernanceInternal Control System Basic Policy

Internal Audits

DBJ has established the following internal controls to ensure

DBJ has established the Internal Audit Department under theoperational soundness, with the Board of Audit, Ministry of

direct supervision of the president of DBJ and independent

Finance, Financial Services Agency, and other institutions also

from other operating departments. The department conducts

conducting examinations of overall management.

inspections to ensure the appropriateness and effectiveness ofinternal controls, including overall operational compliance andStatus of Internal Control Systemrisk management, and performs evaluations and recommends

In accordance with the Companies Act, the Board of Directors

improvements. The Operations Audit Committee deliberates

has established an internal control system under the Internaland decides audit plans, audit reports, and other important

Control System Basic Policy. Specifically, this system ismatters related to internal audits, and this information isdesigned to determine the status of legal compliance, risk

reported to the Board of Directors. As of the end of Junemanagement, and internal audits, as well as other items of

2017, 21 people belonged to the Internal Audit Department.

importance to management. The internal control system isdesigned to confirm applicable regulations and the status of
their implementation in various departments.

Accounting Audits
DBJ has in place an agreement whereby Deloitte Touche

The full text of the Internal Control System Basic Policy isalso available on the DBJ website.

Tohmatsu LLC conducts accounting audits as its
accounting auditor.

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

Compliance
DBJ recognizes compliance as one of its most important man-2) DBJ’s executives and employees are well aware that DBJ

agement issues. As basic policies to ensure that the execution

must conduct its businesses legally and appropriately and beof duties by directors and regular employees complies withresponsible for explaining its actions to the general public.

laws and regulations and the Articles of Incorporation, we haveformulated a corporate philosophy, a Basic Compliance Policy3) DBJ refuses all advances from anti-social forces and coop-and other compliance-related regulations. In addition to its

erates with police and other related institutions to prevent

basic regulations on compliance, DBJ has created and pro-any sort of relationship with such elements.

vided notice throughout the organization of a Compliance
Manual and a compliance program. We seek to thoroughlyCompliance System

implement the compliance activities outlined below.

DBJ has established the Legal and Compliance Department totake overall responsibility for planning, preparing, and adjusting

Compliance Principles

compliance activities. In addition, DBJ has established the

DBJ has formulated the compliance principles indicated below

General Risk Management Committee to reflect on legal com-

as part of its creation of compliance regulations.

pliance matters, determine the extent of compliance, anddeliberate on improvements to DBJ’s internal system. One

1) DBJ’s executives and employees are keenly aware of DBJ’s

The objective of this internal reporting system is to swiftly

and recognize that illegal acts or improper business opera-

identify and resolve any legal violations. DBJ is also preparing

tions harm the reputation of DBJ and interfere significantly

Conflicts of Interest Management Regulations as a basic policy

with DBJ’s ability to fulfill its objectives under the new DBJ

in addition to systems to manage conflicts of interest.

Act. We also realize DBJ’s need to always conduct activities
appropriately and in compliance with the law.

62

specific initiative is the establishment of a compliance hotline.

social mission and responsibilities as a public-sector bankIntegrated Report 2017

Client Protection Management Basic Policy / Declaration on Personal Information Protection /Policy for Managing Conflicts of Interest
The establishment and maintenance of systems for client

We have incorporated a declaration on our policies into ourprotection management and the protection of personal infor-

Declaration on Personal Information Protection.

mation are vital because doing so protects the people who use

DBJ is a registered financial institution under the Financial

the financial institution’s systems and raises their level of con-Instruments and Exchange Act. In accordance with this act

venience. DBJ recognizes the extreme importance of suchand the Cabinet Office Ordinance on Financial Instruments

systems from the standpoint of operational soundness andBusiness, etc., DBJ has drawn up a policy introduced for theappropriateness. DBJ has formulated a Client Protection

management of conflicts of interest and provides an overview

Management Basic Policy to ensure strict compliance withof the publicly announced policy.

laws and regulations, protect the interests of its clients, andraise the level of client convenience. We have also createdinternal regulations based on this policy, which we employ inbriefings to raise in-house awareness.

The Client Protection Management Basic Policy,
Declaration on Personal Information Protection,
and Policy for Managing Conflicts of Interest can also
be found on the DBJ website.

Responses to Japan’s Stewardship CodeIn August 2014, DBJ stated its acceptance of the “Principles

environments, and their management teams’ intention and to

for Responsible Institutional Investors (Japan’s Stewardshipshare with investee enterprises in their long-term strategies.

Code)” (the “Code”). Under the Code, stewardship responsi-

After investing, we leverage our networks and strengths inbilities refers to the responsibilities to enhance the medium- to

information, industry research, and financing technologies tolong-term investment return for clients and beneficiaries by

provide total financing solutions that address the issues they

improving and fostering investee enterprises’ corporate value

face. Through dialogue with investee enterprises, we work toand sustainable growth through constructive “purposeful dia-realize their long-term development and maximize their corpo-

logue” (engagement), based on an in-depth understanding ofrate value over the long term.

the investee enterprises and their business environments.

DBJ believes that its investment operations have been

DBJ recognizes that, in addition to operational selection andconducted in close affinity with the spirit of the Code. In pro-focus and the realization of growth strategies, calls for corpo-

viding risk capital and knowledge, we consider the appropriate

rate governance are growing. Recognizing the importance offulfillment of stewardship responsibilities by institutional inves-the meaning of equity, in our equity investments we support

tors to be of service from the perspective of working withthe long-term advancement of the investee enterprises that are

diverse financial players to ensure the smooth formulation of

our clients, taking particular note of their social responsibilities.

financial and capital markets. Accordingly, we are in agreement

When making investments, we endeavor to gain an in-depthwith the meaning of the principles provided in the Code.

understanding of investee enterprises, their business

Integrated Report 201763

Corporate GovernanceDirectors, Audit & Supervisory Board Members, and Executive Officers(as of the End of June 2017)

Directors
President and CEO

Director and Managing Executive Officer

Masanori Yanagi

Satoshi Tomii

1974: Joined The Japan
Development Bank
2015: President and CEO of DBJ

In charge of Strategic Finance
Department Growth & Cross Border
Investment Department
1985: Joined The Japan
Development Bank
2015: Director and Managing Executive
Officer of DBJ

Deputy President

Director and Managing Executive Officer

Yasushi Kinoshita

Kenkichi Fukuda

1979: Joined the Ministry of Finance2015: Deputy President of DBJ

In charge of Credit Analysis
Department, Accounting Department,
Economic & Industrial Research
Department
1983: Joined The Japan
Development Bank
2016: Director and Managing Executive
Officer of DBJ

Deputy President

Director and Managing Executive Officer

Hajime Watanabe

Koji Narita

1981: Joined The Japan
Development Bank
2015: Deputy President of DBJ

In charge of Treasury Department,
Syndication & Credit Trading
Department, Sustainability Planningand Support Department
1987: Joined the Ministry of Finance2017: Director and Managing Executive
Officer of DBJ

Director and Managing Executive Officer

Outside Director

Shin Kikuchi

Akio Mimura

In charge of Corporate Planning &Coordination Department,
Information Resources Department,
General Affairs Department
1984: Joined The Japan
Development Bank
2015: Director and Managing Executive
Officer of DBJ

64

Integrated Report 2017

Senior Advisor, Honorary Chairmanof Nippon Steel & Sumitomo Metal
Corporation; Chairman of Tokyo
Chamber of Commerce and Industry;
Chairman of Japan Chamber ofCommerce and Industry
2008: Director at DBJ

Director and Managing Executive Officer

Outside Director

Hideo Oishi

Kazuo Ueda

In charge of Business Planningand Coordination Department,
Financial Institutions Department,International Strategy & Coordination
Department, Research Institute of
Capital Formation

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

1985: Joined The Japan
Development Bank
2015: Director and Managing Executive
Officer of DBJ

2008: Director at DBJ

Audit & Supervisory Board Members

Executive Officers (excluding those who are concurrently directors)

Audit & Supervisory Board Member

Managing Executive Officer

Executive Officer

Atsushi Kurashige

Ikuro Hirozane

Masafumi Aizawa

1986: Joined The Japan
Development Bank
2017: Audit & Supervisory Board
Member at DBJ

In charge of Corporate Finance
Department: Division 5

Managing Executive Officer

Executive Officer

Hisanobu Sekine

Takeshi Kiriyama

In charge of Corporate Finance
Department: Division 6,
Hokkaido Branch, Tohoku Branch,
Niigata BranchManaging Executive Officer
Audit & Supervisory Board Member

Mitsue Kurihara
1987: Joined The Japan
Development Bank
2015: Audit & Supervisory Board
Member at DBJ

In charge of Financial Institutions
Department

Takao Kaizu
In charge of Risk Management
Department, Legal Affairs &Compliance Department

Head of Growth & Cross Border
Investment Department

Executive Officer

Norifumi Sugimoto
Head of Corporate Planning &Coordination Department

Executive Officer

Hiroshi Shimizu
Managing Executive Officer

Makoto Anayama
In charge of Corporate Finance
Department: Divisions 1 and 2

Head of Business Planning &Coordination Department

Executive Officer

Ryusei Segawa
Managing Executive Officer
Outside Audit & Supervisory Board Member

Tatsuya Tsuboi
1978: Joined Sumitomo Trust andBanking Co., Ltd.
2009: Audit & Supervisory Board
Member of Sumitomo Trustand Banking
2013: President and CEO of Sumitomo
Mitsui Trust Research InstituteCo., Ltd.
2014: Audit & Supervisory Board
Member at DBJ

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

Makoto Ito
Advisor at Nagashima Ohno &Tsunematsu; Visiting Professor,
Nihon University Law School
2008: Audit & Supervisory Board
Member at DBJ

Executive Officer

Tsutomu Murakami
Head of Human Resources
Management Department

Managing Executive Officer

Executive Officer

Taketsugu Shinobe

Keisuke Takegahara

In charge of Corporate Finance
Department: Division 4

Managing Executive Officer
Outside Audit & Supervisory Board Member

In charge of Internal Audit

Seiji Jige

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

Yoshinao Ikeda
In charge of Kansai Branch,
Chugoku Branch, Shikoku BranchManaging Executive Officer

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

Outside Audit & Supervisory Board Member

Shinji Hatta
Professor of Graduate School ofProfessional Accountancy,
Aoyama Gakuin University
2008: Audit & Supervisory Board
Member at DBJ

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

Integrated Report 201765

Section Four Risk Management

66

Integrated Report 2017

67

Risk Management System

67

Comprehensive Risk Management

70

Business Continuity Initiatives

Risk Management System
DBJ conducts risk management from the perspective of

The ALM & Risk Management Committee and the Generalensuring management soundness. To ensure appropriate

Risk Management Committee deliberate on important mattersmanagement of individual risk categories, DBJ has developed

concerning risks and conduct regular monitoring, in line witha vital risk management system that specifies and evaluates

the basic policy related to comprehensive risk management

manageable risks and clarifies which department is respon-

approved by the Board of Directors.

sible for each type of risk. The Risk Management Department
oversees comprehensive risk management activities.

Asset/Liability and Risk Management System Overview

President

Executive
Committee

ALM & Risk Management
Committee

Risk
Management
Department

Credit Analysis
Department

Investment
and Loan
Departments/
Offices

Treasury
Department

Comprehensive Risk Management
The Risk Management Department assesses both compre-

categories at a determined level. Furthermore, the Corporate

hensive and individual risks. Based on risk guidelines that

Planning & Coordination Department has begun efforts toweigh Executive Committee business plans and the results ofmeasure risk–return by such means as risk-adjusted returnstress tests, the Risk Management Department controls theon capital.

amount of comprehensive risk and that of individual risk

1. Credit Risk Management
Credit risk refers to the risk of sustaining losses resulting fromfor self-assessment of credit quality based on the Financial

a decline in or loss of the value of assets due to deterioration

Services Agency’s Financial Inspection Manual. The resultsin the financial condition of the borrower. DBJ provides corpo-of self-assessments are subject to an audit by an auditing

rate loans and non-recourse loans, making credit risk acquisi-

corporation and are reported to management. Credit risk andtion a source for profits. As such, it represents a significant

amounts are monitored to confirm that they are within therisk category, with DBJ conducting credit management oflimits established for individual borrowers.

individual projects as well as bank-wide portfolio management,
accordingly.

The sales and credit analysis departments hold separate
roles in the screening and administering of credit for individual
projects, and each department keeps the operations of thei. Credit Administration of Individual Loans
When making an investment or loan, DBJ examines the entity’s

other in check.
The Committee on Investment and Loan Decisions meets

project viability and the project’s profitability from a fair andas needed to deliberate important issues concerning the man-

impartial standpoint. DBJ is not subject to the Banking Act oragement and operation of individual projects.

the Act on Emergency Measures for the Revitalization of the
Financial Functions (Act No. 132 of 1998), but carries out

These mutual checking functions serve to ensure the appropriateness of the finance operation and management system.

independent asset assessments in line with internal policies

Integrated Report 2017

67

Risk Management

Borrower Rating System

Asset Self-Assessment System

DBJ’s borrower rating system measures creditworthiness by

Asset self-assessments are used to define asset classifications

combining an evaluation point rating and a borrower categorythat will offset recoverability risk or the degree of risk of value

rating with the results quantifying a potential client’s credit

loss based on the borrower rating, the corresponding borrower

circumstances.

category, and the collateral or guarantee status. Such assess-

The evaluation point rating selects indicator and evaluation
categories that are common across all industries, scoring thements help DBJ establish timely and appropriate amortization
schedules and reserve levels.

creditworthiness of the potential borrower quantitatively andqualitatively. On the other hand, the borrower category rating
measures specific items related to the borrower, looking at theborrower’s realistic financial condition, cash flows, and debt
repayment history, generating a comprehensive assessmentof a borrower’s repayment capacity.
Borrower Rating Classifications
Borrower
RatingBorrower Category

Definition

Claims Classified under the
Financial Revitalization Act

Normal borrowers

1–8

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

Borrowers requiringcaution

9–11

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

Substandard
borrowers

12

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

Substandard claims

Borrowers in dangerof bankruptcy

13

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

Doubtful claims

Effectively bankrupt
borrowers

14

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

15

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

Bankrupt borrowers

Normal claims

Claims in bankruptcy,
reorganization claims,
and similar claims

ii. Portfolio Management

maximum loss that could be incurred at a certain rate of prob-

DBJ performs a comprehensive analysis of data based on

ability minus the EL. The EL and UL calculations are reported

borrower ratings and calculates the loan portfolio’s overall

to the ALM & Risk Management Committee.

exposure to credit risk. Credit risk exposure can be classified

Through such monitoring and the consideration of counter-as (1) expected loss (EL), the average loss expected during ameasures, DBJ is committed to controlling risk and devising

specific loan period; and (2) unexpected loss (UL), theeffective measures to improve risk return.

2. Investment Risk
Investment risk refers to the risk of sustaining losses resulting

In addition to investment analysis and management in linefrom a decline in or loss of the economic value of assets duewith credit risk management, investment decisions based on

to worsening financial conditions for entities receiving funds

target returns in accordance with investment category andand to changing market environments. DBJ’s investments

regular monitoring are utilized to manage individual invest-

include the provision of mezzanine and equity financing, par-ments. In terms of portfolio management, we conduct risk

ticularly to unlisted entities, such as corporations, funds, infra-

measurement that applies credit and market risk assessment

structure, and real estate. As a source of profits, investments

methods, with a focus on differences between investment

represent one of DBJ’s most significant risk categories. DBJ

categories and recovery methods.

makes investment decisions and manages individual investments as well as its bank-wide portfolio accordingly.

68

Integrated Report 2017

3. Market Risk
The primary focuses in terms of market risk management areinterest rate risk and financial liquidity risk. In regard to control-interest rate risk and exchange risk. DBJ classifies market risk

ling interest risk, a portion of the interest rate risk is covered

as passive risk pertaining to investment and loan activities andthrough interest rate swaps.

implements management in the manner detailed below. DBJ
does not have any trading-related risk because it does not

ii. Exchange Risk

engage in trading (specified transactions).

Exchange risk is the risk of loss due to volatility in exchange
rates, and this risk affects entities holding a net excess ofi. Interest Rate Risk

assets or liabilities denominated in foreign currencies. DBJ’s

Interest rate fluctuations can create mismatches on rates of

exchange risk derives from financing in foreign currencies

interest on assets and liabilities or on interest periods, creating

and issuing foreign currency bonds. However, DBJ uses

the risk of reduced profits or the risk of losses. Interest rate risk

exchange swaps and other instruments to limit this risk in

can reduce the economic value of DBJ’s assets or interest

terms of assets and liabilities denominated in foreign curren-

income.

cies at a net-base position.

Based on monitoring through multifaceted indexes, suchas value at risk (VaR) and interest rate sensitivity analyses

DBJ uses swap transactions to manage counterparty risk by(basis point value), as well as ALM policies established by thecontinuously monitoring the creditworthiness of all parties andExecutive Committee, DBJ conducts comprehensive manage-by setting a limit to financing for each counterparty. DBJ alsoment of current assets and liabilities to optimize net interest

conducts risk management through margin transfers by means

expenses and economic value by adequately controllingof a centralized exchange and mutual credit support annex.

4. Liquidity Risk
Liquidity risk is the risk of a mismatch occurring in the periods

relies on the stable procurement of long-term funds from thewhen funds are used and raised or of an unexpected outflow

Japanese government’s Fiscal Investment and Loan Programof funds, causing differences in the flow of funds (cash liquidity

and government-guaranteed bonds rather than on short-termrisk). Such situations make securing funds difficult and create

funds such as deposits. Contingency plans are established as

situations in which interest rates on borrowed funds are sub-appropriate to meet unexpected short-term funding require-stantially higher than usual rates. At other times, because ofments and cash flow shortfalls.

market complexities, entities in these circumstances may

Additionally, DBJ maintains daytime liquidity by using the

become unable to participate in market transactions, compel-

Bank of Japan’s real-time gross settlement system, whereby

ling them to conduct transactions under substantially lesssettlement is made instantly for each transaction. Every effort

favorable terms than otherwise would be the case. The risk

is made to ensure that settlement conditions are managedof losses for these reasons is known as market liquidity risk.

appropriately.

As its main methods of acquiring funds, in addition to issuing corporate bonds and taking out long-term loans, DBJ

In addition to credit risk, the ALM & Risk Management
Committee deliberates DBJ’s market risk and liquidity risk.

5. Operational Risk Management
DBJ defines operational risk as the risk of loss arising frompotential risks from materializing. The General Risk

internal processes, people or systems that are inappropriate orManagement Committee has been established to deliberate

non-functioning, or from external events. DBJ works to estab-

topics concerning operational risk management.

lish a risk management system to minimize risk and prevent

Integrated Report 2017

69

Risk Management

Within operational risk management, DBJ conducts adminis-

ii. System Risk Management

trative risk management and systems risk management as

System risk refers to the risk of loss due to a computer systemdescribed below.

breakdown or malfunction, system defects, or improper computer use. DBJ has implemented the following internal pro-i. Administrative Risk Management

cesses to optimize system risk management and properly

Administrative risk refers to the risk of sustaining losses result-manage risk with regard to systems risk. The System Risk

ing from employees neglecting to perform their duties correctlyManagement Division is responsible for managing DBJ’sor from accidents, fraud, and the like. To reduce or prevent

system risk centrally, based on its system risk managementadministrative risk, DBJ prepares manuals, performs checks onregulations. By determining security standards from a variety

administrative procedures, provides education and training, andof viewpoints—from information system planning and develop-

uses systems to reduce the burden of administrative duties.

ment to operation and use—the department extends the risk
management system bank-wide and addresses appropriate
system risk management operations.

Business Continuity Initiatives
DBJ prepares a business continuity plan (BCP) to protect the

When formulating policies to ensure the continuity andinterests of its stakeholders, including its clients, its share-

recovery of core operations, we took the approach of consid-

holder, and its executives and employees, as well as to fulfill its

ering responses to cases in which important managementsocial mission. The BCP aims to ensure the continuity andresources were damaged due to a large-scale disaster, affect-

rapid recovery of core operations in the event of emergencies,

ing head office (1) buildings and facilities, (2) executives andsuch as natural disasters (in particular, large-scale earth-employees, and (3) systems, instead of considering responses

quakes), influenza and other pandemics, system failures, andto individual events such as earthquakes and fires.

power outages.

Measures to Ensure Business Continuity
We have prepared a variety of measures to ensure business continuity.
Enhanced System Robustness

Chain of Command and Delegation of Authority

We ensured advanced security levels at the main center and

To assure that decision-making concerning the continuity ofcreated a backup center to operate in the event that the maincore operations is prompt and certain, in the event that thecenter ceases to operate.

Disaster Response Committee is established, we have put inplace a chain of command and an alternative hierarchy byMultilayered Communication Procedures

which authority can be delegated.

We introduced a safety confirmation system to quickly determine the whereabouts and status of executives and employ-

Clarification of Initial Response and Procedures forees even at night and on holidays. In addition, we distributed

Continuing or Recovering Core Operations

satellite telephones to key locations and personnel to ensure

For individual business units, we have established in advance

multilayered communication procedures.

the procedures for the initial response and the continuation or
recovery of core operations so that relevant divisions can
respond quickly and with certainty on core operations evenwhen in a state of confusion.

Initiatives to Maintain or Improve BCP Viability
DBJ conducts various types of instruction and training of exec-

cycle, we revise the BCP to reflect training results and recent

utives and regular employees to maintain or improve the viabil-

information, and the Executive Committee reviews it regularly

ity of its BCP. Furthermore, employing a Plan-Do-Check-Act

and amends it as necessary.

70

Integrated Report 2017

Corporate Data

72 Timeline
73 Shareholder
Summary of Changes to the
DBJ Act after Conversion toa Joint-Stock Company

74 Organizational Structure
75 Initiatives Addressing ESG Issues
76 Column:
DBJ’s Connection to Sustainability

Integrated Report 201771

Corporate Data

Timeline

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

Month

Event

1951

April

The Japan Development Bank (JDB) established1952

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

1956

June

The Hokkaido Development Finance Public Corporation established

1957

April

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

1960

JDB branch opened in Takamatsu (now the Shikoku Branch)

1961
1962

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

1963

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

1964

July

1972

January

JDB representative office opened in London
HTDFP representative office opened in Niigata (renamed Niigata Branch in July 1989)

1985

June

The Japan Development Bank Law revised1) Investment function (pertaining to business in such areas as research and development,
urban development, and energy use stipulated by government ordinance) added
2) R&D fund investment function added

1987 September Low interest rate loan system funded partially by sale of NTT shares created by JDB and HTDFP1989

JDB representative offices opened in Oita, Matsuyama, Okayama, and Toyama
HTDFP representative offices opened in Hakodate and Aomori

1995 February

JDB loans to assist disaster recovery commenced

1997 September Bill entitled “Pertaining to Consolidation and Rationalization of Special-Purpose Companies, etc.” approvedby the Cabinet (decision dissolving JDB and HTDFP and consolidating them as a new bank approved)
1998 December JDB and HTDFP loans in response to changes in the financial environment commenced(March 31, 2001, sunset clause introduced)
1999

June
October

2002

May

The Development Bank of Japan Law (Law No. 73 of 1999) approved
All rights and responsibilities of JDB and HTDFP and all financing operations of Japan Regional Development
Corporation and Japan Environment Corporation transferred to the Development Bank of Japan
DBJ representative offices opened in Kushiro and Singapore
The Development Bank of Japan Law revised (additional spot inspections by the Financial Services Agency introduced)

2005 December Important Policy of Administrative Reform approved by the Cabinet
2006

2007

May

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

June

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

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

Development Bank of Japan Inc.
Year

2008

Month

October

Event

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

December DBJ Singapore Limited launched
2009

June

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

September Capital increased to ¥1,103,232 million
November DBJ Europe Limited launched
2010

March

Capital increased to ¥1,181,194 million

2011

May

The Development Bank of Japan Inc. Act partially amended based on establishment of the Act for Extraordinary
Expenditure and Assistance to Cope with the Great East Japan Earthquake (Act No. 40 of 2011)

December Capital increased to ¥1,187,364 million
2012

March

Capital increased to ¥1,187,788 million

June

Capital increased to ¥1,198,316 million

December Capital increased to ¥1,206,953 million
2014

June

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

2015

May

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

AugustCapital reduced by ¥206,529 million, and crisis response reserve increased by the same amount72

Integrated Report 2017

Shareholder
As of March 31, 2017
Name

Address

Number of shares held (thousands of shares)

Percentage of total equity (%)

Finance Minister

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

43,632100.00Total—

43,632100.00

Summary of Changes to the DBJ Act after Conversion to a Joint-Stock Company
On October 1, 2008, DBJ transitioned from a special public

response to large-scale disasters and economic crises, thecorporation to a joint-stock company. In preparation for full-amending act makes DBJ’s Crisis Response Operations oblig-

scale privatization following the disposal of all Japanese govern-

atory for an indefinite period. From the perspective of promot-

ment-owned shares, DBJ has continued working to enhance its

ing the provision of growth capital to revitalize regional

corporate value through integrated investment and loan ser-economies and increase the competitiveness of enterprises,

vices. These activities include providing long-term loans; equity,

the amending act calls for DBJ to accept a certain amount of

mezzanine financing and other types of risk capital; and M&A

capital from the Japanese government (industrial investment).

advisory services.

This investment is to be used for a new scheme, Special

On the other hand, shortly after DBJ’s conversion to a joint-

Investment Operations, to strengthen and develop the Fund forstock company, the global financial crisis and the Great East

Japanese Industrial Competitiveness. In addition, with regard

Japan Earthquake occurred. The Japanese government called

to the application of DBJ’s investment and loan functions

on DBJ to steadily mount large-scale Crisis Response

toward crisis response and the provision of growth capital,

Operations. Due to these crises, the Development Bank ofmeasures were introduced obliging the Japanese government

Japan Inc. Act (Act No. 85 of 2007: “DBJ Act”) was amended

to hold at least a certain percentage of DBJ’s shares.

twice, with DBJ accepting an additional increase in Japanese

As part of this structural revision, deliberations by thegovernment capital. Also, by the end of fiscal 2014, theJapanese government’s Study Panel Concerning the Promotion

Japanese government was to review DBJ’s organization,of Expanding Growth Funding covered such topics as DBJ’s

including its shareholdings, as stipulated by the revision.

proper implementation of Crisis Response Operations, theBased on the deliberations by the Japanese government’s

importance of initiatives for providing growth capital (equity andStudy Panel Concerning the Promotion of Expanding Growth

mezzanine financing) to address shortages in Japanese finan-

Funding, the Act for Partial Amendment of the Development

cial and capital markets, and an evaluation of DBJ’s initiatives

Bank of Japan Inc. Act, which was enacted on May 20, 2015,

following its conversion to a joint-stock company.

maintains the direction toward full-scale privatization. At theNote: For the full text of the DBJ Act, please refer to the data section

same time, in order to fully ensure the provision of funding in

Highlights of 2015 Revisions to the DBJ Act
1. Measures maintaining direction toward full-scale privatization
Full-scale privatization and disposal of all
BeforeJapanese government-held shares, targeting
revisionaround five to seven years from April 1, 2015

• No changes in the main provisions, including Article 1, which stipulates
DBJ’s objectives
Afterrevision • Disposal of shares as soon as practicable (considering its effect on achieving
DBJ’s objectives as well as on the market situation)

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

• Assuming responsibility for Crisis Response Operations for an indefinite period(at the same time reflecting this obligation in the Articles of Incorporation)Afterrevision • Extending for an indefinite period the scope of the Japanese government’s

recapitalization securing DBJ’s financial structure, with the Japanese government
having such obligations as holding more than one-third of DBJ’s shares

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

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

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

Integrated Report 201773

Corporate Data

Organizational Structure (as of April 1, 2017)

Business Planning & Coordination Department

General Meeting of
Shareholders

Innovation Promotion OfficeFinancial Institutions Department
Urban Development Department
International Strategy & Coordination Department

Audit & Supervisory
Board Members /Audit & Supervisory
Board

Corporate Finance Department, Division 1
Corporate Finance Department, Division 2

Aerospace Office

Corporate Finance Department, Division 3
Audit & Supervisory
Board Office

Corporate Finance Department, Division 4
Corporate Finance Department, Division 5
Corporate Finance Department, Division 6

Healthcare Industry Office

Hokkaido Branch
Board of Directors

Executive Committee

Tohoku Branch

Tohoku Recovery & Growth Support OfficeNiigata Branch
Hokuriku Branch
Tokai Branch

Advisory Board

Kansai Branch
Chugoku Branch
Shikoku BranchSpecial Investment
Operations
Monitoring Board

Kyushu Branch

Kumamoto Recovery Office

Minami-Kyushu Branch
Real Estate Finance Department

Chief
Investment
Officer

Strategic Finance Department

Regional Investment Promotion Office

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

Chief
Research
Officer

Sustainability Planning & Support Department

Economic Research Office

Economic & Industrial Research Department

Industrial Research & Customer Solutions
Planning Office

Regional Planning Department
Research Institute of Capital Formation

Corporate Management & Accounting
Research OfficeSecretariat Office
Human Resources Management Department

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

Corporate Planning & Coordination Department
Risk Management Department

Public Relations OfficeSustainability Management OfficeInformation Resources Department

Overseas Representative Office:
New York

General Affairs Department
Accounting Department

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

Settlement & Accounting Operations Office

Credit Analysis Department
Legal Affairs & Compliance Department
Treasury Department

Operations Audit
Committee

Internal Audit Department

Group Companies
DBJ Group offers diverse services in accordance with client needs.

Overseas locations

DBJ Singapore Limited

Current subsidiary based in Singapore

DBJ Europe Limited

Current subsidiary based in London

DBJ Investment Consulting (Beijing) Co., Ltd. Current subsidiaries based in Beijing and Shanghai
DBJ Capital Co., Ltd.

Venture capital to support the establishment of start-ups that apply a hands-on approach to increasing corporate value

DBJ Investment Advisory Co., Ltd.

Company that performs advisory functions related to DBJ’s value-added equity investment

DBJ Securities Co., Ltd.

Subsidiary providing a securities function to complement DBJ Group’s investment and loan functions

DBJ Asset Management Co., Ltd.

Asset management company focused on real estate, private equity, etc.

Research
Consulting

Japan Economic Research Institute Inc.

Comprehensive think tank that primarily conducts surveys and provides consulting services

Value Management Institute, Inc.

Comprehensive think tank with analytical capabilities characterized by cutting-edge technical knowledge and original economic models

Real estate
management/
services, etc.

DBJ Real Estate Co., Ltd.

Company that takes on administrative functions for DBJ Group

Consist Inc.

Company that performs functions from consulting to development, maintenance, and operation of information systems

Investments and loans
Asset management

74

Integrated Report 2017

Initiatives Addressing ESG Issues
To bring about a sustainable society and achieve both economic

Vision 2030, we are conducting Plan-Do-Check-Act cycles inand social value, each and every employee at DBJ Group takes

accordance with targets for important economic issues thaton business activities with an awareness of environmental,

must be addressed in relation to the Fourth Medium-termsocial, and governance (ESG) issues. The following table pres-Management Plan.

ents DBJ initiatives from an ESG standpoint. In pursuit of

Issue

Association with the Sustainable
Development Goals

Main Initiative• Enhancements to the transportation network (pages 20–21)• Maintenance, renovation, and expansion of urban functions(pages 22–23)
Offering financial
services to help addresssocial issues• Support for transforming and growing industrial structures(pages 24–27)• Creation of a resilient society through the Enterprise Disaster
Resilience Rated Loan Program (pages 54–55)• Improvements in companywide productivity through the
Employees’ Health Management Rated Loan Program(pages 54–55)

Provision of risk capital

Development of
human resources with
an emphasis on diversity• Crisis Response Operations (pages 32–33)• Special Investment Operations (pages 30–31)• Development of human resources, improvements in motivation,and reforming of workstyles (pages 48–49)

Contribution to a
low-carbon society
through investments
and loans• Support for spreading the use of renewable energy(pages 18–19)

Consideration for theenvironment in all ofour business activities• Issue of DBJ Sustainability Bond (page 55)• Environmentally Rated Loan Program (pages 54–55)• DBJ Green Building Certification (page 55)• Promotion of environmental management (DBJ website)

Corporate governanceRisk management• Advisory Board (page 59)• Enhancements to comprehensive risk management(pages 67–70)• Special Investment Operations Monitoring Board (page 60)• Business continuity initiatives (page 70)

Integrated Report 201775

Corporate DataC O LU MN

DBJ’s Connection to Sustainability
Sustainability Report
DBJ issued the Environmental Report for a Sustainable
Society in 2003 as a way to communicate with its diverse
stakeholders, a first for a state-run financial institution.
In 2004, the name was changed to the Sustainability
Report, showing DBJ’s strong desire to use finance asa tool to contribute to the creation of a sustainable society. From then on, DBJ has not only remained compliant
with laws and regulations while engaging in social contribution activities, it has conducted corporate social
responsibility through its business operations. Based on
its aspirations to realize a sustainable society, DBJ Grouphas united as one in the pursuit of business activities,
with its current corporate philosophy as the foundationof the value system they reflect, through both its executives and its regular employees.

Sustainability Research
DBJ’s Research Institute of Capital Formation has
been tackling sustainability from an academic
standpoint for many years. Dr. Osamu Shimomura,
who lent theoretical support to Japan’s rapid
growth following World War II and worked as theinstitute’s first director, developed the “zero growththeory” after the first oil crisis as an approach tomaintaining a sustainable economy under resource
constraints. Furthermore, the world-renowned theoretical economist Dr. Hirofumi Uzawa, who worked
as an advisor to the research institute for nearly 50
years, argued for an economy that allowed the natural environment and society to coexist in his 1974
work entitled “The Social Cost of Automobiles” andadvocated for social common capital, an indispensable element to creating a sustainable society as thebasis for a market economy.
The institute has inherited and developed similar lines of research with thecooperation of a number of scholars. For instance, it was responsible for theestablishment of a climate change research center in 1993. In this way, theResearch Institute of Capital Formation has led the way in research on sustainable economics and corporate management.

