Annual Report

Shinkin Central Bank

2021

Shinkin Central Bank,
the Central Bank for Shinkin Banks
As the central financial institution in Japan for the cooperative regional
financial institutions, known as shinkin banks, the Shinkin Central Bank
(hereinafter the SCB) occupies a well-established position in Japan’s
financial industry. Shinkin banks currently hold funds totaling some¥155 trillion (around US$1,405 billion).

Management Philosophy and Operational Policies
Management Philosophy
As the central bank for all shinkin banks, the SCB supports the growth of the shinkin bankindustry, thereby contributing to economic development throughout Japan.

Operational Policies

1. Strengthen the corporate base, broaden operational functions, and enhance the credit standing of shinkin banks.
2. Attract stable funds from shinkin banks and diversify funding sources.
3. Upgrade market operations and develop financial services.
4. Pursue new business to reflect changing financial circumstances.
5. Contribute to regional development and revitalization hand in hand with shinkin banks.
6. Achieve sound management through efficiency, capital adequacy, and strengthened risk management.
7. Nurture professionals and create an attractive workplace.
8. Enhance public trust in the SCB.
Corporate Data (as of March 31, 2021)
Name:
Established:
Number of employees:
Domestic network:
Overseas network:
Total assets:
Total funds:
Paid-in capital:
Preferred shares:
Capital adequacy ratio(consolidated):
Number of member
shinkin banks:Long-term credit ratings:(as of July 31, 2021)

Shinkin Central Bank (SCB)
June 1, 1950
1,248
14
6
¥43,654 billion ($394 billion)¥41,603 billion ($375 billion)¥690 billion ($6,242 million)¥90 billion ($822 million)
25.60%254
A1 (Moody’s)
A (S&P)
A+ (R&I)
AA (JCR)* The number of employees includes full-time Directors and Corporate
Auditors. Our overseas network includes Shinkin International Ltd., asubsidiary in London and Shinkin Singapore Pte. Ltd., a subsidiary in
Singapore.

Shinkin Central Bank

Shinkin Banks

Total assets: ¥43,654 billion ($394 billion)
Domestic network: 14
Overseas network: 6
Number of employees: 1,248
Number of member shinkin banks: 254

Number of shinkin banks: 254
Total assets: ¥175,448 billion($1,585 billion)
Number of branches: 7,181
Number of employees: 103,071
Number of members: 9,094,466(As of March 31, 2021)

Shinkin Central Bank Annual Report 2021

Financial Highlights (Non-consolidated Financial Summary)Millions of Yen
For the years ended March 31,

2021

2020

Millions of US Dollars*
2019

2021

2020

2019

$2,053$2,451$2,332

For the Fiscal Year
Total income¥227,247 ¥266,519 ¥258,767

Total expenses

187,466

214,229

201,720

1,693

1,970

1,817

Net income (loss)

29,57937,92442,286

267

348

381

Net business profit (loss)

33,81458,02542,791

305

533

385

¥43,654,176 ¥40,633,271 ¥39,432,740$394,382$373,776$355,377

At the Year-end
Total assets
Loans and bills discounted

8,451,005

8,474,068

7,045,582

76,34877,951

63,496

Securities

17,744,905

16,477,301

16,613,593

160,311

151,571

149,725

Total liabilities

41,963,346

39,112,432

37,799,235

379,106

359,786

340,656

Deposits

33,787,924

31,208,596

30,966,816

305,248

287,081

279,080

Debentures

1,774,270

2,141,480

2,486,710

16,02919,69922,4101,690,829

1,520,838

1,633,504

15,275

13,98914,721

Net assets* US dollar amounts are given for convenience only, converted at the rate of ¥110.96, ¥108.71, and ¥110.69 per US$1.00, the prevailing rate as of March 31, 2019, 2020, and 2021
respectively.

Contents
Financial Highlights (Non-consolidated Financial
Summary) ................................................................................. 1
Message from the President and CEO ............................. 2
About Shinkin Central Bank ............................................... 6
The SCB Group ...................................................................... 7
About Shinkin Banks ............................................................. 8
Realizing a Sustainable Society ......................................... 10
Medium-Term Management Plan “SCB Strategy
2019” ....................................................................................... 12
Measures against COVID-19 ............................................. 13
TOPICS .................................................................................. 14
Overseas Networks ........................................................... 16

Corporate Management and Auditors .......................... 18
Business Overview .............................................................. 19
Capital Adequacy ................................................................ 20
Asset Quality ....................................................................... 21
Corporate Governance ..................................................... 22
Compliance System ............................................................ 23
Risk Management ................................................................. 25
Preferred Shares ................................................................. 28
Financial Section .................................................................. 29
Organization ......................................................................... 89
International Directory ..................................................... 90

This material contains certain forward-looking statements. They are not guarantees of future performance and involve risks and uncertainties, while actual results may materiallydiffer from those contained in the forward-looking statements as a result of various factors.
US dollar amounts are converted for convenience only, at ¥110.69 per US$1.00, the prevailing rate on March 31, 2021.

1

Message from the President and CEO

Realize a Sustainable Society from Regional Revitalization with Shinkin Banks
Amid the drastic changes in the environment surrounding us, such as the protracted COVID-19 pandemic, theglobal climate change, and rapidly advancing digitalization, the Shinkin Central Bank (the “SCB” hereafter) has been
more proactive than ever in promoting our initiatives for regional revitalization to support Japan’s regional
economies and help realize a sustainable society.
In this message, I would like to explain the key measures the SCB has been taking in the current challenging
environment. I will also discuss the opening of new group companies, established with the aim of regional
revitalization and strengthening of the network of the shinkin bank industry, along with our new challenges in thepost COVID-19 pandemic era.
President and CEO

2

Taking a Look Back at One

made it their mission to resolve regional

shinkin banks have developed with their

Year With COVID-19

issues while growing together with theircustomers through many years of “Face-

The environment surrounding regional

local communities.

to-Face” activities, they promptly re-economies deteriorated rapidly due toAmid the spread of COVID-19, thesponded to the requests for support

the spread of COVID-19. This past year

first thing shinkin banks did was to pro-from a large number of customers who

has been one in which shinkin banks

vide cash flow support to their custom-

suffered a sharp decline in sales andhave been put to the test, as they haveers. Utilizing the strong relationships

needed immediate support. This wasShinkin Central Bank Annual Report 2021

only possible because shinkin banks had

implementing the key measures set forth infunctional enhancements, we also plan toa deeper understanding of their cus-

its Medium-Term Management Plan, such asincrease our bases nationwide to enable

tomers than anyone else.

strengthening its support system for businessmore flexible and efficient support activities.

Once the need for cash flow sup-succession of small and medium scale

As a start, we newly opened the Kinki

port subsided, shinkin banks went one

enterprises (SMEs), regional revitalization,

Office in Osaka in April 2021.

step further and started enhancing theand further promotion of support for[Initiatives for Regional

support for the core businesses of theirdigitalization.

Revitalization]customers, actively providing a variety[Strengthening Support System

In a joint effort with shinkin banks toof support tailored to their circum-for Business Succession of

support regional revitalization projects

stances.

SMEs]

implemented by local governments, in July

Shinkin banks undertook a wide va-

With aging of the population of SME

2020, we established the “SCB Furusato

riety of support initiatives, including on-owners, the shortage of successors is

Ouen Dan (lit.,“hometown cheering team”),”

line sales support for local specialty

becoming increasingly serious. In addi-

a regional revitalization promotion scheme

products, distributing discount coupons

tion, as their business performance has

to make donations to selected projects by

to depositors that can be used at local

deteriorated due to the impact of theutilizing a corporate version of Japan’s

stores, and distributing free stickers to

COVID-19 pandemic, resolving the is-

Furusato

restaurants to certify the implementa-

sue of business succession in SMEs has( * Furusato Nozei donation program is ation of infection prevention measures.

become one of our top priorities.

preferential treatment in Japanese income

Nozei

donationprogram*.

Successful implementation of these ini-

In light of these circumstances, intaxation system.) The “SCB Furusato Ouen

tiatives was possible because shinkin

January 2021, we established the Shinkin

Dan” aims to promote development of Japan’sbanks have a deeper understanding ofBusiness Succession Consortium to address

regional economies by supporting various

their own customers and have strong

the SME business succession issues. The

regional revitalization projects that wouldties with them, which enabled them toConsortium includes a variety of external

contribute to solving problems each locality

accurately assess the customer needs

specialized agencies, and the Shinkin Central

faces in collaboration with shinkin banks.

and flexibly take actions accordingly.

Bank Group acts as a hub to connect shinkin

In fiscal 2020, the SCB donated

A year with COVID-19 pandemic was anbanks with these agencies, enabling theapproximately ¥1 billion (approx. $9.1

extremely difficult one for Japan's regionalbanks to provide one-stop consultation

million) to 100 local governments rec-economies, but it may also have been a year

services to their customers to offer

ommended by shinkin banks. We re-for regional communities to reaffirm thesolutions to various business succession

ceived far more applications than we

presence of the shinkin banks in the respective

related issues.

had initially expected. Through this ini-

In addition to the establishment of thetiative, we realized, once again, how

Shinkin Business Succession Consortium,

closely connected shinkin banks and lo-

Progress of Implementation of

the Shinkin Capital Co., Ltd., one of thecal governments are, and also how

Key Measures

SCB’s group companies, has also been

deeply shinkin banks are committed toThis year marks the final year of “SCB

working to improve its capability to provide

regional revitalization. We will continue

Strategy 2019,” a 3-year Medium-Terma wider range of solutions for businessthe “SCB Furusato Ouen Dan” in fiscal

Management Plan launched in 2019. In

succession related issues, including intra-

2021 to actively promote the initiatives

addition to responding to COVID-19

family succession, along with the existing

to help realize regional revitalization inpandemic, the SCB has been steadily

options such as M&A. In addition to thesecollaboration with shinkin banks.

community and their underlying strength.

3

[Promoting Digitalization]

dustry’s network value through the cre-development of Japan’s regional econo-

At the Shinkin Innovation Hub, whichation of a new digital platform, integrat-

mies together with shinkin banks by

was newly established in April 2020, we

ing digital capabilities with face-to-faceproviding diverse and advanced support

are working to utilize big data and build

interaction that shinkin banks excel in.

for core businesses of their customers
in respective regions and to support

a digital platform unique to the shinkin

Opening of Two New Group

their local economies, Shinkin Regional

Companies

Innovation Co., Ltd. was established toing into event-based marketing (EBM)

The environment surrounding regional

engage in new business areas that go

solutions. EBM is a method that aims toeconomies is becoming increasingly se-

beyond the existing framework.

propose optimal products and services

vere due to structural factors such as a

Shinkin Regional Innovation Co.,at optimal times. In fiscal 2020, we con-declining and aging population, as wellLtd. will operate a “regional trading

ducted a demonstration experiment

as restrictions on social and economic

company business” where the company

with the cooperation of shinkin banks

activities resulting from the spread ofhelps shinkin banks’ customers improveand other organizations and confirmed

COVID-19. As Japan’s regional econo-

the value of the regional resources they

its effectiveness. Based on the results

mies continue to suffer, shinkin banks

offer through providing support forof the experiment, we are now working

are expected more than ever to sup-product development and marketing towith pilot shinkin banks to develop spe-

port the core businesses of their cus-sell their products to large consumingcific solutions to provide the service totomers. In light of this situation, theregions outside the region. It also plansshinkin banks nationwide.

SCB opened two new group companies

to offer “regional revitalization consult-in July 2021.

ing services” to provide seamless sup-"Shinkin direct" as a communication[Establishment of Shinkin

port from building operating systems totool unique to the shinkin bank industry

Regional Innovation Co., Ltd.]

follow-ups for such projects promoted

for the purpose of building a digital plat-

In order to further contribute to theby local governments as tourism revi-bank industry.
For the use of big data, we are look-

In January 2021, we introduced

form. “Shinkin direct” is not only used
as a communication tool to digitalize
customer contact points, but also aims
to expand its role as a platform uniqueto the shinkin bank industry by accumulating data and adding functions and services of external companies (such as
fintech companies).
The shinkin bank industry is a financial group forming a nationwide network of 254 shinkin banks, with approximately

7,100

branchesand

100,000 directors and employees. Thiswide network is one of the major
strengths of the shinkin bank industry,
and we will further strengthen the in-4

Shinkin Central Bank Annual Report 2021

talization and community development.

the way people live. In addition, digitali-

including measures against climate[Establishment of Shinkin Sin-zation accelerated further as peoplechange, are gaining momentum both ingapore Pte. Ltd.]

were restricted from traveling and face-

Japan and overseas. Under such circum-

The SCB has formed a global network

to-face contacts.

stances, companies are expected toby establishing five overseas offices (inWe financial institutions, are also

London, New York, Shanghai, Hongexpected to accurately grasp the chang-Kong, and Bangkok) as well as businesses in society and quickly transform thealliances with nine overseas local banks.

existing business models accordingly.

play even larger roles and fulfill more
responsibilities in this area.
In light of this situation, the SCB has
decided to set new medium- to long-

We have also seconded our staff to

In addition to the initiatives at thesome of our business partner banks to

Shinkin Innovation Hub mentioned ear-collect local information, provide thelier, the SCB has also been actively pro-Specifically, we have set a target of

information to the shinkin bank indus-

moting the digitalization of various¥3 trillion (approx. $27.1 billion) for

try, and support SMEs that wish to en-

measures, including hosting of the

ESG investments and loans from fiscal

ter the local market.

Shinkin Food Expo 2020 online, sup-2021 to fiscal 2030. The SCB has also

To further strengthen this network,

porting the opening of online stores in

decided to aim for virtually zero green-

we established Shinkin Singapore Pte.

cooperation with BASE, Inc., and intro-

house gas emissions by fiscal 2030.

Ltd. as a new overseas subsidiary in Sin-

ducing the Shinkin e-Learning System

The SCB will further accelerate its

gapore, a major financial center in Asia.

(Sels) for shinkin bank directors andefforts to achieve the SDGs and work

employees.

with shinkin banks toward realization

Shinkin Singapore Pte. Ltd. willterm goals to further promote theSDGs.

work with shinkin banks, aiming to in-

Even in the post COVID-19 era,

corporate the growth potential of Asia

shinkin banks’ fundamental principle ofinto the future of regional economies.

“mutual support” and the SCB’s mis-

In Conclusion

Its specific initiatives include providing

sion to contribute to the progress of

In fiscal 2021, regional economies arefinancing and sales channel develop-

the regional economies and societies

expected to gradually recover as vacci-

ment support to shinkin banks’ custom-

together with shinkin banks, will re-nation progresses. However, due toers, strengthening the SCB’s own man-main the same. On the other hand, un-factors such as COVID-19 variants, itagement

expanding

der the concept fuekiryukou, which

remains unclear when the pandemic

investment and loan opportunities, andmeans “the immutable and the tran-

will be contained.

absorbing know-how on the use of fi-

sient,” we will make changes in what

The SCB will continue to work pro-nancial innovation.

needs to be changed with boldness, toactively with shinkin banks nationwide

adapt to the new era.

for regional revitalization, while all thecapabilities

byChallenges in the Postof a sustainable society.

directors and employees of the SCB

COVID-19 Era

Toward the Realization of aGroup will work together to imple-

Since the first case of COVID-19 was

Sustainable Society

ment various measures toward the re-confirmed in Japan in January 2020, its

The SCB has long been actively pro-alization of a sustainable society.

impact has spread rapidly, changing the

moting the SDGs together with shinkin

In closing, I would appreciate yourway of social and economic activities

banks to support regional economies

understanding and continued support

drastically in a short period of time,and help realize a sustainable society.

as we work toward our goals.

from the way business is conducted toEfforts to realize a sustainable society,5About Shinkin Central BankThe SCB was established as a cooperative financial institution funded by the shinkin banks, and serves as the central bank for shinkin banks
throughout Japan, which are also its members. Here we will explain the three major functions performed by the SCB in the shinkin bankindustry.

1. Functions to resolve issues held by regions
Shinkin banks play a key role in supporting regional economies by lending to local organizations and SMEs in Japan. However, individual
shinkin banks are sometimes restricted in performing their banking functions because of their scale and limitations on their business area.
IssuesSolutions

Value provided◦Expansion of sales channels◦Overseas expansion◦Business succession and M&A▪Provide business matching opportunities▪Provide services corresponding to the needs of overseas
expansion▪Support business expansion and networking at overseas locations▪Provide a platform for M&A▪Provide funds and capital through our support fund
▪Provide services according to life stageSound
development of
SMEs

Individual
customers◦Asset buildup◦Succession of assets◦Strengthening of financial literacy▪Provide products corresponding to life events▪Supplement services for assets under management at shinkin
banks▪Provide trust products for individual customers▪Provide digital skills training

Realization of anenriched life forpeopleRegional
communities◦Regional revitalization◦Promotion of regional industry◦Increased use of cashless payments▪Provide Regional Revitalization Support Package▪Regional innovation in collaboration withorganizations▪Alliance with the Mercari Group▪Establishment of the SCB Furusato Ouen Dan

Prosperity ofregional society

SMEs

external

2. Central bank functions for shinkin banks
The SCB makes every effort to maintain an orderly financial system within the shinkin bank industry through the further strengthening of
consulting functions, and cyber security measures in the shinkin bank industry, as well as timely and appropriate operations of the Shinkin
Bank Management Reinforcement System, etc.

Support for
ensuring thesoundness ofshinkin banks

Maintaining andincreasing ofcredibility of theshinkin bankindustry

Solutions◦Strengthening of investment management◦Strengthening of operational efficiency▪Provide deposit products▪Provide investment products using trust banking business
functions▪Provide loan products▪Handle administrative tasks for deposit assessment
operations▪Promote sharing of cash-related operations◦Strengthening of ability to manage risk
◦Nurturing and obtaining of human resources▪Assist sophistication in risk management▪Assist profit simulation and operation planning▪Implement consulting▪Assist improvement of systems for cyber security▪Assist improvement of systems against money laundering orother illicit activities◦Early detection of management issues◦Management reinforcement▪Operate the Shinkin Bank Management Reinforcement
System▪Operate the Shinkin Bank Mutual Funding Support System

Value provided

Development of regional economies
through strengthening managementof shinkin banks

Support forboosting earnings
capacity ofshinkin banks

Issues3. Functions as an institutional investor
The SCB is constructing a stable funding base through deposit operations and bond operations. With the funds procured with this base, the
SCB makes investments and loans for various products, etc. in money markets in Japan and overseas as one of the leading institutional
investors in Japan.
Furthermore, with regard to investment and loan strategy, the SCB pursues efficient risk-return as well as promotes investments andloans that take ESG into consideration, such as forming project finance for private finance initiatives and investing in the World Bank
Sustainable Development Bond.

6

Shinkin Central Bank Annual Report 2021

The SCB Group (As of July 31, 2021)
Regional trading
company operation

Securities

Support foroverseas businessexpansion

Consigned
clerical work
Shinkin Central Bank

Data processing
consignment

Personal loan
guarantees
Investment and
M&A advisory

Assetmanagement

Shinkin Securities¥20bn in capital (100% ownership);¥10bn capital reserve

Securities

Shinkin International£30mn in capital (100% ownership)(London local securities entity)

Regional trading
company operation
Support foroverseas businessexpansion

Shinkin Regional Innovation¥100mn in capital (100%ownership)

Shinkin Singapore$9mn in caital (100%ownership)(Singapore local securities entity)

Personal loan
guarantees

Shinkin Guarantee

Assetmanagement

Shinkin Asset Management

Investment and
M&A advisory

Shinkin Capital

Data processing
consignment
Consigned
clerical work

¥1.0bn in capital (100% ownership)¥0.8bn capital reserve¥200mn in capital (100% ownership)¥490mn in capital (100% ownership)▪Dealing‌‌Brokerage▪
‌Underwriting▪
‌Underwriting new bonds and agency business▪
in the euro market▪
‌Dealing and brokering for existing euro bonds‌Foreign securities investment and consulting▪
▪Regional trading company business‌‌Regional innovation consulting business▪
‌Supporting the overseas expansion of shinkin▪
banks’ customers‌Supporting investments and loans of SCB▪
‌Conducting surveys and research for financial▪
innovation‌Nurturing human resources of the shinkin▪
bank industry‌Debt guarantee business (guarantees for▪
unsecured personal loans provided by shinkinbanks)‌Management services for discretionary▪
investment contract assets▪‌Management services for investment trust assets▪Investment banking‌‌M&A brokering▪
▪
‌Corporate business consulting

The Shinkin Banks
Information System Center▪Data processing consignment‌‌Software development▪
¥4.5bn in capital (50.7% stake;49.2% owned by shinkin banks); ▪
‌Computer consulting and training¥1.5bn capital reserve

Shinkin Chukin Business¥70mn in capital (100% ownership)(handles SCB administrative work)‌Computing▪
‌Promissory note exchange▪
‌Branch, dormitory, and other property▪
management

7

About Shinkin Banks
Shinkin banks are cooperative financial institutions. Their membership comprises local
residents and SMEs. Shinkin banks’ distinctive characteristics are that they are conveniently located; offer fine-tuned, personalized
services; and have a strong relationship of mutual trust with their customers and communities.
Cooperative financial institutions are orga­
nizations that operate under the fundamental
principle of mutual support.
Shinkin banks limit their lending, in principle, to members. However, their functions arealmost the same as those of commercial banks,
and they also deal with many people who are
not members, accepting deposits, providing
exchange services, accepting payments, including those for public utilities, and engaging inover-the-counter sales of public bonds, investment trust funds, and insurance.
Shinkin banks not only provide deposit, lending and exchange services, but also offer a diverse
range of services to customers and other members of the local community in such areas assupport for management improvement and enterprise renewal, business succession support, business start-up support, and local-area revitalization.

Outline of Shinkin Banks

254 shinkin banks form an extensive network,with approximately 7,100 offices across thecountry, from Hokkaido in the north to Kyushu
and Okinawa in the south.
Shinkin banks dedicate themselves to providing high-quality services to local residents,
as financial institutions that are deeply rooted
in their respective regions, and contribute toregional development.
Total deposits outstanding at 254 shinkinbanks as of March 31, 2021, reached approximately ¥155 trillion ($1,405 billion), which ranks
it in third place after Japan’s city and regionalbanks, and gives shinkin banks an important position in Japanese financial markets.
Shinkin banks continue to further deepen
their presence and roles as important infrastructure for regional economies and communities.

Deposits1 Outstanding by
Bank Segment (As of March 31, 2021)
City Banks

Co-financing

Succession support / M&As

Product and service expansion

Overseas expansion

Personal lending businessBusiness start-ups

Local-area revitalization

1,405

Shinkinbankcustomers

Nationwide Network of Shinkin Banks (254 banks)

Hokuriku (15 banks)
Kinki (29 banks)

Hokkaido (20 banks)

Chugoku (20 banks)
Tohoku (27 banks)

Kyushu (26 banks)

Kanto (49 banks)

Tokyo (23 banks)
Tokai (34 banks)

Okinawa (1 bank)

Shikoku (10 banks)

Deposits Outstandingat Shinkin Banks(Trillions of yen / billions of US dollars)

Loan and Bills Discounted
Outstanding at Shinkin Banks(Trillions of yen / billions of US dollars)
78.4
(708)

155.5
(1,405)2,748

Agricultural Cooperatives
Second-tier Regional BanksManagement improvement /enterprise renewal$3,894

Shinkin Banks

137.9(1,229)140.9(1,326)143.4(1,293)145.2(1,336)

69.1
(616)

70.9
(667)

71.9
(648)

72.6
(668)

2018

2019

2020

965
2

609

Credit Cooperatives

202

Labor Credit Associations

197

1. Deposit includes domestic operations.
2. City banks, regional banks and second-tierregional banks do not include the special
international financial transactions account.
Sources: Japanese Bankers Association, the Norinchukin
Bank, National Central Society of Credit
Cooperatives, National Association of Labour
Banks and the SCB.

8

Shinkinbanks(Billions of US dollars)
2

Regional Banks2

Notes:

Shinkin Bank Services

2017

Note:

2018

2019

2020

2021

Items in parentheses are US dollar amounts.
They are given for convenience only, withconversion at ¥112.19, ¥106.28, ¥110.96,¥108.71 and ¥110.69 per US$1.00, the prevailingrate on March 31, 2017, 2018, 2019, 2020 and
2021, respectively.
Source: The SCB.

2017

Note:

2021

Items in parentheses are US dollar amounts.
They are given for convenience only, withconversion at ¥112.19, ¥106.28, ¥110.96,¥108.71 and ¥110.69 per US$1.00, the prevailingrate on March 31, 2017, 2018, 2019, 2020 and
2021, respectively.
Source: The SCB.

Shinkin Central Bank Annual Report 2021

Capital Adequacy Ratio of Shinkin Banks
12.78%

201712.51%

2018

The capital adequacy ratio of shinkin banksrose to 12.48% (preliminary figure) as of March
31 2021, from 12.10% at the end of the previous fiscal period.
The ratio maintains a level that is not inferior to that of other business categories,
and is outperforming other domestic regionalbanks (9.61%).

12.48%

12.26%

12.10%

2019

2020

2021
(Preliminary figure)

Source: The SCB.

Nonperforming-loan Ratioof Shinkin Banks (%)

Non-consolidated Capital Adequacy
Ratio by Bank Segment (%)(as of March, 31, 2021)

15.70%
4.75%

12.48%

4.32%

9.61%

Shinkin banks

City banks(Preliminary figure)

Regional banks

2017

4.05%

2018

2019

2020

3.80%

2021
(Preliminary figure)(Domestic)

Sources: Bank disclosure document, Regional Banks Association of Japan.

3.92%

Source: The SCB.

Difference between Shinkin Banks and Commercial Banks
Category

Shinkin Banks

Commercial Banks
Banking Act

Legal foundation

Shinkin Bank Act

Organization

Non-profit cooperative organization financed For-profit joint stockby its members
corporations

Membership qualifications(1) ‌Those who have an address or office in the Noneregion(2) Those who have a business office in the region(3) Those who work in the region(4) Executive officers of companies that have abusiness office in the region(In the case of businesses)
Businesses with no more than 300 employees orwith less than 900 million yen in capital

9

Realizing a Sustainable Society
Declaration of Shinkin Central Bank Group on SDGs
Shinkin Central Bank Group is a group in which the SCB plays its role as the central financial institution for shinkin banks. As such, the Groupwill strive to implement initiatives together with shinkin banks throughout Japan toward realization of a sustainable society based upon the
Sustainable Development Goals (SDGs) and in accordance with the principle of a cooperative institution focusing on three important themes,
namely the “region”, the “people” and the “environment”.

Sustainable prosperity of a regional society
Major initiatives

Relevant SDGs

■ Improving sustainability of shinkin banks■ Improving sustainability of SMEs
■ Initiative for regional revitalization in collaboration with shinkin banks
We will contribute to sustainable prosperity of regional societies by strengthening sustainability of shinkinbanks which support the regions and SMEs which constitute the business infrastructure for the regions, aswell as by promoting support for regional revitalization.

Well-being to all the people
Major initiatives

Relevant SDGs

■ Support for realization of children’s dream■ Enhancement of support for life planning of all generations■ Promotion of creating a workplace that values uniqueness of employees
Together with shinkin banks, we will strive to implement initiatives to bring well-being to senior generations,children and all the people in the regions, and to contribute to realizing a diversified and inclusive society
with the concept of “leave no one behind”.

Conservation of global environment
Major initiatives

Relevant SDGs

■ Promotion of ESG investments and loans■ Measures for climate change■ Reducing environmental burden associated with business activities
We will strive to reduce environmental burden associated with business activities. Furthermore, as a banking
group making investments and loans on a global scale, we will contribute to conservation of the global
environment by promoting investments and loans that are mindful of the environmental problems.

Support for initiatives
Task Force on Climate-related Financial Disclosures (TCFD)
The “Task Force on Climate-related Financial Disclosures (TCFD)” was established in December 2015 by the Financial
Stability Board at the request of G20 finance ministers and central bankers. In July 2019, the SCB endorsed therecommendations of the TCFD.
Equator Principles
In April 2021, the SCB adopted the Equator Principles, a voluntary framework designed to ensure that in extendingloans to large-scale projects, financial institutions give due consideration to the impact of such projects on theenvironment and society.

10Shinkin Central Bank Annual Report 2021
Measures for climate change
In accordance with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), the SCB will disclose its information
as follows:

Governance
We will hold an Executive Committee meeting to deliberate on our policies and initiatives as to the SDGs including climate change, and thenwill report the result to the Board of Directors.
Also, from a standpoint of integrated management as one banking group, we hold the “Group Promotion Committee on SDGs” meetings
twice a year, a new committee comprised of executives of the SCB and its group companies to discuss such matters as the SCB Group’s policies
and initiatives as to the SDGs including climate change.
Specific initiatives pertaining to SDGs including climate change are being taken on a cross-organizational basis with SDGs Promotion Office(established in April 2020) of Strategic Planning Division playing a central role.

Strategy
The environmental problems including climate change are the most important issues common to all human beings. As such, in accordance withthe “Declaration of Shinkin Central Bank Group on SDGs” formulated in September 2019, we recognize that this climate issue would bring
opportunities, risks and influences on our business activities in the following context. Accordingly, we will actively strive to solve the issues.
<Opportunities>‌Together with shinkin banks nationwide, we are actively implementing initiatives to realize a sustainable society. We recognize that these initiatives will◇contribute to regional revitalization as well as to an increased presence of the shinkin bank industry including the SCB.
◇‌A
 s we see the increased use of renewable energy worldwide and advancement of technological innovations as investment opportunities, we are promoting
ESG investments and loans. Focusing on 2030, the deadline for achieving our SDG goals, we have set ESG investments and loans in ¥3 trillion (from fiscal
2021 to fiscal 2030) as medium- to long-term goal. (ESG investments and loans: ¥68.7 billion [actual]/fiscal 2019, ¥195.1 billion [actual]/fiscal 2020)<Risks>‌We recognize the risk associated with a transition to a low carbon society such as regulatory tightening and technological innovations relating to the◇climate (transitional risk), and the risk of facing difficulties in business continuity due to an increased number of natural disasters or abnormal weather
associated with climate change (physical risk). All these are the risks that affect the businesses and financial conditions of the customers to whichshinkin banks make investments or provide loans, which then indirectly affects the portfolio of the SCB.
‌In consideration of the SCB’s special role of being a central financial institution for shinkin banks, we recognize that the risk of the SCB facing difficulties◇
in its business continuity due to the climate change (physical risk) is a major risk.

