Shinkin Central Bank

Shinkin
ShinkinCentralCentralBankBank

AnnualAnnualReport
ReportAnnual Report 2013

2013
2013

Shinkin Central Bank,
the Central Bank for Shinkin Banks
As the central financial institution of shinkin banks, Shinkin Central
Bank (referred to as SCB hereafter) has occupied a well-establishedposition in Japan’s financial industry, with shinkin banks having a totalof ¥124 trillion (equivalent to $1,327 billion) in funds.
Management Philosophy and Operational Policies

Management Philosophy
As the central bank for all shinkin banks, the SCB supports the growth of
the shinkin bank sector and thus contributes to economic development
throughout Japan.

Operational Policies

1. Strengthening the corporate base, broadening the operational functions, and enhancing the credit standing of shinkin banks

2. Stable fund-raising from shinkin banks as well as diversification offunding sources

3. Upgrading market operation and developing financial services
4. Actively pursuing new business in conformity with changes in financial circumstances

5. Contributing to regional development and revitalization hand in handwith shinkin banks

6. Achieving sound management through efficiency, capital adequacy,
and strengthened risk management

7. Nurturing professionals and creating an attractive workplace
8. Enhancing public trust in the SCB
Corporate Data (as of March 31, 2013)
Name:
Establishment:
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:

Shinkin Central Bank (SCB)
June 1, 1950
1,171
14
5
¥30,805 billion ($327 billion)¥29,342 billion ($311 billion)¥490 billion ($5,217 million)¥90 billion ($967 million)
33.57%270
A1 (Moody’s)
A+ (S&P)
A+ (R&I)
AA (JCR)(As of July 31, 2013)

Note: The number of employees includes full-time Directors and Auditor. The number ofOverseas Network includes Shinkin International, Ltd., a subsidiary in London. The
amounts of total assets and total funds are the average balances for the year ended
March 31, 2013.

Contents
Financial Highlights (Non-Consolidated Financial
Summary) ··················································· 1
Message from the President and CEO ················· 2
Corporate Management and Auditors ················· 3
The SCB Is a Powerful Financial Institution in Japan,
Which Is Listed on the Tokyo Stock Exchange ······· 4Management Issues and Strategies ····················· 6
Efforts Aimed at Recovery from the Great East Japan
Earthquake ···················································· 8Overseas Network ·········································· 9Business Overview ········································ 10
Capital Adequacy ······································· 11
Asset Quality ············································ 12
Important Management Indices ······················· 13
Corporate Governance ································ 14
Strengthening the Compliance System ··············· 15
Risk Management ······································· 16
Corporate Social Responsibility (CSR) Activities ·· 19
What Are Shinkin Banks? ······························ 20
Preferred Shares ········································ 22
Financial Section ············································· 23
Organization / SCB Group ······························· 76
International Directory ····································· 77
This material contains certain forward-looking statements. Such forward-looking
statements are not guarantees of future performance and involve risks and uncertainties,
and actual results may materially differ from those contained in the forward-looking
statements as a result of various factors.
U.S. dollar amounts are converted for convenience only, at ¥94.10 per dollar, theprevailing rate on March 31, 2013.

Shinkin Central Bank Annual Report 2013

Financial Highlights (Non-Consolidated Financial Summary)Millions of Yen

Shinkin Central Bank
For the years ended March 31,

2013

Millions of U.S. Dollars

2012

2011

2013

2012

2011

$

4,080

$ 4,503$

For the Fiscal Year
Total Income¥

383,948¥

370,260 ¥

338,057

4,065

Total Expenses

344,559

334,957

299,982

3,661

4,073

3,607

Net Income (Loss)

32,02429,007

27,387

340

352

329

Net Business Profit (Loss)

45,92745,45149,949

488

552

600

¥30,184,837¥30,049,035¥31,283,720$320,774$365,471$376,232

Loans and Bills Discounted

5,460,155

5,374,685

5,254,796

58,02565,36963,196

Securities

19,681,236

20,624,250

21,547,910

209,152

250,842

259,145

Total Liabilities

28,956,639

28,975,645

30,258,547

307,721352,416

363,903

Deposits

22,012,166

21,609,051

21,581,162

223,923

262,819

259,544

Debentures

3,548,380

3,965,870

4,340,630

37,70848,23452,202

1,228,197

1,073,389

1,025,172

13,052

13,055

12,329At the Year-end
Total Assets

Net Assets

U.S. dollar amounts are converted for convenience only, at ¥83.15, 82.22 and 94.10 per dollar, the prevailing rate on March 31, 2011, 2012 and 2013 respectively.
Total assets and total funds amounted to ¥30,805 billion ($327 billion) and ¥29,342 billion ($311 billion) of the average balance at the year ended March 31, 2013.

1

Message from the President and CEO
Shinkin Central Bank, or the SCB, serves as thecentral bank for Japan’s 270 shinkin banks—regional financial institutions located throughout the country that specialize in operations
with small and medium-sized enterprises.
Since its establishment in 1950, the SCB
has provided a wide range of financial services
in order to expand the potential of the shinkinbank industry as a whole.
Earnings Performance for Fiscal 2012
The SCB launched the previous “SCB MediumTerm Action Program 2010” (“medium-term
management plan”) in April 2010 with the aimof establishing a stable and solid financial base.
During fiscal 2012, amid continued instability inthe market environment, we maintained agile
operations and took other steps to conduct
portfolio management in a manner that allows
a flexible response even in times of emergency,
while also working to secure stable interest and dividends. As a result, in fiscal 2012,
on a non-consolidated basis, we achieved anincrease in net income of ¥3.0 billion from theprevious fiscal year to ¥32.0 billion, exceeding
our initial forecasts.
Earthquake Reconstruction Support
and Status of the Medium-Term Management Plan
Support for recovery and reconstruction fromthe Great East Japan Earthquake continued
to be a priority issue during fiscal 2012. The
shinkin bank industry made a concerted effort
that included helping to expand sales channels
for shinkin bank customers in disaster areas,
and utilization of the “Shinkin no Kizuna”
reconstruction support fund to aid the rehabilitation of small and medium-sized businesses
in disaster areas.
During fiscal 2012, the final year of our mediumterm management plan, the SCB enhanced our

2

support structure for shinkin bank customers
expanding overseas, including opening a representative office in Bangkok in October 2012.
We also further strengthened our structures
to support the efforts of shinkin banks toaddress the issues facing regional communities
and SMEs, including assistance for management
improvement and corporate revitalization forshinkin bank customers, and utilizing the shinkinbank network to help revive regional areas.
New Medium-Term Management Plan
The SCB, reflecting on the successes and challenges of the previous plan, and considering thechanges in the external environment and otherfactors, formulated a new medium-term management plan, the “SCB Medium-Term Action
Program 2013” (the “new medium-term management plan”) for the three-year period fromfiscal 2013 through fiscal 2015. This new planfollows the three Core Plans from the previousplan, with two new Support Plans. We havedesignated fiscal 2013, the initial year of the new
medium-term management plan, as a “year totake a new step forward with shinkin banks forthe sustained development of regional areas,”with all members working together to achieve
the various measures in the management plan.
We will also continue to bring together theties among the shinkin bank industry to support the various measures to aid with recovery
and reconstruction from the Great East Japan
Earthquake.

Strengthening Internal Management
Systems
The SCB will continue our efforts to carry out
thorough compliance, strengthen corporate
governance, and contribute to society, so as
to become a distinguished financial institution
well respected in the society.

Recognizing our crucial responsibilities as
the central bank of the shinkin bank industry,
we will strive with the utmost commitment
to facilitate the continued development of theindustry and thus contribute to development
throughout Japan.
I would like to take this opportunity
to express my sincere gratitude to all ourshareholders and other stakeholders for theircontinued understanding and support.
July 2013

Mitsuo Tanabe
President and Chief Executive Officer

Shinkin Central Bank Annual Report 2013

Corporate Management and Auditors(As of July 31, 2013)

Chairman of the Board of
Directors (Part-Time)
Koji Omae

President and Chief Executive Officer
Mitsuo Tanabe

Directors
Deputy President
Katsuo Akiyama

Masami Fujita
Yasuhiko Hori
Norihiro Takano

Senior Managing Director

Atsushi Kudo

Hiroyuki Shibata

Hiroshi Sudo

Managing Directors

Director and Executive Adviser

Mikio Ichiyanagi
Akira Ito
Hajime Hioki

Shoji Mori

Directors (Part-Time)
Shinji Sugiyama
Takashi Ono
Tomio Makino
Shoichi Yokoyama

Koji Omae
Chairman of the Board of Directors

Mitsuo Tanabe
President and Chief Executive Officer

Kazumi Saito
Kazuhiko Jinbo
Koji Sato
Shigeharu Obayashi
Kenichiro Mimuro
Masatoshi Takahashi
Yukio Kashima
Masuo Kajita
Hiroyuki Hashimoto
Kazuyuki Takaki
Akihiro Hasui
Hidetaka Nakamura
Tadatoshi Inaba

Katsuo Akiyama
Deputy President

AuditorOsamu Taniguchi

Hiroyuki Shibata
Senior Managing Director

Auditors (Part-Time)
Yasuo Yamaguchi
Yutaka Nunogaki
Hiroshi Nakachi
Masamichi Narita

3The SCB Is a Powerful Financial Institution in Japan,
Which Is Listed on the Tokyo Stock Exchange
The SCB operates as a financial institution with the dual role of central bank forshinkin banks and an independent financial institution.
Founded in 1950, the SCB is the central bank for shinkin banks (See “What Are Shinkin Banks?”
on page 20), operating as a cooperative financial institution whose membership consists of all
shinkin banks nationwide.
The SCB plays the dual role of a central bank for shinkin banks and an independent financial institution. The SCB’s total funds mainly comprising deposits from shinkin banks and funds
acquired through the issuance of debentures had an average outstanding balance during the fiscal
year ended March 31, 2013, of ¥29,342 billion (equivalent to $311 billion), and total assets averaged¥30,805 billion (equivalent to $327 billion). The SCB is one of Japan’s leading financial institutions.

Overseas Networks and Correspondent Banks of the SCB(Number of banks with correspondent agreements by head branch; as of March 31, 2013)

The number of our overseas correspondent banks amounts to 246, with main branches covering
50 countries worldwide, as of the end of March 2013.
Shinkin International Ltd. (London)
New York Representative Office

Europe81 banksAsia
104 banks

Middle East
4 banks

North America
26 banks
Japan 9 banks
Shanghai Representative OfficeHong Kong Representative Office
Bangkok Representative Office

Africa3 banks

Latin America
11 banks

Oceania
8 banks

Note: Correspondent banks refer to those banks with whom the SCB has an agreement for foreign exchange tradingin respective countries.

The SCB Is the Central Bank of the Shinkin Bank Sector
The SCB’s funds are raised mostly through deposits mainly from shinkin banks and the issuance ofdebentures. The SCB invests these funds in securities and lends them out as loans, and uses theresulting profits to support the activities of shinkin banks.
Total assets: around ¥30 trillion (equivalent to $320 billion)
Domestic network: 14
Overseas network: 5
Number of employees: 1,171
Number of member shinkin banks: 270

ShinkinBank

ShinkinBank

ShinkinBank

ShinkinBank

ShinkinBank

ShinkinBank

Number of banks: 270
Total assets: ¥134,906 billion (equivalent to $1,433 billion)
Number of branches: 7,504
Number of employees: 113,861
Number of members: 9,305,428(As of March 31, 2013)

4

Roles

Central Bank for Shinkin Banks(1) S upplementing the Operational
Capabilities of Shinkin Banks
Japan’s 270 shinkin banks nationwide play a keyrole in supporting regional economies by lending to local organizations and SMEs. With total
deposits held by shinkin banks reaching ¥124
trillion (equivalent to $1,327 billion), shinkinbanks occupy a very important position within
Japan’s overall financial sector.
As the central financial institution forthe shinkin bank sector, the SCB is promptly
responding to changes in the operating environment of shinkin banks. Such changes include
increasingly sophisticated and diverse customer
needs, intensified competition with other typesof institutions, and demands for very stringent
management control systems. Specifically, the
SCB provides support for shinkin banks’ financial services utilizing shinkin banks’ network,
activities in support of regional development
and the management of small and mediumsized businesses, and over-the-counter sales ofinvestment trust fund products. Furthermore,
the SCB provides support in such areas as assetliability management (ALM) and marketablesecurities portfolio analysis to assist shinkinbanks in raising profitability and strengthening
risk management systems.
Just as the Bank of Japan acts as a clearing house for domestic exchange transactions
between banks, the SCB performs the role ofa clearing house for shinkin banks, and for theyear ended March 31, 2013, the SCB settled
domestic exchange transactions with a substantial total value of ¥225 trillion (equivalent
to $2,394 billion). Moreover, the SCB acts as
the intermediary in settlement of utility bills
handled by shinkin banks.
The SCB also plays the role of supporting
other operations of shinkin banks. In addition to
supplementing international operations such as
foreign exchange operations, the SCB has been
supplementing the lending operations of shinkinbanks, by commissioning shinkin banks to lend
to local small and medium-sized businesses andbusiness owners who are their customers.
In this way, the SCB is further reinforcing
its capabilities to support shinkin banks in areasin which it is either difficult or inefficient forshinkin banks to provide services as individual
institutions.

Shinkin Central Bank Annual Report 2013(2) Enhancing the Creditworthiness of the
Shinkin Bank Sector
The SCB acts as a “consultant” or a “homedoctor” for the shinkin bank sector as part ofits measures to proactively support the management of shinkin banks. Shinkin banks playtheir part by operating such schemes as the“Shinkin Bank Management Reinforcement
System” and the “Shinkin Bank Mutual Funding Support System.” The SCB works to maintain and enhance the creditworthiness of theshinkin bank sector through such activities as
management analysis, management consulting
and capital reinforcement for shinkin banks.
In recent decades, Japanese financial institutions have experienced several major crises,
including the collapse of the country’s asset
bubble in the 1990s, and more recently the
global financial crisis triggered by the Lehman
Brothers bankruptcy. However, amid such
unsettling periods for the financial system, the
SCB’s financial functions have played a crucialrole in maintaining confidence in the shinkinbank sector and contributed to the stability ofregional economies.

Independent Financial Institution(1) Institutional Investor
Looking at the average balance for the year
ended March 31, 2013, the SCB maintained
assets under management of ¥30,315 billion(equivalent to $322 billion). Of this total, the
SCB invested ¥20,380 billion (equivalent to$216 billion) in securities, in the form of government bonds, municipal bonds, corporate
bonds and foreign securities and ¥3,700 billion (equivalent to $39 billion) in short-termmoney markets.
The SCB manages a vast amount of money
in both domestic and international markets,
holding an important position in the financial
industry as one of Japan’s leading institutional
investors.
(2) Comprehensive Financial Services Supplier
The SCB conducts deposit-taking and lending
operations—the core functions of a financial
institution—issues debentures, and conducts
foreign exchange operations.
It also undertakes such auxiliary operations
as underwriting public bonds, handling private

placement bonds, and issuing personal loan
guarantees, as well as peripheral operations offinancial institutions, including trust, securities,
financial advisory, investment trust funds, defined
contribution pensions, venture capital, and M&A
advisory.
These operations are conducted either by
the SCB itself or through its subsidiaries.
(3) Financial Institution Contributing toRegional Development
In order to contribute to the developmentof local economy, the SCB cooperates withshinkin banks, which work closely with local
communities all around the country, andactively promotes direct lending to regional
public bodies and local companies as well as
investment in regional development projects
and PFI entities through its nationwide
network of branches.
In addition, the SCB has been actively supporting the revitalization of regional companies
and invigoration of local communities in cooperation with shinkin banks from the perspectiveof relationship banking, and has been acting as aregional financial institution.

Shinkin bank management reinforcement system

Management analysis system

SCBManagement advisory system

Shinkinbanks

Capital reinforcement system

Management analysis system

Shinkin banks submit materials on their operating and financial conditions. The SCB conducts management analyses
based on those materials, and identifies shinkin banks for recommended management consultations. The SCB also
conducts more detailed analyses on shinkin banks when certain standards apply.

Management advisory system

The SCB provides management consulting and follow-up to shinkin banks that accept consultations or meet certain standards. This
consulting covers everything from overall management to individual issues toward. The consulting reinforces the shinkin banks’ management
capabilities by proposing various measures to resolve management problems and by sharing information on good examples, etc.

Capital reinforcement system

The SCB provides capital to shinkin banks that have received management consulting when analyses indicate this isnecessary. To prevent moral hazard on the part of the shinkin banks, capital is only provided with the submission ofa business revitalization plan, and the SCB provides subsequent management and operations guidance.

5Management Issues and Strategies
In April 2013 we launched the “SCB Medium-Term Action Program 2013”—a new medium-term management plan—which
comprises three core plans to be implemented over three years. As the central financial institution for the shinkin bank industry, we believe that it is essential to clearly articulate where we are headed. Hence, this action program recognizes the needto communicate the SCB’s medium- to long-term management direction.
New Medium-Term Management Plan“SCB Medium-Term Action
Program 2013”
The SCB, reflecting on the successes and challenges of the previous plan, and considering
the changes in the external environment andother factors, formulated a new medium-term
management plan, the “SCB Medium-Term
Action Program 2013” (the “new mediumterm management plan”) for the three-year
period from fiscal 2013 through fiscal 2015.
This new plan comprises three Core Plans
that follow from the previous plan, forming
its foundation. We have also adopted the two
Support Plans of “Actively utilize industry networks” and “Human resources development
and establishment of robust organizationalframeworks.” We have further identified
four management indicators as medium-termtargets.

Shinkin banks bear an important responsibility for regional and SME financing. We willcontinue to work to the best of our abilities ina concerted effort to help shinkin banks meetthe expectations of regional communities, andto contribute to sustainable development.
Core Plan 1:
Support shinkin bank efforts toresolve issues related to regional and
SME financing
The SCB has adopted three principal measures
to support shinkin bank efforts for resolving the issues related to regional and SME
financing: 1) Strengthen support for SMEs;
2) Strengthen support for individual financing; and 3) Strengthen support for community revitalization. As part of our structuralenhancement effort, from April 2013 we
restructured the Shinkin Business Solution

Division into the SME Business Solution Division, and newly established the Retail Business
Solution Division, and the Regional Innovation
Support Office.
Core Plan 2:
Assist in ensuring management
stability for shinkin banks
To support greater profitability at shinkinbanks, SCB will work in conjunction with market-related subsidiaries to develop and offer
managed products conducive to effective utilization of excess capital, and to support moreadvanced risk management for shinkin banks.
We will also conduct in-depth research andconsiderations on the appropriate state of thesafety net of the future, and take steps to put
in place structures that ensure the soundnessof shinkin banks.

Overview of the New Medium-Term Management PlanSCB Medium-Term Action Program 2013
Working with shinkin banks for the sustainable development of regional areas
Core Plan 1:
Support shinkin bankefforts to resolve issues
related to regional and
SME financing

Support Plan 1:
Actively utilize industry
networks

6

Support Plan 2:
Human resources development
and establishment of robust
organizational frameworks

Core Plan 2:

Core Plan 3:

Assist in ensuring
management stability forshinkin banks

Enhance the financial andearnings stability of SCB

Shinkin Central Bank Annual Report 2013

Core Plan 3:
Enhance the financial and earnings
stability of SCB
The SCB will continually optimize its portfolio
in response to changes in the investment environment, and seek to expand new sources of
earnings. We will also take steps to gain earnings other than through market investment,in an effort to enhance financial and earnings
stability.
Support Plan 1:
Actively utilize industry networks
The SCB will take a step beyond our conventional style of support centered on matchingproducts such as foods or manufactured goods,
and utilize the shinkin banks’ greatest strengthof industry networks to match people andtechnologies.
Support Plan 2:
Human resources development andestablishment of robust
organizational frameworks
To execute the new medium-term man-agement plan, we will continue to work todevelop the human resources of the SCB andshinkin banks, revise the necessary operational management structures, and establish
robust organizational frameworks.
Formulation of the“SCB PRINCIPLE OF ACTION”
The key to whether or not the SCB will be able
to realize the policies set out in the mediumterm management plan is human resources.
One of the action program’s support plans
aims to “develop human resources—people
who take pride in working for a central financial
institution and have a high level of professional
expertise.” To cultivate pride and ambition
among the SCB’s directors and employees as
members of the central financial institution forshinkin banks, we formulated the “SCB PRINCIPLE OF ACTION.” All SCB directors andemployees are expected to strongly heed theprinciples as our unified fundamental guidelines for decision-making and behavior during
the conduct of business operations.

SCB PRINCIPLE OF ACTION
As directors and employees of the central
financial institution for shinkin banks, we will
always deal with our business under following
guideline and style of action, with awarenessof the fact and pride in it, and high spirit andstrong sense of responsibility.
GUIDELINE OF ACTION
1. Be customer-oriented
From the perspective of the customers,
including shinkin banks, we try to provide
optimum products, services, and functions.
2. Be innovative
With awareness of the issues and cost-consciousness, regardless of precedent, we will
improve our operations.
3. Be professional
With tireless self-development, we will
strive to improve our expertise and skills
in our specialties.
STYLE OF ACTION
1. Speed
2. Challenge
3. Basic

Target figures
Capital adequacy ratio(domestic standard):
At least 15% (＊)

Net income: ¥35 billion

Outlier ratio: No more than 20%

Nonperforming-loan ratio:
Less than 1%＊ Based on new regulations for the capital adequacy ratio at banks subject

to domestic standards, to be introduced at the end of March 2014.

7

Efforts Aimed at Recovery
from the Great East Japan Earthquake
In April 2013, the SCB relocated its Disaster
Recovery & Reconstruction Support Officefrom Tokyo to Sendai, the core city in
Tohoku region, in order to more accurately
assess the ever-changing needs of shinkinbanks and their customers in the disasterareas, and to strengthen its structure forproviding ready assistance. We will continue
as an industry to provide constant support
until true recovery in the disaster areas isachieved.
Financial Products to Assist Those
Affected by the Earthquake DisasterAs a successor to the “Shinkin Earthquake
Reconstruction Assist ance Fixed-Term
Deposit” offered in fiscal 2011, from July2012 to February 2013 the SCB sold the“ Shinkin Great E ast Japan E ar thquake
Children’s Support Fixed-Term Deposit” at
all shinkin banks nationwide. We received
subscriptions amounting to ¥102.2 billion, of
which 0.25% (¥255.5 million) will be donatedto support the education of children in Iwate,
Miyagi and Fukushima prefectures orphanedby the disaster.
In collaboration with SCB’s subsidiary
Shinkin Asset Management Co., Ltd., from
June 2011 to July 2012 we sold the “Shinkin
Reconstruction Assistance Scholarship Fund”(nicknamed “Children’s Future”) throughshinkin banks. This over-the-counter investment trust invests in government bonds andstocks related to reconstruction assistancein the disaster areas, with a portion of thetrust fee donated to support the educationand lives of children affected by the disaster. A total of ¥15.0 million in contributions
has been donated to the Ashinaga “Great
East Japan Earthquake and Tsunami Orphan’sFund.”