76

Integrated Report 2017

Data Section

78

The Development Bank of Japan Inc. Act

97

Financial Condition

Integrated Report 2017

77

The Development Bank of Japan Inc. Act

The Development Bank of Japan Inc. Act (Act No. 85 of 2007)
Promulgated : June 13, 2007 by Act No. 85 of 2007
Enforced: April 1, 2017
Last Amended : June 3, 2016 by Act No. 62 of 2016

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

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

Chapter II Business Operations
Article 3 Scope of Business Operations
1. The Corporation shall engage in the following business operations to attain its objectives:(1) To accept deposits (limited to certificates of deposit (CDs)and other deposits stipulated in the Cabinet Order);(2) To lend money;(3) To make capital contributions;(4) To guarantee the due performance of debts and obligations;(5) To sell and purchase Securities (other than those that fallwithin monetary claims represented by certificates set forthin Item (7), Short-term Notes, Etc.; the same in Item (8))(other than those that fall within securities-related derivatives
transactions (the securities-related derivatives transactions
set forth in Article 28, Paragraph 8, Item (6) of the Financial
Instruments and Exchange Act (Act No. 25 of 1948); hereinafter in this Item and Item (11) the same), or enter into
securities-related derivatives transactions (limited to thosemade for investment purposes), except in cases wherethese business operations fall within those operations
referred to in Item (3);(6) To lend Securities;(7) To acquire or transfer monetary claims (including claims represented by certificates stipulated in the Ministry of FinanceOrdinance such as negotiable bank deposit certificates);(8) To subscribe for Specified Bonds or Preferred Investment
Securities issued by a Specified Purpose Company (limited
to the cases where the Specified Purpose Company
acquires only designated monetary claims or beneficial
interests in trusts with which designated monetary claims
are entrusted with cash proceeds derived from issue of
those Specified Bonds or Preferred Investment Securities as
set forth in the Asset Liquidation Plans, and except for, incase of Specified Bonds, Specified Short-term Notes), andother similar securities stipulated in the Ministry of FinanceOrdinance (hereinafter in this Item referred to as the“Specified Bonds”) (except in cases where it is intended forsecondary distribution (uridashi)), or to handle primary offering (boshu) of the Specified Bonds so subscribed;(9) To acquire or transfer Short-term Notes, Etc.;(10) To act as an agent or intermediary for execution of agreements which provides for lending money on behalf of banks(the banks set forth in Article 2, Paragraph 1 of the Banking
Act (Act No. 59 of 1981); hereinafter the same) and otherentities engaged in the financial business stipulated in the
Cabinet Order;(11) To enter into derivatives transactions set forth in Article 2,
Paragraph 20 of the Financial Instruments and Exchange
78

Integrated Report 2017

Act (other than those that fall within the securities-related
derivatives transactions), except in cases where these business operations fall within those operations referred to in
Item (7);(12) To do the activities referred to in Article 2, Paragraph 8, Item(7) of the Financial Instruments and Exchange Act;
(13) To do the activities referred to in Article 2, Paragraph 8, Item(9) of the Financial Instruments and Exchange Act (limited, inthe case of the handling of primary offering or secondary
distribution, to those to be conducted upon entrustment byfinancial instruments firms engaged in the type I financial
instruments trading business set forth in Article 28,
Paragraph 1 of the Financial Instruments and Exchange Act(the financial instruments firms set forth in Article 2,
Paragraph 9 of the Financial Instruments and Exchange Act;
hereinafter the same), and for such financial instruments
firms);(14) To do the activities referred to in Article 2, Paragraph 8, Item
(11) of the Financial Instruments and Exchange Act;
(15) To do the activities referred to in Article 2, Paragraph 8, Item(13) of the Financial Instruments and Exchange Act;
(16)	To do the activities referred to in Article 2, Paragraph 8, Item(15) of the Financial Instruments and Exchange Act;
(17) With respect to securities (including, if such securities are
not issued, rights to be represented by such securities) ortransactions referred to in each Item of Paragraph 2 ofArticle 33 of the Financial Instruments and Exchange Act, todo the activities set forth in each Item of the said Paragraph(other than those referred to in Items (3), (5), (7) through (9),(11) and (13));(18) To provide other entities with consulting services regarding
business transfer, merger, corporate split, share-for-shareexchange (kabushiki kokan) or share transfer (kabushiki iten),or to act as a broker for these transactions;(19) To provide other entities with consulting services regarding
management, and to conduct investigations or provide
information as required for the business operations of otherentities;(20) To conduct investigations, research or training regarding
financial and other economic issues; and(21) To do activities incidental to each of the foregoing Items.
2. In addition to the business operations of the preceding
Paragraph, the Corporation may engage in such business activities as necessary to attain its object, subject to authorization of
the Minister of Finance.
3. “Securities” in Items (5) and (6) of Paragraph 1 and Paragraph 5
mean the securities set forth in Article 2, Paragraph 1 of theFinancial Instruments and Exchange Act, and the rights which
are deemed as securities as set forth in Article 2, Paragraph 2 of
the Financial Instruments and Exchange Act.
4. “Short-term Notes, Etc.” in Items (5) and (9) of Paragraph 1, andthe next following Paragraph mean:(1) Short-term notes Etc. set forth in Article 66, Item (1) of the
Act Concerning the Central Depositary System of Corporate
Debentures, Shares, Etc. (Act No. 75 of 2001);(2) Short-term investment corporation notes set forth in Article
139-12, Paragraph 1 of the Act Concerning Investment
Trusts and Investment Corporations (Act No. 198 of 1951);(3) Specified short-term notes set forth in Article 2, Paragraph
8 of the Act concerning Liquidation of Assets (Act No. 105
of 1998);(4) Rights to be indicated on debt securities (other than thosehaving the nature of corporate debentures with stock acquisition rights (shinkabu-yoyaku-ken-tsuki shasai)) to be issued
by foreign corporations, the ownership rights of which shallbe determined based on the entries or recordings in thecentral depositary account register as prescribed by the Act
Concerning the Central Depository System of Corporate
Debentures, Shares, Etc., which satisfy all of the following
requirements:		a. The amount of each right is not less than JPY100 million;		b.	It is stipulated that the principal amount of such debt
securities shall be redeemed on a definitely specified date
which occurs a year after the date on which the aggregate amount of such rights is paid, and further that no
payment shall be made in installments; and		
c.	It is stipulated that interest shall become due and payable
on the same date as the maturity date of the principal
amount in Sub-item b.
5. The business operations referred to in Paragraph 1, Item (7) (inthe case of monetary claims represented by the certificates set
forth in the said Item which fall within Securities) and the business operations referred to in Paragraph 1, Item (9) (in the caseof Short-term Notes, Etc.) shall include the business operations
to do the activities referred to in Article 2, Paragraph 8, Items (1)through (6), and (8) through (10) of the Financial Instruments andExchange Act.
6. The terms “Specified Purpose Company,” “Asset Liquidation
Plan,” “Specified Bonds,” “Specified Short-term Notes” or“Preferred Investment Securities” referred to in Paragraph 1,
Item (8) mean the specified purpose company, asset liquidation
plan, specified bonds, specified short-term debentures or preferred investment securities set forth in Article 2, Paragraphs 3, 4
or 7 through 9 of the Act concerning Liquidation of Assets,
respectively.
7. If the Corporation engages in the business activity referred toParagraph 1, Item (10), the provision of Article 52-36, Paragraph
1 of the Banking Act and other provisions equivalent to that provision of the said Paragraph which apply to those who engage inthe financial business stipulated in the Cabinet Order set forth inParagraph 1, Item (10) and are prescribed in the Cabinet Order,
shall not apply.
Article 4 Application by Changing the Provisions of the
Financial Instruments and Exchange Act to Read
1. For the purpose of application of the provisions of the Financial
Instruments and Exchange Act to the Corporation, the words
and phrases indicated in the center columns of the table below
in the provisions of that Act in the left columns shall be changed
to read the words and phrases indicated in the right column,
respectively:
Article 2, Paragraph 8(referred toas the“Cooperative
Financial
Institutions”)

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

Article 33-8, Paragraph 1

are the financial institutions, or if Development
Bank of Japan Inc. conducts the business activity referred to in Article 3,
Paragraph 1, Item (16) of
The Development Bankof Japan Inc. Act (ActNo. 85 of 2007)

are the financial
institutions

2. Any directors, accounting counsel (kaikei sanyo) (including, if an
accounting counsel is a firm, its members who should performthe duties as such; hereinafter in this Paragraph the same), statutory auditors, executive officers (shikkoyaku) or employees shallnotify the Minister of Finance without delay as set forth in the
Minister of Finance Ordinance if they take up a position of director, accounting counsel, statutory auditor or executive officer of a
Financial Instruments Firm (limited to the firms that engages inthe securities-related business set forth in Article 28, Paragraph
8 of the Financial Instruments and Exchange Act; hereinafter inthis Paragraph the same) (including the cases where a director,
accounting counsel, statutory auditor or executive officer of a
Financial Instruments Firm come to concurrently hold a positionof director, accounting counsel, statutory auditor or executive
officer of the Corporation), or they resign a director, accounting
counsel, statutory auditor or executive officer of a Financial
Instruments Firm.
Article 5 Issue of the Development Bank of Japan Bonds
1. The Corporation may issue the Development Bank of Japan
Bonds.
2. The provision of Article 702 of the Companies Act (Act No. 86 of2005) shall not apply where the Corporation issues theDevelopment Bank of Japan Bonds.
3. Only with respect to the Development Bank of Japan Bonds
issued outside of Japan, the Corporation may issue certificates
representing the Development Bank of Japan Bonds (includinginterest coupons appertaining thereto; hereinafter in thisParagraph, and Article 13, Paragraphs 3 and 4, Item (1), thesame), as prescribed in the Cabinet Order, in the event that it isnecessary to deliver replacement certificates to anyone who has
lost those certificates.
Article 6 Method of Issue of the Development Bank ofJapan Bonds
1. If the Corporation issues certificates representing theDevelopment Bank of Japan Bonds, such certificates shall be in
bearer form; provided, however, that the Corporation may issue
those certificates in registered form upon request of a subscriberor owner of the Bonds.
2. If the Corporation issues the Development Bank of Japan
Bonds, the Corporation shall not enter into a custody agreementwith a subscriber of the Bonds in which matters set forth in the
Ministry of Finance Ordinance and the Cabinet Office Ordinanceare contained.

(referred to as the“Cooperative Financial
Institutions”),
Development Bank ofJapan Inc.

Integrated Report 2017

79

The Development Bank of Japan Inc. Act

3. The Corporation may issue certificates representing theDevelopment Bank of Japan Bonds by way of a secondary distribution (uridashi). In that case, the Corporation shall determine
the distribution period.
4. If the Corporation issues certificates representing theDevelopment Bank of Japan Bonds, the Corporation shall indicate the following matters on the face of those certificates:(1) Trade name of the Corporation;(2) Amount of the Bonds represented by the certificate;(3) Interest rates on the Development Bank of Japan Bonds
represented by the certificate;(4) Method of redemption and maturity date of theDevelopment Bank of Japan Bonds represented by the certificate; and(5) Numbers of the certificate.
5. If the Corporation intends to issue the Development Bank ofJapan Bonds by way of a secondary distribution, theCorporation shall give public notice of the following matters:(1) Distribution period;(2) Aggregate amount of the Development Bank of Japan
Bonds;(3) If payment for the Development Bank of Japan Bonds ismade in more than one installment, the amount of, and timeschedule for, such payments;(4) Issue price or minimum price of the Development Bank ofJapan Bonds;(5) If the Corporation intends to issue the Development Bank ofJapan Bonds, the ownership rights of which shall be determined based on the entries or recordings in the central
depositary account register as prescribed by the Act
Concerning the Central Depository System of Corporate
Debentures, Shares, Etc., description to the effect that theDevelopment Bank of Japan Bonds are subject to the said
Act; and(6) Matters referred to in Items (1) through (4) of the immediately ­preceding Paragraph.
6. The Corporation may issue the Development Bank of Japan
Bonds at a discount.

especially necessary after the discussion referred to in
Paragraph 2.
5. The provisions of Article 4, Paragraph 1 of the Banking Act andArticle 4, Paragraph 1 of the Long-Term Credit Bank Act (ActNo. 187 of 1952) shall not apply to the business operations to
be conducted by the Corporation in the case that the
Corporation obtains the approval referred to in Paragraph 1.

Article 7 Extinctive Prescription of the Development Bank ofJapan Bonds
The extinctive prescription periods of the principal of, and interest on, the Development Bank of Japan Bonds to be issued by
the Corporation shall be fifteen (15) years and five (5) years,
respectively.

Article 11 Fiscal year
The fiscal year of the Corporation shall commence on April 1 ofeach year and end on March 31 of the following year.

Article 8 Mutatis Mutandis Application of the Currency andSecurities Counterfeiting Control Act
The Currency and Securities Counterfeiting Control Act (Act No.
28 of 1895) shall be applied mutatis mutandis to the counterfeiting of certificates representing the Development Bank of Japan
to be issued by the Corporation.
Article 9 Special Rules When Starting Acceptance of
Deposits, Etc.
1. If the Corporation intends to start acceptance of deposits set
forth in Article 3, Paragraph 1, Item (1) or issue of theDevelopment Bank of Japan Bonds, the Corporation shall obtain
the prior approval of the Minister of Finance.
2. If the Minister of Finance intends to give the approval referred toin the preceding Paragraph, the Minister of Finance shall, in
advance, have a discussion with the Prime Minister and obtain
his/her consent.
3. The Prime Minister may request the Minister of Finance to provide
the Prime Minister with the required materials and explanations,whenever the Prime Minister deems necessary after the discussion referred to in the immediately preceding Paragraph.
4. The Prime Minister may request the Corporation to cooperatewith the Prime Minister such as providing materials and explanations, to the required extent, whenever the Prime Minister deems
80

Integrated Report 2017

Article 10 Mutatis Mutandis Application of the Banking Act
1. The provisions of Articles 12-2 (other than Paragraph 3), 13,
13-2, 13-4, 14, 14-2, 20, 21, 23 and 57-4 (limited to the portions relating to Item (1)) of the Banking Act shall apply mutatis
mutandis to the Corporation when the Corporation obtains theapproval referred to in Paragraph 1 of the immediately preceding
Article. For this purpose, references to the “Prime Minister” and“Cabinet Office Ordinance” in these provisions (other than thesecond sentence of Article 13-4 and Article 20, Paragraph 7 of
the Banking Act) shall be changed to read the “Minister ofFinance and the Prime Minister” and the “Ministry of FinanceOrdinance and the Cabinet Office Ordinance,” respectively, andreference to “Article 38, Items (1) and (2), and Article 38-2” inArticle 13-4 of the Banking Act shall be changed to read “Article
38-2,” and other necessary technical changes to read shall beprescribed in the Cabinet Order.
2. For the purpose of application of the provisions of the Financial
Instruments and Exchange Act which shall be applied mutatis
mutandis after changing to read in Article 13-4 of the Banking
Act which is applied mutatis mutandis after changing to read in
the preceding Paragraph, reference to the “Cabinet Office
Ordinance” in those provisions shall be changed to read the“Ministry of Finance Ordinance and Cabinet Office Ordinance.”
3. If the Government stipulates an ordinance pursuant to the provisions of the Banking Act which shall be applied mutatis mutandis
after changing to read in Paragraph 1, the Government shall pay
attention so that interests of users of business operations of the
Corporation such as money lending, when it gives the approvalreferred to in Paragraph 1 of the immediately preceding Article
may not be unreasonably infringed.

Article 12 Shares
1. If the Corporation intends to solicit those who will subscribe forshares offered for sale set forth in Article 199, Paragraph 1 of theCompanies Act (Act No. 86 of 2005) (hereinafter in Article 34,
Item (4) referred to as the “Shares Offered for Sale”) or stockacquisition rights offered set forth in Article 238, Paragraph 1 of
the Companies Act (hereinafter in Article 34, Item (4) referred to
the “Stock Acquisition Rights Offered”), or to deliver shares orstock acquisition rights in connection with a share-for-shareexchange, the Corporation shall obtain authorization of the
Minister of Finance.
2. Without delay after the delivery of shares upon exercise of stockacquisition rights, the Corporation shall submit a report thereon
to the Minister of Finance.
Article 13 Corporate Debentures, Development Bank of Japan
Bonds and Borrowings
1. Prior to the beginning of each fiscal year, the Corporation shallprepare its basic policy regarding the issue of corporate debentures (shasai) (other than the Development Bank of Japan
Bonds, “Corporate Debentures”; hereinafter the same) and theDevelopment Bank of Japan Bonds (excluding the short-term
notes set forth in Article 66, Item (1) of the Act Concerning theCentral Depositary System of Corporate Debentures, Shares,
Etc. (Act No. 75 of 2001) from both the Corporate Debentures
and the Development Bank of Japan Bonds, respectively; hereinafter in this Article and Article 18 the same), as well asregarding the borrowings (limited to those with more than one
year to maturity; hereinafter in this Article and Article 18 thesame), which provides for matters relating to the issue of the
Corporate Debentures and the Development Bank of Japan
Bonds, and the borrowing of money, such as the amounts ofissue and borrowings, denominated currency of the Corporate
Debentures, the Development Bank of Japan Bonds and theborrowings, as stipulated in the Ministry of Finance Ordinance,and obtain authorization of the Minister of Finance. If the
Corporation intends to revise it, the same shall apply.
2. If the Corporation issues the Corporate Debentures or theDevelopment Bank of Japan Bonds, or borrows money, theCorporation shall submit a report thereon to the Minister of Financewithout delay, as stipulated in the Minister of Finance Ordinance.
3. Only with respect to the Corporate Debentures issued outside ofJapan, the Corporation may issue certificates representing the
Corporate Debentures, as prescribed in the Cabinet Order, in theevent that it is necessary to deliver replacement certificates toanyone who has lost those certificates.
4. The provisions of the second sentence of Paragraph 1, andParagraph 2 shall not apply to the following cases:(1) When the Corporation issues certificates representing the
Corporate Debentures or the Development Bank of Japan
Bonds (hereinafter in the following Item and Article 25,
Paragraph 2 referred to as the “Bond Certificates, Etc.”)
upon request for reissue which will be made after a decisionof nullification set forth in Article 699, Paragraph 2 of theCompanies Act; and(2) When the Corporation issues the Bond Certificates Etc. as
set forth in Article 5, Paragraph 3 or the immediately preceding Paragraph.
Article 14 L imits on Borrowing and Limitation on Extensionof Credit
1. The aggregate amount of the items identified below shall not
exceed the amount equal to fourteen (14) times the total amountof paid-in capital and reserves (capital reserve and earned surplus reserve; hereinafter in this Article the same); provided,
however, that if it is necessary, to refinance the issued old bankdebentures (the bank debentures set forth in Article 43,
Paragraph 1 of the Development Bank of Japan Act (Act No. 73
of 1999; hereinafter referred to as the “Old DBJ Act”) before
abolishment as set forth in Article 26 of the Supplementary
Provisions which were issued pursuant to the provision of Article
43, Paragraph 1 or Paragraph 4 of the Old DBJ Act, the “OldBank Debentures”; hereinafter the same), the Corporate
Debentures or the Development of Bank of Japan Bonds, theCorporation may issue the Corporate Debentures and theDevelopment Bank of Japan Bonds, in excess of such amount
only within the period of time required for such refinancing:(1) Outstanding amount of deposits;(2) Outstanding amount of borrowings;(3) Outstanding amount of funds deposited pursuant to theprovision of Article 42, Paragraph 5 of the Old DBJ Act;
(4) Outstanding amount of the obligations representing theprincipals of the Old Bank Debentures;(5) Outstanding amount of the obligations representing theprincipals of the Corporate Debentures and theDevelopment Bank of Japan Bonds issued; and(6) Outstanding amount of those items which have the same
economic nature as those referred to in each of the foregoing, howsoever described.
2. The aggregate amount of the items identified below shall not
exceed the sum of: (i) the amount of paid-in capital and reservesand (ii) the upper limit set forth in the main sentence of the preceding Paragraph:(1) Outstanding amount of the amounts of loans made andclaims acquired (other than those relating to Securities set
forth in Item (3));(2) Outstanding amount of obligations of guarantee;(3) Outstanding amount of Securities acquired (the Securities
set forth in Article 3, Paragraph 3 and exclude the Securities
referred to in Article 2, Paragraph 1, Items (1) and (2) of the
Financial Instruments and Exchange Act (including the rights
to be represented on such securities when such Securities
are not issued), and those relating to capital contributions
under the next following Item); and(4) Outstanding amount of capital contributions.
Article 15 Resolution for Election of Representative Directors
and Other Officers
Resolutions for appointment and dismissal of the representative
directors or representative executive officers of the Corporation,
appointment and dismissal of statutory auditors, or appointment
and dismissal of audit committee members (kansaiin) shall not
become effective without authorization of the Minister of Finance.
Article 16 Authorization of Concurrent Positions of Directors
1. Any director (or, if the Corporation is a company maintaining
committees (iinkai secchi kaisha), any executive officer) who performs the day-to-day business of the Corporation shall not
perform the day-to-day business of any other corporation without authorization of the Minister of Finance.
2. The Minister of Finance shall, upon receipt of an application for
the authorization referred to in the preceding Paragraph, grant
his/her authorization, except in cases where it is determined thatany matter so applied may interfere with sound and proper management of the Corporation.
Article 17 Business Plan
Prior to the beginning of each fiscal year, the Corporation shalldraw out a business plan for the new fiscal year and obtain
authorization of the Minister of Finance, as stipulated in the
Ministry of Finance Ordinance. If the Corporation intends torevise it, the same shall apply.
Article 18 Redemption Plan
Prior to the beginning of each fiscal year, the Corporation shalldraw out redemption plans for the Corporate Debentures, theDevelopment Bank of Japan Bonds and the borrowings andobtain authorization of the Minister of Finance, as stipulated in
the Ministry of Finance Ordinance. If the Corporation intends torevise it, the same shall apply.
Article 19 Subsidiaries Subject to Authorization
1. If the Corporation intends to make any of the following entities(other than individuals in the cases of those referred to in Items(3), (4) and (7); hereinafter referred to as the “Subsidiaries
Subject to Authorization”) its subsidiary (the subsidiary set forthin Article 2, Item (3) of the Companies Act), the Corporation shallobtain authorization of the Minister of Finance in advance:(1) Banks;(2) Long-term credit banks (the long-term credit banks set forthin Article 2 of the Long-Term Credit Bank Act (Act No. 187
of 1952));(3) Financial Instruments Firms (limited to those who engage intype I financial instruments trading business set forth in
Article 28, Paragraph 1 of the Financial Instruments andExchange Act);(4) Money lenders (the money lenders set forth in Article 2,
Paragraph 2 of the Money Lending Business Act (Act No.
32 of 1983), and exclude those who concurrently conduct
the business referred to in the preceding Items or fall within
other requirements stipulated in the Ministry of FinanceOrdinance);(5) Trust companies (the trust companies set forth in Article 2,
Paragraph 2 of the Trust Business Act (Act No. 154 of 2004));(6) Insurance companies (the insurance companies set forth in
Article 2, Paragraph 2 of the Insurance Business Act (ActNo. 105 of 1995)); andIntegrated Report 2017

81

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

Chapter III Miscellaneous Provisions
Article 26 Supervisory Measures
1. The competent minister shall oversee and supervise the
Corporation in accordance with the provisions of this Act.
2. Whenever the competent minister deems necessary to securesound and proper management of the Corporation in light of thecondition of the business operations or properties of the
Corporation, or the properties of the Corporation and its subsidiaries (which are limited to those subsidiaries set forth in Article
2, Item (3) of the Companies Act, which fall within theSubsidiaries Subject to Authorization; hereinafter in Paragraphs
2 and 5 of the immediately following Article, and Article 33,
Paragraph 2, the same) or to otherwise effectuate this Act, thecompetent minister may request the Corporation to submit an
improvement plan to secure its sound management by indicating
those matters for which the Corporation should take measuresand the deadline for submission or direct the Corporation torevise the improvement plan once submitted, or direct, to theextent necessary, the Corporation to suspend its business operations in whole or in part during the designated period of time or
to deposit its properties to the competent deposit office, or giveother orders concerning business necessary for supervision.
Article 27 Reports and Inspections
1. If the competent minister deems necessary to secure sound and82

Integrated Report 2017

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

4. The authority of the officials to conduct on-site inspections pursuant to the provisions of Paragraphs 1 and 2 shall not beinterpreted as that for a criminal investigation.
5. The subsidiaries and the Contractors of the Corporation may
reject the report or on-site inspection pursuant to the provisionof Paragraph 2, if there is any reasonable cause.
Article 28 Delegation of Authority
1. The Minister of Finance may delegate a part of the authority to
conduct on-site inspections pursuant to the provision of
Paragraphs 1 or 2 of the immediately preceding Article to thePrime Minister, as stipulated in the Cabinet Order.
2. If the Prime Minister has had the on-site inspections conductedpursuant to the provision of Paragraphs 1 or 2 of the immediately
preceding Article based on the delegation of the authority under
the preceding Paragraph, the Prime Minister shall promptly
report the Minister of Finance on results of such inspections.
3. The Prime Minister shall delegate the authority delegated pursuant to the provision of Paragraph 1 and the authority pursuant to
the provision of the immediately preceding Paragraph to theCommissioner of the Financial Services Agency.
4. The Commissioner of the Financial Services Agency may delegate all or a part of the authority delegated pursuant to theprovision of the immediately preceding Paragraph to the directorof the competent local financial bureau or local finance branchbureau, as stipulated in the Cabinet Order.
5. If the Corporation obtains the approval referred to in Article 9,
Paragraph 1, each provision of the preceding Paragraphs shallnot apply.
Article 29 Competent Ministers
1. The competent minister under this Act shall be the Minister ofFinance provided, however, that in the case that the Corporation
obtains the approval referred to in Article 9, Paragraph 1, thecompetent ministers for the following matters shall be the
Minister of Finance and the Prime Minister:(1) Matters regarding the provisions of the Banking Act which
are applied mutatis mutandis after changing to read in
Article 10;(2) Matters regarding the directions and orders under Article
26, Paragraph 2 (limited to those to be given when it isdeemed necessary to secure sound and proper management of the Corporation set forth in the said Paragraph);(3) Matters regarding the direction for report and on-site
inspections under Article 27, Paragraph 1 (limited to thoseto be made and conducted when it is deemed necessary tosecure sound and proper management of the Corporation
set forth in the said Paragraph); and(4) Matters regarding the direction for report and on-site
inspections under Article 27, Paragraph 2 (limited to thoseto be made and conducted when it is deemed especiallynecessary to secure sound and proper management of the
Corporation set forth in the said Paragraph).

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

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

Article 31
1. Any person who gives, offers or promises to give a bribe referred
to in Paragraph 1 of the immediately preceding Article shall bepunished with imprisonment for not exceeding three (3) years ora fine not exceeding 1,000,000 yen.
2. If the person who committed the crime referred to in the immediately preceding Paragraph surrendered to justice, his/her penalty
may be reduced or he/she may be exempted from the punishment.
Article 32
1. The crime referred to in Article 30, Paragraph 1 shall comply with
Article 4 of the Criminal Code (Act No. 45 of 1907).
2. The crime referred to in Paragraph 1 of the immediately preceding Article shall comply with Article 2 of the Criminal Code.
Integrated Report 2017

83

The Development Bank of Japan Inc. Act

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

Supplementary Provisions (Extract)
Article 1 Enforcement Date
This Act shall come into force from the date of promulgation;
provided, however, that the provisions set forth in the following
Items shall take effect from the date set forth in each Item:(1) The provisions of Paragraph 1, Items (5), and (11) through(17), Paragraph 3, Paragraph 4, Item (2), Paragraph 5 of
Article 3, Article 4, Article 10, Article 14, Paragraph 2, Item(3), Article 19, Item (3), and Article 21 of the Supplementary
Provisions: Date on which the Act Concerning Amendment
to Parts of the Securities and Exchange Act (Act No. 65 of
2006) comes into force or the date on which this Act comes
into force, whichever is later.
(2) Provision of Article 19, Item (4): Date on which the Act
Concerning Amendment to Parts of the Act Concerning theRegulations on the Money Lending Business (Act No. 115
of 2006) comes into force or the date on which this Act
comes into force, whichever is later.
(3) Provisions of Articles 26 through 60 and 62 through 65 of
the Supplementary Provisions: October 1, 2008.
Article 2 Disposition of Government-Owned Shares
1. Pursuant to the provision of Article 6, Paragraph 2 of the Act
Concerning Promotion of Administrative Reform for Realizing the
Simple and Effective Government (Act No. 47 of 2006), theGovernment shall make efforts to reduce the number of shares
held by it in the Corporation (hereinafter in the following
Paragraph and the Article 3 of the Supplementary Provisions
referred to as “Government-Owned Shares”), taking into accountthe effect on the attainment of the objectives of the Corporation,
as well as the market situation, and shall dispose all of them assoon as practicable.
2. For a period from the effectuation of this Act until theGovernment disposes of all of the Government-Owned Shares,
84

Integrated Report 2017

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

Article 2-4 Redemption of the Government Bonds
1. The Corporation may request the redemption of the government
bonds delivered as set forth in Paragraph 2 of the immediately
preceding Article, only within the amount calculated as stipulatedby the Ministry of Finance Ordinance that become necessary as
the amount of the capital in response to the increase of assets
related to its crisis response business (limited to those conducted by March 31, 2012).
2. If the Government is requested by the Corporation to redeem allor a part of the government bonds delivered pursuant to theprovision of Paragraph 2 of the immediately preceding Article,
the Government shall promptly redeem them.
3. When the redemption has been made pursuant to the provisionof the immediately preceding Paragraph, the amount of the capital of the Corporation shall be the aggregate sum of the amountof the capital immediately preceding such redemption and theamount of such redemption.
4. As for application of the provision of Article 445, Paragraph 1 of
the Companies Act in the case where the provision of the immediately preceding Paragraph applies, “Unless it is otherwise
provided for in this Act” therein shall be deemed to be changed
to read “Unless it is otherwise provided for in this Act and incases where the provision of Article 2-4, Paragraph 3 of the
Supplementary Provisions of the Development Bank of Japan
Inc. Act (Act No. 85 of 2007) applies.”
5. In addition to those set forth in each of the preceding
Paragraphs, other matters required for the redemption of thegovernment bonds delivered by the Government as set forth inParagraph 2 of the immediately preceding Article, shall be stipulated in the Ministry of Finance Ordinance.
Article 2-5 Return of the Government Bonds
1. If there are any government bonds delivered as set forth in Article
2-3, Paragraph 2 of the Supplementary Provisions, those which
are not redeemed as of July 1, 2012, the Corporation shall returnthe unredeemed government bonds to the Government.
2. The Government shall immediately cancel the government
bonds when the government bonds are returned as set forth in
the immediately preceding Paragraph.
3. In addition to those set forth in the preceding two Paragraphs,
other matters required for the return and the cancellation of thegovernment bonds delivered by the Government as set forth in
Article 2-3, Paragraph 2 of the Supplementary Provisions, shallbe stipulated in the Ministry of Finance Ordinance.
Article 2-6 S pecial Rules for Taxation of the Registration
License Tax
In case of the investment as set forth in Article 2-2 of the
Supplementary Provisions, or the redemption as set forth in Article
2-4, Paragraph 2 of the Supplementary Provisions, no registration
license tax shall be assessed on registration of the increase in theamount of the capital of the Corporation, limited to only thoseregistered as set forth in the Minister of Finance Ordinance.
Article 2-7 C orporation’s Obligation to Conduct Crisis
Response Business
The Corporation shall, in order to attain its objectives, in accordance with the provisions set forth in Articles 2-10, 2-11, 2-22
and Articles 2-24 to 2-30 of the Supplementary Provisions, beobligated to conduct crisis response business, for an indefinite
period, to secure a smooth supply of funds to those who needfunds to address the damages set forth in Article 2, Item (4) of
the Japan Finance Corporation Act.
Article 2-8 G overnment’s Holding of Shares with Regard to
Crisis Response BusinessWith a view to ensure proper conduct of crisis response business by the Corporation, the Government shall, for an indefinite
period, hold more than one-third of the total number of issued
shares of the Corporation (excluding shares in respect of which

voting rights may not be exercised for all matters that may beresolved at a general meeting of shareholders; the same shallapply in Article 2-13 of the Supplementary Provisions).
Article 2-9 Capital Contribution by the Government with
Regard to Crisis Response Business
The Government may, for an indefinite period, make capital contributions to the Corporation, to the extent of the amountapproved by the budget, whenever the Government deems necessary for proper implementation of crisis response business by
the Corporation.
Article 2-10 Implementation of Crisis Response Business1. The Corporation shall conduct crisis response business at thehead office or any other office designated by the Minister ofFinance (hereinafter in the following Paragraph and Article 2-31,
Paragraph 1, Item (1) of the Supplementary Provisions referred
to as the “designated office”).
2. The Corporation shall neither suspend nor cease to conduct
crisis response business at the designated office, except incases where crisis response business is temporarily suspended,
in whole or in part, at the designated office due to Acts of Godor other reasons beyond control, as stipulated in the Ministry of
Finance Ordinance.
Article 2-11 Special Provisions, Etc. on Business Plan with
Regard to Crisis Response Business1. The Corporation shall include an implementation policy for itscrisis response business in its business plan provided for in
Article 17, as stipulated in the Ministry of Finance Ordinance.
2. The Corporation shall include the implementation status of itscrisis response business, based on the implementation policy
set forth in the immediately preceding Paragraph, in its business
report provided for in Article 21, as stipulated in the Ministry of
Finance Ordinance.
3. In addition to matters set forth in each of the Items of Article 27of the Companies Act, matters regarding proper implementationof crisis response business shall be included or recorded in the
Articles of Incorporation of the Corporation.
Article 2-12 Special Investment Operations
1. The Corporation shall, in order to attain its objectives, conduct
special investment operations, in accordance with the provisions
set forth in this Article, Articles 2-15 to 2-20, and Articles 2-23 to
2-30 of the Supplementary Provisions.
2. In this Article and up to Article 2-20 of the Supplementary
Provisions, as well as in Articles 2-23, 2-25, 2-27 and 2-31 of
the Supplementary Provisions, “special investment operations”
means, among the investment businesses in special businessactivities, those that are deemed to particularly contribute to thefacilitation of supply of funds by financial institutions and others,
for the revitalization of business activities taking advantage ofregional characteristics that contribute to autonomous development of local economies, or for the enhancement ofcompetitiveness of Japanese companies that contribute to theimprovement of socioeconomic vitality and sustainable development of Japan, as well as for special business activities, andthose of which the business entities that will receive funds fromthe said investment business and the particulars of such supply
are decided during the period from the date on which the authorization specified in Article 2-17, Paragraph 1 of the
Supplementary Provisions is obtained through March 31, 2021,
and any other businesses incidental thereto (including those
conducted on and after April 1, 2021).
3. “Special business activities” set forth in the immediately preceding Paragraph means the following business activities:(1) Business activities conducted by Japanese business entities
with the aim of improving productivity and profitability by cultivating new business through effective use of insufficiently its
management resources not sufficiently used, or by
Integrated Report 201785