<Influences>◇‌Carbon-related assets (energy and public sectors) constitute 4.72% of total loans.

Risk management
We have distinguished those sectors whose financial conditions are susceptible to the climate change and formulated the “Guideline for Making
Responsible Investments and Loans by Type of Businesses” in March 2020. By making investments and loans in accordance with this Guideline,
which is continually being revised, we are making a contribution to realization of a sustainable society as well as managing financial impact on the SCB.
In addition, the SCB adopted the Equator Principles in April 2021. Based on these principles, the SCB has started incorporating theevaluation of the project’s environmental and social impact into a project finance decision-making process and continually monitors the project’slevel of consideration to the environment and society.
We also aim to reduce the balance of investments and loans for the construction of coal-fired power plants by 50% by fiscal 2030 fromthe end of fiscal 2020, and zero by fiscal 2040.

Index and target
In order to reduce CO2 emissions, efforts are underway to achieve electricity consumption reduction goals based on the “shinkin bankindustry’s environmental voluntary action plan”, and regarding current levels of reduction, the amount of reduction has exceeded the fiscal 2030
reduction target.
(Electric power consumption: medium- to long-term reduction target/actual)
Reduction target Medium term Fiscal 2020 in comparison with fiscal 2009: -10.5% Long term Fiscal 2030 in comparison with fiscal 2009: -19.0%
ActualFiscal 2009 373 kWh/m2** Electric power consumption rate = electric power consumption/total floor space

Fiscal 2020 221 kWh/m2 (-40.7%)

11Medium-Term Management Plan “SCB Strategy 2019”
The current business environment surrounding shinkin bank industry involves a number of new and important issues that must be dealt with,such as falling earnings capacity caused primarily by the Bank of Japan’s unprecedented monetary easing, and the rapid advance of digitalization.
Based on this situation, the SCB has definitely decided the medium to long term “vision”, and in pursuit of this has drawn up the new
medium-term management plan “SCB Strategy 2019” that began in April 2019, with seven high-priority strategies as its key components.
In 2020, in addition to continuing to move forward in pursuit of our plans, we will respond flexibly to “new normal” resulting from thesocial changes caused by the spread of COVID-19, and further enhance the competitiveness of the shinkin bank industry.

Management Philosophy
Operational Policies
Medium-Term Management Plan “SCB Strategy 2019” (fiscal 2019 to fiscal 2021)
Our vision for the SCB for the next five to ten years
Together with Shinkin Banks, SCB will aim for constructing combined operations as one banking group, improving competitiveness of Shinkin group, and achieving the future where Shinkin Bank is the most reliable bank in every local area, by
allocating resources to each banks’ field of expertise.

Seven high-priority strategies
Strategy1

Strategy2

Strategy3

Encourage Shinkin Banks’sustainable business model

Improve Shinkin Banks’risk management

Promote Shinkin Bank's
digitalization

Strategy4
Promote to utilize network among Shinkin Banks, SCB and external organization

Strategy5

Strategy6

Strategy7

Pursue optimal balance among profit,
risk and capital distribute
managerial resources appropriately

Promote efficient operation

Nurture appropriate central
financial institution's employee,create an attractive workplace●Levels of management indices that should be maintained
Consolidated capital adequacy ratio(domestic standard)
At least 15%

Maximum amount available
for dividend
At least ¥200 billion●Target level of earnings
Profit attributable to ownersof parent
Around ¥40.0 billion●Results of the fiscal year ended March 31, 2021
Consolidated capital adequacy ratio(domestic standard)

25.60%

Maximum amount available
for dividend¥452.6 billion

Profit attributable to ownersof parent¥31.6 billion* Achievement rate for fiscal 2020 forecast (30.0billion yen): 105.4%

12

Shinkin Central Bank Annual Report 2021

Measures against COVID-19
In light of the spread of COVID-19, we are securing safety of executives and employees and maintaining continuity of ourbusiness by actively implementing work from home or staggered commuting, while undertaking various activities to assist shinkinbanks and their customers.

◆Promote matching for shinkin banks’ customers
To provide assistance to shinkin banks’ customers who were experiencing difficulties in procuring components and other supplies
due to supply-chain disruptions, we opened a matching website specifically designed to address issues associated with COVID-19
in March 2020. This is an initiative to promote matching between shinkin banks’ customers who need supplies and those who
can provide them by making use of the shinkin bank industry network.

◆Operation of “Shinkin no Ishizue, the Cornerstone of Shinkin Banks,” a support fund against COVID-19
In June 2020, the SCB, in collaboration with its group company, Shinkin Capital Co., Ltd., established “Shinkin no Ishizue,” asupport fund against COVID-19, with the total investment of ¥10 billion. Through funding from this fund, we have been working
to strengthen the financial base of shinkin banks’ customers affected by COVID-19.
Also, we provide the shinkin banks’ customers using this Fund with the business improvement measures we have developedin collaboration with Organization for Small & Medium Enterprises and Regional Innovation, JAPAN (SME SUPPORT, JAPAN),
while providing shinkin banks with the management improvement support program dedicated to COVID-19 related issues.

◆Holding “Shinkin Food Expo 2020,” an online business fair
In fiscal 2020, since many of the face-to-face business fairs and businessmatching events organized by shinkin banks were postponed due to the spreadof COVID-19, we introduced support tools for holding these meetings online.
Also, from October to November 2020, we held the Shinkin Food Expo 2020,
an online business fair, to support the expansion of sales channels for shinkinbanks’ customers engaged in the food manufacturing business. The Expo wasparticipated by more than 400 customers.

◆Holding a liaison meeting for SMEs support staff at shinkin banks nationwide
In response to the increasingly specialized and complex management issues that SMEs
face, we also organized a liaison meeting for SMEs support staff at shinkin banks
nationwide.
We discussed the theme of customer support during and after the COVID-19
pandemic, and shinkin banks nationwide shared the examples of their unique approaches
to customer support to improve the problem-solving capability of the shinkin bankindustry.

Support staff

Support staff

Support staff<Group discussion>

Support staff

Support staff

13

TOPICS

Regional revitalization through cooperation between shinkin banks and local governments
In commemoration of the 70th anniversary, we established the “SCB Furusato Ouen Dan (lit., hometown cheering team),” a regional revitalization promotion
scheme that utilizes a corporate version of the Furusato Nozei (lit., hometown tax payment) donation program.
This initiative promotes donation by SCB and helps shinkin banks to commit to regional revitalization projects and support improving the feasibility andcontinuity of creating effects on the community, thereby enabling more effective projects to be conducted.

SCB(Financial support)---Regional revitalization---SCB
Furusato Ouen Dan

Local governments(Implementation)

Creation of new common values

Shinkin banks(Support to Ensure
Effectiveness)

In fiscal 2020, we received applications from many local

Top 5 SDG goals in the local governments applications

governments recommended by their respective local shinkin banks.
Through screening by the committee consisting of academics andexperts, we selected 103 projects (105 shinkin banks and 100 local
governments) and donated a total of ¥1,018 million.

SDGs
Number of
projects(%)

77 projects 69 projects 55 projects 46 projects 32 projects(74.8%)

Designing a new value for regional communities
In July 2021, we established a regional trading company, Shinkin Regional Innovation
Co., Ltd. SCB will act as a hub to connect the efforts of individual shinkin banks that arefamiliar with their regions, aiming to maximize the unique network value of the shinkinbank industry. We will contribute to the development of regional economies together
with shinkin banks by engaging in the “regional trading company business” and the“regional revitalization consulting business,” which go beyond the framework of finance.

14(67.0%)(53.4%)(44.7%)(31.1%)

Shinkin Central Bank Annual Report 2021

Building a one-stop platform
faced by SMEs face, SCB makes the most of its unique network of the shinkin bankindustry to build one-stop platforms for addressing various needs in a wide range ofregions both in Japan and overseas.

Shinkin banks

Shinkin banks’ customers

Issues◦Expansion of sales
channels◦Business succession and
M&A◦Overseas expansion

Consultation

Optimal solutions

A platform unique to the shinkin bank industry

In response to the changing business environment and increasingly complex issues

External
specialized
agencies
Shinkin banks
and their
customers

SCB Group

SCB
Universities
and other
research
institutions

Local
governments
Overseasbusinesses

Investment in sustainable development bond issued by the World Bank
In September 2020, we invested a total of $100 million in sustainable development bond issued by the World Bank (official name: theInternational Bank for Reconstruction and Development or IBRD) in the form of a private placement exclusively for SCB.
The World Bank utilizes Japan’s experience, technology, and knowledge in disaster prevention to provide support to developing
countries by organizing technical assistance projects, providing assistance in their implementation, and dispatching experts.
SCB financially support the World Bank’s projects related to the SDGs and other issues through investment in this bond.
Outline of issuance of the bond
Key themes forinvestment

Support for mainstreaming of disaster prevention in developing countries

Amount issued$100 million

IssuerInternational Bank for Reconstruction and Development

Period10 years

15

Overseas Networks
The SCB has offices in New York, London, Hong Kong, Shanghai, Bangkok and Singapore. These offices collect and disseminate information relating to economic and financial conditions, the investment and loan environment, and the laws,
taxation regimes, and employment situation of each region.
These offices also work with allied banks to support the overseas expansion of shinkin banks’ customers.
Moreover, as part of our support for the overseas business of SMEs, we dispatch employees to allied banks. The overseas
offices also provide shinkin bank employees with opportunities to improve their skills related to supporting the overseas businesses of their customers and contribute to human resources development in the shinkin bank industry.
Network of SCB Group’s overseas offices and allied banks

Shinkin International Ltd.
SCB New York Representative Oﬃce

Bank of China

LondonSCB Hong Kong Representative Oﬃce
Shanghai

The Bank of East Asia

New York

Shinkin Central Bank

BeijingTokyo

SCB Shanghai Representative Oﬃce

Hong Kong
ManilaBangkokBank of Shanghai

Ho Chi Minh City

Mexico City

Bank of Communications

Banco Mercantil del Norte, S.A.

BDO Unibank, Inc.

Singapore

Joint Stock Commercial Bank for
Investment and Development of Vietnam

Jakarta

Shinkin Singapore Pte. Ltd.
Maybank Indonesia
SCB Bangkok
Representative Oﬃce
Bangkok Bank… SCB Oﬃce…

Business Alliances(SCB employees seconded)… Business Alliances

Expanding our global network
Given the increase in the number of Japan’s SMEs expanding overseas, particularly in Southeast Asia, in July 2021, we opened a Singapore-based subsidiary,
Shinkin Singapore Pte. Ltd., as a new Asian base for the shinkin bank industry.
Together with shinkin banks, we are committed to bringing the growth potential of Asia into the future of the regional economy by providing
enhancing financing and sales channel development support for SMEs.

Mission of Shinkin Singapore Pte. Ltd.

16

Supporting the overseas expansion ofshinkin banks’ customers

Establishing a competitive advantage in the shinkin bank industry’s overseas support system by enhancing financefunctions and sales channel development functions.

Supporting investments andloans of SCB

Realize and maintain optimal asset allocation by utilizing the global network of the SCB head office and overseas
offices.

Conducting surveys and research forfinancial innovation

Utilizing examples of financial innovation in Singapore and other Asian countries to revitalize local communities
and offer solutions to social issues.

Nurturing human resources of theshinkin bank industry

Systematically develop and improve engagement of shinkin banks and SCB employees through practicalexperience in Asian markets.

Shinkin Central Bank Annual Report 2021

Support for overseas business expansion and funding
The SCB has formed business alliances with nine local banks overseas to increase its capability to support shinkin banks’ customers who are expanding their businesses overseas.
Working with shinkin banks, the SCB and local banks, we provide a wide range of support to shinkin banks’ customers who conduct businessoverseas by helping them open local bank accounts, and providing local currency denominated financing using standby L/C, for example.

Provision of services corresponding to the needs of overseas expansion
We are collaborating with shinkin banks in the business areas such as overseas expansion, cultivation of overseas sales channels, overseas financing,effective use of overseas human resources, inbound tourism, and foreign exchange, thus providing various services to those shinkin banks’ customers who are considering overseas expansion.

“Shinkinkai” (local networking)In a typical year we hold regular meetings of the “Shinkinkai” local information exchange events in order to build networks among shinkin banks’customers who are active in the region, involving not only the three Asian offices of Hong Kong, Shanghai and Bangkok, but also Ho Chi Minh,
Jakarta and Manila, where staff have been seconded to local banks with which business alliances have been concluded.

Global Expansion by Shinkin Bank Customers
America: 205

China: 1,079
South Korea: 109
Mexico: 33
Hong Kong: 136
Myanmer: 38
India: 51

Thailand: 495

Laos: 10Vietnam: 405

Taiwan: 105

Philippines: 120
Combodia: 36
Malaysia: 83
Singapore: 49
Indonesia: 194

Source: Thir teenth Survey on the Overseas Business of Shinkin Bank Customers (2019)

Support shinkin banks’ customers to sell their products in the
cross-border EC mall
To support the expansion of overseas sales channels for SMEs, we opened a special shop in thelargest EC mall in Southeast Asia and Taiwan, offering only the products of shinkin banks’customers. To make cross-border EC transactions easy even for companies that are not familiar
with EC transactions, we work with external organizations to provide total support for listingprocedures, checking local import regulations, marketing, and promotion.

Holding - the Shinkin Global Summit
To promote SMEs overseas expansion opportunities, we held the “Shinkin Global Summit”
online, where SCB’s business partners in major Asian countries’ gathered together to discuss
measures to strengthen the shinkin bank industry’s initiatives according to the characteristics ofeach country.

17Corporate Management and Auditors

Kenichiro Mimuro

Chairman of the Boardof Directors (Part-time)

Hiroshi Nakahara

Senior Managing Director

Career summary

Career summary

Career summary

April 1968
Joined Hamamatsu Shinkin
Bank (current Hamamatsu
Iwata Shinkin Bank)
June 2005
President and Chief Executive
Officer of Hamamatsu Shinkin
Bank (current position)
June 2008
Director of the SCB
June 2020
Chairman of the Board of
Directors (current position)
June 2020
Chairman of the Board of
Directors of The National
Association of Shinkin
Banks (current position)

April 1980
Joined the SCB
April 2005
General Manager ofStrategic Planning Division
June 2007
Director and General
Manager of Strategic
Planning Division
June 2009Managing Director
June 2013
Senior Managing Director
June 2016
Deputy President
June 2018
President and Chief Executive
Officer (current position)

April 1981
Joined the SCB
June 2007
General Manager of
Personnel Division
June 2010
Director and General
Manager of Osaka Branch
June 2013
Managing Director
June 2016
Senior Managing Director
October 2017
Deputy President(current position)

Hiroyuki Shibata

President and Chief
Executive Officer

Hajime Hioki

Deputy President

Career summary

Career summary

Career summary

April 1981
Joined the Ministry of Finance
June 2013
General Manager of the
Accounting Center and General
Manager of the Policy ResearchInstitute, Ministry of FinanceJuly 2014
Director-General of the
Financial Bureau
July 2015
Commissioner of the
National Tax Agency
October 2016
Executive Consultant of the SCB
June 2017
Director and Executive
Consultant
October 2017
Senior Managing Director(current position)

April 1987
Joined the SCB
April 2005
Representative Director
and President of Shinkin
International Ltd
June 2009
General Manager of Strategic
Planning Division of the Bank
June 2013
Director and General
Manager of Osaka Branch
June 2016
Managing Director
June 2018
Senior Managing Director(current position)

April 1985
Joined the SCB
June 2010
General Manager of
Personnel Division
June 2012
Director and General Manager
of Personnel Division
April 2013
Director and General Manager
of Support & Advisory Division
for Shinkin Banks
June 2015
Managing Director
June 2019
Senior Managing Director(current position)

Hiroshi Sudo

Senior Managing Director

Norihiro Takano

Senior Managing Director

Chairman of the Board of
Directors (Part-time)

Directors

Makoto Shirahase

Zon Suzuki

Norimasa Yoshino

Kenichiro Mimuro

Kenji Tanaka

Tatsuo Takeda

Yuji Takahashi

Kazuo Ohashi

President and Chief Executive Officer

Atsushi Toyoshima

Hiromi Nomura

Hiroyuki Shibata

Yoshinori Jinno

Takayuki Goto

Deputy President

Directors (Part-time)

Corporate Auditor

Hajime Hioki

Masatoshi Masuda

Masafumi Shinagawa

Rinichi Hoshi

18

Senior Managing Directors

Ikuo Higuchi

Corporate Auditors (Part-time)

Hiroshi Nakahara

Tetsu Komori

Takashi Abe

Hiroshi Sudo

Hiroshi Hiramatsu

Seiji Sakuda

Norihiro Takano

Norikazu Shibuya

Akio Okuyama

Kotaro Omae

Naoyuki Yoshino

Managing Directors

Kuniyuki Hashizume

Yuzuru Nishino

Hirotsuna Sumida

Takehiko Murotani

Minoru Kondo

Hideki Sasaki

Koya Nakazawa(As of July 1, 2021)

Shinkin Central Bank Annual Report 2021

Business Overview
Earnings Performance

Asset Management

Looking at the financial results for fiscal 2020
(ended March 31, 2021) overall, operating income amounted to ¥227 billion ($2,052 million), down ¥39 billion ($354 million) or 14.7%,
year on year because of a decrease in interestand dividends on securities from decreases ininterest on securities, dividends from investment trusts and gain on cancellation of contracts. Meanwhile, operating expenses cameto ¥187 billion ($1,692 million), down ¥26 billion ($239 million) or 12.4%, year on year due
to a decrease in interest on payables under
securities lending transactions as a result of
lower foreign currency procurement interest.
As a result, ordinary income came to ¥39
billion ($360 million), a decrease of ¥12 billion($115 million), or 24.2%, year on year. Profit
came to ¥29 billion ($267 million), a decreaseof ¥8 billion ($75 million), or 22.0%, year on
year.

The amount of assets under management in fiscal 2020 increased ¥3,350 billion ($30,272 million), to ¥42,658 billion ($385,387 million).
Mainly due to lower government bondholdings, outstanding invested securities increased ¥1,267 billion ($11,451 million), to¥17,744 billion ($160,311 million) at fiscal year
end.
Loans and bills discounted decreased ¥23
billion ($207 million) to ¥8,451 billion ($76,348
million).
The outstanding amount of short-termmoney market assets increased ¥2,230 billion($20,148 million), to ¥16,097 billion ($145,428
million), primarily reflecting Bank of Japan current deposits.

Funding
In fiscal 2020, the total amount of funding increased ¥2,947 billion ($26,631 million) year on
year, for a total of ¥41,603 billion ($375,859
million). Of this figure, deposits received cameto ¥33,787 billion ($305,248 million), an increase of ¥2,579 billion ($23,302 million),
which mainly comprised demand deposits fromshinkin banks.
After deducting redemptions, debenturesat the end of fiscal 2020 came to ¥1,774 billion($16,028 million), down ¥367 billion ($3,318
million) during the fiscal year, including ¥231
billion ($2,095 million) in debentures issued by
the SCB.
Borrowed money amounted to ¥6,041 billion ($54,582 million), a year-on-year increaseof ¥735 billion ($6,646 million), mainly comprising borrowings under a funding provision to
support increased lending by the Bank of Japan.

Breakdown of Funding*Securities
To advance its diversified investment portfolio, the SCB also invests in such risk assets as
stocks and investment trust funds not subject to interest risk, while optimizing its
portfolio in response to shifts in the financing and investment environment.
The SCB also carries out interest rate
swaps and other derivative trading, to hedge
risks linked to assets under management.
Loans and Bills Discounted
As of March 31, 2021, the outstanding amountof loans and bills discounted was ¥8,451 billion($76,348 million).

14.5%(¥6,041 billion)
4.3%(¥1,774 billion)

81.2%(¥33,787 billion)

Deposits
Debentures
Borrowed money

Breakdown of Asset Management*
0.9% (¥365 billion)

37.7%(¥16,097 billion)

19.8%(¥8,451 billion)

Short-term market
operation
Securities
Loans and bills
discounted
Others41.6%(¥17,744 billion)

Breakdown of Securities*
1.1%(¥187 billion)
28.6%(¥5,073 billion)

33.6%(¥5,971 billion)

3.2%(¥577 billion)
23.2%(¥4,114 billion)

10.3%(¥1,821 billion)

Government bonds
Municipal bonds
Corporate bonds& short-term
corporate bonds
Stocks & investment
trust funds
Foreign securities
OthersBreakdown of Loans and Bills
Discounted*
8.4%(¥706 billion)

National andgovernment
agencies andorganizations

3.8%(¥323 billion)
39.1%(¥3,299 billion)

43.5%(¥3,679 billion)

Regional public
corporations
and charitableorganizations
and others
Business
corporations

5.2%(¥441 billion)

Agency loans
Others* As of March 31, 2021.
* The amount shown in the pie chart is rounded down
to the nearest whole number.

Ordinary Income and Net Income (Non-consolidated)

(Millions of yen)

FY2016FY2017FY2018FY2019FY2020Ordinary income (loss)

48,34260,67858,562

52,63639,884

Net income (loss)

41,38346,49842,28637,92429,57919

Capital Adequacy
OutlineConsolidated Capital Adequacy Ratio

The SCB’s equity capital, as defined underregulations concerning capital adequacy ratio,
mainly comprises common shares from member
shinkin banks, public issues of preferred sharesthat supplement common shares, and internal
reserves accumulated to date by the SCB.
The SCB raises funds through the issuance of general common shares and specificcommon shares. The dividend payout ratio for
specific common shares differs from that for
general common shares.
Furthermore, in accordance with the
SCB’s articles of incorporation, the amountof residual assets distributed per specificcommon share is limited to a maximum of¥100,000 per share. This makes it possible toraise funds by issuing common shares without
diluting the residual assets distributed to preferred shareholders.
According to transitional measures basedon new Japanese domestic standards for regulations concerning capital adequacy ratio, equity capital also includes fixed-period andperpetual subordinated loans.

The SCB’s consolidated capital adequacy ratio
at March 31, 2021, was 25.60%.
Equity capital, the numerator for calculating the capital adequacy ratio, amounted to¥1,502 billion ($13,570 million).
Risk assets, the denominator for calculating the capital adequacy ratio, amounted to¥5,867 billion ($53,005 million).

Risk Management and Capital
Adequacy Assessment
The SCB has implemented policies to manage
its capital adequacy as part of its integrated
risk management. The capital assessment division evaluates capital adequacy using a holistic
approach, measuring various types of risks
under uniform criteria and comparing quantified risks with the SCB’s capital.
In order to assess the potential impacts ofshock on its capital, the SCB conducts stresstesting to estimate losses under various scenarios and the probability of their occurrence.
Risk limits and risk exposure are reported
to senior management at the Risk Management Committee and at other meetings. The
Risk Management Committee deliberates
measures in response to the results of capital
adequacy assessments, and implements measures as deemed necessary.

Capital Adequacy Ratio (Domestic Standard)

Consolidated
Non-consolidated

20

Capital adequacy ratio
Amount of capital
Amount of risk-weighted assets
Capital adequacy ratio(%, billions of yen)
FY2016
37.03
1,764
4,765
38.28

FY2017
30.57
1,645
5,381
31.62

FY2018
23.65
1,425
6,026
24.48

FY2019
24.31
1,476
6,071
25.18

FY2020
25.60
1,502
5,867
26.29

Shinkin Central Bank Annual Report 2021

Asset Quality
Risk-Monitored Loans
The amount of risk-monitored loans as ofthe end of March 2021 was ¥68 million ($0.6
million) for loans to bankrupt borrowers,¥3,399 million ($30 million) for delinquentloans, ¥1,008 million ($9 million) for loans
past due three months or more, and ¥18,921

million ($170 million) for restructured loans.
Total risk-monitored loans increased¥319 million ($2 million) to ¥23,398 million($211 million) during the fiscal year. The ratioof total risk-monitored loans to total loans
remained as low at 0.27%, and the soundness

Risk-monitored Loans (Non-consolidated)

(%, millions of yen)
End of March
2020
75
3,977
1
19,02423,079Loans to bankrupt borrowers
Delinquent loans
Loans past due three months or more
Restructured loans
Total risk-monitored loans (A)End of March
2021
68
3,399
1,008
18,921
23,398

Increase or
Decrease
(7)
(578)
1,007
(103)
319

320

320

−

8,474,068
0.27

8,451,005
0.27(23,063)0.00

End of March
2020
75
3,977
1
19,02423,079End of March
2021
68
3,399
1,008
18,921
23,398

Increase or
Decrease
(7)
(578)
1,007
(103)
319

320

320

−

8,468,123
0.27

8,446,047
0.27(22,076)
0.00

Partial direct write-offs
Total loans (B)Ratio of total risk-monitored loans to total loans (%) (A/B)

Risk-monitored Loans (Consolidated)
Loans to bankrupt borrowers
Delinquent loans
Loans past due three months or more
Restructured loans
Total risk-monitored loans (A)of the SCB’s loan assets remained high.

(%, millions of yen)

Partial direct write-offs
Total loans (B)Ratio of total risk-monitored loans to total loans (%) (A/B)

Asset Assessment under
the Financial Reconstruction Law
As of the end of March 2021, bankrupt andquasi-bankrupt assets amounted to ¥83 million ($0.7 million), doubtful assets ¥3,384
million ($30 million), and substandard assets¥19,930 million ($180 million).
Accordingly, the total amount of bad debts
under the Financial Reconstruction Law increased ¥319 million ($2 million) to ¥23,398
million ($211 million). The coverage ratio ofbad debts (the total of claims deemed collectible with collateral and guarantees and the allowance for possible loan losses divided bytotal bad debts) was 66.24%.
Bankrupt and quasi-bankrupt assets arerecorded for the remaining amount after
deducting the amounts deemed collectible withcollateral and guarantees, while doubtful assets
are recorded for the loss-expected amount of

the remaining amount after similarly deducting
the amounts deemed collectible with collateraland guarantees, respectively, in the specificallowance for possible loan losses.
For substandard assets, the anticipatedloss ratio is calculated based on the loan loss
ratio and recorded in the general allowance for
doubtful accounts.

Asset Assessment under the Financial Reconstruction Law (Non-consolidated)(%, millions of yen)
Bankrupt and quasi-bankrupt assets
Doubtful assets
Substandard assets
Total claims under the Financial Reconstruction Low (FRL) (A)Normal claims
Partial direct write-offs
Total loans (B)Ratio of total claims under the FRL to total loans (%) (A/B)
Total coverage amounts on disclosed claims under the FRL (C)Coverage ratio (%) (C/A)

End of March
2020
323
3,729
19,02523,0798,556,323

End of March
2021
83
3,384
19,93023,3988,466,339

Increase or
Decrease
(240)
(345)
905
319
(89,984)

320

320

−

8,579,402
0.26

8,489,738
0.27(89,664)0.01

15,35966.54

15,50066.24

141(0.30)

21

Corporate Governance
The SCB strives to maintain fairness andtransparency in its management by fortifying
our corporate governance system as we
implement various operational strategies. The
SCB’s goal is to gain the trust of all our stakeholders by demonstrating the strong commitment to establishing a rigorous corporate
governance system and to becoming an evermore distinguished financial institution wellrespected in society.

Institutional Structure

General Assembly of Representatives
The SCB is a cooperative financial institution
comprising 254 shinkin banks nationwide (asof March 31, 2021) that are its members andinvestors. The General Assembly of Representatives, equivalent to the general meetingof shareholders in a joint-stock company, isheld annually to elect directors and resolve
important issues.
Board of Directors
The SCB’s Board of Directors, comparable to
the Board of Directors in a joint-stock company, holds regular meetings nine times per
year, and makes decisions regarding importantbusiness matters.
There are no board members corresponding to the outside directors as defined by theCompanies Act, however, the Board of Directors includes 18 part-time directors selectedfrom among the executive officers of shinkinbanks from each region in Japan. This is in accordance with Article 32, paragraph 4 of the
Shinkin Bank Act, the SCB’s Articles of Incorporation stipulate that more than half the total number of board members must be executive officers of shinkin banks. The SCB is
confident that the appropriate check on management provided by the parttime directors
ensures that supervision and safeguard functions are in place and have a high degree ofobjectivity and transparency in business operations.
Corporate Auditors
The SCB’s corporate auditors, comparable
to the corporate auditors of a joint-stockcompany, audit the execution of duties by the
directors. The Board of Auditors, which consists of all the corporate auditors, regularly
holds discussions on matters concerning audit
policies and plans.
The SCB appoints one full-time corporate
auditor and two part-time corporate auditorsfrom among the executive officers of shinkinbanks, and two part-time corporate auditors
who are not executives of the SCB or shinkinbanks (non-member corporate auditors),
equivalent to outside corporate auditors as defined by the Companies Act. Non-member
corporate auditors are appointed from among
persons who meet the requirements stipulated in Article 32, paragraph 5 of the Shinkin
Bank Act. There are no stipulations of standards or guidelines regarding independence forthe appointment of non-member corporate

22

auditors. The SCB is confident that non-member corporate auditors are able to utilize theirprofessional knowledge and experience toconduct audits from an independent perspective.
One of the non-member corporate auditors is a certified accountant with a wealth ofknowledge and experience regarding financeand accounting.
There are no particularly notable conflicts of interest between the SCB and nonmember corporate auditors.
Part-time Directors and Corporate Auditors
The General Affairs Division provides information and other support for part-time directors,
and the staff members exclusively assisting corporate auditors under their direction provide
the same for part-time corporate auditors, inorder to facilitate the timely and appropriate
execution of duties by part-time directors andcorporate auditors.
General Meeting for Preferred Shares
A general meeting for preferred shareholders
may be held to protect their property rights
under the Law Concerning Preferred Sharesof Cooperative Financial Institutions.

