Annual Report2019Profile
Musashino Bank is the only regional bank whose operationalbase consists of Saitama Prefecture in the Tokyo metropolitan
area. The prefecture lies immediately to the north of Tokyo,
and many of its residents commute to work in the capital.
Currently, 7.3 million (estimated) people live in Saitama,
making it the country’s fifth most populous prefecture after

Tokyo, Kanagawa, Osaka, and Aichi, and the population isstill climbing. Since its establishment in 1952, Musashino
Bank has been one of Saitama Prefecture’s core financial
institutions, and has played a major role in supporting thedevelopment of the regional economy and local industries forover six decades.

Corporate Philosophy“Working in harmony with the local community it serves”

To contribute to the prosperity of the local community and to secure growth and development in partnership with the region.

“Maintaining a deep respect toward customers”

To engage in bold management that anticipates change while providing the highest quality services throughout the organization
as a whole.

Kikuo Kato
Chairman

Kazumasa Nagahori
President

Bank Data (non-consolidated basis, as of March 31, 2019)

Subsidiaries and Affiliated Companies

Head Office:Home page:
Established:
Networks:

Name
The Bugin General Lease
Co., Ltd.
The Bugin Guarantee
Co., Ltd.
The Musashino Card
Co., Ltd.

(As of October 7, 2019)

Number ofmortgage loan centers:
Employees:
Total assets:
Deposits:
Loans:
Common stock:
Capital adequacy ratio:
Number of correspondent
arrangements:
Issued common stock:333-13, OLS Building, Sakuragi-cho 4-chome, Omiya-ku, Saitama
http://www.musashinobank.co.jp
March 6, 1952
Number of branches: 99 (Saitama Prefecture: 93 [of which
2 are sub-branches], outside Saitama Prefecture: 6)92,118¥4,600.9 billion¥4,288.4 billion¥3,535.5 billion¥45.7 billion
8.10%
119
33,805 thousand sharesLine of Business
General leases, installment-payment
services, auto leasing services
Loan guarantees for individuals

Credit card business (JCB, VISA),
loans and loan guarantees related tocard services
The Bugin System Service Development, sale and maintenanceCo., Ltd.
of computer systems
The Bugin Economic
Research into the regional economy,
Research Instituteconsultation, information services,Co., Ltd.
and holding of seminars
The Bugin Capital Co.,Management support for ventureLtd.
businesses
The Musashino Harmony Outsourcing of operational businessCo., Ltd.

Contents
1 Financial and Non-Financial Highlights
2 Message from the President
5 Long-term Vision/Medium-term Management Plan
6 Alliance Strategy/Operational Base of Saitama Prefecture
7 Providing SME Management Assistance
8 Contributing to the Local Economy
9 ESG/SDGs Initiatives
12 Corporate Governance13 Compliance
14 Risk Management
15 Consolidated Balance Sheets
17 Consolidated Statements of Income and Comprehensive Income
18 Consolidated Statements of Changes in Equity
20 Consolidated Statements of Cash Flows
21 Directory

Financial and Non-Financial Highlights
The Musashino Bank, Ltd. and Consolidated Subsidiaries Years Ended March 31, 2019 and 2018

Thousands of
U.S. Dollars(Notes 1 and 2)
2019

Millions of Yen (Note 1)
2019
2018

At Year-end
Total Assets............................................................................................
Deposits including Negotiable Certificates of Deposit............................
Loans and Bills Discounted....................................................................
Trading Account Securities and Securities...............................................
Total Net Assets......................................................................................
Capital Adequacy Ratio (based on domestic standards) (%)...................

¥4,626,044
4,282,860
3,522,130654,442
239,214
8.40¥4,560,693
4,194,337
3,457,846
740,540
247,043
9.32$41,679,827
38,587,800
31,733,760
5,896,405
2,155,275

For the Year
Ordinary Income...................................................................................
Ordinary Expenses.................................................................................
Profit before Income Taxes.....................................................................
Profit attributable to owners of parent....................................................

¥   77,858
66,487
10,917
5,345¥   72,263
56,53015,334
10,917$701,487
599,036
98,36048,157

Notes 1 . In this annual report, Japanese yen (in millions) and U.S. dollars (in thousands) are indicated with fractions rounded off.
2. U.S. dollar figures have been translated at the rate ¥110.99 to U.S.$1, the prevailing market rate as of March 31, 2019.

Ordinary income

Ordinary expenses(¥ million)(¥ million)

77,85855,561

74,334

Profit attributable to owners of parent
66,48758,015(¥ million)

56,53012,56372,26370,903

9,762

10,9175,345

FY2015FY2016FY2017FY2018FY2015FY2016FY2017FY2018FY2015FY2016FY2017FY2018Forward-Looking Statements: This annual report contains forward-looking statements regarding the Bank’s financial condition and results ofoperations. These forward-looking statements, which include the Bank’s views and assumptions with respect to future events, involve certain
risks and uncertainties. Actual results may differ from forecasts due to changes in economic conditions and other factors.

Number of employees
2,285

2,224
778

776

1,477

1,446

1,395

FY2017FY2018Men

Women

CO2 emissions

(%)

(t)

2,171

808

FY2016

Ratio of female manager

17.4

FY201618.5

19.2

FY2017FY2018

6,724

6,887

FY2016FY20176,446

FY20181

Message from the President

Towards becoming“the region’s number one bank thatcreates new value in Saitama”

The Prefectural Economy
In Saitama Prefecture, the economy is performing strongly
as urban redevelopment and the establishment of industries
advance, with the Rugby World Cup taking place in autumn
of 2019, followed in July and August 2020 by the Tokyo
2020 Olympic and Paralympic Games.
Regional financial institutions are seeing a rapid advanceof technological innovation such as FinTech and cashlesstransactions. Meanwhile, in an environment where financial
easing has continued over the long term, they are required toestablish sustainable business models.

Long-teem vision
MVP (Musashino Value-making Plan)
In light of these changing trends, at Musashino Bank
we established our ten-year long-term vision, “the region’s
number one bank that creates new value in Saitama (The
Value-making Bank),” in 2013 as a new vision for the bank
to continue contributing to the development of economy
2and society, and we have been working to realize it. Under
our previous medium-term management plans, “MVP(Musashino Value-Making Plan) 1/3 (One-Third)” (April
2013–March 2016) and “MVP 2/3 (Two-Thirds) (April
2016–March 2019),” we have expanded our branch network
centered on areas with growth potential and further enhanced
our lineup of products and services, built a solution sales system to meet customers’ expectations, and worked to respondto FinTech and the shift to cashless transactions. By steadily
carrying out strategies for realizing the long-term vision over
six years, we can now clearly see the path towards reforming
our earnings structure through the development of businessfrom fees and commissions for provision of services into anearnings pillar alongside deposit and loan services.

Financial Results for Fiscal 2018
While carrying out these initiatives, as of March 31, 2019 ourdeposits, etc. were ¥4,288.4 billion, a year-on-year increaseof ¥78.9 billion. Assets in custody, such as investment trustsand insurance products, were ¥822.8 billion, a year-on-yearincrease of ¥46.1 billion. Loans outstanding increased ¥64.7
billion year on year to ¥3,535.5 billion.
On a non-consolidated basis, profit was ¥4.7 billion,
while on a consolidated basis, profit attributable to ownersof parent was ¥5.3 billion, reflecting an ongoing contraction
in expenses on one hand, and a decline in net interest
income mainly due to dividends from interest on marketablesecurities.

Medium-term Management Plan “MVP 70”
In April 2019, the Bank started a four-year medium-term
management plan, “MVP 70.” In April of 2022, the final
fiscal year of the plan, the Bank will mark its 70th founding
anniversary. The name of the plan embodies the Bank’s
promise to continue contributing to an abundant and fulfilling life for the local community as well as a lively economy
and society in the 70th anniversary year and beyond.
To continue as a bank to remain close to our customers
and communities at all times, and to value people and help
them to grow, we aim to further consolidate the businessmodel reforms that we have been working to achieve over the
past six years.
We aim to provide optimal solutions that will deliver
unrivalled satisfaction for customers. To this end, we will
engage in rigorous human resource development to increase
the expertise of individual employees, while shifting to asales system that assigns personnel with responsibility for
respective individual and corporate customers to enable swift
responses to their needs.
At branches, we will essentially maintain the networks that
we have been enhancing to date, while striving to maintain

Deposits including negotiable deposits(non-consolidated)

Assets in custody(non-consolidated)(¥ billion)(¥ billion)

and increase customer convenience through the use of digitaltechnology and other means. At the same time, we will continue our policy of advancing new branch openings in areas
with growth potential. In October 2019, we opened a branch
in Ikebukuro, which has deep ties with Saitama Prefecture.

