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THE KAGOSHIMA BANK, LTD.
and consolidated subsidiaries
Consolidated Financial Statements for the
Year Ended March 31, 2013, and
Independent Auditor’s Report2THE KAGOSHIMA BANK, LTD. and Consolidated Subsidiaries
Consolidated Balance Sheet
March 31, 2013
Millions of Yen
Thousands of
U.S. Dollars
2013 2012 2013
Assets
Cash and due from banks (Notes 3 and 17) \ 88,937 \ 108,423 $ 945,632
Call loans and bills purchased (Note 17) 21,632 12,466 230,000
Monetary receivables bought 9,946 9,404 105,748
Trading securities (Notes 4 and 17) 182 158 1,934
Money held in trust (Note 5) 7,500 9,964 79,745
Investment securities (Notes 4, 10 and 17) 1,160,445 1,103,906 12,338,596
Loans and bills discounted
(Notes 6, 16 and 17) 2,272,324 2,203,893 24,160,813
Foreign exchange assets (Note 7) 1,358 1,215 14,440
Lease receivables and investments in leases
(Note 10) 19,846 19,563 211,023
Other assets (Note 10) 25,651 26,475 272,740
Tangible fixed assets (Notes 8 and 9) 54,847 55,984 583,170
Intangible fixed assets (Note 8) 8,591 10,788 91,342
Deferred tax assets (Note 19) 611 712 6,497
Customers' liabilities for acceptances and
guarantees (Note 14) 26,154 26,319 278,084
Allowance for doubtful accounts (Note 17) (31,219) (28,313) (331,939)
Total assets \ 3,666,805 \ 3,560,957 $ 38,987,825
See accompanying Notes to Consolidated Financial Statements.3Millions of Yen
Thousands of
U.S. Dollars
2013 2012 2013
Liabilities and Equity
Liabilities:
Deposits (Notes 10, 11 and 17) \ 3,144,798 \ 3,098,416 $ 33,437,516
Negotiable certificates of deposit (Note 17) 68,867 52,980 732,241
Call money and bills sold (Note 17) 20,785 6,822 221,000
Payables under repurchase transactions
(Notes 10 and 17) 32,745 55,964 348,170
Borrowed money (Notes 10, 12 and 17) 44,185 19,720 469,804
Foreign exchange liabilities (Note 7) 23 36 245
Other liabilities 22,943 23,976 243,918
Accrued bonuses to directors and audit &
supervisory board members 56 51 596
Provision for retirement benefits
(Note 13) 1,122 994 11,930
Provision for directors’ and audit &
supervisory board members’ retirement 868 739 9,232
Provision for reimbursement of deposits 586 637 6,235
Provision for contingent losses 240 282 2,556
Deferred tax liabilities (Note 19) 8,310 935 88,354
Deferred tax liabilities for land revaluation
(Notes 2(f) and 19) 8,312 8,597 88,381
Acceptances and guarantees (Note 14) 26,154 26,319 278,084
Total liabilities 3,379,994 3,296,468 35,938,262
Equity (Notes 15 and 21):
Common stock, no par value;
Authorized: 800,000,000 shares
Issued: 210,403,655 shares in 2013 and 2012 18,131 18,131 192,778
Capital surplus 11,217 11,217 119,261
Retained earnings 197,703 191,243 2,102,104
Treasury stock, at cost, 538,735 shares in
2013 and 504,565 shares in 2012 (356) (338) (3,781)
Accumulated other comprehensive
income (loss)
Unrealized gains on available-for-sale
securities (Note 4) 35,656 20,077 379,118
Deferred losses on derivatives under hedge
accounting (295) (360) (3,137)
Land revaluation surplus (Note 2(f)) 14,363 14,820 152,722
Total 276,419 254,790 2,939,065
10,392 9,699 110,498
Minority interests
Total equity 286,811 264,489 3,049,563
Total liabilities and equity \ 3,666,805 \ 3,560,957 $ 38,987,825
See accompanying Notes to Consolidated Financial Statements.4THE KAGOSHIMA BANK, LTD. and Consolidated Subsidiaries
Consolidated Statement of Income
Year Ended March 31, 2013
Millions of Yen
Thousands of
U.S. Dollars
2013 2012 2013
Income:
Interest income and dividends:
Interest on loans and discounts \ 37,959 \ 39,835 $ 403,609
Interest and dividends on securities 10,051 10,895 106,864
Other interest income 86 91 912
Total interest income and dividends 48,096 50,821 511,385
Fees and commissions 11,442 11,476 121,661
Other operating income 16,110 14,468 171,294
Other income 2,717 2,548 28,887
Total income 78,365 79,313 833,227
Expenses:
Interest expenses:
Interest on deposits 1,219 1,504 12,963
Interest on borrowings and rediscounts 158 172 1,683
Interest on repurchase transactions 90 69 957
Other interest expenses 777 1,015 8,259
Total interest expenses 2,244 2,760 23,862
Fees and commissions 2,755 2,823 29,289
Other operating expenses 12,809 10,820 136,192
General and administrative expenses 41,083 42,435 436,826
Transfer to allowance for doubtful accounts 3,874 41,195
Other expenses 2,069 2,719 21,994
Total expenses 64,834 61,557 689,358
Income before income taxes and minority interests 13,531 17,756 143,869
Income taxes:
Current 6,193 6,655 65,850
Deferred (1,089) 1,709 (11,580)
Total income taxes (Note 19) 5,104 8,364 54,270
Net income before minority interests 8,427 9,392 89,599
Minority interests in net income 640 642 6,803
Net income \ 7,787 \ 8,750 $ 82,796
Yen U.S. Dollars
Per share information:
Net income-basic (Note 21) \ 37.10 \ 41.68 $ 0.39
Cash dividends applicable to the year 9.00 8.00 0.10
See accompanying Notes to Consolidated Financial Statements.5THE KAGOSHIMA BANK, LTD. and Consolidated Subsidiaries
Consolidated Statement of Comprehensive Income
Year Ended March 31, 2013
Millions of Yen
Thousands of
U.S. Dollars
2013 2012 2013
NET INCOME BEFORE MINORITY
INTERESTS
\ 8,427 \ 9,392 $ 89,599
OTHER COMPREHENSIVE INCOME (Note 20):
Unrealized gains on available-for-sale securities 15,640 5,131 166,295
Deferred gains on derivatives under hedge
accounting 65 48 691
Land revaluation surplus 1,242
Total other comprehensive income 15,705 6,421 166,986
COMPREHENSIVE INCOME \ 24,132 \ 15,813 $ 256,585
TOTAL COMPREHENSIVE INCOME
ATTRIBUTABLE TO
Owners of the parent \ 23,431 \ 15,154 $ 249,135
Minority interests 701 659 7,450