Checks on Business Operations

Execution of Business Operations
At the SCB, the Board of Directors makes
decisions on important business operations.
Based on those decisions, the president
presides over the SCB’s business operations
and the Deputy president and other full-time
directors assist the president.
In addition, the SCB has established the
Executive Committee to deliberate and makedecisions on important managerial matters,
including ones to be resolved by or reported
to the Board of Directors.
The SCB has also established various
committees of the Executive Committee tofacilitate robust discussions on all aspectsof its business operations. To ensure that
deliberations and decisions are carried out ona cross-organizational basis, each committee
comprises several directors and general managers of divisions.
Supervision and Checks
At the SCB, the Board of Directors supervises
the execution of business by the directors.
More than half of the Board of Directors are
executive officers of shinkin banks, thereby
ensuring that the Board of Directors fulfills its
checking functions.
AuditsTo facilitate audits of the directors’ executionof duties, the corporate auditors at the
SCB attend Board of Directors’ and otherimportant meetings. The corporate auditors
also receive reports from directors regarding
their execution of duties, and inspect theminutes of the Executive Committee andother important documents. In addition, thecorporate auditors hold regular meetings withindependent corporate auditors to exchange
opinions and information.
Dedicated staff members are assigned toassist the corporate auditors to ensure that
directions are given efficiently, and to help
them perform their duties in a timely andappropriate manner.
Internal Audit System
The Internal Audit Division builds an audit system that aims to realize efficient and effective
business operations by examining and assessing compliance management systems, risk
management systems and operations management systems of each division, branch, and affiliated company of the SCB, to make sure thatthey are functioning appropriately and effectively.
At the internal audit, the Internal Audit Division examines and assesses the legal andregulatory compliance status, risk management status, and operations management status, of each division, branch, and affiliatedcompany of the SCB, to make sure that they
are functioning appropriately and effectively.
When deemed necessary, the Internal Audit
Division issues guidance so that corrective
measures may be undertaken.
In addition, each division and branch is
required to carry out its own internal inspections for the prevention and early detectionof administrative errors.
Use of Outside Specialists
The SCB has appointed Ernst & Young ShinNihon LLC as its corporate auditor.
The SCB utilizes the expertise of outside
specialists, including independent auditors,
attorneys, and tax accountants. To effectively
handle more sophisticated and diversified
operational requirements, the SCB consults
with, and receives advice from, such specialists on a regular basis and as the need arises.
Appropriate Information Disclosure
The SCB’s preferred shares are listed on theTokyo Stock Exchange. The SCB strives tomaintain appropriate disclosure of corporate
information, pursuant to the Financial Instruments and Exchange Law, other related laws,
and the Securities Listing Regulations of theTokyo Stock Exchange.

Improving Internal Control Systems

The SCB regards compliance as the basic
premise of all business activities. The SCB
continues to strengthen and operate internal
control systems, based on a policy of maintaining reliable financial reporting, managing
risks flexibly and effectively in response to
those characteristics, and implementing
internal audits by utilizing the Internal Audit
Division, which is independent from theoperational divisions and branches.

Shinkin Central Bank Annual Report 2021

Compliance System
The SCB views compliance as one of thehighest-priority management agendas. In linewith this stance, the SCB is carrying out themeasures outlined below as it strives to further strengthen its compliance system.

Strengthen Compliance System

1. The SCB has formulated the Shinkin Central Bank Code of Ethics, which stipulates
the ethical rules and behavior standards
that must be upheld by all SCB directors
and employees.
2. In order to improve customer protection
and satisfaction, the SCB formulates Customer Protection Control Policy.
3. The SCB formulates an annual Compliance
Program, which lays out its specific compliance plan for each fiscal year.
4. To clarify the rules to be followed by directors and employees, the SCB has compiled a Compliance Manual as a practicalcompliance handbook.
5. A compliance supervisory division andcompliance-related divisions have been set
up, and their respective roles clarified. A
compliance supervisor and deputy, both
responsible for compliance, are appointed
to each division and branch of the SCB.
6. In order to deliberate compliance issues,customer protection issues, and serious

accidents, the SCB has established the Risk
Management Committee.
7. In addition to conducting regular lectures
and training seminars for directors andemployees, each division and branch also
carries out its own training programs as
part of the SCB’s efforts to strengthen
compliance education.
8. The audit items used by the Internal Audit
Division include compliance-related items,
and internal audits include investigation ofwhether the compliance system is functioning adequately.
9. In cases of compliance violation, re ports from the heads of the divisions or
branches concerned are promptly called
for, and appropriate actions are taken toprevent a recurrence.
10. The SCB operates a hotline to facilitate
repor ting of compliance breaches bydirectors and employees. The SCB also
has in place strict measures to protect
whistle-blowers.
11. Pursuant to the Law on Sales of Financial
Products, the SCB has formulated andmade public its Financial Products Solicitation Policy. To ensure that solicitation iscarried out fairly, important points regarding a product must be explained to thecustomer at the time of sale.

12. Pursuant to the Law on Protection of Personal Information, the SCB has published
its Personal Information Protection Policy
on its internet website. The SCB takes
necessary and appropriate safety measures
to protect personal information.
13. In addition to publishing its Outline forManaging Conflicts of Interest on its internet website, pursuant to the Shinkin BankAct and the Financial Instruments and Exchange Law, the SCB is taking appropriate
management steps to ensure that customers’ interests are not wrongfully violated.
14. Based on the financial Alternative Dispute
Resolution (ADR) system, to respond
expeditiously, fairly, and appropriately tocustomers’ inquiries, complaints, disputes,
and other issues, the SCB has overhauled
its internal management system and is
striving to enhance its reliability.
The SCB intends to review and update thecontent of its Compliance Manual and otherpolicies on an ongoing basis. All SCB directors
and employees are working to maintain strict
compliance through coordination among related divisions, and by strengthening internal
education programs.

Compliance System Overview
Customers
Divisions or branches

Corporate
lawyerCorporate
Auditors

Personnel responsible for compliance (appointed by the head of compliance administration)
Personnel deputy responsible for compliance (appointed by the compliance supervisor)
Compliance supervisor (head of division or branch)Compliance supervisory division（General Affairs Division）

Deputy head ofcomplianceadministration

Head of complianceadministration(General Manager ofLegal & Compliance Office)(General Manager ofGeneral Affairs Division)

Supervisor of compliance

Compliance-related divisions
Personnel Division
Strategic Planning Division
Business Promotion DivisionInternal Audit Division

Compliance hotline

Employees

Operations Division
Systems Division(Director in charge ofGeneral Affairs Division)

Risk Management Committee

Directors (full time)

Executive Committee
Board of Directors

23

Countermeasures against Money Laundering and the Financing of Terrorism

Based on societal demands related to theneed for countermeasures against money
laundering and financing of terrorism (the“money laundering and financing of terrorism
countermeasures”), the SCB has designatedthe prevention of money laundering and of
terrorist financing as one of the most important managerial issues, and is working to sophisticate its countermeasures by means of arisk-based approach.
The director in charge of General Affairs

Division is appointed supervisor of money
laundering and financing of terrorism countermeasures, and under the active involvement of
the management team will put in place risk
management arrangements in which the General Affairs Division is the second line of defense (administrative divisions), while also organizing a regulatory system. The General
Affairs Division is also providing with support,
checks and controls in relation to the first lineof defense (business divisions), and training for
employees.
Supervisors of and personnel responsible

for money laundering and financing of terrorism countermeasures are assigned to the firstline of defense (business divisions), and checks
are carried out at the time of the transactionin accordance with the Act on Prevention ofTransfer of Criminal Proceeds and so on, with
notifications being made for suspicious transactions.
The Audit Division, which is the third lineof defense (internal audit division), performs
verification of the effectiveness of money
laundering and financing of terrorism countermeasures.

Risk Management System against Money Laundering and the Financing of Terrorism
Board of Directors
ReportExecutive Committee
Resolve/Report

Risk Management Committee
Deliberate/ReportSupervisor of money laundering and financing of terrorism countermeasures(Director in charge of General Affairs Division)
Report/Consult

General Affairs DivisionFirst line: Business Divisions

Second line: Administrative and Related Divisions【Divisions responsible for money launderingand financing of terrorism countermeasures】【Divisions responsible for managing money launderingand financing of terrorism countermeasures】

Branch offices/Head office divisions(Operations Division, International Operations Center,
Operations Center, Business Promotion Division, TrustBusiness Division, Treasury Operations Division, Transfer &Clearing Division, General Affairs Division (General Affairs
Group), others)

General Affairs Division (Legal & Compliance Office)AssistCheck

Supervisor of money laundering and financing of terrorism
countermeasures (head of division or branch)
Personnel responsible for money laundering and financing ofterrorism countermeasures (personnel responsible forcompliance)

Management supervisor of money laundering and financing of terrorism
countermeasures (General Manager of General Affairs Division)
Management deputy supervisor of money laundering and financing ofterrorism countermeasures (General Manager of Legal & Compliance
Office)【Divisions involved in money laundering andfinancing of terrorism countermeasures】

Strategic Planning Division, Personnel Division, Systems Division

Verification of effectiveness

Third line: Internal Audit DivisionInternal Audit Division

24

Shinkin Central Bank Annual Report 2021

Risk Management
Learning from the experience of the financial crisis, the SCB is exhaustively implementing more highly detailed and thoroughprocesses to manage risk by pursuing more sophisticated integrated, market and credit risk management and other measureswhile also advancing predictor and interim management for credit control.
Risk Appetite Framework

In order for the SCB to fulfill its role as thecentral financial institution of the shinkinbanks, it is necessary for it to take appropriate
risks, which are matched to its level of capitaland congruent with its own business modeland risk culture, to enable it to continue tosecure profits.
A “risk appetite framework” (*1, *2) has
been constructed and is being operated withthe aim of clarifying this basic concept of risktaking and strengthening risk governance.
*1. ‌Risk appetite: the type and size of risks that a financial
institution actively attempts to take in order to fulfill its
role*2. ‌Risk appetite framework: a framework for discussing andexecuting risk-taking policies and risk tolerances asprescribed by the required level of profits and capital

Setting the SCB’s risk culture and risk
appetite

We believe that what is required of SCB isthat it fulfill its function as the central financial
institution of the shinkin banks with a focus on
stability and continuity.
We recognize that, in order to achievethis, the SCB must secure a sound financial
position and stable profits, and that it has arisk culture that does not permit excessiverisk-taking.
In addition to setting risk appetite withreference to this risk culture, the SCB has
designated the consolidated capital adequacy
ratio (domestic standard) and maximum
amount available for dividend as management
indicators (risk appetite indicators).

Management of Risk Appetite Framework

Based on the objectives for which the risk appetite framework was introduced, and ourrisk culture and appetite, we have taken acomprehensive view of the balance between
earnings, risk and capital in order to set a
medium-term target level of earnings (profit
attributable to owners of parent).

Also, based on these medium-term targets, we are executing operations in accordance with a PDCA cycle, under which we formulate earning plans for a single fiscal year,
take on risk, provide status reports, verify
progress, and amend as required.
In addition, we have formulated a risk appetite statement to clarify the content of therisk appetite framework.

Basic Policy on Risk Management

In the wake of the global financial crisis, financial
institutions face significant changes in economic
and financial market conditions and otheraspects of their operating environment. To
respond promptly and appropriately to thesechanges, financial institutions require very finely
tuned risk management.
The SCB has positioned risk management
as a key management priority for ensuringsound management and securing adequate
profits. All directors and employees conduct
their daily duties with a full awareness of theimportance of risk management.
The SCB classifies risk in two broad categories—risk that must be controlled andrisk that must be absolutely minimized—
and manages the risks accordingly. The typesof risk that must be controlled are market,
liquidity, and credit risks. The type of risk thatmust be minimized is operational risk. The
Risk Management Division coordinates the
management of different risks to provide
comprehensive risk management.
The SCB has also established crossorganizational bodies—the Risk Management Committee, Credit Committee and ALM Committee—to manage risk from a Bank-wide perspective. These committees deliberate and makedecisions on specific issues relating to theirrespective risk management functions based on
the policies determined by the Board of Directors and the Executive Committee.
To ensure the effectiveness of its risk management systems, the SCB has also establishedthe Internal Audit Division—a body indepen­

dent from its risk management systems—tomonitor the SCB’s risk management activities.

Integrated Risk Management

To manage risk in a comprehensive manner,
the SCB employs the integrated risk management method to cope with quantifiable risk.
Integrated risk management is a way tomanage its diverse risks by calculating themwith uniform criteria, such as the Value-atRisk (VaR) method, and comparing theiraggregated value to the institution’s overall
financial strength (i.e., capital adequacy).
For market risk and credit risk, the SCB
calculates the VaR. For the calculation of operational risk capital requirements, the SCB
employs the basic indicator approach, proposed under regulations concerning capital
adequacy ratios.
The SCB defines capital under its integrated risk management system and allocates quantitative risk limits, operational risk and other types of risk.* Separately,
the SCB estimates losses under various
stress scenarios as part of its efforts tomonitor potential impacts on capital.
The quantit ative risk limits and re ser ve amounts for each f iscal year are
determined by the Executive Committee
following deliberation by the Risk Management Committee. The Risk Management
Division, which oversees integrated risk
management, measures the amount of risk
exposure both during and at the end of eachmonth, to ensure that quantitative limits
for each type of risk are not exceeded. The
Risk Management Division provides reports
on risk status to senior management andrelated divisions through the Risk Management Committee.
* With regard to subsidiaries within the SCB’s scope of
consolidation, the SCB monitors risk exposure at eachsubsidiary and allocates capital commensurate with theamount of risk. These allocations enable subsidiaries totake risks.

25

Risk Management System
Board of Directors
Division responsible for asset assessment
Credit Planning & Supervision Division

Executive Committee

Risk Management
Committee
Risk Management Division

Risk Management Division

Credit Planning & Supervision Division
Responsible for credit assessment

Responsible for overall management ofoperational risk

Responsible for integrated risk
management

Operations Division
Risk Management Division(Assessment)
Strategic Planning Division (Policy)
Financial Management Division(Calculation)

Responsible for market risk
management
Risk Management Division

Systems Division

Financial Management Division

Responsible for information technology
risk management

General Affairs Division

Risk Management Division, Credit
Planning & Supervision Division

Divisions stipulated by Risk
Management Division

Responsible for liquidity risk
management

Responsible for compliance risk
management

Responsible for the management of otheroperational risk

Responsible for credit control

Market Risk Management Framework

stress losses at times of unexpected market
fluctuations, the basis-point-value (BPV)(changes in the valuation of the market value ofthe portfolio in response to changes in interest rates), and IRRBB (interest rate risk in scenarios specified by the FSA).
The status of these risk management
activities is reported to senior management at
biweekly meetings of the ALM Committee.

Board of Directors
Executive Committee
Decisions

Matters for discussion

Risk Management Committee
ALM Committee
Decisions

Reports

Divisions responsible formarket risk management

Matters for discussion

Market divisions
Mutual checks

Mutual checks

Mutual checks

Administrative control divisions

Market Risk* Management
To maintain an accurate understanding ofmarket risk and rigorously manage this risk,
the SCB has issued a market risk management
policy. Furthermore, divisions responsible formarket risk management are clearly separated
from divisions involved in market operations,providing a risk management structure inwhich internal checks are maintained throughthe independent functions.
The SCB has established the ALM Committee as the body responsible for deliberating and making decisions on matters relating
to m arket risk m an age me nt . The A LM
Committee comprises senior management
and heads of divisions related to market risk.

26

Risk Management Division

Responsible for administrative risk
management

Responsible for capital adequacy

Decisions

ALM
Committee

CreditCommittee

Based on risk status information—obtained
via reports from divisions responsible formanaging market risk and other sources—
the ALM Committee deliberates widely and
expeditiously on policy relating to fundraising and management as well as proposed
market transactions.
For banking operations and trading activities, the divisions responsible for managing
market risk quantify and manage market risk
by VaR within the limit set by the Executive
Committee. In addition, market risk is further
divided into several categories, with risk
quantities monitored by category.
In addition, the SCB manages our exposure on a variety of fronts, such as monitoring* Market risk includes interest rate risk and such equity­
related risk as stock price fluctuation risk.

Liquidity Risk Management
As the central financial institution for shinkinbanks, the SCB maintains a rigorous system
for managing liquidity risk to respond to
the needs of shinkin banks for daily working
capital and emergency funds.
To maintain an accurate understandingof liquidity risk and rigorously manage thisrisk, the SCB has formulated a liquidity risk
management policy. Divisions responsible
for liquidity risk management are clearly
separated from divisions involved in cash
management and market operations, allowinginternal checks to be maintained through theindependent functions. In addition, the ALM
Committee deliberates and makes decisions
on matters relating to liquidity risk management.
Methods used for managing liquidity risk
include the daily setting and monitoring ofrisk limit amounts relating to the gap between
cash receipts and payments. This is carriedout for individual currencies and periods. In
the event that a significant liquidity risk arises,
the SCB is prepared to respond rapidly, andeven secure funding sources.

Shinkin Central Bank Annual Report 2021

Credit Risk* Management
To maintain an accurate understanding ofcredit risk and rigorously manage this risk, the
SCB has formulated a credit risk management
policy. Furthermore, the SCB has formulated
a Credit Policy, which sets out the SCB’s
fundamental philosophy. The SCB requires
strict adherence to the Credit Policy on thepart of all directors and employees involvedin credit operations. The SCB conducts ongoing internal communications emphasizing
the importance of sound ethics in all behavior
and decision making.
At the SCB, divisions responsible for
credit control, credit assessment and asset
assessment are clearly separated from divisions
involved in client services. In this way, we arebuilding a structure in which internal checks
are maintained through the independentfunctions given to each part of the system.
The SCB has established the Credit Committee and the Risk Management Committee
as the bodies responsible for deliberating andmaking decisions on matters relating to credit
risk management. The Credit Committee andthe Risk Management Committee comprisesenior management and the general managers
of related divisions. The Credit Committee deliberates on credit transactions thatexceed a designated amount, and the Risk
Management Committee deliberates broadly
and thoroughly matters relating to credit
risk management. The Executive Committee
deliberates, and makes decisions regarding,
the results of self-assessment of assets andmatters relating to self-assessment of asset
write-offs and asset reserve provisions.
Divisions responsible for credit control
manage the credit risk for each borrower
relating to loans and market trading activities.
An overall credit limit is set for each borrower according to their credit rating.
Credit ratings are based on quantitative
criteria, set by evaluating the borrower’s
financial statements, and qualitative criteria,
set by evaluating the borrower’s competitive
strength in the particular industry within
which it operates. Based on these assessmentsof credit strength, each borrower is given acredit rating on the SCB’s 10-step scale. The
credit ratings given to borrowers are reviewed
regularly, and flexibly revised as necessary.
Divisions responsible for credit control
analyze the SCB’s overall credit portfolio
according to credit rating, industry, country,
and other criteria. These analyses are used
to monitor the diversification of credit risk
as well as changes in portfolio credit risk.
Furthermore, credit risk is quantified andmanaged within the risk limit set by the Executive Committee.
The credit risk amount is measured
using VaR as well as the Monte Carlo simula-tion method.
The Credit Planning & Supervision Division—responsible for credit assessment—
accurately monitors each borrower’s financial
condition, the purposes for which funds areused, and repayment resources. In addition toappropriate assessment and post-transaction
management, the Credit Planning & Supervision Division continually inspects whether theclient service division is conducting appropriate credit controls, and provides guidanceas necessary. In the event that there should
be any problem on the borrower’s side, theCredit Planning & Supervision Division expeditously assesses the borrower’s management
situation and provides supervision. Where
necessary, action is taken to recover the loan.
The Credit Planning & Supervision Division is also responsible for asset assessment.
The division undertakes and manages operations relating to asset self-assessments, andthe calculation of asset write-offs and asset
reserve provisions.
* Credit risk includes such risk as counterparty risk forderivative transactions and securitization transaction
risk.

Operational Risk Management
To comprehensively manage operationalrisks, the SCB has formulated management
guidelines for operational risks, and to address administrative risks, system risks andcompliance risks, which we consider the
major operational risks, we have additionally formulated individual management
guidelines for each of those risks. Furthermore, the SCB has constructed a systemfor comprehensively managing operationalrisks. In addition to having in place a department to comprehensively manage operational risks as well as a department tomanage administrative risks, a department
to manage system risks and a department
to manage compliance risks, we also set up
risk management departments to manageother operational risks as necessary.
The SCB has established the Risk Management Committee as the body responsible fordeliberating and making decisions on mattersrelating to operational risk management. The
Risk Management Committee, comprising senior management and heads of related divisions,deliberates and makes decisions on comprehensive methods for managing operationalrisks, including administrative risks, systemrisks and compliance risks.
Regarding the SCB’s subsidiaries, the
SCB’s Internal Audit Division conducts auditsof the respective systems.
To calculate its operational risk capital requirements, the SCB uses the basic indicator
approach proposed under regulations con-cerning capital adequacy ratios.

• Administrative Risk Management
The Operations Division oversees administrative risk management and administrative
instruction. In addition to developing andmaintaining the administrative processing
system and administrative rules, and undertaking reviews of administrative procedures,the Operations Division conducts administrative instruction programs for divisions
involved in administrative processing. With
this system, the SCB appropriately manages
administrative risk.
Furthermore, the SCB is undertaking a
range of measures to ensure accurate andefficient administrative processing. These
include the systemization of administrative
processing, the provision of various training
programs, including programs, to encourage
staff to submit proposals to improve operatingprocesses at all branches. The SCB also controls the entire process of administrative risk
management, from the identification of risk to
the implementation of corrective measures.

• Information Technology Risk Management
The Systems Division takes charge of information technology risk management. It provides
control and guidance to divisions involved insystem development, operation, and utilization.
Recognizing t h at c y ber at t ack s are
becoming increasingly sophisticated and inge­
nious, the division is stepping up measures
to reinforce its cybersecurity, including theestablishment of the Shinkin Central Bank
Computer Security Incident Response Team.
In the event of a system failure that
seriously affects the execution of business
operations, an SCB-wide response is triggered based on crisis management procedures(contingency planning). In addition to periodically conducting crisis response drills, basedon system failure crisis scenarios, the SCB also
has in place a Disaster Recovery System andother precautions based on the Business Continuity Plan.

• Compliance risk management
The General Affairs Division, which functions
as a department designated for compliancerisk management, manages compliance risks
by a series of processes involving identifying
compliance risks; analyzing and evaluating thecauses, background and range of impact, etc.
of each risk; taking necessary measures tominimize compliance risks; and verifying theresults of the aforementioned.

27

Preferred Shares
The SCB’s Preferred Shares

Trading of Preferred Shares

The SCB issues preferred shares under the
Law Concerning Preferred Shares of Cooperative Financial Institutions. The preferredshares, which are regulated by the Financial
Instruments and Exchange Law, are issued tocomplement members’ (shinkin banks’) common shares and offered publicly to increase thenet worth of cooperative financial institutions.
Although the preferred shares do notcarry the voting rights that holders of common shares receive, the preferred shares havecertain advantages over common shares, suchas the guarantee of priority in the payment
of dividends.

Like listed stocks, the SCB’s preferred sharescan be traded anytime during Tokyo Stock
Exchange trading hours through a securities
company. Credit transactions are also possible
for preferred shares, just as they are for stocks.

Listing of Preferred Shares
The SCB has issued preferred shares since
fiscal 1995 and, for the first time in Japan, thepreferred shares were listed on the Tokyo
Stock Exchange on December 22, 2000 (Securities Identification Code 8421). The SCB’s
preferred shares are marketable securities
that are very similar to preferred stocks,
and, basically, the same listing criteria anddisclosure rules apply to them.

Dividends of Preferred Shares
The SCB’s basic policy is to pay stabledividends while securing sound management,enhancing internal reserves, and boostingearnings power.
The SCB’s preferred shares pay a dividend
to the holders at the end of March of every
fiscal year. As the rule of interim dividends is
not provided in the Law Concerning Preferred
Shares of Cooperative Financial Institutions,
the SCB does not pay interim dividends.
Dividends of preferred shares comprise
preferred dividends and participating dividends.
Preferred dividends are paid before any
dividends are paid to common stock holders(shinkin banks). Participating dividends arepaid from retained earnings after preferred
dividends. They may vary depending on profits
of the SCB.

Composition of Preferred Shares (March 31, 2021)
・Number of Investors (18,295)
Foreign institutions
and others
26(0.1%)
Other corporations
197(1.1%)
Financial institutions
199(1.1%)

Other corporations
33,282(4.7%)(Closing price,yen)First day of listing (December 22, 2000) 200,500
Foreign institutions
and others
1,384(0.2%)

Highest price (March 15, 2006)

311,500

Lowest price (April 14, 2009)

102,400

Closing price (July 31, 2021)

239,500* The price of preferred shares is split-adjusted, reflecting
the stock split of preferred shares as at July 31, 2009.

Individuals
104,475(14.7%)
Individuals
17,863(97.6%)

28

Price of Preferred Shares*

・Number of Subscription (708,222)
Securities companies
7,646(1.1%)

Securities companies
10(0.1%)The SCB’s preferred shares are treatedas stocks in the taxation system, and are given
the same preferential treatment concerning
tax as stocks.
For fiscal 2021, the dividend for preferredshares was ¥6,500 ($58) per share, which
included a preferred dividend of ¥3,000 ($27)
and a participating dividend of ¥3,500 ($31).

Financial institutions
561,435(79.3%)

Financial Section
Contents
29 Five-Year Summary (Consolidated)

36 Notes to Consolidated Financial Statements

30 Consolidated Balance Sheet

81 Independent Auditor’s Report

31 Consolidated Statement of Income

86 Non-Consolidated Balance Sheet

32 Consolidated Statement of Comprehensive Income

87 Non-Consolidated Statement of Income

33 Consolidated Statement of Changes in Net Assets

88 Statement of Trust Account (Consolidated)

35 Consolidated Statement of Cash Flows

Five-Year Summary (Consolidated)
FY2016FY2017FY2018(Millions of Yen)FY2019FY2020Total Income

319,307306,892

293,808

301,954

261,011

Trust Fees

595

351

399

759

1,258

Total Expenses

266,503

244,018

231,873245,596

217,585

Profit Attributable to Owners of Parent

43,871

44,46644,78140,22731,649Comprehensive Income

11,056

20,43353,530(90,508)

196,771

Net Assets

1,625,842

1,626,605

1,660,465

1,550,287

1,727,321

Total Assets

37,464,593

38,790,449

39,693,375

40,868,096

43,843,528

Net Assets per Share (Yen)

299,542.84

299,587.63

306,594.84

283,111.71

320,620.85

Net Income per Share (Yen)

6,223.20

6,311.86

6,358.89

5,679.98

4,401.33

19,603

19,603

19,603

19,603

19,603General Common Shares

12,00012,00012,00012,00012,000Specific Common Shares

3,000

3,000

3,000

3,000

3,000

Preferred Shares

4,603

4,603

4,603

4,603

4,603

Total Trust Assets

1,859,161

525,445807,201

1,320,957

2,015,700

Dividends

Notes:
1. National and local consumption tax incurred by the Shinkin Central Bank and its domestic consolidated subsidiaries are
excluded from transaction amounts.
2. “Total Trust Assets” is calculated by means of simple aggregation of the trust assets for each consolidated company conducting
trust business pursuant to the “Act on Engagement in Trust Business Activities by Financial Institutions”. Consolidated
companies conducting such trust business comprised the Shinkin Central Bank and Shinkin Trust Bank, Ltd. in the fiscal year
ended March 31, 2017, and from the fiscal year ended March 31, 2018 comprised the Shinkin Central Bank.

29

Consolidated Balance Sheet
Shinkin Central Bank As of March 31,
AssetsCash and Due from Banks (Note 2 (2), 26)
Bills Bought and Call Loans (Note 26)
Receivables under Resale Agreements (Note 26)
Receivables under Securities Borrowing Transactions (Note 26)
Monetary Claims Bought (Note 26)
Trading Assets (Note 3, 9, 26, 27)
Money Held in Trust (Note 26, 27)
Securities (Note 4, 7, 9, 26, 27)Loans and Bills Discounted (Note 5, 6, 9, 26)
Foreign Exchanges Assets
Other Assets (Note 9)
Tangible Fixed Assets (Note 8, 14, 25)
Intangible Fixed Assets (Note 25)
Deferred Tax Assets (Note 23)
Customers' Liabilities for Acceptances and Guarantees
Reserve for Possible Loan Losses
Total Assets

30

2021

Millions of Yen

2020

Millions of
U.S. Dollars(Note 1)2021

15,063,421
494,181367,229
180,309
280,431108,030
17,724,041
8,446,047
20,676921,687
73,10020,714
4,008
169,612(29,963)
43,843,528

13,532,061
107,166
20,7251,430
222,175
411,275
103,727
16,456,230
8,468,123
79,114
1,187,809
74,61322,312
4,394
208,005(31,070)
40,868,096

136,086
4,464
3,317
1,628
2,533
975
160,123
76,303
186
8,326
660
187
36
1,532
(270)
396,092

Liabilities and Net Assets
Liabilities
Deposits (Note 26)
Debentures (Note 12, 26)
Trading Liabilities (Note 10, 26)
Borrowed Money (Note 9, 11, 26)
Bills Sold and Call Money (Note 26)
Payables under Repurchase Agreements (Note 9, 26)
Payables under Securities Lending Transactions (Note 9, 26)
Foreign Exchanges Liabilities
Borrowed Money from Trust Account
Other Liabilities (Note 11, 13)
Reserve for Employee Bonuses
Reserve for Directors' Bonuses
Net Defined Benefit Liability (Note 24)
Reserve for Directors' Retirement Allowances
Reserve under Specific Law
Deferred Tax Liabilities (Note 23)
Deferred Tax Liabilities for Land Revaluation (Note 14)
Acceptances and Guarantees
Total Liabilities

33,752,872
1,770,870
31,6254,020,480
10,166
287,020
1,702,956
2,055
30,300190,891
1,806
91
41,943532
196,8996,081
169,612
42,116,207

31,173,847
2,134,520
37,5583,250,980
46,191
232,066
1,788,395
1,413
22,021
335,863
1,812
90
44,539650
133,7706,081
208,005
39,317,809

304,931
15,998285
36,32191
2,593
15,384
18
273
1,724
16
0
378
4
0
875
54
1,532
380,487

Net Assets
Common Shares and Preferred Shares (Note 22)
Capital Surplus
Retained Earnings
Total Shareholders' Equity
Net Unrealized Gains (Losses) on Other Securities (Note 23, 27)
Deferred Gains or Losses on Hedges (Note 23, 28)
Land Revaluation Excess (Note 14)
Foreign Currency Translation Adjustments
Remeasurements of Defined Benefit Plans (Note 24)
Total Accumulated Other Comprehensive Income
Non-Controlling Interests
Total Net Assets
Total Liabilities and Net Assets

690,998
100,678
627,964
1,419,641
307,894(20,577)
14,894(3,408)(3,764)
295,037
12,642
1,727,321
43,843,528

690,998
100,678
615,918
1,407,595
279,543(153,703)
14,894(3,237)(7,014)130,482
12,2091,550,287
40,868,096

6,242
909
5,673
12,825
2,781
(185)
134
(30)
(34)
2,665
114
15,605396,092

The accompanying notes are an integral part of these financial statements.