Developing new financial services
The environment for financial institutions both in Japan andoverseas continues to change at a dizzying pace. In responseto the FinTech and cashless transaction movements, we haveestablished the FinTech Promotion Office in 2016, andmade progress in implementing highly convenient functions
on the Musashino Bank App, our own smartphone app.
Moreover, we have been actively engaged in collaboration
with other business types and with development of humanresources. Looking ahead, we will continue and acceleratethese initiatives.
In addition, in order to respond swiftly to the offshoreneeds of our corporate customers, we have been focusing
our efforts on supporting customers in the ASEAN region,
mainly through our Representative Office Registered in
Singapore, which was opened in August 2018.
For individual customers, we will strive to provide optimal
proposals on matters such as family trusts for inheritance, anarea where needs have been growing dramatically in the past
few years. Here, we will utilize our independent consulting
services and our original financial products such as testamentary trusts and monetary trusts.
The Chiba-Musashino Alliance is a comprehensive alliancewith Chiba Bank. Now the alliance is in its fourth year, ourinitiatives have become firmly established, such as financial
instruments intermediary business and asset management

Loans(non-consolidated)(¥ billion)

822.8

4,288.4
4,140.6

4,209.5

3,535.5

3,333.1

743.7

4,012.3

FY2015

3,425.3

776.7

3,470.8712.2

FY2016FY2017FY2018FY2015FY2016FY2017FY2018FY2015FY2016FY2017FY20183

Creating sustainable local communities

operations for individual investors and cooperative financing,syndicate loans, and support for business succession andbusiness rehabilitation through funds for corporate clients.
Whereas we had initially targeted synergy effects totaling¥10.0 billion for both banks over a five year period, the total
currently amounts to ¥11.8 billion.
Moreover, we will make strategic use of the TSUBASA
Alliance, which is the largest wide-area alliance of regionalbanks, newly joined in March 2019, to further enhance
our customer services and contribute further to the local
community.

The Bank has proactively embraced Environment, Social andGovernance (ESG) perspectives in regard to its management
and has undertaken numerous initiatives. In fiscal 2018,
the Bank developed this initiative even further by formulating Musashino Bank Sustainable Development Goals
Declaration, which aims to contribute to the achievement of
the SDGs and create sustainable local communities.
In our efforts towards regional revitalization andstimulation of the local economy, in addition to our existing
partnerships with regional governments, educational institutions, and NPOs, we will also promote collaboration withcompanies that share our aspirations, aiming to make ourinitiatives more effective.
Recognizing that corporate governance is the core of bankmanagement, we have taken steps to raise the level of governance even further, increasing the number of outside directors and establishing a Management Advisory Committee.
In July 2019, we started construction of a new Head
Office. The new Head Office is designed to be suitable forits location Omiya area, which is known as the gateway toEastern Japan, and to symbolize the sustainable developmentof Saitama Prefecture and Musashino Bank.
We have been given the mission of contributing to therevitalization of the local economy and society. Each of theBank’s officers has taken this mission deeply to heart, and wewill continue striving to improve with all the enthusiasm andpassion we have under a solid management vision.

Kazumasa Nagahori

Diagram for expected completion of the new head
office (Construction to be completed in fall 2021)

Profit attributable to owners of parent/
Net income

President

Dividend payout ratio and annual dividend

5-year average of consolidated ROE

FY2015 FY2016 FY2017 FY2018(¥ billion)

12.5
11.2

10.9
9.7

9.0

10.0

5.3

4.7

Dividend
payout ratio (%)

26.7

29.7

26.5

57.0

Annualdividend (Yen)

90

80

80

80

5.9%

5.6%

5.2%

4.6%

Shareholders return ratio
FY2015 FY2016 FY2017 FY2018
Shareholders
return ratio (%)

FY2015FY2016

Consolidated
Non-consolidated

4

FY2017FY2018

26.7

29.7

26.5

57.0

FY2015FY2016

Consolidated
Non-consolidated

FY2017FY2018

Long-term Vision/Medium-term Management Plan
In 2013, the Bank formulated its long-term vision as a management indicator for the next 10 years. In April 2019, we started
the medium-term management plan, “MVP 70,” as the final phase in this long-term vision. Aiming as a bank to remain close to
our customers and communities at all times, and to value people and help them to grow, we will consolidate the business model
reforms that we have carried out to date, and provide new added value to our local customers.

Long-term Vision: “MVP (Musashino Value-making Plan)”

The number one bank in the region that creates value in Saitama~ The Value-making Bank ~By creating value in Saitama, lead the economic development of Saitama,
and also grow ourselves by responding to the expectations of our customers
Medium-term management plans

Phase 1 (3 years)

Phase 3 (4 years)

Medium-term management plan
“MVP 70”

Phase 2 (3 years)“MVP 1/3 (One-Third)”“MVP 2/3 (Two-Third)”(April 2013–March 2016)(April 2016–March 2019)

Enhance readiness to become
the number one bank in the region

Establish our reputation as thenumber one bank in the region

Maintain our overwhelming
position as the number one bankin the region

Medium-term management plan “MVP 70” Plan period: April 2019–March 2023
Our Vision•A bank always close to customers and communities•A bank that cherishes employees and helps them grow

The Bank rigorously pursues a business model that reinvests
in community development to earn the overwhelming
satisfaction of customers and earnings by resolving issues

Key Strategies• Growth strategy• Securities strategy• Human resource strategy• Group strategy• Alliance strategy• Build infrastructure and systems• Creation strategy• Management and administration systems, Compliance, ESG/SDGs
Quantitative Targets

FY2018FY2022Net earnings from core business¥14.2 billion¥15.0 billion

Earnings¥4.7 billion¥10.0 billion

Core OHR

69.87%

70% or less

ROE

1.99%

4% or more

Equity ratio

8.10%

8% level

5

Alliance Strategy/Operational Base of Saitama Prefecture
Alliance Strategy

Musashino Bank’s Operational Base

Following the Chiba-Musashino Alliance, the Bank has now
entered into the TSUBASA Alliance. While fully leveraging
the benefits of wide-area partnerships, we will further accelerate strategic alliances, contributing to the sustainable growthof regional society through the provision of high value-added
financial services to customers while firmly retaining
autonomy in management.

The Bank’s operating base is Saitama Prefecture, which has ahigh concentration of logistics and production bases due to
its well-developed transportation infrastructure, including anexus for all six of the bullet train lines in East Japan. Total
production in Saitama Prefecture is around ¥22 trillion, making it the fifth largest prefectural economy in Japan. A large
number of companies have relocated there from outside theprefecture, with the net increase from corporate relocations
over the 10-year period from 2009 to 2018 standing at 743
companies, the highest in the country. In this environment,
the Bank recognizes that its mission is to promote locallyrooted finance, and we strive to provide our corporate clientswith a smooth supply of funds and other support throughour core operations.