See accompanying Notes to Consolidated Financial Statements.6THE KAGOSHIMA BANK, LTD. and Consolidated Subsidiaries
Consolidated Statement of Changes in Equity
Year Ended March 31, 2013
Millions ofYen
Accumulated Other Comprehensive Income
Outstanding
Number of
Shares of
Common
Stock
Common
Stock
Capital
Surplus
Retained
Earnings
Treasury
Stock
Unrealized
Gains on
Available
for-sale
Securities
Deferred Gains
(Losses) on
Derivatives
under Hedge
AccountingLandRevaluation
Surplus Total
Minority
Interests
Total
Equity
BALANCE, MARCH 31, 2011 210,403,655 \ 18,131 \ 11,217 \ 184,139 \ (332) \ 14,963 \ (408) \ 13,612 \ 241,322 \ 9,047 \ 250,369
Net income 8,750 8,750 8,750
Cash dividends, 8円.00 per share (1,679) (1,679) (1,679)
Purchases of treasury stock (13,864 shares) (7) (7) (7)
Disposals of treasury stock (1,395 shares) (1) 1 0 0
Reversal of land revaluation surplus 34 34 34
Net change in the year 5,114 48 1,208 6,370 652 7,022
BALANCE, MARCH 31, 2012 210,403,655 18,131 11,217 191,243 (338) 20,077 (360) 14,820 254,790 9,699 264,489
Net income 7,787 7,787 7,787
Cash dividends, 9円.00 per share (1,784) (1,784) (1,784)
Purchases of treasury stock (34,877 shares) (18) (18) (18)
Disposals of treasury stock (707 shares) 0 0 0 0
Reversal of land revaluation surplus 457 457 457
Net change in the year 15,579 65 (457) 15,187 693 15,880
BALANCE, MARCH 31, 2013 210,403,655 \ 18,131 \ 11,217 \ 197,703 \ (356) \ 35,656 \ (295) \ 14,363 \ 276,419 \ 10,392 \ 286,811
Thousands of U.S. Dollars
Accumulated OtherComprehensive Income
Common
Stock
Capital
Surplus
Retained
Earnings
Treasury
Stock
Unrealized
Gains on
Available
for-sale
Securities
Deferred Gains
(Losses)on
Derivatives under
Hedge
AccountingLandRevaluation
Surplus Total
Minority
Interests
Total
Equity
BALANCE, MARCH31, 2012 $ 192,778 $ 119,261 $ 2,033,425 $ (3,596) $ 213,470 $ (3,828) $ 157,576 $ 2,709,086 $ 103,125 $ 2,812,211
Net income 82,796 82,796 82,796
Cash dividends, 0ドル.10 per share (18,969) (18,969) (18,969)
Purchases of treasury stock (34,877 shares) (190) (190) (190)
Disposals oftreasury stock (707 shares) (2) 5 3 3
Reversal ofland revaluation surplus 4,854 4,854 4,854
Net change in the year 165,648 691 (4,854) 161,485 7,373 168,858
BALANCE, MARCH 31, 2013 $ 192,778 $ 119,261 $ 2,102,104 $ (3,781) $ 379,118 $ (3,137) $ 152,722 $ 2,939,065 $ 110,498 $ 3,049,563
See accompanying Notes to Consolidated Financial Statements.7THE KAGOSHIMA BANK, LTD. and Consolidated Subsidiaries
Consolidated Statement of Cash Flows
Year Ended March 31, 2013
Millions of Yen
Thousands of
U.S. Dollars
2013 2012 2013
Cash flows from operating activities:
Income before income taxes and minority interests \ 13,531 \ 17,756 $ 143,869
Adjustments for:
Depreciation 5,495 5,465 58,422
Impairment losses 248 2,639
Increase (decrease) in allowance for doubtful accounts 2,906 (2,717) 30,896
Interest income and dividends recognized on statement
of income (48,096) (50,821) (511,385)
Interest expenses recognized on statement of income 2,244 2,760 23,862
Net loss (gain) on sales or maturities of investment
securities (1,277) 114 (13,577)
Increase in loans and bills discounted (68,432) (82,763) (727,610)
Increase in deposits 46,382 82,481 493,165
Increase in negotiable certificates of deposit 15,887 5,547 168,924
Increase (decrease) in borrowed money 24,465 (27,478) 260,132
Decrease (increase) in due from banks (40) 223 (424)
Decrease (increase) in call loans and bills purchased (9,707) 41,174 (103,212)
Increase (decrease) in call money and bills sold 13,963 (23,445) 148,467
Increase (decrease) in payables under repurchase
transactions (23,219) 14,212 (246,875)
Interest income and dividends received 49,548 51,900 526,828
Interest expenses paid (2,547) (3,190) (27,085)
Decrease (increase) in lease receivables and investments
in leases (282) 41 (3,007)
Other, net (6,401) 3,808 (68,074)
Subtotal 14,668 35,067 155,955
Income taxes paid (5,885) (6,516) (62,565)
Net cash provided by operating activities 8,783 28,551 93,390
Cash flows from investing activities:
Purchases of investment securities (520,003) (349,183) (5,529,011)
Proceeds from sales or maturities of investment securities 493,750 313,141 5,249,871
Net change in money held in trust 2,464 2,442 26,201
Purchases of tangible fixed assets (2,146) (2,382) (22,818)
Proceeds from sales of tangible fixed assets 512 16 5,439
Purchases of intangible fixed assets (1,084) (1,293) (11,532)
Net cash used in investing activities (26,507) (37,259) (281,850)
Cash flows from financing activities:
Dividends paid (1,787) (1,679) (18,997)
Other, net (36) (26) (386)
Net cash used in financing activities (1,823) (1,705) (19,383)
Effect of exchange rate changes on cash and cash
equivalents 21 (2) 227
Net decrease in cash and cash equivalents (19,526) (10,415) (207,616)
Cash and cash equivalents at beginning of year 107,466 117,881 1,142,651
Cash and cash equivalents at end of year (Note 3) \ 87,940 \ 107,466 $ 935,035
See accompanying Notes to Consolidated Financial Statements.8THE KAGOSHIMA BANK, LTD. and Consolidated Subsidiaries
Notes to Consolidated Financial Statements
1. Basis of Presenting Consolidated Financial Statements
The accompanying consolidated financial statements of THE KAGOSHIMA BANK, LTD. (the
"Bank") and consolidated subsidiaries (together, the "Group") have been prepared in accordance
with the provisions set forth in the Japanese Financial Instruments and Exchange Act and its
related accounting regulations, Enforcement Regulation for the Banking Law of Japan and in
accordance with accounting principles generally accepted in Japan, which are different in certain
respects as to the application and disclosure requirements of International Financial Reporting
Standards.