Implementation of Volunteer Activities
by Shinkin Bank Executives andEmployees in Disaster-Hit Areas
In light of the importance of volunteer activities in the areas affected by the Great East
Japan Earthquake, executives and employees
from related organizations, including the SCB
and shinkin banks throughout Japan, initiatedvolunteer activities.
Centered on the SCB’s Disaster Recovery& Reconstruction Support Office, these
activities included providing such assistanceas providing means of transportation, making
accommodation arrangements and coordinating with volunteer centers. As a result, morethan 1,000 executives and employees participated in two years.
Assistance with Expanding Sales
Channels for Shinkin Bank Customers
in Tohoku Region
In order to assist shinkin bank customer
SMEs in the Tohoku region in expanding theirsales channels, the SCB collaborated with
the Tohoku Shinkin Bank Association andproduced a catalogue and opened a website,in which details of the customers’ products
were published.
Support for Shinkin Banks in DisasterAffected Areas through Revised Act on
Special Measures for Strengthening
Financial Functions
In November 2011, the National Associationof Shinkin Banks (Zenshinkyo) and the
SCB established a new support system toallow the use of the special measure —known as the Act on Special Measures forStrengthening Financial Functions (hereinafter “the Financial Functions StrengtheningAct”)—toward recovery and reconstructionof the disaster-affected areas and to enable
the shinkin banks in the disaster-affectedareas to perform smooth financial intermediary functions over the long term.
Four shinkin banks sustained heav ydamage in the earthquake. In order forthem to fulfill the role as a force for regional
finance and contribute to the reconstruction of their local economies, shareholder
equity was enhanced and the building up ofrobust financial bases deemed necessary. In
February 2012, their capital was enhanced bya total of ¥63.0 billion, ¥54.7 billion of which
was government capital participation, basedon the Financial Functions Strengthening Act.
The SCB is providing extensive support
for such initiatives as personnel dispatch,offering advice on shinkin bank policies, andmonitoring—enabling the four shinkin banks
to demonstrate strong financial intermediarycapabilities. We are also steadily implementing measures that contribute to the reconstruction of the disaster regions.
Commencement of Shinkin no Kizuna
Reconstruction Support Fund Operations
With regard to the SMEs working to rebuild
and revitalize their businesses in the disaster-affected areas, in December 2011, the
SCB set up the reconstruction support fundnamed “Shinkin no Kizuna” (“Kizuna” means
bonds in English.). This scheme provides
capital funds for SMEs directly in order toenable shinkin banks to maintain the same
relationships as before with SMEs.
By March 2013, new investments weremade in 26 shinkin bank customer companies.

Flyer announcing the
opening of an online shop
created to support sales
by shinkin bank customers

Shinkin executives andemployees conducting
volunteer activities indisaster areas
The recently opened
shopping website toprovide sales support8

Shinkin Central Bank Annual Report 2013

Overseas Network
The SCB has overseas offices in New York,
Hong Kong, Shanghai, Bangkok and London.
These offices facilitate the SCB’s support
for shinkin banks by actively gathering andanalyzing information on local economies,
financial markets, investment environments,
and consumer markets.
Furthermore, representative offices also
accept trainees or visitors/missions fromvarious shinkin banks to assist the humanresource development program.
New York Representative OfficeEver since Overseas Economic Institute of
Shinkin Central Bank opened its New York
office in November 1983, the New York
Representative Office conducts researchon U.S. markets and assists its Head Office
to explore new investment opportunities.
Taking advantage of its location in the centerof the global financial activities, the New
York Representative Office identifies thelatest trends in the financial markets andobtains vital information for the SCB’s treasury operations.
As a common U.S. infrastructure for theshinkin bank industry, the New York officeprovides shinkin banks with information on
the fast-changing U.S. economy and financial
market, offering a wide range of support.
Hong Kong Representative OfficeEver since Shinkin Central Bank establisheda Hong Kong business office in November
1994, the Hong Kong Representative Officehas been continuously suppor ting theactivities of shinkin bank customers in Asian
countries, particularly in the South China
region, by providing information about theservices of the local banks, legal systems, tax
systems, employment, etc. The Hong Kong
Representative Office is providing shinkinbanks and their customers with the information relating to economic and financial
situations, and the investment environment
in Asian countries.
Shanghai Representative OfficeSince its inception in September 2004, theShanghai Representative Office has been
providing a variety of information relating
to economic and financial conditions, theinvestment and loan environment, and thelaws, taxation and employment of each region.
The Shanghai Representative Office also has
been offering detailed advice and a variety ofof support to shinkin bank customers moving
into China and those planning such a move inthe future.
Bangkok Representative Office
The Bangkok Representative Office, openedin October 2012, provides shinkin bank customers expanding or planning to expand to
Thailand, Vietnam, and Indonesia with information on the economic and financial conditions in those three countries, as well as theinvestment and financing environment, andthe current status of local laws, taxes, andemployment. The office also offers advice
and various types of support.

port infrastructure for shinkin bank customers undertaking overseas business expansion.

Shinkin International Ltd. (London)
Shinkin International Ltd., a wholly owned
subsidiary of the SCB, was established in
London in 1990 as an overseas office forsecurities business in order to expand investment opportunities for the shinkin banksector.
The company arranges Eurobonds in astrong relationship with issuing bodies andoffers these securities to the shinkin banksector in close cooperation with Shinkin
Securities Co. Ltd., another subsidiary of the
SCB. The company also serves its customers’
secondary market trading needs and provides
necessary information about the market.

Supply of Information
With regard to shinkin banks and their customers, in addition to such printed materials as International Business Support OfficeMonthly and China Business Guidebook, the
SCB is supplying the up-to-date information
in a variety of formats, for example by holding overseas investment seminars. From time
to time we also provide investment climate
survey reports that focus on Asia and thelatest information from overseas network.
We use overseas network in Hong Kong,
Shanghai and Bangkok as venues for holding
information exchange meetings for shinkinbank customers that are expanding overseas.
Trade and Investment Consultation
Staff with expertise hold phone- or interview-format trade and investment consultations for the benefit of shinkin bankcustomers that are either expanding or
conducting business transactions overseas
or for shinkin bank customers examining
the prospects for overseas business or new
transactions.
In the case of the trade and investment
consultations, staff with indispensable expertise in overseas business operations offer
consultation support based on the individual
needs of customers, such as by providing
information on the local investment environment, local legal issues and domestic andoverseas market trends.

Supporting the Overseas Expansionof Shinkin Bank Customers

Business Alliances with Asian Banks

As globalization of the international economy
advances, the SCB anticipates that SMEs—
customers of shinkin banks—will increasingly
look to expand overseas and engage in trading activities, particularly centered on China
and other countries in Asia.
For this reason, the SCB provides
support to shinkin bank customers thatare undertaking overseas expansion, specifically through SCB offices in such locations as Hong Kong, Shanghai and Bangkok.
Furthermore, from 2010 to 2012, the SCB
formed business alliance with four banks
in Asia. In addition, in April 2013, the SCB
entered into a business alliance with Joint
Stock Commercial Bank for Investment andDevelopment of Vietnam, which is based in
Hanoi, Vietnam. These relationships are partof the SCB’s policy of strengthening its sup-Support for the Expansion of Overseas
Channels

Expansion into Asia by Shinkin Bank Customers
South Korea: 77
China: 1,233

Hong Kong: 123
Taiwan: 50

Thailand: 238
Vietnam: 142

Philippines: 53

Business Alliances with
Asian Banks•Bangkok Bank (Thailand)•Bank of Communications (China)•Bank of China (China)•Bank International Indonesia(Indonesia)•Joint Stock Commercial Bank for
Investment and Development ofVietnam (Vietnam)

Malaysia: 49
Singapore: 26
Indonesia: 93
Source: Ninth Survey on the Overseas Business of Shinkin Bank Customers (2012).

9

0.9%
¥145 Billion
19.7%¥3,238 Billion

Business Overview
Earnings Performance
Reviewing the SCB’s operating results for fiscal
2012, operating income increased by ¥13 billion(equivalent to $145 million) or 3.6% to ¥383 billion (equivalent to $4,079 million). This result was
mainly attributable to such factors as an increasein gain on sales of bonds. Meanwhile, operating
expenses increased by ¥8 billion (equivalent to$86 million) or 2.4 % to ¥342 billion (equivalent
to $3,642 million). This result was mainly attributable to such factors as a increase in expenses
on derivatives other than for trading or hedging.
As a result, ordinary income increased by ¥5billion (equivalent to $59 million) from the previous fiscal year to a profit of ¥41 billion (equivalent to $437 million). Net income increased by¥3 billion (equivalent to $32 million) from theprevious fiscal year to a net profit of ¥32 billion(equivalent to $340 million).
Funding
During fiscal 2012, the total amount of funding was ¥28,491 billion (equivalent to $302,778
million) at the end of the fiscal year, which was
almost the same amount in fiscal year 2011.
Deposits received during the fiscal year was¥22,010 billion (equivalent to $233,904 million).
This result was mainly attributable to such factors as an increase in gain on callable deposits.
The SCB issued ¥579 billion (equivalent to$6,162 million) worth of debentures during the
fiscal year. The outstanding amount of debentures decreased by ¥417 billion (equivalent
to $4,436 million), or 10.5%, to ¥3,548 billion(equivalent to $37,708 million).
Asset Management
The amount of assets under management in fiscal 2012 increased by ¥335 billion (equivalent to$3,564 million) or 1.1% to ¥29,988 billion (equivalent to $318,684 million).
Owing to a decrease in government bonds,
the outstanding amount of invested securities
decreased by ¥943 billion (equivalent to $10,021
million), or 4.5%, during the fiscal year, to ¥19,681
billion (equivalent to $209,152 million) at the endof the fiscal year.

5.1%¥835 Billion

1.3%¥214 Billion

59.5%¥9,767 Billion

9.5%¥1,558 Billion

Owing to an increase by national or governmental agencies and organizations, loans and bills
discounted increased by ¥85 billion (equivalent
to $908 million) or 1.5% during the fiscal year to¥5,460 billion (equivalent to $58,025 million) at
the end of the fiscal year.
The outstanding amount of short-termmoney market assets increased by ¥1,182 billion(equivalent to $12,567 million), or 38.3%, during the fiscal year, to ¥4,267 billion (equivalent
to $45,353 million). This increase primarilyreflected increases in current deposit.

Breakdown4.0%
of Funding¥651 Billion(As of March 31, 2013)10.3%¥2,930 Billion
12.5%¥3,548 Billion
19.7%¥3,238 Billion
0.0%
1.3%
¥1.7
Billion¥214
Billion
9.5%¥1,558 Billion

5.1%¥835 Billion77.2%¥22,010 Billion
59.5%¥9,767 Billion

4.0%(As of March 31, 2013)
0.6% ¥182 Billion

Loans and Bills Discounted

The SCB has conducted a variety of loan businesses. As of March 31, 2013, the outstanding amount of loans and bills discounted was¥5,460billion (equivalent to $58,025 million).
Out of the total loans and bills discounted,
agency loans to shinkin bank customers (small
and medium-sized businesses) through shinkinbanks accounted for ¥275 billion (equivalent to$2,932 million), while direct loans to parties suchas national or governmental agencies and organizations, regional public corporations and charitable organizations accounted for ¥2,493 billion(equivalent to $26,495 million). Direct loans tobusiness corporations accounted for ¥2,181 billion (equivalent to $23,184 million).

14.3%¥4,267 Billion

1.3% ¥396 Billion
18.2%¥5,460 Billion

Short-Term Market
Operation
65.6%¥19,681 Billion

Securities
Loans and Bills
Discounted
Trading Assets
Money Held in Trust

Breakdown of Securities(As of March 31, 2013)

1.3%¥253 Billion
23.3%¥4,586 Billion
1.9%¥380 Billion
19.7%¥3,238 Billion
10.1%

62.3%
¥12,249 Billion

5.1%¥835 Billion¥1,990 Billion
1.3%¥214 Billion

9.5%¥1,558 Billion

1.1%
59.5%
¥220 Billion¥9,767 Billion

Government Bonds
Municipal Bonds
Corporate Bonds
Stocks & Investment
Trust
Funds Bonds
Government
Foreign
Securities
Municipal
Bonds
OthersCorporate Bonds

Securities
Investment Trusts

Breakdown4.0%
of Loans and Bills
Foreign Securities¥651 Billion
Discounted (As of March 31, 2013) Others
9.3%¥509 Billion

National andGovernmental
Agencies andOrganizations

5.0%¥275 Billion
35.7%¥1,949 Billion
40.0%¥2,181 Billion

Regional Public
Corporations
and Charitable
Organizations
and Others
Business
Corporations

10.0%¥543 Billion

Agency Loans
OthersOrdinary Income and Net Income (Non-Consolidated)

10

Deposits
Government
Bonds
Negotiable
Deposits
Municipal Bonds
Debentures
Corporate
Bonds
Borrowed Money
Securities
Investment Trusts
Foreign Securities
OthersBreakdown ¥651
of Asset
Billion Management

Securities

As of March 31, 2013, the outstanding amountof securities was ¥19,681 billion (equivalent to$209,152 million). Government bonds, corporate
bonds and other domestic securities accountedfor ¥15,094 billion (equivalent to $160,412 million) while foreign securities accounted for¥4,586 billion (equivalent to $48,739 million). In
foreign securities, the SCB mainly invests in safe
assets which include government-secured financial institution bonds and government-agency
bonds in major developed countries.
In order to advance its diversified investment
portfolio, the SCB also invests in risk assets suchas stocks & investment trust funds not subject
to interest risk, and takes steps to optimize its
portfolio in response to shifts in the financing andinvestment environment.

Government Bonds
Municipal Bonds
Corporate Bonds
Securities
Investment Trusts
Foreign Securities
Others(Millions of Yen)

FY2008FY2009FY2010FY2011FY2012

Ordinary Income (Loss)(220,090)

17,186

36,66235,575

41,163Net Income (Loss)(183,812)

28,36527,38729,00732,024

Shinkin Central Bank Annual Report 2013

Capital Adequacy
OutlineThe SCB’s equity capital mostly comprises basic (Tier I) and supplementary (Tier II) items.
The Tier I items comprise common shares
held by member shinkin banks nationwide,
preferred shares issued in public which supplement the common shares and the internal
reserves which the SCB has accumulated todate. The Tier II items comprise fixed-period
subordinated loans from shinkin banks andinstitutional investors, perpetual subordinateddebt and other instruments.
Measures to Enhance Capital Adequacy
Based on the recognition that increasing
equity capital is the most important way tosecure the sound management of financial
institutions, the SCB has raised capital inphases while working to accumulate internal
reserves. In June 2009 the SCB raised ¥200
billion (equivalent to $2,125 million) in common shares (Tier I capital) from the shinkinbank sector in order to improve equity capitalquality by increasing core capital, and thus
strengthen the SCB’s financial constitution,and to stably carry out functions as the central financial institution of the shinkin banksector.
Consequently, the SCB’s core capitalincreased and quality of the SCB’s capital
improved.

Consolidated Capital Adequacy Ratio
The SCB’s consolidated capital adequacy ratiorose 1.14 percentage points year-on-year to33.57% as of March 31, 2013, measured by thedomestic standard.
The amount of capital, which is the numerator for calculating the capital adequacy ratio,
increased by ¥42 billion (equivalent to $456million), or 3.1%, to ¥1,422 billion (equivalent to$15,115 million).
Risk assets, which are the denominator for
calculating the capital adequacy ratio, slightly decrease by ¥17 billion (equivalent to $182 million), or
0.4%, to ¥4,236 billion (equivalent to $45,016 million).

Risk Management and Capital Adequacy
Assessment
To maintain capital adequacy against the risk
level, the SCB has implemented policies tomanage its capital adequacy. As part of its integrated risk management, the capital assessment division evaluates the capital adequacy
using a holistic approach, measuring various
types of risks under the uniform criteria
and comparing quantified risks with the
SCB’s capital.
By adopting integrated risk management
as a method of assessing capital adequacy, the
SCB sets limits on the amount of risks according to the amount of capital allocated to eachcategory and thereby controls risks withinthese limits.
In order to monitor the potential impactsof shocks on its capital, the SCB further
conducts stress testing to estimate losses
under various scenarios, taking into accountthe gravity of each case and probability of its
occurrence.
The situation regarding risk limits and theamount of risk exposure is reported to senior
management at the Risk Management Committee and at other meetings. Furthermore,in principle, the Risk Management Committee
deliberates on measures in response to theresults of capital adequacy assessments andimplements measures as deemed necessary.

Capital Adequacy Ratio (Domestic Standard)

Consolidated
Non-Consolidated

Capital Adequacy Ratio
Amount of Capital
Amount of Risk-weighted Assets
Capital Adequacy Ratio(%, billions of yen)
FY2008
22.56
1,137
5,041
22.43

FY2009
28.17
1,312
4,659
28.06

FY2010
31.76
1,344
4,233
31.78

FY2011
32.43
1,379
4,253
32.54

FY2012
33.57
1,422
4,236
33.42

11

Asset Quality
Risk-Monitored Loans

The amount of risk-monitored loans as ofthe end of March 2013 was ¥404 million(equivalent to $4 million) for loans tobankrupt borrowers, ¥9,418 million(equivalent to $100 million) for delinquentloans, ¥165 million (equivalent to $1.7

million) for loans past due three months or
more, and ¥28,609 million (equivalent to$304 million) for restructured loans. Total
risk-monitored loans increased by ¥1,998
million (equivalent to $21 million) to ¥38,597
million (equivalent to $410 million) during the

Risk-Monitored Loans (Non-Consolidated)fiscal year.
The ratio of total risk-monitored loans
to total loans remained as low as 0.70%, andthe soundness of the SCB's loan assets
remained high.

(Million yen, %)Loans to Bankrupt Borrowers
Delinquent Loans
Loans Past Due Three Months or More
Restructured Loans
Total Risk-Monitored Loans (A)End of March2012
415
12,38077
23,72536,599End of March
2013
404
9,418
165
28,60938,597

Increase or
decrease(11)(2,962)
88
4,884
1,998

1,022

1,206

184

5,374,685
0.68

5,460,155
0.70

85,4700.02

End of March2012
415
12,38077
23,72536,599End of March
2013
404
9,418
165
28,60938,597

Partial direct write-offs
Total Loans (B)Ratio of Total Risk-Monitored Loans to Total Loans (%) (A/B)

Risk-Monitored Loans (Consolidated)(Million yen, %)Loans to Bankrupt Borrowers
Delinquent Loans
Loans Past Due Three Months or More
Restructured Loans
Total Risk-Monitored Loans (A)Partial direct write-offs
Total Loans (B)Ratio of Total Risk-Monitored Loans to Total Loans (%) (A/B)

Increase or
decrease(11)(2,962)
88
4,884
1,998

1,022

1,206

184

5,374,701
0.68

5,460,170
0.70

85,4690.02

Asset Assessment under the Financial
Reconstruction Law

As of the end of March, 2013, bankrupt andquasi-bankrupt assets amounted to ¥1,102
million (equivalent to $11 million), doubtful
assets were ¥8,721 million (equivalent to $92
million), and substandard assets were ¥28,774
million (equivalent to $305 million).
Accordingly, the total amount of bad
debts under the Financial Reconstruction Law
increased by ¥1,998 million (equivalent to$21 million) to ¥38,597 million (equivalent to$410 million).

The coverage ratio of bad debts (the totalof claims deemed collectible with collateraland guarantees and the allowance for possible
loan losses divided by total bad debts) was
60.35%.
Bankrupt and quasi-bankrupt assets arerecorded for the remaining amount after
deducting the amounts deemed collectible
with collateral and guarantees, while doubtful
assets are recorded for the loss-expectedamount of the remaining amount after

similarly deducting the amounts deemed
collectible with collateral and guarantees,
respectively, in the specific allowance forpossible loan losses.
For substandard assets, the anticipatedloss ratio is calculated based on the loan loss
ratio and recorded in the general allowancefor doubtful accounts.

Asset Assessment under the Financial Reconstruction Law (FRL) (Non-Consolidated) (Million yen, %)Bankrupt and Quasi-Bankrupt Assets
Doubtful Assets
Substandard Assets
Total Claims under the 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)

12

End of March
2012
1,762
11,03323,80336,5995,395,073

End of March
2013
1,102
8,721
28,774
38,597
5,476,377

Increase or
decrease(660)(2,312)
4,971
1,998
81,304

1,022

1,206

184

5,431,673
0.67

5,514,975
0.69

83,3020.02

26,67472.88

23,29360.35(3,381)(12.53)

Shinkin Central Bank Annual Report 2013

Important Management Indices
As the central financial institution for shinkin banks, the SCB strives
for sound management.

Capital Adequacy Ratio (%)(As of September 30, 2012)

NPL Ratio (%)(As of September 30, 2012)

32.77%

3.03%

2.00%
16.99%
12.79%

Long-Term Credit Rating

0.70%

SCB

City Banks Regional BanksSCB(As of July 31, 2013)

City Banks Regional Banks

33.57%

0.70%(As of March 31, 2013)(As of March 31, 2013)

Notes	1. City Banks: Average of 6 Banks
2. Regional Banks: Average of 64 Banks
Source Bank disclosure documents

Note
NPL ratio = Total risk-monitored loans/Total loans
Source Financial Services Agency

A1

A+

A+

AA

Moody’s

S&P

R&I

JCR

Note	Symbols indicating credit rating are assigned byeach rating agency.

The SCB promotes streamlining of management through continuous
drastic restructuring.

Funds per Employee(Millions of U.S. dollars)(As of September 30, 2012)

Ratio of Expenses (%)(As of September 30, 2012)
1.03%

291
0.83%

43
SCB

20

City Banks Regional Banks

0.09%
SCB

City Banks Regional Banks$231Million

0.09%(As of March 31, 2013)(As of March 31, 2013)

Notes	1. Total funds = Deposits+CDs+Debentures
2. U S dollar amounts are conver ted forconvenience only, at ¥77.60 and ¥94.10 per
dollar, the prevailing rate on September 30,
2012 and March 31, 2013 , respectively.
Source Japanese Bankers Association

Note

Ratio of expenses = Total expenses/(Deposits+CDs+Debentures) Average
outstanding balance
Source Japanese Bankers Association

13

Corporate Governance
The SCB strives to maintain fairness andtransparency in its management by fortifying
our corporate governance system as the SCB
implements various operational strategies.
The SCB’s goal is to gain the trust of all the
SCB’s stakeholders by demonstrating thestrong commitment to establishing a rigorous
corporate governance system and to becomea distinguished f inancial institution wellrespected in society.

General Meeting for Preferred Shares

Institutional Structure

Support System for Part-Time Directors
and Part-Time Auditors

General Assembly of Representatives(General Meeting)

The SCB is a cooperative financial institution
consisting of 270 shinkin banks nationwide(as of March 31, 2013) as its members andinvestors. The General Assembly of Representatives is equivalent to the general meetingof shareholders in a joint-stock company, andis held annually to elect directors and resolve
important issues.

Board of Directors

The SCB’s Board of Directors currently comprises 30 members, 12 full-time directors and18 part-time directors. It meets regularly ninetimes a year, making decisions about businessmatters vital to the SCB’s management andoperations. Part-time directors check the
SCB’s management from the perspective ofoutside directors. Part-time directors are
selected from shinkin banks.
In addition to 12 full-time directors, the
SCB’s Articles of Incorporation stipulate that
more than one-half of the total number ofboard members shall be executive officers ofshinkin banks. In accordance with this stipulation, persons serving as president or board
chair of a shinkin bank are chosen from eachregion throughout Japan as part-time directors of the SCB.

Auditors

The auditors of the SCB currently comprise
5 members, one full-time auditor appointed
from its employees, two part-time auditors
elected from shinkin banks and two otherpart-time auditors from disinterested parties
other than the SCB and shinkin banks.
Part-time auditors appointed carry out
management checks in what might be called
an outside auditor capacity, working toensure transparency.
In addition, auditors hold regular reporting meetings to inform the directors of theaudit situation. This is to ensure the effectiveness of the audit system.