Chiba-Musashino Alliance
As the Chiba-Musashino Alliance that started in March 2016
enters its fourth year, the two banks’ coordinated projects
and collaborations in many fields are accelerating. We aim
to expand our operational alliance even further in areas suchas joint establishment of sales offices in Tokyo, including
the Ikebukuro Branch (opened in October 2019) and theHamamatsucho Office (opened in June 2018), and further
expand sales collaboration in such areas as securities brokerage, inheritance and international operations. Furthermore,in an effort to resolve regional issues in Saitama and Chiba
Prefectures and revitalize their local economies, we will focus
on initiatives aiming to provide such revitalization, such as
jointly holding relocation seminars and events promoting
local consumption of locally produced goods.
Financial Instruments Intermediary BusinessTochigi
Prefecture

Gunma
Prefecture
NaganoPrefecture

Yamanashi
Prefecture

SaitamaPrefecture
Tokyo
Kanagawa
Prefecture

Asset Management Operations

IbarakiPrefecture

Chiba
Prefecture

Inheritance-Related Services
International Operations
Joint Establishment of Sales BranchBusiness Succession Support

TSUBASA Alliance
In March 2019, the Bank joined the
TSUBASA Alliance, the largest alliance framework forregional banks. As of May 2019, nine banks are participating. As cashless transactions and digitalization continue toadvance through the rise of FinTech, we will cooperate withother alliance partners in a wide range of fields, such as initiatives to increase the sophistication of the financial system,
sharing of business operations, and overseas-related business
operations.
•Musashino Bank
•Chugoku Bank
•North Pacific Bank

•Chiba Bank
•Iyo Bank•Hokuetsu Bank

An expressway and railway networkthat reaches all over Japan

Expressway
Railway (Shinkansen)•Daishi Bank
•Toho Bank
•Shiga Bank

Main Initiatives• Create platforms that promote increased service levelsand cost
reductions• Initiatives to respond to cashless transactions, FinTech, anddigitalization• Collaboration on overseas-related operations• Cost reduction through new technologies• Initiatives for achieving the SDGs

6

NaritaInternational Airport
Tokyo
International Airport(Haneda)Providing SME Management AssistanceStrengthening Solution Marketing
Through initiatives led by the Solutions Marketing Division,
established in April 2018, the Bank is working to create
beneficial cycles in the local economy by providing diverse
solutions to meet the needs of corporate clients at various
stages in their business development. These include management innovation support through partnerships with externalorganizations, such as government institutions, as well as
support for inheritance and business succession, and support
for M&As.
Solutions Marketing Division
Information-based sales

Business matching

Business financing

M&As

Founding businesses and new businesses

Trusts and inheritance

Development/area planning

Private banking

Musashino Bank Group companies
LeasesCredit cards

Loan guarantees

Think tanks

Systems

Venture capital

Support for Solving Various Issues by
Utilizing Information
At the Information Center located in our Head Office, wecollect information about business matching, real estate, thelocal area, and so forth, and use it to meet needs for sales channel expansion, market development, technology alliances, andestablishment of offices, plants, and so forth. In business matching, we have established business alliances with 193 companies
as of June 2019

Support for Overseas Expansion
We opened a Representative Office Registered in Singapore
in August 2018. Through this office, we offer a wide range ofservices to support clients’ activities in the ASEAN region, boththose carrying out business expansion and those examining
the launching of new businesses. Services include providing
information through our local networks, and planning andholding various events.
The Musashino Bank, Ltd.,
Representative Office Registered in
Singapore
50 Raffles Place, #10-07 Singapore
Land Tower, Singapore 048623
TEL: +65-6323-6340
FAX: +65-6535-6341
singapore@musashinobank.co.jp

SMEs
Founding period

Growth andstability period

Reform period

Support for Start-Ups and New Entries
The Bank has developed its own unsecured, unguaranteedfinancial products for entrepreneurs whose businesses areyounger than two years old. We have established a Start-Up
Support Desk, and we use our uniquely capable network toprovide information, support business plan formulation, anddispatch experts. We also provide detailed support throughclose cooperation between our “support team for start-ups
and new entries” in Head Office and our branches.

Offering a Variety of Financing Methods
The Bank has focused on offering a variety of financing
methods, including syndicated loans to diversify procurement
methods and implement financial rationalization when acooperative financing group has been formed by a number offinancial institutions, project financing that provides funding
after focusing on the cash flow of a business, private placement
bonds that result in improving the corporate image of a company conducting fund procurement, and Asset-Based Lending(ABL) that makes use of the customer’s product inventory,
accounts receivable or suchlike.

Supporting M&As, Inheritance, andBusiness Succession
To help customers with issues of inheritance and businesssuccession, our highly knowledgeable expert staff offer
proposals that are optimal for each customer. In March
2019, the Bank became the first financial institution based in
Saitama Prefecture to acquire a trust license, enabling us toprovide a full line of services such as testamentary trusts. In
addition, for customers that wish to transfer their companies,
we provide M&A support services to provide a smooth business succession.

Business Evaluation
The Bank does not rely excessively on financial data, collateraland guarantees—it is carrying out initiatives that prioritize
business evaluation, including the business details and growth
possibilities of each individual company. The number ofborrowers based on a business evaluation stood at 5,400
companies as of March 2019.

7

Contributing to the Local Economy
Deposits from the Region

Loans to the Region

As of March 31, 2019, deposits from the region increased¥71.3 billion year on year to ¥4,063.1 billion. The ratio of
deposits from the region continued to be high, at 98.36% of
the total balance of deposits.
The Bank’s share of deposits within the prefecture as ofMarch 31, 2019 is 13.18%.

Loans to the region as of March 31, 2019 rose ¥5.4 billion to¥3,010.5 billion, thereby maintaining a high loan-to-region
ratio of 85.15%. The Bank’s share of loans in the prefectureis 18.76%.

Assets in Custody from the Region
As of March 31, 2019, assets in custody from the region
increased ¥46.1 billion year on year to ¥821.9 billion. The
breakdown comprises investment trusts of ¥138.2 billion,
life insurance of ¥623.2 billion, and government bonds andother assets of ¥60.5 billion.

Towards a Sounder Financial Position
The Bank is strengthening its capital adequacy and reducing
non-performing loans. The Bank has maintained a consolidated and non-consolidated capital adequacy ratio (Basel III
domestic standard) of 8.40% and 8.10%, respectively, so wehave continued to maintain a very sound financial position.
The Bank’s non-performing loan ratio based on standards
established by the Financial Reconstruction Act, is 1.98%.

* Investment trust figures are market value; life insurance figures are total sales.

Deposits from region/Ratio of deposits from region

Loans to region/Ratio of loans to region

Non-consolidated(¥ billion)

Non-consolidated(¥ billion)

99.31%

3,822.4

FY201599.12%
3,916.998.90%
3,991.8

98.36%
4,063.1

85.97%
2,865.5

FY2016FY2017FY2018Deposits from region
Ratio of deposits from region

FY201586.04%

86.58%

85.15%

2,947.1

3,005.1

3,010.5

FY2016FY2017FY2018Loans to region
Ratio of loans to region

Assets in custody from region

Non-performing loans

Non-consolidated(¥ billion)

Non-consolidated(¥ billion)

821.9
10.1

775.8
711.8

743.0

42.9
2.02%

FY2015FY2016FY2017FY2018

17.1
11.4

11.4

38.3

31.4

1.81%

1.71%

14.9

12.8

FY2015FY201617.0
FY2017

32.7
1.98%
20.9

FY2018Bankrupt and quasi-bankrupt assets (unrecoverable claims)
Claims on potentially bankrupt borrowers
Substandard loans
Ratio of loans subject to mandatory disclosure ofclaims under the Financial Reconstruction Law* “Region” refers to Saitama Prefecture and the areas bordering the prefecture which are a part of the economic and local-living sphere(the Kumegawa Branch, Itabashi Branch, and Goka Branch sales areas).
8ESG/SDGs Initiatives
The Bank proactively embraces Environmental, Social, and Governance (ESG) perspectives in regard to its management,
and focuses on initiatives that take sustainability into consideration. With a view to embedding these initiatives more deeply
and making an even greater contribution to the region, in March 2019, we formulated the Musashino Bank Sustainable
Development Goals Declaration. Going forward, we will continue to make efforts towards realizing sustainable local communities while responding to our stakeholders.

Musashino Bank Sustainable Development Goals Declaration
The Musashino Bank Group declares that all of its officers and employees will strive to contribute to achieving the objectives of the Sustainable Development Goals (SDGs).
• To contribute to the sustainable development of the regional economy, the Bank always exercises its
financial intermediary functions and commitment to customer-oriented business operations.
•To contribute to the creation of a sustainable community including industry and employment, urban development and livability, the Bank engages in partnerships with various bodies, including municipal governments, companies and NPOs.
• The Bank regards issues such as climate change and human rights as having a direct effect on it, and seeks global sustainability.