The Development Bank of Japan Inc. Act

promoting management innovation mainly through co-ordinated alignment with business entities in different fields andeffective combination of management resources; and(2) Business activities that provide funds to the business activities set forth in the preceding Item.
4. “Investment business” set forth in Paragraph 2 means the following businesses concerning supply of funds:(1) To lend money through subordinated loans (which means
loans made under loan agreements with special clause ofsubordinated contents with regard to the payment of principal
and interest, and stipulated in the Ministry of FinanceOrdinance);(2) To make capital contributions;(3) To acquire subordinated corporate debentures (which means
corporate debentures with special clause of subordinatedcontents with regard to the payment of principal and interest,and stipulated in the Ministry of Finance Ordinance); and(4) In addition to those set forth in the preceding three Items, toprovide funds in the manner approved in advance by the
Minister of Finance.
Article 2-13 G overnment’s Holding of Shares with Regard toSpecial Investment Operations
With a view to ensure proper implementation of special investment operations by the Corporation, the Government shall holdone-half or more of the total number of issued shares of the
Corporation, until the Corporation completes the special investment operations.
Article 2-14 C apital Contribution, Etc. by the Government with
Regard to Special Investment Operations
1. The Government may make capital contributions to the
Corporation, to the extent of the amount approved by thebudget, whenever the Government deems necessary for proper
implementation of special investment operations by the
Corporation, until March 31, 2021.
2. The Corporation shall not appropriate money provided throughcapital contributions provided for in the preceding Paragraph toany funds other than funds for special investment operations.
Article 2-15 Supplement or Encouragement of Financing
Conducted by Financial Institutions, Etc. in Special
Investment Operations
The purpose of the Corporation in conducting special investment operations shall be to supplement or encourage financing
conducted by financial institutions and investment conducted byprivate sector.
Article 2-16 Special Investment Guidelines
1. Guidelines to be followed by the Corporation in conducting special investment operations (in the following Paragraph andParagraph 1 of the immediately following Article referred to as
the “special investment guidelines”) shall be established andissued by the Minister of Finance.
2. The special investment guidelines shall provide for the following
matters:(1) Standards to be followed in deciding the business entities
that will receive funds from the special investment operations and the particulars of such supply of funds;(2) Matters regarding appropriate financial management of thespecial investment operations;(3) Matters regarding securing of appropriate competitive relationships between the Corporation and other business entities;(4) Matters regarding the system to be established to evaluate
and supervise the implementation status of special investment operations;(5) Matters regarding reporting to the Minister of Finance on theimplementation status of special investment operations; and(6) Any other matters necessary to ensure proper implementation of special investment operations.
86

Integrated Report 2017

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

2. The Corporation shall, for an indefinite period, include, in its business plans provided for under Article 17, a policy concerning
securing of appropriate competitive relationships with other business entities as stipulated in the Ministry of Finance Ordinance.
3. The Corporation shall, for an indefinite period, describe, in its
business reports provided for under Article 21, the state of
implementation of its business based on the policy mentioned in
the immediately preceding Paragraph as stipulated in the
Ministry of Finance Ordinance.
Article 2-22 Crisis Response Reserve
1. The Corporation shall establish a crisis response reserve andappropriate to such reserve the amount contributed by theGovernment pursuant to the provision of Article 2-9 of the
Supplementary Provisions.
2. When the capital contributions have been made by theGovernment pursuant to the provision of Article 2-9 of the
Supplementary Provisions, the Corporation shall, notwithstanding the provisions of Article 445, Paragraph 2 of the Companies
Act, record the whole of the amount contributed pursuant to theprovision of Article 2-9 of the Supplementary Provisions as theamount of the crisis response reserve. For this purpose, reference to “this Act” in Article 445, Paragraph 1 of the said Act
shall be changed to read “this Act or the Development Bank ofJapan Inc. Act (Act No. 85 of 2007).”
Article 2-23 S pecial Investment Reserve and Special
Investment Surplus Funds
1. The Corporation shall establish a special investment reserve andappropriate to such reserve an amount equal to the total of theamount contributed by the Government pursuant to the provision of Article 2-14, Paragraph 1 of the Supplementary
Provisions, the amount by which the amount of paid-in capital orreserves is reduced pursuant to the provision of Paragraph 3 ofthis Article and the amount reduced from the amount of surplus
funds pursuant to the provision of Paragraph 4 of this Article.
2. When the capital contributions have been made pursuant to theprovision of Article 2-14, Paragraph 1 of the Supplementary
Provisions, the Corporation shall, notwithstanding the provisionof Article 445, Paragraph 2 of the Companies Act, record thewhole of the amount contributed pursuant to the provision of
Article 2-14, Paragraph 1 of the Supplementary Provisions as
the amount of the special investment reserve. For this purpose,reference to “this Act” in Article 445, Paragraph 1 of the said Act
shall be changed to read “this Act or the Development Bank ofJapan Inc. Act (Act No. 85 of 2007).”
3. The Corporation may reduce the amount of its paid-in capital orreserves and increase the amount of its special investment
reserve, whenever the Corporation deems necessary in order toimplement the special investment operations properly. For the purpose of application of the provisions of Article 447 through Article
449 of the Companies Act in this case, reference to “is to beappropriated to reserves” in Article 447, Paragraph 1, Item (2) of
the said Act shall be changed to read “is to be appropriated toreserves or to special investment reserve under Article 2-23,
Paragraph 1 of the Supplementary Provisions of the Development
Bank of Japan Inc. Act (Act No. 85 of 2007) (hereinafter referred toas the “special investment reserve” in this Item, Paragraph 1, Item(2) of the following Article and Article 449, Paragraph 1),” reference
to “the amount to be appropriated to reserves” in the same Item
shall be changed to read “the amount to be appropriated toreserves or special investment reserve,” reference to “the paid-in
capital” in Article 448, Paragraph 1, Item (2) of the said Act shallbe changed to read “the paid-in capital or special investment
reserve,” and reference to “is appropriated to paid-in capital” inArticle 449, Paragraph 1 of the said Act shall be changed to read“is appropriated to paid-in capital or special investment reserve.”
4. The Corporation may reduce the amount of surplus funds andincrease the amount of its special investment reserve, whenever
the Corporation deems this necessary in order to implement the

special investment operations properly. For this purpose, the following matters shall be determined:(1) The amount by which the amount of surplus funds will be
reduced; and(2) The date on which the increase in the amount of the special
investment reserve will become effective.
5. The determination of the matters referred to in each Item of theimmediately preceding Paragraph shall be made by resolution ofa shareholders’ meeting.
6. The amount provided for under Paragraph 4, Item (1) of this
Article may not exceed the amount of surplus funds as of thedate provided for under Item (2) of the said Paragraph.
7. The Corporation shall establish the special investment surplus
funds and record the amount of profit or loss resulting from thecalculation of profits and losses pertaining to the special investment operations for each fiscal year as stipulated in the Ministryof Finance Ordinance.
Article 2-24 Special Provisions on Limits on Borrowing and
Limitation on Extension of Credit
For the purpose of application of the provision of Article 14,
when the amount of the crisis response reserve, the amount of
the special investment reserve or the amount of the special
investment surplus funds is recorded, the total of the amounts
so recorded shall be included in the amount of paid-in capitaland reserves.
Article 2-25 Amount of Surplus Funds, Etc.
1. For the purpose of calculation of surplus funds, the Corporation
shall include the aggregate amount of the crisis response
reserve, the special investment reserve and the special investment surplus funds as of the last day of the most recent fiscal
year (the most recent fiscal year set forth in Article 2, Item (24) of
the Companies Act; the same in the following Paragraph) in the
total amount of paid-in capital and reserves.
2. For the purpose of calculation of surplus funds, the Corporation
shall include the aggregate amount of the amounts set forth inItems (1) though (3) and the aggregate amount of the amounts
set forth in Items (4) through (6), in the aggregate amount of theamounts set forth in Article 446, Items (1) through (4) of theCompanies Act and the aggregate amount of the amounts set
forth in Items (5) through (7) of the said Article, respectively:(1) The amount by which the amount of the crisis response
reserve has been reduced after the last day of the mostrecent fiscal year (excluding the amount of the crisis
response reserve provided for under Article 2-27, Paragraph
4, Item (1) of the Supplementary Provisions), if any;
(2) The amount by which the amount of the special investment
reserve has been reduced after the last day of the mostrecent fiscal year (excluding the amount of the special
investment reserve provided for under Article 2-27,
Paragraph 4, Item (1) of the Supplementary Provisions
which has been paid to the national treasury), if any;
(3) The amount by which the amount of the special investment
surplus funds has been reduced after the last day of themost recent fiscal year (excluding the amount of the special
investment surplus funds provided for under Article 2-27,
Paragraph 4, Item (1) of the Supplementary Provisions thathave been paid to the national treasury), if any;(4) The amount by which the amount of paid-in capital orreserves has been reduced after the last day of the mostrecent fiscal year to increase the amount of the special
investment reserve, if any;(5) The amount by which the amount of surplus funds has been
reduced after the last day of the most recent fiscal year toincrease the amount of the special investment reserve, ifany; and(6) In addition to those listed in the preceding two Items, thetotal amount of the amounts recorded to each account asprescribed in the Ministry of Finance Ordinance.
Integrated Report 2017

87

The Development Bank of Japan Inc. Act

3. If the Corporation calculates the distributable amount under
Article 461, Paragraph 2 of the Companies Act (which shall, in
Article 2-27, Paragraph 6 of the Supplementary Provisions, bereferred to as the “Distributable Amount”), the Corporation shalldeduct, from the total of the amounts set forth in Article 461,
Paragraph 2, Items (1) and (2) of the said Act, the total of theamounts recorded to each account as the amount of profit pertaining to the special investment operations for the period set
forth in Article 441, Paragraph 1, Item (2) of the Companies Act
in the case where the Corporation obtains the approval referred
to in Paragraph 4 of the said Article (or, in cases set forth in theproviso to the said Paragraph, the approval under Paragraph 3of the said Article) of the temporary financial statements referred
to in Paragraph 1 of the said Article and any other amounts
recorded to each account as prescribed in the Ministry of
Finance Ordinance.
Article 2-26 Reduction in Amount of Crisis Response Reserve,
Etc. When Deficit is Covered
1. If the amount of capital reserve and the amount of earned surplus reserve have become zero, the Corporation may reduce theamount of the crisis response reserve, the amount of the special
investment reserve or the amount of the special investment surplus funds (limited, as regards the amount of the special
investment surplus funds, to the case where such amountexceeds zero). For this purpose, the following matters shall be
determined by resolution of a shareholders’ meeting:(1) The amount by which the amount of the crisis response
reserve, the amount of the special investment reserve or theamount of the special investment surplus funds will be
reduced; and(2) The date on which the reduction of the amount of the crisis
response reserve, the amount of the special investment
reserve or the amount of the special investment surplus
funds will become effective.
2. The resolution provided for under the preceding Paragraphshall not become effective without authorization of the Ministerof Finance.
3. The amount of the crisis response reserve, the amount of thespecial investment reserve or the amount of the special investment surplus funds under Paragraph 1, Item (1) of this Article
may not exceed the amount of the crisis response reserve, theamount of the special investment reserve or the amount of thespecial investment surplus funds, respectively, as of the date set
forth in Item (2) of the said Paragraph.
4. The aggregate of the amount of the crisis response reserve, theamount of the special investment reserve and the amount of thespecial investment surplus funds as referred to in Paragraph 1,
Item (1) of this Article may not exceed the amount calculated by
the method prescribed by the Ministry of Finance Ordinance as
the amount of deficit as of the date of the shareholders’ meetingreferred to in the said Paragraph.
5. If the amount of the special investment surplus funds is notexceeding zero, the amount of the special investment reserve as
referred to in Paragraph 1, Item (1) of this Article may not exceed
the amount calculated by the method prescribed by the Ministryof Finance Ordinance as the amount by which the amount of thespecial investment reserve may be reduced.
6. If the amount of surplus funds of the Corporation exceeds zeroafter a reduction of the amount of the crisis response reserve,
the amount of the special investment reserve or the amount of
the special investment surplus funds pursuant to the provision of
Paragraph 1 of this Article, the Corporation shall increase, in an
amount equivalent to such excess, the amount of the crisis
response reserve, the amount of the special investment reserveor the amount of the special investment surplus funds until thetime when the cumulative amount of the amounts of theincreases in the amount of the crisis response reserve, theamount of the special investment reserve or the amount of thespecial investment surplus funds pursuant to the provision of this88

Integrated Report 2017

Paragraph equals the cumulative amount of amounts of reductions, as prescribed by the Minister of Finance Ordinance.
Article 2-27 Payment to National Treasury
1. If it is deemed that the financial basis necessary for proper
implementation of the crisis response business has been sufficiently secured, the Corporation shall pay to the national treasury
an amount equivalent to all or a part of the amount of the crisis
response reserve. In that case, the Corporation shall reduce thecrisis response reserve by the amount equivalent to suchamount to be paid to the national treasury.
2. If it is deemed unnecessary to maintain the current level of thespecial investment reserve for the proper implementation of thespecial investment operations taking into account the state of
implementation and the financial condition of the special investment operations, the Corporation may reduce the amount of thespecial investment reserve in whole or in part. In that case, theCorporation shall pay to the national treasury an amount calculated as prescribed by the Ministry of Finance Ordinance as theamount, out of the amount of such reduction, that should belong
to the national treasury on the basis of the proportion of theamount of the capital contributions made by the Government
pursuant to the provision of Article 2-14, Paragraph 1 of the
Supplementary Provisions to the amount of the special investment reserve.
3. If, in cases where the amount of the special investment surplus
funds exceeds zero, it is deemed unnecessary to maintain thecurrent level of the special investment surplus funds for theproper implementation of the special investment operations
taking into account the state of implementation and the financial
condition of the special investment operations, the Corporation
may reduce the amount of the special investment surplus funds
in whole or in part. In that case, the Corporation shall pay to thenational treasury an amount calculated as prescribed by the
Ministry of Finance Ordinance as the amount, out of the amountof such reduction, that should belong to the national treasury on
the basis of the proportion of the amount of the capital contributions made by the Government pursuant to the provision of
Article 2-14, Paragraph 1 of the Supplementary Provisions to theamount of the special investment reserve.
4. In the case of the preceding three Paragraphs, the following matters shall be determined by resolution of a shareholders’ meeting:(1) The amount by which the amount of the crisis response
reserve, the amount of the special investment reserve or theamount of the special investment surplus funds is reduced; and(2) The date on which the reduction of the amount of the crisis
response reserve, the amount of the special investment
reserve or the amount of the special investment surplus
funds becomes effective.
5. The resolution provided for under the preceding Paragraphshall not become effective without authorization of the Ministerof Finance.
6. The aggregate of the amounts to be paid pursuant to the provision of Paragraphs 1 through 3 of this Article may not exceed
the Distributable Amount as of the date provided for underParagraph 4, Item (2) of this Article.
Article 2-28
1. If the Corporation goes into liquidation and there still remains any
residual property after performance of its obligations, theCorporation shall pay to the national treasury an amount equivalent
to the total amount (if the amount of such residual property is lessthan the aggregate of the amount of the crisis response reserveand the amount calculated as described below, an amount ofsuch residual property) calculated as prescribed by the Ministry of
Finance Ordinance as the amount, out of the aggregate of theamount of the crisis response reserve as of the date of such liquidation (if, after reductions of the amount of the crisis response
reserve pursuant to the provision of Article 2-26, Paragraph 1 of
the Supplementary Provisions, the cumulative amount of theamounts of increases in the amount of the crisis response reserve
pursuant to the provision of Paragraph 6 of the said Article is lessthan the cumulative amount of the amounts of such reductions, anamount after adding the shortfall) and the amount of the special
investment reserve and the special investment surplus funds as ofthe same date (if, after reductions of the amount of the special
investment reserve pursuant to the provision of Paragraph 1 of thesaid Article, the cumulative amount of the amounts of increases in
the amount of the special investment reserve pursuant to the provision of Paragraph 6 of the said Article is less than the cumulative
amount of such amounts of reductions, or if, after reductions of
the amount of the special investment surplus funds pursuant to
the provision of Paragraph 1 of the said Article, the cumulative
amount of the amounts of increases in the amount of the special
investment surplus funds pursuant to the provision of Paragraph 6of the said Article is less than the cumulative amount of suchamounts of reductions, an amount after adding the respective
shortfalls), that should belong to the national treasury on the basisof the proportion of the amount of the capital contributions madeby the Government pursuant to the provision of Article 2-14,
Paragraph 1 of the Supplementary Provisions to the amount of thespecial investment reserve.
2. The payment under the preceding Paragraph shall be made inadvance of the distribution of the residual property toshareholders.
3. The payment procedures or any other matters necessary in connection with the payments to be made pursuant to theprovisions of Paragraphs 1 through 3 of the immediately preceding Article and Paragraph 1 of this Article shall be prescribed in
the Cabinet Order.
Article 2-29 S pecial Rules of the Act Concerning Restrictions
on Fiscal Assistance by the Government to
Corporations
Notwithstanding the provision of Article 1 of the Act Concerning
Restrictions on Fiscal Assistance by the Government to
Corporations, the Corporation shall comply with the preceding
two Articles with respect to the dividend or distribution of profit
or surplus funds to the capital contributions under Article 2-9 of
the Supplementary Provisions or the capital contributions under
Article 2-14, Paragraph 1 of the Supplementary Provisions.
Article 2-30 M utatis Mutandis Application of theCompanies Act
1. The provisions of Article 449, Paragraph 6 (limited to the portions
relating to Item (1)) and Paragraph 7, and Article 828 (limited tothe portions relating to Paragraph 1, Item (5) and Paragraph 2,
Item (5)) of the Companies Act shall apply mutatis mutandis tocases where the amount of crisis response reserve, the amountof special investment reserve or the amount of special investment surplus funds is reduced as set forth in Article 2-26,
Paragraph 1 of the Supplementary Provisions. For this purpose,references to “paid-in capital” in Article 449, Paragraph 6, Item(1) of the said Act shall be changed to read the amount of crisis
response reserve set forth in Article 2-26, Paragraph 1 of the
Supplementary Provisions of the Development Bank of Japan
Inc. Act (Act No. 85 of 2007) (crisis response reserve set forth in
Article 2-22, Paragraph 1 of the Supplementary Provisions of thesaid Act; hereinafter in Article 828, Paragraph 1, Item (5) thesame), the amount of special investment reserve (special investment reserve set forth in Article 2-23, Paragraph 1 of the
Supplementary Provisions of the said Act; hereinafter in this Itemthe same), or special investment surplus funds (special investment surplus funds set forth in Article 2-23, Paragraph 7 of the
Supplementary Provisions of the said Act; hereinafter in this Itemthe same); “Article 447, Paragraph 1, Item (3)” shall be changed
to read “Article 2-26, Paragraph 1, Item (2) of the Supplementary
Provisions of the said Act”; references to “paid-in capital of” inArticle 828, Paragraph 1, Item (5) of the said Act shall bechanged to read “the amount of crisis response reserve, theamount of special investment reserve, or special investment surplus funds set forth in Article 2-26, Paragraph 1 of the
Supplementary Provisions of the Development Bank of Japan
Inc. Act concerning”; “on which the reduction in the amount ofpaid-in capital” shall be changed to read “on which the reductionin the amount of the said crisis response reserve, the amount ofspecial investment reserve, or the amount of special investment
surplus funds”; and references to “, the trustee in bankruptcy ora creditor, who did not give approval to the reduction in theamount of paid-in capital” in Paragraph 2, Item (5) of the said
Article shall be changed to read “or the trustee in bankruptcy.”
2. The provisions of Article 449 (other than the proviso of Paragraph
1 and Paragraph 6, Item (2)) and Article 828 (limited to the portions relating to Paragraph 1, Item (5) and Paragraph 2, Item (5)) of
the Companies Act shall apply mutatis mutandis to cases where
the amount of crisis response reserve is reduced as set forth in
Article 2-27, Paragraph 1 of the Supplementary Provisions. For
this purpose, references to “paid-in capital or reserves (hereinafterin this Article referred to as “Paid-In Capital, Etc.”)” in the mainclause of Article 449, Paragraph 1 of the said Act shall bechanged to read “crisis response reserve as set forth in Article
2-27, Paragraph 1 of the Supplementary Provisions of theDevelopment Bank of Japan Inc. Act (Act No. 85 of 2007) (crisis
response reserve set forth in Article 2-22, Paragraph 1 of the
Supplementary Provisions of the said Act; hereinafter in this Article
and Article 828, Paragraph 1, Item (5) and Paragraph 2, Item (5)the same)”; “In cases where... (excluding cases where the wholeof the amount by which the reserves are reduced is appropriatedto the paid-in capital)” shall be changed to read “In cases
where…”; “of Paid-In Capital, Etc.” shall be changed to read “ofcrisis response reserve”; references to “Paid-In Capital, Etc.” inParagraph 2, Item (1) of the said Article shall be changed to read“crisis response reserve”; references to “Ordinance of the Ministryof Justice” in Item (2) of the said Paragraph shall be changed toread the “Ministry of Finance Ordinance”; references to “Paid-In
Capital, Etc.” in Paragraph 4 and the proviso of Paragraph 5 ofthe said Article shall be changed to read “crisis response reserve”;
references to “paid-in capital” in Paragraph 6, Item (1) of the said
Article shall be changed to read “crisis response reserve set forthin Article 2-27, Paragraph 1 of the Supplementary Provisions of
the Development Bank of Japan Inc. Act”; “Article 447, Paragraph
1, Item (3)” shall be changed to read “Paragraph 4, Item (2) of thesaid Article”; references to “paid-in capital of” in Article 828,
Paragraph 1, Item (5) of the said Act shall be changed to read“crisis response reserve set forth in Article 2-27, Paragraph 1 of
the Supplementary Provisions of the Development Bank of Japan
Inc. Act concerning”; “on which the reduction in the amount ofpaid-in capital” shall be changed to read “on which the reductionin the amount of the said crisis response reserve”; and references
to “paid-in capital” in Paragraph 2, Item (5) of the said Article shallbe changed to read “crisis response reserve set forth in Article
2-27, Paragraph 1 of the Supplementary Provisions of theDevelopment Bank of Japan Inc. Act.”
3. The provisions of Article 449 (other than the proviso of Paragraph
1 and Paragraph 6, Item (2)) and Article 828 (limited to the portions relating to Paragraph 1, Item (5) and Paragraph 2, Item (5)) of
the Companies Act shall apply mutatis mutandis to cases where
the amount of special investment reserve is reduced as set forth in
Article 2-27, Paragraph 2 of the Supplementary Provisions. For
this purpose, references to “paid-in capital or reserves (hereinafterin this Article referred to as “Paid-In Capital, Etc.”)” in the mainclause of Article 449, Paragraph 1 of the said Act shall bechanged to read “special investment reserve as set forth in Article
2-27, Paragraph 2 of the Supplementary Provisions of theDevelopment Bank of Japan Inc. Act (Act No. 85 of 2007) (special
investment reserve set forth in Article 2-23, Paragraph 1 of the
Supplementary Provisions of the said Act; hereinafter in this Article
and Article 828, Paragraph 1, Item (5) and Paragraph 2, Item (5)the same)”; “In cases where... (excluding cases where the wholeof the amount by which the reserves are reduced is appropriatedIntegrated Report 201789

The Development Bank of Japan Inc. Act

to the paid-in capital)” shall be changed to read “In cases
where…”; “of Paid-In Capital, Etc.” shall be changed to read “ofspecial investment reserve”; references to “Paid-In Capital, Etc.” inParagraph 2, Item (1) of the said Article shall be changed to read
“special investment reserve”; references to “Ordinance of the
Ministry of Justice” in Item (2) of the said Paragraph shall bechanged to read the “Ministry of Finance Ordinance”; references
to “Paid-In Capital, Etc.” in Paragraph 4 and the proviso of
Paragraph 5 of the said Article shall be changed to read “special
investment reserve”; references to “paid-in capital” in Paragraph 6,
Item (1) of the said Article shall be changed to read “special
investment reserve set forth in Article 2-27, Paragraph 2 of the
Supplementary Provisions of the Development Bank of Japan Inc.
Act”; “Article 447, Paragraph 1, Item (3)” shall be changed to read
“Paragraph 4, Item (2) of the said Article”; references to “paid-in
capital of” in Article 828, Paragraph 1, Item (5) of the said Act shallbe changed to read “special investment reserve set forth in Article
2-27, Paragraph 2 of the Supplementary Provisions of theDevelopment Bank of Japan Inc. Act concerning”; “on which the
reduction in the amount of paid-in capital” shall be changed toread “on which the reduction in the amount of the said special
investment reserve”; and references to “paid-in capital” inParagraph 2, Item (5) of the said Article shall be changed to read
“special investment reserve set forth in Article 2-27, Paragraph 2of the Supplementary Provisions of the Development Bank ofJapan Inc. Act.”
4. The provisions of Article 449 (other than the proviso of Paragraph
1 and Paragraph 6, Item (2)) and Article 828 (limited to the portions relating to Paragraph 1, Item (5) and Paragraph 2, Item (5))
of the Companies Act shall apply mutatis mutandis to cases
where the amount of special investment surplus funds is reduced
as set forth in Article 2-27, Paragraph 3 of the Supplementary
Provisions. For this purpose, references to “paid-in capital orreserves (hereinafter in this Article referred to as “Paid-In Capital,
Etc.”)” in the main clause of Article 449, Paragraph 1 of the said
Act shall be changed to read “special investment surplus funds
as set forth in Article 2-27, Paragraph 3 of the Supplementary
Provisions of the Development Bank of Japan Inc. Act (Act No.
85 of 2007) (special investment surplus funds set forth in Article
2-23, Paragraph 7 of the Supplementary Provisions of the said
Act; hereinafter in this Article and Article 828, Paragraph 1, Item(5) and Paragraph 2, Item (5) the same)”; “In cases where...
(excluding cases where the whole of the amount by which thereserves are reduced is appropriated to the paid-in capital)” shallbe changed to read “In cases where…”; “of Paid-In Capital, Etc.”
shall be changed to read “of special investment surplus funds”;
references to “Paid-In Capital, Etc.” in Paragraph 2, Item (1) of thesaid Article shall be changed to read “special investment surplus
funds”; references to “Ordinance of the Ministry of Justice” in Item(2) of the said Paragraph shall be changed to read the “Ministry of
Finance Ordinance”; references to “Paid-In Capital, Etc.” inParagraph 4 and the proviso of Paragraph 5 of the said Article
shall be changed to read “special investment surplus funds”; references to “paid-in capital” in Paragraph 6, Item (1) of the said
Article shall be changed to read “special investment surplus funds
set forth in Article 2-27, Paragraph 3 of the Supplementary
Provisions of the Development Bank of Japan Inc. Act”; “Article
447, Paragraph 1, Item (3)” shall be changed to read “Paragraph
4, Item (2) of the said Article”; references to “paid-in capital of” inArticle 828, Paragraph 1, Item (5) of the said Act shall bechanged to read “special investment surplus funds set forth in
Article 2-27, Paragraph 3 of the Supplementary Provisions of theDevelopment Bank of Japan Inc. Act concerning”; “on which the
reduction in the amount of paid-in capital” shall be changed toread “on which the reduction in the amount of the said special
investment surplus funds”; and references to “paid-in capital” inParagraph 2, Item (5) of the said Article shall be changed to read
“special investment surplus funds set forth in Article 2-27,
Paragraph 3 of the Supplementary Provisions of the Development
Bank of Japan Inc. Act.”
90

Integrated Report 2017

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

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

2. Notwithstanding the provision of Article 445, Paragraph 2 of theCompanies Act, with respect to the shares to be issued by the
Corporation upon its incorporation, the Corporation may elect not
to account for the amount in excess of (, as well as the amountnot exceeding,) a half of the amounts of properties contributed by
DBJ upon the incorporation of the Corporation as paid-in capital.
For this purpose, reference to “this Act” in Article 445, Paragraph
1 of the Companies Act shall be changed to read “this Act or theDevelopment Bank of Japan Inc. Act (Act No. 85 of 2007).”

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

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

Article 6 Articles of Incorporation
The founding members shall prepare the Articles of Incorporationand have them authorized by the Minister of Finance.
Article 7 Shares to Be Issued upon the Incorporation of
the Corporation
1. The following matters regarding the shares to be issued upon
the incorporation of the Corporation, and total number of shares
which the Corporation can issue shall be determined in the
Articles of Incorporation:(1) Number of shares (or, if the Corporation is to be organized
as a company issuing class shares, classes of those sharesand number of each class of shares);(2) Amount to be paid for shares (the amount of cash to be
paid or amount of non-cash property to be contributed in
exchange for each share); and(3) Matters relating to the amounts of paid-in capital and capitalreserves.

Article 8 Subscription for Shares
1. DBJ shall subscribe for all shares to be issued by the
Corporation upon its incorporation, and the founding members
shall allocate them to DBJ.
2. The right as the subscriber for shares allocated pursuant to theprovision of the preceding Paragraph in connection with theincorporation of the Corporation shall be exercised by theGovernment.
Article 9 Capital Contribution
Upon the incorporation of the Corporation, DBJ shall contributeall of its properties, except assets to be assumed by Japan pursuant to the provision of Article 15, Paragraph 2 of the
Supplementary Provisions, to the Corporation.
Article 10 Organizational Meeting
For the purpose of application of the provision of Article 65,
Paragraph 1 of the Companies Act concerning the incorporationof the Corporation, reference to the “on and after either the dateunder Article 58, Paragraph 1, Item (3) or the last day of theperiod under such item, whichever comes later,” shall bechanged to read “after allotment of shares set forth in Article 8,
Paragraph 1 of the Supplementary Provisions of theDevelopment Bank of Japan Inc. Act (Act No. 85 of 2007).”
Article 11 Establishment of the Corporation
Contributions to be made by DBJ pursuant to the provision of
Article 9 of the Supplementary Provisions shall be made when
the provision of Article 26 of the Supplementary Provisions
becomes effective, and the Corporation shall be established, notwithstanding the provision of Article 49 of the Companies Act.
Article 12 Registration of Incorporation
Notwithstanding the provision of Article 911, Paragraph 1 of theCompanies Act, the Corporation shall register its incorporation
without delay after the establishment of the Corporation.