14

The SCB’s preferred shares are listed on theTokyo Stock Exchange (see page 22).
Preferred shareholders have no voting
rights at the General Assembly of Represent atives. However, a general meetingfor preferred shareholders may be held toprotect their property rights under the Law
Concerning Preferred Shares of Cooperative
Financial Institutions.

The G e ner al Af f air s Division provide s
information and other support for part-time
directors, and staff exclusively assisting theauditors provide the same for part-time auditors to facilitate timely and precise decision
making by part-time directors and auditors.
Checks on the Execution of 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 the Boardof Directors and ones to be reported to theBoard 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 resolutions are carried out
on a cross-organizational basis, each committee comprises several directors and generalmanagers of divisions.

Supervision and Checks

At the SCB, the Board of Directors supervises
the execution by the directors. More thanhalf of the Board of Directors are executive
officers of shinkin banks, thereby ensuringthat the Board of Directors fulfills its check
functions.

Audits by Auditors

At the SCB, to facilitate audits of the directors’ execution of duties, the auditors attend
meetings of the Board of Directors and otherimportant meetings. The auditors also receive
reports from directors regarding their execution of duties and inspect the minutes of the
Executive Committee and other important
documents. In addition, the auditors conduct
regular meetings with the independent audi-

tors to exchange opinions and information.
Exclusive staffs are assigned to assist theauditors in the execution of their duties so as
to facilitate the timely and precise executionof duties by the auditors.

The Internal Audit System

The SCB is building an internal audit systemthat aims at the realization of efficient andeffective business operations by utilizing theInternal Audit Division that is independent
from operational divisions and branches.
The Internal Audit Division examines andassesses the legal and regulatory compliancestatus, risk management status and operations
management status of each division, branch
and affiliated company of the SCB to makesure that they are functioning appropriately
and effectively. Where deemed necessary,
the Internal Audit Division issues guidance toundertake corrective measures.
In addition, each division and branch is
required to undertake their own internal
inspections for prevention and early detectionof administrative errors.

The Use of Outside Specialists

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 consultswith and receives advice from such specialists
on a regular basis and as the need arises.

Appropriate Disclosure of Corporate
Information

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. The SCB also strives
to maintain transparency in its management
through appropriate disclosure.
Improving Internal Control Systems
The SCB regards compliance as basic premiseof all business activities. The SCB continues tostrengthen and operate the internal control
systems, based upon policy to maintain reliability of financial reporting, to manage risks
flexibly and effectively in response to thosecharacteristics, and to implement internal
audit by utilizing the Internal Audit Division,
which is independent from the operational
divisions and branches.

Shinkin Central Bank Annual Report 2013

Strengthening the 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 tofurther strengthen its compliance system.
Compliance System
1. The SCB has formulated the Shinkin
Centr al B ank Code of E thics, which
stipulates the ethical rules and behavior
standards that must be upheld by all the
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
Progr am , which lays out it s specif ic
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 are establishedand their respective roles are clarified.
A compliance supervisor, personnel responsible for compliance and personnel deputy
responsible for compliance are appointed atevery 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 list of audit items used by the Internal
Audit Division includes compliance-related
items, and internal audits include investigation on whether or not the compliancesystem is functioning adequately.
9. In cases of compliance violation, reports fromthe heads of concerned divisions or branches
are promptly called for and appropriate
actions are taken to prevent recurrence.
10. The SCB operates a hotline system to facilitate reporting of compliance breaches
by directors or 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 web site. 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 web site pursuant to the Shinkin
Bank Law and the Financial Instruments
and Exchange Law, the SCB is implementing appropriate management to ensurethat customers’ interests are not wrongfully violated.
14. Based on the financial Alternative Dispute
Resolution (ADR) system, to respond
expeditiously, fairly and appropriately tocustomers’ enquiries, 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 directors andemployees of the SCB are working to maintain strict compliance through coordination
among related divisions and by strengthening
internal education programs.

Compliance System Overview
Customers
Division or branch

Corporate
lawyerAuditors

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

Gene

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

Risk Management Committee

Directors (full time)

Executive Committee
Board of Directors

15

Risk Management
Learning from the experience of the financial crisis, the SCB is exhaustively implementing more highly detailed and thoroughrisk management by pursuing more sophisticated integrated risk management, market risk management, credit risk management and other measures while also advancing predictor and interim management for credit control.
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 believes that its future depends onrisk management and that a strong risk management system is a prerequisite for maintaining
sound management and securing adequate profits.
The SCB classifies “risk” into two broad
categories—risk that must be controlled andrisk that must be absolutely minimized—andmanages these risks accordingly. The types ofrisk that must be controlled are market risk,
liquidity risk and credit risk. The type of riskthat must be minimized is operational risk.
Risk is managed by divisions which are independent from divisions involved in business
operations. The Risk Management Division
coordinates management of differing risks toprovide comprehensive risk management.
The SCB has also established five crossorganizational bodies—the Risk Management
Committee, ALM Committee, and Credit Committee, —to manage risk from a Bank-wide
perspective. These committees deliberate andmake decisions 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 independent 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-at-Risk(VaR) method and comparing their aggregated value to the institution’s overall financial
strength (i.e., capital adequacy).
For market risk and credit risk, the SCB
calculates Value-at-Risk. For the calculationof operational risk capital requirements, theSCB employs the basic indicator approach
proposed under the Basel II Capital Accord.
The SCB defines capital under its integrated risk management system and allocatesrisk limit amounts for operational risk andother types of risk (note). Separately, theSCB estimates losses under various stressscenarios as part of its efforts to monitor
potential impacts on capital.
The quantitative risk limits and reserveamounts for each fiscal year are determinedby the Executive Committee after deliberationby the Risk Management Committee. The Risk
Management Division, which oversees integrated risk management, measures the amountof risk exposure both during and at the end ofeach month 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.
Note: W ith regard to subsidiaries within the SCB’s
scope of consolidation, the SCB monitors risk
exposure at each subsidiary and allocates capitalcommensurate with the amount of risk. These
allocations provide for risk taking by subsidiaries.

Risk Categories and Definitions

Risk categories
Market Risk

Risks That Must
Be Controlled

Risks That Must
Be Minimized

Risk Definitions
Market risk is the risk of loss resulting from fluctuations in asset or liability values (including offbalance-sheet items) due to changes in such market risk factors as interest rates, stock prices or
exchange rates. This includes the risk of loss due to changes in earnings generated by assets andliabilities.

Liquidity Risk

Liquidity risk is the risk that a financial institution will be unable to generate sufficient cash inflow
to meet required cash outflows and the risk of loss resulting from the unavoidable need to procure
funds at much higher interest rates than normal (cash flow risk); and the risk that market transactions will become either impossible or transactions must be carried out at very unfavorable prices
due to market disruptions (market liquidity risk).

Credit Risk

Credit risk is the risk of loss due to the partial or complete loss of asset value (including off-balancesheet assets), owing to such factors that borrower or counterparty will fail to perform on an obligation.

Operational Risk

Operational risk is the risk of unexpected loss resulting from inadequacies in operational
processes, breaches in internal controls, employee actions, or computer systems, as well as therisk of loss resulting from external events.

Administrative Risk

Administrative risk is the risk of loss resulting from administrative failures, accidents or management
or staff fraud.

Information
Technology Risk

Information technology risk is the risk of loss due to computer system failures, errors, orinadequacies and the risk of loss due to the fraudulent use of computer systems.

Other operational risks are risks other than those mentioned above that may be defined, as necessary,O t h e r O p e r at i o n a lby the divisions responsible for the overall management of operational risk (excluding market risk,
Risk
liquidity risk and credit risk).

16

Shinkin Central Bank Annual Report 2013

Overview of the SCB’s Risk Management System
Board of Directors

Executive Committee

Risk Management
Committee

ALM
Committee

Divisions responsible forthe overall management of operational risk

Division responsible for integrated
risk management

Division responsible for market risk
management

Risk Management Division

Risk Management Division

Risk Management Division

Division responsible for administrativerisk management

Divisions responsible for capital
adequacy

Divisions responsible for liquidity risk
management

Operations Division

Risk Management Division(Assessment)

Division responsible for information
technology risk management

Strategic Planning Division (Policy)
Financial Management Division(Calculation)

Divisions responsible for the
management of other operational risk

Risk Management Division

Systems Division

Financial Management Division

Divisions stipulated by Risk
Management Division

The SCB’s Market Risk Management Framework
Board of Directors
Executive Committee
Decisions

Matters for discussion

Risk Management Committee
ALM Committee
Decisions

Decisions

Reports, etc.

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 tomarket risk management. The ALM Committee comprises senior management and headsof divisions related to market risk. Based on

CreditCommittee

risk status information—obtained via reports
from divisions responsible for managing market risk and other sources—the ALM Committee deliberates widely and expeditiously onpolicy relating to fund-raising 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 and managed
according to risk limits allocated to eachcategory.
Note: M arket risk includes interest rate risk and such
equity-related risk as stock price fluctuation risk.

Divisions responsible for
credit risk management
Divisions responsible for credit control
Risk Management Division, Credit
Planning & Supervision Division
Division responsible for
credit assessment
Credit Planning & Supervision Division
Division responsible forasset assessment
Credit Planning & Supervision Division

In addition, the SCB manages market
risk by monitoring a wide range of measures
under various scenarios. These include theinterest rate risk amount calculated using
outlier standards; the possible stress loss
during a period of very high market volatility;
the basis-point-value (BPV) indicator, whichmeasures the potential change in portfolio
market value for every 0.01 percentage point
fluctuation in interest rates; and the market
risk equivalent amount.
The status of these risk management
activities is reported to senior management at
biweekly meetings of the ALM Committee.
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 understanding of
liquidity risk and rigorously manage this risk,
the SCB has formulated a liquidity risk management policy. Divisions responsible for liquidity
risk management are clearly separated fromdivisions involved in cash management andmarket operations, allowing internal checks
to be maintained through the independentfunctions. In addition, the ALM Committee
deliberates and makes decisions on mattersrelating 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 carried17

out for individual currencies and periods. In
the event that a significant liquidity risk arises,
the SCB has preparations to respond rapidly,
including the securing of funding sources.
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 as the body responsible for deliberating and making decisions on matters relatingto credit risk management. The Credit Committee is comprised of senior management
and general managers of related divisions. The
Credit Committee deliberates widely andthoroughly on credit transactions that exceed
a designated amount.
The Executive Committee deliberates on,
and makes decisions regarding, the results ofself-assessment of assets and matters 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 the credit rating of the borrower.
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 within the particular industry it operates in. Based on these assessments of credit
strength, each borrower is given a credit
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

18

analyze the SCB’s overall credit por tfolio
according to credit rating, industry, country
and other criteria. These analyses are used tomonitor the diversification of credit risk as well
as changes in portfolio credit risk. Furthermore,credit risk is quantified and managed within therisk limit set by the Executive Committee.
The credit risk amount is measured using
VaR as well as the Monte Carlo simulation
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 checks whether theclient service division is conducting appropriate credit control, and provides guidanceas necessary. In the case of any problem on
the side of borrowers, the Credit Planning& Supervision Division rapidly makes assessments of the borrower’s management situationand provides supervision. Where necessary,an 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.
Note: C redit risk includes such risk as counterpar ty
risk for derivative transactions and securitizationtransaction risk.

Operational Risk Management
To provide comprehensive management ofoperational risk, the SCB has issued a policythat governs operational risk management.
In addition, the SCB has separate policies tomanage two major types of operational risk:
administrative risk and information technology
risk. The Risk Management Division is responsible for overall operational risk management,
the Operations Division oversees administrative risk management, and the Systems Division is responsible for information technology
risk management. The SCB may also create
new divisions to cope with other types ofoperational risk as necessity arises. With thisstructure, the SCB comprehensively manages
operational risk.
The SCB has established the Risk Management Committee to deliberate and makedecisions on matters relating to operationalrisk management . The Risk Management
Committee, comprising senior management
and heads of related divisions, deliberates
and makes decisions on comprehensive
methods for managing operational risk,
including administrative risk and systems risk.
To calculate its operational risk capitalrequirements, the SCB uses the basic indicator approach proposed under the Basel
II Standards.

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 further automation of administrative
processing, training programs tailored for eachstaff and management level, and programs toencourage staff to submit proposals to improveadministrative processes. 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
T h e Sy s t e m s D i v i s io n t a ke s c h a r ge o f
information technology risk management. It
provides control and guidance to divisions
involved in system development, operation
and utilization.
In the event of a system failure that
seriously affects the execution of business
operations, a Bank-wide response is triggered
based on crisis management procedures(contingency plan). The SCB also conducts
crisis response drills periodically based on
system-failure crisis scenarios.
To prevent damage caused by system
failure, the SCB has issued a security policy
and undertakes internal communications
programs to ensure that all directors andemployees have a thorough understanding of
the SCB’s security policy.

Shinkin Central Bank Annual Report 2013

Corporate Social Responsibility (CSR) Activities
The SCB aims to be a financial institution highly valued throughout society.
Activities as a Regional Financial Institution
Since the SCB’s funds are principally deposits
received from many local shinkin banks, we
believe that it is ideal to contribute to thesocial and economic development of local
communities with its funds.
For this reason, in cooperation withshinkin banks, the SCB actively provides
financing to local governments, public interest corporations, and locally based businessenterprises.
Fur thermore , in collabor ation withshinkin banks, the SCB contributes to thedevelopment and revitalization of local communities with a very extensive variety ofactivities, including syndicated loans, private
finance initiatives (PFI), support for the improvement of SME managements, regional
industry research, and the implementation of
local contribution programs.

Revitalizing Local Communities andPursuing Activities to Promote Environmental Sustainability
As part of its efforts to contribute to local
communities, the SCB sponsors Metrolink Nihonbashi, to realize human- and environmentfriendly transportation set in the Tokyo metropolitan government’s urban planning vision.
Metrolink Nihonbashi uses low-emission,
low-noise electric buses that provide a highdegree of accessibility through a low-floor
design. The buses serve a circular route thatruns through Nihonbashi and Yaesu, near to
the SCB’s head office, providing shoppers andpeople working in the area with a transportation option that is convenient and free ofcharge. This service aims to revitalize the local
area by helping to improve the environmentand by attracting shoppers and sightseers.

Shinkin Bank Contributions to Local
Society
Shinkin banks are born of their communities,
and develop together with them. The Shinkin
Bank Social Contribution Award was createdin 1997 to help publicize the shinkin bank industry’s dedication to community and social
contributions in a wide range of fields, and tofurther enhance the value of shinkin banks inthe community.
The 16th Shinkin Bank Social Contribution Award elicited submissions for 494 social
contribution initiatives in a wide range of areas, from 153 shinkin banks and three relatedorganizations, between November 2012 andJanuary 2013. Activities were evaluated on thebasis of continuity, social significance, integrity
with the community, and impact on the local
society. Awards were presented for activities
at eight shinkin banks, with three shinkin bank
employees recognized for their exemplary actions.

Activities Implemented through theProvision of Financial Products

Charitable Trusts
Shinkin Trust Bank Ltd., a wholly owned
subsidiary of the SCB, sets up and manages
charitable trusts on behalf of individuals andcompanies in order to contribute to activities
for the public good, such as environmental
conservation, scholarships, academic researchand subsidies for social welfare.

Socially Responsible Investing (SRI)
Funds
Shinkin Asset Management Co. Ltd., a wholly
owned subsidiary of the SCB, offers the
Shinkin SRI Fund, in which it focuses on thesocial responsibility of the companies andinvests.
SRI is based on the philosophy according
to which “companies with the best potential
for steady growth are those that maintainsustainable economic growth by fulfilling
their corporate social responsibilities.” Consequently, SRI funds carry out investments
based on research and analysis from a broad
range of perspectives, including financial,environmental, social and ethical.

Metrolink Nihonbashi

Activities That Aim to Contribute toSociety
With branches and offices throughout Japanand overseas, the SCB aims to contribute not
only to local communities but also to society
in the broadest possible way.
The SCB has become a supporter of the“Table For Two” program, a social contribution project that began in Japan. Table For
Two enables consumers to contribute to famine relief efforts in developing countries while
enhancing their health. When a customer
purchases an item on the “healthy menu” offered at the SCB head office cafeteria, partof the price of the meal (¥20) is donated to adeveloping country.

Shinkin Bank Social
Contribution Award

19

What Are Shinkin Banks?
Shinkin banks are cooperative financial institutions. Their membership is composed of local
residents and small and medium-sized companies. Shinkin banks' distinctive characteristics
are (1) they are close and convenient, (2) they
offer fine-tuned and personalized services and(3) they have a strong relationship of mutual
trust with their customers and communities.
Cooperative financial institutions are organizations 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 various payments
including those for public utilities, and engaging in over-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 as support for management improvement and enterpriserenewal, business succession support, businessstart-up support and local-area revitalization.
Outline of Shinkin Banks
Shinkin banks dedicate themselves to providing
high-quality services to local residents, as financial institutions that are deeply rooted in theirrespective regions and contribute to regional
development.
Total deposits outstanding at 270 shinkinbanks as of March 31, 2013, reached approximately ¥124 trillion (equivalent to $1,327 billion), which ranks after Japan’s city and regionalbanks, and gives shinkin banks an important position in Japanese financial markets. The numberof shareholders at shinkin banks is 9.30 million.
Shinkin banks also possess one of the largest
branch networks among the financial businesscategories, forming a strong network throughout Japan.
Shinkin banks continue to further deepen
their presence and roles as important infrastructure for regional economies and communities.

Shinkin bank services

Regional Banks
Shinkin Banks

7,504

Succession support / M&A

Product and service expansion

Overseas expansion

Personal lending businessBusiness start-up

Local-area revitalization

3,071

2,403

1,732
639

Shinkin
Banks

Regional
Banks

Second-tier
Regional
Banks

City
Banks

CreditCooperatives

Labor
CreditAssociations

Note	
The number of shinkin banks is as of March 31, 2013. The numbers of regional banks, second-tier regionalbanks, city banks, credit cooperatives and labor credit associations are as of September 30, 2012.
Sources	Japanese Bankers Association, National Central Society of Credit Cooperatives, National Association of Labour
Banks and SCB

Deposit Outstandingat Shinkin Banks

Loan and Bills Discounted
Outstanding at Shinkin Banks(Trillions of Yen / Billions of U.S.Dollars)

115,4<1,175>

2009

117,3
<1,261>

2010

119,7
<1,440>

2011

122,5
<1,490>2012(Trillions of Yen / Billions of U.S.Dollars)

124,8<1,327>

64,8
<660>

2013

2009

(Billions of U.S. Dollars) Note
Items in angular brackets are U.S. dollar amounts.
	U.S. dollar amounts are converted for convenience$3,012
only at ¥98.20, ¥93.05 and ¥83.15, 82.22, 94.10
per dollar, the prevailing rate on March 31, 2009,
2,423
2010, and 2011, 2012, 2013 respectively.
Source SCB

1.327

Agricultural Cooperatives

953

Second-tier Regional Banks

637

Credit Cooperatives

194

Labor Credit Associations

188

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, Norinchukin
Bank, National Central Society of Credit
Cooperatives, National Association of Labour
Banks and SCB

Shinkinbankcustomers

7,498

64,1
<689>

63,7
<766>

63,7
<775>

63,6
<676>

2010

2011

2012

2013

Note
Items in angular brackets are U.S. dollar amounts.
	U.S. dollar amounts are converted for convenience
only at ¥98.20, ¥93.05 and ¥83.15, 82.22 ,94.10
per dollar, the prevailing rate on March 31, 2009,2010, and 2011, 2012, 2013 respectively.
Source SCB

Growth of Number of Shareholders (Millions) (As of March 31,2013 )
7.36
5.51
3.67

Notes

20

Co-financing

Domestic Branches by Bank Segment (Number of branches)

Deposits Outstanding by
Bank Segment (As of March 31, 2013)
City BanksManagement improvement / enterprise renewal

Shinkin
bank

8.11

8.87

9.13

9.30

2005.32013.3

6.20

4.25

2.58
1.31
1955.3

1.81

1960.3

Source SCB

1965.3

1970.31975.3

1980.3

1985.3

1990.3

1995.3

2000.3

Shinkin Central Bank Annual Report 2013

The capital adequacy ratio of shinkin banks
as of the end of March 2013 increased by 0.19
percentage point over the previous fiscal
period to 13.04% (preliminary figure).
The capital adequacy ratio of shinkin banks
maintains a standard which is by no means inferior even compared to other business categories, and is outperforming the standardsof other domestic regional banks (11.57%) or
second-tier regional banks (10.41%).

Capital Adequacy Ratio of Shinkin Banks
13.04%
12.67%

12.85%

12.34%
11.80%

2009

2010

2011

2012

2013
(Preliminary Figure)

Source SCB

Non-Consolidated
Capital Adequacy Ratio
by Bank Segment (%)

Nonperforming-Loan Ratioof Shinkin Banks (%)(as of March, 31, 2013)17.16%

Shinkin
Banks

6.87%

6.80%

13.04%

11.57%

City Banks(Preliminary Figure)10.41%

Regional Second-tierBanks Regional Banks

6.25%

6.27%

6.44%

2009

2010

2011

2012

Sources Bank disclosure document
Regional Banks Association of JapanThe Second Association of Regional Banks

2013(Preliminary Figure)(Domestic)

Source SCB

Reference:
The Difference between Shinkin Banks and Commercial Banks
Category

Shinkin Banks

Commercial Banks

Legal Foundation

Shinkin Bank Act

Banking Act

Organization

Cooperative organizationFor-profit joint stock
corporations

Membership Qualifications• Those who have an address or location inNone

the region.
• Those who have a business office in the region.
• Those who work in the region.

21

Preferred Shares
The SCB’s 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.
Listing of Preferred Shares
The SCB has issued preferred shares since fiscal 1995, and the preferred shares were listedon the Tokyo Stock Exchange on December
22, 2000 (Securities Identification Code 8421)
for the first time in Japan. The SCB’s preferredshares are marketable securities that are very
similar to preferred stocks, and basically apply
the same listing criteria and disclosure ruleswith them.
Trading of Preferred Shares
Like listed stocks, the SCB’s preferred sharescan be traded anytime during trading hours of

the Tokyo Stock Exchange through a securities company. Credit transactions are also
possible for preferred shares just as they arefor stocks.
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 at the Law Concerning Preferred
Shares of Cooperative Financial Institutions,
the SCB does not pay interim dividends.
Dividends of preferred shares are comprised of 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.
The SCB’s preferred shares have the same
treatment as stocks in the taxation system, andthey are given the same preferential treatment
concerning tax as stocks.
For fiscal 2012, a dividend for preferredshare was ¥6,500 (equivalent to $69) per

Composition of Preferred Shares (March 31, 2013)
・Number of Investors (Total 17,557)
Foreign Institutions
and Others
26(0.1%)
Financial Institutions
220(1.3%)
Other Corporations229(1.3%)

Price(closing price,
in yen)First Day of Listing (December 22, 2000) 200,500

Other Corporations
40,166(5.7%)

Foreign Institutions
and Others
1,961(0.3%)

Highest Price (March 15, 2006)

311,500

Lowest Price (April 14, 2009)

102,400

Closing Price (July 31, 2013)

169,100

Note: P rices of preferred share are split-adjusted,reflecting the stock split of preferred shares witha record date of July 31, 2009.