Vision for the Bank (Key Areas)
Corporate Governance as the Source ofSustainable Growth

A Society in Which People Can Live Their
Own Way for as Long as They Wish

The Bank positions corporate governance as the source of sustainable growth, and aims to conduct steadfast bank management
grounded on its management philosophy, which has remained
unchanged since its founding. (Corresponding SDGs: 16 and 17)

The Bank will actively work to create a society in which
all people can live in their own way, healthily and happily.
(Corresponding SDG: 3)

Sustainable Regional Economy
The bank will promote innovation in local industry and local
production for local consumption, as well as contributing to
the development of comfortable, strong towns and working
to realize sustainable economic growth. (Corresponding
SDGs: 8, 9 and 11)

Responding to Climate Change, Maintaining
and Increasing Biodiversity
The Bank will respond to global climate change and makeefforts to maintain and improve the rich local biodiversity.
(Corresponding SDGs: 13 and 15)

Specific Initiatives• The Bank will work through investment and loans to encourage sustainable corporate conduct among business partners.
• The Bank will build a platform for industry revival and regional revitalization.
• The Bank will take steps to revitalize towns and suburban residential areas, and promote interest in sightseeing in the uplandareas, etc.
• The Bank will implement health and productivity management.
• The Bank will focus on improving the financial literacy of customers of all ages.
• The Bank will lead efforts to pass on Saitama Prefecture’s abundant biodiversity to the next generation.
9

Initiatives for Regional Revitalization

Environmental Initiatives

In addition to assisting initiatives by local government,
the Bank works with government, corporations, NPOs,
educational institutes, and other relevant people to solve
various local issues and to create new value. We will make aconcerted effort regarding the government’s “comprehensive
strategy for towns, people, and job revitalization.”
In August 2019, the Bank newly formed the Regional
Revitalization Consortium as a collaboration platform.

Initiatives to Preserve the Environment
through Our Main Business

Alliances and Partnerships with Local
Government Organizations, Etc.
Prefectures

Saitama Prefecture (October 2013)

DesignatedMunicipalities

Saitama City (January 2016)

Municipalities

Tsurugashima City (December 2014)
Toda City (April 2016)
Yokoze Town (June 2016)
Gyoda City (July 2016)
Kumagaya City (September 2016)
Kasukabe City (December 2016)
Konosu City (June 2017)
Hasuda City (September 2017)
Kitamoto City (December 2017)
Yorii Town (March 2018)
Ogano Town (August 2018)
Fujimi City (October 2018)
Kawagoe City (February 2019)
Fujimino City (March 2019)

Initiatives for PPP and PFI
Against the backdrop of a declining population, we are also
working to improve public services that utilize PPP and
PFI schemes, and to support the creation of private-sectorbusiness opportunities, for the matters with which local
government organizations are involved, including theimprovement of community services, and the maintenanceand administration of public facilities.

The Bank handles a large number of environment-related
products, and conducts investment and financing for projects
that contribute to sustainability, such as issuing Green Bonds(Daiwa Securities Group Head Office) and Sustainability
Finance (Japan Railway Construction, Transport andTechnology Agency).

Environmentally Conscious BranchManagement
The Bank strives to construct its branches in considerationof biodiversity and other environmental factors. We practicegreen procurement at branches, and strive to reduce CO2.
As part of this effort, we have introduced electric vehicles for
our Head Office sales vehicle fleet, and have installed electricvehicle charging stations at nine of our branches.

Supporting Efforts to Promote Greening
The Musashino Green Fund public trust has provided ¥70
million in assistance in total to 277 environmental organizations since its creation in 1992, proactively supporting
greening activities in Saitama Prefecture and other places.

Musashino Green Fund public trust
Number of environmentalorganizations provided withassistance:

277

Amount of assistance:¥70 million

Donation toward greening activities in Saitama
Prefecture and other places
Cumulative total amountdonated to the Saitama
Greenery Commission:¥16 million

Cumulative total amountdonated to the Saitama
Greenery Trust Fund:¥107 million

Environmental Education for Employees
Each year, the Bank conducts natural environment preservation activities such as removing invasive plant species from
the Mitsumata-numa
Biotope along the Arakawa
River in collaboration with
Ecosystem Conservation
Society – Saitama andthe Arakawa Citizens
Environmental Supporters.
10

Diversity Initiatives

Other Initiatives

Allowing diverse human resources of all genders and ages toadvance and participate increases the competitive capabilities ofa company and creates a source of new value creation. Based on
this idea, the Bank has formulated the Basic Policy Regarding
Promotion of Advancement and Participation by Human
Resources and the long-term vision relating to promoting
participation by human resources. Guided by these, we will focus
on promoting the advancement and participation not only of
women, but also of people with disabilities and seniors (career
veterans).

Initiatives to Improve Financial Literacy
The Bank actively provides financial literacy classes andworkplace experiences where participants can learn about theimportance of money and the role of banks in society.

Promoting Women’s Participation andAdvancement
The bank has formulated an action plan based on the Act
on Promotion of Women’s Participation and Advancement.
Initiatives to support women’s career advancement include
overseas observation and training, and joint management
skills seminars held with Chiba Bank.
Ratio of women in positionsof chief or higher

Average lenght of service for
women

25.0%
14.3%

FY2015

11.5 years

19.2%

FY2022

Ratio of men taking childcare
leave

FY2015FY2018Promotion of Culture, Art, and Sports

65%

71.9%

24.2%
FY2018FY2022

FY2022

Ratio of annual paid leave
used

100%

FY201529.4%

FY2018We are offering the “Musashino SDGs Private-Placement
Bond” which contributes to creating a sustainable regional
community. Together with local companies, we aresupporting organizations working to achieve SDGs such as
educational institutions and NPOs.

13 years

9.5 years

FY2018Musashino SDGs Private-Placement Bond
“Mirai no Chikara”

FY2022We are working to promote music, drama, and other aspectsof culture and the airs with a view to stimulating local society
and raising healthy children.
Number of schools where violin concerts have been held:

44 (as of September 2019)
We are making an effort to promote sports. We support
locally based sports teams, including the OMIYA ARDIJA
J.LEAGUE (Japan Professional Football League) team, theSaitama Seibu Lions professional baseball team, and the T.T.
Saitama professional table tennis team; and we also provide
support for local athletes.

Creating a Society Where Diverse Human
Resources Can Participate
The Musashino Harmony Co., Ltd. is a special subsidiaryestablished with the goal of increasing opportunities forpeople with disabilities to play a role. The company currently
has six employees and its operations include printing businesscards and making novelty items. We will strive to create aworkplace that is motivating for all employees by enablingthem to use their special talents and providing solid support.

Violin concert held at an elementary
school music class11Corporate Governance
Enhance Management Oversight Systems

Management Advisory Committee

Musashino Bank recognizes that upgrading and expanding
its corporate governance capabilities are key priorities ofmanagement. In addition to adhering strictly to a policyof compliance with statutory and regulatory requirements
as well as in-house rules and regulations, every effort ismade to ensure that the Board of Directors and the Boardof Corporate Auditors stringently monitor directors in theexecution of their duties. Moreover, to further strengthen thegovernance structure, the number of outside directors has
been increased by one to create a system with three. Threeoutside directors and three outside auditors with abundant
knowledge and experience are selected to monitor and audit
directors in the execution of their duties. They also take partin meetings of the Board of Directors where they are able toproactively voice their opinions and offer advice on management from a broad, independent and neutral perspective.
This ensures that the management monitoring function isboth objective and impartial.

The Management Advisory committee was established as anadvisory function to the Board of Directors. The committee
is made up of seven people: three outside directors, including the committee chair, two external experts (the Bank’s
independent outside auditors), and two internal directors. It
deliberates on matters related to the selection, dismissal, andremuneration of directors. The Board of Directors reflects
the deliberations of the committee in its decision-making.

Corporate Governance Structure (As of June 30, 2019)

General Meeting of Shareholders
Assignment

Management
Advisory
Committee

Assignment

Inquiry
Audit

Board of Directors
Directors

Board of Corporate Auditors
Auditors

reportSupervision

Discussion
Discussion

Assignment

ReportBusiness execution functions
Executive Committee

Indication/
Verification
Compliance Committee

Audit

Accounting auditors

Executive officers

Head office/Branches

12

Audit

AdviceAuditing Division

Law officeLicensed tax accountants

Compliance
Compliance Framework
The social and public mission of the banking business makes
high demands for operations based on fair and transparent
corporate activities in compliance with laws, regulations,and social norms and in accordance with the principles ofself-discipline and self-responsibility. Accordingly, the Bank
considers the thorough compliance of its directors andemployees in business operations to be a top priority, and to
this end management is actively involved in the fulfillmentof the Bank’s social and public mission as the Bank works
to strengthen its compliance framework through steps suchas system improvements and the establishment of teaching
methods.
In the future the Bank will further strengthen its corporate
activities based on a strong sense of ethics and integrity andits management approach in accordance with principles ofself-responsibility as it further strengthens the complianceframework so that the Bank’s daily business activities andactions ensure compliance with laws, regulations, and social
norms.