Consolidated Statement of Income
Shinkin Central Bank For the year ended March 31,
IncomeInterest Income:Interest on Loans and Discounts
Interest on Due from Banks
Interest on Bills Bought and Call Loans
Interest on Receivables under Resale Agreements
Interest on Receivables under Securities Borrowing Transactions
Interest and Dividends on Securities
OthersTrust Fees
Fees and Commissions (Note 16)
Trading Income (Note 17)
Other Operating Income
Other Income (Note 19)
Total Income

Expenses
Interest Expenses:
Interest on Deposits
Interest on Debentures
Interest on Borrowed Money
Interest on Bills Sold and Call Money
Interest on Payables under Repurchase Agreement
Interest on Payables under Securities Lending Transactions
OthersFees and Commissions (Note 16)
Trading Losses (Note 18)
Other Operating Expenses
General and Administrative Expenses
Other Expenses (Note 20)
Total Expenses

Profit before Income Taxes
Income Taxes (Note 23):
Current
Deferred
Total Income Taxes
ProfitProfit Attributable to Non-Controlling Interests
Profit Attributable to Owners of Parent

2021

Millions of Yen

2020

175,162
17,565
7,756
80(1,226)(0)150,507478
1,258
41,175
1,507
31,09810,809261,011207,202
20,371
9,026
670
(780)
0
176,804
1,109
759
44,151
2,001
45,067
2,772
301,954

1,582
158
70
0
(11)
(0)
1,359
4
11
371
13
280
97
2,358

83,93033,296
1,691
1,966
60
149
3,289
43,476
14,90015560,75854,7153,125
217,585

113,700
41,878
3,077
1,795
590
1,748
19,78444,824
16,243
54,11953,645
7,888
245,596

758
300
15
17
0
1
29
392
134
1
548
494
28
1,965

43,42656,358392

11,32857
11,38532,040390
31,64916,066(409)
15,65640,701
474
40,227

102
0
102
289
3
285

2020
5,679.98
3,000.00
1,500.00
6,500.00

U.S. Dollars(Note 1)
2021
39.76
27.10
13.55
58.72

Yen

Net Income per Share (Note 31)
Dividend Declared per Share (General Common Shares)
Dividend Declared per Share (Specific Common Shares)
Dividend Declared per Share (Preferred Shares)

Millions of
U.S. Dollars(Note 1)2021

2021
4,401.33
3,000.00
1,500.00
6,500.00

The accompanying notes are an integral part of these financial statements.

31

Consolidated Statement of Comprehensive Income
Shinkin Central Bank For the year ended March 31,
ProfitOther Comprehensive Income (Note 21)
Net Unrealized Gains (Losses) on Other Securities
Deferred Gains or Losses on Hedges
Foreign Currency Translation Adjustments
Remeasurements of Defined Benefit Plans
Comprehensive Income
Comprehensive Income Attributable to Owners of Parent
Comprehensive Income Attributable to Non-Controlling Interests
The accompanying notes are an integral part of these financial statements.

32

2021

Millions of Yen

32,040164,730
28,350133,125(170)
3,425
196,771
196,204566

2020

40,701(131,209)(44,139)(87,070)
145(144)(90,508)(90,960)
451

Millions of
U.S. Dollars(Note 1)
2021
289
1,488
256
1,202
(1)
30
1,777
1,772
5

Consolidated Statement of Changes in Net Assets
Shinkin Central Bank For the year ended March 31, 2021

Millions of Yen
Shareholders' Equity
Common Shares and Preferred
SharesBalance at Beginning of Year

Capital Surplus

690,998

Retained Earnings
100,678

Total Shareholders' Equity
615,918

1,407,595

Surplus Dividends(19,603)(19,603)

Profit Attributable to Owners of Parent

31,64931,649Fluctuation Amount during the Fiscal YearNet Changes in Items Other Than Shareholders'Equity during the Fiscal Year
Total Fluctuation Amount during the Fiscal Year
Balance at End of Year--

12,046

12,046690,998

100,678

627,964

1,419,641

Accumulated Other Comprehensive Income
Net Unrealized
Gains (Losses)
on Other
Securities
Balance at Beginning of Year279,543

Deferred Gains
Land Revaluationor Losses on
ExcessHedges(153,703)

Total
Remeasurements Accumulatedof Defined Benefit
Other
Plans
Comprehensive
IncomeForeign
Currency
Translation
Adjustments

14,894(3,237)(7,014)130,482

NonControlling
Interests

Total Net
Assets

12,2091,550,287

Fluctuation Amount during the Fiscal Year
Surplus Dividends(19,603)

Profit Attributable to Owners of Parent

31,649Net Changes in Items Other Than Shareholders'Equity during the Fiscal Year

28,350133,125

-

(170)

3,249

164,555432

164,987

Total Fluctuation Amount during the Fiscal Year

28,350133,125

-

(170)

3,249

164,555432

177,034

Balance at End of Year

307,894(20,577)

14,894(3,408)(3,764)

295,037

12,642

1,727,321

Millions of U.S. Dollars (Note 1)
Shareholders' Equity
Common Shares and Preferred
SharesBalance at Beginning of Year

Capital Surplus

6,242

Retained Earnings
909

Total Shareholders' Equity
5,564

12,716

Surplus Dividends

(177)

(177)

Profit Attributable to Owners of Parent

285

285

Fluctuation Amount during the Fiscal YearNet Changes in Items Other Than Shareholders'Equity during the Fiscal Year
Total Fluctuation Amount during the Fiscal Year
Balance at End of Year

-

-

108

108

6,242

909

5,673

12,825

Accumulated Other Comprehensive Income
Net Unrealized
Gains (Losses)
on Other
Securities
Balance at Beginning of Year

2,525

Deferred Gains
Land Revaluationor Losses on
ExcessHedges(1,388)134

Foreign
Currency
Translation
Adjustments
(29)

Total
Remeasurements Accumulatedof Defined Benefit
Other
Plans
Comprehensive
Income(63)

1,178

NonControlling
Interests

Total Net
Assets110

14,005

Fluctuation Amount during the Fiscal Year
Surplus Dividends(177)

Profit Attributable to Owners of Parent

285

Net Changes in Items Other Than Shareholders'Equity during the Fiscal Year
Total Fluctuation Amount during the Fiscal Year
Balance at End of Year

256

1,202

-

(1)

29

1,486

3

1,490

256

1,202

-

(1)

29

1,486

3

1,599

2,781

(185)

134

(30)

(34)

2,665

114

15,60533

Shinkin Central Bank For the year ended March 31, 2020

Millions of Yen
Shareholders' Equity
Common Shares and Preferred
SharesBalance at Beginning of Year

Capital Surplus

690,998

Retained Earnings
100,678

Total Shareholders' Equity
595,294

1,386,971

Surplus Dividends(19,603)(19,603)

Profit Attributable to Owners of Parent

40,22740,227

Fluctuation Amount during the Fiscal YearNet Changes in Items Other Than Shareholders'Equity during the Fiscal Year
Total Fluctuation Amount during the Fiscal Year
Balance at End of Year--

20,623

20,623690,998

100,678

615,918

1,407,595

Accumulated Other Comprehensive Income
Net Unrealized
Gains (Losses)
on Other
Securities
Balance at Beginning of Year323,683

Deferred Gains
Land Revaluationor Losses on
ExcessHedges(66,632)

14,894Foreign
Currency
Translation
Adjustments(3,383)Total
Remeasurements Accumulated
Otherof Defined Benefit
Plans
Comprehensive
Income(6,892)

261,669

NonControlling
Interests

11,824

Total Net
Assets1,660,465

Fluctuation Amount during the Fiscal Year
Surplus Dividends(19,603)

Profit Attributable to Owners of Parent

40,227

Net Changes in Items Other Than Shareholders'Equity during the Fiscal Year

(44,139)(87,070)

-

145

(122)

(131,187)

384(130,802)

Total Fluctuation Amount during the Fiscal Year

(44,139)(87,070)

-

145

(122)

(131,187)

384(110,178)

Balance at End of Year279,543(153,703)

14,894(3,237)(7,014)130,482

12,2091,550,287

The accompanying notes are an integral part of these financial statements.

34

Consolidated Statement of Cash Flows
Millions of
U.S. Dollars
Shinkin Central Bank For the year ended March 31,
Cash Flows from Operating Activities:
Profit before Income Taxes
Depreciation
Impairment Loss
Increase (Decrease) in Reserve for Possible Loan Losses
Increase (Decrease) in Reserve for Employee Bonuses
Increase (Decrease) in Reserve for Directors' Bonuses
Increase (Decrease) in Net Defined Benefit Liability
Increase (Decrease) in Reserve for Directors' Retirement AllowancesInterest Income
Interest Expenses
Net Losses (Gains) on Securities
Net Losses (Gains) on Money Held in Trust
Net Losses (Gains) on Foreign Exchange
Net Losses (Gains) on Disposal of Fixed Assets
Net Decrease (Increase) in Trading Assets
Net Increase (Decrease) in Trading Liabilities
Net Increase (Decrease) in Trading Payables
Net Decrease (Increase) in Loans and Bills Discounted
Net Increase (Decrease) in Deposits
Net Increase (Decrease) in Debentures
Net Increase (Decrease) in Borrowed Money (Excluding Subordinated Borrowings)
Net Decrease (Increase) in Due from Banks (Excluding Due from Central Bank)Net Decrease (Increase) in Call Loans and Others
Net Decrease (Increase) in Receivables under Securities Borrowing Transactions
Net Increase (Decrease) in Call Money and Others
Net Increase (Decrease) in Payables under Securities Lending Transactions
Net Decrease (Increase) in Monetary Claims Bought
Net Decrease (Increase) in Foreign Exchanges (Assets)
Net Increase (Decrease) in Foreign Exchanges (Liabilities)
Net Increase (Decrease) in Due to Trust Accounts
Interest Received
Interest Paid
Other, Net
Sub-total
Income Taxes Paid
Net Cash Provided by (Used in) Operating Activities

2021

Millions of Yen(Note 1)
2021

2020

43,426
10,259(1,106)(5)
1(2,596)(117)(175,162)
83,9303,251(440)(112,246)
127
130,844(5,932)(9,088)22,0752,579,025(363,650)
769,500(166,116)(733,519)
1,430
18,929(85,439)
41,86658,437641
8,278
216,361(97,318)
197,501
2,433,146(16,472)
2,416,674

56,358
11,266
86
832
33
4
2,133
63
(207,202)
113,700(7,908)(529)
67,494266(162,689)(34,607)
30,515(1,429,337)
232,549(349,780)
1,283,800
88,688677,995
21,79887,601
3,849(443)(57,984)
16
7,996
261,547(136,007)(215,922)
346,184(13,440)
332,744

392
92
(9)
(0)
0
(23)
(1)
(1,582)758
29(3)(1,014)
1
1,182
(53)
(82)
199
23,299(3,285)
6,951(1,500)(6,626)
12
171
(771)
378
527
5
74
1,954
(879)
1,784
21,981(148)
21,832

Cash Flows from Investing Activities:
Acquisitions of Securities
Proceeds from Sale of Securities
Proceeds from Redemption of Securities
Increase in Money Held in Trust
Decrease in Money Held in Trust
Acquisitions of Tangible Fixed Assets
Acquisitions of Intangible Fixed Assets
Proceeds from Sales of Tangible Fixed Assets
Net Cash Provided by (Used in) Investing Activities(11,019,193)
1,092,846
8,902,375(10,004)
10,000(2,729)(5,032)90(1,031,648)(3,688,121)
1,437,278
2,182,320(60)
39,839(2,724)(7,771)(39,240)(99,550)
9,873
80,426
(90)
90
(24)
(45)
0
(9,320)Cash Flows from Financing Activities:
Dividends Paid
Dividends Paid to Non-Controlling Interests
Net Cash Provided by (Used in) Financing Activities(19,603)(133)(19,737)(19,603)(66)(19,670)

(177)
(1)
(178)

0
1,365,289
13,127,527
14,492,817(0)
273,834
12,853,693
13,127,527

0
12,334
118,597
130,931

Effect of Exchange Rate Changes on Cash and Cash Equivalents
Net Increase (Decrease) in Cash and Cash Equivalents
Cash and Cash Equivalents at Beginning of Period
Cash and Cash Equivalents at End of Period (Note 2 (2) )The accompanying notes are an integral part of these financial statements.

35

Notes to Consolidated Financial Statements
1. Basis of Presentation:
The accompanying consolidated financial statements have been
prepared from the accounts maintained by Shinkin Central Bank (the“Bank”) and its consolidated subsidiaries in accordance withaccounting principles and practices generally accepted in Japan thatare different in certain respects from the application and disclosure
requirements of International Financial Reporting Standards.
Certain items presented in the consolidated financial statements
have been reclassified for the convenience of readers outside Japan.
The amounts in Japanese yen are presented in millions of yen by
rounding down figures. As a result, the totals in yen shown in the
consolidated financial statements do not necessarily agree with thesums of the individual account balances.
U.S. dollar amounts represent the arithmetical results oftranslating original Japanese yen amounts of the respective accountbalances to U.S. dollars on a basis of ¥110.69 to U.S.$1, the exchange
rate prevailing as of March 31, 2021. The amounts in U.S. dollars arepresented in millions of U.S. dollars by rounding down figures. As aresult, the totals in U.S. dollars shown in the consolidated financial
statements do not necessarily agree with the sums of the individual
account balances. The U.S. dollars amounts are included solely forthe convenience of readers outside Japan and this translation should
not be construed as representation that Japanese yen amounts havebeen or could be readily converted, realized or settled in U.S. dollars
at that or at any other rates.
2. Significant Accounting Policies:(1) Principles of Consolidation
The consolidated financial statements include the accounts of the
Bank and its eight consolidated subsidiaries as of March 31, 2021
listed below:
Ownership
Name
Location
Percentage
The Shinkin Banks Information
System Center Co., Ltd.
Tokyo
50.7%
Shinkin International Ltd.
London100%
Shinkin Chukin Business Co., Ltd.
Tokyo
100%
Shinkin Asset Management Co., Ltd.
Tokyo
100%
Shinkin Securities Co., Ltd.
Tokyo
100%
Shinkin Capital Co., Ltd.
Tokyo
100%
Shinkin Guarantee Co., Ltd.
Tokyo
100%
Shinkin Singapore Pte. Ltd.
Singapore100%(*) Shinkin Singapore Pte. Ltd. was established on February 3, 2021, and,
therefore, has been included in the scope of consolidation from the current
fiscal year.

Unconsolidated subsidiaries
Shinkin no Kizuna Investment Limited Partnership
Shinkin no Tsubasa Investment Limited Partnership
Shinkin no Ishizue Investment Limited Partnership
Unconsolidated subsidiaries are excluded from the scope of
consolidation because their total assets, total income, net income(amount based on the equity method), retained earnings (amountbased on the equity method) and accumulated other comprehensive
income (amount based on the equity method) are immaterial and do
not hinder a rational judgment of the Bank’s financial condition andresults of operation when excluded from the scope of consolidation.
The fiscal year and the closing date thereof for the financial
statements of the consolidated subsidiaries are consistent with thoseof the Bank, except for Shinkin International Ltd. and Shinkin

36

Singapore Pte. Ltd., which have a fiscal year ended on December 31.
For the consolidation of the subsidiary, the Bank makes appropriate
adjustments for any material transactions subsequent to December 31.
All significant intercompany accounts and transactions havebeen eliminated in consolidation. The Bank’s share of net assets ofsubsidiaries is valued at fair value on acquisition. Non-controllinginterests in net assets of subsidiaries are valued at fair value on
acquisition in the consolidated financial statements. The excess of thecost over the fair value of the underlying net equity in subsidiaries onacquisition is expensed when incurred.
The application of equity-method to unconsolidated subsidiaries andaffiliates is as follows:
Non-consolidated equity-method subsidiaries:
N/A
Affiliated equity-method companies:
N/A
Unconsolidated subsidiaries that are not accounted for by the equity
method:Shinkin no Kizuna Investment Limited Partnership
Shinkin no Tsubasa Investment Limited Partnership
Shinkin no Ishizue Investment Limited Partnership
Unconsolidated subsidiaries that are not accounted for by theequity method are excluded from the scope of equity method because
their effect on the accompanying consolidated financial statements, interms of net income (amount based on the equity method) andretained earnings (amount based on the equity method), would not bematerial.
Affiliated companies to which the equity method is not applied due toimmateriality:
Aozora Loan Services Co., Ltd.
(2) Cash and Cash Equivalents
In the consolidated statement of cash flows, “Cash and Cash
Equivalents” consist of Cash and Due from Central Bank.
Reconciliation between Cash and Due from Banks in the
consolidated balance sheet and Cash and Cash Equivalents at March
31, 2021 and 2020 is as follows:
Millions ofMillions of Yen
U.S. Dollars
2021
2020
2021
Cash and Due fromBanks

15,063,421

13,532,061

136,086

Due from Banks(Excluding Duefrom Central Bank)(570,604)(404,534)(5,154)

14,492,817

13,127,527

130,931

Cash and Cash
Equivalents(3) Trading Assets and Liabilities
Transactions for “Trading Purposes” (for purposes of seeking tocapture gains arising from short-term changes in interest rates,
currency exchange rates or market prices of financial instruments andother market related indices or from gaps among markets) are
included in “Trading Assets” and “Trading Liabilities” on the
consolidated balance sheet on a trade date basis. In addition, gains
and losses from “Trading Assets” and “Trading Liabilities” arerecorded as “Trading Income” and “Trading Losses” on the
consolidated statement of income on a trade date basis.

Securities and Monetary Claims Bought for trading purposes
are stated at fair value at the fiscal year end. Trading-related financial
derivatives such as swaps, futures and options are stated at theamounts that would have been delivered for settlement as of the fiscal
year end date.
(4) Financial Instruments(i) Securities
The Bank and its consolidated subsidiaries classify securities into
three categories: held-to-maturity debt securities, investments inaffiliates that are not accounted for by the equity method, and othersecurities. Held-to-maturity debt securities are stated at cost and areamortized by the straight-line depreciation method using themoving-average method. Investments in affiliates that are notaccounted for by the equity method are stated at cost using themoving-average method. Stocks and investment trusts in othersecurities are stated based on the average quoted market price over amonth preceding the balance sheet date and others are stated at fairvalue based on quoted market prices at the balance sheet date andother applicable information (and the cost of securities sold is mainly
determined using the moving-average method). Other securities
where there is significant difficulty in determining fair value arestated at cost using the moving-average method.
The full amount of net unrealized gains or losses on othersecurities is recorded directly within Net Assets.
Securities included as trust property in “Money Held in Trust”
are stated in the same manner as above.
(ii) Derivative Transactions
Derivative transactions are stated at fair value.
(iii) Hedge Accounting(a) Hedge of Interest Rate Risk
The Bank applies the deferred method of hedge accounting describedin the Japanese Institute of Certified Public Accountants (JICPA)
Industry Committee Practical Guidelines No. 24, October 8, 2020
“Accounting and Auditing Treatment of Accounting Standards for
Financial Instruments in Banking Industry” to transactions to hedge
against interest rate risk arising from the financial assets andliabilities.
Effectiveness of a fair value hedge is assessed for each of theidentified group of hedged items such as loans and deposits, andcorresponding group of hedging instruments such as interest rate
swaps with the same maturity bucket. Effectiveness of a cash flow
hedge is assessed based on the correlation between an interest raterisk factor of the hedged items and that of the hedging instruments.
For certain assets and liabilities, the exceptional treatment forinterest rate swaps is applied.
(b) Hedge of Foreign Exchange Fluctuation Risk
The deferred method of hedge accounting is applied to transactions tohedge against foreign exchange fluctuation risks associated with
monetary assets and liabilities denominated in foreign currencies inaccordance with the regulations set forth in JICPA Industry
Committee Practical Guidelines No. 25, October 8, 2020 “Accounting
and Auditing Treatment of Accounting Standards for Foreign
Currency Transactions in the Banking Industry”.
To minimize foreign exchange fluctuation risk on monetary
assets and liabilities, the Bank has engaged in currency swaps,
foreign exchange swaps, and similar transactions. Effectiveness ofthese transactions in the hedging of foreign exchange risks ofmonetary assets and liabilities denominated in foreign currencies isassessed through comparison of the foreign currency position of thehedged monetary assets and liabilities and that of the hedging
instruments.
The Bank has also applied fair value hedge accounting to theforeign exchange risk of other securities in foreign currency (otherthan bonds) when the hedged foreign currency securities are specified
prior to the commencement of transactions, and there exists spot andforward liabilities exceeding the acquisition costs of the foreign
currency securities designated as hedged items on a foreign currency
basis.
(c) Internal Derivative Transactions
Internal derivative transactions between trading accounts and otheraccounts, which are designated as hedges, are not eliminated andrelated gains and losses are recognized in the consolidated statementof income or deferred under hedge accounting because the internalinterest rate swaps and currency swaps transactions, etc. designated as
hedging instruments are conducted in a manner without any
subjection and are appropriately covered by third party transactions
conducted in accordance with the standard articulated by Industry
Committee Practical Guidelines No. 24 and No. 25.
(d) Others
Given that deferred hedge using interest rate swaps and exceptional
treatment of interest rate swaps to offset market fluctuations onhedged items of loans, other securities (bonds) and held-to-maturity
debt securities are affected by the discontinuing publication of
London Inter-Bank Offered Rate (LIBOR) and transition toalternative reference rate, the Bank has adopted “Treatment of Hedge
Accounting for Financial Instruments that Reference LIBOR”(Practical Issues Task Force Report No. 40, September 29, 2020) to
avoid impact on the continuation of hedging relationship.
(5) Tangible Fixed Assets (excluding Leased Assets)
Tangible fixed assets of the Bank are depreciated by the decliningbalance method. However, buildings acquired on or after April 1,
1998 (excluding facilities installed in buildings), and facilities
installed in buildings and structures that are acquired on or after April
1, 2016, are depreciated by the straight-line method.
The estimated useful lives of major items are as follows:
Buildings ................. 5 to 50 years
Others ...................... 3 to 20 years
Tangible fixed assets of consolidated subsidiaries are, in
principle, depreciated by the declining balance method, based on theirestimated useful lives.
(6) Intangible Fixed Assets (excluding Leased Assets)
Intangible fixed assets are amortized by the straight-line method. The
costs of software for internal use are amortized by the straight-line
method, mainly 5 year period (the estimated useful life of thesoftware).
(7) Leased Assets
Leased assets of Tangible Fixed Assets and Intangible Fixed Assets
related to finance leases that do not transfer ownership are
depreciated by the straight-line method with estimated useful lives
equal to lease terms, and zero residual values.
(8) Deferred Debenture Charges
Debenture charges are expensed in the fiscal year of issuance.

37

38

(9) Reserve for Possible Loan Losses
Reserve for possible loan losses of the Bank is provided inaccordance with the internal rules for self-assessments of asset quality
and write-offs and provisioning criteria predetermined by the Bank asfollows:
The amounts of write-offs and provisions are calculated based on the
result of self-assessments of the borrower classification, etc. The
Bank has the credit risk rating system as a method for assessing credit
risk to determine the borrower classification appropriately. Based on
this system, the borrower classification for self-assessments are
determined. The credit rating evaluates the degree of a borrower’s
creditworthiness, such as its debt servicing capacity, and classifies theborrower on a scale of 10. The classification reflects qualitative
factors such as the evaluation of industry to which the borrower
belongs and competitiveness within the industry, in addition to thequantitative evaluation based on the borrower's financial information.
The credit rating is reviewed on a regular basis once a year, and isalso reviewed as needed, such as when there are changes in thecreditworthiness of the borrower.
The reserve is provided for loans to borrowers who areclassified as substantially bankrupt or who are bankrupt in the legal
sense as a result of the self-assessment of asset quality, at 100% of thecarrying amount remaining after write-offs and deducting the amount
expected from the realization of collateral and the execution ofguarantees. In addition, a reserve is provided for loans to borrowers
who are not currently bankrupt but are highly likely to go bankrupt(“Probably Bankrupt Borrowers”). In such cases, the reserve isprovided at the amount deemed necessary based on the borrower’s
debt servicing capacity after deducting the amount expected from therealization of collateral and the execution of guarantees.
The Bank calculates the amount of reserve by the cash flow
estimate method. For borrowers classified as Probably Bankrupt
Borrowers or borrowers with large exposures who have restructuredloans (“Intensive Control Borrowers”) to whom loan receivables are
renegotiated, cash flows are reliably estimated based on therepayment plan prepared by the borrowers, creditworthiness, theBank's lending policies and default rate of an external credit rating
agencies, the amount of reserve for possible loan losses is set at thedifference between the book values of the loans and the amounts
calculated by discounting by the original contractual interest rates the
cash flows that are reliably estimated based on the repayment plan
prepared by the borrowers, creditworthiness, the Bank's lending
policies and default rates of an external credit rating agencies.
For all other loans to Intensive Control Borrowers and otherborrowers (other special attention borrowers) who warrant special
attention for future management, the Bank estimates the amount of
expected losses over the next three years. The amount of expected
losses is calculated by determining the expected loss ratio based on
the average of the historical charge-off ratios over the past three years,
and adding necessary adjustments such as future prospects.
For the borrowers (Performing) who are recognized to havegood business performance and no particular financial problems, areserve is expected for the next 1 year and provided based on the ratioof the average value of the bad debt rate calculated by the bad debt
record for 1 year with necessary adjustments such as future prospects.
All claims are assessed by the Operating Related Division basedon internal rules for self-assessments of asset quality. Subsequently,
the Asset Auditing Division, that is independent from the Operating
Related Division, audits these self-assessments. The reserve isprovided based on the results of the assessments.
For loans to Bankrupt Borrowers and Substantially Bankrupt
Borrowers, amounts deemed uncollectible, which are calculated after

deduction of expected collection from the realization of collateral andthe execution of guarantees, are written off. The amount written off
was ¥320 million ($2 million) as of March 31, 2021 and ¥320 million
as of March 31, 2020.
Reserve for possible loan losses of the consolidated subsidiaries
for general claims is provided as the amounts deemed necessary
based on the default rate calculated from actual default during acertain period in the past, and for doubtful claims as the amounts
deemed uncollectible based on the assessment of each claim.
(10) Reserve for Employee Bonuses
Reserve for Employee Bonuses is set aside to pay employee bonuseswith respect to the portion of estimated bonus payments to employeesthat correspond to this fiscal year.
(11) Reserve for Directors’ Bonuses
Reserve for Directors’ Bonuses is set aside to pay directors andcorporate auditors bonuses with respect to the portion of estimatedbonus payments to directors and corporate auditors that correspond to
this fiscal year.
(12) Reserve for Directors’ Retirement Allowances
Reserve for Directors’ Retirement Allowances provided for by the
Bank is calculated based on the estimated allowances to be paid up to
the end of this fiscal year.
(13) Reserve under Specific Law
This reserve amount is calculated pursuant to Article 46-5, Paragraph
1 of the “Financial Instruments and Exchange Act” and Article 175 of
the “Cabinet Office Ordinance on Financial Instruments Business” toindemnify any losses incurred from accidents in the conduct ofmarket derivative transactions on behalf of clients.
(14) Employees’ Retirement Benefits
The Bank accounted for retirement benefit obligation based on the
projected benefit obligations. The projected benefit obligations are
attributed to periods on a benefit formula basis. The methods foramortizing prior service costs and actuarial differences are as follows:
Prior service costs:
Prior service costs are amortized, using the straight-line method overa certain number of years (10 years) within the average remaining
service period of current employees at the time the cost is incurred.
Actuarial differences:
Actuarial differences are amortized from the following year, using thestraight-line method over a certain number of years (10 years) within
the average remaining service period of current employees at eachtime the cost is incurred.
Also, certain consolidated subsidiaries calculate the net defined
benefit liability and retirement benefit cost using the simplified
method which assumes the retirement benefit obligation to be equal
to the amount necessary to pay for the voluntary resignation for all
employees at the fiscal year-end.
(15) Translation of Foreign Currency-Denominated Assets andLiabilities
Foreign currency-denominated assets and liabilities are translated into
Japanese yen at exchange rates prevailing at the end of the fiscal year.
Foreign currency-denominated assets and liabilities of consolidated
subsidiaries are translated into Japanese yen at exchange rates
prevailing at the end of the fiscal year.