Individuals
109,648(15.5%)
Individuals
17,066(97.2%)

22

Price of Preferred Shares

・Number of Subscription (Total 708,222)
Securities Companies
6,776(0.9%)

Securities Companies
16(0.1%)

share, which comprised a preferred dividend of¥3,000 (equivalent to $31) and a participating
dividend of ¥3,500 (equivalent to $37). For
fiscal 2013, a dividend for preferred share is
expected to remain ¥6,500 (equivalent to $69)
per share.

Financial Institutions
549,671(77.6%)

Financial Section

Contents
24 Five-Year Summary (Consolidated)
25 Consolidated Balance Sheet
26 Consolidated Statement of Income
27 Consolidated Statement of Comprehensive Income
28 Consolidated Statement of Changes in Net Assets
29 Consolidated Statement of Cash Flows
30 Notes to Consolidated Financial Statements
73 Independent Auditor’s Report
74 Non-Consolidated Balance Sheet
75 Non-Consolidated Statement of Income

23Five-Year Summary(Consolidated)
Five-Year
Summary(Consolidated)(Millions of yen)
FY2008FY2009FY2010FY2011FY2012

Total Income

484,598

392,849

361,820395,277

408,917

Total Expenses

701,720

373,135

322,361

357,662

367,469

Net Income (Loss)(182,518)

29,20627,88729,80532,862－－35,97063,791

171,545

Net Assets

443,564

1,020,800

1,043,267

1,092,354

1,249,229

Total Assets

27,505,115

28,575,669

31,502,697

30,248,492

30,410,702

Net Assets per Share (yen)185,280.93

214,698.35

219,425.69

229,768.12

263,016.93

Net Income (loss) per Share (yen)(77,531.92)

6,425.11

5,471.96

5,879.26

6,528.60－

13,37014,603

14,603

16,603

Common Shares

－

8,767

10,00010,00012,000Preferred Shares

－

4,603

4,603

4,603

4,603

22.56

28.17

31.76

32.43

33.57

Comprehensive Income

Dividends

Capital Adequacy Ratio(Domestic Standard) (%)

Notes:
1. Consumption tax and local consumption tax incurred by the Bank and its domestic consolidated subsidiaries are excluded
from transaction amounts.
2. Net assets per share was obtained by deducting preferred dividends from net assets and was divided by the number ofshares at term-end. This calculation complies with ASBJ (Accounting Standards Board of Japan) statement No. 2,
September 25, 2002 “Accounting Standards for Earnings Per Share” and ASBJ Guidance No. 4, September 25, 2002
“Guidance on Accounting Standards for Earnings Per Share”.
3. Net income per share was obtained by dividing the value obtained by deducting preferred dividends from current profit.
This calculation complies with ASBJ statement No. 2, September 25, 2002 “Accounting Standards for Earnings Per Share”
and ASBJ Guidance No. 4, September 25, 2002 “Guidance on Accounting Standards for Earnings Per Share”.
4. The Bank’s capital adequacy ratio is calculated using the formula stipulated in “Financial Services Agency Notification
No. 21 (2006).” This notification is pursuant to the standards set forth in Article 14-2 of the Banking Law, which is
stipulated for application by Article 89-1 of the Shinkin Bank Law.
5. Beginning with fiscal 2010, the Bank had adopted the Accounting Standard for Presentation of Comprehensive Income(ASBJ Statement No.25; June 30, 2010).

Shinkin Central Bank

24

1

Consolidated
Balance Sheet
Consolidated Balance Sheet
Millions of Yen
Shinkin Central Bank As of March 31,
AssetsCash and Due from Banks (Note 2 (2), 9, 24)
Bills Bought and Call Loans (Note 24)
Receivables under Resale Agreements (Note 24)
Receivables under Securities Borrowing Transactions (Note 24)
Monetary Debts Purchased (Note 24)
Trading Assets (Note 3, 9, 24, 25)
Money Held in Trust (Note 24, 25)
Securities (Note 4, 7, 9, 24, 25)Loans and Bills Discounted (Note 5, 6, 9, 24)
Foreign Exchanges Assets
Other Assets (Note 9)
Tangible Fixed Assets (Note 8, 14, 23)
Intangible Fixed Assets (Note 23)
Deferred Tax Assets (Note 21)
Customers’ Liabilities for Acceptances and Guarantees
Reserve for Possible Loan Losses
Reserve for Investment Losses
Total Assets

Liabilities and Net Assets
Liabilities
Deposits (Note 24)
Debentures (Note 12, 24)
Trading Liabilities (Note 10, 24)
Borrowed Money (Note 9, 11, 24)
Bills Sold and Call Money (Note 9, 24)
Payables under Securities Lending Transactions (Note 9, 24)
Foreign Exchanges Liabilities
Other Liabilities (Note 13)
Reserve for Employee Bonuses
Reserve for Directors' Bonuses
Reserve for Employee Retirement Benefits (Note 22)
Reserve for Directors' Retirement Allowances
Reserve under Specific Law
Deferred Tax Liabilities (Note 21)
Deferred Tax Liabilities for Land Revaluation (Note 14)
Acceptances and Guarantees
Total Liabilities

Net Assets
Common Shares and Preferred Shares (Note 20)
Capital Surplus
Retained Earnings
Total Shareholders' Equity
Net Unrealized Gains on Other Securities (Note 21, 25)
Net Deferred Gains(Losses) on Hedging Instruments (Note 21, 26)
Land Revaluation Excess (Note 14)
Foreign Currency Translation Adjustments
Total Accumulated Other Comprehensive Income
Minority Interests
Total Net Assets
Total Liabilities and Net Assets
The accompanying notes are an integral part of these financial statements.

Millions of
U.S. Dollars(Note 1)
2013

2013

2012

3,117,393
636,264
80,985
187,023
330,758
475,025
182,901
19,647,850
5,460,170
4,413
105,724
74,66918,003
1,863
117,054(29,346)(52)
30,410,702

1,963,108
663,867
73,99071,529392,916
463,463
181,193
20,592,299
5,374,701
3,126
292,485
74,653
15,77810,853
102,672(28,069)(78)
30,248,492

33,128
6,761
860
1,987
3,514
5,048
1,943
208,797
58,025
46
1,123
793
191
19
1,243
(311)
(0)
323,174

22,000,309
3,537,350
148,338
811,890559,088
1,637,068
187
269,541
1,508
77
22,452551
149,9236,129
117,054
29,161,473

21,595,878
3,953,960
136,023
792,410497,739
1,605,617
162
441,464
1,476
69
21,609
529
1
23
6,499
102,672
29,156,138

233,797
37,591
1,576
8,627
5,941
17,397
1
2,864
16
0
238
5
0
530
65
1,243
309,898

490,998
100,678
429,841
1,021,518
298,822(90,092)
13,532(3,313)218,948
8,763
1,249,229
30,410,702

490,998
100,678
410,6211,002,298
156,850(85,557)
14,495(4,163)81,6258,430
1,092,354
30,248,492

5,217
1,069
4,567
10,855
3,175
(957)
143
(35)
2,326
93
13,275323,17425

Consolidated
Statement
Consolidated Statementof Income of Income
Millions of
U.S. Dollars(Note 1)
2013

Millions of Yen
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
OthersFees and Commissions (Note 15)
Trading Income (Note 16)
Other Operating Income
Other Income
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 15)
Trading Losses (Note 17)
Other Operating Expenses
General and Administrative Expenses
Other Expenses (Note 18)
Total Expenses

Income before Income Taxes and Minority Interests
Income Taxes (Note 21):
Current
Deferred
Total Income Taxes
Income before Minority Interests
Minority Interests in Net Income
Net Income

Net Income per Share (Note 29)
Dividend Declared per Share (Common Shares)
Dividend Declared per Share (Preferred Shares)
The accompanying notes are an integral part of these financial statements.

26

2012

2013
240,936
39,605
4,069
1,280
77
430
192,930
2,541
31,443
11,969121,520
3,046
408,917

264,149
45,247
6,215
2,639
79
311
206,445
3,209
31,861
15,36379,4494,453
395,277

2,560
420
43
13
0
4
2,050
27
334
127
1,291
32
4,345

162,183
65,00735,061
11,033966
64,337
45,77010,622
635
138,465
45,256
10,305367,469

197,241
81,91646,927
12,716827
84,415
50,430
10,48326
85,31046,14818,451
357,662

1,723
690
372
117
10
0
46
486
112
6
1,471
480
109
3,905

41,44837,614

440

1,006
7,180
8,186
33,261399
32,862

1,251
6,097
7,349
30,265459
29,805

10
76
86
353
4
349

2012
5,879.26
2,500.00
6,500.00

U.S. Dollars
2013
69.37
31.88
69.07

Yen
2013
6,528.60
3,000.00
6,500.00

Consolidated
Statementof Comprehensive
IncomeConsolidated Statementof Comprehensive
IncomeMillions of Yen
Shinkin Central Bank For the year ended March 31,
Income before Minority Interests
Other Comprehensive Income (Note 19)
Net Unrealized Gains on Other Securities
Net Deferred Gains (Losses) on Hedging Instruments
Land Revaluation Excess
Foreign Currency Translation Adjustments
Comprehensive Income
Comprehensive Income attributable to owners of the parent
Comprehensive Income attributable to minority interests

2013
33,261
138,283
141,971(4,535)(2)849
171,545
171,146399

2012
30,26533,526
121,067(88,047)
793(286)
63,791
63,332
459

Millions of
U.S. Dollars(Note 1)
2013
353
1,469
1,508
(48)
(0)
9
1,823
1,818
4

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

27

Consolidated Statement of
Changes in Net Assets
Consolidated
Statementof Changes in Net Assets
Millions of
U.S. Dollars(Note 1)
2013

Millions of Yen
Shinkin Central Bank For the year ended March 31,
Shareholders' Equity
Common Shares and Preferred Shares
Balance at Beginning of Year
Fluctuation Amount during the Fiscal Year
Total Fluctuation Amount during the Fiscal Year
Balance at End of Year
Capital Surplus
Balance at Beginning of Year
Fluctuation Amount during the Fiscal Year
Total Fluctuation Amount during the Fiscal Year
Balance at End of Year
Retained Earnings
Balance at Beginning of Year
Fluctuation Amount during the Fiscal Year
Surplus Dividends
Net Income
The revarsal of Land Revaluation Excess
Decrease due to decrease in subsidiaries
Total Fluctuation Amount during the Fiscal Year
Balance at End of Year
Total Shareholders’ Equity
Balance at Beginning of Year
Fluctuation Amount during the Fiscal Year
Surplus Dividends
Net Income
The revarsal of Land Revaluation Excess
Decrease due to decrease in subsidiaries
Total Fluctuation Amount during the Fiscal Year
Balance at End of Year
Accumulated Other Comprehensive Income
Net Unrealized Gains (Losses) on Other Securities
Balance at Beginning of Year
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 YearNet Deferred Gains (Losses) on Hedging Instruments
Balance at Beginning of Year
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
Land Revaluation Excess
Balance at Beginning of Year
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
Foreign Currency Translation Adjustments
Balance at Beginning of Year
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
Total Accumulated Other Comprehensive Income
Balance at Beginning of Year
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
Minority Interests
Balance at Beginning of Year
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
Total Net Assets
Balance at Beginning of Year
Fluctuation Amount during the Fiscal Year
Surplus Dividends
Net Income
The revarsal of Land Revaluation Excess
Decrease due to decrease in subsidiaries
Net Changes in Items Other Than Shareholders’ Equity during the Fiscal Year
Total Fluctuation Amount during the Fiscal Year
Balance at End of Year
The accompanying notes are an integral part of these financial statements.

28

2012

2013

490,998

490,998

5,217

490,998

490,998

5,217

100,678

100,678

1,069

100,678

100,678

1,069

410,621395,280

4,363(14,603)
32,862960
19,220429,841(14,603)29,805173(34)
15,341
410,621

(155)
349
10
204
4,567

1,002,298

986,957

10,651(14,603)
32,862960
19,2201,021,518(14,603)29,805173(34)
15,341
1,002,298

(155)
349
10
204
10,855

156,850

35,783

1,666

141,971
141,971
298,822

121,067
121,067
156,850

1,508
1,508
3,175

(85,557)

2,490

(909)

(4,535)(4,535)(90,092)(88,047)(88,047)(85,557)

(48)
(48)
(957)

14,495

13,875

154

(962)
(962)
13,532619
619
14,495

(10)
(10)
143

(4,163)(3,876)

(44)

849
849
(3,313)

(286)
(286)
(4,163)99(35)

81,62548,272

867

137,322
137,322
218,948

33,35333,35381,625

1,459
1,459
2,326

8,430

8,037

89

332
332
8,763

392
392
8,430

3
3
93

1,092,354

1,043,267

11,608(14,603)
32,862960
137,655
156,875
1,249,229(14,603)29,805173(34)
33,74649,087
1,092,354

(155)
349
10
1,462
1,667
13,275

Consolidated
Statement of Cash Flows
Consolidated Statement of Cash Flows
Millions of
U.S. Dollars
Millions of Yen
Shinkin Central Bank For the year ended March 31,
Cash Flows from Operating Activities:
Income before Income Taxes and Minority Interests
Depreciation
Loss on Impairment of Fixed Assets
Increase (Decrease) in Reserve for Possible Loan Losses
Increase (Decrease) in Reserve for Investment Losses
Increase (Decrease) in Reserve for Employee Bonuses
Increase (Decrease) in Reserve for Directors' Bonuses
Increase (Decrease) in Reserve for Employee Retirement Benefits
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 Debts Purchased
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 Refund (Paid)
Net Cash Provided by (Used in) Operating Activities

2013

2012

(Note 1)
2013

41,448
9,129
1,813
1,277
(25)
32
8
842
21
(240,936)
162,183(97,298)(1,452)(372,743)(38)(11,562)
12,31523,179(85,469)
404,431(416,610)
5,240(16,419)
20,608(115,493)
61,34931,451
62,158(1,286)24(113)
362,836(236,719)
133,363(262,453)(1,646)(264,099)

37,614
8,089
268
4,258
(136)
62
5
1,245
31
(264,149)
197,241(39,083)(1,005)76,90415
3,106(3,435)(43,203)(119,888)
26,546(369,640)
153,310(78,794)
100,110
21,60862,466(1,237,760)
102,726874
18(99)406,810(361,810)
59,205(1,256,483)
717(1,255,766)

440
97
19
13
(0)
0
0
8
0
(2,560)
1,723(1,033)(15)(3,961)
(0)
(122)
130
246
(908)
4,297
(4,427)
55
(174)
219
(1,227)
651
334
660
(13)
0
(1)
3,855
(2,515)
1,417(2,789)(17)(2,806)

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(8,190,402)
4,435,726
5,167,006(41,707)
40,000(5,001)(3,690)154
1,402,083(5,334,246)
3,010,246
3,451,941(1,906)(5,857)138
1,120,316(87,039)
47,13854,909
(443)
425
(53)
(39)
1
14,899Cash Flows from Financing Activities:
Proceeds from Subordinated Borrowings
Repayment of Subordinated Borrowings
Dividends Paid
Dividends Paid to Minority Interests
Net Cash Provided by (Used in) Financing Activities

216,200(201,960)(14,603)
(66)
(430)

108,150(100,000)(14,603)(66)(6,520)2,297(2,146)
(155)
(0)
(4)

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) )1
1,137,554
250,171
1,387,726(0)(141,970)
392,142
250,1710
12,0882,658
14,747

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

29

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 ¥94.10 to U.S.$1, the exchange
rate prevailing as of March 31, 2013. 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, 2013
listed below:
Ownership
Location
Name
Percentage
The Shinkin Banks Information
System Center Co., Ltd.
Tokyo
50.7%
Shinkin International Ltd.
London100%
Shinkin Central Business Co., Ltd.
Tokyo
100%
Shinkin Asset Management Co., Ltd.
Tokyo
100%
Shinkin Trust Bank, Ltd.
Tokyo
100%
Shinkin Securities Co., Ltd.
Tokyo
100%
Shinkin Capital Co., Ltd.
Tokyo
100%
Shinkin Guarantee Co., Ltd.
Tokyo
100%

30

Unconsolidated subsidiaries
Shinkin Capital No. 2 Limited Liability Investment Partnership
Shinkin no Kizuna Limited Liability Investment Partnership
Unconsolidated subsidiaries are excluded from the scope of
consolidation because their total assets, ordinary 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 position 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 in agreement withthose of the Bank, except for Shinkin International Ltd., which has afiscal year ended on December 31. For the consolidation of thesubsidiary, the Bank makes appropriate adjustments for any materialtransactions 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. Minority interests2

Shinkin Central Bankin net assets of subsidiaries are valued at fair value on acquisition in
the consolidated financial statements. The excess of the cost over thefair value of the underlying net equity in subsidiaries on acquisitionis expensed when incurred.
The application of equity-method to unconsolidated subsidiaries
and affiliates is as follows:
Non-consolidated equity-method subsidiaries:
N/A
Affiliated equity-method companies:
N/A
Unconsolidated subsidiaries that are not accounted for by theequity method:
Shinkin Capital No. 2 Limited Liability Investment Partnership
Shinkin no Kizuna Limited Liability Investment 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 to immateriality:
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 of Cash and Cash Equivalents with the amounts
disclosed in the consolidated balance sheet at March 31, 2013 and2012 is as follows:
Millions ofMillions of Yen
U.S. dollars
2013
2012
2013
Cash and Due fromBanks

3,117,393

1,963,108

33,128Due from Banks(Excluding Duefrom Central Bank )(1,729,667)(1,712,936)(18,381)

Cash and Cash
Equivalents

1,387,726

250,171

14,747(3) Trading Assets & Liabilities
Transactions for “Trading Purposes” (for purposes of seeking
to capture 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 debts purchased 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 thedeemed amounts that would be received or paid for settlement if suchtransactions were terminated at the fiscal year end.
(4) Financial Instruments(i) Securities
The Bank and its consolidated subsidiaries classify securities
into three categories: held-to-maturity debt securities, investments inaffiliates 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 theweighted-average method. Investments in affiliates that are notaccounted for by the equity method are stated at cost using theweighted-average method. Stocks and investment trusts in othersecurities are stated based on the average quoted market price overthe month preceding the balance sheet date and others are stated atfair value based on quoted market prices and other applicable
information at the balance sheet date (and the cost of securities soldis mainly determined using the weighted-average method). Other
securities where there is significant difficulty in determining fairvalue are stated at cost using the weighted-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
described in the Japanese Institute of Certified Public Accountants(JICPA) Industry Audit Committee Report No. 24 “Accounting and
Auditing Treatment of Accounting Standards for Financial
Instruments in Banking Industry” to transactions to hedge againstinterest rate risk arising from the financial assets and liabilities.
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 asset 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 totransactions to hedge against foreign exchange fluctuation risks
associated with monetary assets and liabilities denominated inforeign currencies in accordance with the regulations set forth in
JICPA Industry Audit Committee Report No. 25 “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 and forward liabilities exceeding the acquisition costs of theforeign currency securities designated as hedged items on a foreign
currency basis.

3

Shinkin Central Bank(c) Internal Derivative Transactions
Internal derivative transactions between trading accounts andother accounts, which are designated as hedges, are not eliminatedand related gains and losses are recognized in the consolidated
statement of income or deferred under hedge accounting because theinternal interest 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
JICPA Industry Audit Committee Reports No. 24 and No. 25.
(5) Tangible Fixed Assets (excluding Leased Assets)
Tangible fixed assets of the Bank are depreciated by the
declining balance method, except for buildings acquired on or after
April 1, 1998 (excluding facilities installed in buildings), which 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 using the declining balance method, based on
their estimated useful lives.
(Changes in Accounting Policies Difficult to Distinguish from
Changes in Accounting Estimates)
In accordance with revisions to the Corporation Tax Act, fromthis fiscal year, the Bank and its domestic consolidated subsidiaries
changed their depreciation method for tangible fixed assets acquiredon or after April 1, 2012, based on the revised Corporation Tax Act.
The effect of this change on the consolidated financial
statements is immaterial.
(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 thestraight-line method, mainly over a 5 year period (the estimateduseful life of the software).
(7) Leased Assets
Leased assets of Tangible Fixed Assets and Intangible Fixed
Assets related to finance leases that do not transfer ownership are
depreciated using 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.
(9) Reserve for Possible Loan Losses
Reserve for possible loan losses of the Bank is provided inaccordance with the Bank’s predetermined internal rules forwrite-offs and provisions as follows:
The reserve for loans to borrowers who are classified as
substantially bankrupt or who are bankrupt in the legal sense isprovided at 100% of the amount remaining after write-offs anddeduction of expected collection from the disposal of collateral andthe execution of guarantees. In addition, a reserve is provided forloans to borrowers who, although not actually bankrupt in the legal
sense, are experiencing serious financial difficulties and whose
failure is imminent. In such cases, the reserve is provided at theamount deemed necessary based on the borrower’s capability of
repayment after deduction of expected collection from the disposal ofcollateral and the execution of guarantees.

31

The Bank calculates the reserve by the cash flow estimate
method to those borrowers who owe the debts classified as Loans toProbably Bankrupt Borrowers and Restructured Loans by the Bank,
whose total credit exceeds a certain amount and also the cash flow
related to collection of the principal and interests from whom can be
estimated. The cash flow estimate method is to determine the gap
between the amounts calculated by discounting the cash flow by thecontracted interest rate prior to relaxation of terms and conditions ofloans and their book values.
For all other loans, a reserve is provided based on the ratio of
actual defaults for a certain period in the past.
All claims are assessed by the Operating Related Division
based on internal rules for self-assessment of asset quality.
Subsequently, the Asset Auditing Division, that is independent fromthe Operating Related Division, audits these self-assessments. The
reserve is provided 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 disposal of collateral andthe execution of guarantees, are written off. The amount written off
was ¥1,206 million ($12 million) as of March 31, 2013 and ¥1,022
million as of March 31, 2012.
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 Investment Losses
An investment loss reserve is allocated in an amountconsidered necessary to provide against possible future losses frominvestments, taking into consideration the financial position of thecompany issuing the securities and other factors.
(11) Reserve for Employee Bonuses
Reserve for employee bonuses is set aside to pay employee
bonuses with respect to the portion of estimated bonus payments toemployees that correspond to this fiscal year.
(12) 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.
(13) Reserve for Employee Retirement Benefits
Reserve for employee retirement benefits represents theestimated projected retirement benefit obligations in excess of thefair value of related pension plan assets at the end of the fiscal year.
Prior service costs and actuarial differences are charged to income asfollows:
Prior service costs:
Prior service costs are amortized, using the straight-line
method over 10 years within the average remaining service
years of the current employees.
Actuarial differences:
Actuarial differences will be amortized from the following
fiscal year, using the straight-line method over 10 years within
the average remaining service years of the current employees.