Basic Compliance Policy
Musashino Bank’s basic compliance policy entails that officers
and employees go about their daily duties in accordance with
the Bank’s two fundamental management guidelines, namely
its Corporate Philosophy and Code of Behavior.
Under its unwavering Corporate Philosophy, the Bank
strives to work in harmony with the local community it
serves while maintaining a deep respect toward customers.
As a local bank in Saitama Prefecture, we continue tocontribute to the local community and society. Furthermore,
the Code of Behavior is founded on “the public mission of
the bank” and stipulates “provision of high quality financial
services,” “compliance with laws, regulations, rules, etc.,”“open business management through communication withsociety,” “respecting the personalities of employees,” “tacklingenvironmental problems,” “tackling social contribution
activities,” and “resolute responses to anti-social forces,” anddirectors and employees go about their daily duties guided bythese basic policies.

Compliance Management Structure
The Legal Affairs Office of the Risk Management Division
serves as the compliance management department for the
Bank. This Office undertakes the uniform managementof all legal issues relating to compliance while providing
instructions based on investigation and research. At the sametime, the Office coordinates with officers responsible forlegal compliance appointed to all branches while working
to strengthen the compliance structure. Regular meetings
are held with the officers responsible for legal complianceappointed to each branch in order to improve the level ofcompliance through the sharing of information and training
and also, meetings are held each month with the officers
responsible for legal compliance in the head office and eachdepartment. These meetings serve as a forum to deliberate oncompliance issues and to share information.
In addition to the aforementioned, periodic compliancechecks are undertaken at each branch by the officers responsible for legal compliance. In this manner, the Bank has put
in place a mechanism that is capable of grasping the status ofdaily compliance management.
Furthermore, Musashino Bank has established theCompliance Committee with the president of the bank serving as the chairperson, which serves as the organization thatchecks the status of compliance on a Bank-wide basis whileconsidering any and all other important matters throughregular meetings. In addition, the committee evaluates andchecks on the progress and implementation status of the“Compliance Program” approved by the Board of Directors.

Compliance ManualTo ensure the compliance of its officers and employees, theBank has distributed a compliance manual that has been
approved by the Board of Directors to all of its officers andemployees and is working to ensure that all staff members are
fully aware of its contents.
The compliance manual contains sections on the Bank’s
Corporate Philosophy, Code of Behavior, and basic policies.
It contains a section on compliance standards that stipulates
the matters officers and employees should comply with, asection on the compliance framework that provides an explanation on various structures at the Bank including educationand verification structures, a section on laws and regulations
that require directors’ and employees’ compliance, and whichcontains an explanation of the laws and regulations that bank
employees are required to be knowledgeable of, and a pick-up
compliance section that provides a more detailed explanationof the matters that should be prioritized in the conduct ofdaily work. The compliance manual serves as a standard formaking decisions and taking actions in everyday businessactivities.

Money Laundering—Countermeasures against
Anti-Social Forces
The Bank has positioned prevention of money launderingand financing of terrorism as important issues in its management strategy. We strive to implement countermeasuresagainst money laundering and to eliminate anti-social forces,
while working to build control structures to help withprevention through basic policies.
In addition, we provide ongoing training for all employees
to help ensure that everyone is aware of relevant laws andregulations, and takes appropriate operational measures.

13

Risk Management
Risk Management Policy
As the risks associated with banking operations become
increasingly varied and complex, the Bank has formulated
a set of internal management policies that take into consideration the Bank’s strategic targets, in order to ensure thatthe manner in which it manages its business is both soundand pertinent. Guided by these policies, the Bank works
diligently to manage risk.
In specific terms, the Bank classifies all pertinent risks
according to their nature and attributes. Classifications
comprise (1) comprehensive risks; (2) credit risks; (3) market
risks; (4) liquidity risks; and (5) operational risks (including
administrative and system risks). These individual risks arethen managed according to their particular characteristics andrequirements.

Management Structure by Type of Risk
(1) Comprehensive Risk Management
In order to appropriately manage the wide variety of risks
on a comprehensive basis, the Bank has established theComprehensive Risk Management Department and is working to develop and improve its management structure. The
Comprehensive Risk Management Department puts in placerules and criteria for determining the scope of comprehensive
risk management, management methods, evaluation of new
products and operations as well as the level of acceptable risk
after taking into consideration management strategies, management capacity as well as business scale and characteristics.
Based on these rules and criteria the ALM (Asset Liability
Management) and other appropriate committees monitor andcontrol risks. The results of these activities are reported to theBoard of Directors and other relevant bodies on a regular basis.

(2) Credit Risk Management
Musashino Bank has historically taken steps to maintain the
independence of the Credit Screening Division and to build
a stringent screening and management structure in orderto maintain and strengthen the soundness of its assets. At
the same time, the Bank has adopted a ranking system andendeavored to upgrade and expand its credit risk management capabilities as a part of its efforts to establish objective
decisions and lending policies on an individual transaction
counterparty basis.

(3) Market Risk Management
Musashino Bank has established the Market Risk
Management Department in order to appropriately manage
market risks. Relevant steps are taken to ensure the independence of the Department from the Market Management
Department and Business Promotion Division, and to establish and develop a structure that is capable of harnessing thechecks-and-balances function. At the same time, the ALM
and Credit Portfolio Management committees deliberate as
and when required.
14(4) Liquidity Risk Management
Musashino Bank has established the Liquidity Risk
Management and Cash Management departments in order toappropriately manage liquidity risk. While ensuring the independence of the Liquidity Risk Management Department
from the Cash Management Department, Market
Management Department and Business Promotion Division,
every effort is made to establish and develop a structure thatis capable of harnessing the checks-and-balances function. At
the same time, the ALM Committee deliberates as and whenrequired.

(5) Operational Risk Management
Musashino Bank confronts broad and varied operationalrisks. In addition to classifying risks as (i) administrative risk,(ii) systems risk, and (iii) other operational risks (a. legalrisk, b. human risk, c. tangible asset risk, and d. reputationrisk), putting in place rules on an individual risk basis andpromoting the management of each risk by the appropriate
management department, the Bank has established the
Operational Risk Management Department to undertake themanagement of operational risks on a comprehensive basis.
The Bank also pushes forward measures aimed at establishingand developing a management structure that is capable ofharnessing the checks-and-balances function with respect
to each business division. Moreover, the Operational Risk
Management Committee deliberates on issues as and whenrequired.

Crisis Management/BCP Framework
To ensure business continuity in the event of a major earthquake or a system failure, the Bank has established a BusinessContinuity Plan (BCP) and prepared related manuals forhandling all situations. We make sure that all bank employees
understand the business continuity system in the event ofan emergency. Moreover, the Bank holds periodic drills toincrease the effectiveness and level of sophistication of the
BCP.

A Cyber Security Management Framework
We established the Cyber Security Management
Subcommittee as a CSIRT within the Bank, with the aimof ensuring a highly-effective cyber security framework that
includes trying to prevent any impact from the occurrence ofcyber attacks, and minimizing the damage and achieving an
early-stage recovery if there is any. We are developing diverse
activities for normal times and for emergencies (if someincident occurs).
*CSIRT: Computer Security Incident Response TeamA general term for teams responsible for cyber security management within an organization. At the Bank, the “Cyber Security
Management Subcommittee” and its secretariat are CSIRTs.