In preparing these consolidated financial statements, certain reclassifications and rearrangements
have been made to the consolidated financial statements issued domestically in order to present
them in a form that is more familiar to readers outside Japan. In addition, certain reclassifications
have been made in the 2012 financial statements to conform to the classifications used in 2013.
The consolidated financial statements are stated in Japanese yen, the currency of the country in
which the Bank is incorporated and operates. The translation of Japanese yen amounts into U.S.
dollar amounts is included solely for the convenience of readers outside Japan and has been made
at the rate of 94円.05 to 1,ドル the approximate rate of exchange at March 31, 2013. Such translation
should not be construed as representations that the Japanese yen amounts could be converted into
U.S. dollars at that or any other rate.
2. Summary of Significant Accounting Policies
(a) Principles of consolidation
The accompanying consolidated financial statements include the accounts of the Bank and its
significant subsidiaries. The number of consolidated subsidiaries as of March 31, 2013 and 2012,
is seven.
Under the control or influence concept, those companies in which the Bank, directly or indirectly,
is able to exercise control over operations are to be fully consolidated.
The consolidated financial statements do not include the accounts of one of the subsidiaries in
2013 and 2012 because the majority of operating profit from that subsidiary was not retained by
the subsidiary (paid out to investors).
Investments in the unconsolidated subsidiaries are stated at cost. If the equity method of
accounting had been applied to the investments in these companies, the effect on the
accompanying consolidated financial statements would not be material.
All significant intercompany balances and transactions have been eliminated in consolidation.
All material unrealized profit included in assets resulting from transactions within the Group is
also eliminated.
Fiscal year-ends of all consolidated subsidiaries are at the end of March.9(b) Cash and cash equivalents
Cash and cash equivalents in the consolidated statement of cash flows comprise cash on hand and
due from The Bank of Japan.
(c) Trading securities
Trading securities are stated at fair value at the fiscal year-ends. Related gains or losses, both
realized and unrealized, are included in current earnings. Accrued interest on trading securities is
included in other assets.
(d) Investment securities
Debt securities for which the Group has ability to hold to maturity are stated at amortized cost.
Marketable securities are carried at fair value as available-for-sale securities, with the net
unrealized gains or losses reported as a separate component of shareholders’ equity, net of
applicable income taxes. Available-for-sale securities whose fair values cannot be reliably
determined are stated at the moving-average cost or amortized cost. The carrying amounts of
individual investment securities are reduced, if necessary, through write-downs to reflect
other-than-temporary impairments in value. For other-than-temporary declines in fair value,
securities are reduced to net realizable value by a charge to income. Accrued interest on securities
is included in other assets. Funds entrusted to trust banks for securities (included in "Money held
in trust") of the Bank are stated at fair value.
(e) Derivatives and hedge accounting
The Bank uses swaps, forward and option contracts and other types of derivative contracts. These
derivative instruments are used for trading purposes to generate revenues and fee income, and to
hedge exposures arising from fluctuations in interest and foreign exchange rates.
Derivatives are carried at fair value, with the unrealized and realized gains and losses recorded in
current earnings.
(1) Hedging against interest rate changes
The Bank applies deferred hedge accounting based on the rules of the Japanese Institute of
Certified Public Accountants (the "JICPA") Industry Audit Committee Report No. 24, "Accounting
and Auditing Treatments on the Application of Accounting Standards for Financial Instruments in
the Banking Industry" for interest rate derivatives to manage interest rate risk from various
financial assets and liabilities as a whole.
Under this rule, the effectiveness of cash flow hedges is assessed based on the correlation between
a base interest rate index of the hedged cash flow and that of the hedging instrument.
(2) Hedging against currency fluctuations
The Bank applies deferred hedge accounting based on the rules of the JICPA Industry Audit
Committee Report No. 25, "Treatment for Accounting and Auditing of Application of Accounting
Standard for Foreign Currency Transactions in Banking Industry" for funding swap transactions
and currency swap transactions related to lending or borrowing in different currencies.
Pursuant to the rules, the Bank assesses the effectiveness of funding swap transactions and
currency swap transactions executed for the purpose of offsetting the risk of changes in currency
exchange rates by verifying that there are foreign-currency monetary claims and debts
corresponding to the foreign-currency positions.10(f) Tangible fixed assets
(1) Tangible fixed assets are stated at cost less accumulated depreciation.
Tangible fixed assets of the Bank are depreciated using the declining-balance method over the
following estimated useful lives of the assets, except for buildings acquired on or after April 1,
1998, which have been depreciated using the straight-line method.
Buildings 19 years to 50 years
Other 2 years to 20 years
Tangible fixed assets of the consolidated subsidiaries are principally depreciated by the
straight-line method over the estimated useful lives of the assets.
Change of accounting policy which is not easily distinguished from change of accounting
estimate-Effective April 1, 2012, as a result of the revision of Japanese corporate tax law, the
Bank and its consolidated domestic subsidiaries changed their depreciation method for tangible
fixed assets acquired on or after April 1, 2012, to the method stipulated under the revised corporate
tax law. The effect of this change was immaterial.
(2) Land revaluation
Under the "Law of Land Revaluation," the Bank elected a one-time revaluation of its own-use land
to a value based on real estate appraisal information as of March 31, 1998.
The resulting land revaluation surplus is stated as a component of equity, and represents the total
of unrealized appreciation of land, net of income taxes, and unrealized losses on the land. There
was no effect on the consolidated statement of income. Continuous readjustment is not permitted
unless the land value subsequently declines significantly such that the amount of the decline in
value should be removed from the land revaluation surplus account and related deferred tax
liabilities. At March 31, 2013 and 2012, the difference in the carrying values of land used for the
banking business after reassessment of the current fair value of such land at the respective
year-ends amounted to 14,593円 million (155,161ドル thousand) and 14,123円 million, respectively.
(g) Intangible fixed assets
Intangible fixed assets mainly consisted of computer software developed or obtained for internal
use and are amortized using the straight-line method over the estimated useful lives, mainly five
years.
(h) Long-lived assets
The Group reviews its long-lived assets for impairment whenever events or changes in
circumstances indicate the carrying amount of an asset or asset group may not be recoverable.