Article 14 Exception from Application of the Companies Act
The provisions of Article 30 and Part II, Chapter 1, Section 3 of
the Companies Act shall not apply to the incorporation of the
Corporation.
Article 15 Dissolution of DBJ, Etc.
1. DBJ shall be dissolved at the time of establishment of the
Corporation, whereupon any and all rights and obligations of
DBJ shall be taken over by the Corporation, except for thoseassets to be assumed by the Government as set forth in the following Paragraph.
2. Of the rights actually held by DBJ at the time of establishment of
the Corporation, the assets which will be considered no longer
necessary for the Corporation to smoothly perform its futurebusiness operation shall be assumed by Japan at the time ofestablishment of the Corporation.
3. The scope of assets to be assumed by Japan pursuant to theprovision of the immediately preceding Paragraph, and other
Integrated Report 201791

The Development Bank of Japan Inc. Act

matters required for transfer of those assets to Japan shall beprescribed in the Cabinet Order.
4. The fiscal year of DBJ commencing on April 1, 2008 shall end on
the day immediately preceding the date of dissolution of DBJ.
5. Settlement of accounts, and preparations, Etc. of list of properties, balance sheets, and profits and loss statements of DBJ for
the fiscal year commencing on April 1, 2008 shall be conductedby the Corporation as previously conducted, except for the portions relating to Article 38, Paragraph 1 (limited to the portions
relating to the Auditor’s opinions) and Article 40, Paragraph 1 (limited to the portions relating to the Auditor’s opinions) of the Old
DBJ Act. For this purpose, the reference to “for each half-yearfrom April to September and from October to March of the following year” and “for each half-year and for each fiscal year” in Article
38, Paragraph 1 of the Old DBJ Act shall be deleted, and references to “within two months after the end of the relevant half-yearor three months after the end of the fiscal year” in the saidParagraph shall be changed to read “on or prior to December 31,
2008.” Reference to “the settlement of accounts for each fiscal
year not later than May 31 of the following fiscal year” in Article 39of the Old DBJ Act shall be changed to read “the settlement ofaccounts for the fiscal year commencing on April 1, 2008 not later
than November 30, 2008.” Reference to “November 30 of the following fiscal year” in Article 4, Paragraph 3 of the Old DBJ Act
shall be changed to read “November 30, 2009.”
6. Disposition of profits and payment into the national treasury by
DBJ under Article 41 of the Old DBJ Act for the fiscal year commencing on April 1, 2008 shall be conducted by the Corporation
as previously conducted. For this purpose, references to “eachfiscal year” and “May 31 of the following fiscal year” in Article 41,
Paragraph 3 of the Old DBJ Act shall be changed to read “thefiscal year commencing on April 1, 2008” and “November 30,
2008,” respectively.
7. The matters regarding the registration of the dissolution in thecase that DBJ is dissolved pursuant to the provision of
Paragraph 1, shall be prescribed in the Cabinet Order.
Article 16 Values of Properties Assumed
1. The values of assets and liabilities assumed by the Corporationfrom DBJ (in the immediately following Paragraph referred to as
the “Assumed Properties”) shall be as evaluated by evaluation
officers (hyoka iin).
2. If evaluation officers intend to make evaluations as set forth in
the preceding Paragraph, their evaluations shall be made basedon the market prices of the Assumed Properties as of the dateon which the Corporation is established; provided, however, that
if it is deemed inappropriate to use the market prices taking into
account the matters of the Assumed Properties such as thekinds and purpose of use, their evaluations may be made notbased on the market prices of the Assumed Properties.
3. In addition to those set forth in the preceding two Paragraphs,
evaluation officers and other matters necessary for evaluations
shall be prescribed in the Cabinet Order.
Article 17 T ransitional Measures in Connection with
Assumption of Rights and Obligations
1. With respect to the Old Bank Debentures and interest coupons
concerning the obligations to be assumed by the Corporation
pursuant to the provision of Article 15, Paragraph 1 of the
Supplementary Provisions, the provisions of Article 43,
Paragraphs 5 and 6 of the Old DBJ Act shall remain effective
and in force even after the provision of Article 26 of the
Supplementary Provisions becomes effective.
2. With respect to the old Hokuto bonds (the Hokkaido-Tohoku
Development Finance Corporation Bonds issued pursuant to theprovision of Article 27, Paragraph 1 of the Hokkaido-Tohoku
Development Finance Corporation Act (Act No. 97 of 1956; hereinafter in this Paragraph referred to as the “Old HTDFC Act”)
before abolishment under Article 17, Item (2) of the Supplementary
Provisions of the Old DBJ Act) and interest coupons to be
92

Integrated Report 2017

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

Paragraph 1, Article 17 and Article 18 shall be changed to read“without delay after the incorporation of the Corporation.”
2. For the purposes of the balance sheet, profit and loss statement
and business report for the first fiscal year of the Corporation,references to “For each fiscal year” and “the interim businessperiod (the period from April 1 to September 30 of the currentyear) of the current fiscal year, and its balance sheet, profit andloss statement and business report for the current fiscal year” inArticle 21 shall be changed to read “For the fiscal year in which
the date on which the Corporation is established is included”
and “the current fiscal year,” respectively.
3. For the purpose of application of the provision of the preceding
Paragraph when the Corporation obtains the approval under
Article 9, Paragraph 1, the “Ministry of Finance Ordinance” and“Minister of Finance” in Article 21 which are applied mutatis
mutandis after changing to read in the said Paragraph shall bechanged to read the “Ministry of Finance Ordinance and the
Cabinet Office Ordinance” and the “Minister of Finance and thePrime Minister,” respectively.
Article 21 S
 pecial Rules for Operations ofRegistered Financial Institution
1. Within three (3) months of the date set forth in Article 1, Item (3)of the Supplementary Provisions (or, if the registration under
Article 33-5, Paragraph 1 of the Financial Instruments andExchange Act is rejected during such period or if abolition of theoperations of the registered financial institution (the operations ofregistered financial institution set forth in Article 33-5, Paragraph
1, Item (3) of the Financial Instruments and Exchange Act,
including the operations referred to in Article 3, Paragraph 1,
Item (16) to be conducted pursuant to the provision of Article
33-8, Paragraph 1 of the same Act which is applied after changing to read as set forth in Article 4, Paragraph 1; the same in this
Article) is ordered pursuant to the provision of Article 52-2,
Paragraph 1 of the Financial Instruments and Exchange Act
which is applied after the changing to read as set forth in theimmediately following Paragraph, the period up to the date ofsuch rejection or the date of order of such abolition), theCorporation may, notwithstanding the provision of Article 33-2 ofthe Financial Instruments and Exchange Act which is applied
after changing to read as set forth in Article 4, Paragraph 1, conduct the operations of the registered financial institutions. If the
Corporation applies for registration under the said Article during
such period, the same shall apply until the date of receipt ofnotice of registration or the date of receipt of notice of no registration after the elapse of such period.
2. If the Corporation conducts the operations of registered financial
institution pursuant to the provision of the preceding Paragraph,the provisions of the Financial Instruments and Exchange Act(except for Article 33-6; Article 37, Paragraph 1, Item (2); Article
37-3, Paragraph 1, Item (2); Article 50-2, Paragraph 2; Article
52-2, Paragraph 1, Item (2) and Paragraph 3; Article 54; andArticle 64, Paragraph 2) shall apply by deeming the Corporation
as the registered financial institution (the Registered Financial
Institution set forth in Article 2, Paragraph 11 of the Financial
Instruments and Exchange Act). For this purpose, reference to“rescind the registration under Article 33-2” in Article 52-2,
Paragraph 1 (except for Item (2)) of the Financial Instruments andExchange Act shall be changed to read “order the abolition ofoperations of registered financial institution,” reference to“rescind the registration under Article 29 or 33-2 or the authorization under Article 30, Paragraph 1 pursuant to the provision of
Article 52, Paragraph 1 or Article 52-2, Paragraph 1” in Article
54-2, Item (1) of the same Act shall be changed to read “order
the abolition of operations of the registered financial institution
pursuant to the provision of Article 52-2, Paragraph 1 which isapplied after changing to read as set forth in Article 21,
Paragraph 2 of the Supplementary Provisions of theDevelopment Bank of Japan Inc. Act (Act No. 85 of 2007),” reference to “registration under Article 29 or 33-2 is rescindedpursuant to the provision of Article 52, Paragraph 1, Article 52-2,
Paragraph 1, Article 53, Paragraph 3 or Article 54” in Article 56,
Paragraph 1 of the same Act shall be changed to read the “abolition of operations of the registered financial institution is orderedpursuant to the provision of Article 52-2, Paragraph 1 which isapplied after changing to read as set forth in Article 21,
Paragraph 2 of the Supplementary Provisions of theDevelopment Bank of Japan Inc. Act,” and reference to “rescission of registration under Article 33-2 as set forth in Article 52-2,
Paragraph 1” in Article 194-3, Item (3) of the same Act and reference to “rescission of registration under Article 33-2 as set forthin Article 52-2, Paragraph 1 or 3 or Article 54” in Article 194-4,
Paragraph 1, Item (5) of the same Act shall be changed to read“order of abolition of operations of the registered financial institution pursuant to the provision of Article 52-2, Paragraph 1 which
is applied after changing to read as set forth in Article 21,
Paragraph 2 of the Supplementary Provisions of theDevelopment Bank of Japan Inc. Act” and other required technical changes to read shall be prescribed in the Cabinet Order.
3. For the purpose of application of the provision of Article 33-5,
Paragraph 1, Item (1) of the Financial Instruments and Exchange
Act in the event that the Corporation is ordered to abolish theoperations of the registered financial institution pursuant to theprovision of Article 52-2, Paragraph 1 of the same Act which isapplied after changing to read as set forth in the immediately preceding Paragraph, the Corporation shall be deemed as the entity
whose registration under Article 33-2 of the same Act isrescinded pursuant to the provision of Article 52-2, Paragraph 1of the same Act, and the date on which such abolition is orderedshall be deemed as the date of rescission of registration under
the said Article 33-2 pursuant to the provision of Article 52-2,
Paragraph 1 of the same Act.
4. For one year of the date set forth in Article 1, Item (3) of the
Supplementary Provisions, the Corporation may, notwithstanding the provision of Article 64, Paragraph 2 of the Financial
Instruments and Exchange Act, cause any persons other thanthose who are registered pursuant to the provision of Paragraph
1 of the said Article to conduct the duties of sales representatives (gaimu-in). If the Corporation applies for registration under
the said Paragraph during such period, the same shall apply until
the date of receipt of notice of registration with respect to suchapplication or the date of receipt of notice of no registration after
the elapse of such period with respect to such application.
Article 22 Special Rules for Taxation of the Registration
License Tax
1. No registration license tax shall be assessed on registration of
the incorporation of the Corporation pursuant to the provision of
Article 12 of the Supplementary Provisions, and registration orrecordation of the Corporation in connection with provisions ofproperties upon the capital contribution by DBJ pursuant to theprovision of Article 9 of the Supplementary Provisions.
2. With respect to the registration license tax for registration orrecordation of origination (hozen), creation (settei) or transfer(iten) of lien (sakidori token), pledge (shichiken) or mortgage(teitoken) to secure the claims concerning business operations
set forth in Article 20, Paragraph 1, Item (1) of the Old DBJ Act
which shall be assumed by the Corporation from DBJ pursuant
to the provision of Article 15, Paragraph 1 of the Supplementary
Provisions, or registration of transfer of movable properties ortransfer of claims, based on the agreements executed by DBJ
before the provision of Article 48 of the Supplementary
Provisions comes into force, the provision of Schedule III-22 of
the Registration Tax Act (Act No. 35 of 1967) before amendment
under Article 48 of the Supplementary Provisions shall still
remain effective and in force.
Article 23 Special Rules for Taxation of the Corporation Tax
1. Capital investment in the Corporation to be made by DBJ pursuant to the provision of Article 9 of the Supplementary Provisions
Integrated Report 201793

The Development Bank of Japan Inc. Act(hereinafter in this Article referred to as the “Specified In-kindContribution”) shall be deemed as qualified in-kind contribution
set forth in Article 2, Item (12-14) of the Corporation Tax Act (ActNo. 34 of 1965), and the Corporation Tax Act and other laws
and ordinances relating to the corporation tax shall be appliedon such basis.
2. With respect to assets and liabilities of DBJ to be transferred by
the Specified In-kind Contribution which shall be subject to the
Corporation Tax Act and other laws and ordinances relating to
the corporation tax pursuant to the provision of the immediately
preceding Paragraph, the value evaluated by evaluation officers
pursuant to the provision of Article 16, Paragraph 1 of the
Supplementary Provisions shall be deemed as the book value;
provided, however, that with respect to allowance for loan
losses, the amount purported to be assumed by the Corporation
pursuant to the provision of the immediately following Paragraphshall be deemed as the book value, and the book values of theamounts of allowances prescribed by the Cabinet Order such asallowance for retirement payments shall be nil.
3. If it is determined to apply the provisions of Article 52 of the
Corporation Tax Act in the fiscal year in which the day prior to
the date of the Specified In-kind Contribution of the DBJ is
included (in the immediately following Paragraph referred to the“Final Fiscal Year”), the amount up to the upper limit of individual
allowance for loan losses set forth in Article 52, Paragraph 1 as
calculated in the said Paragraph or the amount up to the amountcalculated as prescribed by the Cabinet Order as set forth inParagraph 2 of the said Article shall, notwithstanding the provisions of Paragraph 7 of the said Article, be assumed by the
Corporation. For this purpose with respect to calculation of theamount of income for the fiscal year in which the date of theSpecified In-kind Contribution of the Corporation is included, theamount assumed by the Corporation shall be included in theamount of profits.
4. The Corporation shall submit the financial statements of DBJ for
the Final Fiscal Year set forth in Article 38, Paragraph 1 of the
Old DBJ Act to the director of competent district tax office within
three (3) months of the date of the Specified In-kindContribution.
Article 24 Special Rules for Taxation of Local Taxes
No real estate acquisition tax or vehicle acquisition tax can be
imposed on acquisition of real estate or vehicle in connection
with capital investment to be made by DBJ pursuant to the provision of Article 9 of the Supplementary Provisions.
Article 25 Delegation to the Cabinet Order
In addition to those set forth in Articles 2 to 24 of the
Supplementary Provisions, matters necessary for incorporationof the Corporation and dissolution of DBJ, as well as other matters necessary for effectuation of these provisions shall be
stipulated in the Cabinet Order.
Article 26 Abolition of the Development Bank of Japan Act
The Development Bank of Japan Act shall be abolished.
Article 27 T ransitional Measures for Abolition of theDevelopment Bank of Japan Act
1. Actions such as dispositions and procedures made, taken ordone pursuant to the provisions of the Old DBJ Act (except
Article 10 thereof) before the provision of the immediately preceding Article becomes effective shall be considered the actions
such dispositions and procedures made, taken, or done pursuant to the corresponding provisions of this Act.
2. The provisions of Article 16, Paragraphs 5 and 6 of the
Supplementary Provisions of the Old DBJ Act shall still remain
effective even after the provisions of the immediately preceding
Article takes effect, with respect to the lending of funds by the
Corporation to the designated entities under Article 2, Paragraph
5 of the Act Concerning Facilitation of the Improvement, Etc. of94

Integrated Report 2017

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

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

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

Article 4 Transitional Measures for Redemption of Government
Bonds and others
1.	Notwithstanding the provision of Article 2-4, Paragraph 1 of the
Supplementary Provisions of the New Act (including the application thereof under Article 36 of the Act for Extraordinary
Expenditure and Assistance to Cope with the Great East Japan
Earthquake), the Corporation may demand, for an indefinite
period, the redemption of government bonds delivered in accordance with the provision of Article 2-3, Paragraph 2 of the
Supplementary Provisions of the Former Act up to the amountcalculated pursuant to the provisions prescribed by the Ministerof Finance Ordinance as the necessary capital according to theincrease in the asset pertaining to the crisis response operations(in case of business whose implementation date is on or after
April 1, 2015, including the business implemented from April 1,2015 up to the previous day of such an implementation date).
2. Notwithstanding the provision of Article 2-4, Paragraph 3 of the
Supplementary Provisions of the New Act, the Corporation shallrecord the value redeemed in accordance with the provision of
Article 2-4, Paragraph 2 thereof on or after the above implementation date as the amount of the crisis response reserve. In thiscase, for the application of the provisions of Article 2-22,
Paragraph 1 and Article 2-29 of the Supplementary Provisions of
the New Act, “Article 2-9 of the Supplementary Provisions” in theabove Paragraph shall be interpreted as “the value redeemed inaccordance with the provisions of Article 2-4, Paragraph 2 of the
Supplementary Provisions, and Article 2-9 of the Supplementary
Provisions”, and “Article 2-9 of the Supplementary Provisions” inthe above Article as “the capital contribution by the redemptionof the government bonds in accordance with the provisions ofArticle 2-4, Paragraph 2 of the Supplementary Provisions, andArticle 2-9 of the Supplementary Provisions”.
3. For the application of the provision of Article 2-4, Paragraph 5 of
the Supplementary Provisions of the New Act when the provisionof the preceding paragraph is applied, “each preceding
Paragraph” in the Paragraph 5 shall be interpreted as“Paragraph 2 and Article 4, Paragraphs 1 and 2 of the Act for
Partial Amendment of the Development Bank of Japan Inc. Act(Act No. 23 of 2015)”.
Article 5 Transitional Measures for Rules Regarding Special
Investment Operations and others
1. The Corporation shall, without delay after this Act takes effect,
set rules regarding special investment operations provided in
Article 2-17, Paragraph 1 of the Supplementary Provisions of the
New Act, and obtain authorization from the Minister of Finance.
2. The Corporation shall, without delay after this Act takes effect,
revise the business plan provided in Article 17 of the New Act tocomply with the provisions of Article 2-11, Paragraph 1, Article
2-18, Paragraph 1 and Article 2-21, Paragraph 2 of the
Supplementary Provisions of the New Act, and obtain authorization from the Minister of Finance.
3. The Corporation shall, without delay after this Act takes effect,
revise the Articles of Incorporation thereof to comply with theprovisions of Article 2-11, Paragraph 3 and Article 2-18,
Paragraph 3 of the Supplementary Provisions of the New Act,and obtain authorization from the Minister of Finance.
Article 6 Delegation to Cabinet Order
In addition to the provisions of Article 2 through Article 5 ofthese Supplementary Provisions, transitional measures necessary for the implementation of this Act shall be set forth in the
Cabinet Order.

Integrated Report 201795

The Development Bank of Japan Inc. Act

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

96

Integrated Report 2017

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

Financial Condition

98

Consolidated Financial Statements

142

Non-Consolidated Financial Statements

146

Capital Adequacy Ratio

Integrated Report 201797

Financial Condition

Consolidated Balance Sheet

Development Bank of Japan Inc. and Consolidated Subsidiaries

Thousands of
U.S. Dollars (Note 1)

Millions of Yen

As of March 31,

2017

2016

2017

AssetsCash and due from banks (Notes 2(c),11, 14 and 28)
Money held in trust (Notes 28 and 30)¥ 1,044,104
15,599¥461,312
17,786$

9,306,571
139,045

Securities (Notes 3, 14, 28 and 30)

1,750,342

1,803,087

15,601,591

Loans (Notes 4, 5, 14 and 28)

13,039,526

12,952,567

116,227,169

Other assets (Notes 6, 11 and 14)

178,490

175,076

1,590,964

Tangible fixed assets (Notes 7, 11 and 14)

396,982

368,8463,538,483

Intangible fixed assets (Notes 11 and 14)

18,717

7,668

166,834

Asset for retirement benefits (Note 23)

1,989

2,458

17,734

362

374

3,235

Customers’ liabilities for acceptances and guarantees (Note 13)

181,010

180,124

1,613,427

Allowance for loan losses (Notes 8 and 28)
Allowance for investment losses(56,213)(414)(61,529)(594)(501,059)(3,699)¥16,570,496¥15,907,180$147,700,295¥ 3,016,714¥ 3,221,870$ 26,889,334

Deferred tax assets (Note 24)

		Total assets
Liabilities and equity

Liabilities:
Debentures (Notes 9, 14 and 28)
Call money and bills sold (Note 28)

13,000—115,875

Payables under repurchase agreements (Notes 14 and 28)

55,142—

491,513

Borrowed money (Notes 10, 11, 14, 28 and 31)

8,472,367

7,892,171

75,518,026

Corporate bonds (Notes 9, 11 and 28)

1,695,141

1,506,038

15,109,562

Other liabilities (Notes 12 and 31)

112,156

181,043

999,698

Accrued bonuses to employees

5,077

4,731

45,259Accrued bonuses to directors

11

11

105

Liability for retirement benefits (Note 23)

7,973

7,997

71,069Reserve for directors’ retirement benefits

82

63

737

Reserve for contingent losses

40

16

364

25,492
181,01028,910180,124

227,224
1,613,427

13,584,211

13,022,979

121,082,194

1,000,424

1,000,424

8,917,230

Crisis response reserve (Note 16)

206,529

206,529

1,840,886

Special investment reserve (Note 17)

230,000

130,000

2,050,094

Deferred tax liabilities (Note 24)
Acceptances and guarantees (Note 13)
		Total liabilities
Equity:Common stock authorized, 160,000 thousand shares in 2017 and2016; issued, 43,632 thousand shares in 2017 and 2016 (Note 15)

1,813

618

16,166

945,466
513,758

995,466
456,591

8,427,367
4,579,359

Unrealized gain on available-for-sale securities (Note 30)

45,01755,074401,258

Deferred gain on derivatives under hedge accounting

33,68034,561

300,212

Foreign currency translation adjustments(1,271)

429(11,337)

Special investment surplus (Note 17)

Capital surplus (Note 15)
Retained earnings (Note 15)
Accumulated other comprehensive income:Accumulated adjustments for retirement benefits (Note 23)

		TotalNon-controlling interests
		Total equity
		 Total liabilities and equity
See notes to consolidated financial statements.
98

Integrated Report 2017

(484)

(83)

(4,323)

2,974,932

2,879,611

26,516,913

11,352

4,588

101,188

2,986,284¥16,570,496

2,884,200¥15,907,180

26,618,101$147,700,295

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

Thousands of
U.S. Dollars (Note 1)

Millions of Yen

For the year ended March 31,

2017

2016

2017

IncomeInterest income:¥190,060¥215,315$1,694,098

Interest on loans

162,606

185,136

1,449,386

Interest and dividends on securities

19,13822,123

170,587—

82—

Interest on receivables under resale agreements

—

226

—

Interest on due from banks

15

54

135

8,164

7,549

72,777

136

141

1,213

13,605

11,326

121,273

Interest on call loans and bills boughtInterest on swaps
Other interest income
Fees and commissions
Other operating income (Note 19)

6,327

9,526

56,397

Other income (Note 20)

75,669126,509674,473

		Total income

285,662

362,677

2,546,241

98,073106,932

874,177

34,83135,056

310,470

Expenses
Interest expense:
Interest on debentures
Interest on call money and bills sold

(11)

0

(106)

Interest on payables under repurchase agreements

(5)

—

(49)

Interest on borrowed money (Note 31)

58,08966,981

517,777

Interest on short-term corporate bonds

764

202

6,812

4,409

4,623

39,302

Interest on corporate bonds
Other interest expense
Fees and commissions

(3)

68

(31)

567

798

5,059

Other operating expenses (Note 21)

3,358

7,479

29,937

General and administrative expenses

51,13346,041455,777

Other expenses (Note 22)

10,091

14,692

89,948

		Total expenses

163,224

175,944

1,454,898

		

122,437

186,733

1,091,344

Current

31,576

51,795

281,459

Deferred

3,100

5,867

27,633

Total income taxes

34,677

57,663309,092

Net income

87,760129,070

782,251

121

117

1,084

¥   87,639¥   128,952$  781,168

Income before income taxes

Income taxes (Note 24):

Net income attributable to non-controlling interests
Net income attributable to owners of the parent

Yen

U.S. Dollars (Note 1)

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

¥1,994.88¥2,948.33$      
17.78

452

671

4.03

See notes to consolidated financial statements.

Integrated Report 201799

Financial Condition

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

Thousands of
U.S. Dollars (Note 1)

Millions of Yen

For the year ended March 31,

2017

Net income¥ 87,760¥129,070$ 782,251

Unrealized loss on available-for-sale securities(10,580)(35,774)(94,312)Deferred (loss) gain on derivatives under hedge accounting

2016

2017

Other comprehensive loss (Note 26):
(1,467)

1,533(13,084)

Foreign currency translation adjustments

(486)

(592)

(4,332)Adjustments for retirement benefits

(400)

(62)

(3,565)Share of other comprehensive (loss) income in affiliates
accounted for by the equity method

(104)

4,086

(931)

Total other comprehensive loss
Comprehensive income(13,039)(30,810)(116,225)¥ 74,721¥ 98,259$ 666,027¥ 74,598¥ 98,152$ 664,926

123

107

1,100

Total comprehensive income attributable to:
Owners of the parent
Non-controlling interests
See notes to consolidated financial statements.

100

Integrated Report 2017

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

Millions of Yen

For the year ended March 31, 2017

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

Commonstock

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

Special investment Special investment
reserve
surplus¥130,000
50,000¥  618

CapitalsurplusRetainedearnings¥995,466¥456,591

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

Millions of Yen
Accumulated other comprehensive income
Noncontrollinginterests

Unrealized gain
on available-forsale securities

Deferred gain
on derivatives
under hedge
accounting

Foreigncurrencytranslation
adjustments

Accumulated
adjustments
for retirement
benefits

Balance at beginning of year
Investment from government
Transfer from capital surplus to special
	  investment reserve
Cash dividends
Net income attributable to owners of the parent
Transfer from retained earnings to special
	  investment surplus¥ 55,074¥34,561¥     429

¥ (83)Net change during the year

(10,057)(880)(1,701)(401)(13,041)

6,763(6,277)

Balance at end of year

¥ 45,017¥33,680¥(1,271)¥(484)¥2,974,932¥11,352¥2,986,284

For the year ended March 31, 2016

Commonstock

Crisis response
reserve

For the year ended March 31, 2017

Total

¥2,879,611
50,000¥ 4,588

Total equity¥2,884,200
50,000—(29,277)
87,639(29,277)
87,639—Millions of Yen

Balance at beginning of year
Investment from government
Transfer from common stock to crisis response
reserve
Transfer from capital surplus to special
investment reserve
Cash dividends
Net income attributable to owners of the parent
Transfer from retained earnings to special
investment surplus
Change in scope of equity method investments
Net change during the year
Balance at end of year

¥1,206,953(206,529)¥—

Special investment Special investment
reserve
surplus¥—65,000¥ —CapitalsurplusRetainedearnings¥1,060,466¥344,728

206,52965,000(65,000)(22,514)
128,952618¥1,000,424¥206,529¥130,000

¥618

(618)
6,043
¥ 995,466¥456,591

Millions of Yen
Accumulated other comprehensive income

For the year ended March 31, 2016

Balance at beginning of year
Investment from government
Transfer from common stock to crisis
	  response reserve
Transfer from capital surplus to special
investment reserve
Cash dividends
Net income attributable to owners of the parent
Transfer from retained earnings to special
investment surplus
Change in scope of equity method investments
Net change during the year
Balance at end of year

Unrealized gain
on available-forsale securities

Deferred gain
on derivatives
under hedge
accounting

Foreigncurrencytranslation
adjustments¥ 85,865¥33,311¥ 1,617

Accumulated
adjustments
for retirement
benefits

¥(12)

Total

¥2,732,929
65,000Noncontrollinginterests¥14,344

Total equity¥2,747,274
65,000—(30,790)¥ 55,074

1,249¥34,561(1,188)
¥ 429

(70)
¥(83)

(22,514)
128,952—(22,514)
128,952

6,043(30,799)¥2,879,611—
6,043(40,555)¥2,884,200(9,755)¥ 4,588

Integrated Report 2017101

Financial Condition

Thousands of U.S. Dollars (Note 1)

For the year ended March 31, 2017

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

Commonstock

Crisis response
reserve$8,917,230$1,840,886

Special investment Special investment
reserve
surplus$1,158,749
445,673$ 5,515

CapitalsurplusRetainedearnings$8,873,040$4,069,804

445,673(445,673)(260,962)
781,168
10,651$8,917,230$1,840,886$2,050,094$16,166(10,651)$8,427,367$4,579,359

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

For the year ended March 31, 2017

Unrealized gain
on available-forsale securities

Deferred gain
on derivatives
under hedge
accounting

Foreigncurrencytranslation
adjustments

Accumulated
adjustments
for retirement
benefits$490,906$308,061$  3,829$  (744)

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

102

Integrated Report 2017

Total

$25,667,276
445,673

Noncontrollinginterests$ 40,900

Total equity$25,708,176
445,673—(260,962)
781,168(260,962)
781,168—(89,648)(7,849)(15,166)(3,579)(116,241)

60,288(55,953)$401,258$300,212$(11,337)$(4,323)$26,516,913$101,188$26,618,101

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

Thousands of
U.S. Dollars (Note 1)

Millions of Yen

For the year ended March 31,

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

2017

2016

2017

¥ 122,437¥ 186,733$ 1,091,344

6,761
442
(9)
—
11
(4,061)(190,060)
98,073(42,447)(385)
10,569
91

5,245
107
(4,000)2,047
347(6,140)(215,315)
106,932(72,107)(251)
41,52428

60,268
3,945
(87)
—
103
(36,204)(1,694,098)
874,177(378,357)(3,434)
94,210817(5,315)
(179)
312
—
468
(50)
24
(86,852)(205,156)
570,274
189,103(16,100)——
13,00055,142
196,692(98,528)(57,596)556,662(53,338)
503,323(23,188)
69
74
0
50
37
3
308,775
1,664(718,579)
156,686
40,100335,000
5,299——
233,286(108,335)(73,119)
202,978(63,023)
139,954(47,378)(1,603)
2,781
—
4,178
(451)
220
(774,155)(1,828,649)
5,083,112
1,685,566(143,507)——
115,875
491,513
1,753,211(878,233)(513,384)
4,961,781(475,429)
4,486,351(323,917)
121,329
271,044(6,210)8,560(22,781)
14,614(5,011)
1(21,253)(458,912)
183,113328,233(85,110)123,065(87,124)945(3,805)——(2,887,219)
1,081,465
2,415,942(55,353)
76,301(203,062)
130,265(44,668)
10(189,441)

39
36,416

1,660
2,065

353
324,593

50,000(29,277)

65,000(22,514)445,673(260,962)

6,810
(416)
27,116296(216)
42,56560,702(3,708)
241,704(164)
566,691
423,032(316)
184,269
239,272(1,470)5,051,179
3,770,679—¥ 989,724(509)¥ 423,032—$ 8,821,857

Integrated Report 2017103

Financial Condition

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

1. Basis of Presentation
The accompanying consolidated financial statements have been prepared in accordance with the provisions set forth in
the Japanese Financial Instruments and Exchange Act and its related accounting regulations and Ministerial Ordinance for
Accounting of the Development Bank of Japan Inc. (“DBJ Inc.”) and in conformity with accounting principles generally
accepted in Japan (“Japanese GAAP”), which are different in certain respects as to application and disclosure requirementsof International Financial Reporting Standards.
In preparing these consolidated financial statements, certain reclassifications and rearrangements have been madeto the consolidated financial statements issued domestically in order to present them in a form which is more familiar toreaders outside Japan. In addition, certain reclassifications have been made in the 2016 consolidated financial statements toconform to the classifications used in 2017.
The amounts indicated in millions of yen are rounded down by omitting the figures less than one million yen.
Accordingly, the sum of each amount appearing in the accompanying financial statements and the notes thereto may not
be equal to the sum of the individual account balances. Amounts in U.S. dollars are presented solely for the convenience ofreaders outside Japan. The rate of ¥112.19=$1.00, the effective exchange rate prevailing as of March 31, 2017, has beenused in the conversion. The presentation of such amounts is not intended to imply that Japanese yen amounts have been or
could have been readily translated, realized or settled in U.S. dollars at that rate or any other rate.

2. Summary of Significant Accounting Policies(a) Principles of Consolidation(1) Scope of Consolidation
Under the control concept, those companies in which DBJ Inc., directly or indirectly, is able to exercise control over
operations are fully consolidated. On September 8, 2006, the Accounting Standards Board of Japan (“ASBJ”) issued
Practical Issues Task Force No. 20, “Practical Solution on Application of Control Criteria and Influence Criteria to
Investment Associations” which was effective for the period and the fiscal years ending on or after September
8, 2006. The practical solution clarifies how the control and influence concept should be practically applied tothe consolidation scope of collective investment vehicles, such as limited partnerships, Tokumei Kumiai (silent
partnership) and other entities with similar characteristics.
(i) Consolidated Subsidiaries
The number of consolidated subsidiaries as of March 31, 2017 is 27. The major consolidated subsidiaries as ofMarch 31, 2017 are as follows:
DBJ Singapore Limited
Japan Economic Research Institute Inc.
DBJ Europe Limited
DBJ Real Estate Co., Ltd.
DBJ Investment Advisory Co., Ltd.
DBJ Capital Co., Ltd.
DBJ Securities Co., Ltd.
DBJ Asset Management Co., Ltd.
Value Management Institute, Inc.
DBJ Investment Consulting (Beijing) Co., Ltd.
Consist Inc.
In the year ended March 31, 2017, Tokumei Kumiai with the proprietor of Japan Wind Development Joint Fund KK
and other three companies and Consist Inc. were newly consolidated due to capital investment and acquisition ofshares, respectively. UDS Corporate Mezzanine Limited Partners and two other companies were excluded from thescope of consolidation due to liquidation in the year ended March 31, 2017.
(ii) Unconsolidated Subsidiaries
The number of unconsolidated subsidiaries as of March 31, 2017 is 40. The major unconsolidated subsidiary as ofMarch 31, 2017 was UDS II Corporate Mezzanine Limited Partnership.
Unconsolidated subsidiaries are excluded from the scope of consolidation because such exclusion has no material
impact on the consolidated financial statements in terms of total assets, income, net income, retained earnings andaccumulated other comprehensive income.
104

Integrated Report 2017

(iii) Companies not classified as subsidiaries where DBJ Inc. holds the majority of voting rights
SHINX Ltd.
Kinugawa Rubber Industrial Co., Ltd.
These companies were not treated as subsidiaries because the capital contributions were made for the purposeof incubating these companies, and not for the purpose of owning these investees under its control throughoperational, personnel, capital or other form of transactions.
(2) Application of the Equity Method
Under the influence concept, unconsolidated subsidiaries and affiliates over which DBJ Inc. has the ability to exercise
significant influence are accounted for by the equity method.
(i) Unconsolidated subsidiaries not accounted for by the equity method
The number of unconsolidated subsidiaries not accounted for by the equity method as of March 31, 2017 was 40.
The major unconsolidated subsidiary not accounted for by the equity method was UDS II Corporate Mezzanine
Limited Partnership.
(ii) Affiliates accounted for by the equity method
The number of affiliates accounted for by the equity method as of March 31, 2017 was 26. One of the majoraffiliates accounted for by the equity method as of March 31, 2017 was AIRDO Co., Ltd.
Changes in the scope of affiliates accounted for by the equity method:
Gordon Brothers Japan Co., Ltd. and another company were newly accounted for by the equity method due to anincrease in their materiality from the year ended March 31, 2017. Mezzanine Solution I Limited Partnership was
excluded from the scope of equity method accounting due to liquidation from the year ended March 31, 2017.
(iii) Affiliates not accounted for by the equity method
The number of affiliates not accounted for by the equity method as of March 31, 2017 was 99. One of the majoraffiliates as of March 31, 2017 was New Perspective One LLC.
Unconsolidated subsidiaries and affiliates that are not accounted for by the equity method have been excluded
from the scope of the equity method because their aggregate effect in terms of net income, retained earnings andaccumulated other comprehensive income has no material impact on the consolidated financial statements of DBJ Inc.
(iv) Entities not classified as affiliates where DBJ Inc. holds voting rights of between 20% and 50%
The following companies of which DBJ Inc. holding voting rights of between 20% and 50% are not affiliates
accounted for by the equity method, because the capital contributions were made for the purpose of incubatingthese companies, and not for the purpose of owning these investees under its control through operational,
personnel, capital or other form of transactions.
As of March 31, 2017
Shinwa Seiko Corporation
Socionext Inc.
Minebea Intec GmbHSII Semiconductor Corporation
KANTO-UNYU Co., Ltd.
Daisho-gun Co., Ltd.
PT. PETROTEKNO
Izumi Products Company(3) Balance Sheet Dates of Consolidated Subsidiaries
		 Balance sheet dates of consolidated subsidiaries are as follows:
Number of subsidiaries

2017

December 31
February 28 or 29
March 3119
1
7
Integrated Report 2017105

Financial Condition

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

Millions of Yen

2017

2016

2017

Cash and due from banks¥1,044,104¥461,312$9,306,571

Time deposits with banks(54,380)(38,280)(484,713)

Cash and cash equivalents¥  989,724¥423,032$8,821,857(d) Securities
Held-to-maturity debt securities are stated at amortized cost with amortization computed on a straight-line basis, using
the weighted average method. Available-for-sale securities are carried at fair value with the corresponding unrealized
gains and losses, net of applicable taxes, recorded directly in a separate component of equity, after deducting theamount charged to profit or losses by applying fair value hedge accounting. The cost of these securities upon sale iscalculated principally using the weighted average method. Financial instruments whose fair value cannot be reliably
determined are stated at cost using the weighted average method.
Investments in limited partnerships and other similar partnerships are accounted for at their original cost plus
DBJ Inc.’s interest in earnings since acquisition and less any dividends received, based on the investees’ most recent
financial statements.
Securities which are held as trust assets in money held in trust accounts are valued in the same way as other securities.