Consolidated Balance Sheets
The Musashino Bank, Ltd. and Consolidated Subsidiaries As of March 31, 2019 and 2018

Thousands of
U.S. Dollars*
2019

Millions of Yen
2019
2018

AssetsCash and due from banks����������������������������������������������������������������������
Monetary claims bought������������������������������������������������������������������������
Trading account securities���������������������������������������������������������������������
Money held in trust�������������������������������������������������������������������������������
Securities�����������������������������������������������������������������������������������������������
Loans and bills discounted��������������������������������������������������������������������
Foreign exchanges���������������������������������������������������������������������������������
Lease receivables and investment assets��������������������������������������������������
Other assets�������������������������������������������������������������������������������������������
Tangible fixed assets������������������������������������������������������������������������������
Buildings, net�����������������������������������������������������������������������������������
Land�������������������������������������������������������������������������������������������������
Lease assets���������������������������������������������������������������������������������������
Construction in progress�������������������������������������������������������������������
Other tangible fixed assets����������������������������������������������������������������
Intangible fixed assets����������������������������������������������������������������������������
Software��������������������������������������������������������������������������������������������
Lease assets���������������������������������������������������������������������������������������
Other intangible fixed assets�������������������������������������������������������������
Net defined benefit asset�����������������������������������������������������������������������
Deferred tax assets���������������������������������������������������������������������������������
Customers’ liabilities for acceptances and guarantees�����������������������������
Allowance for loan losses�����������������������������������������������������������������������
Total assets�����������������������������������������������������������������������������

¥  347,398¥  250,530$  3,129,994

12,634

10,558113,830

62

364

559

1,490

1,490

13,425654,380

740,176

5,895,846

3,522,130

3,457,846

31,733,760

2,560

4,951

23,06521,32020,985

192,089

34,47334,455

310,596

36,76737,374331,264

9,584

9,999

86,35025,322

25,322

228,147

24

—

216

347

244

3,126

1,488

1,808

13,407

3,910

2,863

35,228

3,656

2,688

32,940

80

—

721

173

175

1,559

6,732

6,659

60,654

1,004

1,010

9,046

4,200

4,802

37,841(23,023)(13,377)(207,433)¥4,626,044¥4,560,693$41,679,827

15

Thousands of
U.S. Dollars*
2019

Millions of Yen
2019
2018

Liabilities
Deposits������������������������������������������������������������������������������������������������
Negotiable certificates of deposit�����������������������������������������������������������
Call money and bills sold����������������������������������������������������������������������
Payables under securities lending transactions���������������������������������������
Borrowed money�����������������������������������������������������������������������������������
Foreign exchanges���������������������������������������������������������������������������������
Bonds payable���������������������������������������������������������������������������������������
Other liabilities�������������������������������������������������������������������������������������
Provision for bonuses����������������������������������������������������������������������������
Provision for directors’ bonuses�������������������������������������������������������������
Net defined benefit liability�������������������������������������������������������������������
Provision for directors’ retirement benefits��������������������������������������������
Provision for loss on interest repayment������������������������������������������������
Provision for reimbursement of deposits������������������������������������������������
Provision for point card certificates�������������������������������������������������������
Provision for contingent loss�����������������������������������������������������������������
Provision for share-based compensation������������������������������������������������
Allowance for demolition of non-current assets�������������������������������������
Deferred tax liabilities���������������������������������������������������������������������������
Deferred tax liabilities for land revaluation��������������������������������������������
Acceptances and guarantees�������������������������������������������������������������������
Total liabilities������������������������������������������������������������������������
Net assets
Capital stock�����������������������������������������������������������������������������������������
Capital surplus��������������������������������������������������������������������������������������
Retained earnings����������������������������������������������������������������������������������
Treasury shares��������������������������������������������������������������������������������������
Total shareholders’ equity��������������������������������������������������������
Valuation difference on available-for-sale securities�������������������������������
Deferred gains or losses on hedges���������������������������������������������������������
Revaluation reserve for land������������������������������������������������������������������
Remeasurements of defined benefit plans����������������������������������������������
Total accumulated other comprehensive income���������������������
Subscription rights to shares������������������������������������������������������������������
Non-controlling interests����������������������������������������������������������������������
Total net assets�����������������������������������������������������������������������
Total liabilities and net assets�������������������������������������������������

¥4,125,430¥4,030,917$37,169,385

157,430

163,420

1,418,416

30,522

22,187274,998

21,151

21,629190,567

10,933

15,71598,504

199

239

1,793

—

15,000—24,51922,529220,912

1,148

1,210

10,343

9

11

81

3,542

3,810

31,913

30

29

270

44

59

396

493

651

4,442

85

78

766

198

219

1,784

67

38

604

611

294

5,505

1,983

6,578

17,866

4,227

4,227

38,085

4,200

4,802

37,841

4,386,830

4,313,650

39,524,552

45,743   45,743

412,136

38,291

38,291

344,995

131,563

128,901

1,185,359

(906)

(900)

(8,163)

214,692

212,036

1,934,336

18,391

28,754

165,700(1,453)(1,279)(13,091)

8,286

8,286

74,655(1,087)(1,105)(9,794)

24,13734,655

217,470

66

66

595

318

285

2,865

239,214

247,043

2,155,275¥4,626,044¥4,560,693$41,679,827* U.S. dollar figures have been translated at the rate ¥110.99 to U.S.$ 1, the prevailing market rate as of March 31, 2019.

16

Consolidated Statements of Income and Comprehensive Income
The Musashino Bank, Ltd. and Consolidated Subsidiaries For the Years Ended March 31, 2019 and 2018

Consolidated Statements of Income

Millions of Yen
2019
2018

Ordinary income���������������������������������������������������������������������������������
Interest income�������������������������������������������������������������������������������������
Interest on loans and discounts���������������������������������������������������������
Interest and dividends on securities���������������������������������������������������
Interest on call loans and bills bought�����������������������������������������������
Interest on deposits with banks���������������������������������������������������������
Other interest income�����������������������������������������������������������������������
Fees and commissions���������������������������������������������������������������������������
Other ordinary income��������������������������������������������������������������������������
Other income����������������������������������������������������������������������������������������
Recoveries of written off claims���������������������������������������������������������
Other������������������������������������������������������������������������������������������������
Ordinary expenses�������������������������������������������������������������������������������
Interest expenses������������������������������������������������������������������������������������
Interest on deposits���������������������������������������������������������������������������
Interest on negotiable certificates of deposit��������������������������������������
Interest on call money and bills sold�������������������������������������������������
Interest on payables under securities lending transactions�����������������
Interest on borrowings and rediscounts���������������������������������������������
Interest on bonds������������������������������������������������������������������������������
Other interest expenses���������������������������������������������������������������������
Fees and commissions payments������������������������������������������������������������
Other ordinary expenses������������������������������������������������������������������������
General and administrative expenses�����������������������������������������������������
Other expenses��������������������������������������������������������������������������������������
Provision of allowance for loan losses������������������������������������������������
Other������������������������������������������������������������������������������������������������
Ordinary profit������������������������������������������������������������������������������������
Extraordinary income��������������������������������������������������������������������������
Gain on disposal of non-current assets����������������������������������������������
Extraordinary losses����������������������������������������������������������������������������
Loss on disposal of non-current assets�����������������������������������������������
Impairment loss��������������������������������������������������������������������������������
Other������������������������������������������������������������������������������������������������
Profit before income taxes�������������������������������������������������������������������
Income taxes—current��������������������������������������������������������������������������
Income taxes—deferred�������������������������������������������������������������������������
Total income taxes�������������������������������������������������������������������
Profit����������������������������������������������������������������������������������������������������
Profit attributable to non-controlling interests����������������������������������
Profit attributable to owners of parent�����������������������������������������������

¥77,858
41,19333,176
7,794
(17)
0
240
13,856
1,892
20,915822
20,093
66,487
2,622
788
26
797
469
57
65
417
3,958
1,646
34,92323,337
11,831
11,505
11,371
1
1
455
15
—
439
10,917
5,905
(363)
5,541
5,376
31
¥ 5,345¥72,263
42,37333,731
8,387
(4)
0
259
13,824
1,365
14,699568
14,131
56,530
1,938
624
31
301
258
113
91
518
3,751
1,525
36,587
12,727
1,716
11,01015,732
0
0
399
7
1
390
15,334
4,573
(207)
4,366
10,96750¥10,917

Thousands of
U.S. Dollars*
2019$701,487
371,142
298,91070,223
(153)
0
2,162
124,840
17,047
188,4407,406
181,034
599,036
23,624
7,100
234
7,181
4,226
514
586
3,757
35,661
14,830314,650
210,262
106,595
103,658
102,451
9
9
4,099
135
—
3,955
98,36053,203(3,271)
49,92348,437279$ 48,157* U.S. dollar figures have been translated at the rate ¥110.99 to U.S.$ 1, the prevailing market rate as of March 31, 2019.