An impairment loss would be recognized if the carrying amount of an asset or asset group exceeds
the sum of the undiscounted future cash flows expected to result from the continued use and
eventual disposition of the asset or asset group. The impairment loss would be measured as the
amount by which the carrying amount of the asset exceeds its recoverable amount, which is the
higher of the discounted cash flows from the continued use and eventual disposition of the asset or
the net selling price at disposition.
(i) Allowance for doubtful accounts
The allowance for doubtful accounts of the Bank is established to cover future credit losses in
accordance with the internal rules for self-assessment of asset quality.
The allowance for doubtful accounts is calculated in accordance with the Bank’s internal rules
based on the "Practical Guidelines for Audits of the Self-Assessment of Assets of Financial11Institutions Including Banks, Write-Down and Allowance for Doubtful Accounts" (Report No. 4 of
the Ad Hoc Committee for the Audit of Banks, etc., of JICPA).
For claims to borrowers who are legally bankrupt and virtually bankrupt, an allowance has been
provided based on the net of amounts exceeding the expected collectible amounts through the
disposal of collateral or execution of guarantees. For claims to borrowers who are possibly
bankrupt, an allowance has been provided for the loan losses at the amounts considered to be
necessary based on an overall solvency assessment of the borrowers and expected collectible
amounts through the disposal of collateral or execution of guarantees. For claims to large-lot
borrowers who are classified as "Need attention," whose loans are classified as restructured loans
and whose future cash flows of principal and interest are reasonably estimated, an allowance is
provided for as the difference between the present value of expected future cash flows discounted
at the contracted interest rate and the carrying amount of the claims. In cases where it is difficult
to reasonably estimate future cash flows, an allowance is provided based on the estimated credit
losses within the remaining loan terms calculated by the Bank. For other claims, an allowance is
provided based on historical loan loss experience.
All claims are assessed by the Bank’s operating divisions in accordance with the Bank’s internal
rules for the self-assessment of asset quality. The inspection division, which is independent from
operating divisions, conducts audits of these assessments and an allowance is provided based on
the results of these audits.
Regarding the consolidated subsidiaries, a general allowance for loan losses is provided in the
amount deemed necessary based on the historical loan-loss ratio, and for specific claims an
allowance is provided in the amount deemed uncollectible based on the respective assessments.
(j) Accrued bonuses to directors and audit & supervisory board members
Bonuses to directors and audit & supervisory board members are accrued at the end of the year to
which such bonuses are attributable.
(k) Provision for retirement benefits
The Group accounts for the provision for retirement benefits based on the projected benefit
obligations and plan assets at the consolidated balance sheet date. Prior service cost is amortized
using the straight-line method over 10 years as a certain term within the employees’ average
remaining service period. Net actuarial gain and loss is amortized using the declining-balance
method over 10 years as a certain term within the employees’ average remaining service period
commencing from the next fiscal year after incurrence.
(l) Provision for directors’ and audit & supervisory board members’ retirement benefits
Retirement benefits to directors and audit & supervisory board members are provided at the
amount that would be required if all directors and audit & supervisory board members retired at the
consolidated balance sheet date.
(m) Provision for reimbursement of deposits
Provision for reimbursement of deposits that were derecognized as liabilities under certain
conditions is provided for possible losses on future claims of withdrawal based on the historical
reimbursement experience.
(n) Provision for contingent losses
Provision for contingent losses is provided for possible losses from contingent events related to the12enforcement of the "responsibility-sharing system," and is calculated by estimation of future
burden charges and other payments to the Credit Guarantee Institution.
(o) Leases
In March 2007, the Accounting Standards Board of Japan (the "ASBJ") issued ASBJ Statement No.
13, "Accounting Standard for Lease Transactions," which revised the previous accounting standard
for lease transactions issued in June 1993. The revised accounting standard for lease transactions
is effective for fiscal years beginning on or after April 1, 2008.
Under the previous accounting standard, finance leases that were deemed to transfer ownership of
the leased property to the lessee were to be treated as sales. However, other finance leases were
permitted to be accounted for as operating lease transactions if certain "as if sold" information was
disclosed in the notes to the lessor’s financial statements. The revised accounting standard
requires that all finance leases that are deemed to transfer ownership of the leased property to the
lessee should be recognized as lease receivables, and all finance leases that are not deemed to
transfer ownership of the leased property to the lessee should be recognized as investments in
leases.
The Group applied the revised accounting standard effective April 1, 2008.
Lease revenue and lease costs are recognized over the lease period.
(p) Foreign currency translation
Assets and liabilities denominated in foreign currencies are translated into Japanese yen at the
exchange rates at the balance sheet date. Revenues and expenses are translated at the exchange
rates at transaction dates. Gains or losses resulting from foreign currency translation are included
in the determination of net income.
(q) Per share information
Basic net income per share is computed by dividing net income available to common shareholders
by the weighted-average number of common shares outstanding for the period.
Cash dividends per share presented in the accompanying consolidated statement of income are
dividends applicable to the respective years, including dividends to be paid after the end of the
year.
(r) Income taxes
The provision for income taxes is computed based on the pretax income included in the
consolidated statement of income. The asset and liability approach is used to recognize deferred
tax assets and liabilities for the expected future tax consequences of temporary differences between
the carrying amounts and the tax bases of assets and liabilities. Deferred taxes are measured by
applying currently enacted tax laws to the temporary differences.
A valuation allowance is provided for any portion of the deferred tax assets if it is considered more
likely than not that they will not be realized.
(s) New accounting pronouncements
Accounting standard for retirement benefits-On May 17, 2012, the ASBJ issued ASBJ
Statement No. 26, "Accounting Standard for Retirement Benefits," and ASBJ Guidance No. 25,
"Guidance on Accounting Standard for Retirement Benefits," which replaced the Accounting13Standard for Retirement Benefits that had been issued by the Business Accounting Council in 1998,
with an effective date of April 1, 2000, and the other related practical guidance, and followed by
partial amendments from time to time through 2009.
Major changes are as follows:
(a) Treatment in the balance sheet
Under the current requirements, actuarial gains and losses and past service costs that are yet to be
recognized in profit or loss are not recognized in the balance sheet, and the difference between
retirement benefit obligations and plan assets (hereinafter, "deficit or surplus"), adjusted by such
unrecognized amounts, is recognized as a liability or asset.
Under the revised accounting standard, actuarial gains and losses and past service costs that are yet
to be recognized in profit or loss shall be recognized within equity (accumulated other
comprehensive income), after adjusting for tax effects, and any resulting deficit or surplus shall be
recognized as a liability (liability for retirement benefits) or asset (asset for retirement benefits).