106

Integrated Report 2017

(e) Valuation Method for Derivative Financial Instruments
All derivative financial instruments are carried at market value. Except for certain derivatives that are designated as
hedging instruments as discussed below, gains or losses on derivative transactions are recognized in the statement ofincome.
(f) Hedge Accounting(1) Hedge Accounting
DBJ Inc. applies the deferral method of hedge accounting or the accrual method (*1). The portfolio hedge isaccounted for by the method stipulated in “Accounting and Auditing Treatments on the Application of AccountingStandards for Financial Instruments in the Banking Industry,” issued by the Japanese Institute of Certified Public
Accountants (the “JICPA Industry Audit Committee Report No. 24” February 13, 2002). In addition, foreign currency
swaps which are used to hedge foreign currency fluctuations are not stated at market values but at contractual
rates, as the foreign currency swap contracts meet the hedging criteria under the Accounting Standards for Financial
Instruments.
In addition, DBJ Inc. applies portfolio hedges to hedge foreign currency fluctuations associated with equity
investments in overseas subsidiaries and affiliates and foreign currency denominated available-for-sale securities(other than bonds). The translation differences on hedging instruments are included in foreign currency translation
adjustments in the case of equity investments in overseas subsidiaries and affiliates; fair value hedges are applied toforeign currency denominated available-for-sale securities (other than bonds).
(2) Hedging Instruments and Hedged Items• Hedging Instruments : Interest rate swaps
Hedged Items: Debentures, Borrowed money, Corporate bonds, Securities and Loans• Hedging Instruments : Foreign currency swaps
Hedged Items: F oreign currency denominated Debentures, Borrowed money, Corporate bonds, Securities
and Loans• Hedging Instruments : Forward liability denominated in foreign currency
Hedged Items: Foreign currency denominated equity investments in overseas subsidiaries and affiliates
and foreign currency denominated available-for-sale securities (other than bonds)(3) Hedging Policy
DBJ Inc. utilizes hedging instruments to hedge interest rates and foreign currency fluctuations on its assets andliabilities. Individual or certain group contracts are drawn for each hedged item.
(4) Evaluation of Hedge EffectivenessAccording to the risk management policy, DBJ Inc. evaluates the effectiveness of the hedges by testing whether thederivatives are effective in reducing the risks associated with the hedged items.
In addition, with respect to portfolio hedging activities, for interest rate swaps used to hedge market interest rate
fluctuations, hedge effectiveness is assessed on a specifically identifiable group of hedged items and a corresponding
group of hedging instruments, and for interest rate swaps used to hedge variability in cash flows, hedge
effectiveness is assessed based on the correlation between the base interest rate index of the hedged cash flows andthe hedging instrument.
With respect to hedging activities against foreign exchange risk of equity investments in overseas subsidiaries
and affiliates and foreign currency denominated available-for-sale securities (other than bonds), the effectiveness is
assessed by confirming that the total foreign currency position of the hedged items is equal to or larger than that ofhedging instruments.
With respect to an individual hedge, for both interest rate swap contracts which meet the hedging requirementsof the accrual method (*1) and foreign currency swap contracts which meet the hedging requirements of theassignment method (*2), DBJ Inc. is not required to periodically evaluate hedge effectiveness.
*1.	If interest rate swap contracts are used as hedges and meet certain hedging criteria, the net amount to be paidor received under the interest rate swap contract is added to or deducted from the interest on the assets or
liabilities for which the swap contract was executed.

Integrated Report 2017107

Financial Condition*2.	In cases where foreign currency swaps are used as hedges and meet certain hedging criteria, foreign exchange
forward contracts and hedged items are accounted for in the following manner:(i) If a foreign currency swap is executed to hedge existing foreign currency assets or liabilities, a) the difference,
if any, between the Japanese yen amount of the hedged foreign currency asset or liability translated using the
spot rate at the inception date of the contract and the book value of the asset or liability is recognized in thestatement of income in the period since inception, and b) the discount or premium on the contract (that is,the difference between the Japanese yen amount of the contract translated using the contracted forward rate
and that translated using the spot rate at the inception date of the contract) is recognized over the term of
the contract.
(ii) If a foreign currency swap is executed to hedge a future transaction denominated in a foreign currency,
the future transaction is recorded using the contracted forward rate, and no gains or losses on the foreignexchange forward contract are recognized.
(g) Fixed Assets(1) Depreciation of Tangible Fixed Assets
Tangible Fixed Assets are stated at cost less accumulated depreciation. Tangible Fixed Assets of DBJ Inc. aredepreciated using the declining-balance method, except for buildings (excluding installed facilities) and installedfacilities and structures acquired on or after April 1, 2016 that are depreciated on a straight-line basis, anddepreciation of tangible fixed assets of consolidated subsidiaries is computed principally using the straight-line
method, based on the estimated useful lives of the assets.
The estimated useful lives are principally as follows:
Buildings : 3 years to 50 years
Others: 4 years to 20 years(2) Amortization of Intangible Fixed Assets
Intangible Fixed Assets are amortized using the straight-line method. Capitalized software for internal use isamortized using the straight-line method over the estimated useful lives (mainly 5 years).
(3) Lease Assets
Depreciation for lease assets is computed by the straight-line method with zero residual value over the lease term.
(h) Long-lived Assets
DBJ Inc. reviews its long-lived assets for impairment whenever events or changes in circumstance indicate the carrying
amount of an asset or asset group may not be recoverable. Impairment losses are recognized if the carrying amount ofan asset or asset group exceeds the sum of the undiscounted future cash flows expected to result from the continued
use and eventual disposition of the asset or asset group. The impairment losses would be measured as the amount bywhich the carrying amount of the asset exceeds its recoverable amount, which is the higher of the discounted cash
flows from the continued use and eventual disposition of the asset or the net selling price at disposition.
(i) Debenture and Corporate Bonds Issuance Costs“Debenture and Corporate Bonds Issuance Costs” are charged to expense as incurred.
(j) Foreign Currency Translation and Revaluation Method
Assets and liabilities denominated in foreign currencies held by DBJ Inc. have been translated at the exchange rates
prevailing as of the balance sheet date. Foreign currency accounts held by consolidated foreign subsidiaries aretranslated into the currency of the subsidiaries at the respective year-end exchange rates. The foreign exchange gains
and losses from transactions are recognized in the statement of income to the extent that they are not hedged byforward exchange contracts. The balance sheet accounts of the consolidated foreign subsidiaries are translated into
Japanese yen at the current exchange rate as of the balance sheet date except for equity, which is translated at thehistorical rate. Differences arising from such translation are shown as “Foreign Currency Transaction Adjustments” in a
separate component of equity. Income and expense accounts of consolidated foreign subsidiaries are translated into yen
at the exchange rate prevailing as of the balance sheet date.

108

Integrated Report 2017

(k) Allowance for Loan Losses
DBJ Inc. provides for “Allowance for Loan Losses” as detailed below pursuant to the internal policies for self-assessmentof credit quality and loan losses. The allowance for claims on debtors who are legally bankrupt, in special liquidation
or effectively bankrupt is provided for based on the amount of claims, after the write-off described below, net ofamounts expected to be recovered through disposal of collateral or execution of guarantees. The allowance for claims
on debtors who are not legally bankrupt, but are likely to become bankrupt, and for which future cash flows cannot
reasonably be estimated (possibly bankrupt), is provided for at the amount considered to be necessary based on an
overall solvency assessment performed on the claims, net of amounts expected to be recovered through disposal ofcollateral or execution of guarantees. With respect to the claims on debtors who are likely to become bankrupt or to beclosely monitored, and for which future cash flows can reasonably be estimated, the allowance is provided for as thedifference between the present value of expected future cash flows discounted at the contracted interest rate and thecarrying value of the claims. The allowance for claims on debtors other than those described above is provided basedon the historical default rate, which is calculated based on the actual defaults over a certain historical period. All claims
are assessed initially by the investment and lending departments and then by the Credit Analysis Department, which is
independent of the investment and lending departments based on internal policies for self-assessment of credit quality.
The allowance is provided for based on the results of the self-assessment.
With respect to the claims on debtors who are legally or substantially bankrupt with collateral or guarantees, theamount of claims exceeding the estimated market values of collateral or guarantees which are deemed uncollectible
were written-off, and totaled ¥22,138 million ($197,327 thousand) and ¥22,791 million for the years ended March 31,2017 and 2016, respectively. The consolidated subsidiaries calculate the general reserve for “normal” categories basedon the specific actual historical loss ratio, and the specific reserve for the “possibly bankrupt,” “effectively bankrupt”
and “legally bankrupt” categories based on estimated losses, considering the recoverable value.
(l) Allowance for Investment Losses“Allowance for Investment Losses” is provided for based on the estimated losses on certain investments based on anassessment of the issuers’ financial condition.
(m) Accrued Bonuses to Employees and Directors“Accrued Bonuses to Employees and Directors” are provided for in the amount of the estimated bonuses which are
attributable to the years ended March 31, 2017 and 2016.
(n) Employees’ Retirement Benefits
DBJ Inc. has defined benefit pension plans, which consist of a defined benefit corporate pension plan and a lump-sum
severance indemnity plan, as well as a defined contribution pension plan. Some domestic consolidated subsidiaries havea lump-sum severance indemnity plan and defined contribution plans, and some overseas consolidated subsidiaries
have retirement benefit plans which are typically defined contribution plans. The projected benefit obligations are
attributed to periods on a straight-line basis. Actuarial gains and losses and service costs that are yet to be recognizedin profit or loss are recognized with in equity (accumulated other comprehensive income), after adjusting for tax effects
and are recognized in profit or loss over ten years no longer than the expected average remaining service period of theemployees.
(o) Reserve for Directors’ Retirement Benefits“Reserve for Directors’ Retirement Benefits” is accrued based on the amount that would be required if all directors
retired at the balance sheet date.
(p) Reserve for Contingent Losses
Reserve for contingent losses is provided for possible contingent losses on loan commitment limits based on individuallyestimated losses.
(q) Lease Transactions
Finance Lease transactions are capitalized by recognizing lease assets and lease obligations in the consolidatedbalance sheet.
(r) Consumption Taxes
Income and expenses subject to consumption taxes are presented net of related consumption taxes paid or received.
Integrated Report 2017109

Financial Condition(s) Income Taxes
The provision for income taxes is computed based on the pretax income included in the consolidated statement ofincome. The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future
tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities.
Deferred taxes are measured by applying currently enacted tax rates to the temporary differences.
(t) Capitalization of Interest Costs on Real Estate Development Business
Interest costs arising in the normal course of development related to real estate development business of certain
domestic consolidated subsidiaries are capitalized and included in the acquisition cost of assets.
(u) Per Share Information
Basic net income per share is computed by dividing net income available to owners of the parent related to common
stock by the weighted-average number of shares of common stock outstanding for the period, retroactively adjusted forstock splits. Diluted net income per share for the years ended March 31, 2017 and 2016 is not disclosed because there
are no dilutive securities.
Cash dividends per share presented in the accompanying consolidated statement of income are dividends applicableto the year including dividends to be paid after the end of the year.
(v) Accounting Change
Pursuant to an amendment to the Corporate Tax Act, DBJ Inc. adopted Accounting Standards Board of Japan Practical
Issues Task Force No. 32 “Practical Solution on a change in depreciation method due to Tax Reform 2016” and changed
the depreciation method for installed facilities and structures acquired on or after April 1, 2016, from the decliningbalance method to the straight-line method.
There was no material impact from this for the year ended March 31, 2017.
(w) Additional Information
DBJ Inc. applied ASBJ Guidance No. 26 “Guidance on Recoverability of Deferred Tax Assets,” effective April 1, 2016.

3. Securities
Securities as of March 31, 2017 and 2016 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

Japanese government bonds

2017

2016

2017

¥  193,190¥  227,655$ 1,721,997

Corporate bonds

648,077

639,421

5,776,604

Equities

381,715412,370

3,402,400

Other securities

527,359

523,6394,700,590¥1,750,342¥1,803,087$15,601,591

Total*1. Investments in unconsolidated subsidiaries and affiliates included in “Equities” as of March 31, 2017 and 2016, are ¥37,716 million($336,184 thousand) and ¥33,638 million, respectively. Investments in unconsolidated subsidiaries and affiliates included in “Other
securities” as of March 31, 2017 and 2016, are ¥105,525 million ($940,600 thousand) and ¥80,835 million, respectively.
*2. DBJ Inc. has contingent liabilities for guarantees of corporate bonds among securities which were issued by private placement (Article
2, Paragraph 3 of Financial Instruments and Exchange Act), which amount to ¥6,982 million ($62,234 thousand) and ¥3,032 million asof March 31, 2017 and 2016, respectively.
*3. Japanese government bonds include securities lent in accordance with the unsecured securities lending agreement in the amount of¥25,000 million ($222,836 thousand) as of March 31, 2017.
*4. Securities available-for-sale (excluding those securities those fair value cannot be reliably determined), whose fair value significantly
declined compared with the acquisition cost, and is considered to be other than recoverable decline, were written down to therespective fair value which is recorded as the carrying amount on the consolidated balance sheets.
The criterion for determining whether the fair value is “significantly declined” are as follows:
Fair value declined by 50% or more of the acquisition cost.
Fair value declined by 30% or more of the acquisition cost, and such decline is not considered as recoverable.

110Integrated Report 2017

Impairment losses for the years ended March 31, 2017 and 2016 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2017

2016

Equities

¥—

Bonds
Other
Total

2017

¥—

$ —

65

—

579

—

14

—

¥65

¥14

$579

4. Non-Performing Loans
The amounts of non-performing loans included in “Loans” as of March 31, 2017 and 2016 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2017Loans to bankrupt debtors¥

Delinquent loans

46,035Loans past due three months or more

—

2016

2017

¥

$

786

53,893—410,338———

Restructured loans

24,86027,792

221,594

Total¥70,896¥82,472$631,933*1. The amounts of loans indicated above are stated at gross amounts, before reduction of the allowance for loan losses.
*2. “Loans to bankrupt debtors” represent non-accrual loans to debtors who are legally bankrupt as defined in Article 96-1-3 and 4 of theJapanese Tax Law Enforcement Regulation.
*3. “Delinquent loans” represent non-accrual loans other than (i) Loans to bankrupt debtors and (ii) Loans whose interest payments aredeferred in order to assist or facilitate the restructuring efforts of borrowers in financial difficulty.
*4. “Loans past due three months or more” are loans whose principal or interest payment is three months or more past due and do not
fall under the category of “Loans to bankrupt debtors” or “Delinquent loans.”*5. “Restructured loans” are loans whose repayment terms have been modified to the advantage of debtors through means such as a
reduction or exemption of interest rates, postponement of principal and interest payments, and forgiveness of loans to support or
restructure the debtors’ businesses, and do not fall under the category of “Loans to bankrupt debtors,” “Delinquent loans,” or “Loanspast due three months or more.”

Integrated Report 2017111

Financial Condition

5. Commitments
Loan commitment limits are contracts under which DBJ Inc. lends to customers up to the prescribed limits in response tocustomers’ applications for loans as long as there is no violation of any terms and conditions in the contracts. As of March
31, 2017 and 2016, the amounts of unused commitments are ¥662,751 million ($5,907,404 thousand) and ¥841,229
million, respectively. As of March 31, 2017 and 2016, the amounts of unused commitments with remaining contract term
within one year are ¥385,266 million ($3,434,055 thousand) and ¥394,333 million, respectively.
Since many of these commitments expire without being drawn down, the unused amount does not necessarily
represent a future cash requirement. Most of these contracts have terms and conditions whereby DBJ Inc. and its
subsidiaries can reject customers’ applications for loans or decrease the contract limits with proper reason (e.g., changes
in financial situation, deterioration in customers’ credit worthiness). At the inception of contracts, DBJ Inc. and its
consolidated ­subsidiaries obtain liens on customers’ real estate, securities or other assets as collateral as deemed­necessary. Subsequently, DBJ Inc. and its consolidated subsidiaries perform periodic reviews of the customers’ businessresults based on internal rules, and take necessary measures to reconsider the terms and conditions of contracts and/or
require additional collateral and guarantees.

6. Other Assets
Other assets as of March 31, 2017 and 2016 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2017

2016

2017

Prepaid expenses¥  3,771¥  3,986$   33,618

Accrued income

26,96729,925

240,375

Derivatives

55,077

67,987490,929

Other

92,67373,177826,042

Total¥178,490¥175,076$1,590,964

7. Tangible Fixed Assets
Tangible fixed assets as of March 31, 2017 and 2016 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

Buildings
Land
Leased assets
Construction in progress

2017

2016

2017

¥ 18,513¥ 19,221$  165,020

91,252

91,578813,374

188

4

1,683

5,094

4,491

45,409Other281,933

253,550

2,512,996

Total¥396,982¥368,846$3,538,483

Note: Accumulated depreciation of tangible fixed assets as of March 31, 2017 and 2016, is ¥17,455 million ($155,589 thousand) and¥13,406 million, respectively.

8. Allowance for Loan Losses
Allowance for loan losses as of March 31, 2017 and 2016 is as follows:
Thousands of
U.S. Dollars

Millions of Yen

2017

2016

2017

General allowance for loan losses¥36,657¥38,493$326,745

Specific allowance for loan losses

19,55623,035

174,314

Total¥56,213¥61,529$501,059

112

Integrated Report 2017

9. Debentures and Corporate Bonds
Debentures and corporate bonds as of March 31, 2017 and 2016 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

Issue date

Interest rate(%)

Maturity date

2017

2016

2017

Jun. 2006– 1.6–
Aug. 2008
2.2

Aug. 2016–
Jun. 2023¥ 359,988[99,997]¥ 459,953$ 3,208,738[891,323]

Nov. 2008–
Mar. 2017

0.001–
2.1

Jul. 2016–
Mar. 2027

1,319,698[79,997]

1,199,121

11,763,063[713,052]

1.81

Sep. 2028

25,04625,050223,251

Japanese government–
guaranteed foreign bonds
5–7, 10–14*1,7Dec. 2002– 1.05–
Nov. 2007 5.125

Feb. 2017–
Nov. 2027

369,020552,700

3,289,243

Japanese government–
guaranteed Euro MTN bonds
4–14*3Oct. 2011–
Sep. 2016

1.0–
2.875

Oct. 2016–
Sep. 2026

716,004[88,716]

693,100

6,382,072[790,766]

FILP agency domestic bonds
11,20,27,29–31,33–36,
39,41,42,44,46,49,51*4,7Dec. 2003– 1.63–
Jul. 2008 2.74

Sep. 2016–
Mar. 2047

224,956[79,996]

289,944

2,005,140[713,046]

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

Sep. 2008

2.032

Sep. 2023

2,000

2,000

17,827

Apr. 2009– 0.001–

Jun. 2016–

1,144,400

1,165,000

10,200,556(Issuer: DBJ Inc.)
Debentures
Japanese governmentguaranteed bonds 12–23*1,7
Japanese governmentguaranteed bonds 1–39

Japanese governmentSep. 1998
2,7
guaranteed foreign bond 67*

Corporate bonds
Corporate bonds throughpublic placement 5,13,16,17,19, Jan. 201721,23,25,26,28,30,31,33–75

1.745

Jan. 2031[295,600]

Corporate bonds throughprivate placement
3–25,27–37,39–48

Feb. 2015–
Mar. 2017

0.00086– May 2019–
0.725
Feb. 2037

207,000

61,0001,845,084

Corporate bonds Euro MTN
24–32,34,36,37,39,40,42,43,
45–65*6

May 2011–
Feb. 2017

0.0–
3.64

May 2016–
Feb. 2027

338,991

275,2883,021,583(Issuer: Green Asset Investment TMK)
Specified corporate bonds 1*8 Dec. 2012

5.53

May 2018

4,500(Issuer: Hiratsuka Holding TMK)
Specified corporate bonds 4*8

0.12727

Sep. 2019

Total

Sep. 2014[2,634,816][84,847][756,288]

4,500

40,111

250

250

2,228

¥4,711,856¥4,727,908$41,998,897*1. These bonds are government-guaranteed bonds issued by the Development Bank of Japan.
*2. This bond is a government-guaranteed bond issued by the Japan Development Bank.
*3. These bonds are unsecured guaranteed bonds issued based on Medium Term Note program (“MTN program”).
*4. Fiscal Investment and Loan Program (FILP) agency bonds (“FILP bonds”) are not government-guaranteed. These bonds are issued by theDevelopment Bank of Japan.
*5. This bond is a FILP bond issued based on MTN program.
*6. These bonds are unsecured corporate bonds issued based on MTN program.
*7. General mortgage under the DBJ Inc. Act (17 of the Supplementary Provisions) and the DBJ Act (Article 43)*8. These bonds are non-recourse debts.
*9. Figures indicated in brackets [ ] indicate the amounts to be redeemed within one year.

Integrated Report 2017113

Financial Condition

Scheduled redemptions of above debentures and corporate bonds for the following 5 years subsequent to March 31, 2017
are as follows:
Millions of Yen

Thousands of U.S. Dollars

Debentures/
corporate bonds

Non-recourse
corporate bonds

Debentures/
corporate bonds

Non-recourse
corporate bonds

The fiscal year ending March 31, 2018

¥729,155¥   —$6,499,291

$

2019

654,0174,500

5,829,552

40,111—

2020

611,213250

5,448,023

2,228

2021

333,475—

2,972,414—

2022

539,392—

4,807,848—

10. Borrowed Money
Borrowed money as of March 31, 2017 and 2016 is as follows:
Thousands of
U.S. Dollars

Millions of Yen
Average interest rate (%)

Due date of repayment

2017

2016

2017

Borrowings

0.64

May 2017–Feb. 2037

¥8,383,916¥7,840,720$74,729,620

Non-recourse borrowings

0.56

May 2018–Sep. 2024

Total

0.64

88,451

51,451

788,406¥8,472,367¥7,892,171$75,518,026

Scheduled repayments of above borrowings and non-recourse borrowings for the following 5 years subsequent to March
31, 2017 are as follows:
Millions of Yen
Borrowings

Thousands of U.S. Dollars

Non-recourse borrowings¥24,329

Borrowings

Non-recourse borrowings$11,296,692$216,864

The fiscal year ending March 31, 2018

¥1,267,375

2019

1,106,668

41,474

9,864,239

369,6852020

964,618

12,186

8,598,078

108,6222021

898,625180

8,009,858

1,604

2022

1,068,472

180

9,523,774

1,604

11. Non-Recourse Debts
Non-recourse debts in consolidated special purpose companies as of March 31, 2017 and 2016 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2017

2016

2017

Non-recourse debts:
Borrowed money¥ 88,451¥51,451$  788,406

Corporate bonds

4,750

4,750

42,339

3,851

4,689

34,332

Assets corresponding to non-recourse debts:
Cash and due from banks
Other assets
Tangible fixed assets
Intangible fixed assets

114

Integrated Report 2017

682

—

6,079

115,81373,5181,032,297

97

—

866

12. Other Liabilities
Other liabilities as of March 31, 2017 and 2016 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2017

2016

2017

Accrued expenses¥ 21,675¥ 21,914$193,204

Unearned income

1,143

1,036

10,193

Accrued income taxes

5,490

27,49648,939Derivatives

23,55544,799209,963

Lease obligations
Asset retirement obligations

37

5

332

2,630

1,469

23,443

Other

57,62384,322513,624

Total¥112,156¥181,043$999,698

13. Acceptances and Guarantees
Acceptances and guarantees as of March 31, 2017 and 2016 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

Guarantees

2017

2016

2017

¥181,010¥180,124$1,613,427

14. Assets Pledged as Collateral
Cash and due from banks of ¥3,851 million ($34,332 thousand), securities of ¥54,573 million ($486,437 thousand), otherassets of ¥682 million ($6,079 thousand), tangible fixed assets of ¥115,813 million ($1,032,297 thousand) and intangible
fixed assets of ¥97 million ($866 thousand) are pledged as collateral for payables under repurchase agreements of ¥55,142
million ($491,513 thousand) and borrowed money of ¥88,451 million ($788,406 thousand) as of March 31, 2017.
Cash and due from banks of ¥4,689 million and tangible fixed assets of ¥73,518 million are pledged as collateral forborrowed money of ¥51,451 million as of March 31, 2016.
Securities and loans pledged as collateral in Real Time Gross Settlement for bank deposits at the Bank of Japan are¥80,529 million ($717,792 thousand) and ¥342,883 million ($3,056,272 thousand), respectively, as of March 31, 2017,
which are deposited as replacement of margin money for future trading, cash collateral paid for financial instruments,
etc. and collateral for transactions, including exchange settlements as of March 31, 2017. On behalf of the investees whoborrow from third parties, ¥34,425 million ($306,846 thousand) of securities are deposited as security as of March 31,
2017. Additionally, ¥937 million ($8,357 thousand) of margin deposits for futures transactions, ¥25,197 million ($224,599
thousand) of cash collateral paid for financial instruments, etc., ¥28,502 million ($254,052 thousand) of margin deposits
with the central clearing house and ¥69 million ($616 thousand) of guarantee deposits are included in other assets asof March 31, 2017. Under the DBJ Inc. Act (Article 17 of the Supplementary Provisions) and the DBJ Act (Article 43),
obligations created by the bonds issued by DBJ are secured by a statutory preferential right over the property of DBJ Inc.
The face value of these debentures amounts to ¥981,289 million ($8,746,671 thousand) as of March 31, 2017.
Securities and loans pledged as collateral in Real Time Gross Settlement for bank deposits at the Bank of Japan are¥115,563 million and ¥461,856 million, respectively, as of March 31, 2016, which are deposited as replacement of margin
money for future trading and collateral for transactions, including exchange settlements as of March 31, 2016. On behalfof the investees who borrow from third parties, ¥7,400 million of securities are deposited as security as of March 31, 2016.
Additionally, ¥937 million of margin deposits for futures transactions, ¥12,936 million of cash collateral paid for financial
instruments, etc. ¥21,662 million of margin deposits with the central clearing house and ¥73 million of guarantee deposits
are included in other assets as of March 31, 2016. Under the DBJ Inc. Act (Article 17 of the Supplementary Provisions) andthe DBJ Act (Article 43), obligations created by the bonds issued by DBJ Inc. are secured by a statutory preferential rightover the property of DBJ Inc. The face value of these debentures amounts to ¥1,330,054 million as of March 31, 2016.

Integrated Report 2017115

Financial Condition

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

16. Crisis Response Reserve
DBJ Inc. recorded the accumulated amounts of the government’s contribution to implement the crisis response operationsin accordance with the provision of Article 2-22 of the supplementary provision of the DBJ Inc. Act (hereinafter the “Act”)
as “Crisis response reserve.”
The reserve is characterized as follows:(a)	For the purpose of calculating the amount of surplus, the amount of crisis response reserve is included in the total
amount of common stock and capital surplus based on the provision of Article 2-25 of the supplementary provision of
the Act.
(b)	In case of compensation for deficit, the amount of crisis response reserve may be decreased when the capital surplus
and legal retained earnings become nil based on the provision of Article 2-26 of the supplementary provision of theAct. When the surplus becomes positive after the decrease in the amount of crisis response reserve, the amount of crisis
response reserve shall be increased based on the provision of Article 2-26 of the supplementary provision of the Act.
116

Integrated Report 2017

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

17. Special Investment Reserve and Special Investment Surplus
DBJ Inc. recorded the amounts transferred from the government’s investment and capital surplus to implement the
special investment operations in accordance with the provision of Article 2-23 of the supplementary provision of the Act
as “Special investment reserve”. In addition, profit or loss arising from special investment operations is transferred fromretained earnings to “Special investment surplus.”
Special Investment Reserve and Special Investment Surplus are characterized as follows:(a)	For the purpose of calculating the amount of surplus, the amounts of special investment reserve and special investment
surplus are included in the total amount of common stock and capital surplus based on the provision of Article 2-25 of
the supplementary provision of the Act.
(b)	In case of compensation for deficit, the amounts of special investment reserve or special investment surplus may bedecreased when the capital surplus and legal retained earnings become nil based on the provision of Article 2-26 of the
supplementary provision of the Act. When the surplus becomes positive after the decrease in the amounts of special
investment reserve or special investment surplus, the amounts of special investment reserve or special investment
surplus shall be increased based on the provision of Article 2-26 of the supplementary provision of the Act.
(c)	In case that DBJ Inc. determined that these amounts became unnecessary to implement special investment operations
properly, DBJ Inc. may pay the full or partial amount of special investment reserve or special investment surplus to the
National Treasury according to the resolution of the shareholders meeting and authorization of the Minister of Finance,in accordance with the provision of Article 2-27 of the supplementary provision of the Act.
(d)	If DBJ Inc. were to be liquidated, DBJ Inc. shall pay the amounts of special investment reserve and special investment
surplus corresponding to the amount attributable to the National Treasury to the National Treasury based on theprovision of Article 2-28 of the supplementary provision of the Act when residual assets exist after discharging debts.

18. Per Share Information
Basic net income per common share (“EPS”) for the years ended March 31, 2017 and 2016 is as follows:Year ended March 31, 2017

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

Millions of Yen

Thousands of Shares

Yen

U.S. Dollars

Net income attributable toowners of the parent

Weighted average shares

EPS

EPS

¥ 87,639

597¥ 87,041

43,632¥1,994.88

43,632¥2,948.33$17.78Year ended March 31, 2016

Basic EPS
Net income attributable to ownersof the parent
Net income not attributable to common
	 shareholders (Amount attributable to
the National Treasury related to special
investment operations)
Net income attributable to owners of	 the parent relating to common stock¥128,952

309¥128,642

Note: Diluted net income per share for the years ended March 31, 2017 and 2016 is not disclosed because there are no dilutive securities.
Integrated Report 2017117

Financial Condition

19. Other Operating Income
Other operating income for the years ended March 31, 2017 and 2016 is as follows:
Thousands of
U.S. Dollars

Millions of Yen

2017

2016

2017

Foreign exchange gains¥5,236¥—$46,675

Gains on sales of bonds

257

3,519

2,293

Gains on derivatives

—

5,107

—

Other

833

899

7,429

Total

¥6,327¥9,526$56,397

20. Other Income
Other income for the years ended March 31, 2017 and 2016 is as follows:
Thousands of
U.S. Dollars

Millions of Yen

2017

2016

2017

Reversal of allowance for loan losses¥ 2,904¥ 17,488$ 25,886

Gains on sales of equities and other securities

25,656

46,163

228,685

Gains on money held in trust

413

261

3,686

Equity in earnings of affiliates

4,061

6,140

36,204

Gains on sales of fixed assets

176

70

1,577

Collection of written-off claims

1,743

8,274

15,53921,41034,057

190,838

9

4,000

87

8,793

5,126

78,378

Gains on investments in limited partnerships andother similar partnerships
Gain on bargain purchase
Rental income on land and buildings
Other

10,5004,926

93,594

Total¥75,669¥126,509$674,473

21. Other Operating Expenses
Other operating expenses for the years ended March 31, 2017 and 2016 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2017

Losses on sales of bonds
Foreign exchange losses

¥

2016

2017

—

¥2,616

$

—

3,219

—
—

Write-off of bonds

65

—

579

Debenture issuance costs

709

867

6,325

Corporate bonds issuance costs

935

769

8,334

1,639

—

14,611

Other

9

5

88

Total

¥3,358¥7,479$29,937

Losses on derivatives

118

Integrated Report 201722. Other Expenses
Other expenses for the years ended March 31, 2017 and 2016 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

Write-off of loans
Losses on sales of equities and other securities
Write-off of equities
Losses on money held in trust
Losses on sales of fixed assets
Impairment losses
Losses on investments in limited partnerships andother similar partnerships
Losses on step acquisitions
Depreciation
Other
Total

2017

2016

2017

¥

12
122
2,080
28
268
11

¥ 1,198
1
1,925
10
99
347

$

4,153
—
3,023
391
¥10,091

7,588
2,047
1,368
104
¥14,692

37,021—
26,946
3,487$89,948

107
1,093
18,545
252
2,394
103

23. Employees’ Retirement Benefits
Employees whose service with DBJ Inc. is terminated are, under most circumstances, entitled to retirement and pension
benefits determined by reference to basic rates of pay at the time of termination, length of service and conditions underwhich the termination occurs. If the termination is involuntary, caused by retirement at the mandatory retirement age or
caused by death, the employee is entitled to greater payment than in the case of voluntary termination.
(a) Defined Benefit Pension Plan
(1) The changes in retirement benefit obligation for the years ended March 31, 2017 and 2016, are as follows:
Thousands of
U.S. Dollars

Millions of Yen

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

2017

2016

¥33,413
1,576
364
568
(1,811)¥34,111¥32,243
1,518
351
873
(1,574)¥33,4132017$297,829
14,056
3,248
5,069(16,149)$304,053(2) The changes in plan assets for the years ended March 31, 2017 and 2016, are as follows:
Thousands of
U.S. Dollars

Millions of Yen

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

2017

2016

¥27,874
139
(130)
1,026
(781)
¥28,128¥26,792
133
679
961
(692)
¥27,8742017$248,460
1,242(1,165)
9,147(6,966)$250,718

Integrated Report 2017119

Financial Condition(3)	Reconciliation between the liability for retirement benefits recorded in the consolidated balance sheet and the balancesof retirement benefit obligations and plan assets for the years ended March 31, 2017 and 2016, are as follows:
Thousands of
U.S. Dollars

Millions of Yen

Funded retirement benefit obligations
Plan assets
Unfunded retirement benefit obligations
Net liability for retirement benefits recorded in
the consolidated balance sheet
Liability for retirement benefits
Asset for retirement benefits
Net liability for retirement benefits recorded in
the consolidated balance sheet

2017

2016

2017

¥ 26,138(28,128)(1,989)7,973¥ 25,416(27,874)(2,458)7,997$ 232,984(250,718)(17,734)
71,069¥  5,983¥  5,538$  53,335¥  7,973(1,989)¥  7,997(2,458)$  71,069(17,734)¥  5,983¥  5,538$  53,335(4) The components of net periodic retirement benefit costs for the years ended March 31, 2017 and 2016, are as follows:
Thousands of
U.S. Dollars

Millions of Yen

Service cost
Interest cost
Expected return on plan assets
Amortization of net actuarial losses
Amortization of prior service cost
Net periodic retirement benefit costs

2017

2016

2017

¥1,576
364
(139)
110
12
¥1,925¥1,518
351
(133)
91
12
¥1,840$14,056
3,248(1,242)
987
113$17,162(5)	Amounts recognized in other comprehensive income (before income tax effect) in respect of adjustments for
retirement benefit for the years ended March 31, 2017 and 2016, are as follows.
Thousands of
U.S. Dollars

Millions of Yen

2017

Prior service cost
Actuarial gains (losses)
Total

2016

¥  12
(588)
¥(575)

2017

¥  12
(102)
¥ (90)$  113(5,247)$(5,134)(6)	Amounts recognized in accumulated other comprehensive income (before income tax effect) in respect ofadjustment for accumulated retirement benefit as of March 31, 2017 and 2016, are as follows.
Thousands of
U.S. Dollars

Millions of Yen

2017

Unrecognized prior service cost
Unrecognized actuarial gains (losses)
Total

120

Integrated Report 2017

¥ (44)(646)¥(690)

2016¥ (57)(57)¥(114)

2017$  (396)(5,761)$(6,157)

(7) Plan assets
		 (i) Components of plan assets
		 Plan assets as of March 31, 2017 and 2016, consisted of the following:
2017

		

2016

Debentures

86%

86%

Equity12%

11%

Others

2%

3%

Total

100%

100%

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

(8) Assumptions used for the year ended March 31, 2017 and 2016, were set forth as follows:
2017

Discount rate
Expected salary increase rate
Expected rate of return on plan assets

2016

1.1%

1.1%

1.7%–5.3%

1.8%–5.3%

0.5%

0.5%

(b) Defined Contribution Plans
The amounts of the required contribution to the defined contribution plans of DBJ Inc. and its consolidated subsidiaries forthe years ended March 31, 2017 and 2016 are ¥220 million ($1,965 thousand) and ¥218 million, respectively.