(16) Consumption Tax
National and local consumption tax incurred by the Bank and its
domestic consolidated subsidiaries are excluded from transaction
amounts. However, national and local consumption tax paid onpurchases of tangible fixed assets and intangible fixed assets, which
are not deductible as a tax credit, are expensed in this fiscal year.
(17) Amortization of Goodwill
Goodwill is fully amortized in the fiscal year incurred.
(18) Accounting Principles and Procedures Adopted when theProvisions of Relevant Accounting Standards, etc. are not Clear
Contract cancellation revenue and gains on redemptions ofinvestment trusts are included in “Interest Income (Interest andDividends on Securities)” and losses on cancellation and redemptionsof investment trusts are included in “Other Operating Expenses” inthe consolidated statement of income.
(Additional information)
The Bank adopted the “Accounting Standard for Accounting Policy
Disclosures, Accounting Changes and Error Corrections” (ASBJ
Statement No. 24, revised on March 31, 2020) in the consolidated
financial statements as of the end of and for the fiscal year ended
March 31, 2021, and therefore disclosed adopted accounting
principles and procedures when there are no specific provisions
involved such accounting standards.
(19) Significant Accounting Estimates
Reserve for Possible Loan Losses(i) The amount recorded in the consolidated financial statements forthe current fiscal year
Reserve for Possible Loan Losses ¥29,963 million ($270 million)(ii) Information on details of significant accounting estimate ofidentified items(1) Method of calculation
Method of calculation is described in the “Note 2 Significant
Accounting Policies (9) Reserve for Possible Loan Losses”.
(2) Key assumptions(a) The impact of COVID-19 on economic activities and outlook ofborrowers’ performance when determining borrower classification
The Bank assumes that the impact of the stagnation in economic
activities caused by the COVID-19 pandemic would persist until theend of fiscal year 2021, that the pace of recovery in economic andcorporate activities would be extremely slow during that period, andamong other things, that the business performance of certain
industries, such as airlines and natural resources, would besignificantly affected over a certain period of time.
These assumptions consider changes in the number of people infectedwith COVID-19 and current status of vaccination and uses objective
information such as outlook of worldwide air travel demand of theInternational Air Transport Association (IATA) and of world energy
demand of The International Energy Agency (IEA).
In the consolidated financial statements for the fiscal year ended
March 31, 2021, based on the above assumptions, classification of thespecific borrowers is determined considering such factors if their
future performance is expected to be significantly affected by theseassumptions.
(b) Inputs of the cash flow estimate method
The Bank calculates the amount of reserve for possible loan losses by
the cash flow estimate method if the borrowers are classified as
Probably Bankrupt Borrowers or Intensive Control Borrowers withlarge exposures.

Key assumptions of the cash flow estimate are the repayment
schedule prepared by the borrower, creditworthiness, the Bank's
lending policies and default rates of an external credit ratingorganization according to the credit condition of borrower.
(3) Effects on the consolidated financial statements in the fiscal year
ending March 31, 2022
Though the key assumptions include how the COVID-19 will spreadout or when it will be settled, there are no precedents or
widely-agreed view that can be used as reference. Accordingly, theBank makes a best estimate based on certain assumptions, available
external information and an approval of decision-making body inaccordance with the internal rules. However, the assumptions used in
the estimates incorporate uncertainty and, if there are changes in
conditions of the COVID-19 pandemic or changes in its impact on theeconomic activities, the performance of borrowers may be affected
and a reserve for possible loan losses to be recorded in the
consolidated financial statements for the fiscal year ending March 31,
2022 may be significantly affected.
If the assumptions used in the initial estimate are changed due tochanges in the borrowers’ performance, inputs used for the cash flow
estimate method may significantly affect a reserve for possible loan
losses to be recorded in the consolidated financial statements for the
fiscal year ending March 31, 2022.
(20) Accounting Standards Issued but not yet Adopted- “Accounting Standard for Revenue Recognition” (ASBJ Statement
No. 29, revised on March 31, 2020)- “Implementation Guidance on Accounting Standard for Revenue
Recognition” (ASBJ Guidance No. 30, revised on March 26, 2021)- “Implementation Guidance on Disclosures about Fair Value of
Financial Instruments” (ASBJ Guidance No. 19, revised on March
31, 2020)(i) Overview
This is a comprehensive accounting standard for revenue recognition.
Specifically, the accounting standard establishes the following
five-step model that will apply to revenue from customers:
Step 1: Identify the contracts with a customer
Step 2: Identify the separate performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the separate performanceobligations
Step 5: Recognize revenue when (or as) the entity satisfies a
performance obligation by transferring good or service(ii) Date of adoption
The Bank will adopt the accounting standard and implementation
guidance in the consolidated financial statements from the beginningof the fiscal year beginning on April 1, 2021.
(iii) Effects of the adoption of the accounting standard and guidance
The Bank is evaluating the effect of the adoption of the accounting
standard and implementation guidance on its consolidated financial
statements.
- “Accounting Standard for Fair Value Measurement” (ASBJ
Statement No. 30, issued on July 4, 2019)- “Implementation Guidance on Accounting Standard for Fair Value
Measurement” (ASBJ Guidance No. 31, issued on July 4, 2019)- “Accounting Standard for Measurement of Inventories” (ASBJ
Statement No. 9, issued on July 4, 2019)- “Accounting Standard for Financial Instruments” (ASBJ Statement
No. 10, issued on July 4, 2019)39

- “Implementation Guidance on Disclosures about Fair Value of
Financial Instruments” (ASBJ Guidance No. 19, revised on March
31, 2020)(i) Overview
In order to improve the comparability with international accounting
standards, “Accounting Standard for Fair Value Measurement” and“Implementation Guidance on Accounting Standard for Fair Value
Measurement” (“Fair Value Measurement accounting standards, etc.”)
were developed and the guidance on how to measure fair value wasestablished. Fair Value Measurement accounting standards, etc. apply
to the fair value of the following items:
・Financial instruments in the Accounting Standard for Financial
Instruments
・Inventories held for trading purposes under the Accounting Standard
for Measurement of Inventories
In addition, “Implementation Guidance on Disclosures about Fair
Value of Financial Instruments” was revised to specify notes such as
breakdown of the fair value of financial instruments by level.
(ii) Date of adoption
The Bank will adopt the accounting standards and guidance in the
consolidated financial statements from the beginning of the fiscal
year beginning on April 1, 2021.
(iii) Effects of the adoption of the accounting standards and guidance
The Bank is evaluating the effect of the adoption of the accounting
standards and guidance on its consolidated financial statements.
(21) Changes in Presentation
The Bank adopted the “Accounting Standard for Disclosure of
Accounting Estimates” (ASBJ Statement No. 31, March 31, 2020) in
the consolidated financial statements as of March 31, 2021 and forthe fiscal year then ended and included notes regarding significant
accounting estimates therein.
However, information for the previous fiscal year ended March 31,
2020 is not disclosed in accordance with transitional provisions in theprovision of paragraph 11 of the said accounting standard.

Stocks69,19363,277625

Others5,740,754

5,618,106

51,863

Total

17,724,041 16,456,230

160,123

Notes:
1. Stocks include investments in affiliated companies totaling ¥189
million ($1 million) as of March 31, 2021 and 2020.
2. Others include common shares and investment in unconsolidated
subsidiaries totaling ¥8,552 million ($77 million) as of March 31,
2021 and ¥8,589 million as of March 31, 2020. Others also include
preferred shares issued by Shinkin Banks which were contributedin accordance with the Shinkin Bank Management Reinforcement
System. The amount was ¥169,524 million ($1,531 million) as ofMarch 31, 2021 and ¥171,524 million as of March 31, 2020.
Others also include foreign bonds and equities.

5. Loans and Bills Discounted:
Loans and Bills Discounted include the following non-performing
loans:
Millions ofMillions of Yen
U.S. Dollars
2021
2020
2021
Loans to Bankrupt
68
75
0
Borrowers

3. Trading Assets:
The details of Trading Assets as of March 31, 2021 and 2020 are as
follows:

Delinquent Loans

3,399

3,977

30

Loans Past Due Three
Months or More

1,008

1

9

Millions of
U.S. Dollars
2021

Restructured Loans

18,921

19,024

170

Total

23,39823,079211

Millions of Yen
2021
2020
Trading AccountSecurities
Derivatives of Securities
related to Trading
Transactions
Trading-Related
Financial Derivatives

40

4. Securities:
The details of Securities as of March 31, 2021 and 2020 are as
follows:
Millions ofMillions of Yen
U.S. Dollars
2021
2020
2021
Japanese Government
5,978,192 4,606,207
54,008Bonds
Municipal Government
1,821,893 1,425,190
16,459
Bonds
Short-Term Corporate
38,016－－
Bonds
4,114,006 4,705,432
37,166
Corporate Bonds

23,36326,051

211

0

−

0

28,02431,034

253

Other Trading Assets

229,043

354,189

2,069

Total

280,431411,275

2,533

The above amounts are the amounts before exclusion of reserves forpossible loan losses.
Loans to Bankrupt Borrowers represent non-accrual loans toborrowers who are legally bankrupt as defined in Article 96,
Paragraph 1, Item 3 (a)-(e) or Item 4 of the “Order for Enforcementof the Corporation Tax Act” (Cabinet Order No. 97 of 1965).
Delinquent Loans represent non-accrual loans other than Loans
to Bankrupt Borrowers and certain Restructured Loans withmoratorium on interest payments.
Loans Past Due Three Months or More represent loans forwhich the principal and interests are past due three months or moreother than Loans to Bankrupt Borrowers and Delinquent Loans.

Restructured Loans represent loans on which contracts weremodified in favor of the borrowers (e.g. the reduction of or exemption
from stated interests, the deferral of interest payments, the extensionof maturity dates, and the renunciation of claims in order to assist or
facilitate the business restructuring of borrowers under financial
difficulties) other than Loans to Bankrupt Borrowers, Delinquent
Loans and Loans Past Due Three Months or More.
Loans include subordinated loans with a lower priority forrepayment of principal and interests than that of other debt claims.
The amount was ¥11,500 million ($103 million) as of March 31, 2021
and ¥13,500 million as of March 31, 2020. Of these amounts, none asof March 31, 2021 and ¥2,000 million as of March 31, 2020, were
provided to Shinkin Banks in accordance with the Shinkin BankManagement Reinforcement System.
Bills Discounted are accounted for as financial transactions inaccordance with Industry Committee Practical Guidelines No. 24.
The face value of bills of lading amounted to ¥76 million ($0 million)
as of March 31, 2021 and ¥148 million as of March 31, 2020. The
Bank has the right to freely dispose of, sell or re-hypothecate suchbills.
With respect to loan participation, in accordance with
“Accounting and Presentation of Loan Participation” (JICPA
Accounting Committee Report No. 3, November 28, 2014), theamount of the participation principal is accounted for as a loan to theoriginal debtor, and this amounted to ¥13,983 million ($126 million)
as of March 31, 2021 and ¥16,584 million as of March 31, 2020.

6. Commitments to Overdrafts and Loans:
Commitments related to overdrafts and loans represent agreements toextend overdrafts or loans up to a pre-agreed amount at thecustomer’s request as long as there is no violation of the conditions
stipulated in commitment agreements.
The amount of unused loan commitments may not necessarily
have a significant effect on the future cash flows of the Bank because
most of these loan commitments expire without being drawn down.
Most of these agreements have provisions which stipulate that the
Bank may not extend the loan or may decrease the amount ofcommitment when there are certain changes in the financial
conditions, certain issues relating to credit protection and otherreasons. The Bank limits the commitment to an amount not exceeding
the amount of the related customer’s time deposit. The Bank
periodically checks the financial condition of its customers based on
its internal rules and performs certain actions to secure loans orrevises the contracts, as necessary.
The amounts of unused loan commitments are ¥26,282,059
million ($237,438 million) as of March 31, 2021 and ¥25,176,506
million as of March 31, 2020.
The amounts which the Bank could unconditionally cancel at
any time or of which the original contractual maturity is less than one
year are ¥26,141,095 million ($236,164 million) as of March 31,
2021 and ¥25,046,442 million as of March 31, 2020.

7.

Special Contracts for Securities and Cash-Collateralized
Securities Lending and Borrowings:
Securities lending based on non-collateralized special contracts(securities lending and borrowings) are stated as Japanese
Government Bonds in “Securities”. The amount in total was ¥197,643
million ($1,785 million) as of March 31, 2021 and ¥309,494 million
as of March 31, 2020.
Those held by the Bank without being disposed of as of March
31, 2021 amounted to ¥407,355 million ($3,680 million) and as ofMarch 31, 2020 amounted to ¥22,637 million.
8.

Tangible Fixed Assets:
Millions of Yen
2021
2020

Accumulated Depreciation
on Tangible Fixed Assets
Accumulated Deferred
Gains on Tangible Fixed
Assets(Deferred Gains recognized
for the fiscal year)

Millions of
U.S. Dollars
2021

96,456

93,779

871

1,764

1,764

15

(－)

(－)

(－)

9. Assets Pledged as Collateral and Associated Liabilities:
Assets pledged as collateral for the fiscal years ended March 31, 2021
and 2020 are as follows:
Millions ofMillions of Yen
U.S. Dollars
2021
2020
2021
Assets Pledged as Collateral
Trading Assets

14,858

11,956134

5,494,516

4,813,193

49,638842,558

591,1217,611

6,351,933

5,416,271

57,384

3,858,000

3,088,500

34,854

Payables under Repurchase
Agreements

287,020232,066

2,593

Payables under Securities
Lending Transactions

1,702,956

1,788,395

15,384

Securities
Loans and Bills Discounted
Total
Liabilities associated with
Assets Pledged as Collateral
Borrowed Money

Trading Assets of none as of March 31, 2021 and ¥501 million as ofMarch 31, 2020 and Securities in the amount of ¥271,673 million($2,454 million) as of March 31, 2021 and ¥257,071 million as ofMarch 31, 2020, were pledged as collateral for exchange settlementtransactions, etc. or as substitute for margin in futures transactions,
etc.

41

Other assets include Guarantee Money, Cash Collateral Pledged
for Financial Instruments, Clearing Margin Deposits for Central
Counterparty, and Cash Collateral Pledged for Repurchase
Agreement. The amounts are as follows:
Millions ofMillions of Yen
U.S. Dollars
2021
2020
2021

10. Trading Liabilities:
The details of Trading Liabilities as of March 31, 2021 and 2020 are
as follows:
Millions ofMillions of Yen
U.S. Dollars
2021
2020
2021
Trading Bonds Sold

2,390

620

21

Guarantee Money

Trading-Related Financial
Derivatives

29,23536,938264

Total

31,62537,558285

Cash Collateral
Pledged for Financial
Instruments
Clearing Margin
Deposits for Central
Counterparty
Cash Collateral
Pledged for
Repurchase
Agreement

42

379

353

3

149,174

348,459

1,347

700,000

700,000

6,323

1,606

500

14

11. Borrowed Money and Lease Obligations:
Balance as of
Category
April 1, 2020
(Millions of Yen)
3,250,980
Borrowings

Balance as ofMarch 31, 2021
(Millions of Yen)
4,020,480

3,250,980

4,020,480

36,321

0.04

285

347

3

1.51

－

567

324

2

2.69

May 2022June 2026

Borrowed Money
Lease Obligations Due within One
Year
Lease Obligations (Excluding Those
Due within One Year)

Balance as of
Average
March 31, 2021
Interest Rate (%)(Millions of U.S. Dollars)
36,321
0.04

Maturity－
Aug. 2021Mar. 2029

Notes:
1. Average interest rates were computed by the weighted average method using the interest rates and the balances at the fiscal year-end.
2. The repayment schedule within 5 years after the balance sheet date is as follows:
Millions of Yen
Over 1 year,
Over 2 years,
Over 3 years,
Over 4 years,
Within 1 year
within 2 years
within 3 years
within 4 years
within 5 years
931,500
690,700
1,283,800
952,000－
Borrowed Money
347
144
116
57
6
Lease Obligations

Within 1 year

Millions of U.S. Dollars
Over 1 year,
Over 2 years,
Over 3 years,
within 2 years
within 3 years
within 4 years

Over 4 years,
within 5 years

8,415
6,239
11,5988,600－
Borrowed Money
3
1
1
0
0
Lease Obligations
3. Borrowed Money includes subordinated borrowings of ¥162,480 million ($1,467 million) as of March 31, 2021 and 2020.

12. Debentures:
IssuerThe Bank

The Bank

The Bank
Total

Name of Issue

No. 305-376
5-yearInterest-bearing
debentures
No. 2
7-yearInterest-bearing
debentures
No. 2
10-yearInterest-bearing
debentures－

Issuance Date

Balance as of Balance as of Balance as ofApril 1,March 31,
March 31,
2020
2021
2021
(Millions of (Millions of (Millions of
Yen)
Yen)
U.S. Dollars)

4,303



Collateral

Redemption
Date

Apr. 2015Mar. 2021

2,104,520

1,740,870

15,7270.010.25－

Apr. 2020Mar. 2026

Sep. 25, 2015

10,00010,000

90

0.29

－

Sep. 27, 2022

Sep. 25, 2015

20,00020,000

180

0.52

－

Sep. 26, 2025－

2,134,520

1,770,870

15,998

－

－

－

Note:
The redemption schedule within 5 years after the balance sheet date is as follows:
Millions of Yen
Over 1 year,
Over 2 years,
Over 3 years,
Within 1 year
within 2 years
within 3 years
within 4 years
476,340
349,250
399,930
293,400

Within 1 year

CouponRate (%)

Over 1 year,
within 2 years
3,155

Millions of U.S. Dollars
Over 2 years,
within 3 years
3,613

Over 3 years,
within 4 years
2,650

Over 4 years,
within 5 years
251,950
Over 4 years,
within 5 years
2,276

43

13. Asset Retirement Obligations:
The disclosure of Asset Retirement Obligations was omitted because
the amount was one-hundredth or less of the total balance of Liabilities
and Net Assets as of April 1, 2020 and as of March 31, 2021.

14. Land Revaluation:
Based on the “Act on the Revaluation of Land” (Act No. 34,
promulgated on March 31, 1998), land used for business was revalued.
Deferred tax on the revaluation of the land was recorded as “Deferred
Tax Liabilities for Land Revaluation” under Liabilities, and unrealized
gain on the revaluation of the land, net of deferred tax, was recorded as“Land Revaluation Excess” under Net Assets.
Date of Revaluation: March 31, 1999
Revaluation method in accordance with Article 3, Paragraph 3 of Act
No. 34: Revaluations were made based on the method, determined by
the Commissioner of the National Tax Administration, which formed
the basis for calculating land value taxes (prescribed by the “Land
Value Tax Law”), as set forth in Article 2, Item 4 of the “Order for
Enforcement of the Act on Revaluation of Land” (Government
Ordinance No. 119, dated March 31, 1998), with appropriate
adjustments.

15. Trusts with Contracts:
The details of principal amounts of trusts with contracts forcompensation of loss of principal for the fiscal years ended March 31,
2021 and 2020 are as follows:
Millions of
U.S. Dollars
Millions of Yen
2021
2020
2021
Money Trust
272
30,153
21,831

16. Fees and Commissions:
The details of Fees and Commissions for the fiscal years ended March
31, 2021 and 2020 are as follows:
Millions ofMillions of Yen
U.S. Dollars
2021
2020
2021
Deposit, Fixed Income
479
787
4
Securities and Lending
369
422
3
Exchange Business
8,996
9,761
81
Securities Related Business
2,095
2,094
18
Agency Business
9,187
10,54083
Guarantee Business
19,22919,812173
Trustee Business
818
733
7
OthersIncome on Fees and41,175
44,151
371
Commissions Businesses
224
225
2
Exchange
945
1,149
8
Agency Loans Business
13,73014,868124
OthersExpenses on Fees and
14,900
16,243
134
Commissions Businesses

44

17. Trading Income:The details of Trading Income for the fiscal years ended March 31,
2021 and 2020 are as follows:
Millions ofMillions of Yen
U.S. Dollars
2021
Income from Trading
Account Securities
Income from
Trading-Related Securities
Income from
Trading-Related Financial
Derivatives
Other Trading Income
Total

2020

2021

651

499

5

－

199

－

810

1,084

7

45
1,507

218
2,001

0
13

18. Trading Losses:
The details of Trading Losses for the fiscal years ended March 31,
2021 and 2020 are as follows:
Millions ofMillions of Yen
U.S. Dollars
2021
Expenses from
Trading-Related Securities
Total

2020

2021

155

－

1

155

－

1

19. Other Income:The details of Other Income for the fiscal years ended March 31, 2021
and 2020 are as follows:
Millions ofMillions of Yen
U.S. Dollars
2021
2020
2021
Gains on Sale of Stocks and
9,243
2,203
83
Other Securities
Reversal of Allowance for Loan
1,106
9
－
LossesOthers
458
568
4
Total
10,8092,772
97

20. Other Expenses:
The details of Other Expenses for the fiscal years ended March 31,
2021 and 2020 are as follows:
Millions ofMillions of Yen
U.S. Dollars
2021
2020
2021
Losses on Sale of Stocks and
2,980
6,701
26
Other Securities
Impairment Losses on Fixed
Assets (*)

－

86

－

Others

145

1,099

1

Total

3,125

7,888

28

21. Consolidated Statement of Comprehensive Income:For the fiscal years ended March 31, 2021 and 2020
Reclassification adjustment amount and tax effect amount related to Other Comprehensive Income
Millions ofMillions of Yen
2021

U.S. Dollars
2020

2021

Net Unrealized Gains (Losses) on Other Securities:
The Amount Arising during the Period

36,933(52,654)333

Reclassification Adjustment Amount

1,932(8,095)

17

Prior to Tax Effect Adjustment

38,865(60,749)

351

Tax Effect Amount(10,514)

16,610(94)

Net Unrealized Gains (Losses) on Other Securities

28,350(44,139)

256

Deferred Gains or Losses on Hedges:
The Amount Arising during the Period

128,499(184,035)

1,160

Reclassification Adjustment Amount56,192

63,238507

Prior to Tax Effect Adjustment

184,692(120,797)

1,668

Tax Effect Amount(51,567)

33,727(465)

Deferred Gains or Losses on Hedges

133,125(87,070)

1,202

The Amount Arising during the Period

(170)

145

(1)

Reclassification Adjustment Amount

－

－

－

Prior to Tax Effect Adjustment

－

－

－

Tax Effect Amount

－

－

－

(170)

145

(1)

The Amount Arising during the Period

2,899(1,907)

26

Reclassification Adjustment Amount

1,901

1,700

17

Prior to Tax Effect Adjustment

4,800

(206)

43

Foreign Currency Translation Adjustments:

Foreign Currency Translation Adjustments
Remeasurements of Defined Benefit Plans:

Tax Effect Amount(1,374)62(12)

Remeasurements of Defined Benefit Plans

3,425

(144)

30

Other Comprehensive Income

164,730(131,209)

1,488

45

22. Changes in Net Assets:(1) Class and Number of Shares Outstanding, and Class and Number of Shares of Treasury Shares
Number of Share Units at
Number of Share Units at
Increase During the Fiscal Decrease During the Fiscal
March 31, 2021
April 1, 2020 (Thousand
Year (Thousand Units)
Year (Thousand Units)(Thousand Units)
Units)
Shares Outstanding
General Common Shares

4,000

－

－

4,000

Specific Common Shares

2,000

－

－

2,000

Preferred Shares (Type-A)

708

－

－

708

6,708

－

－

6,708

General Common Shares

－

－

－

－

Specific Common Shares

－

－

－

－

Preferred Shares (Type-A)

－

－

－

－

－

－

－

－

Total
Treasury Shares

Total(2) Dividends
Dividends paid during the fiscal year ended March 31, 2021
Resolution

Annual General Meeting of
Shareholders, June 24, 2020

Class of ShareTotal Dividend
Amount (Million Yen)

Amount Per Share(Yen)

Record Date

Effective Date

GeneralCommon Shares

12,0003,000

March 31, 2020

June 24, 2020

Specific
Common Shares

3,000

1,500

March 31, 2020

June 24, 2020

Preferred Shares(Type-A)

4,603

6,500

March 31, 2020

June 24, 2020

Among the dividends whose record date falls within the fiscal year ended March 31, 2021, those whose effective date will fall within thefollowing fiscal year:
Resolution

Annual General Meeting of
Shareholders, June 24, 2021

46

Class of ShareTotal Dividend
Amount (Million Yen)

Resource ofDividends

Amount Per Share(Yen)

Record Date

Effective Date

GeneralCommon Shares

12,000Retained Earnings

3,000

March 31, 2021 June 24, 2021

Specific
Common Shares

3,000

Retained Earnings

1,500

March 31, 2021 June 24, 2021

Preferred Shares(Type-A)

4,603

Retained Earnings

6,500

March 31, 2021 June 24, 2021

23. Income Taxes:(1) Breakdown of Deferred Tax Assets and Liabilities is as follows:
Millions ofMillions of Yen
U.S. Dollars
2021

2020

2021

Depreciation

2,732

2,891

24

Reserve for Possible Loan
Losses

1,122

1,479

10

Net Defined Benefit Liability

12,133

12,874109

Write-Downs for Securities

1,431

1,819

12

7,970

59,536

72

0

112

0

Others

4,252

4,476

38

Valuation Allowances(3,411)(3,839)Total Deferred Tax Assets

26,23279,351

Deferred Tax Assets:

Deferred Gains or Losses on
HedgesNet Unrealized Gains on Other
Securities

Others(118,719) (108,312)
(404)

2021

2020

(30)

66,96365,325604

236

Service Cost

3,002

2,990

27

Interest Cost

257

251

2

Actuarial Difference
Incurred(2,011)

(73)

(18)

Retirement Benefits Paid

(1,684)(1,530)(15)

Prior Service Cost

－

－

－

Other

－

－

－

66,526

66,963601(1,072)

(415)

(3)

Total Deferred Tax Liabilities(119,124) (108,728)(1,076)

Net Deferred Tax Liabilities(92,891)(29,376)(839)(2) Reconciliation between the effective statutory tax rate and theactual effective tax rate for the fiscal years ended March 31, 2021 and
2020:
2021
2020
Statutory effective tax rate

27.92 %

－ %(Adjustments)
Change in Valuation Allowances(0.98 %)－ %Dividends received, not taxable(1.18 %)－ %Others0.45 %－ %Actual effective income tax rate after
the application of tax effect accounting

26.21 %－ %Note:
In the fiscal year ended March 31, 2020, since the difference between
the statutory effective tax rate and the actual effective income tax rate
after the application of tax effect accounting was less than 5% of thestatutory effective tax rate, notes on this are omitted.

(2) Defined Benefit Plan as of March 31, 2021 and 2020 is asfollows:(i) Reconciliation of beginning- and end-of-period balance ofRetirement Benefit Obligation
Millions ofMillions of Yen
U.S. Dollars
Retirement Benefit
Obligation at Beginningof Period

Deferred Tax Liabilities:
Net Unrealized Gains on Other
Securities

24. Retirement Benefit Plans:(1) Retirement Benefit Scheme
The Bank and some of its consolidated domestic subsidiaries have adefined benefit plan that offers lump-sum payments upon retirement
and contributes to the Employees’ Pension Fund for all shinkin banks
nationwide.
With regard to notes related to employees’ retirement benefits
based on a multiple-employer plan, they are included in notes related
to employees’ retirement benefits based on a defined benefit plan.

Retirement Benefit
Obligation at End of
Period2021(ii) Reconciliation of beginning- and end-of-period balance ofPension Plan Assets
Millions ofMillions of Yen
U.S. Dollars
Balance of Pension Plan
Assets at Beginning of
PeriodExpected Return on
Pension Plan Assets
Actuarial Difference
IncurredContributions by the
Employer and Employees
Retirement Benefits Paid
Other
Balance of Pension Plan
Assets at End of Period

2021

2020

2021

22,423

22,919

202

672

916

6

888

(1,980)

8

1,598

1,532

14

(999)

(964)

(9)

－

－

－

24,58322,423

222

47

(iii) Reconciliation of end-of-period balance of Retirement Benefit
Obligation and Pension Plan Assets with Net Defined Benefit
Liability and Net Defined Benefit Asset presented on the consolidatedbalance sheet
Millions ofMillions of Yen
U.S. Dollars
2021

2020

Funded Plan Retirement
Benefit Obligation

54,812

55,198Pension Plan Assets(24,583)

Unfunded Plan Retirement
Benefit Obligation
Net Amount of Liabilities
and Assets Presented on
the Consolidated Balance
Sheet

2021

(v) Remeasurements of Defined Benefit Plan
Remeasurements of Defined Benefit Plan (before tax effects)
comprise the following.
Millions ofMillions of Yen
U.S. Dollars
2021

2021

Prior Service Cost

－

－

－

495

Actuarial Differences

4,800

(206)

43

(22,423)

(222)

Other

－

－

－

30,22832,775

273

Total

4,800

(206)

43

11,714

11,764105

41,94344,539378(vi) Accumulated Remeasurements of Defined Benefit Plan
Accumulated Remeasurements of Defined Benefit Plan (before tax
effects) comprise the following.
Millions ofMillions of Yen
U.S. Dollars
2021

Millions of
U.S. Dollars

Millions of Yen

2021

UnrecognizedPrior Service Cost
Unrecognized
Actuarial Differences

2020

2021

－

－

－

5,886

10,686

53

2021

2020

41,94344,539

378

Other

－

－

－

Net Defined Benefit Asset

－

－

－

Total

5,886

10,68653

Net Amount of Liabilities
and Assets Presented on
the Consolidated Balance
Sheet41,94344,539378(vii) Pension Plan Assets(a) The ratios by main asset categories in total pension plan assets are
as follows:
2021
2020

Net Defined Benefit
Liability(iv) Breakdown of Retirement Benefit Expense

Millions of
U.S. Dollars

Millions of Yen
2021

2020

2021

Bonds

58 %

66 %

Stocks28 %22 %Service Cost

3,002

2,990

27

Cash and Deposits

11 %

9%

Interest Cost

257

251

2

Other

3%

3%

Total

100 %

100 %

Expected Return on
Pension Plan Assets
Amortization ofActuarial Differences
Amortization of Prior
Service Cost

(672)

(916)

(6)

1,901

1,700

17

－

－

－

Other

(588)

(563)

(5)

Retirement Benefit
Expenses Related toDefined Benefit Plan

3,899

3,461

35

Note:
Other includes the employee contribution amount to the Employees’
Pension Fund.

