YMFG Business Situation
Summary of Business Results

In January 2016, we established YM Asset Management
Co., Ltd., in cooperation with the Daiwa Securities GroupPerformance
During the fiscal year ended March 31, 2016, the Japanese

in an effort to reinforce our asset investment business.
Banking operations, which are the core of YMFG’s

economy pursued a course of modest recovery, due in partbusiness, are conducted through the efforts of its banks toto the impact of various government measures. Production

meet the varied financial needs of customers in the regions

activity showed signs of weakness in some areas, stemmingwhere they conduct business via a wide range of financialfrom an economic slowdown in China and other areas ofproducts through their deposit and loan operations.

the overseas economy, but remained strong overall. At theIn deposit products, we offered time deposits withsame time, in February 2016 the Bank of Japan introduced

special interest rates under the “Campaign to deposit youra negative interest rate policy in an attempt to stave offmoney in YMFG, receive it, and rebuild your hometown”

deflation through further monetary easing.

and the “YMFG three arrows lucky campaign.”

Meanwhile, the region continued to enjoy a modest
recovery. Overall production activity was solid, withstrong performance centering on the automotive sector.

In loan products, we began handling the “loan to combat
unoccupied houses” and the “home loan for UJI turners.”
In July 2015, we established YMFG Zone Planning Co.,

Personal consumption began to make a compact,

Ltd., as a wholly owned consulting company specializing inamid improvements in the employment and income

regional revitalization. Putting all its efforts into initiativesenvironment.

to address the issues facing the Group’s hometown

Against this backdrop, in line with their mission ofarea of Yamaguchi, Hiroshima and Kitakyushu, the newcontributing to regional economic development, regional

company provides comprehensive business support themed

financial institutions face requests to deliver stronger

on regional revitalization and aimed at boosting thefinancial soundness and profitability, supply funding moreproductivity of the region and the companies located there.

flexibly and further enhance their financial services.

In international operations, Yamaguchi Bank
cosponsored the “Seventh Hong Kong and South China

YMFG Performance
Amid these financial and economic conditions, supported

as one of the 17 regional banks with offices in Hongby its shareholders and business partners all YMFG’sKong. We also cosponsored the “Vietnam Businessofficers and employees were united in their efforts toNetworking Event 2015” in Hanoi in June 2015 andstrengthen the Group’s management base, bolsterin Ho Chi Minh City in December in collaboration withoperating performance and contribute to the region.

Joyo Bank, Hyakujushi Bank, Juroku Bank and Nanto

In the final year of the “YMFG Medium-Term19

Business Networking Event for Japanese Companies”

Bank, which also use our shared regional bank computer

Management Plan 2013,” which commenced in the fiscalsystem. Furthermore, to support customers’ overseas

year ended March 31, 2014, we strengthened regionaltransactions we concluded a trade insurance business

relations as a group centered on three banks—Yamaguchi

agency agreement with Nippon Export and Investment

Bank, Momiji Bank and Kitakyushu Bank—and workedInsurance. YMFG is reinforcing the Asian network it hastogether with YM Securities, YM Consulting and otherconstructed in order to facilitate overseas business efforts

Group companies to pursue comprehensive Groupand will continue to support customers’ Asian businesscapabilities as “One YMFG.”

developments going forward.

YMFG Annual Report 2016

billion at year-end, down ¥203 billion, due to decreases inFinancial Results
YMFG’s consolidated operating performance for the yearJapanese bonds. This change reflected investment decisions

ended March 31, 2016, is outlined below.

made in consideration of market fluctuations.

Total income amounted to ¥166,858 million, up ¥5,421

Total assets amounted to ¥10,438 billion at fiscal

million from the preceding fiscal year. The main reasons foryearend, up ¥243 billion from one year earlier. This rise

this increase were higher other ordinary income, including

was attributable to growth in loans and bills discounted,

income on sales of government and other bonds, and anbased on the increase in deposits, including NCDs.
At the end of the fiscal year, the consolidated capitalincrease in gains on sale of stock.

adequacy ratio for the Yamaguchi Financial Group (uniform

Total expenses, meanwhile, rose ¥3,877 million, to¥115,999 million, due to such factors as an increase ininternational standard) was 13.37%. Our consolidated

other operating expenses. As a result, income before

total Tier 1 capital adequacy ratio was 12.72%, and our

income taxes increased ¥1,544 million, to ¥50,859 million,

consolidated common equity Tier I capital adequacy ratio

and net income attributable to owners of the parent rose

was 12.72%.
Net cash provided by operating activities was ¥22 billion,¥1,773 million, to ¥32,296 million.
Although interest rates remained low, due to the¥205 billion lower than in the preceding fiscal year, mainly

expansion of products and services to meet increasingly

due to change in call loans and negotiable certificates ofdiverse customer needs and steady marketing efforts based

deposit. Net cash provided by investing activities was ¥222

on solid community relationships, the Group succeededbillion, a ¥399 billion change from cash used in thesein boosting deposits ¥301 billion year on year, to ¥9,510

activities in the previous year, principally because of decreased

billion, including negotiable certificates of deposit (NCDs).

purchases of securities. Net cash used in financing activities

Loans and bills discounted increased ¥221 billion, toamounted to ¥28 billion, a change of ¥47 billion from the¥6,449 billion as of March 31, 2016, due to the Group’s

cash provided by these activities in the fiscal year ended

efforts to fulfill its role as a regional financial institution

March 31, 2015. Principal factors were the absence ofthrough its function as a financial intermediary and aggressiveproceeds from issuance of bonds with warrants and payments

efforts to meet demand from business partners with whom

for the redemption of subordinated bonds payable. As a

the Group has developed trust-based relationships.

result of these cash flows, cash and cash equivalents at theend of the fiscal year came to ¥1,159 billion, up ¥216 billion.

The Group’s holdings of securities came to ¥2,121

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

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

Millions of yen
2016

Millions of yen
2015

Millions of yen
2014

Millions of yen
2013

Thousands ofU.S. dollars*1
2016

166,858
32,296

161,437
30,523

161,180
31,242

158,452
27,233

1,480,813
286,617

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

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

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

51,743
521,423
9,327,236
1,901.30
yen
102.48yen
102.18yen
13.34%
5.52%
9.28 times

69,5785,175,435
92,634,052
20.93
U.S. dollars
1.18
U.S. dollars
0.97
U.S. dollars*1 US dollar amounts have been translated, for convenience only, at the rate of ¥112.68 = US$1.00 as of March 31, 2016.
*2 YMFG calculated its capital ratio according to the uniform international standard (Basel 3).

YMFG Annual Report 201620