24. Income Taxes
DBJ Inc. and its domestic consolidated subsidiaries are subject to Japanese national and local income taxes which, in theaggregate, resulted in a normal effective statutory tax rate of approximately 30.86% and 32.34% for the years ended
March 31, 2017 and 2016, respectively.
A reconciliation of the normal effective statutory tax rate with the actual effective tax rate for the year ended March 31,2017 is as follows:
2017

Normal effective statutory tax rate

30.86%

Increase (decrease) in taxes resulting from:
Change in valuation allowance(1.87)%

Equity in earnings of affiliates(1.02)%

Other

0.35%

Actual effective tax rate

28.32%A reconciliation of the normal effective statutory tax rate with the actual effective tax rate for the year ended March 31,
2016 is omitted since the difference is less than 5% of the statutory tax rate.

Integrated Report 2017121

Financial Condition

The tax effects of significant temporary differences and loss carryforwards which resulted in deferred tax assets and liabilities
as of March 31, 2017 and 2016 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2017

2016

2017

¥ 21,300¥ 22,190$ 189,862

Losses from revaluation of securities

11,845

12,504

105,582

Excess of fair value over assets of consolidated subsidiaries

4,538

5,439

40,454

Liability for retirement benefits

1,985

2,034

17,695

Tax loss carryforwards

5,037

4,967

44,899Deferred tax assets:
Allowance for loan losses

Other

9,381

11,527

83,621

Sub-total

54,08858,664482,112(44,798)(47,050)(399,309)

9,289

11,61382,802

Unrealized gain on available-for-sale securities(17,491)(21,767)(155,912)

Deferred gain on derivatives under hedge accounting(14,783)(15,519)(131,771)

Less-valuation allowance

Total
Deferred tax liabilities:(2,143)(2,861)(19,109)

Total

Other

(34,418)(40,149)(306,791)

Net deferred tax assets (liabilities)¥(25,129)¥(28,536)$(223,989)

25. Lease Transactions(a) Finance Leases
Information about finance leases is omitted since there is no materiality.
(b) Operating Leases(As lessee)
The minimum lease commitments under non-cancelable operating leases as of March 31, 2017 and 2016 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2017

2016

2017

Due within 1 year

¥1,472¥ 421$13,123

Due after 1 year

3,959

581

35,297

Total¥5,432¥1,003$48,420(As lessor)
The minimum lease commitments under non-cancelable operating leases as of March 31, 2017 and 2016 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2017

2016

Due within 1 year

¥ 3,394¥ 5,213$30,252

Due after 1 year

7,375

11,09765,739¥10,769¥16,310$95,991

Total

122

Integrated Report 20172017

26. Other Comprehensive Loss
The components of other comprehensive loss for the years ended March 31, 2017 and 2016 are as follows:
Thousands of
U.S. Dollars

Millions of Yen

2017

2016

2017

(Loss) gain arising during the year

¥ (3,890)¥

Reclassification adjustments to profit or loss

(11,177)(54,885)(99,628)(15,067)(54,521)(134,305)

Unrealized loss on available-for-sale securities:

		

Amount before income tax effect		

Income tax effect		Total363$ (34,678)

4,486

18,74639,993(10,580)(35,774)(94,312)Deferred (loss) gain on derivatives under hedge accounting:
Gain arising during the year

6,465

7,618

57,630Reclassification adjustments to profit or loss

(8,755)(6,184)(78,045)(2,290)

1,433(20,415)

822

99

7,331

(1,467)

1,533(13,084)

(486)

(592)

(4,332)

—

—

—

(486)

(592)

(4,332)

—

—

—

(486)

(592)

(4,332)

(699)

(194)

(6,234)

123

104

1,100

(575)

(90)

(5,134)

		Amount before income tax effect		

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

Income tax effect		TotalAdjustments for retirement benefits:
Adjustments arising during the year
Reclassification adjustments to profit or loss		Amount before income tax effect		

Income tax effect		Total

175

27

1,568

(400)

(62)

(3,565)

(341)

3,760

(3,048)

Share of other comprehensive (loss) income in affiliates:(Loss) gain arising during the year
Reclassification adjustments to profit or loss		Amount before income tax effect		

Income tax effect		Total
Total other comprehensive loss

237

325

2,117

(104)

4,086

(931)

—

—

—

(104)

4,086

(931)

¥(13,039)¥(30,810)$(116,225)

Integrated Report 2017123

Financial Condition

27. Segment Information
DBJ Inc. consists of only one business segment of long-term financing and accordingly, the disclosure of the reportablesegment information is omitted.
Related Information:
Segment information by service for the years ended March 31, 2017 and 2016 is following:
Millions of Yen
Year ended March 31, 2017

Loan business

Securities investment

Other

Total

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

Year ended March 31, 2016

Loan business

Securities investment

Other

Total

Ordinary income from external customers¥210,899¥106,362¥41,344¥358,606

Year ended March 31, 2017

Loan business

Securities investment

Other

Total

Ordinary income from external customers$1,490,810$606,809$446,959$2,544,578

Millions of Yen

Thousands of U.S. Dollars

28. Financial Instruments and Related Disclosures(a) Financial Instruments(1) Policy for Financial Instruments
DBJ Inc. provides investment and loan services that are aimed to provide long-term stable funding. As main methodsof acquiring funds, in addition to issuing corporate bonds and long-term borrowings, DBJ Inc. relies on the stableprocurement of long-term funds from the government’s Fiscal Investment and Loan Program (FILP). Since the majorityof its assets are long-term with fixed rate, DBJ Inc. raises its funds mainly with long-term, fixed rate liabilities.
From both funding and investment aspects, DBJ Inc. implements comprehensive asset/liability management inorder to mitigate the risk of capital shortfall and losses from fluctuations of interest rate and exchange rate. DBJ Inc.
utilizes derivative financial instruments in order to hedge or manage the risks related to interest and currency.
(2) Nature and Extent of Risks Arising from Financial Instruments
The financial assets of DBJ Inc. are mainly investments and loans in domestic customers, which are exposed tocredit risk that stems from customers’ default of contracts or decline of their creditworthiness. Main categories ofindustries of debtors are electricity, gas, thermal supply, water supply, real estate, rental and leasing, manufacturing
and others as of March 31, 2017. The changes of economic circumstances surrounding these industries may
influence the fulfillment of their obligations. DBJ Inc. holds securities such as bonds, equities and investments inlimited partnerships and other similar partnerships, which are exposed to issuer’s credit risk, interest rate risk, pricevolatility risk and other risks. DBJ Inc. does not have any trading-related risk because it does not engage in trading(specified transactions).
Although corporate bonds and borrowings are exposed to cash liquidity risk and interest rate risk, these risks
are hedged or controlled by matching of financing and investing activities, interest-rate swap agreements and othertransactions.
Foreign currency denominated loans, debentures and corporate bonds are exposed to exchange rate risk. DBJ
Inc. mitigates this risk by matching foreign currency investments and loans with foreign currency corporate bonds
and currency-related transactions.
DBJ Inc. utilizes derivative financial transactions such as interest-rate swap agreements and currency swap
agreements in order to hedge or manage the risks related to interest and currency. DBJ Inc. applies hedge
accounting as necessary. Details for hedging instruments, hedged items, hedging policy and assessment ofeffectiveness of the hedges are described in Note 2 (f) “Hedge Accounting.”(3) Risk Management for Financial Instruments(i) Credit Risk Management
In accordance with the internal guidelines, DBJ Inc. utilizes credit exposure management and portfolio
management for investments and loans. When making an investment or loan, DBJ Inc. examines the entity’s
viability and the entity’s project’s profitability. After that, DBJ Inc. sets ratings along with an internal rating
124

Integrated Report 2017

system, grants credit amount, sets collateral and guarantee. The sales and credit analysis departments holdseparate roles in the screening and administering of credit for individual loans and each department keeps
the operations of the other in check. The Committee on Investment and Loan Decisions meets as needed todeliberate important issues concerning the management and governance of individual loans. DBJ Inc. performs acomprehensive analysis of data based on borrower ratings, and calculates the loan portfolio’s overall exposure tocredit risk, which is measured regularly to ensure that such risk remains within specified range of capital.
The credit risk of securities is managed in the same way as that of loans. In addition, DBJ Inc. regularly
examines total risk which takes into account the market value of the securities. As for counterparty risk arisingfrom derivative transactions, DBJ Inc. manages derivative transactions by setting a limit after continuallymonitoring the cost of restructuring its transactions and the creditworthiness of each counterparty and also
manages risk by utilizing central clearance organization and through receipt/payment of margin money based on
Credit Support Annex (CSA) between counterparties.
(ii) Market Risk Management
1) Interest Rate Risk Management
DBJ Inc. manages interest rate risk by asset/liability management. Details of risk management methods andprocedures are determined on internal rules, and Management Committee and ALM & Risk Management
Committee determine policies related to asset/liability management, monitoring of implementation and futureplans. In addition, the risk management department monitors the interest rate and term of financial assets/
liabilities overall. ALM & Risk Management Committee conducts regular monitoring with cash flow ladderanalyses (gap analysis), value at risk (VaR), interest rate sensitivity analyses (basis point value), and othermethods. As part of asset/liability management, interest-rate swaps are used to avoid or hedge interest rate risk.
2) Foreign Exchange Risk Management
Foreign currency investments, loans and bonds are exposed to exchange rate risk, therefore those risks arehedged or managed not only by offsetting some foreign currency denominated investments and loans withforeign currency denominated corporate bonds and debentures but also by making currency-related hedging
transactions.
3) Price Volatility Risk Management
When DBJ Inc. acquires financial assets entailing price volatility risk such as securities with readily available
market quotations, it follows in-house regulations and policies which have been developed taking into
account market fluctuation risks, and the risk management department is involved in decision-making, as
necessary. Through regular monitoring, price volatility risks are reviewed on a timely basis and reported to
ALM & Risk Management Committee periodically.
4) Derivative Transactions
In conducting derivative transactions, segregation of duties is maintained in the front office, the back officeand the risk management department based on in-house regulations.
5) Quantitative Information about Market Risk
DBJ Inc. has not been engaged in trading activities, and all the assets and liabilities are financial instruments
for the purposes other than trading.
Market risk exposure (estimated loss) is based on VaR using the historical simulation method (holding
period of 1 year, observation period of 5 years, and confidence interval of 99.9%). The amount of market
risk (risks pertaining to the changes in interest rates, foreign exchanges and market prices) as of March
31, 2017 and 2016 was ¥17,511 million ($156,090 thousand) and ¥26,360 million, respectively. Suchmeasurements are conducted by the risk management department on a regular basis and reported to ALM &Risk Management Committee to utilize for establishing ALM operating policies.
DBJ Inc. conducts backtesting to compare the VaR calculated by the model with hypothetical
performances calculated based on the actual market movements and confirms that the measurement models
in use capture the market risk with sufficient accuracy. VaR measures the market risk volume under a definite
probability of incidence calculated statistically based on the historical market movements and accordingly,
and therefore there may be cases where market risk cannot be captured in such situations as when market
conditions are changing dramatically beyond what was experienced historically.
Integrated Report 2017125

Financial Condition(iii) Liquidity Risk Management on Financing
The risk management department monitors the possession level of cash liquidity and reports it to the ALM & Risk
Management Committee periodically in line with in-house regulations of liquidity risk management on financing.
The ALM & Risk Management Committee manages liquidity risk by appropriate operations of financing andinvesting activities based on the risk situation.
(4) Supplementary Explanation on Fair Value of Financial Instruments
The fair value of financial instruments is measured at the quoted market price. If the quoted price is not available,
DBJ Inc. measures reasonably assessed price. Because assessed price is computed using certain assumptions, pricecould differ if different assumptions are used.
(b) Fair Values Information of Financial Instruments
The following are the carrying amount, fair value and differences between them as of March 31, 2017 and 2016.
Unlisted equities and others, whose fair value cannot be reliably determined, are excluded from the table below (see (2)).
Millions of Yen

2017
Carrying amount

Fair value¥ 1,044,104¥ 1,044,104

Held-to-maturity debt securities

694,354708,226

Available-for-sale securities

460,222460,222

—

1,055

6,778

5,723

12,986,074

13,522,246

536,172

Total assets¥15,185,811¥15,741,578¥555,767

Debentures

3,016,714

3,143,805

127,090

Call money and bills sold

13,00013,000—

Payables under repurchase agreements

55,14255,142—

Borrowed money

8,393,367

8,484,914

91,546

Corporate bonds

1,695,141

1,697,995

2,853

Total liabilities¥13,173,366¥13,394,858¥221,491

32,47532,475—

Cash and due from banks

Difference¥—

Securities

Investments in affiliates
Loans

13,039,526(53,451)

Allowance for loan losses*1

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

126

Integrated Report 201713,871(953)¥

31,521(953)¥

31,521—¥—Millions of Yen

2016
Carrying amount

Cash and due from banks¥

Fair value461,312¥Difference

461,314¥

2

Securities
Held-to-maturity debt securities

804,050

821,180

17,130Available-for-sale securities

419,648419,648

—

—

—

—

12,891,632

13,544,524

652,892

Total assets¥14,576,643¥15,246,667¥670,024

Debentures

3,221,870

3,377,600

155,729

Call money and bills sold

—

—

—

Payables under repurchase agreements

—

—

—

Investments in affiliates
Loans

12,952,567(60,935)

Allowance for loan losses*1

Borrowed money

7,813,171

8,001,512

188,341

Corporate bonds

1,506,038

1,514,237

8,199

Total liabilities¥12,541,080¥12,893,351¥352,271

24,91924,919—Derivative transactions*2
Derivative transactions not qualifying forhedge accounting
Derivative transactions qualifying forhedge accounting
Total derivative transactions¥(1,731)
23,188¥(1,731)
23,188——¥

Thousands of U.S. Dollars

2017
Carrying amount

Fair value$  9,306,571$  9,306,571

Held-to-maturity debt securities

6,189,097

6,312,741

Available-for-sale securities

4,102,171

4,102,171

—

9,407

60,42251,016

Cash and due from banks

Difference$—

Securities

Investments in affiliates
Loans

123,643

116,227,169(476,440)

Allowance for loan losses*1

115,750,729

120,529,876

4,779,147

Total assets$135,357,974$140,311,780$4,953,806

Debentures

26,889,334

28,022,152

1,132,817

Call money and bills sold

115,875

115,875—

Payables under repurchase agreements

491,513491,513—

Borrowed money

74,813,864

75,629,863

815,999

Corporate bonds

15,109,562

15,135,000

25,437

Total liabilities$117,420,148$119,394,402$1,974,254

289,466

289,466—

Derivative transactions*2
Derivative transactions not qualifying for	  hedge accounting
Derivative transactions qualifying for	  hedge accounting
Total derivative transactions$(8,499)280,967$(8,499)280,967$——*1. General and specific allowances for loan losses are deducted.
*2. Assets and liabilities arising from derivative transactions are presented on a net basis.

Integrated Report 2017127

Financial Condition(1) Following are the methods used to calculate the fair values of financial instruments:
Assets(i) Cash and due from banks
For deposits without maturity, the carrying amount is presented as the fair value, as such carrying amountapproximates the fair value. For deposits with maturity, the carrying amount is presented as the fair value, assuch carrying amount approximates the fair value because the remaining maturity period of the majority of suchdeposits is short (maturity within 1 year).
(ii) Securities
The fair value of marketable equity securities is measured at the market price. The fair value of bonds ismeasured at the market price or the quoted price from third party. For bonds without such price, the fair value isdetermined by discounting contractual cash flows at the rates that consist of the risk free rate and the credit risk
premium based on types of securities, internal ratings and tenor.
(iii) Loans
The fair value of loans is determined by discounting contractual cash flows at the rates that consist of the risk
free rate and the credit risk premium that is based on types of loans, internal ratings and tenor. Foreign currency
swap contracts which meet the hedging requirements of the assignment method is limited to loans for which
the contractual cash flows are matched with the interest rate swap and foreign currency swap. For loans which
are short contract terms (1year or less), the carrying amount is presented as the fair value, as such carrying
amount approximates the fair value. With respect to the claims on debtors who are likely to become bankrupt
or to be closely monitored, and for which future cash flows can reasonably be estimated, the fair values are
determined by discounting expected cash flows that reflect expected loss at the risk free rate. For loans to
obligors who are “legally bankrupt,” “effectively bankrupt” and “possibly bankrupt,” the reserve is provided
based on the discounted cash flow method, or based on amounts expected to be collected through the disposalof collateral or execution of guarantees. Carrying value net of the reserve as of the consolidated balance sheet
date is a reasonable estimate of the fair value of those loans.
Liabilities(i) Debentures
For floating rate debentures issued by DBJ Inc., the carrying amount is presented as the fair value, as suchcarrying amount approximates the fair value. This is on the basis that the market interest rate is reflected in thefair value of such debentures because the terms of these were set within a short time period and that there
has been no significant change in the creditworthiness of DBJ Inc. before and after the issuance. For fixed
rate debentures with market prices, the fair value is determined based on their market price. For fixed rate
debentures without market prices, the fair value is determined by discounting contractual cash flows basedon types of maturity lengths (when interest rate swap contracts which meet the hedging requirements of theaccrual method is qualified to debentures, the contractual cash flows are based on the interest rate swap) at therates that consist of the risk free rate and the rate of certain costs applicable to DBJ Inc. Certain foreign currency
denominated debentures are translated using the forward contract rates and the present value of the contractual
cash flows is computed regarding them as Japanese yen denominated debentures.
(ii) Call money and bills sold and (iii) Payables under repurchase agreements
For each of these items, the majority of transactions have short contract terms (1 year or less). Thus, the carrying
amount is presented as the fair value, as such carrying amount approximates the fair value.
(iv) Borrowed money
For floating rate borrowed money, the carrying amount is presented as the fair value, as such carrying amountapproximates the fair value. This is on the basis that the market interest rate is reflected in the fair value ofsuch borrowed money because the terms of these were set within a short time period for such variable rateborrowings and that there has been no significant change in the creditworthiness of DBJ Inc. nor consolidated
subsidiaries before and after such borrowings were made. For fixed rate borrowed money, the fair values
are determined by discounting contractual cash flows based on types of maturity lengths (when interest rate
swap contracts which meet the hedging requirements of the accrual method is qualified to borrowings, the128

Integrated Report 2017

contractual cash flows are based on the interest rate swap) at the rates that consist of the risk free rate and therate of certain costs applicable to DBJ Inc. or consolidated subsidiaries. Certain foreign currency denominatedborrowed money is translated using the forward contract rates and the present value of the contractual cash
flows is computed regarding them as Japanese yen denominated borrowed money.
(v) Corporate bonds
For floating rate corporate bonds issued by DBJ Inc., the carrying amount is presented as the fair value, as suchcarrying amount approximates the fair value. This is on the basis that the market interest rate is reflected in theinterest rate set within a short time period and that there has been no significant change in the creditworthinessof DBJ Inc. before and after the issuance. For fixed rate corporate bonds with market prices, the fair value isdetermined based on their market price. For fixed rate corporate bonds without market prices, the fair value isdetermined by discounting contractual cash flows based on types of maturity lengths (when interest rate swap
contracts which meet the hedging requirements of the accrual method is qualified to corporate bonds, thecontractual cash flows are based on the interest rate swap) at the rates that consist of the risk free rate and therate of certain costs applicable to DBJ Inc. Certain foreign currency denominated corporate bonds are translatedusing the forward contract rates and the present value of the contractual cash flows is computed regarding themas Japanese yen denominated corporate bonds.
Derivatives
Derivatives consist of interest rate related derivatives (interest rate swaps), currency related derivatives (currency
swaps, forward foreign exchange contracts) and credit derivatives. Fair value of these derivatives is determinedbased on the discounted present value, quoted prices presented by the financial institutions, etc.
(2)	Following are the financial instruments whose fair value cannot be reliably determined as of March 31,2017 and 2016:
		These securities are not included in the amount in the table summarizing fair values of financial instruments.
Carrying amountThousands of
U.S. Dollars

Millions of Yen

2017

2016

2017

Money held in trust*1¥ 15,599¥ 17,786$  139,045

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

298,396

330,616

2,659,746

218,510111,325

190,641
90,821

1,947,683
992,291

79,00079,000704,163

Total¥722,832¥708,864$6,442,927*1.	Assets in trust and partnership assets which consist of financial instruments, whose fair value cannot be reliably determined,
such as unlisted equities and other securities, are not subject to fair value disclosures.
*2.	Financial instruments for which the quoted price is not available and fair value cannot be reliably determined, are not subject tofair value disclosures.
*3.	Impairment loss on financial instruments whose fair value cannot be reliably determined for the year ended March 31, 2017and 2016 was ¥2,080 million ($18,545 thousand) and ¥1,910 million, respectively, which consist of unlisted equities of ¥808
million ($7,206 thousand) and ¥561 million and unlisted other securities of ¥1,272 million ($11,340 thousand) and ¥1,348
million for the years ended March 31, 2017 and 2016, respectively.
*4.	For the industrial investment borrowed money (Special Account for FILP), the interest rate is not determined at the time ofborrowing, but total amount of interest expense will be determined at the time of final repayment. Accordingly, since thefuture cash flows cannot be reasonably estimated and the fair value is extremely difficult to determine, it is not subject to thefair value disclosure requirement.

Integrated Report 2017129

Financial Condition(3) 	Maturity analysis for financial assets and securities with contractual maturities as of March 31, 2017 and2016 are as follows:
Millions of Yen

2017

Due from banks
Securities
Held-to-maturity debt securities	  with market values
		 Japanese government bonds

Due in1 year or lessDue after
1 year through3 years

Due after
3 years through5 years

Due after
5 years through7 years

Due after
7 years through10 years

Due after
10 years¥1,044,098

¥

¥

¥

¥

¥

—

—

—

—

—

125,071
45,101

243,240
40,153

170,635
10,20963,804
10,03474,85915,17016,742
15,042

		 Japanese local government bonds

—

—

—

—

—

—

		 Short-term corporate bonds

—

—

—

—

—

—

		Corporate bonds

26,906

117,095

104,671

29,47453,7001,700

		Other
Available-for-sale securities with
	  contractual maturities
		 Japanese government bonds

53,06485,99155,75524,295

5,989—

10,660—69,508—107,127
31,66841,8585,230

54,896
18,58991,402
1,991

		 Japanese local government bonds

—

—

—

—

—

—

		 Short-term corporate bonds

—

—

—

—

—

—

10,66069,50875,45936,62732,862

89,410		Corporate bonds
		Other

—

—

—

—

3,445

—

Loans*1

2,366,164

3,536,702

2,864,175

1,643,378

1,822,873

760,196

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

Millions of Yen

2016

Due from banks
Securities
Held-to-maturity debt securities	  with market values
		 Japanese government bonds
		 Japanese local government bonds
		 Short-term corporate bonds

Due after
3 years through5 years

Due after
5 years through7 years

Due after
7 years through10 years

Due after
10 years¥ 461,305

¥

¥

¥

¥

¥

—

—

—

—

—

187,914230,709

215,835

81,22656,53531,82935,19365,56820,09015,24715,15020,129

—

—

—

—

—

—

—

—

—

—

—

—

		Corporate bonds

93,682

88,571

99,61935,30035,00011,700		Other
Available-for-sale securities with
	  contractual maturities
		 Japanese government bonds

59,03876,56996,12530,678

6,385—

24,35836,589113,368

78,171

38,70244,088

—

—

5,372

26,784

24,119—		 Japanese local government bonds

—

—

—

—

—

—

		 Short-term corporate bonds

—

—

—

—

—

—

24,35836,589107,996

51,387

11,12844,088

—

—

—

—

3,454

—

		Corporate bonds
		Other130

Due in1 year or lessDue after
1 year through3 years

Loans*2

2,525,049

3,401,265

3,055,686

1,622,470

1,564,807

728,609

Total¥3,198,627¥3,668,563¥3,384,889¥1,781,867¥1,660,046¥804,527

Integrated Report 2017

Thousands of U.S. Dollars

2017
Due in1 year or lessDue from banks$ 9,306,521

Securities
Held-to-maturity debt securities	  with market values
		 Japanese government bonds
		 Japanese local government bonds

Due after
1 year through3 years

Due after
3 years through5 years

Due after
5 years through7 years

Due after
7 years through10 years

Due after
10 years

$

$

$

$

$

—

—

—

—

—

1,114,822
402,0072,168,112
357,909

1,520,953
90,999568,717
89,441

667,257
135,218

149,236
134,083

—

—

—

—

—

—

—

—

—

—

—

—

		Corporate bonds

239,825

1,043,724

932,984

262,722478,652

15,153		Other
Available-for-sale securities with
	  contractual maturities
		 Japanese government bonds

472,990

766,479

496,970

216,554

53,387—

95,019—619,564—

954,880
282,276

373,10246,622

489,320
165,693814,710
17,750

—

—

—

—

—

—

		 Short-term corporate bonds

		 Japanese local government bonds
		 Short-term corporate bonds
		Corporate bonds
		Other

—

—

—

—

—

—

95,019619,564

672,604

326,480

292,915

796,959

—

—

—

—

30,711—Loans*1

21,090,691

31,524,219

25,529,685

14,648,168

16,248,095

6,775,973

Total$31,607,053$34,311,896$28,005,517$15,589,988$17,404,672$7,739,918*1. Obligations to “Legally Bankrupt,” “Effectively Bankrupt” and “Possibly Bankrupt” amounting to ¥46,035 million ($410,338
thousand) are not included as of March 31, 2017.
*2. Obligations to “Legally Bankrupt,” “Effectively Bankrupt” and “Possibly Bankrupt” amounting to ¥54,680 million are notincluded as of March 31, 2016.

(4) 	Maturity analysis for Debentures, Borrowed money and Other Interest-Bearing Liability as of March 31,2017 and 2016 are as follows:
Millions of Yen

2017
Due in1 year or lessDue after
1 year through3 years

Due after
3 years through5 years

Due after
5 years through7 years

Due after
7 years through10 years

Call money and bills sold

¥

¥

¥

¥

¥

Borrowed money

1,291,705

Debentures and Corporate bonds
Total

13,000—2,124,948—

1,967,458—

1,010,326—

Due after
10 years¥

962,438—

1,115,489

729,155

1,269,981

872,867

674,010

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

Due after
10 yearsMillions of Yen

2016
Due in1 year or lessDue after
1 year through3 years

Due after
3 years through5 years

Due after
5 years through7 years

Due after
7 years through10 years

Call money and bills sold

¥

¥

¥

¥

¥

Borrowed money

1,242,393

Debentures and Corporate bonds
Total

—

—

2,152,580—

1,638,552—
968,592—¥

1,028,287—
861,763

837,694

1,389,077

808,749

589,822849,704

252,860¥2,080,087¥3,541,657¥2,447,302¥1,558,414¥1,877,992¥1,114,624

Due after
7 years through10 years

Due after
10 yearsThousands of U.S. Dollars

2017
Due in1 year or lessDue after
1 year through3 years

Due after
3 years through5 years

Call money and bills sold$   115,875 $Borrowed money

11,513,556

18,940,623

17,536,841

9,005,499

8,578,647

9,942,860

Debentures and Corporate bonds

6,499,291

11,319,914

7,780,262

6,007,761

8,098,273

2,293,396

Total

— $

Due after
5 years through7 years

— $

— $

— $

—

$18,128,721 $30,260,537 $25,317,103 $15,013,260 $16,676,920 $12,236,257
Integrated Report 2017131

Financial Condition

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

2017
Contract amount

Over-the-counter
Swaps
		 Receive fixed/ Pay float
		 Receive float/ Pay fixed		 Receive float/ Pay float
Total

Total

Due after 1 year

Fair value

Unrealized gains(losses)¥1,013,253
995,749——¥856,257
839,565——¥ 52,075(19,689)—¥ 32,385¥ 52,075(19,689)—¥ 32,385

Millions of Yen

2016
Contract amount

Over-the-counter
Swaps
		 Receive fixed/ Pay float
		 Receive float/ Pay fixed		 Receive float/ Pay float
Total

Total

Due after 1 year

Fair value

Unrealized gains(losses)¥1,024,150
1,008,768
44,367—¥940,143
925,900——¥ 64,971(29,922)10¥ 35,058¥ 64,971(29,922)10¥ 35,058

Thousands of U.S. Dollars

2017
Contract amount

Over-the-counter
Swaps
		 Receive fixed/ Pay float
		 Receive float/ Pay fixed		 Receive float/ Pay float
Total

Total

Due after 1 year

Fair value

Unrealized gains(losses)$9,031,582
8,875,563——$7,632,210
7,483,428——$ 464,168(175,500)—$ 288,668$ 464,168(175,500)—$ 288,668*1. The above transactions are marked to market and changes in unrealized gains (losses) are included in the consolidated
statement of income.
*2. Fair values for the over-the-counter transactions are based primarily on discounted present values.

(2) Currency-related transactions
Millions of Yen

2017
Contract amount
Total

Over-the-counter
Swaps
Forwards
		Sold		Bought
Total¥

Due after 1 year

Fair value

—

¥—

¥

136,290108,747
—

—
—

1,518
(1,469)¥48——

Unrealized gains(losses)

¥

—

1,518
(1,469)¥48

Millions of Yen

2016
Contract amount
Total

Over-the-counter
Swaps
Forwards
		Sold		Bought
Total
132

Integrated Report 2017

Due after 1 year

Fair value

Unrealized gains(losses)¥ 73,147¥—¥(11,572)¥(11,572)

195,698
151,731
—

—
—

2,722
(1,203)¥(10,053)

2,722(1,203)¥(10,053)—

Thousands of U.S. Dollars

2017
Contract amountTotal

Due after 1 year

Unrealized gains(losses)

Fair value

Over-the-counter
Swaps

$

—

$—

		Sold1,214,817—

		Bought

969,315

$

—

$

—

Forwards

Total

13,534——

13,534(13,100)

—

$

434

(13,100)$

434*1. The above transactions are marked to market and changes in unrealized gains (losses) are included in the consolidated
statement of income.
*2. Fair values are based primarily on discounted present values.

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

2017
Contract amountTotal

Due after 1 year

Unrealized gains(losses)

Fair value

Over-the-counter
Credit default options
		Sold¥7,500¥7,500

¥ 202

¥ 202

		Bought

7,500

7,500

(161)

(161)

Total

—

—

¥ 40

¥ 40

Millions of Yen

2016
Contract amountTotal

Due after 1 year

Unrealized gains(losses)

Fair value

Over-the-counter
Credit default options
		Sold¥13,828¥13,828

¥ 59

¥ 59

		Bought

6,500

6,500

(145)

(145)

Total

—

—

¥ (85)¥ (85)

Thousands of U.S. Dollars

2017
Contract amountTotal

Due after 1 year

Unrealized gains(losses)

Fair value

Over-the-counter
Credit default options
		Sold$66,851$66,851$ 1,805$ 1,805

		Bought

66,851

66,851(1,441)(1,441)

Total

—

—

$

$

364

364

*1. The above transactions are marked to market and changes in unrealized gains (losses) are included in the consolidated
statement of income.
*2. Fair values are based on discounted present values or the counterparties’ tendered price.
*3. ‘Sold’ means the underwriting of credit risk and ‘Bought’ means the transferring of credit risk.
Integrated Report 2017133

Financial Condition(b) Derivative Transactions to which Hedge Accounting is Applied(1) Interest rate-related transactions
Millions of Yen
2017
Contract amount
Hedged item

Total

Due after 1 year

Fair value

Deferral method
Swaps
		

Receive fixed/ Pay float

		

Receive float/ Pay fixed

Accrual method
Swaps
		

Receive fixed/ Pay float

		

Receive float/ Pay fixed

Borrowed money
and Loans¥

Debentures,
Borrowed money,
Corporate bonds,
Securities and Loans

Total

—

¥ —

98,700—¥53,892(707)

897,401

825,638*3

10,525

8,948

—

—

¥(707)

Millions of Yen
2016
Contract amount
Hedged item

Total

Due after 1 year

Fair value¥¥

Deferral method
Swaps
		

Receive fixed/ Pay float

		

Receive float/ Pay fixed

Accrual method
Swaps
		

Receive fixed/ Pay float

		

Receive float/ Pay fixed

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

¥

—

—

—

95,26787,556(1,581)

1,030,643

862,005

*3

1,933

1,933

—

—

Total

¥(1,581)

Thousands of U.S. Dollars
2017
Contract amount
Hedged item

Total

Due after 1 year

Fair value$$

Deferral method
Swaps
		

Receive fixed/ Pay float

		

Receive float/ Pay fixed

Accrual method
Swaps
		

Receive fixed/ Pay float

		

Receive float/ Pay fixed

Total

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

$

—

—

—

879,762

480,364(6,310)7,998,945

7,359,285*3

93,81979,758——$(6,310)*1. DBJ Inc. applies the deferral method of hedge accounting primarily stipulated in “Accounting and Auditing Treatments on the
Application of Accounting Standards for Financial Instruments in Banking Industry” (JICPA Industry Audit Committee Report
No. 24, February 13, 2002).
*2. Fair values for the over-the-counter transactions are based primarily on discounted present values.
*3. The above interest rate swap contracts which qualify for the hedging requirements of the accrual method are not remeasured
at fair value but the differential paid or received under the swap agreements are recognized and included in interest expense
or income. In addition, the fair value of such interest rate swaps in Note 28 “Financial Instruments and Related Disclosures” isincluded in that of hedged items such as debentures, borrowed money, corporate bonds, securities and loans.