(b) Method for setting the Expected Long-Term Rate of Return
To set the Expected Long-Term Rate of Return on Pension Plan
Assets, the Bank takes into account past return performance and thecurrent and future expected rate of return on the diverse range ofassets that makes up the pension assets.
(viii) Underlying actuarial assumptions
Main underlying actuarial assumptions as of March 31, 2021 and2020 are as follows:

Discount Rate
Expected Long-Term Rate of
Return on Pension Plan Assets
Estimated Rate of Salary
Increase

48

2020



2021

2020

0.0～0.6 %0.0～0.6 %

3.0 %

4.0 %

0.0～8.5 %0.0～7.4 %25. Leases:
1. Finance Leases(1) Finance leases that do not transfer ownership(i) Outline of lease assets(a) Tangible fixed assets
Mainly, hardware related to computer equipment(b) Intangible fixed assets
Software related to computer equipment(ii) Lease asset depreciation method
Depreciation method is described in the “Significant Accounting
Policies”.
(2) Finance leases that do not transfer ownership and are accounted
for in accordance with the ordinary lease transaction method
Disclosure of data omitted due to immateriality.
2. Operating Leases
Future lease payments related to non-cancelable operating leases:
Disclosure of data omitted due to immateriality.

26. Financial Instruments:
1. Matters concerning financial instruments(1) Policies on financial instruments
Shinkin Central Bank Group (the “Group”) works to ensure the stable
funding through the acceptance of deposits mainly from its Shinkin
Bank members and through the issuance of debentures. Additionally,
the Group takes steps to diversify its funding methods by procuring
funds from short-term money markets depending on market
conditions.
Procured funds are invested in short-term money market
instruments, marketable securities, and loans.
Moreover, the Group uses derivative transactions for the
purpose of risk-hedging in ALM (asset liability management)
activities and engages in short-term trading of securities andderivatives.
To appropriately manage the various risks that result from thesefinancial instruments, the Group engages in ALM activities including
the above-mentioned derivative transactions. For its trading activities,
the Group establishes risk limit and loss cut limits amounts andengages in transactions within the scopes of these risk limits, as a way
to maintain a financial soundness and to ensure stable earnings.
(2) Types and related risks of financial instruments
Financial assets held by the Group consist mainly of short-term funds,
securities, and loans assets.
Short-term funds are invested in the call loan.
These investments are exposed to the counterparty credit risk,
and market risks such as interest rate risk and foreign currency
exchange risk.
Securities portfolios of the Group consist of domestic securities
including Japanese government bonds (JGBs), corporate bonds andother bonds as well as foreign securities such as government bonds,
government-guaranteed bonds, and agency bonds issued in the majorindustrialized countries. The Group also invests in equity securities
and investment funds to diversify its portfolio.



These investments are exposed to the individual issuers’ credit
risk as well as market risks such as interest rate risk, price fluctuation
risk, and foreign currency exchange risk, and market liquidity risk.
Loans assets consist of direct loans to low-risk borrowers
including Shinkin Banks, central and local governments, public
service corporations, good standing domestic and overseas companies,
and agency loans provided through Shinkin Banks.
These loans are exposed to counterparty credit risk, and market
risks such as interest rate risk and foreign currency exchange risk.
Meanwhile, financial liabilities of the Group consist mainly of
deposits and debentures.
Deposits include current deposits, ordinary deposits, deposits at
notice, term deposits, and foreign currency-denominated deposits,
most of which are deposits from Shinkin Bank members.
These deposits are exposed to market risks such as interest raterisk and foreign currency exchange risk, and liquidity risk.
As a debenture issuer, the Group issues interest-bearing
debentures.
These debentures are exposed to interest rate risk and liquidity
risk.
Furthermore, the Group engages in derivative transactions.
Specifically, the Group trades interest rate derivatives (interest
swaps, interest futures, and interest options), currency derivatives(foreign currency forwards and currency swaps) and bond derivatives(bond futures and bond futures options).
These transactions are exposed to counterparty credit risk, andmarket risks such as interest rate risk and foreign currency exchangerisk.
The Bank hedges market risks of its financial assets andliabilities through ALM activities.
The Group partially avoids exposure to market risks by
mitigating (i) interest rate risk through interest rate swaps and(ii) foreign currency exchange risk of foreign currency-denominatedassets through foreign currency-denominated funding, currency
swaps, and forex swaps.
Hedge accounting is applied to risk hedging through ALM
activities including the use of derivatives. With regard to hedge
accounting, hedging instruments, hedged items, hedging policies, andmethods of hedge effectiveness assessment, etc. are described in the“Significant Accounting Policies”.
(3) Risk management frameworks of financial instruments
In the basic risk management policy, the Bank divides risks into“risks to be minimized” and “risks to be controlled”. Credit risks,market risks and liquidity risks are classified into latter category.
Risks of both categories are managed by risk management divisions
that are independent of the client service divisions. The Risk
Management Division comprehensively manages these risks.
<Integrated risk management>
For the integrated management of risks, the Bank has introduced
integrated risk management for quantifiable risks. Integrated risk
management is a risk management method of measuring various risks
using a uniform risk measure such as Value at Risk (VaR),
aggregating the measurements, and comparing the aggregatedamounts with the Bank’s capital. The Bank measures credit risks andmarket risks using VaR methodology, and monitors them on a daily
basis to prevent risk limits from being breached.

49

These risk limits are reviewed each fiscal year by the Risk
Management Committee and determined at the Executive Committee.
The risk exposures are measured weekly by the Risk Management
Division, which takes steps to prevent any of the various risk limits
from being breached, and through the Risk Management Committee,
reports regularly to the management and relevant divisions.
The risk exposures at consolidated subsidiaries are aggregatedand managed through the integrated risk management framework.
(i) Credit risk management
For the accurate identification and strict management of credit risk,
the Bank has established credit risk management policies. Moreover,the Bank has created a structure in which divisions responsible for
credit control, credit management and credit assessment are clearly
segregated from divisions involved in client services, with mutuallyindependent tasks to ensure effective internal checking functions.
The Bank established the Credit Committee and the Risk
Management Committee, comprised of senior management and headsof divisions related to credit risk, as bodies to deliberate and makedecisions on matters relating to credit risk management. The Credit
Committee deliberates on credit transactions that exceed the credit
limit, while the Risk Management Committee deliberates on theestablishment and the review of policies regarding credit management.
The Executive Committee deliberates and makes decisions on mattersrelated to asset self-assessments including the results of asset
self-assessments, asset write-offs and asset reserve provisions.
Divisions responsible for credit control manage the credit riskfor each borrower relating to loans and market trading activities. An
overall credit limit is set for each borrower according to the credit
rating of the borrower. These divisions analyze the Bank’s overall
credit portfolio according to credit rating, industry, country and othercriteria. These analyses are used to monitor the diversification of
credit risk as well as changes in portfolio credit risk. Additionally,
divisions responsible for credit control quantify credit risk in VaR
methodology using Monte Carlo simulation methods and manage
credit risks based on the limits set at the Executive Committee.
Divisions responsible for credit management accurately monitor
each borrower’s financial condition, the purposes for which funds areused and repayment resources. In addition to appropriate assessment
and post-transaction management, these divisions continually check
whether the client service divisions are conducting appropriate credit
control, and provide guidance as necessary.
Divisions responsible for credit assessment undertake andmanage operations relating to asset self-assessments, and thecalculation of asset write-offs and asset reserve provisions.
Credit risks of consolidated subsidiaries are added to the credit
risk of the Bank by each borrower and monitored.
(ii) Market risk management
To maintain an accurate understanding of market risk and rigorously
manage this risk, the Bank has issued a market risk management
policy. Furthermore, divisions responsible for market risk
management are clearly separated from divisions involved in market
operations, providing a risk management structure in which internal
checks are maintained through independent functions.
The Bank has established the ALM Committee as the body
responsible for deliberating and making decisions on matters relating
to market risk management. The ALM Committee is comprised ofsenior management and heads of divisions related to market risk.

50



Based on risk status information—obtained via reports from divisions
responsible for market risk management and other sources—the ALM
Committee deliberates broadly and in a timely manner ALM related
policies and market transactions including the Bank’s fund-raisingand management as well as the usage of hedging transactions
involving derivatives such as interest rate swaps.
Divisions responsible for market risk management quantify andmanage market risk mainly by VaR within the limit set by the
Executive Committee. In addition, market risk is classified into
several categories, and the amount of risk for each category ismonitored. Market risk management at the Bank not only uses VaR
methodology but takes multi-faceted approaches, that is, monitoring
sensitivity to change in individual risk factors such as the basis pointvalue (BPV: the amount of the change in a portfolio’s market value
from a specific change in the interest rate), stress loss amounts from
unexpected market changes, and appraisal losses from financial
instruments. For stress loss amounts, in particular, a supplementary
framework has been incorporated into the integrated risk management,in addition to the above monitoring system. In this way, market risks
including those that cannot be captured through VaR methods alone
are managed.
Moreover, for trading operations, clear regulations are in placeconcerning the trading instruments and trading management methods,
enabling appropriate trading operations by setting specific loss cut
limits.
Market risks of consolidated subsidiaries are not directly added
to the values of market risk of the Bank but are managed separately
under integrated risk management.
<Quantitative information on market risk>(a) Financial instruments held for trading purposes
The Bank uses VaR analysis for quantifying market risk of trading
securities held within securities and interest-rate andforeign-exchange instruments held for trading purposes withinderivative transactions. The VaR model is based on the delta method
and uses a 99.0% confidence interval, a holding period of fivebusiness days and an observation period of one year. In addition, withregard to market risk related to trading operations at consolidated
subsidiaries, which is managed separately within the integrated risk
management framework, the Bank uses a market risk-equivalentamount under the regulations on banks’ capital ratio.
The market risk amount (estimated loss amount) of the Bank’s
trading operations was ¥43 million ($0 million) as of March 31, 2021
and ¥122 million as of March 31, 2020, and the market risk amount(estimated loss amount) of the trading operations of the Bank’s
consolidated subsidiaries was ¥745 million ($6 million) as of March
31, 2021 and ¥964 million as of March 31, 2020.
The Bank conducts back testing to compare VaR calculatedusing the model with actual losses. Based on the results of backtesting covering the fiscal year ended March 31, 2021, the number ofactual loss amount exceeding the VaR is one time, and the Bank
believes that the measurement model it uses has an adequate level ofaccuracy to capture market risk. However, it should be noted that VaR
measures the market risks at certain probability levels statisticallycalculated based on historical market fluctuation. Hence, there may
be cases where market risk cannot be captured in situations where
market conditions change unprecedentedly.

(b) Financial instruments other than those held for trading purposes
The Bank uses VaR analysis for quantifying market risk of due frombanks, securities not held for trading purposes, loans and bills
discounted, deposits, debentures, payables under securities lendingtransactions and, within derivative transactions, interest-rate andforeign-exchange instruments not held for trading purposes. The VaRmodel is based on the delta method and uses a 99.0% confidence
interval, a holding period of one year and an observation period offive years. In addition, with regard to market risk at consolidated
subsidiaries related to operations other than trading operations, which
is managed separately within the integrated risk management
framework, such risk is calculated in accordance with methods usedby the Bank.
The Group’s market risk amount (estimated loss amount) otherthan for trading purposes was ¥502,889 million ($4,543 million) as ofMarch 31, 2021 and ¥485,863 million as of March 31, 2020. The
Bank conducts back testing to compare VaR calculated using themodel with actual losses, and believes that the measurement model it
uses has an adequate level of accuracy to capture market risk.
However, it should be noted that VaR measures the market risks atcertain probability levels statistically calculated based on historicalmarket fluctuation. Hence, there may be cases where market risk
cannot be captured in situations where market conditions change
unprecedentedly.

(iii) Liquidity risk management related to fund-raising
For the accurate identification and strict management of liquidity risk,
the Bank has established liquidity risk management policies.
Divisions responsible for liquidity risk management are clearly
separated from divisions involved in cash management and market
operations, allowing internal checks to be maintained through theindependent functions. In addition, the ALM Committee deliberates
and makes decisions on matters relating to liquidity risk management.
Methods used for managing liquidity risk include the setting
and daily monitoring of risk limit amounts relating to the gap between
cash receipts and payments. This is carried out for individual
currencies and periods. In the event that a significant liquidity riskarises, the Bank has preparations to respond rapidly, including thesecuring of funding sources.
The liquidity risk management frameworks created by the Bank
include subsidiaries as well, such as by providing overdraft facilities
for consolidated subsidiaries with operations involving fundmovements in relatively large amounts.
(4) Supplementary explanation concerning the fair values of financial
instruments
Fair values of financial instruments, in addition to values based onmarket prices, also include values based on reasonable estimates ifmarket prices are unavailable. Since value estimates are predicated on
certain assumptions, values may vary if the underlying assumptions
change.

51

2. Fair value of financial instruments (and other information)
Carrying values stated on the consolidated balance sheet, fair value and differences between them are as follows. Unlisted stocks and similar
items with significant difficulty in determining fair value are not included in the table below. (See Note 2.)
Immaterial items have been omitted.
As of March 31, 2021
Millions of Yen
Carrying Value(1) Cash and Due from BanksFair Value

15,063,421

Difference

15,063,421

0(2) Bills Bought and Call Loans

494,181494,181－(3) Receivables under Resale Agreements

367,229367,229

－

－

－

－

180,303180,3096(4) Receivables under Securities Borrowing Transactions(5) Monetary Claims Bought (*1)
(6) Trading Assets
Trading Securities

252,407

252,407－(7) Money Held in Trust

108,030

108,030－

450,801

508,986

58,185

17,071,363

17,071,363－(8) Securities
Held-to-Maturity Debt Securities
Other Securities(9) Loans and Bills Discounted
Reserve for Possible Loan Losses (*1)

8,446,047(26,053)
8,419,993

8,466,020

46,026

Total Assets

42,407,732

42,511,950

104,217(1) Deposits

33,752,872

33,763,581

10,709(2) Debentures

1,770,870

1,772,304

1,434(3) Trading Liabilities
Trading Bonds Sold
(4) Borrowed Money

2,390

2,390

－

4,020,480

4,024,179

3,699(5) Bills Sold and Call Money

10,166

10,166－(6) Payables under Repurchase Agreements

287,020

287,020－(7) Payables under Securities Lending Transactions

1,702,956

1,702,956－

Total Liabilities

41,546,756

41,562,599

15,843

Derivatives (*2)
To which Hedge Accounting is not applied(4,041)(4,041)－

To which Hedge Accounting is applied(42,348)(99,544)(57,195)(46,389)(103,585)(57,195)

Total Derivatives

52Millions of U.S. Dollars
Carrying Value(1) Cash and Due from BanksFair Value

136,086

Difference

136,0860(2) Bills Bought and Call Loans

4,464

4,464

－

(3) Receivables under Resale Agreements

3,317

3,317

－

(4) Receivables under Securities Borrowing Transactions

－

－

－

1,628

1,628

0

Trading Securities

2,280

2,280

－

(7) Money Held in Trust

975

975

－

4,072

4,598

525

154,226

154,226－(5) Monetary Claims Bought (*1)
(6) Trading Assets(8) Securities
Held-to-Maturity Debt Securities
Other Securities(9) Loans and Bills Discounted
Reserve for Possible Loan Losses (*1)

76,303(235)
76,06876,484415

Total Assets

383,121384,063941(1) Deposits

304,931305,02896(2) Debentures

15,99816,011

12

21

21

－

36,32136,35533(3) Trading Liabilities
Trading Bonds Sold
(4) Borrowed Money

91

91

－

(6) Payables under Repurchase Agreements(5) Bills Sold and Call Money

2,593

2,593

－

(7) Payables under Securities Lending Transactions

15,384

15,384－

Total Liabilities

375,343

375,486

143

Derivatives (*2)
To which Hedge Accounting is not applied

(36)

(36)

－

To which Hedge Accounting is applied

(382)

(899)

(516)

(419)

(935)

(516)

Total Derivatives*1. General and specific reserves for possible loan losses of Loans and Bills Discounted have been deducted. Loss reserves for Monetary
Claims Bought are immaterial and have therefore been deducted directly from the carrying value.
*2. Derivative transactions stated in trading assets and liabilities, and other assets and liabilities are shown as a single amount.
For net claims and obligations derived from derivative transactions, net amounts are stated. Sums that represent net obligations areshown in parenthesis.

53As of March 31, 2020
Millions of Yen
Carrying Value

Fair Value

Difference(1) Cash and Due from Banks

13,532,061

13,532,061－(2) Bills Bought and Call Loans

107,166

107,166－(3) Receivables under Resale Agreements

20,725

20,725

－

1,430

1,430

－

222,169

222,175

6(4) Receivables under Securities Borrowing Transactions(5) Monetary Claims Bought (*1)
(6) Trading Assets
Trading Securities

380,241

380,241－(7) Money Held in Trust

103,727

103,727－

451,414

520,433

69,01915,807,598

15,807,598－(8) Securities
Held-to-Maturity Debt Securities
Other Securities(9) Loans and Bills Discounted
Reserve for Possible Loan Losses (*1)

8,468,123(26,932)
8,441,191

8,504,756

63,565

Total Assets

39,067,727

39,200,317

132,590(1) Deposits

31,173,847

31,174,578

731(2) Debentures

2,134,520

2,134,462(57)(3) Trading Liabilities
Trading Bonds Sold
(4) Borrowed Money

620

620

－

3,250,980

3,257,310

6,330(5) Bills Sold and Call Money46,191

46,191－(6) Payables under Repurchase Agreements

232,066

232,066－(7) Payables under Securities Lending Transactions

1,788,395

1,788,395－

Total Liabilities

38,626,620

38,633,625

7,004

Derivatives (*2)
To which Hedge Accounting is not applied
To which Hedge Accounting is applied
Total Derivatives(3,817)(3,817)－(205,586)(274,810)(69,224)(209,404)(278,628)(69,224)*1. General and specific reserves for possible loan losses of Loans and Bills Discounted have been deducted. Loss reserves for Monetary
Claims Bought are immaterial and have therefore been deducted directly from the carrying value.
*2. Derivative transactions stated in trading assets and liabilities, and other assets and liabilities are shown as a single amount.
For net claims and obligations derived from derivative transactions, net amounts are stated. Sums that represent net obligations areshown in parenthesis.
Note 1: Calculation method of fair value for financial instruments
Assets(1) Cash and Due from Banks
For deposits that do not mature and have maturities with variable-interest-rates, since fair value approximates carrying value, carrying value isused as fair value. For deposits that have maturities with fixed-interest-rate, present value is calculated by discounting future cash flows using the
expected interest rate that would be applied to new deposits. For term deposits with short maturities, since fair value approximates carrying value,
carrying value is used as fair value.
(2) Bills Bought and Call Loans, (3) Receivables under Resale Agreements and (4) Receivables under Securities Borrowing Transactions
Since contract durations are short-term and fair value approximates carrying value, carrying value is used as fair value.
(5) Monetary Claims Bought
Monetary Claims Bought is stated at amounts obtained from brokers, etc.

54(6) Trading Assets
Securities including bonds held for trading are stated at market prices, etc.
(7) Money Held in Trust
Securities managed as trust assets of money held in trust whose main purpose is securities investment are valued at the prices quoted by theexchanges in the case of listed equity shares and at market prices in the case of bonds.
Note concerning securities categorized by holding purpose is stated in “Fair Value of Securities and Money Held in Trust”.
(8) Securities
Stocks are valued at the price quoted by the exchanges. Investment trusts are valued at the announced standard price. Bonds are valued at thequoted market prices or price calculated on the basis of rational estimation, etc.
Note concerning securities categorized by holding purpose is stated in “Fair Value of Securities and Money Held in Trust”.
(9) Loans and Bills Discounted
For floating rate loans, since market interest rates are reflected in fair value in short term and fair value approximates carrying value unless theborrower’s credit standing after the lending undergoes significant change, carrying value is used as fair value. For fixed rate loans, categorized bytype of loan and internal credit rating, fair value is determined by discounting loans to present value using the interest rate that would conceivably
be applied in case of a newly made loan of the same principal and interest total. For loans with short contractual maturities, since fair value
approximates carrying value, carrying value is used as fair value.
With regard to loans to Bankrupt Borrowers, Substantially Bankrupt Borrowers or Probably Bankrupt Borrowers, the Bank estimates loan
loss based on the present value of estimated future cash flows or the estimated recoverable value from collateral and guarantees. Since fair value
therefore approximates the total loan value on the consolidated balance sheet at the closing date less the total recorded value of the reserve forpossible loan losses, this value is used for fair value.
Liabilities(1) Deposits
For demand deposits, the amount payable upon demand on the balance sheet date (carrying value) is used as fair value. For term deposits, fairvalue is calculated by discounting future cash flows to present value. The discount rate is the interest rate that would be applicable to newly taken
deposits. For term deposits with short contractual maturities and term deposits with variable interest rates, since fair value approximates carrying
value, carrying value is used as fair value.
(2) Debentures
For debentures issued by the Bank, market prices are used as fair value.
(3) Trading Liabilities
For trading bonds sold, market prices, etc. are used as fair value.
(4) Borrowed Money
For borrowed money, categorized by types of loans, fair value is calculated by discounting borrowed money to present value using the interest
rate that would conceivably be applied in case of a newly made loan of the same principal and interest total.
In instances with short contractual maturities, since fair value approximates carrying value, the carrying value is used as fair value.
(5) Bills Sold and Call Money, (6) Payables under Repurchase Agreements, and (7) Payables under Securities Lending Transactions
Since contract durations are short term and fair value approximates carrying value, carrying value is used as fair value.
Derivative Transactions
With regard to derivative transactions, these are noted in “Derivatives”.
Note 2: The following financial instruments have significant difficulty in determining fair value and are not included in fair value
information of financial instruments.
Millions of Yen
Category

2021

Millions of U.S. Dollars
2021

2020

Unlisted stocks, etc. (*1)

175,797

177,796

1,588

Investment in investment partnerships (*2)

26,07819,420235

Total

201,876

197,217

1,823*1. Unlisted stocks, etc. mean unlisted common shares and preferred shares held by the Bank. Since unlisted stocks, etc. have no market prices
and therefore have significant difficulty in determining fair value, unlisted stocks, etc. are not included in fair value disclosure information.
*2 Investment in investment partnerships is not included in fair value disclosure information given that investment partnership assets include
items such as unlisted stocks, etc., which have significant difficulty in determining fair value.



55

Note 3: Amounts of monetary claims and securities with maturities scheduled for redemption after the balance sheet date
As of March 31, 2021
Millions of Yen
Within 1 year

Over 1 year,
within 3 years

Over 3 years,
within 5 years

Over 5 years,
within 7 years

Over 7 years,
within 10 years

Over 10 years

Due from Banks (*1)
Bills Bought and Call Loan
Receivables under Resale Agreements
Receivables under Securities Borrowing
Transactions
Monetary Claims Bought
Securities
Held-to-Maturity Debt Securities
Japanese Government Bonds
Municipal Government Bonds
Short-Term Corporate Bonds
Corporate Bonds
Other Securities with Maturities
Japanese Government Bonds
Municipal Government Bonds
Short-Term Corporate Bonds
Corporate Bonds
Loans and Bills Discounted (*2)

14,962,535
494,181367,229

55,138－－20,000
－
－

－
－
－

－
－
－

－
－
－

－

－

－

－

－

－

18,976

4,764

16,859

7,144

18,100114,580

797
－
－
－
－
3,877,545
2,355,380
224,441－
1,000,889
4,002,566

9,595
7,000
－
－
－
3,299,164
856,500
513,050－
1,620,784
1,812,820

70,92370,000－－－2,669,487
782,000
668,303－929,642
1,188,546

210,461
210,000－－－
861,265
40,000118,757－
172,107647,937

155,000
155,000－－－
1,597,908
561,000
283,830－
116,512598,631－－－－－
1,629,051
873,000－－
243,049
193,872

Total

23,723,833

5,181,483

3,965,817

1,726,809

2,369,640

1,937,505

Millions of U.S. Dollars

Due from Banks (*1)
Bills Bought and Call Loan
Receivables under Resale Agreements
Receivables under Securities Borrowing
Transactions

Within 1 year

Over 1 year,
within 3 years

Over 3 years,
within 5 years

Over 5 years,
within 7 years

Over 7 years,
within 10 years

Over 10 years

135,175
4,464
3,317

498
－
－

180
－
－

－
－
－

－
－
－

－
－
－

－

－

－

－

－

－

Monetary Claims Bought
Securities
Held-to-Maturity Debt Securities
Japanese Government Bonds
Municipal Government Bonds
Short-Term Corporate Bonds
Corporate Bonds
Other Securities with Maturities
Japanese Government Bonds
Municipal Government Bonds
Short-Term Corporate Bonds
Corporate Bonds
Loans and Bills Discounted (*2)

171

43

152

64

163

1,035

7
－
－
－
－
35,03021,279
2,027
－
9,042
36,16086
63－－－
29,805
7,737
4,635
－
14,642
16,377

640
632
－
－
－
24,116
7,064
6,037
－
8,398
10,737

1,901
1,897
－
－
－
7,780
361
1,072
－
1,554
5,853

1,400
1,400
－
－
－
14,435
5,068
2,564
－
1,052
5,408

－
－
－
－
－
14,717
7,886
－
－
2,195
1,751

Total

214,326

46,81035,82815,60021,407

17,503*1. Current deposits, ordinary deposits, deposits at notice, and transfer deposits, included in “Due from Banks”, are stated under amounts
redeemable “Within 1 year”.
*2. Loans of ¥1,782 million ($16 million) to the borrowers categorized as bankrupt, potentially bankrupt or substantially bankrupt, and for which
a redemption schedule is not foreseen, are not included.

56As of March 31, 2020
Millions of Yen
Within 1 year

Over 1 year,
within 3 years

Over 3 years,
within 5 years

Over 5 years,
within 7 years

Over 7 years,
within 10 years

Over 10 years

Due from Banks (*1)
Bills Bought and Call Loan
Receivables under Resale Agreements
Receivables under Securities Borrowing
Transactions
Monetary Claims Bought
Securities
Held-to-Maturity Debt Securities
Japanese Government Bonds
Municipal Government Bonds
Short-Term Corporate Bonds
Corporate Bonds
Other Securities with Maturities
Japanese Government Bonds
Municipal Government Bonds
Short-Term Corporate Bonds
Corporate Bonds
Loans and Bills Discounted (*2)

13,431,526
107,166
20,72568,871－－

20,871
－
－

－
－
－

－
－
－

－
－
－

1,430

－

－

－

－

－

43,845

3,026

38,82718,18816,404

101,745

717
－
－
－
－
2,306,666
812,800
89,31438,0001,031,921
4,162,113

9,103
7,000
－
－
－
4,188,256
1,531,000
442,188
－
1,845,795
1,611,877

41,80840,000－－－2,091,337
333,500
421,858－
1,081,048
1,157,384

130,071130,000－－－
1,069,332
160,000
259,517－
360,019605,173

265,000
265,000－－－
1,249,617
330,000
198,220－
140,960
724,631－－－－－
1,719,261
879,000－－
201,404
205,137

Total

20,074,192

5,881,134

3,350,228

1,822,766

2,255,653

2,026,144*1. Current deposits, ordinary deposits, deposits at notice, and transfer deposits, included in “Due from Banks”, are stated under amounts
redeemable “Within 1 year”.
*2. Loans of ¥1,883 million to the borrowers categorized as bankrupt, potentially bankrupt or substantially bankrupt, and for which a redemption
schedule is not foreseen, are not included.

57

Note 4: Amounts of deposits, debentures and other interest bearing debt scheduled for repayment after the balance sheet date
As of March 31, 2021
Millions of Yen
Within 1 year

Over 1 year,
within 3 years

Over 3 years,
within 5 years

Over 5 years,
within 7 years

Over 7 years,
within 10 years

Deposits (*)

16,452,259

Debentures

476,340

17,106,292

50,8393,310

140,170－

749,180545,350－－－

Borrowed Money
Bills Sold and Call Money931,500

1,974,500

952,000－

162,480－

10,166

－

－

－

－

－

Payables under Repurchase Agreements

Over 10 years

287,020

－

－

－

－

－

Payables under Securities Lending
Transactions

1,702,956

－

－

－

－

－

Total

19,860,242

19,829,972

1,548,189

3,310

302,650－

Within 1 year

Over 1 year,
within 3 years

Over 3 years,
within 5 years

Over 5 years,
within 7 years

Deposits (*)

148,633

154,542459

29

Debentures

4,303

6,768

4,926

－

－

－

Borrowed Money

8,415

17,838

8,600

－

1,467

－

Millions of U.S. Dollars

Bills Sold and Call Money

Over 7 years,
within 10 years Over 10 years
1,266

－

91

－

－

－

－

－

Payables under Repurchase Agreements

2,593

－

－

－

－

－

Payables under Securities Lending
Transactions

15,384

－

－

－

－

－

Total
179,422
179,148
13,986* Demand deposits, included in “Deposits”, are stated under amounts payable “Within 1 year”.

29

2,734

－

As of March 31, 2020
Millions of Yen
Within 1 year

Over 1 year,
within 3 years

Over 3 years,
within 5 years

Over 5 years,
within 7 years

Over 7 years,
within 10 years

Over 10 years

Deposits (*)

22,842,675

8,027,211

76,63837,307

189,015

1,000

Debentures

596,160

827,630

690,730

20,000－－Borrowed Money602,300

1,202,400

1,283,800－

162,480－

Bills Sold and Call Money46,191

－

－

－

－

－

Payables under Repurchase Agreements

232,066

－

－

－

－

－

1,788,395

－

－

－

－

－

Total
26,107,788
10,057,241
2,051,168* Demand deposits, included in “Deposits”, are stated under amounts payable “Within 1 year”.