(b) Treatment in the statement of income and the statement of comprehensive income
The revised accounting standard does not change how to recognize actuarial gains and losses and
past service costs in profit or loss. Those amounts would be recognized in profit or loss over a
certain period no longer than the expected average remaining working lives of the employees.
However, actuarial gains and losses and past service costs that arose in the current period and have
not yet been recognized in profit or loss shall be included in other comprehensive income and
actuarial gains and losses and past service costs that were recognized in other comprehensive
income in prior periods and then recognized in profit or loss in the current period shall be treated as
reclassification adjustments.
(c) Amendments relating to the method of attributing expected benefit to periods and relating to the
discount rate and expected future salary increases
The revised accounting standard also made certain amendments relating to the method of attributing
expected benefit to periods and relating to the discount rate and expected future salary increases.
This accounting standard and the guidance for (a) and (b) above are effective for the end of annual
periods beginning on or after April 1, 2013, and for (c) above are effective for the beginning of
annual periods beginning on or after April 1, 2014, or for the beginning of annual periods beginning
on or after April 1, 2015, subject to certain disclosure in March 2015, both with earlier application
being permitted from the beginning of annual periods beginning on or after April 1, 2013.
However, no retrospective application of this accounting standard to consolidated financial
statements in prior periods is required.
The Bank expects to apply the revised accounting standard for (a) and (b) above from the end of the
annual period beginning on April 1, 2013, and for (c) above from the beginning of the annual period
beginning on April 1, 2014, and is in the process of measuring the effects of applying the revised
accounting standard in future applicable periods.
3. Cash and Cash Equivalents
A reconciliation of the cash and cash equivalent balances on the consolidated statement of cash
flows and the account balances on the consolidated balance sheet was as follows:
Millions of Yen
Thousands of
U.S. Dollars
2013 2012 2013
Cash and due from banks \ 88,937 \ 108,423 $ 945,632
Less: due from banks other than
The Bank of Japan (997) (957) (10,597)
Cash and cash equivalents \ 87,940 \ 107,466 $ 935,035144. Trading Securities and Investment Securities
Trading securities consisted of national government bonds and local government bonds.
At March 31, 2013 and 2012, trading securities were as follows:
Millions of Yen
Thousands of
U.S. Dollars
2013 2012 2013
National government bonds \ 17 \ 29 $ 181
Local government bonds 165 129 1,753
Total \ 182 \ 158 $ 1,934
At March 31, 2013 and 2012, investment securities consisted of the following:
Millions of Yen
Thousands of
U.S. Dollars
2013 2012 2013
National government bonds \ 468,817 \ 458,645 $ 4,984,760
Local government bonds 89,624 98,925 952,936
Corporate bonds 450,453 428,522 4,789,509
Equity securities 68,613 55,772 729,534
Other 82,938 62,042 881,857
Total \ 1,160,445 \ 1,103,906 $ 12,338,596
At March 31, 2013 and 2012, carrying amounts of trading securities and the related net unrealized
gains or losses included in current earnings were as follows:
Millions of Yen
Thousands of
U.S. Dollars
2013 2012 2013
Carrying
amounts
Unrealized
gains
Carrying
amounts
Unrealized
gains
Carrying
amounts
Unrealized
gains
Trading securities \ 182 \ 0 \ 158 \ (1) $ 1,934 $ 1
At March 31, 2013 and 2012, gross unrealized gains and losses for available-for-sale securities
with fair value were summarized as follows:
Millions of YenCostGross
unrealized
gains
Gross
unrealized
losses Fair value
At March 31, 2013:
Bonds:
National government bonds \ 456,008 \ 12,809 \ \ 468,817
Local government bonds 87,366 2,258 89,624
Corporate bonds 442,537 7,990 (74) 450,453
Equity securities 37,277 29,832 (829) 66,280
Other 79,047 2,653 (93) 81,607
Total \ 1,102,235 \ 55,542 \ (996) \ 1,156,78115Millions of YenCostGross
unrealized
gains
Gross
unrealized
losses Fair value
At March 31, 2012:
Bonds:
National government bonds \ 451,001 \ 7,744 \ (100) \ 458,645
Local government bonds 96,796 2,129 98,925
Corporate bonds 423,911 4,765 (154) 428,522
Equity securities 37,055 18,082 (1,535) 53,602
Other 60,563 514 (784) 60,293
Total \ 1,069,326 \ 33,234 \ (2,573) \ 1,099,987
Thousands of U.S. DollarsCostGross
unrealized
gains
Gross
unrealized
losses Fair value
At March 31, 2013:
Bonds:
National government bonds $ 4,848,563 $ 136,197 $ $ 4,984,760
Local government bonds 928,935 24,001 952,936
Corporate bonds 4,705,341 84,960 (792) 4,789,509
Equity securities 396,353 317,196 (8,815) 704,734
Other 840,480 28,209 (995) 867,694
Total $ 11,719,672 $ 590,563 $ (10,602) $ 12,299,633
At March 31, 2013 and 2012, net unrealized gains on available-for-sale securities, net of applicable
income taxes and minority interests, recorded in a separate component of shareholders’ equity on
the accompanying consolidated balance sheet were as follows:
Millions of Yen
Thousands of
U.S. Dollars
2013 2012 2013
Unrealized gains \ 54,546 \ 30,661 $ 579,961
Less: applicable income taxes (18,794) (10,549) (199,826)
Less: minority interests portion (96) (35) (1,017)
Net unrealized gains in shareholders’
equity \ 35,656 \ 20,077 $ 379,118
During the years ended March 31, 2013 and 2012, the Group sold available-for-sale securities and
recorded gains of 4,161円 million (44,248ドル thousand) and 1,819円 million, respectively, and losses of
2,862円 million (30,428ドル thousand) and 869円 million, respectively, on the accompanying
consolidated statement of income.
5. Money Held in Trust16The carrying amounts and unrealized gains of money held in trust at March 31, 2013 and 2012,
were as follows:
(a) Money held in trust for investment
Millions of Yen
Thousands of
U.S. Dollars
2013 2012 2013
Carrying amounts \ 7,500 \ 9,964 $ 79,745
Unrealized gains recognized in income 0 71 3
(b) Money held in trust held to maturity
None.
(c) Other money held in trust (money held in trust other than held for investment or held to
maturity)
None.