32
4Shinkin Central Bank

(14) 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.
(15) Reserve under Specific Law
This reserve amount is calculated pursuant to Article 46-5,
Paragraph 1 of the Financial Instruments and Exchange Act andArticle 175 of the Cabinet Office Ordinance on Financial Instruments
Business to indemnify any losses incurred from accidents in the
conduct of market derivative transactions on behalf of clients.
(16) Translation of Foreign Currencies
Foreign currency-denominated assets and liabilities aretranslated 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.
(17) Leases
Finance leases for the Bank and its domestic consolidated
subsidiaries that do not transfer ownership and contracted for before
the fiscal year beginning April 1, 2008 are accounted for as operatingleases.
(18) Consumption Tax
Consumption tax and local consumption tax incurred by the
Bank and its domestic consolidated subsidiaries are excluded fromtransaction amounts. However, consumption tax and local
consumption tax paid on purchases of tangible fixed assets andintangible fixed assets, which are not deductible as a tax credit, arecharged to income at the end of the fiscal year.
(19) Amortization of Goodwill
Goodwill is fully amortized in the fiscal year incurred.
(20) Issued but not yet Adopted Accounting Standard and Others“Accounting Standard for Retirement Benefits” (ASBJ
Statement No. 26, May 17, 2012) and “Guidance on AccountingStandard for Retirement Benefits” (ASBJ Guidance No. 25, May 17,
2012)(i) Overview
The accounting standard and guidance have been adopted fromthe standpoint of improving financial reporting and international
convergence. They comprise mainly 1) a change in the treatment
method for unrecognized actuarial differences and unrecognizedprior service cost, along with expansion of disclosure items; and 2)
revision to the calculation method for projected benefit obligations
and service costs.
(ii) Scheduled Date of Application
The Bank plans to apply 1) above to the consolidated financial
statements at the end of the fiscal year beginning on April 1, 2013,
and apply 2) above from the start of the fiscal year beginning on
April 1, 2014.
(iii) Effects of the Application of the Accounting Standard andGuidance
The Bank is evaluating the effect of these accounting standard
and guidance at the time of preparation of the consolidated financial
statements.

3.

Trading Assets:
The details of Trading Assets as of March 31, 2013 and 2012
are as follows:
Millions ofMillions of Yen
U.S. Dollars

5.

Loans and Bills Discounted:
Loans and Bills Discounted include the following non-performing
loans:
Millions ofMillions of Yen
U.S. Dollars
2013

2013

2012

2013

2013

2012

78,87876,005

838

Loans to Bankrupt
Borrowers

404

415

4

Trading Bonds-Related
Financial Derivatives

2

18

0

Delinquent Loans

9,418

12,380100

Derivatives of Securities
related to Trading
Transactions

13

－

0

Loans Past Due Three
Months or More

165

77

1

Trading-Related
Financial Derivatives

52,377

61,699556

Restructured Loans

28,60923,725304

Other Trading Assets

343,754

325,740

3,653

Total

38,59736,599410

Total

475,025

463,463

5,048

The above amounts are the amounts before exclusion ofreserves for possible loan losses.
Loans to Bankrupt Borrowers represent non-accrual loans toborrowers who are legally bankrupt as defined in Article 96-1-3 or 4of the Order for Enforcement of the Corporation Tax Act (Article 97
of 1965 Cabinet Order).
Delinquent Loans represent non-accrual loans other than Loans
to Bankrupt Borrowers and Restructured Loans.
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 wereamended in favor of the borrowers (e.g. the reduction of or
exemption from stated interests, the deferral of interest payments, theextension of maturity dates, and the renunciation of claims in order toassist or facilitate the business restructuring of borrowers underfinancial difficulties) other than Loans to Bankrupt Borrowers,
Delinquent Loans and Loans Past Due Three Months or More.
Loans include subordinated loans with a covenant stipulatingthat repayment of principal is preceded by that of general credits. The
amount was ¥101,800 million ($1,081 million) as of March 31, 2013and ¥104,200 million as of March 31, 2012, respectively. Of theseamounts, ¥25,000 million ($265 million) as of March 31, 2013, and¥27,400 million as of March 31, 2012, respectively, were provided to
Shinkin Banks in accordance with the Shinkin Bank Management
Reinforcement System.
Bills Discounted are accounted for as financial transactions inaccordance with JICPA Industry Audit Committee Report No.24“Accounting and Auditing Treatment of Accounting Standards for
Financial Instruments in Banking Industry”. The face value of bills of
lading amounted to ¥250 million ($2 million) as of March 31, 2013and ¥189 million as of March 31, 2012, respectively. The Bank has
the right to freely dispose of, sell or re-collateralize such bills.
With respect to loan participation, in accordance with the
JICPA Accounting Committee Report No. 3, dated June 1, 1995, theamount of the participation principal is accounted for as capitalloaned to the original debtor, and this amounted to ¥88,299 million($938 million) as of March 31, 2013 and ¥112,712 million as ofMarch 31, 2012.

Trading AccountSecurities

4.

Securities:
The details of Securities as of March 31, 2013 and 2012 are as
follows:
Millions ofMillions of Yen
U.S. Dollars
2013
2012
2013
Japanese Government
12,264,427 13,793,428
130,333
Bonds
Municipal Government
Bonds

221,085

296,803

2,349

Short-term Corporate
Bonds

14,998－159

1,975,692

1,430,556

20,995

Stocks43,49853,083

462

Others5,128,148

5,018,427

54,496

Total

19,647,850 20,592,299

208,797

Corporate Bonds

Notes:
1. Stocks include investments in affiliated companies totaling ¥189
million ($2 million) as of March 31, 2013 and 2012.
2. Others include common shares and investment in unconsolidated
subsidiaries totaling ¥5,973 million ($63 million) as of March 31,
2013 and ¥6,901 million as of March 31, 2012. Others also include
preferred shares issued by Shinkin Banks which were contributedin accordance with the Shinkin Bank Management Reinforcement
System. The amount was ¥246,245 million ($2,616 million) as ofMarch 31, 2013 and ¥252,980 million as of March 31, 2012,
respectively. Others also include foreign bonds and equities.

33
5Shinkin Central Bank

6.

Commitments to Overdrafts and Loans:
Commitments related to overdrafts and loans represent
agreements to extend overdrafts or loans up to a pre-agreed amount at
the customer’s request as long as there is no violation of theconditions stipulated in commitment agreements.
The amount of unused commitment lines does not necessarily
have a significant effect on the future cash flows of the Bank because
most of these commitment lines are terminated without being
exercised. Most of these agreements have provisions which stipulatethat the Bank may not extend the loan or may decrease thecommitment when there are certain changes in the financial
conditions, certain issues relating to collateral and other reasons. The
Bank limits the commitment line to an amount below the amount of
the related customer’s time deposit. The Bank periodically checks thefinancial condition of its customers based on its internal rules andperforms certain actions to secure loans or revises the contracts, asnecessary.
The amounts of unused commitment lines under suchagreements are ¥17,572,383 million ($186,741 million) as of March
31, 2013 and ¥17,335,508 million as of March 31, 2012, respectively.
The amounts which the Bank could cancel at any time without
penalty or of which the original contractual maturity is less than one
year are ¥17,503,679 million ($186,011 million) as of March 31,
2013 and ¥17,257,824 million as of March 31, 2012, respectively.
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 and Others in “Securities.” The amount in total
was ¥117,536 million ($1,249 million) as of March 31, 2013 and¥97,988 million as of March 31, 2012.
Of cash-collateralized securities borrowings, those freely
disposable for sale or re-collateralized, and pledged as collateralamounted to ¥5,398 million ($57 million) as of March 31, 2013 and¥8,872 million as of March 31, 2012. Those held by the Bank
without being disposed of as of March 31, 2013 amounted to¥392,858 million ($4,174 million) and as of March 31, 2012amounted to ¥319,304 million.
8.

Tangible Fixed Assets:
Millions of Yen
2013
2012

Millions of
U.S. Dollars
2013

9.

Assets Pledged as Collateral and Associated Liabilities:
Assets pledged as collateral for the fiscal years ended March 31,
2013 and 2012 are as follows:
Millions of U.S.
Millions of Yen
Dollars
2013
2012
2013
Assets Pledged as Collateral0－043,42424,894461

4,048,354 4,591,392

43,021Loans and Bills Discounted 1,682,828 1,415,656

17,883

Total

61,366

Cash and Due from Banks
Trading Assets
Securities

5,774,607 6,031,942

Liabilities associated with
Assets Pledged as Collateral
Borrowed Money

113,500

155,310

1,206

Bills Sold and Call Money

260,000

276,300

2,763

1,631,653 1,596,740

17,339

Payables under Securities
Lending Transactions

Cash and Due from Banks of ¥11 million ($0 million) as ofMarch 31, 2013 and ¥10 million as of March 31, 2012, Trading
Assets of ¥720 million ($7 million) as of March 31, 2013 and ¥835
million as of March 31, 2012 and Securities in the amount of¥1,296,146 million ($13,774 million) as of March 31, 2013 and¥991,750 million as of March 31, 2012, respectively, were secured ascollateral for exchange settlement transactions, etc. or futures or as
substitute for margin money in futures transactions, etc.
Other Assets included margin money. The amount was ¥264
million ($2 million) as of March 31, 2013, and ¥232 million as ofMarch 31, 2012. Other Assets also included guarantee money
amounting to ¥356 million ($3 million) as of March 31, 2013, and¥331 million as of March 31, 2012, respectively.
10. Trading Liabilities:
The details of Trading Liabilities as of March 31, 2013 and2012 are as follows:
Millions ofMillions of Yen
U.S. Dollars
2013
2012
2013
Trading Bonds Sold

Accumulated Depreciation
on Tangible Fixed Assets
Accumulated Deferred
Gains on Tangible Fixed
Assets(Deferred Gains recognized
for the fiscal year)34
6Shinkin Central Bank

84,992

81,93360,324

61,394

641

－

2

－

Trading-Related Financial
Derivatives

88,01374,626935

Total

148,338

136,023

1,576

903
Derivatives of Securities
related to Trading Transactions

1,764
（－)

1,764
（－)

18
（－)

11. Borrowed Money and Lease Obligations:
Balance as ofApril 1, 2012
(Millions of Yen)

Balance as ofMarch 31, 2013
(Millions of Yen)

Balance as ofMarch 31, 2013
(Millions of U.S.
Dollars)

Borrowings

792,410

811,890

Borrowed Money792,410

Lease Obligations Due for Repayment
within One Year
Lease Obligations (Excluding Those
Due for Repayment within One Year)

Category

Average
Interest Rate (%)

Maturity

8,627

1.19

－

811,890

8,627

1.19

Jun. 2013～
No maturity

829

2,149

22

2.34

－

4,370

4,859

51

2.23

Apr. 2014～
May. 2020

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 2 years,
Over 3 years,
Over 4 years,
Over 1 year,
One year or lessup to 2 years
up to 3 years
up to 4 years
up to 5 years
160,550－－－－
Borrowed Money
2,149
1,104
1,116
1,137
955
Lease Obligations
Millions of U.S. Dollars
Over 1 year,
Over 2 years,
Over 3 years,
Over 4 years,
One year or lessup to 2 years
up to 3 years
up to 4 years
up to 5 years
1,706
－
－
－
－
Borrowed Money
11
11
12
10
22
Lease Obligations
3. Borrowed Money includes subordinated borrowings of ¥651,340 million ($6,921 million) as of March 31, 2013 and ¥637,100 million as ofMarch 31, 2012.
12. Debentures:

IssuerThe Bank

Name of Issue

No.209-280
5-yearInterest-bearing
debentures

Total

Issuance Date

Balance as of Balance as of Balance as ofApril 1,March 31,
March 31,
2012
2013
2013
(Millions of (Millions of (Millions of
Yen)
Yen)
U.S. Dollars)Interest
Rate (%)

Collateral

Redemption
Date

Apr. 2007～
Mar. 2013

3,953,960

3,537,350

37,591

0.20～
1.65

－

Apr. 2012～
Mar. 2018－

3,953,960

3,537,350

37,591

－

－

－

Note:
The redemption schedule within 5 years after the balance sheet date is as follows:
Millions of Yen
One year or less
1,007,980

Over 1 year,
up to 2 years
799,060

Over 2 years,
up to 3 years
580,490

Over 3 years,
up to 4 years
575,360

Over 4 years,
up to 5 years
574,460

Over 3 years,
up to 4 years
6,114

Over 4 years,
up to 5 years
6,104

Millions of U.S. Dollars
One year or less
10,711
7Over 1 year,
up to 2 years
8,491Over 2 years,
up to 3 years
6,168

Shinkin Central Bank35

13. Asset Retirement Obligations:
The details of Asset Retirement Obligations were omitted
because the amount was one-hundredth or less of the total balance of
Liabilities and Net Assets as of April 1, 2012 and as of March 31, 2013,
respectively.

16. Trading Income:The details of Trading Income for the fiscal years ended March 31,
2013 and 2012 are as follows:
Millions ofMillions of Yen
U.S. Dollars
2013

14. Land Revaluation:
Based on the Act on the Revaluation of Land (Law 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 3-3 of Law 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 2-4 of theOrder for Enforcement of the Act on Revaluation of Land
(Government Ordinance No. 119, dated March 31, 1998), withappropriate adjustments.
The difference between the total fair value at the end of thisfiscal year and the total post-revaluation book value of land thatis used for business and has been revalued pursuant to Article 10of Law 34.: 6,495 million ($69 million) as of March 31, 2013,and ¥ 7,578 million as of March 31, 2012.
15. Fees and Commissions:
The details of Fees and Commissions for the fiscal years ended
March 31, 2013 and 2012 are as follows:
Millions ofMillions of Yen
U.S. Dollars
2013
2012
2013
Deposit, Fixed Income
500
655
5
Securities and Lending
421

454

4

Securities Related Business

6,024

5,904

64

Agency Business

2,170

2,191

23

Guarantee Business

4,659

3,876

49

Trustee Business

17,132

18,251

182

534

528

5

31,44331,861

334

Exchange

132

121

1

Others

10,49010,361

111

Expenses on Fees andCommissions Businesses

10,622

10,483112

Exchange Business

OthersIncome on Fees andCommissions Businesses

836

Shinkin Central Bank

Income from Trading
Account Securities
Income from Trading-Related
Financial Derivatives
Other Trading Income
Total

2012

2013

566

530

6

10,981

14,419

116

421

413

4

11,96915,363

127

17. Trading Losses:
The details of Trading Losses for the fiscal years ended March 31,
2013 and 2012 are as follows:
Millions ofMillions of Yen
U.S. Dollars
2013
2012
2013
Expenses from26
6635
Trading-Related Securities
Total

635

26

18. Other Expenses:
Other Expenses include Losses on sale of stocks and othersecurities, Losses on devaluation of stocks and other securities, andImpairment Losses on Fixed Assets.
(1) Securities
The amount of Losses on sale of stocks and other securities was¥5,919 million ($62 million) and ¥12,179 million for the fiscal years
ended March 31, 2013 and 2012, respectively. The amount of Losses ondevaluation of stocks and other securities was ¥407 million ($4 million)and ¥1,273 million for the fiscal years ended March 31, 2013 and 2012,
respectively.
(2) Impairment Losses on Fixed Assets:
Each business location such as branch office or company housing
is the smallest unit of asset group. Also, the assets used in the head
office and facilities for employee welfare and recreation are treated as
the corporate assets since they do not produce any cash flows by
themselves. Each consolidated subsidiary is treated as a single unit for
the asset grouping.
Branch offices and other assets that are designated to betransferred or disposed due to deterioration or other factors areindividually treated as idle assets. The carrying amount is reduced to
the recoverable amount and the reduction amount is recorded as
impairment losses as below.
The recoverable amount used for measurement of impairment
losses is the net selling value and this is derived from the purchase priceand others obtained from real estate agents.

6

For the fiscal year ended March 31, 2013
Principal Use

Category

Millions ofYenMillions of
U.S. Dollars

Ichigaya Annex(Tokyo Prefecture)

Idle assets

Buildings

205

2

Fukuoka Branch(Fukuoka Prefecture)

Idle assets

Land and buildings

516

5

Minami-Kyushu Branch(Kumamoto Prefecture)

Idle assets

Land and buildings

621

6

Employee housing

Idle assets

Land and buildings

470

4

1,813

19

Location

Total

For the fiscal year ended March 31, 2012
Location
Shikoku Branch(Kagawa Prefecture)

Principal Use

Category

Idle assets

Land and structures

Millions of
Yen
268

Total

268

19. Consolidated Statement of Comprehensive Income
For the fiscal year ended March 31, 2013 and 2012
Reclassification adjustment amount and tax effect amount related to Other Comprehensive Income
Millions ofMillions of Yen
U.S. Dollars
2013

2012

2013

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

288,363

200,733

3,064

Reclassification Adjustment Amount(93,303)(33,681)(991)

Prior to Tax Effect Adjustment

195,059

167,052

2,072

Tax Effect Amount(53,088)(45,984)(564)

Net Unrealized Gains on Other Securities

141,971

121,067

1,508

The Amount Arising during the Period(170,024)(234,236)(1,806)

Reclassification Adjustment Amount

163,736

111,998

1,740
(66)

Net Deferred Gains (Losses) on Hedging Instruments :Prior to Tax Effect Adjustment(6,287)(122,237)

Tax Effect Amount

1,752

34,19018

Net Deferred Gains (Losses) on Hedging Instruments(4,535)(88,047)

(48)

－

－

－
－

Land Revaluation Excess:
The Amount Arising during the Period
Reclassification Adjustment Amount

－

－

－

Prior to Tax Effect Adjustment－－

Tax Effect Amount

(2)

793

(0)

Land Revaluation Excess

(2)

793

(0)

The Amount Arising during the Period

849

(286)

Reclassification Adjustment Amount

－

－

－

－
－

Foreign Currency Translation Adjustments:

Prior to Tax Effect Adjustment

9－

Tax Effect Amount－－Foreign Currency Translation Adjustments

849

(286)

9

138,283

33,526

1,469

Other Comprehensive Income

9－

Shinkin Central Bank37

20. 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, 2013
April 1, 2012 (Thousand
Year (Thousand Units)
Year (Thousand Units)(Thousand Units)
Units)
Shares Outstanding
General Common Shares

4,000

－

－

4,000

Preferred Shares (Type-A)

708

－

－

708

4,708

－

－

4,708

General Common Shares

－

－

－

－

Preferred Shares (Type-A)

－

－

－

－

－

－

－

－

Amount Per Share(Yen)

Record Date

Effective Date

Total
Treasury Shares

Total(2) Dividends
Dividends paid during the fiscal year ended March 31, 2013
Resolution

Class of share

Total Dividend
Amount (Million Yen)

Common shares

10,0002,500

Mar 31, 2012

Jun 20, 2012

Preferred shares

4,603

6,500

Mar 31, 2012

Jun 20, 2012

Annual General Meeting of
Shareholders, June 20, 2012

In the case of dividends for which the record date falls in the fiscal year ended March 31, 2013, the effective date of the dividend falls in
the following fiscal year:
Resolution

Class of share

Total Dividend
Amount (Million Yen)

Resource ofDividends

Amount Per Share(Yen)

Record Date

Effective Date

Common shares

12,000Retained Earnings

3,000

Mar 31, 2013

Jun 21, 2013

Preferred shares

4,603

Retained Earnings

6,500

Mar 31, 2013

Jun 21, 2013

Annual General Meeting of
Shareholders, June 21, 2013

10

38

Shinkin Central Bank

21. Income Taxes:(1) Breakdown of Deferred Tax Assets and Liabilities is as follows:
Millions ofMillions of Yen
U.S. Dollars
2013

2012

2013

3,169

3,089

33

2,886

2,178

30

6,342

6,120

67

Deferred Tax Assets:
Depreciation
Reserve for Possible Loan
LossesReserve for Employee
Retirement Benefits
Write-Downs for Securities

6,995

11,183

Shinkin Banks nationwide.
(2) Reserve for Employee Retirement Benefits as of March 31, 2013
and 2012 is analyzed as follows:
Millions ofMillions of Yen
U.S. Dollars
2013

2012

Projected Benefit
Obligations (A)(46,428)(41,086)(493)

Plan Assets (B)18,36916,828

195

Unfunded Retirement
Benefits
Obligations (C) = (A) + (B)(28,059)(24,257)(298)

Unrecognized Actuarial
Differences (D)

5,855

3,415

62

Unrecognized Prior Service
Costs (E)

(248)

(767)

(2)

Net Amounts Reported in theConsolidated Balance Sheet(F) = (C) + (D) + (E)(22,452)(21,609)

(238)

－

－

－

(22,452)(21,609)

(238)

74

Net Deferred Losses on
Hedging Instruments

34,81033,058369

Tax Loss Carryforwards

16,86425,455179

Others

1,934

2,537

20

Valuation Allowances(8,797)(13,645)(93)

Total Deferred Tax Assets

64,20569,977682(111,830)(58,742)(1,188)

(434)

(406)

(4)

Total Deferred Tax Liabilities(112,265)(59,148)(1,193)

Net Deferred
Tax Assets (Liabilities）(48,059)

10,829(510)

Deferred Tax Liabilities:
Net Unrealized Gains on Other
Securities
Others

Prepaid Pension Costs (G)(2) Reconciliation between the effective statutory tax rate and theactual effective tax rate for the fiscal years ended March 31, 2013
and 2012:

Statutory effective tax rate

2013

2013

2012

29.65 %

31.26 %

Reserve for Employee
Retirement
Benefits (F) – (G)Notes:
1. The above projected benefit obligations included the governmental
welfare program.
2. The above projected benefit obligations on the lump-sum paymentof retirement benefits included amounts measured by consolidated
subsidiaries under the non-actuarial method.
(3) The breakdown of Pension Expenses for the fiscal years ended
March 31, 2013 and 2012 is as follows:
Millions ofMillions of Yen
U.S. Dollars
2013
2012
2013

(Adjustments)
Change in valuation allowances
Dividends received, not taxable(9.97%)(3.89%)

1,350

1,332

14

Interest Costs

806

786

8

(252)

(163)

(2)

(519)

(595)

(5)

917

1,403

9

－

－

－

2,302

2,763

24

(15.36%)(4.17%)－

6.73 %

Others

3.96 %

1.07 %

Actual effective income tax rate after
the application of tax effect accounting

19.75 %

19.53 %

Reduction and Adjustment of Deferred
Tax Assets Due to Changes in Tax Rate

Service Costs

22. Reserve for Employee Retirement Benefits:(1) Retirement Benefit Scheme
The Bank and some of its consolidated domestic subsidiaries
have a defined benefit plan that offers lump-sum payments uponretirement and contributes to the Employees’ Pension Fund for all

Expected Return on Plan
AssetsAmortization of Prior
Service Costs
Amortization of Actuarial
Differences
Others (e.g., Extraordinary
Retirement Benefits Paid
Out of the Scope of the
Retirement Benefit Scheme)
Net Pension Expenses

11 Shinkin Central Bank

39

Notes:1. The amounts paid by employees to the Employees’ Pension Fundare excluded from Service Cost.
2. The retirement benefit costs on the lump-sum payment of retirement
benefit for consolidated subsidiaries are included in Service Cost.
(4) Assumptions used in the calculation of the above information
were as follows:
2013

2012

Discount Rate

1.1～
1.5 %

2.0 %

Expected Rate of Return on Plan
Assets

1.5 %

1.0 %

Method of Attributing the Projected Benefits to Periods of Services:
Straight-line basis
Amortization of Unrecognized Prior Service Costs:
10 years (Unrecognized prior service costs are amortized, using
the straight-line method within the average remaining service
years of the current employees)
Amortization of Unrecognized Actuarial Differences
10 years (Unrecognized actuarial differences will be amortizedfrom the following fiscal year, using the straight-line method
within the average remaining service years of the current
employees)

Note:
The rate of retirement, the mortality rate and the rate of increase in
future compensation levels used in calculating the retirement benefit
obligations on the Employees’ Pension Fund are identical to thefigures used in the formula for the calculation of the Employees’
Pension Fund itself.
23. Leases:
1. Finance Leases(1) Finance leases that do not transfer ownership(i) Outline of lease assets(a) Tangible fixed assets
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 accounted for inaccordance with the ordinary lease transaction method
Data omitted due to immateriality.
2. Operating Leases
Future lease payments related to noncancelable operating leases:
Not applicable

1240Shinkin Central Bank

24. Financial Instruments:
1. Matters concerning financial instruments(1) Policies on financial instruments
Shinkin Central Bank Group (the “Group”) works to ensure thestable procurement of funds through the acceptance of deposits
mainly from its Shinkin Bank members and through the issuance ofdebentures. 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 limit amounts and engages
in transactions within the scopes of these risk limits, and in this way
works to preserve a sound management 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 and euro-yen
deposits.
These investments are exposed to market risks such as thecounterparty credit risk, interest rate risk, and foreign currency risk.
Securities portfolios of the Group consist of domestic securities
including Japanese government, corporate bonds and others as well
as foreign securities such as government, government-guaranteed,
and government related institutional bonds issued in the majorindustrialized countries. In addition, for investment diversification
the Group also invests in equity securities and investment funds.
These investments are exposed to market risks such as theindividual issuers’ credit risk, interest rate risk, price fluctuation risk,
and foreign currency risk, as well as market liquidity risk.
Loans assets consist of direct loans to low-risk borrowers
including Shinkin Banks, central and local governments, public
service corporations, blue chip private-sector corporations, andagency loans performed through Shinkin Banks.
These loans are exposed to counterparty credit risk and interest
rate 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 denominated deposits, most ofwhich are deposits from Shinkin Bank members.
These deposits are exposed to market risks such as interest raterisk and foreign currency risk, as well as liquidity risk.
As a debenture issuer, the Group issues 5-year interest-bearing
debentures each month.
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 market risks such ascounterparty credit risk, interest rate risk, and foreign currency risk.
The Bank hedges market risks of its financial assets andliabilities through ALM activities.
The Group partially avoids market risks by mitigating (i)interest rate risk through interest rate swaps and (ii) foreign currency
risk of foreign denominated assets through foreign-denominatedfunds procurement, currency swaps, and forex swaps.
Hedge accounting is applied to risk hedges through ALM
activities including the use of derivatives. As for the hedge
accounting, hedged items, hedging methods, policies, and methods ofhedge effectiveness assessment, etc. are described in the “Significant
Accounting Policies.”(3) Risk management frameworks for financial instruments
The basic policies for risk management of the Bank are broadly
distinguished between “risks to be minimized” and “risks to becontrolled”. Credit risk, market risks, and liquidity risks fall into thelatter category. Both categorized risks are managed by risk
management divisions that are independent of the market divisions.
For the comprehensive management of these risks, Risk Management
Division has been established.
<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 bymeasuring various risks using a uniform risk measure such as Valueat Risk (VaR), aggregating the measurements, and comparing theaggregated amounts with the strength of the Bank’s capital. The Bank
measures credit risks and market risks using VaR methodology, andmonitors on a daily basis to prevent risk limits from being breached.
These risk limit amounts are reviewed each fiscal year by the
Risk Management Committee and determined at the Executive
committee. The values of risk, on the other hand, are measured at the
middle and end of each month by the Risk Management Division,
which takes steps to prevent any of the various risk limits from being
breached and, through a Risk Management Committee, reports
regularly to the management and relevant divisions.
The values of risk managed at consolidated subsidiaries areaggregated and 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 mutually independent tasks to ensure effective internal
checking functions.
The Credit Committee has been established as an organ forreviewing and determining matters related to credit risk management.