57,307351,495

1,000

Payables under Securities Lending
Transactions5827. Fair Value of Securities and Money Held in Trust:
1. Securities
The following tables contain information relating to Securities, Trading Assets (trading account securities and short-term corporate bonds), Cashand Due from Banks (negotiable certificates of deposit) and Monetary Claims Bought (beneficiary rights) in the consolidated balance sheet.
(1) Trading Securities

Millions of Yen

Net Unrealized Gains (Losses)
Recognized as Income

2021

Millions of U.S. Dollars
2021

2020
2

188

0

(2) Held-to-Maturity Debt Securities
As of March 31, 2021
Millions of Yen

445,881－－－4,627
450,509
－
－
－
－
291
291

503,911－－－
4,784
508,695
－
－
－
－
290
290

Unrealized
Gains (Losses)
58,029－－－156
58,185
－
－
－
－
(0)
(0)

450,801

508,986

58,185Carrying Value

Securities with Fair
Value Exceeding
Carrying Value

Securities with Fair
Value notExceeding Carrying
Value

Japanese Government Bonds
Municipal Government Bonds
Short-Term Corporate Bonds
Corporate Bonds
Others
Total
Japanese Government Bonds
Municipal Government Bonds
Short-Term Corporate Bonds
Corporate Bonds
Others
Total
Total

Fair Value

Millions of U.S. Dollars
Carrying Value

Securities with Fair
Value Exceeding
Carrying Value

Securities with Fair
Value notExceeding Carrying
Value

Japanese Government Bonds
Municipal Government Bonds
Short-Term Corporate Bonds
Corporate Bonds
Others
Total
Japanese Government Bonds
Municipal Government Bonds
Short-Term Corporate Bonds
Corporate Bonds
Others
Total
Total



4,028
－
－
－
41
4,070
－
－
－
－
2
2
4,072

Fair Value
4,552
－
－
－
43
4,595
－
－
－
－
2
2
4,598

Unrealized
Gains (Losses)
524
－
－
－
1
525
－
－
－
－
(0)
(0)
525

59

As of March 31, 2020
Millions of Yen

446,559－－－
4,491
451,051
－
－
－
－
363
363

515,464－－－
4,607
520,071
－
－
－
－
361
361

Unrealized
Gains (Losses)
68,904－－－115
69,020
－
－
－
－
(1)
(1)

451,414

520,433

69,019Carrying Value

Securities with Fair
Value Exceeding
Carrying Value

Securities with Fair
Value notExceeding Carrying
Value

Japanese Government Bonds
Municipal Government Bonds
Short-Term Corporate Bonds
Corporate Bonds
Others
Total
Japanese Government Bonds
Municipal Government Bonds
Short-Term Corporate Bonds
Corporate Bonds
Others
Total
Total

Fair Value(3) Other Securities
As of March 31, 2021
Millions of Yen
Carrying Value

Securities with
Carrying Value
ExceedingAcquisition Cost

Securities with
Carrying Value not
ExceedingAcquisition Cost

60



Stocks
Bonds
Japanese Government Bonds
Municipal Government Bonds
Short-Term Corporate Bonds
Corporate Bonds
Others
Total
Stocks
Bonds
Japanese Government Bonds
Municipal Government Bonds
Short-Term Corporate Bonds
Corporate Bonds
Others
Total
Total

61,337
7,057,548
3,222,800
1,260,135－
2,574,612
4,469,467
11,588,353
1,585
4,410,662
2,309,509
561,758－
1,539,394
1,260,563
5,672,812
17,261,165

Acquisition Cost
29,1806,980,548
3,164,134
1,256,062－
2,560,351
4,064,681
11,074,411
1,772
4,435,365
2,332,102
562,361－
1,540,901
1,321,573
5,758,711
16,833,123

Unrealized
Gains (Losses)
32,15676,99958,666
4,072－
14,260404,786
513,942(186)(24,702)(22,593)(602)－(1,506)(61,009)(85,899)
428,042Millions of U.S. Dollars

Stocks
Bonds
Japanese Government Bonds
Municipal Government Bonds
Short-Term Corporate Bonds
Corporate Bonds
Others554
63,75929,115
11,384－23,25940,378263
63,06328,585
11,347－
23,13036,721

Unrealized
Gains (Losses)
290
695
530
36
－
128
3,656

Total
Stocks
Bonds
Japanese Government Bonds
Municipal Government Bonds
Short-Term Corporate Bonds
Corporate Bonds
Others
Total
Total

104,691
14
39,846
20,864
5,075－
13,907
11,38851,249155,941

100,048
16
40,07021,0685,080－
13,92011,93952,025
152,074

4,643
(1)
(223)
(204)
(5)
－
(13)
(551)
(776)
3,867

Carrying Value

Securities with
Carrying Value
ExceedingAcquisition Cost

Securities with
Carrying Value not
ExceedingAcquisition Cost

Acquisition Cost

As of March 31, 2020
Millions of Yen
Carrying Value

Securities with
Carrying Value
ExceedingAcquisition Cost

Securities with
Carrying Value not
ExceedingAcquisition Cost

Stocks
Bonds
Japanese Government Bonds
Municipal Government Bonds
Short-Term Corporate Bonds
Corporate Bonds
Others
Total
Stocks
Bonds
Japanese Government Bonds
Municipal Government Bonds
Short-Term Corporate Bonds
Corporate Bonds
Others
Total
Total

45,693
7,197,865
3,478,205
795,405
38,0162,886,238
3,749,648
10,993,207
11,3143,130,421
681,442629,785－
1,819,193
1,906,298
5,048,033
16,041,241

Acquisition Cost
19,472
7,077,397
3,382,735
791,00237,9982,865,660
3,422,636
10,519,506
14,192
3,146,777694,647
630,409－
1,821,721
1,966,749
5,127,719
15,647,225

Unrealized
Gains (Losses)
26,220120,468
95,4694,402
18
20,577
327,012473,701(2,878)(16,356)(13,205)(623)－(2,527)(60,451)(79,686)
394,015(4) Held-to-Maturity Debt Securities Sold during the Fiscal Year
Not applicable.

61

(5) Other Securities Sold during the Fiscal YearFor the Fiscal Year Ended March 31, 2021

StocksAmounts ofSecurities Sold
39,038Millions of Yen
Aggregate Gains on
Sale
9,236

Aggregate Losses on
Sale(2,980)

Bonds

219,091

9,977(2,528)Japanese Government Bonds

198,468

9,968(2,437)

Municipal Government Bonds

10,623－(86)

Short-Term Corporate Bonds

－

－

－

9,999

8

(4)

OthersCorporate Bonds

265,005

19,509(1,648)

Total

523,135

38,723(7,157)

StocksAmounts ofSecurities Sold
352

Bonds

1,979

90

(22)

Millions of U.S. Dollars
Aggregate Gains on
Aggregate Losses on
Sale
Sale
83
(26)

Japanese Government Bonds

1,793

90

(22)

Municipal Government Bonds

95

－

(0)

Short-Term Corporate Bonds

－

－

－

90

0

(0)

OthersCorporate Bonds

2,394

176

(14)

Total

4,726

349

(64)

StocksAmounts ofSecurities Sold
117,489

Millions of Yen
Aggregate Gains on
Sale
2,162

Aggregate Losses on
Sale(6,701)

Bonds

190,377

17,395(1,458)For the Fiscal Year Ended March 31, 2020

Japanese Government Bonds

186,874

17,392(1,458)Municipal Government Bonds

－

－

－

Short-Term Corporate Bonds

－

－

－

3,503

3

－

OthersCorporate Bonds

387,20921,009

(146)

Total

695,076

40,567(8,306)(6) Impaired Securities
Of Securities other than Trading Securities (excluding those where there is significant difficulty in determining fair value), if the fair value falls
by 30% or more compared with the acquisition price and it is not expected to recover up to the acquisition price in view of the rate of decline overpast periods, the securities are devalued and the fair value is recorded as the carrying amount on the consolidated balance sheet. In addition, thedifference between the fair value and the acquisition price is recognized as impairment losses in the fiscal year.
In the case where the issuer is classified as in bankrupted, de facto bankrupted, or doubtful borrower, impairment loss is recognized for
securities when the market price is below the acquisition price.
In the fiscal year ended March 31, 2021, there were no impairment losses.
In the fiscal year ended March 31, 2020, the amount of impairment losses on securities was ¥0 million (all impairment losses were incurredon stocks).

62

2. Money Held in Trust(1) Money Held in Trust for Trading Purposes
As of March 31, 2021

Millions of Yen
Unrealized Gains (Losses)
Recognized as Income

Carrying Value
Money Held in Trust for
Trading Purposes

60,000Carrying Value
Money Held in Trust for
Trading Purposes－
Millions of U.S. Dollars
Unrealized Gains (Losses)
Recognized as Income542

As of March 31, 2020－

Millions of Yen
Unrealized Gains (Losses)
Recognized as Income

Carrying Value
Money Held in Trust for
Trading Purposes

59,995－(2) Held-to-Maturity Money Held in Trust
Not applicable.
(3) Other Money Held in Trusts (Money Held in Trust other than Held for Trading Purposes or Held-to-Maturity)
As of March 31, 2021
Millions of Yen
Carrying
Value
Other Money Held in Trusts

48,030Acquisition
Cost
50,000

Unrealized
Gains(Losses)(1,969)Items with
Carrying Value
ExceedingAcquisition Cost

Items with
Carrying Valuenot Exceeding
Acquisition Cost－

(1,969)Items with
Carrying Value
ExceedingAcquisition Cost

Items with
Carrying Valuenot Exceeding
Acquisition Cost

Millions of U.S. Dollars
Carrying
Value

Acquisition
Cost

Unrealized
Gains(Losses)

Other Money Held in Trusts
433
451
(17)
－
(17)
Note:
Components of “Unrealized Gains (Losses)” are shown in “Items with Carrying Value Exceeding Acquisition Cost” and “Items with Carrying
Value not Exceeding Acquisition Cost”.
As of March 31, 2020

Millions of Yen
Carrying
Value

Acquisition
Cost

Unrealized
Gains(Losses)

Items with
Carrying Value
ExceedingAcquisition Cost

Items with
Carrying Valuenot Exceeding
Acquisition Cost

Other Money Held in Trusts
43,73250,000(6,267)－(6,267)
Note:
Components of “Unrealized Gains (Losses)” are shown in “Items with Carrying Value Exceeding Acquisition Cost” and “Items with Carrying
Value not Exceeding Acquisition Cost”.

63

3. Net Unrealized Gains on Other Securities and Other Money Held in Trust
Components of Net Unrealized Gains on Other Securities in the consolidated balance sheet are as follows:
As of March 31, 2021
Millions of
U.S. Dollars
Millions of Yen
Other Securities

428,582

3,871

Other Money Held in Trust(1,969)(17)

Net Unrealized Gains

426,613

3,854

Deferred Tax Liabilities

118,718

1,072

Net Unrealized Gains(Prior to Equity Method Adjustment)

307,894

2,781

Non-Controlling Interests’ Portion－－

Parent Company’s Portion of Valuation Differential for Other
Securities Held by Equity-Method-Applicable Companies－－

307,894

2,781

Net Unrealized Gains

Note:
Unrealized Gains on foreign currency translations of foreign currency-denominated other securities where there is significant
difficulty in determining fair value are included in “Other Securities” under “Net Unrealized Gains”.
As of March 31, 2020
Millions of Yen
Other Securities

394,015

Other Money Held in Trust(6,267)

Net Unrealized Gains

387,747

Deferred Tax Liabilities

108,203

Net Unrealized Gains(Prior to Equity Method Adjustment)

279,543

Non-Controlling Interests’ Portion－

Parent Company’s Portion of Valuation Differential for Other
Securities Held by Equity-Method-Applicable Companies－

Net Unrealized Gains

279,543

Note:
Unrealized Gains on foreign currency translations of foreign currency-denominated other securities where there is significant
difficulty in determining fair value are included in “Other Securities” under “Net Unrealized Gains”.

6428. Derivatives:
1. Derivative transactions to which hedge accounting is not applied
The following tables summarize the notional amount or the contracted principal equivalents, fair values, net unrealized gains (losses) and thevaluation methods of the fair values of the Bank’s derivative transactions that do not qualify for hedge accounting as of the consolidated balance
sheet date, which are classified by types of financial instruments. Please note that the notional amount in themselves do not reflect the market risk
associated with the Bank’s derivative transactions.
(1) Interest-Rate-Related Transactions
As of March 31, 2021
Millions of Yen
Notional Amount(Over 1 Year until
Fair Value
Settlement or Expiry)

Total
Notional
AmountNet Unrealized
Gains (Losses)

Exchange-Traded Transactions
Interest Rate Futures:
Sold

－

－

－

－

Bought

－

－

－

－

Sold

－

－

－

－

Bought

－

－

－

－

Sold

－

－

－

－

Bought－－－－Fixed Rate Receivable/Floating Rate Payable

4,927,409

3,489,591

69,50869,508Floating Rate Receivable/Fixed Rate Payable

4,741,064

3,459,445(70,103)(70,103)

Floating Rate Receivable/Floating Rate Payable

95,08080,750

73

73

－

－

－

－

Sold

－

－

－

－

Bought

－

－

－

－

Sold

554,540

352,000

210

210

Bought582,500

376,400(802)(1,996)(1,112)(2,306)

Interest Rate Options:Over the Counter Transactions
Interest Rate Forwards:

Interest Rate Swaps:

Fixed Rate Receivable/Fixed Rate Payable
Interest Rate Options:

Others:

Total



65

Millions of U.S. Dollars
Notional Amount(Over 1 Year until
Fair Value
Settlement or Expiry)

Total
Notional
AmountNet Unrealized
Gains (Losses)

Exchange-Traded Transactions
Interest Rate Futures:
Sold

－

－

－

－

Bought

－

－

－

－

Sold

－

－

－

－

Bought

－

－

－

－

Sold

－

－

－

－

Bought－－－－Fixed Rate Receivable/Floating Rate Payable

44,51531,525627

627

Floating Rate Receivable/Fixed Rate Payable

42,831

31,253

(633)

(633)

Floating Rate Receivable/Floating Rate Payable

858

729

0

0

Fixed Rate Receivable/Fixed Rate Payable

－

－

－

－

Sold

－

－

－

－

Bought

－

－

－

－

Sold

5,009

3,180

1

1

Bought

5,262

3,400

(7)

(18)

(10)

(20)

Interest Rate Options:Over the Counter Transactions
Interest Rate Forwards:

Interest Rate Swaps:

Interest Rate Options:

Others:

Total

Notes:
1. Transactions mentioned above are valued at fair value, and Net Unrealized Gains (Losses) are accounted for in the consolidated
statement of income.
2. Fair value calculation: Exchange-Traded Transactions are valued on the basis of closing prices, mainly on the Tokyo Financial ExchangeInc. Over the counter transactions are valued using discounted present value or calculation models for option prices, etc.

66As of March 31, 2020
Millions of Yen
Notional Amount(Over 1 Year until
Fair Value
Settlement or Expiry)

Total
Notional
AmountNet Unrealized
Gains (Losses)

Exchange-Traded Transactions
Interest Rate Futures:
Sold

－

－

－

－

Bought

－

－

－

－

Sold

－

－

－

－

Bought

－

－

－

－

Sold

－

－

－

－

Bought－－－－Fixed Rate Receivable/Floating Rate Payable

5,466,663

4,247,094

115,004

115,004

Floating Rate Receivable/Fixed Rate Payable

5,598,564

3,977,614(111,535)(111,535)

Floating Rate Receivable/Floating Rate Payable

140,080

93,080

9

9

－

－

－

－

Sold

－

－

－

－

Bought

－

－

－

－

Sold

647,140

273,140(4,308)(1,192)

Bought793,500

416,700(1,505)(5,430)(2,335)(3,144)

Interest Rate Options:Over the Counter Transactions
Interest Rate Forwards:

Interest Rate Swaps:

Fixed Rate Receivable/Fixed Rate Payable
Interest Rate Options:

Others:

Total

Notes:
1. Transactions mentioned above are valued at fair value, and Net Unrealized Gains (Losses) are accounted for in the consolidated
statement of income.
2. Fair value calculation: Exchange-Traded Transactions are valued on the basis of closing prices, mainly on the Tokyo Financial ExchangeInc. Over the counter transactions are valued using discounted present value or calculation models for option prices, etc.

67

(2) Currency-Related Transactions
As of March 31, 2021
Total Notional
AmountMillions of Yen
Notional Amount(Over 1 Year until
Fair Value
Settlement or Expiry)

Net Unrealized
Gains (Losses)

Exchange-Traded Transactions
Currency Futures:
Sold

－

－

－

－

Bought

－

－

－

－

Sold

－

－

－

－

Bought

－

－

－

－

2,608

44

34

34

Currency Options:Over the Counter Transactions
Currency Swaps:
Forward Foreign Exchange Contracts:
Sold247,652

1,772(6,517)(6,517)

Bought115,256

1,627

3,595

3,595

Sold

－

－

－

－

Bought

－

－

－

－

Sold

－

－

－

－

Bought－－Currency Options:

Others:

Total

68



－

－

(2,887)(2,887)

Total Notional
AmountMillions of U.S. Dollars
Notional Amount(Over 1 Year until
Fair Value
Settlement or Expiry)

Net Unrealized
Gains (Losses)

Exchange-Traded Transactions
Currency Futures:
Sold

－

－

－

－

Bought

－

－

－

－

Sold

－

－

－

－

Bought

－

－

－

－

23

0

0

0

Sold

2,237

16

(58)

(58)

Bought

1,041

14

32

32

Sold

－

－

－

－

Bought

－

－

－

－

Sold

－

－

－

－

Bought

－

－

－

－

(26)

(26)

Currency Options:Over the Counter Transactions
Currency Swaps:
Forward Foreign Exchange Contracts:

Currency Options:

Others:

Total

Notes:
1. Transactions mentioned above are valued at fair value, and Net Unrealized Gains (Losses) are accounted for in the consolidated
statement of income.
2. Fair value calculation: Transactions are valued using discounted present value, etc. (for currency swaps, fair value is calculated after
deduction of principal.)69

As of March 31, 2020
Total Notional
AmountMillions of Yen
Notional Amount(Over 1 Year until
Fair Value
Settlement or Expiry)

Net Unrealized
Gains (Losses)

Exchange-Traded Transactions
Currency Futures:
Sold

－

－

－

－

Bought

－

－

－

－

Sold

－

－

－

－

Bought

－

－

－

－

5,932

2,644

46

46

Sold

151,881－(1,572)(1,572)

Bought75,550

－

171

171

Sold

－

－

－

－

Bought

－

－

－

－

Sold

－

－

－

－

Bought－－Currency Options:Over the Counter Transactions
Currency Swaps:
Forward Foreign Exchange Contracts:

Currency Options:

Others:

Total

－

－

(1,355)(1,355)

Notes:
1. Transactions mentioned above are valued at fair value, and Net Unrealized Gains (Losses) are accounted for in the consolidated
statement of income.
2. Fair value calculation: Transactions are valued using discounted present value, etc. (for currency swaps, fair value is calculated after
deduction of principal.)(3) Stock-Related Transactions
Not applicable.

70(4) Bond-Related Transactions
As of March 31, 2021
Millions of Yen
Notional Amount(Over 1 Year until
Fair Value
Settlement or Expiry)

Total
Notional
AmountNet Unrealized
Gains (Losses)

Exchange-Traded Transactions
Bond Futures:
Sold

1,511

－

0

0

Bought

302

－

(0)

(0)

Sold

－

－

－

－

Bought

－

－

－

－

Sold

－

－

－

－

Bought

－

－

－

－

Sold

－

－

－

－

Bought

－

－

－

－

－

－

Bond Futures Options:Over the Counter Transactions
Bond Options:

Others:

Total

Millions of U.S. Dollars
Notional Amount(Over 1 Year until
Fair Value
Settlement or Expiry)

Total
Notional
AmountNet Unrealized
Gains (Losses)

Exchange-Traded Transactions
Bond Futures:
Sold

13

－

0

0

Bought

2

－

(0)

(0)

Bond Futures Options:
Sold

－

－

－

－

Bought－－－－Over the Counter Transactions
Bond Options:
Sold

－

－

－

－

Bought－－－－Others:

Total

Sold

－

－

－

－

Bought

－

－

－

－

－

－

Notes:
1. Transactions mentioned above are valued at fair value, and Net Unrealized Gains (Losses) are accounted for in the consolidated
statement of income.
2. Fair value calculation: Exchange-Traded Transactions are valued on the basis of closing prices, mainly on the Osaka Exchange, Inc.
Over the counter transactions are valued using calculation models for option prices, etc.

71

As of March 31, 2020
Millions of Yen
Notional Amount(Over 1 Year until
Fair Value
Settlement or Expiry)

Total
Notional
AmountNet Unrealized
Gains (Losses)

Exchange-Traded Transactions
Bond Futures:
Sold

2,135

－

(0)

(0)

Bought

762

－

－

－

Sold

－

－

－

－

Bought

－

－

－

－

Sold

－

－

－

－

Bought

－

－

－

－

Sold

－

－

－

－

Bought

－

－

－

－

(0)

(0)

Bond Futures Options:Over the Counter Transactions
Bond Options:

Others:

Total

Notes:
1. Transactions mentioned above are valued at fair value, and Net Unrealized Gains (Losses) are accounted for in the consolidated
statement of income.
2. Fair value calculation: Exchange-Traded Transactions are valued on the basis of closing prices, mainly on the Osaka Exchange, Inc.
Over the counter transactions are valued using calculation models for option prices, etc.

(5) Commodity-Related Derivative Transactions
Not applicable.

(6) Credit Derivative Transactions
Not applicable.

722. Derivative transactions to which hedge accounting is applied
The following summarizes the notional amount or the contracted principal equivalents, fair values and the valuation methods of the fair values of
the Bank’s derivative transactions that qualify for hedge accounting as of the consolidated balance sheet date, which are classified by types offinancial instruments and methods for hedge accounting. Please note that the notional amount in themselves do not reflect the market risk
associated with the Bank’s derivative transactions.
(1) Interest-Rate-Related Transactions
As of March 31, 2021
Method for Hedge
Accounting
Basic Treatment

Exceptional
Treatments forInterest Rate
Swaps

Items

Millions of Yen
Notional Amount(Over 1 Year until
Settlement or Expiry)

Total Notional
AmountInterest Rate Swaps
Fixed Rate Receivable/Floating Rate Payable

－

－

－

Floating Rate Receivable/Fixed Rate Payable

3,901,015

2,596,065(33,805)

Fixed Rate Receivable/Floating Rate Payable

－

－

－

Floating Rate Receivable/Fixed Rate Payable

1,046,891

1,040,819(57,195)

Interest Rate Swaps

Total

Method for Hedge
Accounting
Basic Treatment

Exceptional
Treatments forInterest Rate
Swaps

Fair Value(91,001)

Items

Millions of U.S. Dollars
Notional Amount
Total Notional(Over 1 Year until
AmountSettlement or Expiry)

Fair Value

Interest Rate Swaps
Fixed Rate Receivable/Floating Rate Payable

－

－

－

Floating Rate Receivable/Fixed Rate Payable

35,242

23,453(305)

Fixed Rate Receivable/Floating Rate Payable

－

－

－

Floating Rate Receivable/Fixed Rate Payable

9,457

9,403

(516)

Interest Rate Swaps

Total

(822)

Notes:
1. Most of hedged items with respect to Basic Treatment are Interest-bearing assets and liabilities such as Loans and Bills Discounted,
Other Securities (Bonds) and Deposits.
2. Hedged items with respect to Exceptional Treatments for Interest Rate Swaps are Loans and Bills Discounted, Held-to-Maturity Debt
Securities and Debentures.
3. The deferred method of hedge accounting is primarily applied to the transactions mentioned above based on the Industry Committee
Practical Guidelines No. 24.
4. Fair value calculation: Exchange-Traded Transactions are valued on the basis of closing prices, mainly on the Tokyo Financial ExchangeInc. Over the counter transactions are valued using discounted present value or calculation models for option prices, etc.

73

As of March 31, 2020
Method for Hedge
Accounting
Basic Treatment

Exceptional
Treatments forInterest Rate
Swaps

Items

Millions of Yen
Notional Amount(Over 1 Year until
Settlement or Expiry)

Total Notional
AmountFair Value

Interest Rate Swaps
Fixed Rate Receivable/Floating Rate Payable

－

－

－

Floating Rate Receivable/Fixed Rate Payable

4,366,665

3,866,556(221,003)

Fixed Rate Receivable/Floating Rate Payable

－

－

－

Floating Rate Receivable/Fixed Rate Payable

1,050,939

1,049,781(69,224)

Interest Rate Swaps

Total(290,227)

Notes:
1. Most of hedged items with respect to Basic Treatment are Interest-bearing assets and liabilities such as Loans and Bills Discounted,
Other Securities (Bonds) and Deposits.
2. Hedged items with respect to Exceptional Treatments for Interest Rate Swaps are Loans and Bills Discounted, Held-to-Maturity Debt
Securities and Debentures.
3. The deferred method of hedge accounting is primarily applied to the transactions mentioned above based on the Industry Committee
Practical Guidelines No. 24.
4. Fair value calculation: Exchange-Traded Transactions are valued on the basis of closing prices, mainly on the Tokyo Financial ExchangeInc. Over the counter transactions are valued using discounted present value or calculation models for option prices, etc.
(2) Currency-Related Transactions
As of March 31, 2021
Millions of Yen
Method for Hedge
Accounting
Basic Treatment

Items
Currency Swaps

Notional Amount(Over 1 Year until
Settlement or Expiry)

Total Notional
Amount522,290

Fair Value

400,876(2,815)

Forward Foreign Exchange Contracts:
Sold

626

－

(33)

Bought

－

－

－

Total

(2,849)Millions of U.S. Dollars

Method for Hedge
Accounting
Basic Treatment

Items
Currency Swaps

Notional Amount(Over 1 Year until
Settlement or Expiry)

Total Notional
Amount
4,718

3,621

Fair Value(25)

Forward Foreign Exchange Contracts:
Sold

5

－

(0)

Bought

－

－

－

Total

(25)

Notes:
1. Most of hedged items are foreign currency-denominated securities, Due from Banks, etc.
2. The deferred method of hedge accounting is primarily applied to the transactions mentioned above based on the Industry Committee
Practical Guidelines No. 25.
3. Fair value calculation: Transactions are valued using discounted present value, etc. (for currency swaps, fair value is calculated after
deduction of principal.)74As of March 31, 2020
Millions of Yen
Method for Hedge
Accounting
Basic Treatment

Items
Currency Swaps

Notional Amount(Over 1 Year until
Settlement or Expiry)

Total Notional
Amount554,330

Fair Value

445,714(565)

48,767

－

596

－

－

－

Forward Foreign Exchange Contracts:
Sold
BoughtTotal

31

Notes:
1. Most of hedged items are foreign currency-denominated securities, Due from Banks, etc.
2. The deferred method of hedge accounting is primarily applied to the transactions mentioned above based on the Industry Committee
Practical Guidelines No. 25.
3. Fair value calculation: Transactions are valued using discounted present value, etc. (for currency swaps, fair value is calculated after
deduction of principal.)(3) Stock-Related Transactions
Not applicable.
(4) Bond-Related Transactions
Not applicable.

29. Related Party Transactions:
For the Fiscal Year Ended March 31, 2021
There were no significant related-party transactions.
For the Fiscal Year Ended March 31, 2020
There were no significant related-party transactions.

30. Segment Information:(1) Description of Reportable Segments
The Group classifies the businesses of the Bank and its consolidated subsidiaries as single business segment, respectively. Among those businesssegments, the business of the Bank is determined as the reportable segment.
The Bank, as an individual financial institution, provides such services as deposits, debentures, lending, market fund management, trading
operations, clearing and trust business. As the central financial institution for Shinkin Banks, the Bank complements the functions of the Shinkin
Banks and operates the shinkin bank industry’s own safety net, including the Shinkin Bank Management Reinforcement System. By doing so, theBank strives to maintain an orderly financial system within the shinkin bank industry.
(2) Method of Calculating Amounts by Reportable Segment
The accounting methods of the reportable segment are consistent with those described in the “Significant Accounting Policies”. Reportablesegment profit is based on profit attributable to owners of parent.

75

(3) Amounts by Reportable Segment
For the Fiscal Year Ended March 31, 2021

(Millions of Yen)

Reportable segment
Shinkin Central Bank
business

Other

Total

Adjustment

Amount presented
in the consolidated
financial statements

IncomeExternal customers
Inter-segment
Total

224,31236,707

261,020(9)261,011

2,934

1,533

4,467

(4,467)－227,247

38,241

265,488(4,476)

261,011

Segment profit

29,5792,990

32,569(919)

31,649Segment assets

43,654,176

272,879

43,927,055(83,526)

43,843,528

Segment liabilities

41,963,346

183,520

42,146,866(30,659)

42,116,207

Depreciation
Interest Income

4,934
174,728

5,325
605

10,259175,333(0)(171)

10,259175,162Interest Expenses

83,92048

83,968(38)

83,930

Income Taxes

10,201

1,358

11,560(174)

11,385

Increase in Tangible andIntangible Fixed Assets

4,343

3,418

7,761

－

7,761

Other items(Millions of U.S. Dollars)
Reportable segment
Shinkin Central Bank
business

Other

Total

Adjustment

Amount presented
in the consolidated
financial statements

IncomeExternal customers
Inter-segment
Total

2,026

331

2,358

(0)

2,358

26

13

40

(40)

－

2,053

345

2,398

(40)

2,358

Segment profit

267

27

294

(8)

285

Segment assets

394,3822,465

396,847(754)

396,092

Segment liabilities

379,106

1,657

380,764(276)

380,487

Depreciation
Interest Income

44
1,578

48
5

92
1,584

(0)
(1)

92
1,582

Interest Expenses

758

0

758

(0)

758

Income Taxes

92

12

104

(1)

102

Increase in Tangible andIntangible Fixed Assets

39

30

70

－

70

Other items

Notes:
1. The “Other” is a business segment not included in our reportable segment and relates to businesses performed by consolidated
subsidiaries.
The Bank’s consolidated subsidiaries provide such financial services as brokerage & dealing, overseas business support, consumer credit
guarantees, asset management, investment and M&A advisory operations, and data processing services. Shinkin Singapore Pte. Ltd. wasestablished on February 3, 2021 to provide overseas business support services.
2. Adjustment comprises the following.
(i) Within adjustment of segment profit, reduction of ¥919 million ($8 million) comprises reduction of ¥390 million ($3 million) on
profit attributable to non-controlling interests and ¥529 million ($4 million) on inter-segment eliminations, etc.
(ii) Within adjustment of segment assets, reduction of ¥83,526 million ($754 million) comprises reduction of ¥43,199 million ($390
million) on eliminations relating to capital consolidation and ¥40,327 million ($364 million) on inter-segment eliminations, etc.
(iii) The adjustment for other items including reduction of ¥30,659 million ($276 million) on the adjustment of segment liabilities
comprises inter-segment eliminations, etc.
3. Segment profit has been adjusted from profit attributable to owners of parent presented in the consolidated statement of income.