Consolidated Statements of Comprehensive Income
Profit�����������������������������������������������������������������������������������������������������
Other comprehensive income����������������������������������������������������������������
Valuation difference on available-for-sale securities���������������������������
Deferred gains or losses on hedges����������������������������������������������������
Remeasurements of defined benefit plans, net of tax�������������������������
Comprehensive income�������������������������������������������������������������������������
Comprehensive income attributable toComprehensive income attributable to owners of parent������������������
Comprehensive income attributable to non-controlling interests������

Millions of Yen
2019
2018

Thousands of
U.S. Dollars*
2019¥ 5,376(10,516)(10,361)(173)
18¥ (5,140)¥10,967
4,787
3,942
119
725
¥15,755$   48,437(94,747)(93,351)(1,559)162$(46,310)¥ (5,173)33¥15,70351$(46,608)
297* U.S. dollar figures have been translated at the rate ¥110.99 to U.S.$ 1, the prevailing market rate as of March 31, 2019.
17

Consolidated Statements of Changes in Equity
The Musashino Bank, Ltd. and Consolidated Subsidiaries For the Years Ended March 31, 2019 and 2018
Millions of yen
Shareholders’ equity

Balance as of April 1, 2017................................................
Changes of items during period:
Dividends of surplus����������������������������������������������������
Profit attributable to owners of parent�������������������������
Purchase of treasury shares�������������������������������������������
Disposal of treasury shares��������������������������������������������
Transfer to capital surplus from retained earnings��������
Sales of shares of consolidated subsidiaries��������������������
Net changes of items other than shareholders’ equity���Total changes of items during period���������������������������
Balance as of March 31, 2018...........................................
Changes of items during period:
Dividends of surplus����������������������������������������������������
Profit attributable to owners of parent�������������������������
Purchase of treasury shares�������������������������������������������
Disposal of treasury shares��������������������������������������������
Transfer to capital surplus from retained earnings��������
Sales of shares of consolidated subsidiaries��������������������
Net changes of items other than shareholders’ equity���Total changes of items during period���������������������������
Balance as of March 31, 2019...........................................

Capitalstock

CapitalsurplusRetainedearnings

TreasurysharesTotalshareholders’ equity¥45,743¥38,290¥120,667¥(907)¥203,793(2,682)(2,682)

10,917

10,917
(11)

(0)

(11)

18

0

18

(0)

—

1

1

—

1

8,233

7

8,242

45,74338,291

128,901(900)

212,036(2,682)(2,682)

5,345

5,345
(6)

(0)

(6)

0

0

0

(0)

—

—

—

—

—

2,662

(6)

2,656

¥45,743¥38,291¥131,563¥(906)¥214,692

Millions of yen
Accumulated other comprehensive income

18

Valuationdifference on
available-for-salesecurities

Deferred
gains orlosses onhedgesBalance as of April 1, 2017................................................ ¥24,813
Changes of items during period:
Dividends of surplus����������������������������������������������������
Profit attributable to owners of parent�������������������������
Purchase of treasury shares�������������������������������������������
Disposal of treasury shares��������������������������������������������
Transfer to capital surplus from retained earnings��������
Sales of shares of consolidated subsidiaries��������������������
Net changes of items other than shareholders’ equity���3,941
Total changes of items during period���������������������������
3,941
Balance as of March 31, 2018........................................... 28,754
Changes of items during period:
Dividends of surplus����������������������������������������������������
Profit attributable to owners of parent�������������������������
Purchase of treasury shares�������������������������������������������
Disposal of treasury shares��������������������������������������������
Transfer to capital surplus from retained earnings��������
Sales of shares of consolidated subsidiaries��������������������
Net changes of items other than shareholders’ equity��� (10,363)
Total changes of items during period��������������������������� (10,363)
Balance as of March 31, 2019........................................... ¥18,391¥(1,399)

Total accuRevaluation Remeasurements mulated other Subscription
Nonreserve forof defined comprehensive rights tocontrolling
land
benefit plansincomesharesinterests¥8,286¥(1,831)¥ 29,869

¥ 80

¥230

Total net
assets¥233,974(2,682)
10,917
(11)
18
—
1

119

—

725

4,786

(14)

54

4,826

119

—

725

4,786

(14)

54

13,068(1,279)8,286(1,105)34,65566  285

247,043(2,682)
5,345
(6)
0
—
—

(173)

—

18

(10,518)—

32(10,485)

(173)

—

18

(10,518)—

32(7,829)¥(1,453)¥8,286¥(1,087)¥ 24,137

¥ 66

¥318

¥239,214Thousands of U.S. Dollars*
Shareholders’ equity

Balance as of March 31, 2018������������������������������������������
Changes of items during period:
Dividends of surplus����������������������������������������������������
Profit attributable to owners of parent�������������������������
Purchase of treasury shares�������������������������������������������
Disposal of treasury shares��������������������������������������������
Transfer to capital surplus from retained earnings��������
Sales of shares of consolidated subsidiaries��������������������
Net changes of items other than shareholders’ equity���Total changes of items during period���������������������������
Balance as of March 31, 2019...........................................

Capitalstock

CapitalsurplusRetainedearnings

TreasurysharesTotalshareholders’ equity$412,136$344,995$1,161,375$(8,109)$1,910,406(24,164)(24,164)

48,157

48,157
(54)

(0)

(54)

0

0

0

(0)

—

—

—

—

—

23,984(54)

23,930$412,136$344,995$1,185,359$(8,163)$1,934,336

Thousands of U.S. Dollars*
Accumulated other comprehensive income
Valuationdifference on
available-for-salesecurities

Deferred
gains orlosses onhedgesBalance as of March 31, 2018������������������������������������������ $259,068 $(11,524)
Changes of items during period:
Dividends of surplus����������������������������������������������������
Profit attributable to owners of parent�������������������������
Purchase of treasury shares�������������������������������������������
Disposal of treasury shares��������������������������������������������
Transfer to capital surplus from retained earnings��������
Sales of shares of consolidated subsidiaries��������������������
Net changes of items other than shareholders’ equity��� (93,369) (1,559)
Total changes of items during period��������������������������� (93,369) (1,559)
Balance as of March 31, 2019........................................... $165,700 $(13,091)

Total accuRevaluation Remeasurements mulated other Subscription
Nonreserve forof defined comprehensive rights tocontrolling
land
benefit plansincomesharesinterests$74,655$(9,956)$312,235$595$2,568

Total net
assets$2,225,813(24,164)
48,157
(54)
0
—
—

—

162

(94,765)—288(94,468)—

162(94,765)—

288(70,538)$74,655$(9,794)$217,470$595$2,865$2,155,275* U.S. dollar figures have been translated at the rate ¥110.99 to U.S.$ 1, the prevailing market rate as of March 31, 2019.

19

Consolidated Statements of Cash Flows
The Musashino Bank, Ltd. and Consolidated Subsidiaries For the Years Ended March 31, 2019 and 2018