134

Integrated Report 2017

(2) Currency-related transactions
Millions of Yen
2017
Contract amountTranslated at contractual rates
Currency swaps
Forward foreign exchange
contracts
		SoldHedged item

Total

Due after 1 year

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

Foreign-currency
available-for-sale securities

32,096—¥(245)

		Bought

—

Total

—

—

—

Fair value—¥(245)

Millions of Yen
2016
Contract amountTranslated at contractual rates
Currency swaps
Forward foreign exchange
contracts
		SoldHedged item

Total

Due after 1 year

Foreign-currency debentures, Borrowed money, andCorporate bonds¥282,773¥282,773*2

Foreign-currency
available-for-sale securities

45,239—¥(149)

		Bought

—

Total

—

—

—

Fair value—¥(149)

Thousands of U.S. Dollars
2017
Contract amountTranslated at contractual rates
Currency swaps
Forward foreign exchange
contracts
		SoldHedged item

Total

Due after 1 year

Fair value

Foreign-currency debentures, Borrowed money, andCorporate bonds$3,499,390$2,504,790*2Foreign-currency
available-for-sale securities

286,095—$(2,190)

		Bought
Total

—
—

—
—

—
$(2,190)*1. Fair values are based primarily on discounted present values.
*2. The above currency swaps which qualify for the hedging requirements of assignment method are not subject to the disclosure offair value information. In addition, the fair value of such foreign currency swaps in Note 28 “Financial Instruments and Related
Disclosures” is included in that of hedged items such as foreign-currency debentures, borrowed money and corporate bonds.

(3) Equity-related transactions
		Not applicable.
(4) Bond-related transactions
		Not applicable.

Integrated Report 2017135

Financial Condition

30. Fair Value of Securities and Money Held in Trust
Fair value of securities, money held in trust and negotiable certificate of deposit classified as “Cash and due from banks” asof March 31, 2017 and 2016 is summarized below.
(a) Securities(1) Held-to-Maturity Debt Securities as of March 31, 2017 and 2016, are as follows:
Millions of Yen

2017

Fair value exceeds
carrying amountJapanese government bonds
Japanese local government bonds
Short-term corporate bonds
Corporate bonds
Other

Sub-total
Fair value does not
Japanese government bonds
exceed carrying amount Japanese local government bonds
Short-term corporate bonds
Corporate bonds
Other
Sub-total
Total

Carrying amount

Fair value

Difference¥135,711——
181,112167,165
483,988———
152,435
57,930210,366¥694,354¥144,901——
184,569
169,497498,968———
151,399
57,857
209,257¥708,226¥ 9,190
—
—
3,457
2,332
14,979———(1,035)(72)(1,108)¥13,871

Millions of Yen

2016

Fair value exceeds
carrying amountJapanese government bonds
Japanese local government bonds
Short-term corporate bonds
Corporate bonds
Other

Sub-total
Fair value does not
Japanese government bonds
exceed carrying amount Japanese local government bonds
Short-term corporate bonds
Corporate bonds
Other
Sub-total
Total

Carrying amount

Fair value

Difference¥171,379——
269,860
177,552
618,793———
94,012
91,245
185,257¥804,050¥183,334——
274,714180,258
638,307———
93,26589,607
182,873¥821,180¥11,954
—
—
4,853
2,706
19,514———(746)(1,637)(2,383)¥17,130

Thousands of U.S. Dollars

2017

Fair value exceeds
carrying amountJapanese government bonds
Japanese local government bonds
Short-term corporate bonds
Corporate bonds
Other

Sub-total
Fair value does not
Japanese government bonds
exceed carrying amount Japanese local government bonds
Short-term corporate bonds
Corporate bonds
Other
Sub-total
Total

Carrying amount

Fair value

Difference$1,209,656——
1,614,335
1,490,017
4,314,009———
1,358,726
516,362
1,875,089$6,189,097$1,291,572——
1,645,150
1,510,809
4,447,531———
1,349,495
515,714
1,865,209$6,312,741$ 81,916——
30,815
20,792
133,523———(9,231)(649)(9,880)$123,643

Note: Fair value is based on the closing price at the consolidated balance sheet date.

136

Integrated Report 2017

(2) Available-for-sale Securities as of March 31, 2017 and 2016, are as follows:
Millions of Yen

2017

Carrying amountexceeds cost

Sub-total
Carrying amount does
not exceed cost

Equities
Bonds
Japanese government bonds
Japanese local government bonds
Short-term corporate bonds
Corporate bonds
Other
Equities
Bonds
Japanese government bonds
Japanese local government bonds
Short-term corporate bonds
Corporate bonds
Other

Sub-total
Total

Carrying amount(Fair value)

Acquisition cost

Difference¥ 74,336
288,652
57,479——231,173
5,950
368,939
7,926
83,356———
83,35650,000141,282¥510,222¥ 30,436
284,154
55,846——228,307
3,581
318,171
8,394
84,205———84,20550,000142,599¥460,771¥43,900
4,498
1,632
—
—
2,865
2,369
50,768
(468)
(848)
—
—
—
(848)
—
(1,317)¥49,451

Millions of Yen

2016

Carrying amountexceeds cost

Carrying amount(Fair value)

Acquisition cost

Difference

Equities¥ 68,361¥ 24,571¥43,790

Bonds

323,242

307,426

15,81656,27554,0702,205

Japanese government bonds
Japanese local government bonds

—

—

—

Short-term corporate bonds

—

—

—

266,967

253,356

13,610

6,069

3,587

2,482

Corporate bonds
Other
Sub-total
Carrying amount does
not exceed cost

397,674

335,585

62,089Equities

13,393

14,668(1,275)

Bonds

8,581

8,712

(131)

Japanese government bonds

—

—

—

Japanese local government bonds

—

—

—

Short-term corporate bonds
Corporate bonds
Other
Sub-total
Total

—

—

—

8,581

8,712

(131)

35,00035,000—56,97458,381(1,407)¥454,648¥393,966¥60,681

Integrated Report 2017137

Financial Condition

Thousands of U.S. Dollars

2017

Carrying amountexceeds cost

Carrying amount(Fair value)

Acquisition cost

Difference

Equities$  662,598$  271,291$391,307

Bonds

2,572,890

2,532,797

40,094

512,341

497,788

14,552

Japanese local government bonds

—

—

—

Short-term corporate bonds

—

—

—

2,060,550

2,035,008

25,54253,03931,921

21,118Japanese government bonds

Corporate bonds
Other
Sub-total
Carrying amount does
not exceed cost

3,288,528

2,836,009

452,519

Equities

70,64974,824(4,175)

Bonds

742,993

750,558(7,564)

Japanese government bonds

—

—

—

Japanese local government bonds

—

—

—

Short-term corporate bonds
Corporate bonds
Other

—

—

—

742,993

750,558(7,564)445,673445,673—

Sub-total

1,259,315

1,271,054(11,739)

Total$4,547,843$4,107,063$440,780

Note: Carrying amount above represents the fair values determined based on the closing price at the fiscal year-end.

(3) Available-for-sale Securities sold during the year ended March 31, 2017 and 2016, are as follows:
Millions of Yen

2017
Proceeds from sales

Total amount ofgains on sales

Total amount oflosses on sales

Equities¥ 86,415¥22,147

¥  5

Bonds

23,861

257—

Japanese government bonds

—

—

—

Japanese local government bonds

—

—

—

Short-term corporate bonds

—

—

—

23,861

257

—

Other

Corporate bonds

22,143

3,509

117

Total

¥132,420¥25,914¥122

Millions of Yen

2016
Proceeds from sales

Total amount ofgains on sales

Total amount oflosses on sales

Equities¥ 67,916¥45,705

¥  1

Bonds

106,641

3,332

376

82,364

2,957

57

Japanese local government bonds

—

—

—

Short-term corporate bonds

—

—

—

Japanese government bonds

Corporate bonds

138

24,277

375

319

Other

3,518

376

0

Total

¥178,075¥49,414¥378

Integrated Report 2017

Thousands of U.S. Dollars

2017
Proceeds from sales

Total amount ofgains on sales

Total amount oflosses on sales

Equities$  770,259$197,415$   47

Bonds

212,688

2,293—

Japanese government bonds

—

—

—

Japanese local government bonds

—

—

—

Short-term corporate bonds

—

—

—

212,688

2,293

—

Other

Corporate bonds

197,374

31,280

1,046

Total

$1,180,321$230,988$1,093(b) Money Held in Trust(1) Money Held in Trust for the Purpose of Investment and Held to Maturity
Not applicable.
(2) Other (other than for the purpose of investment and held to maturity)
Millions of Yen

2017
Unrealized gains (losses)

Other money held in trust

Carrying
amountAcquisition
cost

Net

¥15,599¥14,908¥690

Carrying amount (Carrying amount
does not exceed cost)exceeds cost

¥690

¥—

Millions of Yen

2016
Unrealized gains (losses)

Other money held in trust

Carrying
amountAcquisition
cost

Net

¥17,786¥16,821¥964

Carrying amount (Carrying amount
does not exceed cost)exceeds cost

¥964

¥—

Thousands of U.S. Dollars

2017
Unrealized gains (losses)

Other money held in trust

Carrying
amountAcquisition
cost

Net

$139,045$132,889$6,156

Carrying amount (Carrying amount
does not exceed cost)exceeds cost

$6,156$—(c) Unrealized Gain on Available-for-sale Securities
The breakdown of unrealized gain on available-for-sale securities is as follows:
Thousands of
U.S. Dollars

Millions of Yen

2017

2016

2017

¥ 54,756¥ 69,550$ 488,067

Unrealized gain on
Available-for-sale securities

690

964

6,156

Deferred tax liabilities

Other money held in trust(15,909)(20,395)(141,805)

Unrealized gain on available-for-sale securities before interest
adjustments

39,537

50,118352,418

—

—

—

5,479

4,956

48,840¥ 45,017¥ 55,074$ 401,258

Amount corresponding to non-controlling interests
DBJ Inc.’s interest in net unrealized gain on available-for-salesecurities held by affiliates accounted for by the equity method
Unrealized gain on available-for-sale securities, net of taxes

Integrated Report 2017139

Financial Condition*1. The profit of ¥2,350 million ($20,948 thousand) and the loss of ¥4,010 million recognized by applying the fair value hedge accounting,which was reflected in profit or loss, is deducted from above unrealized gain on available-for-sale securities, net of taxes, as of March 31,2017 and 2016, respectively.
*2.	Unrealized gain includes foreign currency translation adjustments on available-for-sale securities denominated in foreign currency
whose fair value cannot be reliably determined as of March 31, 2017 and 2016.

31. Related Party Transactions
Related party transactions for the years ended March 31, 2017 and 2016 are as follows:
2017
Transaction Amount
Related party

Finance
MinisterCategory

Description

Shareholder Receipt ofcontribution*1
Borrowings*2

Account item—

Millions of Yen¥

50,000

Balance at March 31, 2017

Thousands of
U.S. Dollars

Millions of Yen

Thousands of
U.S. Dollars

445,673——¥4,324,952$38,550,251$

Repayments

Borrowed
money

Payment forinterest

Accruedexpenses

36,438324,791

12,587112,197

Guarantees*3—

2,799,265

24,951,117——

800,000

7,130,760

404,138

3,602,269

According to Article 2, item 5 of the Japan Finance Corporation Act, DBJ Inc. has borrowed ¥2,672,621 million ($23,822,275 thousand)from Japan Finance Corporation relating to the crisis response operations.
*1.	Receipt of contribution is related to the special investment operations.
*2.	DBJ Inc. has borrowed from the fiscal investment and loan program funds, and applied interest rates for fiscal investment and loan. The
last redemption period is February 20, 2037 without posting collateral.
*3.	The guarantees are for debentures issued by DBJ Inc. free of guarantee charge.

2016
Related party

Finance
MinisterCategory

Description

Shareholder Receipt ofcontribution*1
Borrowings*2

Transaction Amount

Balance at March 31, 2016

Millions of Yen

Millions of Yen

Account item—¥

65,000—

Repayments

Borrowed
money

Payment forinterest

Accruedexpenses

39,961

12,688

Guarantees*3—

2,937,092—

300,000¥3,929,091

437,328

According to Article 2, item 5 of the Japan Finance Corporation Act, DBJ Inc. has borrowed ¥2,723,044 million from Japan FinanceCorporation relating to the crisis response operations.
*1. Receipt of contribution is related to the special investment operations.
*2. DBJ Inc. has borrowed from the fiscal investment and loan program funds, and applied interest rates for fiscal investment and loan. The
last redemption period is October 20, 2035 without posting collateral.
*3. The guarantees are for debentures issued by DBJ Inc. free of guarantee charge.

32. Subsequent Event
On June 29, 2017, the shareholders approved the following appropriations of retained earnings. On the same day, theFinance Minister authorized becoming effective of the timing and amounts for dividends as of June 30, 2017:
Appropriations of Retained earnings as of March 31, 2017

Year-end cash dividends-Common stock (¥452-$4.03 per share)

140

Integrated Report 2017

Millions of Yen

Thousands of
U.S. Dollars¥19,721$175,790

Independent Auditor’s Report

Integrated Report 2017141

Financial Condition

Non-Consolidated Balance Sheet (Unaudited)
Development Bank of Japan Inc.

Thousands of
U.S. Dollars (Note)

Millions of Yen

As of March 31,

2017

2016

2017

AssetsCash and due from banks
Money held in trust¥

987,258
14,037¥433,496$  8,799,879

16,032

125,126

Securities

1,789,322

1,828,773

15,949,042

Loans

13,210,171

13,119,393

117,748,210

Other assets

174,607172,215

1,556,353

Tangible fixed assets

111,916

113,291

997,562

Intangible fixed assets

9,831

6,883

87,631

Prepaid pension costs

1,268

1,290

11,307

Customers’ liabilities for acceptances and guarantees

181,010

180,124

1,613,427

Allowance for loan losses(56,441)(61,907)(503,089)

(414)

(594)

(3,699)¥16,422,568¥15,808,999$146,381,750

Debentures¥ 3,016,714¥ 3,221,870$26,889,334

Call money

13,000—115,875

Allowance for investment losses
Total assets
Liabilities and equity
Liabilities:

55,142—

491,513

Borrowed money

Payables under repurchase agreements

8,383,916

7,840,720

74,729,620

Corporate bonds

1,690,391

1,501,288

15,067,224

Other liabilities

106,304

176,320

947,542

4,789

4,400

42,687

Accrued bonuses to employees
Accrued bonuses to directors
Reserve for employees’ retirement benefits

11

11

105

6,389

6,544

56,957

Reserve for directors’ retirement benefits

71

56

634

Reserve for contingent losses

40

16

364

Deferred tax liabilities

25,44427,603226,801

Acceptances and guarantees

181,010

180,124

1,613,427

13,483,227

12,958,957

120,182,084

Total liabilities
Equity:Common stock authorized, 160,000 thousand shares in 2017 and2016; issued, 43,632 thousand shares in 2017 and 2016

1,000,424

1,000,424

8,917,230

Crisis response reserve

206,529

206,529

1,840,886

Special investment reserve

230,000

130,000

2,050,094

Special investment surplus

1,813

618

16,166

Capital surplus

945,466

995,466

8,427,367

Retained earnings

479,443

429,751

4,273,492

Unrealized gain on available-for-sale securities

42,23352,206

376,451

Deferred gain on derivatives under hedge accounting
Total equity
Total liabilities and equity

33,43035,045297,980

2,939,340

2,850,042

26,199,666¥16,422,568¥15,808,999$146,381,750

Note: Amounts in U.S. dollars are presented solely for the convenience of readers outside Japan. The rate of ¥112.19=$1.00, the effective
exchange rate prevailing as of March 31, 2017, has been used in the conversion.

142

Integrated Report 2017

Non-Consolidated Statement of Income (Unaudited)
Development Bank of Japan Inc.

Thousands of
U.S. Dollars (Note)

Millions of Yen

For the year ended March 31,

2017

2016

2017

IncomeInterest income:¥193,678¥216,972$1,726,341

Interest on loans

165,276

187,526

1,473,187

Interest and dividends on securities

20,08921,402

179,064—

82—

Interest on receivables under resale agreements

—

226

—

Interest on due from banks

11

43

100

8,164

7,549

72,777

136

141

1,213

12,682

10,333113,049

Interest on call loans

Interest on swaps
Other interest income
Fees and commissions
Other operating income

5,896

9,526

52,557

Other income

57,598108,148

513,404

269,856

344,9812,405,351

Total income
Expenses
Interest expense:

98,097

106,933

874,385

Interest on debentures

34,83135,056

310,470

Interest on call money

(11)

0

(106)

Interest on payables under repurchase agreements

(5)

—

(49)

58,113

66,982517,991

764

202

6,812

4,408

4,623

39,298Interest on borrowed money
Interest on short-term corporate bonds
Interest on corporate bonds
Other interest expense
Fees and commissions

(3)

68

(32)

183

391

1,636

Other operating expenses

3,357

8,296

29,929General and administrative expenses

45,20742,401

402,959

Other expenses

9,310

12,66082,989Total expenses

156,156

170,683

1,391,897

Income before income taxes

113,699

174,298

1,013,454

Current

30,70350,844

273,677

Deferred

2,832

5,587

25,243

Income taxes:

Total income taxes
Net income

33,53556,432298,920¥ 80,163¥117,865$  714,534

Note: Amounts in U.S. dollars are presented solely for the convenience of readers outside Japan. The rate of ¥112.19=$1.00, the effective
exchange rate prevailing as of March 31, 2017, has been used in the conversion.

Integrated Report 2017143

Financial Condition

Non-Consolidated Statement of Changes in Equity (Unaudited)
Development Bank of Japan Inc.

Millions of Yen

For the year ended March 31, 2017

Balance at beginning of year

Commonstock

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

Special investment Special investment
reserve
surplus¥130,000

Investment from government

50,000Transfer account from capital surplus to special investment reserve

50,000¥618

Capitalsurplus¥995,466(50,000)

Cash dividends
Net income
Transfer from retained earnings to special investment surplus

1,194

Net change during the year
Balance at end of year

¥1,000,424¥206,529¥230,000¥ 1,813¥945,466

Millions of Yen

For the year ended March 31, 2017

Balance at beginning of year

Retained earnings

Unrealized gain on
available-for-salesecurities

Deferred gain onderivatives underhedge accounting

Total equity¥429,751¥52,206¥35,045¥2,850,042

Investment from government

50,000Transfer account from capital surplus to special investment reserve—

Cash dividends(29,277)(29,277)

Net income

80,16380,163

Transfer from retained earnings to special investment surplus(1,194)—

Net change during the year
Balance at end of year

¥479,443(9,972)(1,615)(11,587)¥42,233¥33,430¥2,939,340

Millions of Yen

For the year ended March 31, 2016

Balance at beginning of year

Commonstock¥1,206,953

Crisis response
reserve¥

Special investment Special investment
reserve
surplus—¥Investment from government
Transfer from common stock to crisis response reserve—¥ —Capitalsurplus¥1,060,466

65,000(206,529)

206,529

Transfer account from capital surplus to special investment reserve

65,000(65,000)

Cash dividends
Net income
Transfer from retained earnings to special investment surplus

618

Net change during the year
Balance at end of year

¥1,000,424¥206,529¥130,000¥618¥  995,466

Millions of Yen

For the year ended March 31, 2016

Balance at beginning of year

Retained earnings

Unrealized gain on
available-for-salesecurities

Deferred gain onderivatives underhedge accounting

Total equity¥335,018¥ 84,749¥32,217¥2,719,404

Investment from government

65,000Transfer from common stock to crisis response reserve—

Transfer account from capital surplus to special investment reserve—

Cash dividends(22,514)(22,514)

Net income

117,865

117,865

Transfer from retained earnings to special investment surplus(618)

Net change during the year
Balance at end of year

144

Integrated Report 2017

¥429,751—(32,542)2,828(29,714)¥ 52,206¥35,045¥2,850,042

Thousands of U.S. Dollars (Note)

For the year ended March 31, 2017

Commonstock

Crisis response
reserve

Balance at beginning of year

$8,917,230$1,840,886

Special investment Special investment
reserve
surplus$1,158,749

Investment from government

445,673

Transfer account from capital surplus to special investment reserve445,673$ 5,515

Capitalsurplus$8,873,040(445,673)

Cash dividends
Net income
Transfer from retained earnings to special investment surplus

10,651

Net change during the year
Balance at end of year

$8,917,230$1,840,886$2,050,094$16,166$8,427,367

Thousands of U.S. Dollars (Note)

For the year ended March 31, 2017

Balance at beginning of year

Retained earnings

Unrealized gain on
available-for-salesecurities

Deferred gain onderivatives underhedge accounting

Total equity$3,830,572$465,342$312,376$25,403,709

Investment from government

445,673—

Transfer account from capital surplus to special investment reserve
Cash dividends(260,962)(260,962)

Net income

714,534

714,534

Transfer from retained earnings to special investment surplus(10,651)—

Net change during the year
Balance at end of year

$4,273,492(88,892)(14,396)(103,288)$376,451$297,980$26,199,666

Note: Amounts in U.S. dollars are presented solely for the convenience of readers outside Japan. The rate of ¥112.19=$1.00, the effective
exchange rate prevailing as of March 31, 2017, has been used in the conversion.

Integrated Report 2017145

Financial Condition

Capital Adequacy Ratio

Although DBJ is not yet subject to Article 14-2 of the Banking Act of Japan, capital adequacy ratios have been calculated inaccordance with “Criteria for Judging Whether a Financial Institution’s Own Capital Is Sufficient in Light of the Assets Held,etc. under the Provision of Article 14-2 of the Banking Act” (2006, Financial Services Agency Notification No. 19,
hereinafter, the “Capital Adequacy Ratio Notification”), and therefore effectively conform to this act.
(Reference)
In addition to the application of uniform international standards, credit risk assets were calculated using the standardized
approach, and equivalent operational risk was calculated using the basic indicator approach. The DBJ Group has not
introduced procedures in line with market risk regulations.

[1] Capital Structure Information
Capital Structure Information (Consolidated)

(Millions of yen)March 31, 2017
Items

Common Equity Tier 1 capital: instruments andreserves
Directly issued qualifying common share capital plus
related capital surplus and retained earningsof which: common stock and capital surplusof which: retained earningsof which: treasury stockof which: planned distribution of incomeof which: other than the above
Rights to acquire new common shares
Accumulated other comprehensive income andother disclosed reserves
Adjusted non-controlling interests, etc. (amountallowed to be included in group Common Equity
Tier 1)
Total of items included in Common Equity Tier 1
capital: instruments and reserves subject totransitional arrangementsof which: items included in non-controlling interests,
etc. subject to transitional arrangements
Common Equity Tier 1 capital: instruments andreserves (A)Common Equity Tier 1 capital: regulatory
adjustments
Total intangible assets (excluding those relating tomortgage servicing rights)
of which: goodwill (including those equivalent)of which: other intangible assets other than goodwill
and mortgage servicing rights
Deferred tax assets that rely on future profitability
excluding those arising from temporary differences(net of related tax liability)
Deferred gains or losses on derivatives under hedge
accounting
Shortfall of eligible reserves to expected losses
Capital increase due to securitization transactions
Gains and losses due to changes in own credit risk onfair valued liabilities
Assets for retirement benefits
Investments in own shares (excluding those reported in
the Equity section)
Reciprocal cross-holdings in common equity

146

Integrated Report 2017

March 31, 2016

Amounts
excluded undertransitionalarrangements

2,439,927
1,945,890
513,758—
19,721——
499,895

Amounts
excluded undertransitionalarrangements

2,423,204
1,995,890
456,591—
29,277——
15,388391,137

—

24

1,838

1,316

1,838

1,316

2,941,661

2,815,681

Basel III
Template No.

1a+2-1c-26
1a
2
1c
26
1b
35,992

3

5

6

12,545
6,969

3,136
1,742

3,315
436

2,210 8+9
290 8

5,575

1,393

2,879

1,919

9

144

36

110

73

10

26,944
—
—

6,736
—
—

20,736——

13,824 11
— 12
— 13

—

—

—

—

1,102

275

1,009

672

—

—

—

—

—

—

—

—

14
15
16
17

(Millions of yen)March 31, 2017
Items

Investments in the capital of banking, financial andinsurance entities that are outside the scope of
regulatory consolidation (“Other Financial
Institutions”), net of eligible short positions, where
the bank does not own more than 10% of the issued
share capital (amount above the 10% threshold)Amount exceeding the 10% threshold on specified
items
of which: significant investments in the common
stock of Other Financial Institutions, net of eligible
short positionsof which: mortgage servicing rightsof which: deferred tax assets arising from temporary
differences (net of related tax liability)
Amount exceeding the 15% threshold on specified
items
of which: significant investments in the common
stock of Other Financial Institutions, net of eligible
short positionsof which: mortgage servicing rightsof which: deferred tax assets arising from temporary
differences (net of related tax liability)
Regulatory adjustments applied to Common Equity
Tier 1 due to insufficient Additional Tier 1 andTier 2 to cover deductions
Common Equity Tier 1 capital: regulatory adjustments(B)
Common Equity Tier 1 capital (CET1)
Common Equity Tier 1 capital (CET1) ((A)-(B)) (C)Additional Tier 1 capital: instruments
Directly issued qualifying Additional Tier 1 instruments
plus related capital surplus of which: classified as
equity under applicable accounting standards andthe breakdown
Rights to acquire new shares in relation to Additional
Tier 1 instruments
Directly issued qualifying Additional Tier 1 instruments
plus related capital surplus of which: classified asliabilities under applicable accounting standards
Qualifying Additional Tier 1 instruments plus related
capital surplus issued by special purpose vehicles andother equivalent entities
Adjusted non-controlling interests, etc. (amountallowed to be included in group Additional Tier 1)
Eligible Tier 1 capital instruments subject to transitionalarrangements included in Additional Tier 1 capital:
instrumentsof which: instruments issued by banks and their
special purpose vehiclesof which: instruments issued by subsidiaries(excluding banks’ special purpose vehicles)

March 31, 2016

Amounts
excluded undertransitionalarrangements

Amounts
excluded undertransitionalarrangements

Basel III
Template No.

—

—

—

—

18

—

—

—

—

19+20+21

—
—

—
—

—
—

— 19
— 20

—

—

—

—

21

—

—

—

—

22

—
—

—
—

—
—

— 23
— 24

—

—

—

—

25

593

—

27

41,33025,17228

2,900,330

2,790,509

29

—

—

31a

—

—

31b

—

—

32

—

—

1,356

597

34-35

—

—

33+35

—

—

33

—

—

35

30

Integrated Report 2017147

Financial Condition(Millions of yen)March 31, 2017
Items

Total of items included in Additional Tier 1 capital:
items subject to transitional arrangementsof which: foreign currency translation adjustmentsof which: items included in non-controlling interests,
etc. subject to transitional arrangements
Additional Tier 1 capital: instruments (D)Additional Tier 1 capital: regulatory adjustments
Investments in own Additional Tier 1 instruments
Reciprocal cross-holdings in Additional Tier 1
instruments
Investments in the capital of banking, financial andinsurance entities that are outside the scope of
regulatory consolidation, net of eligible shortpositions, where the bank does not own more than
10% of the issued common share capital of the entity(amount above the 10% threshold)
Significant investments in the Additional Tier 1 capitalof Other Financial Institutions (net of eligible shortpositions)
Total of items included in Additional Tier 1 capital:
regulatory adjustments subject to transitionalarrangementsof which: goodwill
Regulatory adjustments applied to Additional Tier 1
due to insufficient Tier 2 to cover deductions
Additional Tier 1 capital: regulatory adjustments (E)Additional Tier 1 capital (AT1)
Additional Tier 1 capital ((D)-(E)) (F)Tier 1 capital (T1 = CET1 + AT1)
Tier 1 capital (T1 = CET1 + AT1) ((C)+(F)) (G)Tier 2 capital: instruments and reserves
Directly issued qualifying Tier 2 instruments plus related
capital surplus of which: classified as equity underapplicable accounting standards and its breakdown
Rights to acquire new shares in relation to Tier 2
instruments
Directly issued qualifying Tier 2 instruments plus related
capital surplus of which: classified as liabilities underapplicable accounting standards
Tier 2 instruments plus related capital surplus issued by
special purpose vehicles and other equivalent entities
Adjusted non-controlling interests, etc. (amountallowed to be included in group Tier 2)
Eligible Tier 2 capital instruments subject to transitionalarrangements included in Tier 2: instruments andreservesof which: instruments issued by banks and their
special purpose vehiclesof which: instruments issued by subsidiaries(excluding banks’ special purpose vehicles)
Total of general allowance for loan losses and eligible
reserves included in Tier 2of which: general allowance for loan lossesof which: eligible reserves

148

Integrated Report 2017

March 31, 2016

Amounts
excluded undertransitionalarrangements(158)

Amounts
excluded undertransitionalarrangements

(254)

384
171

96
1,198

213
982

Basel III
Template No.

36

—

—

—

—

37

—

—

—

—

38

—

—

—

—

39

49

12

4

3 40

1,742
1,742

200
200

—
1,792

—
295

42
43

—

686

44

2,900,330

2,791,197

45

—

—

—

—

—

—

—

—

318

141

48-49

—

—

47+49

—

—

47

—

—

49

36,65736,657—38,49338,493
—

50
50a
50b

46

(Millions of yen)March 31, 2017
Items

Total of items included in Tier 2 capital: instruments
and reserves subject to transitional arrangementsof which: items included in accumulated othercomprehensive income, etc. subject to transitionalarrangements
Tier 2 capital: instruments and reserves (H)Tier 2 capital: regulatory adjustments
Investments in own Tier 2 instruments
Reciprocal cross-holdings in Tier 2 instruments
Non-significant Investments in the Tier 2 capital of
Other Financial Institutions, net of eligible shortpositions (amount above the 10% threshold)
Significant investments in the Tier 2 capital of Other
Financial Institutions (net of eligible short positions)
Total of items included in Tier 2 capital: regulatory
adjustments subject to transitional arrangements
Tier 2 capital: regulatory adjustments (I)Tier 2 capital (T2)
Tier 2 capital (T2) ((H)-(I)) (J)Total capital (TC = T1 + T2)
Total capital (TC = T1 + T2) ((G) + (J)) (K)Risk weighted assets
Total of items included in risk weighted assets subject
to transitional arrangementsof which: other intangible fixed assets other than
goodwill and mortgage servicing rightsof which, significant investments in the Additional
Tier 1 capital of Other Financial Institutions (net of
eligible short positions)of which: deferred tax assets that rely on future
profitability excluding those arising from temporary
differences (net of related tax liability)of which: net defined benefit assets
Risk weighted assets (L)Capital ratio (consolidated)
Common Equity Tier 1 risk-weighted capital ratio(consolidated) ((C)/(L))
Tier 1 risk-weighted capital ratio (consolidated) ((G)/(L))
Total risk-weighted capital ratio (consolidated) ((K)/(L))
Regulatory adjustments
Non-significant Investments in the capital of Other
Financial Institutions that are below the thresholds
for deduction (before risk weighting)Significant investments in the common stock of Other
Financial Institutions that are below the thresholds fordeduction (before risk weighting)Mortgage servicing rights that are below the thresholds
for deduction (before risk weighting)Deferred tax assets arising from temporary differencesthat are below the thresholds for deduction (before
risk weighting)March 31, 2016

Amounts
excluded undertransitionalarrangements

Amounts
excluded undertransitionalarrangements

Basel III
Template No.

5,483

13,575

5,483
42,45913,57552,210

51

—
—

—
—

—
—

— 52
— 53

—

—

—

—

54

—

—

—

—

55

—
—

—
—

57

42,45952,21058

2,942,790

2,843,407

59

1,718

2,669

1,393

1,919

12

3

36
275
16,840,640

73
672
15,908,614

60

17.22%
17.22%
17.47%

17.54%
17.54%
17.87%

61
62
63

72,82072,291

72

5,635

1,221

73

—

—

74

3,217

2,332

75

Integrated Report 2017149

Financial Condition(Millions of yen)March 31, 2017
Items

Reserves included in Tier 2 capital: instruments
and reserves
General allowance for loan losses
Cap on inclusion of general allowance for loan losses
Eligible reserves for inclusion in Tier 2 in respect of
exposures subject to internal ratings-based approach(prior to application of cap)
Cap for inclusion of reserves in Tier 2 under internalratings-based approach
Capital instruments subject to transitionalarrangements
Current cap on Additional Tier 1 instruments subject totransitional arrangements
Amount excluded from Additional Tier 1 due to cap(excess over cap after redemptions and maturities)
Current cap on Tier 2 instruments subject totransitional arrangements
Amount excluded from Tier 2 due to cap (excess overcap after redemptions and maturities)

150

Integrated Report 2017

March 31, 2016

Amounts
excluded undertransitionalarrangements

Amounts
excluded undertransitionalarrangements

Basel III
Template No.

36,657
207,729

38,493
195,844

76
77

—

—

78

—

—

79

—

—

82

—

—

83

—

—

84

—

—

85

Capital Structure Information (Non-Consolidated)

(Millions of yen)March 31, 2017

March 31, 2016

Amounts
excluded undertransitionalarrangements

Items

Amounts
excluded undertransitionalarrangements

Basel III
Template No.

Common Equity Tier 1 capital: instruments andreserves
Directly issued qualifying common share capital plus
related capital surplus and retained earnings

2,405,612

2,396,364

1a+2-1c-26

of which: common stock and capital surplus

1,945,890

1,995,890

1a479,443

429,751

2

—

—

1c

19,721

29,27726

of which: other than the above——

Rights to acquire new common shares——of which: retained earningsof which: treasury stockof which: planned distribution of income

Valuation and translation adjustment and otherdisclosed reserves

498,874

Total of items included in Common Equity Tier 1
capital: instruments and reserves subject totransitional arrangements——

Common Equity Tier 1 capital: instruments andreserves (A)2,904,485

2,785,863

15,132

389,4991b34,9003

6Common Equity Tier 1 capital: regulatory
adjustments
Total intangible assets (excluding those relating tomortgage servicing rights)

5,456

1,364

2,855

1,903

of which: goodwill (including those equivalent)

—

—

—

—

8

5,456

1,364

2,855

1,903

9

Deferred tax assets that rely on future profitability
excluding those arising from temporary differences(net of related tax liability)

—

—

—

—

10

Deferred gains or losses on derivatives under hedge
accounting

26,744

6,686

21,027

14,01811of which: other intangible assets other than goodwill
and mortgage servicing rights

8+9

Shortfall of eligible reserves to expected losses

—

—

—

—

12

Capital increase due to securitization transactions

—

—

—

—

13

Gains and losses due to changes in own credit risk onfair valued liabilities

—

—

—

—

14

Prepaid pension cost

702

175

535

356

15

Investments in own shares (excluding those reported in
the Equity section)

—

—

—

—

16

Reciprocal cross-holdings in common equity

—

—

—

—

17

Investments in the capital of banking, financial andinsurance entities that are outside the scope of
regulatory consolidation (“Other Financial
Institutions”), net of eligible short positions, where
the bank does not own more than 10% of the issued
share capital (“Non-significant Investment”) (amountabove the 10% threshold)

—

—

—

—

18

Amount exceeding the 10% threshold on specified
items

—

—

—

—

19+20+21

of which: significant investments in the common
stock of Other Financial Institutions, net of eligible
short positions

—

—

—

—

19

of which: mortgage servicing rights

—

—

—

—

20

of which: deferred tax assets arising from temporary
differences (net of related tax liability)

—

—

—

—

21

Integrated Report 2017151

Financial Condition(Millions of yen)March 31, 2017
Items

Amount exceeding the 15% threshold on specified
items

March 31, 2016

Amounts
excluded undertransitionalarrangements——

Amounts
excluded undertransitionalarrangements——

Basel III
Template No.