13

The Credit Committee is comprised of senior management andgeneral managers of related divisions and deliberates on credit
transactions that exceed a designated amount. The Executive
Committee deliberates on 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. They 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 whichfunds are used and repayment resources. In addition to appropriate
assessment and post-transaction management, they continually check
whether the client service division is conducting appropriate credit
control, and provides 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 by individual
borrower added to the credit risk of the Bank and monitored.
(ii) Market risk management
To maintain an accurate understanding of market risk andrigorously 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 inmarket operations, providing a risk management structure in whichinternal 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.
Based on risk status information—obtained via reports from divisions
responsible for market risk management and other sources—the
ALM Committee reviews broadly and in a timely manner ALM
related policies and market transactions for 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 by VaR within the limit set by the Executive
Committee. In addition, market risk is further divided into several
categories and managed according to risk limits allocated to eachcategory. 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 interest raterisk based on outlier standard and the basis point value (BPV: theamount of the change in a portfolio’s market value from a specificchange in the interest rate), stress loss amounts from unexpectedmarket 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

Shinkin Central Bank

41

the above monitoring system. In this way, market risks including
those that cannot be captured through VaR methods alone aremanaged.
Moreover, for trading operations, clear regulations are in placeconcerning the trading instruments and trading management methods,
enabling appropriate trading operations by setting a specific loss limit
amount.
Market risks of consolidated subsidiaries are not directly added
to the values of market risk of the parent operations 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 ¥247 million ($2 million) as of March 31,
2013 and ¥251 million as March 31, 2012 and the market risk
amount (estimated loss amount) of the trading operations of theBank’s consolidated subsidiaries was ¥1,382 million ($14 million) as
of March 31, 2013 and ¥1,204 million as March 31, 2012.
The Bank conducts back testing to compare VaR calculatedusing the model with actual loss amounts. Based on the results ofback testing covering the fiscal year ended March 31, 2013, theactual loss amount exceeded the VaR model on four occasions, andthe Bank believes that the measurement model it uses has anadequate level of accuracy to capture market risk. However, it should
be noted that VaR measures the amount of market risk at certain
probability levels statistically calculated 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 duefrom banks, securities not held for trading purposes, loans and bills
discounted, deposits, debentures, receivables under securities
borrowing transactions and, within derivative transactions,interest-rate and foreign-exchange instruments not held for trading
purposes. The VaR model is based on the delta method and uses a
99.0% confidence interval, a holding period of one year and an
observation period of five 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 accordancewith methods used by the Bank.
The Group’s market risk amount (estimated loss amount) otherthan for trading purposes was ¥357,370 million ($3,797 million) as ofMarch 31, 2013 and ¥314,373 million as March 31, 2012. The Bank
conducts back testing to compare VaR calculated using the modelwith actual loss amounts. However, it should be noted that VaR
14

42

Shinkin Central Bank

measures the amount of market risk at certain probability levels
statistically calculated based on historical market 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 ofliquidity risk, the Bank has established liquidity risk management
policies. Divisions responsible for liquidity risk management areclearly separated from divisions involved in cash management andmarket operations, allowing internal checks to be maintained throughthe independent 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 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, by providing overdraft facilities forconsolidated subsidiaries with operations involving fund movements
in relatively large amounts.
(4) Supplementary explanation concerning the fair values offinancial instruments
Fair values of financial instruments, in addition to values basedon market prices, also include values based on reasonable estimates ifmarket prices are unavailable. Since value estimates are predicatedon certain assumptions, values may vary if the underlying
assumptions change.

2. Matters concerning fair value and others of financial instruments
Carrying values stated on the consolidated balance sheet, fair value and differences between them are as follows. Unlisted stocks andsimilar 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, 2013
Millions of Yen
Carrying Value

Fair Value

Difference－－(1) Cash and Due from Banks

3,117,393

3,117,393(2) Bills Bought and Call Loans

636,264

636,264(3) Receivables under Resale Agreements

80,98580,985(4) Receivables under Securities Borrowing Transactions

187,023

187,023－(5) Monetary Debts Purchased (※1)

330,737

330,700(37)

Trading Securities

422,633

422,633－(7) Money Held in Trust

182,901

182,901－

Held-to-Maturity Debt Securities

3,263,221

3,391,635

128,413

Other Securities

16,125,875

16,125,875－

5,435,654

5,489,280

53,625

Total Assets

29,782,690

29,964,692

182,002(1) Deposits

22,000,309

22,013,154

12,845(2) Debentures

3,537,350

3,567,065

29,715(6) Trading Assets－(8) Securities(9) Loans and Bills Discounted
Reserve for Possible Loan Losses (※1)

5,460,170(24,516)

60,32460,324－(4) Borrowed Money

811,890

836,586

24,696(5) Bills Sold and Call Money559,088

559,088(3) Trading Liabilities
Trading Bonds Sold

(6) Payables under Securities Lending Transactions

1,637,068

1,637,068－

Total Liabilities

28,606,031

28,673,288

67,256(8,227)(8,227)－(148,178)(202,779)(54,601)(156,405)(211,007)(54,601)

Derivatives (※2)
To which Hedge Accounting was not applied
To which Hedge Accounting was applied
Total Derivatives

17－

Shinkin Central Bank

43

Millions of U.S.Dollars
Carrying Value

Fair Value

Difference－－(1) Cash and Due from Banks

33,12833,128(2) Bills Bought and Call Loans

6,761

6,761

860

860

(4) Receivables under Securities Borrowing Transactions

1,987

1,987

－

(5) Monetary Debts Purchased (※1)

3,514

3,514

(0)

Trading Securities

4,491

4,491

－

(7) Money Held in Trust

1,943

1,943

－
1,364

(3) Receivables under Resale Agreements(6) Trading Assets－(8) Securities
Held-to-Maturity Debt Securities

34,67836,042Other Securities

171,369

171,369(9) Loans and Bills Discounted
Reserve for Possible Loan Losses (※1)－

58,025(260)
57,76458,334569

Total Assets

316,500

318,434

1,934(1) Deposits

233,797

233,933

136(2) Debentures

37,59137,907

315

641

641

－

(4) Borrowed Money

8,627

8,890

262

(5) Bills Sold and Call Money

5,941

5,941

(6) Payables under Securities Lending Transactions

17,397

17,397－

Total Liabilities

303,996

304,710714(3) Trading Liabilities
Trading Bonds Sold

(87)

(87)

－

(1,574)(2,154)(580)(1,662)(2,242)(580)

Derivatives (※2)
To which Hedge Accounting was not applied
To which Hedge Accounting was applied
Total Derivatives－※1. General and specific reserves for possible loan losses of Loans and Bills Discounted have been deducted. Loss reserves for Monetary
Debts Purchased 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.

18

44

Shinkin Central BankAs of March 31, 2012
Millions of Yen
Carrying Value

Fair Value(1) Cash and Due from Banks

1,963,108

1,963,108(2) Bills Bought and Call Loans

663,867

663,867(3) Receivables under Resale Agreements

73,99073,990Difference－－－(4) Receivables under Securities Borrowing Transactions

71,52971,529－(5) Monetary Debts Purchased (※1)

392,893392,736(157)

Trading Securities

401,745

401,745－(7) Money Held in Trust

181,193

181,193－
110,535(6) Trading Assets(8) Securities
Held-to-Maturity Debt Securities

4,089,392

4,199,927

Other Securities

16,236,328

16,236,328－

5,351,153

5,404,185

53,032

Total Assets

29,425,203

29,588,614

163,410(1) Deposits

21,595,878

21,613,518

17,640(2) Debentures

3,953,960

3,996,691

42,731(9) Loans and Bills Discounted
Reserve for Possible Loan Losses (※1)

5,374,701(23,548)

61,394

61,394－(4) Borrowed Money792,410

811,782

19,372(5) Bills Sold and Call Money

497,739497,739(3) Trading Liabilities
Trading Bonds Sold－－

79,744(6) Payables under Securities Lending Transactions

1,605,617

1,605,617

Total Liabilities

28,506,999

28,586,744

To which Hedge Accounting was not applied(1,599)(1,599)－To which Hedge Accounting was applied

79,07856,270(22,807)77,47954,671(22,807)

Derivatives (※2)

Total Derivatives※1. General and specific reserves for possible loan losses of Loans and Bills Discounted have been deducted. Loss reserves for Monetary
Debts Purchased 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.
Note1: Calculation method of fair value for financial instruments
Assets(1) Cash and Due from Banks
For deposits without maturities, since fair value approximates carrying value, carrying value is used as fair value. For deposits withmaturities, present value is calculated by discounting based on the interest rate that would conceivably be applied to newly made deposits.
(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 Debts Purchased
Monetary debt purchased is stated at amounts obtained from brokers.
(6) Trading Assets
Securities including bonds held for trading are stated at market prices, etc.

19

Shinkin Central Bank45

(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
the exchanges in the case of listed equity shares and at market prices in the case of bonds.
(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
the quoted market prices and other applicable information at the balance sheet date.
Floating-Rate Japanese Government Bonds
The Bank believes that current market prices may not accurately reflect fair value due to very limited volume of actual transactions
continuously. The Bank used a valuation technique at the end of the fiscal year which management believes provided a reasonable estimate of
the bond's fair value. As a result of this change, the fair value and the net unrealized gains of Securities decreased by ¥2,132 million ($22
million) as of March 31, 2013 and increased ¥9,922 million as of March 31, 2012 with regard to the Held-to-Maturity Debt Securities,
compared to amounts determined by using market prices as basis for the fair value. Moreover, the fair value increased by ¥6,372 million ($67
million) as of March 31, 2013 and ¥20,907 million as of March 31, 2012, Net Unrealized Gains on Other Securities increased by ¥4,596 million($48 million) as of March 31, 2013 and ¥15,080 million as of March 31, 2012 and Deferred Tax Liabilities increased by ¥1,775 million ($18
million) as of March 31, 2013 and Deferred Tax Assets decreased ¥5,826 million as of March 31, 2012 with regard to the Other Securities,
compared to amounts determined by using market prices as basis for fair value.
Fair value based on management's reasonable estimates for Floating-Rate Japanese Government Bonds was calculated using thediscounted cash flow approach and others, with the primary price variables including government bond yields and swaption volatility andothers.
Securitized Products
Fair values for overseas Collateralized Loan Obligations (CLOs) and some other securitized products were previously determined basedon price information received from brokers. However, the bank believes that broker quotes do not accurately reflect fair values continuously
because of the very low frequency with which these products are traded and the significant gap in prices desired by sellers and buyers. Fairvalues for these securities, therefore, have been determined using a valuation technique which management believes provided a reasonableestimate of securities' fair value at the end of the fiscal year.
As a result of this change, the fair value and the net unrealized gains of Securities increased by ¥12,542 million ($133 million) as ofMarch 31, 2013 and ¥26,543 million as of March 31, 2012 with regard to the Held-to-Maturity Debt Securities, compared to amounts
determined by using price information received from brokers as basis for the fair value. Moreover, the fair value increased by ¥4,817 million($51 million) as of March 31, 2013 and ¥10,751 million as of March 31, 2012, Net Unrealized Gains on Other Securities increased by ¥3,474
million ($36 million) as of March 31, 2013 and ¥7,755 million as of March 31, 2012 and Deferred Tax Liabilities increased by ¥1,342 million($14 million) as of March 31, 2013 and Deferred Tax Assets decreased ¥2,996 million as of March 31, 2012 with regard to the Other Securities.
The securitized products for which fair values are stated based on management's estimates include CLOs with secured loans to overseas
companies as underlying assets and other similar investments with a stated value of ¥488,661 million ($5,193 million) as of March 31, 2013 and¥491,696 million as of March 31, 2012 on the consolidated balance sheet at the end of the fiscal year.
Fair values based on management’s reasonable estimates for these products were calculated using the discounted cash flow approach withthe primary price variables including default rates for similar assets, recovery rates, early redemption rates, and discount rates.
Notes concerning securities categorized by holding purpose are stated in “Fair Value of Securities and Money Held in Trust”(9) Loans and Bills Discounted
For floating rate loans, since market interest is 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, categorizedby type 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, sincefair 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 consolidated closing date less the total recorded value of thereserve for possible 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,
fair value is calculated by discounting future cash flows to present value. The discount rate is the interest rate that would be applicable to newly
made deposits. For term deposits with short contractual maturities, since fair value approximates carrying value, carrying value is used as fairvalue.
(2) Debentures
For debentures issued by the Bank, market prices are used as fair value.

20

46

Shinkin Central Bank(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 theinterest 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, and (6) 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
Derivative transactions consist of interest-rate-related transactions (interest rate futures, interest rate options, interest rate swaps, etc.),
currency-related transactions (currency futures, currency swaps, etc.), and bond-related transactions (bond futures, bond future options, etc.),
and are stated at exchange-traded transaction prices, discounted present value, and amounts calculated using option pricing models, etc.
Note 2: The following financial instruments have significant difficulty in determining fair value and are not included in fair value
information of financial instruments.

Category

Millions of Yen

Millions of Yen

Millions of U.S.Dollars

2013

2012

2013

Unlisted stocks, etc.(※1)
Investment in investment partnerships(※2)
Total

251,664

258,400

2,674

7,089

8,178

75

258,753

266,578

2,749※1. Unlisted stocks, etc. means unlisted common shares and preferred shares held by the Bank. Since unlisted stocks, etc. have no market prices
and therefore are with 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 are with significant difficulty in determining fair value.
Note 3: Amounts of monetary claims and securities with maturities scheduled for redemption after the consolidated balance sheet date
As of March 31, 2013
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

Due from Banks (※1)
Bills Bought and Call Loan
Receivables under Resale Agreements
Receivables under Securities Borrowing
Transactions
Monetary Debts Purchased
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)

3,060,164
636,264
80,98528,643
－
－

2,000
－
－

1,000
－
－

－
－
－

187,023

－

7,705
－
－

17,161

41,157

13,385

12,42820,261

226,293

1,124,495
912,200
29,355－
142,940
2,497,612
1,284,000
46,021
15,000212,250
2,999,299

328,235
282,300－－
43,8432,940,737
1,275,400
93,453－668,969
1,070,037

636,122
619,400
400－－
2,296,820
1,661,500
25,784－331,198
626,783

518,870
456,400－－－
1,826,090
1,454,800
7,445－
278,624
292,541

202,6429,700－－－
3,697,031
2,682,000
14,736－
237,004
285,919469,690435,000－－－
1,220,221
824,000－－
10,496
178,315

Total

10,603,005

4,408,811

3,580,817

2,651,931

4,206,854

2,094,520

21

－

－

－

Over 10 years－

Shinkin Central Bank

47

Millions of U.S.Dollars
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

Due from Banks (※1)
Bills Bought and Call Loan
Receivables under Resale Agreements
Receivables under Securities Borrowing
Transactions
Monetary Debts Purchased
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)

32,520
6,761
860

304
－
－

21
－
－

10
－
－

－
－
－

1,987

－

81
－
－

182

437

142

132

215

2,404

11,950
9,693
311
－
1,519
26,542
13,645
489
159
2,255
31,873

3,488
3,000
－
－
465
31,251
13,553993－
7,109
11,371

6,760
6,582
4
－
－
24,40817,656
274
－
3,519
6,660

5,514
4,850
－
－
－
19,405
15,460
79
－
2,960
3,108

2,153
103
－
－
－
39,28828,501
156
－
2,518
3,038

4,991
4,622
－
－
－
12,967
8,756
－
－
111
1,894

Total

112,678

46,852

38,05328,18244,70622,258Over 10 years－－

Over 10 years－－※1. Current deposits, ordinary deposit, deposits at notice, and transfer deposits, included in “Due from banks,” are stated under amounts
redeemable “Within 1 year.”※2. The loans of ¥7,879 million ($83 million) which obligor categories are Bankrupt Borrowers, Substantially Bankrupt Borrowers or Probably
Bankrupt Borrowers and which periods of redemption cannot be foreseen are not included in Loans and Bills Discounted.
As of March 31, 2012
Millions of Yen

Due from Banks (※1)
Bills Bought and Call Loans
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

1,905,631
663,867
73,99034,660
－
－

1,000
－
－

1,000
－
－

－
－
－

71,529

－

1,000
－
－
－

－

－

－

Monetary Debts Purchased
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)

7,402

19,942

52,072

14,547

11,275288,514810,410630,61052,062－103,998
3,791,456
2,672,500
66,365－331,508
2,715,014

1,374,982
1,117,900
29,355－
171,383
3,341,646
1,590,000
85,406－400,234
1,316,565

386,306
360,300－－
15,4001,834,253
1,046,400
41,497－
244,577
562,073

738,018
701,400
200－－
905,308
672,100
7,649－
127,027
274,879

270,61292,500200－－
3,311,413
2,745,000
10,088－11,360291,764

517,210442,000－－－
1,808,159
1,415,000－－
3,500
205,785

Total

10,039,303

6,087,797

2,835,706

1,933,753

3,886,065

2,819,670※1. Current deposits, ordinary deposit, deposits at notice, and transfer deposits, included in “Due from banks,” are stated under amounts
redeemable “Within 1 year.”※2. The loans of ¥8,972 which obligor categories are Bankrupt Borrowers, Substantially Bankrupt Borrowers or Probably Bankrupt Borrowers
and which periods of redemption cannot be foreseen are not included in Loans and Bills Discounted.

2248

Shinkin Central Bank

Note 4: Amounts of deposits, debentures and other interest bearing debt scheduled for repayment after the consolidated balance sheet date
As of March 31, 2013
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 (※1)

11,584,537

8,736,352

1,644,635

21,040Debentures－－

13,744－－－－324,350

－

－

－

－

21,040338,094－

1,007,980

1,379,550

160,550－

1,149,820

Borrowed Money (※2)
Bills Sold and Call Money559,088－－－

Payables under Securities Lending
Transactions

1,637,068

－

Total

14,949,224

10,115,902

2,794,455－－－

Millions of U.S.Dollars
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 (※1)

123,108

92,841

17,477223

10,711

14,660

Payables under Securities Lending
Transactions

17,397

－

－

－

－

5,941

－

3,446

Bills Sold and Call Money

－

－

－

1,706

－

－

Borrowed Money (※2)－

12,219－146

Debentures

－

－

－

223

3,592

－

※1. Demand deposits, included in “Deposits,” are stated under amounts payable “Within 1 year.”※2. Borrowed Money without maturity is not included.
Total

158,865

107,501

29,696－－－

As of March 31, 2012
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 (※1)

11,998,156

8,288,612

1,286,920

4,690

997,050

1,806,140

－

－

－

－

108,150

497,739－

201,960

Bills Sold and Call Money－－

155,310－－

Borrowed Money (※2)－

1,150,770－

17,498Debentures

－

－

－

206,650

125,648

Payables under Securities Lending
Transactions

1,605,617※1. Demand deposits, included in “Deposits,” are stated under amounts payable “Within 1 year.”※2. Borrowed Money without maturity is not included.
Total

23

15,253,872

10,094,752

2,437,690

－

－
－
－

Shinkin Central Bank49

25. 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), Cash and Due from Banks (negotiable certificates of deposit) and Monetary Debts Purchased (loaned claims in trust) in the
consolidated balance sheet.
(1) Trading Securities
Millions of Yen
2013
Net Unrealized Gains (Losses)
Recognized as Income

553

Millions of Yen
2012

Millions of U.S. Dollars
2013

71

5

(2) Held-to-Maturity Debt Securities
As of March 31, 2013
Millions of Yen

2,409,219
29,776－
172,758
316,908
2,928,663
320,026－－
14,531
900
335,458

2,506,244
29,894－
173,249
348,036
3,057,424
319,684－－
14,525
900
335,110

Unrealized
Gains (Losses)
97,024117－
491
31,128
128,761
(342)
－
－
(6)
－
(348)

3,264,121

3,392,535

128,413

Carrying Value

Items with Fair
Value Exceeding
Carrying Value

Items 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

Items with Fair
Value Exceeding
Carrying Value

Items 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

24

50

Shinkin Central Bank

Fair Value

Unrealized
Gains (Losses)

25,602
316
－
1,835
3,367
31,122
3,400
－
－
154
9
3,564

26,633
317
－
1,841
3,698
32,491
3,397
－
－
154
9
3,561

1,031
1
－
5
330
1,368
(3)
－
－
(0)
－
(3)

34,68736,052

1,364

As of March 31, 2012
Millions of Yen

3,284,427
81,825－274,841
344,262
3,985,357
85,263100－
17,432
4,054
106,850

3,362,337
82,365－
275,840
375,687
4,096,231
85,208100－
17,2034,000
106,511

Unrealized
Gains (Losses)
77,910540－
998
31,424
110,873
(55)
(0)
－
(229)
(53)
(338)

4,092,207

4,202,743

110,535

Carrying Value

Items with Fair
Value Exceeding
Carrying Value

Items 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, 2013
Millions of Yen
Carrying Value

Items with Carrying
Value Exceeding
Acquisition Cost

Items with Carrying
Value notExceedingAcquisition Cost

25

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

35,092
11,478,758
9,521,182
189,228
14,9981,753,350
4,231,134
15,744,986
2,988
51,131
13,9982,080－
35,052856,068
910,188
16,655,175

Acquisition Cost
24,592
11,228,658
9,290,389
186,392
14,995
1,736,881
4,052,347
15,305,598
3,121
51,312
13,9982,083－
35,229864,177
918,611
16,224,209

Unrealized
Gains (Losses)
10,499250,100
230,793
2,835
2
16,469178,787439,387
(133)
(180)
(0)
(2)
－
(177)
(8,108)(8,422)430,965

Shinkin Central Bank

51

Millions of U.S. Dollars

Stocks
Bonds
Japanese Government Bonds
Municipal Government Bonds
Short-Term Corporate Bonds
Corporate Bonds
Others372
121,984
101,1812,010
159
18,632
44,964

261
119,326
98,7281,980
159
18,45743,064

Unrealized
Gains (Losses)
111
2,657
2,452
30
0
175
1,899

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

167,321
31
543
148
22
－
372
9,097
9,672
176,994

162,652
33
545
148
22
－
374
9,183
9,762
172,414

4,669
(1)
(1)
(0)
(0)
－
(1)
(86)
(89)
4,579

Carrying Value

Items with Carrying
Value Exceeding
Acquisition Cost

Items with Carrying
Value notExceedingAcquisition Cost

Acquisition Cost

As of March 31, 2012
Millions of Yen
Carrying Value

Items with Carrying
Value Exceeding
Acquisition Cost

Items with Carrying
Value notExceedingAcquisition 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
OthersTotal
Total(4) Held-to-Maturity Debt Securities Sold during the Fiscal Year
Not applicable.