76For the Fiscal Year Ended March 31, 2020

(Millions of Yen)

Reportable segment
Other

Shinkin Central Bank
business

Total

Amount presented
in the consolidated
financial statements

Adjustment

IncomeExternal customers

263,337

38,649301,986(31)

301,954

3,182

1,729

4,912

(4,912)－

266,519

40,379306,899(4,944)

301,954

Inter-segment
Total
Segment profit

37,924

3,164

41,089(862)

40,227

Segment assets

40,633,271

322,334

40,955,605(87,508)

40,868,096

Segment liabilities

39,112,432

237,069

39,349,501(31,691)

39,317,809

Depreciation
Interest Income

5,111
207,066

6,155
245

11,267
207,312(0)(109)

11,266207,202

Interest Expenses

113,68556

113,742(41)

113,700

Income Taxes

14,365

1,437

15,802(145)

15,656

Increase in Tangible andIntangible Fixed Assets

3,402

7,093

10,495－

10,495

Other items

Notes:
1. The “Other” is a business segment not included in our reportable segment and relates to businesses performed by consolidated
subsidiaries.
The Bank’s consolidated subsidiaries provide such financial services as brokerage & dealing, consumer credit guarantees, asset
management, investment and M&A advisory operations, and data processing services.
2. Adjustment comprises the following.
(i) Within adjustment of segment profit, reduction of ¥862 million comprises reduction of ¥474 million on profit attributable tonon-controlling interests and ¥388 million on inter-segment eliminations, etc.
(ii) Within adjustment of segment assets, reduction of ¥87,508 million comprises reduction of ¥43,114 million on eliminations relating tocapital consolidation and ¥44,394 million on inter-segment eliminations, etc.
(iii) The adjustment for other items including reduction of ¥31,691 million on the adjustment of segment liabilities comprises
inter-segment eliminations, etc.
3. Segment profit has been adjusted from profit attributable to owners of parent presented in the consolidated statement of income.

(Related Information)
For the Fiscal Year Ended March 31, 2021
1. Information by service(Millions of Yen)

Securities investment
operations
Income from externalcustomers

188,775

Lending operations

Other

17,565

Total
54,671

261,011(Millions of U.S. Dollars)

Securities investment
operations
Income from externalcustomers



1,705

Lending operations
158

Other

Total
493

2,358

77

2. Information by geographic region(1) Income
Japan
121,567

Japan

United States
21,496

EuropeUnited States

EuropeOther26,264

91,683

Other

1,098
194
237
Note: Income from derivative transactions and Trading income are included in Other.

(Millions of Yen)
Total
261,011(Millions of U.S. Dollars)
Total
828
2,358

(2) Tangible fixed assets
The Group’s tangible fixed assets located in Japan account for over 90% of the tangible fixed assets presented in the consolidated balance sheet.
Consequently, this information is omitted.

3. Information by principal customer
Name of customer
The Government of Japan

IncomeName of customer
The Government of Japan

Income30,486(Millions of Yen)
Related segment
Shinkin Central Bank business

275(Millions of U.S. Dollars)
Related segment
Shinkin Central Bank business

For the Fiscal Year Ended March 31, 2020
1. Information by service(Millions of Yen)

Securities investment
operations
Income from externalcustomers

Lending operations

217,714

20,371

Other

Total
63,868

2. Information by geographic region(1) Income
Japan

United States
EuropeOther132,751
31,84826,964
110,390
Note: Income from derivative transactions and Trading income are included in Other.

301,954(Millions of Yen)
Total
301,954(2) Tangible fixed assets
The Group’s tangible fixed assets located in Japan account for over 90% of the tangible fixed assets presented in the consolidated balance sheet.
Consequently, this information is omitted.
3. Information by principal customer
Name of customer
The Government of Japan78



Income39,356(Millions of Yen)
Related segment
Shinkin Central Bank business(Information related to Impairment losses of Fixed Assets by Reportable Segment)
For the Fiscal Year Ended March 31, 2021
Not applicable.
For the Fiscal Year Ended March 31, 2020

Impairment losses(Millions of Yen)

Reportable segment
Shinkin Central Bank business
86

Other

Total
86

－

Note: The “Other” is a business segment not included in our reportable segment and relates to businesses performed by consolidated
subsidiaries.
The Bank’s consolidated subsidiaries provide such financial services as brokerage & dealing, consumer credit guarantees, asset
management, investment and M&A advisory operations, and data processing services.

(Information related to Amortization of Goodwill and Balance of Unamortized Goodwill by Reportable Segment)
Not applicable.
(Information related to Accrual of Income from Negative Goodwill by Reportable Segment)
Not applicable.

31. Amounts per Share:

Yen
2021

Net Assets per Share

320,620.85

283,111.71

2,896.56

Net Income per Share

4,401.33

5,679.98

39.76

－

－

－

Net Income per Share after Adjustment for Common
Share equivalents



U.S. Dollars
2021

2020

79

Notes:1. The basis for calculation of net assets per share is as follows:
2021

2020

2021

Total Net Assets

Millions of Yen

1,727,321

1,550,287

Millions of U.S.
Dollars

Amount Deducted from Total Net Assets

Millions of Yen

217,767

217,334

Millions of U.S.
Dollars

1,967

Non-Controlling Interests

Millions of Yen

12,642

12,209Millions of U.S.
Dollars114

Preferred Dividends

Millions of Yen

2,124

2,124

Millions of U.S.
Dollars

19

Dividend Attributable to SpecificCommon Shares

Millions of Yen

3,000

3,000

Millions of U.S.
Dollars

27

Distribution of Residual Assets
Millions of Yen
Attributable to Specific Common Shares

200,000

200,000

Millions of U.S.
Dollars

1,806

Millions of Yen

1,509,554

1,332,952

Millions of U.S.
Dollars

13,637

Number of Share Units at Fiscal Year-end
Used to Calculate Net Assets per ShareUnit

4,708,222

4,708,222－－

Number of General Common Share
Units

Unit

4,000,000

4,000,000－－

Number of Preferred Share UnitsUnit

708,222708,222－－

Net Assets at Fiscal Year-end Used to
Calculate Net Assets per Share

15,605* When calculating net assets per share, of dividend attributable to preferred shares, preferred dividends are deducted from total net assets
whereas participating dividends are not deducted from total net assets.
Dividend attributable to specific common shares and distribution of residual assets attributable to specific common shares are
deducted from total net assets, and the number of specific common shares is not included within the number of shares.
2. The basis for calculation of net income per share is as follows:
2021

2020

2021

Millions of Yen

31,64940,227

Millions of U.S.
Dollars

285

Amount Deducted from Profit Attributable
Millions of Yen
to Owners of Parent

2,124

2,124

Millions of U.S.
Dollars

19

Millions of Yen

2,124

2,124

Millions of U.S.
Dollars

19

Profit Attributable to Owners of Parent
Used to Calculate Net Income per Share

Millions of Yen

29,525

38,102Millions of U.S.
Dollars

266

Average Number of Share Units for the
Fiscal YearUnit

6,708,222

6,708,222－－

Average Number of General Common
Share Units

Unit

4,000,000

4,000,000－－

Average Number of Specific Common
Share Units

Unit

2,000,000

2,000,000－－

Average Number of Preferred
Share UnitsUnit

708,222708,222－－

Profit Attributable to Owners of Parent

Preferred Dividend* When calculating net income per share, of dividends attributable to preferred securities, dividends attributable to preferred shares are
deducted from profit attributable to owners of parent whereas participating dividends are not deducted from profit attributable to ownersof parent.
3. Net income per share after adjustment for common share equivalents is not listed as there are no dilutive securities.

32. Subsequent Events:
Not applicable.

80Independent Auditor’s Report

The Board of Directors
Shinkin Central Bank
OpinionWe have audited the accompanying consolidated financial statements of Shinkin Central Bankand its consolidated subsidiaries (the Group), which comprise the consolidated balance sheet as
at March 31, 2021, and the consolidated statements of income, comprehensive income, changes
in net assets, and cash flows for the year then ended, and notes to the consolidated financial
statements.
In our opinion, the accompanying consolidated financial statements present fairly, in all material
respects, the consolidated financial position of the Group as at March 31, 2021, and its
consolidated financial performance and its consolidated cash flows for the year then ended inaccordance with accounting principles generally accepted in Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for
the Audit of the Consolidated Financial Statements section of our report. We are independent of
the Group in accordance with the ethical requirements that are relevant to our audit of theconsolidated financial statements in Japan, and we have fulfilled our other ethical responsibilities
in accordance with these requirements. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significancein our audit of the consolidated financial statements of the current period. These matters wereaddressed in the context of the audit of the consolidated financial statements as a whole, and informing the auditor’s opinion thereon, and we do not provide a separate opinion on these matters.

81

Reasonableness of determination of the borrower classification in light of the effect of the
COVID-19 pandemic and the appropriateness of the inputs applied to the cash flow estimate method
Key Audit Matter

Auditor’s Responses

The Group extends loans to central and local
governments, public service corporations, aswell as domestic and overseas companies
mainly including listed companies, andrecorded Loans and Bills Discounted of¥8,446,047 million, representing 19.3% of
total assets, on its consolidated balance sheet
as of March 31, 2021.

We performed the following audit procedures
to examine the reasonableness of determinationof the borrower classification and theappropriateness of the inputs applied to the
DCF method, among others:･

It is possible that these loans may default due
to domestic and global economic situation,
fluctuations in the real estate and stock markets,
deterioration in the business conditions of ･individual borrowers, and the impact of stagnant
economy caused by the recent COVID-19
pandemic.
Consequently, the Group calculates theamount of expected losses from future defaults
and records them as Reserve for Possible Loan
Losses.

We evaluated the design and operating
effectiveness of the Group’s internal control
over assignment of internal credit ratingsand determination of the borrowerclassification as well as application of the
DCF method.
We involved our credit risk assessment
experts to examine the appropriateness ofthe credit rating system used as the basis
for determining the borrower classification,by inspecting the results of the Group’s
validation of its internal rating model inthe credit rating system and comparing theinternal rating model with industry practices.

As of March 31, 2021, the Group had Reserve ･ In order to examine the reasonableness offor Possible Loan Losses of ¥29,963 million
the assumptions made by the Group about
on its consolidated balance sheet. The specific
the timing when the COVID-19 pandemic
principles to calculate reserve for possible loan
is contained and the degree of effect on thelosses are stated in Note 2 Significant
borrower’s debt servicing capacity, we
compared those assumptions with available
Accounting Policies (9) Reserve for Possible
Loan Losses and (19) Significant Accounting
external information such as economic
Estimates.
forecasts published by public institutions.
The reserve for possible loan losses is calculated ･in accordance with the Group’s internal rules
for self-assessment of asset quality and writeoffs/provision, and the calculation processincludes determination of the borrowerclassification in the self-assessment of asset
quality based on the credit rating system, bywhich the Group evaluates the borrower’s debt
servicing capacity in terms of the borrower’s
repayment history, financial condition, businessperformance and prospects thereof. For certain
borrowers’ loans, the reserve for loan losses iscalculated using the cash flow estimate method(hereinafter referred to as the “DCF method”).

82

In order to examine the appropriateness ofthe classification of individual borrowers,
we selected sample borrowers, taking into
account such factors as borrowers’ industry,
repayment history, financial position,
operating performance and the degree of
impact of the COVID-19 pandemic on the
borrowers’ debt servicing capacity, in
addition to the monetary impact of the
migration of the borrower classification on
the amount of the reserve for possible loan
losses.

In determining the borrower classifications, ･ In order to comprehend the recent repayment
the Group assumed that the impact of thehistory, financial condition and operating
performance of the borrowers selected as
stagnation in economic activities caused by the
samples, we inspected the sets of the
COVID-19 pandemic will persist until the end
documents used for self-assessment ofof the fiscal year ending March 31, 2022, thatthe pace of recovery in economic and corporate
asset quality by the Group, which include
activities will be extremely slow during that
but are not limited to explanatory materials
period, and that the business performance ofon the borrowers’ business profile,certain industries, such as airlines and natural
supporting materials on historicalresources, will be significantly affected over a
experiences of borrowing activities,
certain period of time. The classification of the
supporting materials to understand theborrower is determined considering suchactual financial condition, financial
factors as whether their future performance isstatements and trial balances in light of the
expected to be significantly affected by theseavailable external information. In addition,
assumptions. In applying the DCF method, thewe made inquiries to the Credit Planningreserve for loan losses is calculated based on& Supervision Division as necessary.
the key assumptions of the repayment plan ･ In order to examine the reasonableness of
prepared by the borrowers, their credit conditions,
the Group’s prospects of individual
the Group’s lending policy, and inputs such as
borrowers, we comprehended the Group’s
default rates issued by the external rating
analysis of the extent of effect of theagencies based on the creditworthiness of the
COVID-19 pandemic on the individual
borrower.
borrowers and the borrowers’ repayment
history. We then analyzed the trend from
Prospects of such factors as the individual
borrowers’ performance are highly uncertain
the past in respect of forecasts of major
because they are affected by changes in theincome statement items, such as net sales
and ordinary income, and major balancebusiness environment surrounding the borrowers,
including the COVID-19 pandemic, andsheet items, such as shareholders’ equityof the borrowers, in the Group’s analysis,
outcome of the borrowers’ business strategies.
and compared the assumptions used in
If the borrower classification downgrades, thecredit cost may increase, significantly affecting
these forecasts with the available external
information on the industry in which thethe financial performance and financial
position of the Group. In addition, since theborrower operates.
various inputs used in the DCF method cannot ･ In order to examine the appropriateness ofbe objectively or uniquely determined, there is
the Group’s assessment of the reasonablenessa high degree of reliance on management’s
and feasibility of the repayment plan
judgment.
which underlies the future cash flows used
as inputs for the DCF method, we compared
the assumptions in the repayment planwith available external information and theGroup’s lending policies, and compared
the cash flows estimated in the previous
year with the actual results.

Therefore, the reasonableness of determinationof the borrower classification and theappropriateness of the inputs applied to the
DCF method are considered a key audit matter.

･In order to assess the reasonableness of theprobability of default used as an input for
the DCF method, we compared it with thedefault rates available in external
information. Also, we recalculated thepresent value of the cash flows using those
inputs.
83

Responsibilities of Management and the Corporate Auditors for the Consolidated Financial
Statements
Management is responsible for the preparation and fair presentation of these consolidated financial
statements in accordance with accounting principles generally accepted in Japan, and for suchinternal control as management determines is necessary to enable the preparation of consolidated
financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing theGroup’s ability to continue as a going concern and disclosing, as required by accounting principles
generally accepted in Japan, matters related to going concern.
The Corporate Auditors are responsible for overseeing the Group’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial
statements as a whole are free from material misstatement, whether due to fraud or error, and toissue an auditor’s report that includes our opinion. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of these consolidated financial
statements.
As part of an audit in accordance with auditing standards generally accepted in Japan, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:・ Identify and assess the risks of material misstatement of the consolidated financial
statements, whether due to fraud or error, design and perform audit procedures responsive tothose risks, and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion.
・ Consider internal control relevant to the audit in order to design audit procedures that areappropriate in the circumstances for our risk assessments, while the purpose of the audit of
the consolidated financial statements is not expressing an opinion on the effectiveness of theGroup’s internal control.
・ Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
・ Conclude on the appropriateness of management’s use of the going concern basis ofaccounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Group’s ability tocontinue as a going concern. If we conclude that a material uncertainty exists, we are required
to draw attention in our auditor’s report to the related disclosures in the consolidated financial
statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditor’s report. However, future
events or conditions may cause the Group to cease to continue as a going concern.
・ Evaluate the overall presentation, structure and content of the consolidated financial
statements, including the disclosures, and whether the consolidated financial statements
represent the underlying transactions and events in a manner that achieves fair presentation inaccordance with accounting principles generally accepted in Japan.

84

・ Obtain sufficient appropriate audit evidence regarding the financial information of the entities
or business activities within the Group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the groupaudit. We remain solely responsible for our audit opinion.

We communicate with the Corporate Auditors regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including any significant deficiencies ininternal control that we identify during our audit.
We also provide the Corporate Auditors with a statement that we have complied with the ethicalrequirements regarding independence that are relevant to our audit of the financial statements inJapan, and to communicate with them all relationships and other matters that may reasonably bethought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the Corporate Auditors, we determine those matters thatwere of most significance in the audit of the consolidated financial statements of the current period
and are therefore the key audit matters. We describe these matters in our auditor’s report unlesslaw or regulation precludes public disclosure about the matter or when, in extremely rare
circumstances, we determine that a matter should not be communicated in our report because theadverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
Interest Required to Be Disclosed by the Certified Public Accountants Act of Japan
Our firm and its designated engagement partners do not have any interest in the Group which is
required to be disclosed pursuant to the provisions of the Certified Public Accountants Act of Japan.
Convenience Translation
The U.S. dollar amounts in the accompanying consolidated financial statements with respect tothe year ended March 31, 2021 are presented solely for convenience. Our audit also included thetranslation of Japanese yen amounts into U.S. dollar amounts and, in our opinion, such translation
has been made on the basis described in Note 1 to the consolidated financial statements.
Ernst & Young ShinNihon LLC
Tokyo, Japan
June 25, 2021
/s/ Ryuji Takagi
Designated Engagement Partner
Certified Public Accountant/s/ Ken Komatsuzaki
Designated Engagement Partner
Certified Public Accountant

85

Non-Consolidated Balance Sheet
Shinkin Central Bank As of March 31,
AssetsCash and Due from Banks
Call Loans
Receivables under Resale Agreements
Monetary Claims Bought
Trading Assets
Money Held in Trust
Securities
Loans and Bills Discounted
Foreign Exchanges Assets
Other Assets
Tangible Fixed Assets
Intangible Fixed Assets
Customers' Liabilities for Acceptances and Guarantees
Reserve for Possible Loan Losses
Total Assets

86

Millions of
U.S. Dollars

Millions of Yen
2021

2020

15,057,804
494,181365,228
180,309257,067
108,030
17,744,905
8,451,005
20,676917,274
66,472
4,863
15,981(29,625)
43,654,176

13,517,962
107,166
19,999222,175
385,224
103,727
16,477,301
8,474,068
79,114
1,181,019
66,7105,774
23,689(30,665)
40,633,271

136,035
4,464
3,299
1,628
2,322
975
160,31176,348
186
8,286
600
43
144
(267)
394,382

Liabilities and Net Assets
Liabilities
Deposits
Debentures
Trading Liabilities
Borrowed Money
Call Money
Payables under Repurchase Agreements
Payables under Securities Lending Transactions
Foreign Exchanges Liabilities
Borrowed Money from Trust Account
Other Liabilities
Reserve for Employee Bonuses
Reserve for Directors' Bonuses
Reserve for Employee Retirement Benefits
Reserve for Directors' Retirement Allowances
Deferred Tax Liabilities
Deferred Tax Liabilities for Land Revaluation
Acceptances and Guarantees
Total Liabilities

33,787,924
1,774,270
29,2354,020,480
10,166
285,725
1,695,042
2,055
30,300180,768
1,361
91
26,362395
97,106
6,081
15,981
41,963,346

31,208,596
2,141,480
36,9373,250,980
16,191
228,458
1,788,395
1,413
22,021
325,971
1,371
90
24,826489
35,438
6,081
23,68939,112,432

305,248
16,029264
36,32191
2,581
15,313
18
273
1,633
12
0
238
3
877
54
144
379,106

Total Net Assets
Total Liabilities and Net Assets

1,690,829
43,654,176

1,520,838
40,633,271

15,275394,382

2021

Non-Consolidated Statement of Income
Shinkin Central Bank For the year ended March 31,
IncomeInterest Income:Interest on Loans and Discounts
Interest on Due from Banks
Interest on Call Loans
Interest on Receivables under Resale Agreements
Interest and Dividends on Securities
OthersTrust Fees
Fees and Commissions
Trading Income
Other Operating Income
Other Income
Total Income

Expenses
Interest Expenses:
Interest on Deposits
Interest on Debentures
Interest on Borrowed Money
Interest on Call Money
Interest on Payables under Repurchase Agreement
Interest on Payables under Securities Lending Transactions
Interest Payable on Interest Rate Swaps
OthersFees and Commissions
Trading Losses
Other Operating Expenses
General and Administrative Expenses
Other Expenses
Total Expenses

Millions of
U.S. Dollars

Millions of Yen
2021

2021

2020

174,728
17,597
7,747
80(1,224)150,048
477
1,258
7,842
856
31,82010,741
227,247

207,066
20,409
9,010
670
(778)
176,645
1,109
759
8,630
1,502
45,794
2,767
266,519

1,578
158
69
0
(11)
1,355
4
11
70
7
287
97
2,053

83,92033,297
1,696
1,950
60
152
3,287
43,255
221
7,040
155
60,821
32,426
3,101
187,466

113,685
41,879
3,080
1,775
591
1,750
19,78244,583
241
7,353
54,13531,163
7,891
214,229

758
300
15
17
0
1
29
390
1
63
1
549
292
28
1,693

39,78052,290

359

9,970
230
10,201
29,57914,697(332)
14,36537,924

90
2
92
267

Income before Income Taxes
Income Taxes
Current
Deferred
Total Income Taxes
Net Income

U.S. Dollars

Yen
Net Income Per ShareDividend Declared per Share (General Common Shares)
Dividend Declared per Share (Specific Common Shares)
Dividend Declared per Share (Preferred Shares)



2021

4,092.69
3,000.00
1,500.00
6,500.00

2020

5,336.77
3,000.00
1,500.00
6,500.00

2021

36.97
27.10
13.55
58.72

87

Statement of Trust Account (Consolidated)
Shinkin Central Bank As of March 31,
AssetsSecurities
Beneficiary Rights
Securities Held in Custody Accounts
Monetary Claims
Other Claims
Due from Banking AccountCash and Due from Banks
Total Assets
Liabilities
Money Trust
Investment Trusts
Money Held in Trust Other than Money Trust
Securities Trusts
Monetary Claims Trusts
Composite Trusts
Total Liabilities

Millions of
U.S. Dollars

Millions of Yen
2021

2020

2021

1,654,325
63,000266,855
28
30,3001,188
2,015,700

6,000
1,089,378
63,000140,3288
22,021219
1,320,957

14,945
569
2,410
0
273
10
18,21040,18257,362
8,561
77,200267,028
1,565,365
2,015,700

32,55523,46314,80587,200140,523
1,022,409
1,320,957

363
518
77
697
2,412
14,141
18,210(Note 1) Consolidated companies conducting trust business pursuant to the “Act on Engagement in Trust Business Activities by Financial
Institutions” comprised only the Bank in the fiscal years ended March 31, 2021 and 2020.
(Note 2) No trust assets were entrusted to other trust banks for asset administration as of March 31, 2021 and 2020.

88Organization (As of July 31, 2021)
General Meeting of Members
Corporate Auditors

Chief Secretary
Internal Audit DivisionCorporate Business Division I

General Affairs Division

Board of Directors
Chairman of the Board of Directors (part-time)

Legal & Compliance Office

Corporate Business Division II

BCP Management Office
Personnel Division

Osaka Corporate Business Division

President and Chief Executive Officer
Strategic Planning Division

Deputy President

SDGs Promotion OfficeSenior Managing Directors

Cashless Business Promotion Office

Nagoya Corporate Business DivisionTokyo Business Division

Investor & Public Relations Office

Managing Directors
Shinkin Innovation Hub

Directors

Kanto Business Division I

SDB Office

Kanto Business Division II
Financial Management Division
Risk Management Division

Hokkaido Branch

Credit Planning & Supervision Division
Trust Business Division
Business Promotion Division
Disaster Recovery & Reconstruction
Support Office*Regional Innovation Division

Tohoku Branch(Disaster Recovery & Reconstruction Support office)

Hokuriku Branch

Shizuoka Branch

SME Business DivisionInternational Business Division

Nagoya BranchInternational Operations Center
Retail Business Division
Support & Advisory Division for Shinkin Banks

Osaka Branch

Kobe Branch

Consulting Office
Portfolio Management Support Office

Okayama BranchTransfer & Clearing Division
Management Office for Domestic FundTransfer System
Operations Division

Chugoku Branch

Shikoku Branch

Shinkin Business Transformation Office
Operations Center

Fukuoka Branch

Systems Division

Minami-Kyushu Branch
Systems Center
Corporate Business Promotion Division

New York Representative Office

Project Finance OfficeTreasury Business Division

Hong Kong Representative OfficeTreasury Division
Credit & Alternative Investment Division

Shanghai Representative OfficeTreasury Operations Division

Bangkok Representative Office(Shinkin Central Bank) Research Institute* Located in the Tohoku Branch.

89International Directory (As of July 31, 2021)
Senior Managing Director(in charge of Corporate Business Promotion/
Treasury Operations/Reserch Institute)
Hiroshi Nakahara
Senior Managing Director(in charge of Strategic Planning/
International Business/
Overseas Offices)
Hiroshi Sudo
Senior Managing Director(in charge of Treasury Business)
Norihiro Takano
Managing Director(in charge of Treasury/
Credit & Alternative Investment)
Hideki Sasaki
Strategic Planning Division(including International Planning)
Address: 3-7, Yaesu 1-chome,
Chuo-ku, Tokyo 103-0028
Telephone: +81-3-5202-7624
Facsimile: +81-3-3278-7033
International Business Division
Address: 3-7, Yaesu 1-chome,
Chuo-ku, Tokyo 103-0028
Telephone: +81-3-5202-7703
Facsimile: +81-3-3278-7035
International Operations Center(including Correspondent Banking)Address: 8-1, Kyoubashi 3-chome,
Chuo-ku, Tokyo 104-0031
Telephone: +81-3-5250-1700
Facsimile: +81-3-5250-1780
SWIFT: ZENB JPJT
Corporate Business Promotion Division
Address: 3-7, Yaesu 1-chome,
Chuo-ku, Tokyo 103-0028
Telephone: +81-3-5202-7679
Facsimile: +81-3-3278-7045
Treasury Business Division
Address: 3-7, Yaesu 1-chome,
Chuo-ku, Tokyo 103-0028
Telephone: +81-3-5202-7642
Facsimile: +81-3-3278-7040
SWIFT: ZENB JPJT
Treasury Division
Address: 3-7, Yaesu 1-chome,
Chuo-ku, Tokyo 103-0028
Telephone: +81-3-5202-7660
Facsimile: +81-3-3278-7043
SWIFT: ZENB JPJT

Overseas Offices
New York
New York Representative Office
Address: 655 Third Avenue, Suite 2620,
New York, NY 10017, U.S.A.
Telephone: +1-212-642-4700
Facsimile: +1-212-730-6000
Chief Representative: Kentaro Sone
Hong Kong
Hong Kong Representative Office
Address: Suite 4008, 40/F, Central Plaza, 18
Harbour Road, Wan Chai, Hong Kong, P.R. of China
Telephone: +852-2537-3777
Facsimile: +852-2537-4002
Chief Representative: Masao Yamaguchi

Research Institute
Address: 3-7, Yaesu 1-chome,
Chuo-ku, Tokyo 103-0028
Telephone: +81-3-5202-7671
Facsimile: +81-3-3278-7048

LondonShanghai
Shanghai Representative Office
Address: Room 508, Shanghai International Trade
Center, 2201 Yan-An Xi Road
Shanghai, P.R. of China
Telephone: +86-21-6270-3091
Facsimile: +86-21-6270-3095
Chief Representative: Yosuke Abe

ShanghaiHong Kong
Bangkok
Singapore

Bangkok
Bangkok Representative Office
Address: 19th Floor, 1903, Athenee Tower, 63
Wireless Road, Lumpini, Pathumwan, Bangkok
10330, Thailand
Telephone: +66-2-168-8796
Facsimile: +66-2-168-8799
Chief Representative: Naoto Seita

Overseas Subsidiary
LondonShinkin International Ltd.
Address: 1st Floor, 85 London Wall,London EC2M 7AD, UK
Telephone: +44-20-7562-0500
Facsimile: +44-20-7256-8544
Managing Director: Takuya Sakamoto

Hokkaido(Sapporo)

Singapore
Shinkin Singapore Pte. Ltd.
Address: 8 Marina View, #15-07B Asia Square Tower
1, Singapore
Telephone: +65-6360-9500
Facsimile: +65-6223-2558
Managing Director: Satoshi Igarashi

Tohoku(Sendai)

Credit & Alternative Investment Division
Address: 3-7, Yaesu 1-chome,
Chuo-ku, Tokyo 103-0028
Telephone: +81-3-5202-7664
Facsimile: +81-3-3278-7044
Treasury Operations Division
Address: 3-7, Yaesu 1-chome,
Chuo-ku, Tokyo 103-0028
Telephone: +81-3-5202-7666
Facsimile: +81-3-3278-7046
SWIFT: ZENB JPJTNew York

Hokuriku(Kanazawa)
Chugoku(Hiroshima)

Okayama Kobe
Osaka
Shikoku(Takamatsu)

FukuokaMinami-Kyushu(Kumamoto)Head Office

NagoyaShizuokaHead Office
BranchOffice/subsidiary

Shinkin Central Bank Head Office3-7, Yaesu 1-chome, Chuo-ku, Tokyo 103-0028, Japan
Telephone: +81-3-5202-7711
https://www.shinkin-central-bank.jp/

90

Shinkin Central Bank Annual Report 2021

Shinkin Central BankSCB supports the Sustainable Development Goals.

3-7, Yaesu 1-chome, Chuo-ku, Tokyo 103-0028, Japan
https://www.shinkin-central-bank.jp/
Printed in Japan