22

of which: significant investments in the common
stock of Other Financial Institutions, net of eligible
short positions

—

—

—

—

23

of which: mortgage servicing rights

—

—

—

—

24

of which: deferred tax assets arising from temporary
differences (net of related tax liability)

—

—

—

—

25

Regulatory adjustments applied to Common Equity
Tier 1 due to insufficient Additional Tier 1 and Tier 2
to cover deductions

49

4

27

Common Equity Tier 1 capital: regulatory adjustments(B)

32,95324,42228

2,871,532

2,761,441

29

Directly issued qualifying Additional Tier 1 instruments
plus related capital surplus of which: classified as
equity under applicable accounting standards andthe breakdown

—

—

31a

Rights to acquire new shares in relation to Additional
Tier 1 instruments

—

—

31b

Directly issued qualifying Additional Tier 1 instruments
plus related capital surplus of which: classified asliabilities under applicable accounting standards

—

—

32

Qualifying Additional Tier 1 instruments plus related
capital surplus issued by special purpose vehicles andother equivalent entities——

Eligible Tier 1 capital instruments subject to transitionalarrangements included in Additional Tier 1 capital:
instruments——

Total of items included in Additional Tier 1 capital:
items subject to transitional arrangements——

Additional Tier 1 capital: instruments (D)

—

—

36

Investments in own Additional Tier 1 instruments

—

—

37

Reciprocal cross-holdings in Additional Tier 1
instruments

—

—

38

Investments in the capital of banking, financial andinsurance entities that are outside the scope of
regulatory consolidation, net of eligible shortpositions, where the bank does not own more than
10% of the issued common share capital of the entity(amount above the 10% threshold)

—

—

39

Significant investments in the Additional Tier 1 capitalof Other Financial Institutions (net of eligible shortpositions)49

Total of items included in Additional Tier 1 capital:
regulatory adjustments subject to transitionalarrangements

Common Equity Tier 1 capital (CET1)
Common Equity Tier 1 capital (CET1) ((A)-(B)) (C)Additional Tier 1 capital: instruments

33+35

Additional Tier 1 capital: regulatory adjustments

12

4

3

40

—

—

Regulatory adjustments applied to Additional Tier 1
due to insufficient Tier 2 to cover deductions

—

—

42

Additional Tier 1 capital: regulatory adjustments (E)

49

4

43

152

Integrated Report 201730

(Millions of yen)March 31, 2017

March 31, 2016

Amounts
excluded undertransitionalarrangements

Items

Amounts
excluded undertransitionalarrangements

Basel III
Template No.

Additional Tier 1 capital (AT1)
Additional Tier 1 capital ((D)-(E)) (F)

—

—

44

2,871,532

2,761,441

45

Directly issued qualifying Tier 2 instruments plus related
capital surplus of which: classified as equity underapplicable accounting standards and its breakdown——

Rights to acquire new shares in relation to Tier 2
instruments——

Directly issued qualifying Tier 2 instruments plus related
capital surplus of which: classified as liabilities underapplicable accounting standards——

Tier 2 instruments plus related capital surplus issued by
special purpose vehicles and other equivalent entities——

Eligible Tier 2 capital instruments subject to transitionalarrangements included in Tier 2: instruments andreserves——

36,88538,87150

36,88538,871

50a

—

—

50b

5,333

13,227

5,333

13,22742,21852,098Tier 1 capital (T1 = CET1 + AT1)
Tier 1 capital (T1 = CET1 + AT1) ((C)+(F)) (G)Tier 2 capital: instruments and reserves

Total of general allowance for loan losses and eligible
reserves included in Tier 2of which: general allowance for loan lossesof which: eligible reserves
Total of items included in Tier 2 capital: instruments
and reserves subject to transitional arrangementsof which: items included valuation and translation
adjustments, etc. subject to transitionalarrangements
Tier 2 capital: instruments and reserves (H)

46

47+49

51

Tier 2 capital: regulatory adjustments
Investments in own Tier 2 instruments

—

—

—

—

52

Reciprocal cross-holdings in Tier 2 instruments

—

—

—

—

53

Non-significant Investments in the Tier 2 capital of
Other Financial Institutions, net of eligible shortpositions (amount above the 10% threshold)

—

—

—

—

54

Significant investments in the Tier 2 capital of Other
Financial Institutions (net of eligible short positions)

—

—

—

—

55

Total of items included in Tier 2 capital: regulatory
adjustments subject to transitional arrangements——

Tier 2 capital: regulatory adjustments (I)

—

—

57

42,21852,09858

2,913,750

2,813,539

59

Tier 2 capital (T2)
Tier 2 capital (T2) ((H)-(I)) (J)Total capital (TC = T1 + T2)
Total capital (TC = T1 + T2) ((G) + (J)) (K)

Integrated Report 2017153

Financial Condition(Millions of yen)March 31, 2017

March 31, 2016

Amounts
excluded undertransitionalarrangements

Items

Amounts
excluded undertransitionalarrangements

Basel III
Template No.

Risk weighted assets
Total of items included in risk weighted assets subject
to transitional arrangements

1,552

2,263

of which: other intangible fixed assets other than
goodwill and mortgage servicing rights

1,364

1,903

of which: significant investments in the Additional
Tier 1 capital of Other Financial Institutions (net of
eligible short positions)123of which: prepaid pension cost

175

356

17,937,691

16,695,289

60

Common Equity Tier 1 risk-weighted capital ratio(consolidated) ((C)/(L))

16.00%

16.54%

61

Tier 1 risk-weighted capital ratio (non-consolidated)((G)/(L))

16.00%

16.54%

62

Total risk-weighted capital ratio (non-consolidated)((K)/(L))

16.24%

16.85%

63

Non-significant Investments in the capital of Other
Financial Institutions that are below the thresholds
for deduction (before risk weighting)

83,34072,321

72

Significant investments in the common stock of Other
Financial Institutions that are below the thresholds
for deduction (before risk weighting)

394

394

73

Mortgage servicing rights that are below the thresholds
for deduction (before risk weighting)

—

—

74

Deferred tax assets arising from temporary differencesthat are below the thresholds for deduction (before
risk weighting)

3,010

2,124

75

General allowance for loan losses

36,88538,87176

Cap on inclusion of general allowance for loan losses

221,422205,678

77

Eligible reserves for inclusion in Tier 2 in respect of
exposures subject to internal ratings-based approach(prior to application of cap)

—

—

78

Cap for inclusion of reserves in Tier 2 under internalratings-based approach

—

—

79

Current cap on Additional Tier 1 instruments subject
to transitional arrangements

—

—

82

Amount excluded from Additional Tier 1 due to cap(excess over cap after redemptions and maturities)

—

—

83

Current cap on Tier 2 instruments subject totransitional arrangements

—

—

84

Amount excluded from Tier 2 due to cap (excess overcap after redemptions and maturities)

—

—

85

Risk weighted assets (L)Capital ratio (non-consolidated)

Regulatory adjustments

Reserves included in Tier 2 capital: instruments
and reserves

Capital instruments subject to transitionalarrangements

154

Integrated Report 2017

[2] Qualitative Disclosure
1. Scope ofConsolidation(1)	Differences and the reasons for those differences at companies included in the scope of
consolidation based on the regulation (Ministry of Finance Regulation No. 28, 1976) related tothe companies belonging to the group of companies included in the scope of calculation of theconsolidated capital adequacy ratio as provided in Article 3 of the Notification (hereinafter, the“Consolidated Group”), and the language, format and preparation method of theirconsolidated financial statements (hereinafter, the “Scope of Accounting Consolidation”)
No differences.
(2)	Within the Consolidated Group, the number of consolidated subsidiaries and the names andmain businesses of principal consolidated subsidiaries.
The number of consolidated subsidiaries as of March 31, 2017 is 27.
Principal consolidated subsidiaries
Company

Principal Businesses

Consist Inc.

Information system development, maintenanceand consulting

Japan Economic Research Institute Inc.

Research, consulting and advisory services

Value Management Institute, Inc.

Research, consulting and advisory services

DBJ Securities Co., Ltd.

Securities business

DBJ Capital Co., Ltd.

Management of investment associations

DBJ Asset Management Co., Ltd.

Investment management, investment advisory andagency services

DBJ Singapore Limited

Investment and loan support and advisory services

DBJ Europe Limited

Investment and loan support and advisory services

DBJ Investment Advisory Co., Ltd.

Investment advisory and agency services

DBJ Real Estate Co., Ltd.

Real estate leasing

DBJ Investment Consulting (Beijing)Co., Ltd.

Investment and loan support and advisory services(3)	Number of affiliated companies that conduct financial business to which Article 9 of the
Notification applies, the names of affiliated companies conducting such related financial
business and their primary businesses
Not applicable.
(4)	Companies that belong to the Consolidated Group but are not included in the Scope of
Accounting Consolidation and companies that do not belong to the Consolidated Group but
are included in the Scope of Accounting Consolidation, as well as the amount of total assets
and net assets on their balance sheets, and their primary businesses
Not applicable.
(5)	Overview of limitations related to the transfer of funds or capital within the ConsolidatedGroup
Not applicable.
2. Overview of Methods
for Evaluating the
Degree of Capital
Adequacy

Regarding the degree of capital adequacy, DBJ quantifies credit risk, investment risk, interest raterisk and operational risk, compares the total risk amount with total capital and measures the capitalsurplus. This surplus enables DBJ to respond to unquantifiable risks and unforeseen events, decide
whether to take new financing risks and establish the operating directions.

3. Credit Risk(a) Overview of Risk Management Policies and Procedures
Credit risk refers to the risk of loss to DBJ resulting from the decline in or disappearance of thevalue of credit assets, owing to the worsening credit standing of clients for loans or debt
guarantees. These risks include expected losses (EL), or losses that on average can be expected
to occur within a certain measurement period; and unexpected losses (UL), which go extend
beyond the boundaries of losses that, on average, are expected within a period of time. DBJ
periodically compares UL and capital to measure the amount of capital in surplus.
(b) Rating Agencies Eligible to Weight Risks
The rating agencies that DBJ uses for weighting risk are among the four that the FSA has
named eligible to perform such weighting. Eligible rating agencies are not selected according totype of exposure.
		 The rating agencies are Rating and Investment Information, Inc. (R&I), Japan Credit Rating
Agency, Ltd. (JCR), Moody’s Investors Service, Inc. (Moody’s), and Standard & Poor’s Corp. (S&P).

Integrated Report 2017155

Financial Condition

4. Overview of Risk
Management Policies
and Procedures for
Reducing Credit Risk

DBJ obtains collateral or guarantees as necessary based on changes in the borrower’s
creditworthiness. If required, the effectiveness of collateral is determined from the perspective of
the amount certain to be recovered based on a reasonable evaluation of the collateral.
In principle, collateral valuation is performed by the Credit Analysis Department, based on therequest of investment and loan departments/offices. Investment and loan departments/offices andthe Credit Analysis Department manage credit risk based on valuation results. In principle, thevaluation of all collateral property is reviewed once or twice each year to ensure DBJ is aware of thecurrent status of its collateral property.

5. Overview of Risk
Management Policies
and Procedures
Related to Risk
Involving Counter­parties in Derivative
Product Transactions
and Transactions withLong Settlement
Periods

DBJ regularly refers to the ratings and credit amounts of transaction counterparties to determine
the advisability of entering a transaction or to understand the risks of existing transactions.

6. Securitization
Exposure(a) Overview of Risk Management Policies and Risk Characteristics
Excluding credit derivatives, the majority of DBJ’s securitization exposure falls into the categoryof specialised lending (Item 47, Article 1, of the Capital Adequacy Ratio Notification) employing
internal rating methods. Different from the internal ratings that are applied to standard
corporate credit, this exposure is given a rating by using a grading system applied to match thecharacteristics of specialised lending. DBJ conducts risk management in line with changes inrating level. In addition to rating its exposure when making new acquisitions, DBJ reviews theseratings periodically.
			 DBJ’s involvement in securitized and resecuritized transactions is typically that of an investor,and in principle the exposure acquired through such transactions continues until the
instrument’s maturity.
(b) Overview of status of implementation and operation of systems stipulated in Article
249, Paragraph 4, Items 3-6, of the Capital Adequacy Ratio Notification (including
application with modifications in Capital Adequacy Ratio Notification Article 254,
Paragraph 2, and Article 302-4, Item 1)
DBJ has created the systems necessary for operating within its credit risk management framework.
Specifically, as one aspect of our credit risk management, our sales department endeavors toappropriately collect information related to comprehensive risk characteristics and performance,
and DBJ monitors conditions to determine any changes in the borrower’s creditworthiness.
Related information is also provided to the credit analysis department, which may revise
borrower ratings or make other adjustments on the basis of this related information as necessary.
(c) Methods Used to Calculate Credit Risk Asset Amount of Securitization Exposure
DBJ employs the standardized approach for these calculations.
(d) Method of Accounting for Securitized Transactions
DBJ’s involvement in securitized transactions is that of an investor. DBJ adequately accounts forthese transactions in accordance with the ”Accounting Standard for Financial Instruments.”(e) Rating Agencies Eligible to Weight Risks by Type of Securitization Exposure
The rating agencies that DBJ uses for weighting risk are among the four that the FSA has
named eligible to perform such weighting. Eligible rating agencies are not selected according totype of securitization exposure.
			 The rating agencies are Rating and Investment Information, Inc. (R&I), Japan Credit Rating
Agency, Ltd. (JCR), Moody’s Investors Service, Inc. (Moody’s), and Standard & Poor’s Corp. (S&P).

156

Integrated Report 2017

7. Market Risk

DBJ includes in its calculation method no market risk equivalent amount.

8. Operational Risk(a) Overview of Risk Management Policies and Procedures
DBJ defines operational risk as the risk of loss arising from internal processes, the activities
of officers and employees or systems that are inappropriate or non-functioning, or fromextrinsic events.
			 DBJ establishes its management structure and basic risk management policy pertaining tomanagement methods after considering the wide range of operational risks that it potentiallyfaces, such as operational risk, systems risk, legal risk, human risk, tangible asset risk andreputational risk.
			 DBJ designates internal control officers at each of its offices. These personnel are charged
with establishing data collection procedures, understanding risks and creating risk databases.
			 In line with the increasing advancement and diversity of the financial business, DBJ
addresses various operational risks by establishing or improving management methods andpreparations to appropriately identify, evaluate, measure, monitor and control these risks.
(b) Method Used to Calculate Operational Risk Equivalent AmountDBJ uses the basic indicator approach to calculate this risk.

9. Overview of Risk
Management Policies
and Procedures
Regarding Exposure
to Shares and Other
Equity Investments
and Capital Injections
into the Banking Book

DBJ defines investment risk as its risk of sustaining a partial or total loss on the economic value of
assets (including off-balance-sheet assets), owing to such factors as the worsening of an investee’s
financial conditions or to fluctuations in the market environment. For newly acquired exposure, DBJ
considers the balance between investment risk and potential return in each field of investment.
Thereafter, DBJ regularly conducts performance evaluations on its exposure.

10.	Interest Rate Risk on
the Banking Book(a) Overview of Risk Management Policies and Procedures
Long-term, fixed-rate loans make up the majority of the DBJ’s lending, and DBJ seeks to reduce
its interest rate risk by raising funds featuring similarly long-term, fixed rates. DBJ also employs
the value at risk (VaR) and Basis Point Value (BPV) to compute various risks from the standpointof their economic value.
			 DBJ regularly compares VaR and 200 BPV against capital to ensure that interest rate risk
remains within a specified range of capital.
(b) Overview of Methods for Calculating Interest Rate Risk Used by the Bank for Internal
Control of the Banking Book
DBJ calculates interest rate risk based on the following method.
(i)	VaR: Use a historical method of measurement with a one-year holding period, a five-yeartime horizon and a 99.9% confidence level(ii)	Measure interest rate fluctuations in the 1st percentile and 99th percentile, using a one-year
holding period and a five-year time horizon(iii)	200 BPV: Use a 2% parallel shift in a standardized interest rate shock to measure thechange in economic value

Integrated Report 2017157

Financial Condition[3] Quantitative Disclosure
Quantitative Disclosure (Consolidated)
1. Items Related to Credit Risk (Excluding Securitization Exposure)(a) Fiscal year-end credit risk exposure and breakdown by principal categories
Loans
Equities, funds(Millions of yen)March 31, 2017

March 31, 2016

¥12,435,447¥12,439,266

606,683

599,297

5,828

15,712

Commitments and customers’ liabilities for acceptances and guarantees

432,213450,976

Bonds (JGBs and corporate bonds, etc.)

788,812850,148

Reverse repurchase agreement/call loan

80,148

7,962

Central counterparty clearing house

Other

1,677,021

1,122,837

Total¥16,026,155¥15,486,201

March 31, 2017

March 31, 2016

Domestic total¥16,012,596¥15,476,856

Overseas total

13,5599,345

March 31, 2017

March 31, 2016

¥ 3,041,264¥ 3,184,409

Agriculture and forestry

277

184

Fisheries

250

350

Mining, quarrying and gravel extraction

80,39979,711

Construction

73,10554,9493,490,175

3,586,791

435,546

427,900(b) Fiscal year-end credit risk exposure, broken down as follows:		(1) By region

(Millions of yen)

Note: ”Overseas” refers to overseas consolidated subsidiaries. DBJ has no overseas branches.

		(2) Breakdown by industry and transaction counterpartyManufacturing

Electrical, gas, heat supply and water
Information and communications
Transportation and postal

2,367,264

2,418,207

Wholesale and retail961,284

988,276

Finance and insurance

2,169,351

1,608,972

Real estate and leasing of goods

2,292,130

2,098,076

328,804

320,266

Services

158(Millions of yen)

Municipal government

16,061

16,645

Other

770,238

701,458

Total¥16,026,155¥15,486,201

Integrated Report 2017		(3) Breakdown by period to maturity

(Millions of yen)March 31, 2017

March 31, 2016

Five years or less

¥7,994,608¥7,504,681

More than five years, up to 10

4,567,510

4,619,964

More than 10 years, up to 15

1,555,676

1,703,740

More than 15 years

784,171

630,494

No maturity date

1,124,187

1,027,321(c) Breakdown of exposure by risk weight (after accounting for credit risk mitigations)
Risk weight 0%(Millions of yen)March 31, 2017

March 31, 2016

¥1,116,720¥  564,565

Risk weight 10%

2,099

6,185

Risk weight 20%

1,101,150

1,265,891

Risk weight 50%

6,334,257

6,424,898

Risk weight 100%

7,276,861

7,065,556

Risk weight 150%

66,76740,439Risk weight 250%

10,874

6,490

Risk weight 1,250%

2,946

2,242

Other

75,741

79,448

2. Securitization Exposure(a) Securitization exposure in which the Consolidated Group is the originator		

Not applicable.

(b) Securitization exposure in which the Consolidated Group is an investor
		(1) Retained securitization exposure amount and breakdown by major underlying asset type
Structured finance(Millions of yen)March 31, 2017

March 31, 2016

¥1,201,217¥1,007,271——

Of which, resecuritization exposure
Credit derivatives
Of which, resecuritization exposure
Funds*Of which, resecuritization exposure

—

7,328

—

5,454

252,915

211,724——* Assets held by funds including the commitment to funds (calculated on ”look-through” approach basis).

(2) Balance of retained securitization exposure by risk weight and required capital amounts
Risk weight0%

Balance		Capital requirement
Risk weight

20%

Balance		Capital requirement
Risk weight

50%

Balance		Capital requirement
Risk weight

100%

Balance(Millions of yen)March 31, 2017

March 31, 2016

¥ 69,568¥ 76,7660050,44974,905807

1,198

92,23944,945

3,689

1,797

852,420

681,563

		Capital requirement

68,19354,525

Risk weight

366,670322,615

		Capital requirement

1,250%

366,670322,615

Risk weight

22,78420,073

9,243

6,334

Other*

Balance
Balance		Capital requirement* Applying to exposure the transitional arrangements indicated in Article 15 of the Supplementary Provisions to the Capital Adequacy Ratio Notification.

Integrated Report 2017159

Financial Condition

Resecuritization exposure(Millions of yen)March 31, 2017

Risk weight

40%

Balance

March 31, 2016¥—

¥5,454—174

		Capital requirement(3)	A 1,250% risk weight is applied to the breakdown of securitization exposure amounts in accordance with Article 247 of
the Capital Adequacy Ratio Notification
(Millions of yen)March 31, 2017

March 31, 2016

Structured finance¥117,227¥111,401

Funds*

251,167

211,214* Assets held by funds including the commitment to funds (calculated on ”look-through” approach basis).

(4)	Breakdown of retained resecuritization exposure by application of techniques to mitigate credit risks and guarantors, or byrisk weighting applied to guarantors.
			Not applicable.
(5)	Amount of credit risk assets calculated with application of Article 15 of the Supplementary Provisions to the Capital
Adequacy Ratio Notification
(Millions of yen)March 31, 2017

Credit risk assets¥—

March 31, 2016¥—

3. Interest Rate Risk in the Banking Book
Decrease in economic value resulting from interest rate shock

160

Integrated Report 2017

March 31, 2017

March 31, 2016

Decrease in economic
value resulting from aninterest rate shockmeasuring interest rate
fluctuations in the 1st
percentile and 99th
percentile, using a oneyear holding period anda five-year time horizon:¥4.1 billion

Decrease in economic
value resulting from aninterest rate shockmeasuring interest rate
fluctuations in the 1st
percentile and 99th
percentile, using a oneyear holding period anda five-year time horizon:¥10.1 billion

Composition of Leverage Ratio Disclosure (Consolidated)
Item(Millions of yen)March 31, 2017

March 31, 2016

Corresponding Line No.
on Basel III Disclosure Template
Table 2On-balance sheet exposures (1)On-balance sheet exposures before deducting adjustments items
Total assets reported in the consolidated balance sheet
The amount of assets of subsidiaries that are not included in thescope of the leverage ratio on a consolidated basis (-)
The amount of assets of subsidiaries that are included in thescope of the leverage ratio on a consolidated basis (except
those included in the total assets reported in the consolidatedbalance sheet)
The amount of assets that are deducted from the total assets
reported in the consolidated balance sheet (except adjustment
items) (-)
The amount of adjustment items pertaining to Tier1 capital (-)
Total on-balance sheet exposures(a)Exposures related to derivatives transactions (2)Replacement cost associated with derivatives transactions, etc.
Add-on amount associated with derivatives transactions, etc.
The amount of receivables arising from providing cash margin in
relation to derivatives transactions, etc.
The amount of receivables arising from providing cash margin,
provided where deducted from the consolidated balance sheet
pursuant to the operative accounting framework
The amount of deductions of receivables (out of those arisingfrom providing cash variation margin) (-)
The amount of client-cleared trade exposures for which a bankor bank holding company acting as clearing member is not
obliged to make any indemnification (-)
Adjusted effective notional amount of written credit derivatives
The amount of deductions from effective notional amount of
written credit derivatives (-)
Total exposures related to derivative transactions(b)Exposures related to repo transactions (3)The amount of assets related to repo transactions, etc.
The amount of deductions from the assets above (line 12) (-)
The exposures for counterparty credit risk for repo transactions, etc.
The exposures for agent repo transactions
Total exposures related to repo transactions, etc.
(c)Exposures related to off-balance sheet transactions (4)Notional amount of off-balance sheet transactions
The amount of adjustments for conversion in relation to offbalance sheet transactions (-)
Total exposures related to off-balance sheet transactions(d)Leverage ratio on a consolidated basis (5)The amount of capital (Tier1 capital)
(e)
Total exposures ((a)+(b)+(c)+(d))
(f)
Leverage ratio on a consolidated basis ((e)/(f))

Table 1

16,308,273

15,645,193

1

16,570,496

15,907,180

1a

1

—

—

1b

2

—

—

1c

7

262,223
15,584
16,292,688

261,986
4,731
15,640,462

1d
2
3

3
7

66,76339,795

118,524
49,6764
526,135

13,873

—

—

6

—

—

7

—
7,500

—
13,8288
9—140,194—
195,903

10
11

4

—
—
—
—
—

—
—
—
—
—

12
13
14
15
16

5

1,223,575

1,163,033

17

297,157
926,418

332,330
830,70218
19

2,900,330
17,359,301
16.70%

2,791,197
16,667,068
16.74%

20
21
22

6

8

Integrated Report 2017161

Financial Condition

Quantitative Disclosure (Non-Consolidated)
1. Items Related to Capital Adequacy Level(a) Capital requirement to total credit risk
(1) Exposure by portfolio to which standardized method applied(Millions of yen)March 31, 2017

March 31, 2016

¥1,417,323¥1,316,522

872,200

859,308		(i) Japanese government and regional municipal bodies

—

—

		

(ii) Exposure to financial institutions

12,804

14,534		(iii) Exposure to corporations

787,690

775,437		(iv) Equity exposure

59,131

57,615		(v) Other exposure

12,575

11,721

539,276

448,372(2) Securitization risk exposure(3) Central counterparty clearing house(4) Capital requirement to credit valuation adjustment (CVA) risk(b) Capital requirement to market risk(c) Capital requirement to operational risk(d) Non-consolidated total capital requirement ((a) + (b) + (c))

9

25

5,838

8,817

—

—

17,78919,1001,435,112

1,335,622

2. Items Related to Credit Risk (Excluding Securitization Exposure)(a) Fiscal year-end credit risk exposure and breakdown by principal categories
Loans
Equities, funds
Central counterparty clearing house(Millions of yen)March 31, 2017

March 31, 2016

¥12,664,757¥12,662,784

661,687

657,256

5,828

15,712

Commitments and customers’ liabilities for acceptances and guarantees

434,676

453,128

Bonds (JGBs and corporate bonds, etc.)

788,812850,148

Reverse repurchase agreement/call loan

80,148

7,962

Other

1,332,039

831,624

Total¥15,967,949¥15,478,616(b) Fiscal year-end credit risk exposure, broken down as follows:		 (1) By region

(Millions of yen)March 31, 2017

March 31, 2016

Domestic total¥15,967,949¥15,478,616

Overseas total——

Note: DBJ has no overseas branches.

		 (2) Breakdown by industry and transaction counterpartyManufacturing

March 31, 2017

March 31, 2016

¥ 3,041,264¥ 3,184,409

Agriculture and forestry

277

184

Fisheries

250

350

Mining, quarrying and gravel extraction

80,39979,711

Construction

73,10554,9493,490,175

3,586,791

Electrical, gas, heat supply and water
Information and communications

435,708

427,900

2,367,264

2,418,207

Wholesale and retail961,284

988,276

Finance and insurance

2,422,809

1,834,706

Real estate and leasing of goods

2,366,118

2,174,852

329,917

321,379

Transportation and postal

Services

162(Millions of yen)

Municipal government

16,061

16,645

Other383,311390,250

Total¥15,967,949¥15,478,616

Integrated Report 2017

		 (3) Breakdown by period to maturity

(Millions of yen)March 31, 2017

March 31, 2016

Five years or less

¥8,144,175¥7,646,767

More than five years, up to 10

4,640,823

4,674,053

More than 10 years, up to 15

1,561,702

1,703,740

More than 15 years

786,909

635,901

No maturity date

834,337

818,154(c) Breakdown of exposure by risk weight (after accounting for credit risk mitigations)

(Millions of yen)March 31, 2017

March 31, 2016

Risk weight 0%¥1,116,720¥  564,565

Risk weight 10%

2,099

6,185

Risk weight 20%

1,071,063

1,237,802

Risk weight 50%

6,334,257

6,424,898

Risk weight 100%

7,248,494

7,078,666

Risk weight 150%

66,76740,439Risk weight 250%

5,425

5,455

Risk weight 1,250%

2,946

2,242

Other

91,05889,6093. Items Related to the Effect of Credit Risk Mitigations
Exposure to Items to Which Effect of Credit Risk Mitigations Applied(Millions of yen)March 31, 2017

March 31, 2016

Eligible financial collaterals¥ 55,140¥       —Guarantees or credit derivatives

975,998

1,002,656

4. Transaction Counterparties’ Risk on Derivative Product Transactions and Transactions with Long Settlement Periods
(Millions of yen)

Equivalent credit calculation method
Gross restructuring cost

March 31, 2017

March 31, 2016

Current exposure
methodCurrent exposure
method¥106,137¥175,991

54,72559,799Interest rate transactions

24,54628,496

Foreign exchange transactions

29,781

30,954Credit derivative transactions

375

325

Gross add-on, by transaction type22

24

Reducing credit equivalent amounts through netting

60,17873,028Net equivalent credit

100,684

162,762

Net restructuring cost
Notional amounts of credit derivatives forcalculated credit equivalent amount by type ofCredit default swaps provisioncredit derivative, by protection purchase or provision

65,591

118,206

7,500

13,829Credit default swaps purchase

7,500

6,500

—

—

Other commodity transactions

Notional amounts of credit derivatives taking
into account credit risk mitigations

Notes: 1. Collateral is not used to reduce credit risk on derivative product transactions.
2. Credit derivatives used to compute the credit equivalent amount are included in securitization exposure; there is some data overlap withsecuritization exposure indicated elsewhere and what are known as single-name CDS offerings include the measurement of customers’ liabilities
for acceptances and guarantees as consisting of the legal and other exposure of the company in question.

Integrated Report 2017163

Financial Condition

5. Securitization Exposure(a) Securitization exposure in which DBJ is the originator
		 Not applicable.
(b) Securitization exposure in which DBJ is an investor
		(1) Retained securitization exposure amount and breakdown by major underlying asset type

Structured finance(Millions of yen)March 31, 2017

March 31, 2016

¥1,353,991¥1,139,376

—

—

—

7,328

Of which, resecuritization exposure
Credit derivatives
Of which, resecuritization exposure
Funds*Of which, resecuritization exposure

—

5,454

263,428

211,454——* Assets held by funds including the commitment to funds (calculated on ”look-through” approach basis).

		(2) Balance of retained securitization exposure by risk weight and required capital amounts
Risk weight0%

Balance		Capital requirement
Risk weight

20%

Balance		Capital requirement
Risk weight

50%

Balance		Capital requirement
Risk weight

100%

Balance(Millions of yen)March 31, 2017

March 31, 2016

¥ 69,568¥ 76,766——

50,44974,905807

1,198

92,23944,945

3,689

1,797

931,716757,074		Capital requirement

74,53760,565

Risk weight

442,659

369,500

		Capital requirement442,659

369,500

Risk weight

30,78729,512

17,582

15,135

1,250%
Other*

Balance
Balance		Capital requirement* Applying to exposure the transitional measures indicated in Article 15 of the Supplementary Provision to the Capital Adequacy Ratio Notification.

Resecuritization exposure(Millions of yen)March 31, 2017

Risk weight

40%

Balance		Capital requirement

March 31, 2016¥—

¥5,454—174

		(3) A 1,250% risk weight is applied to the breakdown of securitization exposure amounts in accordance with Article 247 of
the Capital Adequacy Ratio Notification
(Millions of yen)March 31, 2017

March 31, 2016

Structured finance¥190,705¥167,995

Funds*

253,678

201,505* Assets held by funds including the commitment to funds (calculated on ”look-through” approach basis).

		(4)	Breakdown of retained resecuritization exposure by application of techniques to mitigate credit risks and guarantors, or byrisk weighting applied to guarantors.
			Not applicable.

164

Integrated Report 2017

6. Items Related to Market Risk
DBJ falls into the category indicated in Article 16 of the Capital Adequacy Ratio Notification. Consequently, calculation of themarket risk equivalent amount was not performed.
7. Items Related to Shares and Other Equity Investments and Capital Injections into the Banking Book

(Millions of yen)March 31, 2017

March 31, 2016(a) Market value of below-listed items as included within categories in
the non-consolidated balance sheets		

Exposure to listed shares¥ 91,546¥ 84,369

		Exposure to other equity investments and capital injections

570,442575,946

24,74845,787

1,491

1,797

42,23352,206(b) Gains or losses on the sale of equity investments or shares
Gain or loss on write-off of equity exposure(c) Gains or losses from valuation recognized on the non-consolidated balance sheets
but not recognized on the non-consolidated statement of income

Notes: 1. DBJ has no gains or losses from valuation unrecognized on the non-consolidated balance sheets or the non-consolidated statement of income.
2. DBJ has no exposure to shares to which Article 13 of the Supplementary Provisions to the Capital Adequacy Ratio Notification applies.

8. Exposure Applied for the Deemed Calculation of Credit Risk Assets
Not applicable.
9. Interest Rate Risk in the Banking Book
Decrease in economic value resulting from interest rate shock

March 31, 2017

March 31, 2016

Decrease in economic
value resulting from aninterest rate shockmeasuring interest rate
fluctuations in the 1st
percentile and 99th
percentile, using a
one-year holding period
and a five-year time
horizon:¥4.1 billion

Decrease in economic
value resulting from aninterest rate shockmeasuring interest rate
fluctuations in the 1st
percentile and 99th
percentile, using a
one-year holding period
and a five-year time
horizon:¥10.1 billion

Integrated Report 2017

165

166

Integrated Report 2017

Disclosure
DBJ Group considers public relations and investor relations to be important functions for connecting management with each andevery stakeholder. With the goal of gaining the trust of all its stakeholders, DBJ Group strives for disclosure through PR and IR toaccurately convey information on its current status, operations policy, and more.

Information Disclosure Materials
DBJ Group offers a wide range of information, using such media as newsletters and its website.

1. Materials legally required for disclosure
Securities Report (Japanese)
Stock Exchange Report (Japanese)
Business Report (Japanese)

2. Voluntarily disclosed information
Integrated Report (Annual Report & CSR Report)
End-of-Period Financial Reports

3. Others
DBJ Quarterly Journal (newsletter)
DBJ News Digest (mail magazine; Japanese)
Websitehttp://www.dbj.jp/en/

Glossary (Japanese)

http://www.dbj.jp/glossary/

Integrated Report 2017167

http://www.dbj.jp/en/

In consideration of the environment, this report is printed on
FSC-certified paper using vegetable oil ink.

Printed in Japan