6. Loans and Bills Discounted
At March 31, 2013 and 2012, loans and bills discounted consisted of the following:
Millions of Yen
Thousands of
U.S. Dollars
2013 2012 2013
Bills discounted \ 15,624 \ 15,578 $ 166,126
Loans on notes 152,771 150,702 1,624,355
Loans on deeds 1,813,218 1,757,137 19,279,294
Overdrafts 290,711 280,476 3,091,038
Total \ 2,272,324 \ 2,203,893 $ 24,160,813
The loans and bills discounted include "loans to borrowers in bankruptcy" totaling 5,001円 million
(53,170ドル thousand) and 4,991円 million as of March 31, 2013 and 2012, respectively, as well as
"past due loans" totaling 26,991円 million (286,984ドル thousand) and 26,256円 million as of March 31,
2013 and 2012, respectively. "Loans to borrowers in bankruptcy" are loans to borrowers who are
legally bankrupt and are placed on nonaccrued status. "Past due loans" include loans classified as
"possible bankruptcy" and "virtual bankruptcy" under the Bank’s self-assessment guidelines and
are loans on which accrued interest income is not recognized, excluding loans to bankrupt
borrowers and loans on which interest payments are deferred in order to support the borrower’s
recovery from financial difficulties.
In addition to "past due loans," certain other loans classified as "in need of caution" under the
Bank’s self-assessment guidelines include "accruing loans contractually past due for three months
or more," which are loans on which the principal and/or interest is three months or more past due
but exclude "loans to borrowers in bankruptcy" or "past due loans." There was no "accruing
loans contractually past due for three months or more" as of march 31, 2013. The balance of
"accruing loans contractually past due for three months or more" as of March 31, 2012, was 38円
million.
"Restructured loans" are loans where the Bank has restructured lending conditions, such as by a
reduction of the original interest rate, forbearance of interest payments, principal repayments, or
renunciation of claims to support the borrowers’ reorganization, but exclude "loans to borrowers in
bankruptcy," "past due loans" and "accruing loans contractually past due for three months or
more." The outstanding balances of "restructured loans" as of March 31, 2013 and 2012, were
25,684円 million (273,089ドル thousand) and 28,744円 million, respectively.
Total amount of assets, which consisted of "loans to borrowers in bankruptcy," "past due loans,"17"accruing loans contractually past due for three months or more" and "restructured loans" as of
March 31, 2013 and 2012, were 56,956円 million (605,590ドル thousand) and 60,029円 million,
respectively. The allowance for doubtful accounts is not deducted from the amounts of loans
shown in the above.
Bills discounted are treated as secured lending transactions. As of March 31, 2013 and 2012, the
Bank had the right by contract or custom to sell or repledge bills discounted and foreign exchange
bills bought, and their total face value was 15,626円 million (166,151ドル thousand) and 15,578円
million, respectively.
7. Foreign Exchange
At March 31, 2013 and 2012, foreign exchange assets and liabilities consisted of the following:
Millions of Yen
Thousands of
U.S. Dollars
2013 2012 2013
Assets:
Due from banks \ 1,159 \ 1,076 $ 12,324
Foreign bills of exchange purchased 2 1 25
Foreign bills of exchange receivable 197 138 2,091
Total \ 1,358 \ 1,215 $ 14,440
Liabilities:
Foreign bills of exchange sold \ 8 \ 18 $ 81
Foreign bills of exchange payable 15 18 164
Total \ 23 \ 36 $ 245
8. Tangible Fixed Assets and Intangible Fixed Assets
At March 31, 2013 and 2012, the major classifications of tangible fixed assets and intangible fixed
assets were as follows:
Millions of Yen
Thousands of
U.S. Dollars
Tangible fixed assets 2013 2012 2013
Buildings \ 35,939 \ 36,153 $ 382,131
Land 36,966 37,135 393,051
Construction in progress 18 80 190
Other 15,315 15,597 162,828
Less: accumulated depreciation
88,238 88,965 938,200
(33,391) (32,981) (355,030)
Total \ 54,847 \ 55,984 $ 583,170
Intangible fixed assets
Software \ 8,437 \ 10,501 $ 89,713
Other 154 287 1,629
Total \ 8,591 \ 10,788 $ 91,342
9. Fixed Asset Impairment Losses18The bank wrote down the carrying amounts to the recoverable amounts and recognized
impairment losses for the following assets for the year ended March 31, 2013:
Year ended March 31, 2013
Purpose
of use Area Items Type
Millions ofYenThousands of
U.S. Dollars
In use Kagoshima 4 Land and buildings \ 160 $ 1,707
Not in use Kagoshima 18 Land and buildings 70 742
Outside of
Kagoshima 5 Land and buildings 18 190
Total \ 248 $ 2,639
The Bank groups assets by branch, which is a minimum unit for managerial accounting. The
Bank treats each consolidated subsidiary as a unit for asset grouping.
The recoverable value is calculated based on the real estate appraisal value less the estimated cost
of disposal.
10. Assets Pledged
At March 31, 2013 and 2012, assets pledged as collateral were as follows:
Millions of Yen
Thousands of
U.S. Dollars
2013 2012 2013
Investment securities \ 336,862 \ 314,657 $ 3,581,738
Investment in leases 1,978 2,752 21,027
Other 3,037 2,918 32,296
At March 31, 2013 and 2012, the liabilities related to the above pledged assets were as follows:
Millions of Yen
Thousands of
U.S. Dollars
2013 2012 2013
Deposits \ 10,853 \ 9,926 $ 115,400
Borrowed money 41,596 17,088 442,275
Payables under repurchase
transaction 32,745 55,964 348,170
In addition, securities totaling 19,657円 million (209,001ドル thousand) and 34,822円 million at March
31, 2013 and 2012, respectively, were pledged as collateral for the settlement of exchange,
derivatives and other transactions.
11. Deposits
At March 31, 2013 and 2012, deposits consisted of the following:
Millions of Yen
Thousands of
U.S. Dollars
2013 2012 2013
Demand deposits \ 1,885,867 \ 1,893,234 $ 20,051,751
Time deposits 1,234,560 1,182,746 13,126,630
Other 24,371 22,436 259,135
Total \ 3,144,798 \ 3,098,416 $ 33,437,5161912. Borrowed Money
At March 31, 2013, the annual maturities of borrowed money, which were due through March
2018 with an average interest rate of 0.23% per annum, were as follows:
Years ending March 31,
Millions ofYenThousands of
U.S. Dollars
2014 \ 39,514 $ 420,134
2015 2,111 22,441
2016 1,436 15,271
2017 781 8,304
2018 329 3,502
Total \ 44,171 $ 469,652
Apart from borrowed money, lease obligations are included in "Other liabilities."