26

52

Shinkin Central Bank

9,062
10,953,799
9,673,064
210,852－
1,069,882
3,292,151
14,255,014
38,603823,097
750,674
4,024－
68,3991,652,180
2,513,881
16,768,895

Acquisition Cost
6,353
10,770,566
9,500,012
207,920－
1,062,632
3,213,353
13,990,273
43,870823,445
750,756
4,035－
68,653
1,672,356
2,539,673
16,529,946

Unrealized
Gains (Losses)
2,709
183,233
173,051
2,932
－
7,250
78,797
264,740(5,267)
(347)
(82)
(10)
－
(254)
(20,176)(25,792)
238,948

(5) Other Securities Sold during the Fiscal YearFor the Fiscal Year Ended March 31, 2013
Millions of Yen
Amounts ofSecurities Sold

Aggregate Gains on
Sales

Aggregate Losses on
Sales

Stocks46,086

1,305

5,919

Bonds

2,718,676

113,137

156

Japanese Government Bonds

－

－

－

2,718,275

113,137

156

Short-Term Corporate Bonds

－

－

－

Corporate Bonds

400

0

－

Others1,328,099

5,659

10,495

Total

4,092,861

120,103

16,572

Municipal Government Bonds

Millions of U.S. Dollars
Amounts ofSecurities Sold

Aggregate Gains on
Sales

Aggregate Losses on
Sales

Stocks

489

13

62

Bonds

28,891

1,202

1

－

－

Japanese Government Bonds－

28,887

1,202

Short-Term Corporate Bonds－－

Corporate Bonds

4

0

－

Others

14,113

60

111

Total

43,494

1,276

176

Municipal Government Bonds

1－

For the Fiscal Year Ended March 31, 2012
Millions of Yen
Amounts ofSecurities Sold

Aggregate Losses on
Sales

Stocks

41,713

2,815

8,629

Bonds

1,717,263

54,619

1,382

Japanese Government Bonds

1,688,405

53,373

1,382

Municipal Government Bonds

28,858

1,245

－

－
－

－

Short-Term Corporate Bonds
Corporate Bonds

27

Aggregate Gains on
Sales

－

0

－

Others918,147

23,01623,265

Total

2,677,124

80,451

33,278

Shinkin Central Bank53

(6) Impaired Securities
Of Securities other than Trading Securities (excluding those where there is significant difficulty in determining fair value), if the fairvalue 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 therate of decline over past periods, the securities are devalued and the fair value is recorded as the carrying amount on the consolidated
financial balance sheet. In addition the difference between the fair value and the acquisition price is treated as impairment losses in thefiscal year.
The amount of impairment losses on securities was ¥407 million ($4 million) including ¥407 million ($4 million) on Stocks and¥2,325 million including ¥1,273 million on stocks and ¥1,052 million on Other for the fiscal years ended March 31, 2013 and 2012,
respectively.

2. Money Held in Trust(1) Money Held in Trust for Trading Purposes
As of March 31, 2013
Millions of Yen
Unrealized Gains (Losses)
Recognized as Income

Carrying Value
Money Held in Trust for
Trading Purposes

182,901

Carrying Value
Money Held in Trust for
Trading Purposes

9

Millions of U.S. Dollars
Unrealized Gains (Losses)
Recognized as Income

1,943

0

As of March 31, 2012
Millions of Yen

Money Held in Trust for
Trading Purposes

Carrying Value

Unrealized Gains (Losses)
Recognized as Income

181,193(102)(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)
Not applicable.

28

54

Shinkin Central Bank

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 sheets are as follows:
As of March 31, 2013
Millions of U.S.
Millions of Yen
Dollars
410,651

4,363

－

－

Net Unrealized Gains

410,651

4,363

Deferred Tax Liabilities

111,829

1,188

Net Unrealized Gains(Prior to Equity Method Adjustment)

298,822

3,175

Minority Interests’ Portion－－

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

298,822

3,175

Other Securities
Other Money Held in Trust

Net Unrealized Gains

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

As of March 31, 2012
Millions of Yen
Other Securities
Other Money Held in Trust

215,591－

Net Unrealized Gains

215,591

Deferred Tax Liabilities

58,741Net Unrealized Gains(Prior to Equity Method Adjustment)

156,850

Minority Interests’ Portion－

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

Net Unrealized Gains

156,850

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

29

Shinkin Central Bank55

26. Derivatives:
1. Derivative transactions to which hedge accounting was not applied
The following summarizes the contract values 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 consolidatedbalance sheet date, which were classified by types of financial instruments. Please note that the contract values in themselves do not reflect
the market risk associated with the Bank’s Derivative Transactions.
(1) Interest-Rate-Related Transactions
As of March 31, 2013
Millions of Yen
Total
Contract
Value

Contract Value(Over 1 Year until
Settlement or Expiry)

Fair ValueNet Unrealized
Gains (Losses)

Exchange-Traded Transactions
Interest Rate Futures:
Sold

－

－

－

－

Bought

－

－

－

－

Sold

－

－

－

－

Bought

－

－

－

－

Sold

－

－

－

－

Bought－－－－Fixed Rate Receivable/Variable Rate Payable

13,156,877

10,836,129

270,979

270,979

Variable Rate Receivable/Fixed Rate Payable

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

Interest Rate Swaps:

13,430,970

10,207,085(226,548)(226,548)

Variable Rate Receivable/Variable Rate Payable

47,00037,00029

29

Fixed Rate Receivable / Fixed Rate Payable

110,000

30,000

546

546

Sold

－

－

－

－

Bought

－

－

－

－

Sold

4,281,400

3,414,400(47,118)(9,009)Bought

4,465,530

3,001,450(5,688)(20,244)－－(7,800)15,753

Interest Rate Options:

Others:

Total

30

56

Shinkin Central Bank

Millions of U.S. Dollars
Total
Contract
Value

Contract Value(Over 1 Year until
Settlement or Expiry)

Fair ValueNet Unrealized
Gains (Losses)

Exchange-Traded Transactions
Interest Rate Futures:
Sold

－

－

－

－

Bought

－

－

－

－

Sold

－

－

－

－

Bought

－

－

－

－

Sold

－

－

－

－

Bought－－－－Fixed Rate Receivable/Variable Rate Payable

139,818

115,155

2,879

2,879

Variable Rate Receivable/Fixed Rate Payable

142,730

108,470(2,407)(2,407)

499

393

0

0

1,168

318

5

5

Sold

－

－

－

－

Bought

－

－

－

－

Sold

45,49836,284

(500)

(95)

Bought47,45531,896

(60)

(215)

－

－

(82)

167

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

Interest Rate Swaps:

Variable Rate Receivable/Variable Rate Payable
Fixed Rate Receivable/ Fixed Rate Payable
Interest Rate Options:

Others:

Total

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

31

Shinkin Central Bank57

As of March 31, 2012
Millions of Yen
Total
Contract
Value

Contract Value(Over 1 Year until
Settlement or Expiry)

Fair ValueNet Unrealized
Gains (Losses)

Exchange-Traded Transactions
Interest Rate Futures:
Sold

－

－

－

－

Bought

－

－

－

－

Sold

－

－

－

－

Bought

－

－

－

－

Sold

－

－

－

－

Bought－－－－Fixed Rate Receivable/Variable Rate Payable

12,815,183

10,381,479

213,712

213,712

Variable Rate Receivable/Fixed Rate Payable

12,858,842

9,751,496(185,397)(185,397)

Variable Rate Receivable/Variable Rate Payable

40,00025,00023

23

Fixed Rate Receivable / Fixed Rate Payable

110,000

110,000

1,636

1,636

Sold

－

－

－

－

Bought

－

－

－

－

Sold

3,542,400

1,955,400(33,249)(1,602)

Bought

3,083,703

2,093,270

1,223(8,466)－－(2,052)

19,905Interest Rate Options:Over the Counter Transactions
Interest Rate Forwards:

Interest Rate Swaps:

Interest Rate Options:

Others:

Total

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

32

58

Shinkin Central Bank(2) Currency-Related Transactions
As of March 31, 2013
Millions of Yen
Total Contract
Value

Contract Value(Over 1 Year until
Settlement or Expiry)

Net Unrealized
Gains (Losses)

Fair Value

Exchange-Traded Transactions
Currency Futures:
Sold

－

－

－

－

Bought

－

－

－

－

Sold

－

－

－

－

Bought－－－－55,59935,585

245

245

Sold

49,548

－

(523)

(523)

Bought55,511

－

381

381

Sold

－

－

－

－

Bought

－

－

－

－

Sold

－

－

－

－

Bought

－

－

－

－

－

－

102

102

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

Currency Options:

Others:Total

33

Shinkin Central Bank

59

Millions of U.S. Dollars
Total Contract
Value

Contract Value(Over 1 Year until
Settlement or Expiry)

Net Unrealized
Gains (Losses)

Fair Value

Exchange-Traded Transactions
Currency Futures:
Sold

－

－

－

－

Bought

－

－

－

－

Sold

－

－

－

－

Bought

－

－

－

－

590

378

2

2

Sold

526

－

(5)

(5)

Bought

589

－

4

4

Sold

－

－

－

－

Bought

－

－

－

－

Sold

－

－

－

－

Bought

－

－

－

－

－

－

1

1

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

Currency Options:

Others:

Total

Notes:
1. Transactions mentioned above were valued at fair value, and Net Unrealized Gains (Losses) were accounted for in the consolidated
statements of income.
2. Fair value calculation: Transactions were valued using discounted present value, etc.

3460

Shinkin Central BankAs of March 31, 2012
Millions of Yen
Total Contract
Value

Contract Value(Over 1 Year until
Settlement or Expiry)

Net Unrealized
Gains (Losses)

Fair Value

Exchange-Traded Transactions
Currency Futures:
Sold

－

－

－

－

Bought

－

－

－

－

Sold

－

－

－

－

Bought

－－－－80,851

49,633

1,535

1,535

Sold

32,866

－

(496)

(496)

Bought52,666

－

532

532

Sold

－

－

－

－

Bought

－

－

－

－

Sold

－

－

－

－

Bought

－

－

－

－

－

－

1,571

1,571

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

Currency Options:

Others:

Total

Notes:
1. Transactions mentioned above were valued at fair value, and Net Unrealized Gains (Losses) were accounted for in the consolidated
statements of income.
2. Fair value calculation: Transactions were valued using discounted present value, etc.

(3) Stock-Related Transactions
Not applicable.

35

Shinkin Central Bank61

(4) Bond-Related Transactions
As of March 31, 2013
Millions of Yen
Total
Contract
Value

Contract Value(Over 1 Year until
Settlement or Expiry)

Fair Value

23,457

－
－

38

－

－

Sold

－

－

－

1,000

－

－

Bought

2

(1)

－

－

－

－

－

－

－

－

－

－

40

37

Contract Value(Over 1 Year until
Settlement or Expiry)

Fair ValueNet Unrealized
Gains (Losses)

249
－

－
－

0

－

0

－

Sold

－

－

－

10

－

－

Bought

0

(0)

－

－

－

－

－

－

－

－

－

－

0

0

Net Unrealized
Gains (Losses)

Exchange-Traded Transactions
Bond Futures:
Sold－

BoughtBond Futures Options:38

Over the Counter Transactions
Bond Options:
Sold－

BoughtOthers:Sold－

Bought
Total

－

－

－

－

－

－

Millions of U.S. Dollars
Total
Contract
Value
Exchange-Traded Transactions
Bond Futures:
Sold
BoughtBond Futures Options:Over the Counter Transactions
Bond Options:
Sold
BoughtOthers:Sold
Bought
Total

－

－

－

－

－

－

－

－

Notes:
1. Transactions mentioned above were valued at fair value, and Net Unrealized Gains (Losses) were accounted for in the consolidated
statements of income.
2. Fair value calculation: Transactions on exchanges were valued on the basis of closing prices, mainly on the Tokyo Stock Exchange.
Over the counter transactions were valued using discounted calculation models for option prices, etc.

3662

Shinkin Central BankAs of March 31, 2012
Millions of Yen
Total
Contract
Value

Contract Value(Over 1 Year until
Settlement or Expiry)

Fair ValueNet Unrealized
Gains (Losses)－

Exchange-Traded Transactions
Bond Futures:
Sold

7,659

(8)

5,678

－

(8)

Bought

1

1

－

－

－

－

18

(3)

Bond Futures Options:
Sold
Bought12,000

－

－

－

－

－

－

－

－

－

－

－

11

(10)

Over the Counter Transactions
Bond Options:
Sold
BoughtOthers:Sold
Bought
Total

－

－

－

－

－

－

－

－

Notes:
1. Transactions mentioned above were valued at fair value, and Net Unrealized Gains (Losses) were accounted for in the consolidated
statements of income.
2. Fair value calculation: Transactions on exchanges were valued on the basis of closing prices, mainly on the Tokyo Stock Exchange.
Over the counter transactions were valued using discounted calculation models for option prices, etc.
(5) Commodity-Related Derivative Transactions
Not applicable.

(6) Credit Derivative Transactions
Not applicable.

37

Shinkin Central Bank63

2. Derivative transactions to which hedge accounting was applied
The following summarizes the contract values or the contracted principal equivalents, fair values and the valuation methods of the Bank’s
derivative transactions that qualify for hedge accounting as of the consolidated balance sheet date, which were classified by types of financial
instruments. Please note that the contract values in themselves do not reflect the market risk associated with the Bank’s Derivative
Transactions.
(1) Interest-Rate-Related Transactions
As of March 31, 2013

Method for Hedge
Accounting
Basic Treatment

Exceptional
Treatments forInterest Rate
Swaps

Items

Total Contract
Value

Fixed Rate Receivable/Variable Rate Payable

1,300,000

635,000

9,534

Variable Rate Receivable/Fixed Rate Payable

4,646,832

4,444,593(141,932)

Variable Rate Receivable/Variable Rate Payable

102,172

102,172(6,106)

Fixed Rate Receivable/Variable Rate Payable

1,450,000

980,000

11,907

Variable Rate Receivable/Fixed Rate Payable

885,000

885,000(66,509)－－(193,106)Interest Rate Swaps

Method for Hedge
Accounting

Exceptional
Treatments forInterest Rate
Swaps

Fair Value

Interest Rate Swaps

Total

Basic Treatment

Millions of Yen
Contract Value(Over 1 Year until
Settlement or Expiry)

Items

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

Total Contract
Value

Fair Value

Interest Rate Swaps
Fixed Rate Receivable/Variable Rate Payable

13,815

6,748

101

Variable Rate Receivable/Fixed Rate Payable

49,381

47,232(1,508)

Variable Rate Receivable/Variable Rate Payable

1,085

1,085

(64)

Fixed Rate Receivable/Variable Rate Payable

15,40910,414126

Variable Rate Receivable/Fixed Rate Payable

9,404

9,404

(706)

－

－

(2,052)

Interest Rate Swaps

Total

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 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 JICPA Industry Audit
Committee Report No. 24, “Accounting and Auditing Treatment of Accounting Standards for Financial Instruments in Banking Industry”.
4. Fair value calculation: Transactions on exchanges were valued on the basis of closing prices, mainly on the Tokyo Financial Exchange Inc.
Over the counter transactions were valued using discounted present value or calculation models for option prices,
etc.

38

64

Shinkin Central BankAs of March 31, 2012

Method for Hedge
Accounting
Basic Treatment

Exceptional
Treatments forInterest Rate
Swaps

Items

Millions of Yen
Contract Value(Over 1 Year until
Settlement or Expiry)

Total Contract
Value

Fair Value

Interest Rate Swaps
Fixed Rate Receivable/Variable Rate Payable

2,385,000

1,300,000

9,896

Variable Rate Receivable/Fixed Rate Payable

3,986,892

3,840,253(141,553)

Variable Rate Receivable/Variable Rate Payable

92,206

92,206(4,937)

Fixed Rate Receivable/Variable Rate Payable

1,791,000

1,270,000

15,891

Variable Rate Receivable/Fixed Rate Payable

885,000

885,000(38,699)－－(159,401)

Interest Rate Swaps

Total

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 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 JICPA Industry Audit
Committee Report No. 24, “Accounting and Auditing Treatment of Accounting Standards for Financial Instruments in Banking Industry”.
4. Fair value calculation: Transactions on exchanges were valued on the basis of closing prices, mainly on the Tokyo Financial Exchange Inc.
Over the counter transactions were valued using discounted present value or calculation models for option prices,etc.
(2) Currency-Related Transactions
As of March 31, 2013
Millions of Yen
Method for Hedge
Accounting
Basic Treatment

Items
Currency Swaps

Contract Value(Over 1 Year until
Settlement or Expiry)

Total Contract
Value

Fair Value

1,008,663

398,647(153)

539,025－(12,776)－(12,929)

Forward Foreign Exchange Contracts:
Sold－

Bought

－

Total

－

－

Millions of U.S.Dollars
Method for Hedge
Accounting
Basic Treatment

Items
Currency Swaps

Contract Value(Over 1 Year until
Settlement or Expiry)

Total Contract
Value

Fair Value

10,719

4,236

(1)

Sold

5,728

(135)

－

－

Bought－(137)

Forward Foreign Exchange Contracts:

Total

39

－

－

－

Shinkin Central Bank

65

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 JICPA Industry
Audit Committee Report No. 25, “Accounting and Auditing Treatment of Accounting Standards for Foreign Currency Transactionsin the Banking Industry”.
3. Fair value calculation for these transactions was carried out using discounted present value, etc.

As of March 31, 2012
Millions of Yen
Method for Hedge
Accounting
Basic Treatment

Items
Currency Swaps

Contract Value(Over 1 Year until
Settlement or Expiry)

Total Contract
Value

Fair Value

1,037,908

623,860

4,349

641,535－(20,311)－(15,962)

Forward Foreign Exchange Contracts:
Sold
Bought
Total

－
－

－

－

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 JICPA Industry
Audit Committee Report No. 25, “Accounting and Auditing Treatment of Accounting Standards for Foreign Currency Transactionsin the Banking Industry”.
3. Fair value calculation for these transactions was carried out using discounted present value, etc.

(3) Stock-Related Transactions
Not applicable.

(4) Bond-Related Transactions
Not applicable.

27. Related Party Transactions:
For the Fiscal Year Ended March 31, 2013
There were no significant related-party transactions.
For the Fiscal Year Ended March 31, 2012
There were no significant related-party transactions.

40

66

Shinkin Central Bank

28. Segment Information:(1) Description of Reportable Segments
The Group classifies the businesses of the Bank and its consolidated subsidiaries as individual business segments. Among thosebusiness segments, the business of the Bank is deemed as the reportable segment.
The Bank, as an individual financial institution, provides such financial services as deposits, debentures, lending, market fundmanagement, securities and clearing. As the central financial institution for shinkin banks, the Bank complements the functions of theshinkin banks and operates the shinkin bank industry’s own safety net, including the Shinkin Bank Management Reinforcement System.
(2) Method of Calculating Amounts by Reportable Segment
The accounting methods of the reportable segment are the same as those described in the “Significant Accounting Policies”.
Reportable segment profit is based on net income.
(3) Amounts by Reportable Segment
For the Fiscal Year Ended March 31, 2013
(Millions of Yen)
Reportable segment
Shinkin Central Bank
business

Other

Total

Adjustment

Amount presented
in the consolidated
financial statements

IncomeExternal customers

382,120

27,035409,156(238)

408,917

1,827

2,144

3,972

(3,972)－

Total

383,948

29,180413,128(4,211)

408,917

Segment profit

32,024

1,737

33,761(899)

32,862

Segment assets

30,184,837

300,847

30,485,685(74,982)

30,410,702

Segment liabilities

28,956,639

223,520

29,180,160(18,687)

29,161,473

Depreciation

5,116

4,014

9,130

(0)

9,129

Interest Income

240,538486

241,024(88)

240,936

Interest Expenses

161,980245

162,225(42)

162,183

Income Taxes

7,364

914

8,279

(92)

8,186

Increase in Tangible andIntangible Fixed Assets

3,293

5,398

8,691

－

8,691

Inter-segment

Other items

41

Shinkin Central Bank

67

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

Other

Total

Adjustment

Amount presented
in the consolidated
financial statements

IncomeExternal customers

4,060

287

4,348

(2)

4,345

19

22

42

(42)

－

4,080

310

4,390

(44)

4,345

Segment profit

340

18

358

(9)

349

Segment assets

320,774

3,197

323,971(796)

323,174

Segment liabilities

307,7212,375

310,097(198)

309,898

Depreciation

54

42

97

(0)

97

Interest Income

2,556

5

2,561

(0)

2,560

Interest Expenses

1,721

2

1,723

(0)

1,723

Income Taxes

78

9

87

(0)

86

Increase in Tangible andIntangible Fixed Assets

34

57

92

－

92

Inter-segment
Total

Other items

Notes:
1. The “Other” classification comprises the Bank’s eight consolidated subsidiaries which are not included within the reportable segment.
The Bank’s consolidated subsidiaries provide such financial services as trust and banking, securities, investment advisory and investment
trust, guarantees, venture capital and M&A intermediary, and data processing outsourcing.
2. Adjustment comprises the following.
(i)Within adjustment of segment profit, reduction of ¥899 million ($9 million) comprises reduction of ¥399 million ($4 million) on
minority interests and ¥499 million ($5 million) on inter-segment eliminations, etc.
(ii)Within adjustment of segment assets, reduction of ¥74,982 million ($796 million) comprises reduction of ¥53,114 million ($564
millions) on eliminations relating to capital consolidation and ¥21,867 million ($232 million) on inter-segment elimination, etc.
(iii) Reduction of ¥18,687 million ($198 millions) on the adjustment of segment liabilities comprises inter-segment eliminations, etc.
(iv)The adjustment for other items comprises inter-segment eliminations, etc.
3. Segment profit has been adjusted from Net Income presented in the Consolidated Statement of Income.