Millions of Yen
2019
2018

Cash flows from operating activities
Profit before income taxes���������������������������������������������������������������������
Depreciation�����������������������������������������������������������������������������������������
Impairment loss������������������������������������������������������������������������������������
Share of (profit) loss of entities accounted for using equity method�������
Increase (decrease) in allowance for loan losses��������������������������������������
Increase (decrease) in provision for bonuses�������������������������������������������
Increase (decrease) in provision for directors’ bonuses����������������������������
Decrease (increase) in net defined benefit asset��������������������������������������
Increase (decrease) in net defined benefit liability����������������������������������
Increase (decrease) in provision for directors’ retirement benefits����������
Increase (decrease) in provision for loss on interest repayment���������������
Increase (decrease) in provision for reimbursement of deposits��������������
Increase (decrease) in provision for point card certificates����������������������
Increase (decrease) in provision for contingent loss��������������������������������
Increase (decrease) in provision for share-based compensation���������������
Increase (decrease) in allowance for demolition of non-current assets����
Gain on fund management�������������������������������������������������������������������
Financing expenses��������������������������������������������������������������������������������
Loss (gain) related to securities��������������������������������������������������������������
Loss (gain) on money held in trust��������������������������������������������������������
Foreign exchange losses (gains)��������������������������������������������������������������
Loss (gain) on disposal of non-current assets�����������������������������������������
Net decrease (increase) in trading account securities������������������������������
Net decrease (increase) in loans and bills discounted�����������������������������
Net increase (decrease) in deposit����������������������������������������������������������
Net increase (decrease) in negotiable certificates of deposit��������������������
Net increase (decrease) in payables under securities lending transactions���Net increase (decrease) in borrowed money (excluding subordinated borrowings)����
Net decrease (increase) in deposit (excluding deposit paid to Bank of Japan)�������������
Net decrease (increase) in call loans�������������������������������������������������������
Net increase (decrease) in call money����������������������������������������������������
Net decrease (increase) in foreign exchanges—assets������������������������������
Net increase (decrease) in foreign exchanges—liabilities������������������������
Proceeds from fund management
Payments for finance�����������������������������������������������������������������������������
Other, net���������������������������������������������������������������������������������������������
Subtotal�����������������������������������������������������������������������������������
Income taxes paid����������������������������������������������������������������������������������
Net cash provided by (used in) operating activities����������������Cash flows from investing activities
Purchase of securities�����������������������������������������������������������������������������
Proceeds from sales of securities�������������������������������������������������������������
Proceeds from redemption of securities�������������������������������������������������
Increase in money held in trust��������������������������������������������������������������
Decrease in money held in trust������������������������������������������������������������
Purchase of tangible fixed assets�������������������������������������������������������������
Proceeds from sales of property, plant and equipment���������������������������
Purchase of intangible assets������������������������������������������������������������������
Payments for asset retirement obligations����������������������������������������������
Net cash provided by (used in) investing activities�����������������Cash flows from financing activities
Decrease in subordinated borrowings����������������������������������������������������
Redemption of subordinated bonds�������������������������������������������������������Cash dividends paid������������������������������������������������������������������������������
Dividends paid to non-controlling interests�������������������������������������������
Purchase of treasury shares��������������������������������������������������������������������
Proceeds from sales of treasury shares����������������������������������������������������
Proceeds from changes in ownership interests in subsidiaries�����������������
Net cash provided by (used in) financing activities�����������������
Net increase (decrease) in cash and cash equivalents��������������������������Cash and cash equivalents at beginning of period������������������������������Cash and cash equivalents at end of period����������������������������������������

¥ 10,917
2,387
—
(11)
9,645
(61)
(1)
(466)
(269)
1
(15)
(158)
6
(21)
28
317
(41,193)
2,622(6,830)8(1,872)14
301(64,284)
94,512(5,990)(477)
217(10,174)(2,075)
8,334
2,391
(39)
41,752(2,583)(987)
35,946(4,617)31,328¥ 15,334
3,271
1
(8)
(1,998)
(41)
1
(438)
(314)
29
16
(102)
2
(91)
23
294
(42,373)
1,938
(578)
6
2,579
7
257
(45,713)92,626(25,345)(24,805)
1,062
108(1,932)(2,519)(1,092)76
42,636(1,904)(9,137)
1,877(3,187)(1,310)$    98,360
21,506—(99)
86,900(550)(9)(4,199)(2,424)9(135)(1,424)
54
(189)
252
2,856
(371,142)
23,624(61,537)
72(16,866)
126
2,712(579,187)
851,536(53,969)(4,298)
1,955(91,666)(18,695)
75,08821,542(351)
376,178(23,272)(8,893)323,867(41,598)
282,260(187,262)
80,015
188,064
(9)
—
(775)
1
(1,965)(14)
78,054(161,253)
47,093
162,748—
0(1,945)1(892)(2)
45,749(1,687,197)
720,921
1,694,423(81)—(6,983)
9(17,704)(126)703,253(5,000)(15,000)(2,682)(0)(6)
0—(22,689)
86,694250,092¥ 336,786(2,500)—(2,682)
(0)
(11)
17
4
(5,172)39,266
210,826¥ 250,092(45,049)(135,147)(24,164)
(0)
(54)
0
—
(204,424)
781,097
2,253,284$ 3,034,381* U.S. dollar figures have been translated at the rate ¥110.99 to U.S.$ 1, the prevailing market rate as of March 31, 2019.
20

Thousands of
U.S. Dollars*
2019Directory
Organization Chart (as of July 1, 2019)
General Meeting of Shareholders

Board of Corporate Auditors

Corporate Auditors
OutsideCorporate Auditor

Board of Directors* and Representative Director

Executive Committee
Chairman*President*

Senior Managing Director*
Managing Directors
Director (outside)

General Planning and Management Division
Strategic Planning Office
Alliance Management OfficeFinancial Affairs Office
Tokyo Office
Risk Management Division
Legal Affairs Office
Customer Service Promotion Office
Personnel Division
Secretariat
Career Development Office
Health Support Office
Human Resources Activities Promotion OfficeBusiness Management Division
Business Planning Office
Assets in Custody Promotion Office
FinTech Promotion Office
Local Community Support Division
Community Value Creation Office
Solutions Marketing Division
Credit DivisionCorporate Management Support OfficeInternational and Treasury Division
Global Business Advisory Office
Representative Office Registered in Singapore
General Affairs Division
Administration Division
Systems Management Office
Operation Services Division
Auditing Division

Board of Directors, Corporate Auditors and Executive Officers (as of July 1, 2019)
Chairman

Senior Managing Director

Directors

Corporate Auditors

Executive Officers

Kikuo Kato

Kazuya Koyama

President

Managing Directors

Kazumasa Nagahori

Toshiyuki Shirai
Susumu Kurosawa

Emi Ishida (outside)
Takeshi Higuchi (outside)
Ryuichi Mitsuoka (outside)

Yoshio Kenmochi (standing)
Yuichi Tanaka (standing)Atsumu Kuroishi (outside)
Tomio Kezuka (outside)
Kenji Tamura (outside)

Ichiro Noda
Tsutomu Kainuma
Tadashi Uehara
Kazuhiro Wakabayashi

Managing Executive Officers

Ritsu Kumagai
Masaharu Saito
Ken Otomo

Investor Information (as of March 31, 2019)
Number of Shares Held by Type of Shareholders

 uthorized: 80,000 thousand shares
A
Issued:33,805 thousand shares
Number of Shareholders: 11,145
Common Stock

Financial institutions
44.90%

Major Shareholders
NameJapan Trustee Services Bank, Ltd. (trust account)
The Master Trust Bank of Japan, Ltd. (trust account)
Japan Trustee Services Bank, Ltd. (trust account 4)
The Chiba Bank, Ltd.
Japan Trustee Services Bank, Ltd. (trust account 9)
Meiji Yasuda Life Insurance Company
The Bank of Mitsubishi UFJ, Ltd.
Sumitomo Life Insurance Company
Musashino Bank Industries Employees’ Stockholding Association
DFA INTL SMALL CAP VALUE PORTFOLIO(Standing proxy: Citibank, N.A., Tokyo Branch)* Shareholding percentages are rounded down to two decimal places.

Shares held asa percentage of
total outstanding
shares (%)
2,766,400
8.24
1,310,700
3.90
1,231,700
3.67
925,000
2.75
848,400
2.53
735,858
2.19
727,587
2.16
702,900
2.09
686,167
2.04

Other corporations
23.30%

Number ofshares666,300

1.98

Foreign companies
and others
15.83%
Individuals and others
14.68%

Financial instruments
business operators
1.29%

Notes: 1. Some treasury stock is contained in “Individuals and others.”
2. “Other corporations” includes a unit of 14 shares under the nameof Japan Securities Depository Center, Inc.

21

333-13, OLS Building, Sakuragi-cho 4-chome,
Omiya-ku, Saitama 330-0854
Phone: +81-48-641-6111

Brand Message

The Musashino Bank’s brand message is “More for You.”
The Bank personnel always ask themselves“What can I do for everyone?” and“What kind of service do I want to give everyone?”“Everyone” includes the Bank’s customers,
the members of local communities, our shareholders,and friends of the Bank, together with their families.
Accordingly, the Musashino Bank aspires to provide
everyone with better services and to contribute to
our local communities.