At March 31, 2013, the annual maturities of lease obligations, which were due through March
2018 with an average interest rate of 2.07% per annum, were as follows:
Years ending March 31,
Millions ofYenThousands of
U.S. Dollars
2014 \ 12 $ 126
2015 12 128
2016 11 12020172018
Total \ 35 $ 374
13. Employee Retirement Benefits
The Bank has a cash-balance type pension plan and unfunded retirement benefit plans.
Consolidated subsidiaries have unfunded retirement benefit plans.
The following table reconciles the benefit liability and net periodic retirement benefit expenses as
of and for the years ended March 31, 2013 and 2012:
Millions of Yen
Thousands of
U.S. Dollars
2013 2012 2013
Reconciliation of benefit liability:
Projected benefit obligation \ (23,711) \ (22,478) $ (252,114)
Fair value of pension plan assets at year-end 25,568 23,573 271,858
1,857 1,095 19,744
Unrecognized actuarial differences 4,894 5,827 52,033
Unrecognized prior service cost of retroactive
benefits granted by plan amendment 683 474 7,264
Net amounts of provision for retirement benefits
recognized on the consolidated balance sheet \ 7,434 \ 7,396 $ 79,041
Balance sheet presentation:
Prepaid pension cost (other assets) \ 8,556 \ 8,390 $ 90,971
Provision for retirement benefits \ (1,122) \ (994) $ (11,930)20Millions of Yen
Thousands of
U.S. Dollars
2013 2012 2013
Components of net periodic retirement benefit
expenses:
Service cost \ 819 \ 798 $ 8,711
Interest cost 404 441 4,291
Expected return on pension plan assets (214) (237) (2,272)
Amortization of prior service cost (209) (209) (2,227)
Amortization of actuarial differences 1,200 1,131 12,764
Net periodic retirement benefit expense \ 2,000 \ 1,924 $ 21,267
Major assumptions used in the calculation of the above information for the years ended March 31,
2013 and 2012, were as follows:
2013 2012
Discount rate 1.4% 1.8%
Expected rate of return on pension plan assets:
Defined benefit pension plan 0.5% 0.5%
Trusts for retirement benefits 2.5% 2.5%
Amortization of prior service cost 10 years 10 years
Amortization of actuarial differences 10 years 10 years
14. Acceptances and Guarantees
The Bank provides guarantees for the liabilities of its customers for payments of loans or other
liabilities to other financial institutions. As a contra account, "Customers’ liabilities for
acceptances and guarantees" are shown as assets on the accompanying consolidated balance sheet
indicating the Bank’s right of indemnity from the customers.
15. Equity
Japanese banks are subject to the Banking Law and the Companies Act of Japan (the "Companies
Act"). The significant provisions in the Banking Law and the Companies Act that affect financial
and accounting matters are summarized below:
(a) Dividends
Under the Companies Act, companies can pay dividends at any time during the fiscal year in
addition to the year-end dividend upon resolution at the shareholders’ meeting. For companies
that meet certain criteria, such as (1) having a board of directors, (2) having independent auditors,
(3) having an audit & supervisory board, and (4) the term of service of the directors is prescribed as
one year rather than two years of normal term by its articles of incorporation, the board of directors
may declare dividends (except for dividends-in-kind) at any time during the fiscal year if the
company has prescribed so in its articles of incorporation. The Bank meets all the above criteria.
The Companies Act permits companies to distribute dividends-in-kind (noncash assets) to
shareholders subject to certain limitations and additional requirements.
Semiannual interim dividends may also be paid once a year upon resolution by the board of
directors if the articles of incorporation of the company so stipulate. The Companies Act and the
Banking Law provide certain limitations on the amounts available for dividends or the purchase of
treasury stock.
(b) Increases/decreases and transfer of common stock, reserve and surplus
The Banking Law requires that an amount equal to 20% of dividends must be appropriated as a
legal reserve (a component of retained earnings) or as additional paid-in capital (a component of21capital surplus) depending on the equity account charged upon the payment of such dividends until
the aggregate amount of legal reserve and additional paid-in capital equals 100% of capital stock.
Under the Companies Act, the total amount of additional paid-in capital and legal reserve may be
reversed without limitation. The Companies Act also provides that capital stock, legal reserve,
additional paid-in capital, other capital surplus and retained earnings can be transferred among the
accounts under certain conditions upon resolution of the shareholders.
(c) Treasury stock and treasury stock acquisition rights
The Companies Act also provides for companies to purchase treasury stock and dispose of such
treasury stock by resolution of the board of directors. The amount of treasury stock purchased
cannot exceed the amount available for distribution to the shareholders, which is determined by
specific formula. Under the Companies Act, stock acquisition rights are presented as a separate
component of equity. The Companies Act also provides that companies can purchase both
treasury stock acquisition rights and treasury stock. Such treasury stock acquisition rights are
presented as a separate component of equity or deducted directly from stock acquisition rights.
16. Loan Commitments
Contracts for overdraft facilities and loan commitment limits are contracts that the Bank makes
with customers up to prescribed limits in response to customers’ loan applications as long as there
is no violation of any condition in the contracts. The amount of unused commitments at March
31, 2013 and 2012, was 602,182円 million (6,402,790ドル thousand) and 589,777円 million,
respectively, and the amount of unused commitments whose original contract terms are within one
year or unconditionally cancelable at any time at March 31, 2013 and 2012, was 597,142円 million
(6,349,202ドル thousand) and 581,268円 million, respectively.
Since many of these commitments expire without being drawn down, the unused amount does not
necessarily represent a future cash requirement. Most of these contracts have conditions that
allow the Bank to refuse customers’ loan applications or decrease the contract limits for legitimate
reasons (e.g., changes in financial situation, deterioration in customers’ creditworthiness). At the
inception of the contracts, the Bank obtains real estate, securities, etc., as collateral if considered to
be necessary. Subsequently, the Bank performs a periodic review of customers’ business results
based on internal rules and takes necessary measures to reconsider conditions in the contracts
and/or require additional collateral and guarantees.
17. Financial Instruments and Related Disclosures
(a) Policy on financial instruments
The main business of the Group is banking operations, which consists of deposit-taking and
lending services, securities investment, etc. Additionally, the Group provides other financial
services, such as leasing services.
Accordingly, the Bank holds financial assets and liabilities that are subject to interest rate
fluctuations and conducts Asset-Liability Management (ALM) in order to minimize any
unfavorable impacts from interest rate fluctuations. The Bank also conducts derivative
transactions as part of its ALM.