42

68

Shinkin Central BankFor the Fiscal Year Ended March 31, 2012
(Millions of Yen)
Reportable segment
Other

Shinkin Central Bank
business

Total

Amount presented
in the consolidated
financial statements

Adjustment

IncomeExternal customers

368,461

27,008395,469(192)

395,277

1,799

2,273

4,073

(4,073)－

Total

370,260

29,282399,543(4,265)395,277

Segment profit

29,0071,840

30,848(1,042)29,805

Segment assets

30,049,035

276,698

30,325,733(77,241)

30,248,492

Segment liabilities

28,975,645

201,869

29,177,515(21,377)

29,156,138

Depreciation

4,654

3,436

8,091

(1)

8,089

Interest Income

263,702538

264,241(91)

264,149

Interest Expenses

197,168

219

197,388(146)

197,241

Income Taxes

6,296

1,081

7,377

(27)

7,349

Increase in Tangible andIntangible Fixed Assets

4,792

2,971

7,764

－

7,764

Inter-segment

Other items

Notes:
1. The “Other” classification comprises the Bank’s eight consolidated subsidiaries which are not included within the reportable segment.
The Bank’s consolidated subsidiaries provide such financial services as trust and banking, securities, investment advisory and investment
trust, guarantees, venture capital and M&A intermediary, and data processing outsourcing.
2. Adjustment comprises the following.
(i)Within adjustment of segment profit, reduction of ¥1,042 million comprises reduction of ¥459 million on minority interests and ¥582
million on inter-segment eliminations, etc.
(ii)Within adjustment of segment assets, reduction of ¥77,241 million comprises reduction of ¥53,114 million on eliminations relating tocapital consolidation and ¥24,126 million on inter-segment elimination, etc.
(iii) Reduction of ¥21,377 million on the adjustment of segment liabilities comprises inter-segment eliminations, etc.
(iv)The adjustment for other items comprises inter-segment eliminations, etc.
3. Segment profit has been adjusted from Net Income presented in the Consolidated Statement of Income.

(Related Information)
For the Fiscal Year Ended March 31, 2013
1. Information by service(Millions of Yen)
Securities investment
operations
Ordinary Income fromexternal customers

315,329

Lending operations

Other

39,605

Total
53,925

408,860(Millions of U.S. Dollars)
Securities investment
operations
Ordinary Income fromexternal customers

43

3,351

Lending operations
420

Other

Total
573

4,344

Shinkin Central Bank69

2. Information by geographic region(1) Ordinary Income
Japan

Europe286,233

25,915Japan

Europe3,041

275

United States
26,699Other

United States

Other

70,011(Millions of Yen)
Total
408,860(Millions of U.S. Dollars)
Total
744
4,344

283

(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

Ordinary Income

Name of customer
The Government of Japan

Ordinary Income

94,376(Millions of Yen)
Related segment
Shinkin Central Bank business

1,002(Millions of U.S. Dollars)
Related segment
Shinkin Central Bank business

For the Fiscal Year Ended March 31, 2012
1. Information by service(Millions of Yen)
Securities investment
operations
Ordinary Income fromexternal customers

287,827

Lending operations

Other

45,247

Total
62,150395,226

2. Information by geographic region(1) Ordinary Income
Japan

Europe249,179

44,872

United States
31,151

Other
70,022(Millions of Yen)
Total
395,226(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

44

70

Shinkin Central Bank

Ordinary Income
108,936(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, 2013
(Millions of Yen)

Impairment losses

Reportable segment
Shinkin Central Bank business
1,813

Impairment losses

Reportable segment
Shinkin Central Bank business
19

Other

Total
－

1,813

(Millions of U.S. Dollars)
Other

Total
－

19

Note:
The “Other” classification comprises the Bank’s eight consolidated subsidiaries which are not included within the reportable segment.
The Bank’s consolidated subsidiaries provide such financial services as trust and banking, securities, investment advisory and investment
trust, guarantees, venture capital and M&A intermediary, and data processing outsourcing.

For the Fiscal Year Ended March 31, 2012
(Millions of Yen)

Impairment losses

Reportable segment
Shinkin Central Bank business
268

Other

Total
－

268

Note:
The “Other” classification comprises the Bank’s eight consolidated subsidiaries which are not included within the reportable segment.
The Bank’s consolidated subsidiaries provide such financial services as trust and banking, securities, investment advisory and investment
trust, guarantees, venture capital and M&A intermediary, and data processing outsourcing.

(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.

45

Shinkin Central Bank71

29. Amounts per Share:
Yen
2013

U.S. Dollars
2013

2012

Net Assets per Share
263,016.93

229,768.12

2,795.07－

5,879.26－

69.37

Net Income per Share

6,528.60
Net Income per Share after Adjustment for Common
Share equivalents－

Notes:
1. In the calculation of net assets per share and net income per share, preferred dividends were deducted from current net income. However,participating dividends were not deducted from current net income.
2. The basis for calculation of net assets per share is as follows:
2013
2013
2012
Millions of Yen

1,249,229

1,092,354

Millions of U.S.
dollars

13,275

Millions of Yen

10,887

10,555

Millions of U.S.
dollars

115

Minority Interests

Millions of Yen

8,763

8,430

Millions of U.S.
dollars93

Preferred Dividends

Millions of Yen

2,124

2,124

Millions of U.S.
dollars

22

Millions of Yen

1,238,342

1,081,799

Millions of U.S.
dollars

Unit

4,708,222

4,708,222－

13,159Number of Common
Share Units

Unit

4,000,000

4,000,000

Number of Preferred
Share UnitsUnit

708,222708,222－－

Total Net Assets
Amount Deducted from Total Net Assets

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

3. The basis for calculation of net income per share is as follows:
2013

2013

2012

Net Income

Millions of Yen

32,86229,805

Millions of U.S.
dollars

349

Amount Deducted from Net Income

Millions of Yen

2,124

2,124

Millions of U.S.
dollars

22

Millions of Yen

2,124

2,124

Millions of U.S.
dollars

22

Millions of Yen

30,73827,680Millions of U.S.
dollars

Unit

4,708,222

4,708,222－

326

Average Number of Common
Share Units

Unit

4,000,000

4,000,000－

Average Number of Preferred
Share UnitsUnit

708,222708,222－－－

Preferred Dividend
Net Income Used to Calculate
Net Income per share
Average Number of Share Units for the
fiscal year

4. Net income per Share after adjustment for Common share equivalents is not listed as there are no dilutive securities.
30. Subsequent Events:
Not applicable.

46

72

Shinkin Central Bank－

73

Non-Consolidated Balance Sheet
Non-Consolidated Balance Sheet
Millions of
U.S. Dollars

Millions of Yen
Shinkin Central Bank As of March 31,
AssetsCash and Due from Banks
Call Loans
Receivables under Resale Agreements
Receivables under Securities Borrowing Transactions
Monetary Debts Purchased
Trading Assets
Money Held in Trust
Securities
Loans and Bills Discounted
Foreign Exchanges Assets
Other Assets
Tangible Fixed Assets
Intangible Fixed Assets
Deferred Tax Assets
Customers’ Liabilities for Acceptances and Guarantees
Reserve for Possible Loan Losses
Allowance for Investment Losses
Total Assets

74

2013

3,107,570
636,264
80,985
113,130
329,858
396,119
182,901
19,681,236
5,460,155
4,413
102,089
68,744
5,813
44,765(29,159)(52)
30,184,837

2012

2013

1,957,215
663,867
73,990390,101
387,453
181,193
20,624,250
5,374,685
3,126
286,528
70,867
7,181
9,071
47,496(27,915)(78)
30,049,035

33,024
6,761
860
1,202
3,505
4,209
1,943
209,152
58,025
46
1,084
730
61
475
(309)
(0)
320,774

Liabilities and Net Assets
Liabilities
Deposits
Debentures
Trading Liabilities
Borrowed Money
Call Money
Payables under Securities Lending Transactions
Foreign Exchanges Liabilities
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

22,012,166
3,548,380
88,013811,890519,088
1,599,947
187
257,272
1,143
77
17,302357
49,9206,129
44,76528,956,639

21,609,051
3,965,870
74,623
792,410448,439
1,583,194
162
429,442
1,119
69
16,918348
6,499
47,49628,975,645

233,923
37,708
935
8,627
5,516
17,002
1
2,734
12
0
183
3
530
65
475
307,721

Total Net Assets
Total Liabilities and Net Assets

1,228,197
30,184,837

1,073,389
30,049,035

13,052
320,774-

Non-Consolidated Statement of Income
Non-Consolidated Statement of Income
Millions of
U.S. Dollars

Millions of Yen
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 on Receivables under Securities Borrowing Transactions
Interest and Dividends on Securities
OthersFees 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

2013

2012

2013

240,538
39,605
4,045
1,280
77
285
192,706
2,538
6,720
11,403
122,312
2,972
383,948

263,70245,247
6,197
2,639
79
134
206,202
3,201
7,001
14,83280,2704,453
370,260

2,556
420
42
13
0
3
2,047
26
71
121
1,299
31
4,080

161,980
65,01035,101
10,905906
64,280
44,876
894
6,687
751
138,737
26,241
10,159344,559

197,168
81,92347,067
12,607760
84,371
44,790
5,639
7,322
44
85,58726,32518,508334,957

1,721
690
373
115
9
0
45
476
9
71
7
1,474
278
107
3,661

39,38935,303

418

55
7,308
7,364
32,024

63
6,232
6,296
29,007

0
77
78
340

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

Yen
2013

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

6,350.60
3,000.00
6,500.00

U.S. Dollars
2012

5,709.76
2,500.00
6,500.00

2013

67.48
31.88
69.07

75

Organization (As of July 31, 2013)
General Meeting of Members
Auditors
Board of Directors
Chairman of the Board of Directors (Part-Time)
President and Chief Executive Officer
Deputy President
Senior Managing Director
Managing Directors
Directors

Chief Secretary
Internal Audit Division
General Affairs Division
Legal & Compliance OfficeBusiness Continuity Management Office
Personnel Division
Strategic Planning Division
Investor & Public Relations OfficeFinancial Management Division
Risk Management Division
Credit Planning & Supervision Division
Business Promotion Division
Product Development Office
Disaster Recovery & Reconstruction
Support Office ＊SME Business Solution Division
Shinkin Networks Promotion OfficeInternational Business Solution DivisionInternational Operations Center
Retail Business Solution Division
Client Assets Business Promotion Office

Corporate Business Division I
Corporate Business Division II
Osaka Corporate Business DivisionTokyo Business Division
Kanto Business Division I
Kanto Business Division II
Hokkaido Branch
Tohoku Branch(Disaster Recovery & Reconstruction Support office)＊

Hokuriku Branch
Shizuoka Branch
Nagoya Branch
Osaka Branch
Kobe Branch

Support & Advisory Division for Shinkin Banks
Consulting OfficeTransfer & Clearing Division
Management Office for Domestic FundTransfer System
Operations Division
Operations Center
Systems Division
Systems Center
Corporate Business Promotion Division
Project Finance OfficeTreasury Business Division
Treasury Division
Credit & Alternative Investment Division
Treasury Operations Division
Research InstituteRegional Innovation Support Office
SDB Office

Okayama Branch
Chugoku Branch
Shikoku Branch
Fukuoka Branch
Minami-Kyushu Branch
New York Representative OfficeHong Kong Representative Office
Shanghai Representative Office
Bangkok Representative Office＊ Located in Tohoku Branch

SCB Group
SCB Group
Trust businessBanking

Securities

Shinkin
Trust Bank
Trust business
Fund trust
Special money trust
Securities
investment trust
Negotiablesecurities trust
Money debentures
trust
Designated gift
trust
Public interest trust
Land trust■

Dealing■

Brokerage■

Underwriting■

Banking■■¥10bn in capital(100% ownership)■76

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

ShinkinInternational■■

Underwriting new
bonds and agency
business in theeuro market

Investment consulting
Investment trust

Personal loan
guarantee

Venture capital
M&A advisory

Data processing
consignment

Consigned
clerical works

Shinkin AssetManagement

Shinkin
Guarantee

Shinkin
CapitalShinkin Banks
Information
System Center

Shinkin
ChukinBusiness■

Data processing
consignment(handles SCB
administrative work)■

Softwaredevelopment■

Computing■

Promissory
note exchange■

Branch,dormitory, andother property
management■¥70mn in capital(100% ownership)■

Investment trust
consignments■

Investment
consulting fornegotiablesecurities andother products andinvestment
discretionary
contract
administration

Dealing andbrokering forexisting euro
bonds

■

Foreign securities
investment andconsulting■

30mn pounds incapital (100%ownership)
London local
securities entity■¥200mn in capital(100% ownership)■■

Debt guarantee
business(guarantees for
unsecuredpersonal loans
provided byshinkin banks)¥1.0bn in capital(99.1% stakewith Shinkin
Trust at 0.8%) ;¥0.8bn capitalreserve■

Venturecapitalbusiness■

M&A
brokering■■■

Corporatebusiness
consulting¥490mn in capital(100% ownership)■

Computer
consulting andtraining¥4.5bn in capital(50.7% stake;
49.2% owned byshinkin banks) ;¥1.5bn capitalreserve

of Julyof July
31,31,
2013)
2013)
International
InternationalDirectory
Directory(As(AsManaging
Managing
Director
Director(in charge(in chargeof International/of International/
Treasury
Treasury
Operations)Operations)
MikioMikio
Ichiyanagi
Ichiyanagi
Managing
Managing
Director
Director(in charge(in chargeof Overseasof Overseas
Offices)
Offices)
AkiraAkira
Ito ItoManaging
Managing
Director
Director(in charge(in chargeof Internationalof International
Planning)
Planning)
HajimeHajimeHiokiHioki
Strategic
Strategic
Planning
Planning
Division
Division(including(includingInternational
International
Planning)
Planning)
Address:
Address:
3-7, Yaesu
3-7, Yaesu
1-chome,1-chome,Chuo-ku,Chuo-ku,
TokyoTokyo
103-0028
103-0028
Telephone:
Telephone:+81-3-5202-7624+81-3-5202-7624
Facsimile:
Facsimile:+81-3-3278-7033+81-3-3278-7033
Director:
Director:
AtsushiAtsushi
KudoKudoInternational
International
Business
Business
Solution
Solution
Division
Division(including(includingInternational
International
Operations
Operations
Center/Center/Correspondent
Correspondent
Banking)
Banking)
Address:
Address:
3-7, Yaesu
3-7, Yaesu
1-chome,1-chome,Chuo-ku,Chuo-ku,
TokyoTokyo
103-0028
103-0028
Telephone:
Telephone:+81-3-5202-7703+81-3-5202-7703
Facsimile:
Facsimile:+81-3-3278-7035+81-3-3278-7035
GeneralGeneralManager:Manager:
MakotoMakotoAsahiAsahi
International
International
Operations
Operations
CenterCenterAddress:
Address:
8-1, 8-1,
Kyoubashi
Kyoubashi
3-chome,3-chome,Chuo-ku,Chuo-ku,
TokyoTokyo
104-0031
104-0031
Telephone:
Telephone:+81-3-5250-1700+81-3-5250-1700
Facsimile:
Facsimile:+81-3-5250-1780+81-3-5250-1780
SWIFT:SWIFT:ZENBZENBJPJT JPJT
GeneralGeneralManager:Manager:
ShigeoShigeoEnomotoEnomotoOperations
Operations
Division
Division
Address:
Address:
3-7, Yaesu
3-7, Yaesu
1-chome,1-chome,Chuo-ku,Chuo-ku,
TokyoTokyo
103-0028
103-0028
Telephone:
Telephone:+81-3-5202-7655+81-3-5202-7655
Facsimile:
Facsimile:+81-3-3278-7041+81-3-3278-7041
GeneralGeneralManager:Manager:
ToshioToshioMuroiMuroi
Corporate
Corporate
Business
Business
Promotion
Promotion
Division
Division
Address:
Address:
3-7, Yaesu
3-7, Yaesu
1-chome,1-chome,Chuo-ku,Chuo-ku,
TokyoTokyo
103-0028
103-0028
Telephone:
Telephone:+81-3-5202-7665+81-3-5202-7665
Facsimile:
Facsimile:+81-3-3278-7045+81-3-3278-7045
GeneralGeneralManager:Manager:
Nobuhiro
Nobuhiro
KoizumiKoizumiTreasury
TreasuryBusiness
Business
Division
Division
Address:
Address:
3-7, Yaesu
3-7, Yaesu
1-chome,1-chome,Chuo-ku,Chuo-ku,
TokyoTokyo
103-0028
103-0028
Telephone:
Telephone:+81-3-5202-7642+81-3-5202-7642
Facsimile:
Facsimile:+81-3-3278-7040+81-3-3278-7040
SWIFT:SWIFT:ZENBZENBJPJT JPJT
GeneralGeneralManager:Manager:
Hiroyuki
Hiroyuki
Toda Toda
Treasury
Treasury
Division
Division
Address:
Address:
3-7, Yaesu
3-7, Yaesu
1-chome,1-chome,Chuo-ku,Chuo-ku,
TokyoTokyo
103-0028
103-0028
Telephone:
Telephone:+81-3-5202-7660+81-3-5202-7660
Facsimile:
Facsimile:+81-3-3278-7043+81-3-3278-7043
SWIFT:SWIFT:ZENBZENBJPJT JPJT
GeneralGeneralManager:Manager:
Hideki
Hideki
SasakiSasaki
CreditCredit& Alternative& Alternative
Investment
Investment
Division
Division
Address:
Address:
3-7, Yaesu
3-7, Yaesu
1-chome,1-chome,Chuo-ku,Chuo-ku,
TokyoTokyo
103-0028
103-0028
Telephone:
Telephone:+81-3-5202-7664+81-3-5202-7664
Facsimile:
Facsimile:+81-3-3278-7044+81-3-3278-7044
GeneralGeneralManager:Manager:
Katsushi
Katsushi
Okado
Okado

Treasury
Treasury
Operations
Operations
Division
Division
Address:
Address:
3-7, Yaesu
3-7, Yaesu
1-chome,1-chome,Chuo-ku,Chuo-ku,
TokyoTokyo
103-0028
103-0028
Telephone:
Telephone:+81-3-5202-7666+81-3-5202-7666
Facsimile:
Facsimile:+81-3-3278-7046+81-3-3278-7046
SWIFT:SWIFT:ZENBZENBJPJT JPJT
GeneralGeneralManager:Manager:
TomoakiTomoakiNishimuraNishimura

New York
New York

ResearchResearch
Institute
Institute
Address:
Address:
3-7, Yaesu
3-7, Yaesu
1-chome,1-chome,Chuo-ku,Chuo-ku,
TokyoTokyo
103-0028
103-0028
Telephone:
Telephone:+81-3-5202-7671+81-3-5202-7671
Facsimile:
Facsimile:+81-3-3278-7048+81-3-3278-7048
GeneralGeneralManager:Manager:
TsuguoTsuguoFujinoFujino

LondonLondonOverseas
Overseas
Offices
Offices
NewNew
York York
Representative
Representative
OfficeOffice
Address:
Address:
114 West
114 West
47th 47th
Street,Street,Suite Suite
2420,2420,
NewNew
York,York,NY 10036,
NY 10036,
U.S.A.U.S.A.
Telephone:
Telephone:+1-212-642-4700+1-212-642-4700
Facsimile:
Facsimile:+1-212-730-6000+1-212-730-6000
ChiefChief
Representative:
Representative:
AtsushiAtsushiToyoshima
Toyoshima

Shanghai
ShanghaiHong Hong
Kong Kong
Bangkok
Bangkok

HongHong
KongKong
Representative
Representative
OfficeOffice
Address:
Address:
Suite Suite
4008,4008,
40/F, 40/F,
CentralCentralPlaza,Plaza,
18 18
HarbourHarbourRoad,Road,Wan WanChai,Chai,
HongHong
Kong,Kong,
P.R. ofP.R.
China
of China
Telephone:
Telephone:+852-2537-3777+852-2537-3777
Facsimile:
Facsimile:+852-2537-4002+852-2537-4002
ChiefChief
Representative:
Representative:
TokuoTokuo
IwasakiIwasakiShanghai
Shanghai
Representative
Representative
OfficeOffice
Address:
Address:
RoomRoom
508, Shanghai
508, Shanghai
International
International
TradeTrade
Center,Center,22012201
Yan-AnYan-AnXi RoadXi RoadShanghai,
Shanghai,
P.R. ofP.R.
China
of China
Telephone:
Telephone:+86-21-6270-3091+86-21-6270-3091
Facsimile:
Facsimile:+86-21-6270-3095+86-21-6270-3095
ChiefChief
Representative:
Representative:
Masataka
Masataka
Murakami
Murakami
Bangkok
Bangkok
Representative
Representative
OfficeOffice
Address:
Address:
19th 19th
FloorFloor,1903,,1903,
AtheneeAtheneeTower,
Tower,
63 63
Wireless
Wireless
Road,Road,
Lumpini,
Lumpini,
Pathumwan,
Pathumwan,
Bangkok
Bangkok
10330,
10330,
ThailandThailand
Telephone:
Telephone:+66-2-168-8796+66-2-168-8796
Facsimile:
Facsimile:+66-2-168-8799+66-2-168-8799
ChiefChief
Representative:
Representative:
Minetaka
Minetaka
KawaiKawai

Hokkaido
Hokkaido

Overseas
Overseas
Subsidiary
Subsidiary
Shinkin
ShinkinInternational
International
Ltd. Ltd.
Address:
Address:
4th Floor,
4th Floor,
RiverRiver
Plate Plate
House,
House,
7-11 7-11
Finsbury
Finsbury
Circus,Circus,LondonLondonEC2MEC2M
7YA, 7YA,
UK UK
Telephone:
Telephone:+44-20-7562-0500+44-20-7562-0500
Facsimile:
Facsimile:+44-20-7256-8544+44-20-7256-8544
Managing
Managing
Director:
Director:
Kengo
Kengo
Kaji KajiTohokuTohokuHokuriku
Hokuriku

NagoyaNagoyaKobe Kobe
OkayamaOkayama
Chugoku
Chugoku
OsakaOsaka
Fukuoka
FukuokaHead Head
OfficeOffice

Shizuoka
Shizuoka

Shikoku
Shikoku

Minami-Kyushu
Minami-Kyushu

Head Head
OfficeOffice
BranchBranchOffice/Subsidiary
Office/Subsidiary

Shinkin
ShinkinCentralCentral
Bank
Bank
Head
Head
OfficeOffice3-7, 3-7,
YaesuYaesu
1-chome,1-chome,Chuo-ku,Chuo-ku,
Tokyo
Tokyo
103-0028,
103-0028,
JapanJapan
Telephone:
Telephone:+81-3-5202-7711+81-3-5202-7711
http://www.shinkin-central-bank.jp
http://www.shinkin-central-bank.jp

77 77

Shinkin Central Bank

3-7, Yaesu 1-chome, Chuo-ku, Tokyo 103-0028, Japan
Telephone: +81-3-5202-7711
http://www.shinkin-central-bank.jp

Printed in Japan