(b) Nature and extent of risks arising from financial instruments
The main financial instruments that the Group has are as follows:
The Group provides loans mainly to domestic corporations and individual customers. Loans are
exposed to credit risk, which represents losses on defaults caused by deterioration in a borrower’s
financial condition. Moreover, fixed interest rate loans are exposed to interest rate risks.22The Group has mainly the following securities: national government bonds, local government
bonds, corporate bonds and equity securities. These securities are exposed to interest rate risks,
market price risks, foreign exchange risks and credit risks.
The Bank handles deposits and negotiable certificates of deposit from customers. These deposits
are exposed to interest rate risks.
Call money is exposed to liquidity risk, which may lead the Bank to face difficulties in raising
necessary funds under certain circumstances.
The Group conducts derivative transactions mainly to manage market risks of loans and securities,
etc., and partly applies hedge accounting to them.
(c) Risk management for financial instruments
(1) Credit risk management
As a basis of credit risk management, the Bank periodically monitors the debtors’ financial status.
This checking system is called the "Monitoring System of Customers."
The Bank has established a "Lending Policy" to advance the credit risk control systems for
individual accounts and to enhance the effectiveness of these credit portfolio management
measures. In addition, the Bank assists debtors, which have problems in their financial conditions,
and guides their management in financial aspects.
To enhance its risk management system, the Bank has established a system of checks and balances
in its credit risk management operations by separating the Corporate Risk Management Department
from the Credit & Investment Planning Department. In addition, regarding business loans, the
Corporate Risk Management Department is responsible for measuring credit risks and planning a
credit rating system.
Corporate credit rates are decided by the Monitoring System of Customers with a financial support
system called "Key Man." The Monitoring System of Customers gives corporate credit rates with
internal standards based on actual financial or nonfinancial conditions and decides the credit rating
classification, lending policies and lending rates according to the corporate credit rates.
The Credit Risk Management Department reports the management situation of the credit portfolio
to the Risk Management Committee and the ALM Committee regularly or as needed, and the
agenda is reported to the Board of Directors.
Regarding credit examinations and lending judgment on individual transactions, the Bank
establishes a "Lending Policy," which determines the basic lending policies, individual lending
criterion and, to prevent the concentration of lending, conducts credit examinations in accordance
with the policy.
(2) Market risk management
The Bank recognizes the importance of appropriate market risk management to attain its purpose.
Therefore, its basic policy is to understand the market risk management situation precisely and to
take appropriate business risks by establishing an appropriate market risk management system that
enables it to manage and take certain market risks.
The Bank has separated its departments into the Market Department (front office), the Office
Management Department (back office) and the Risk Management Department (middle office), and23has established an effective mutual monitoring system.
Moreover, the Bank conducts strict operational management with retention limits, Value at Risk
(VaR) limits and loss limits, which are decided by the Executive Board on a semiannual basis.
The middle office reports to directors on a daily basis and to the Risk Management Committee on a
monthly basis on the status of risks related to market transactions, such as retention limits,
unrealized gains or losses, Basis Point Value of the securities portfolio, VaR, etc. The study
results of the Risk Management Committee are reported to the Board of Directors.
The ALM Committee monitors market risks, including interest risk of bank accounting in terms of
comprehensive management of assets and liabilities and studies hedging strategies based on the
financial environment and market forecasts.
(Quantitative information of market risk)
1) Financial instruments held for trading purposes
The Bank has set upper holding limits for trading securities and fund trusts. As of March 31,
2013 and 2012, the limits were 10,000円 million (106,326ドル thousand) for trading securities and
14,000円 million (148,857ドル thousand) for fund trusts. For trading securities, the Bank has not set
an allowable potential loss amount to smoothly trade securities with customers. The Bank holds
fund trusts to earn profit by taking advantage of short-term fluctuations in the market or
discrepancies in interest rates, currency exchange rates or other market indices in different markets.
In order to manage risks, the Bank has set an allowable potential loss amount for fund trusts, which
was 300円 million (3,190ドル thousand) and 450円 million as of March 31, 2013 and 2012, respectively.
2) Financial instruments held for other than trading purposes
(a) Management of interest rate risks
The main financial instruments that are affected by interest rate risks in the Bank are "Loans and
bills discounted," bonds within "Securities," "Deposits" and interest rate swaps of "Derivative
transactions."
The Bank has computed the VaR of these financial assets and liabilities with the
variance-covariance method and uses that method for quantitative analysis of interest rate risk
management. The assumptions for computing VaR are based on a 60-day holding period, 99%
confidence level and a five-year observation period. The aggregate amount of interest rate risks
(value of estimated record of losses) was 10,100円 million (107,390ドル thousand) and 9,000円 million
as of March 31, 2013 and 2012, respectively. The Bank conducts back testing to verify the
reliability of VaR by monthly monitoring and analysis. The results support the reliability of the
Bank’s model, which has captured interest rate risks with sufficient accuracy.
The Bank has computed interest rate risks with core deposits estimated by the core deposits
measurement model. In this model, the Bank estimates the amount of core deposits from a shift
of the lower 99th percentile of deposit decrease in the future distribution of demand deposits. The
distribution is computed by a linear regression model and a future interest rate scenario, and the
linear regression model uses the one-month Tokyo Interbank Offered Rate as an explanatory
variable.
The Bank conducts back testing to verify the reliability of the core deposits measurement model by
comparing core deposits expectations and core deposits actual values, which are measured with the
core deposits measurement model. The results support the reliability of the Bank’s model, which
has captured core deposits movements with sufficient accuracy.
The VaR and the core deposits measurement model represent the amount of interest rate risks and
core deposits arising with a certain probability using a statistical methodology based on historical24interest rate fluctuations and the relationship between interest rate fluctuations and deposit
fluctuations. It may not be able to capture the interest rate risks and movements of core deposits
arising under drastic market movements beyond normal estimates.
(b)Management of market price risks
The Bank uses VaR for quantitative analysis of market price risk related to trading securities in
"Securities." The assumptions for computing VaR include a 60-day holding period (regarding a
part of asset, for example, cross-shareholdings is 125-day), a 99% confidence level and a one-year
observation period. The VaR was 26,000円 million (276,449ドル thousand) and 16,300円 million as of
March 31, 2013 and 2012, respectively.
The Bank conducts research to compare the VaR calculated using the model with gains or losses,
which are assumed to have been incurred when the portfolio was fixed. According to the results
of the research, it is believed that the measurement model used is adequate to capture market risk.
It should be noted that VaR measures the amount of market risk at certain probability levels
statistically calculated based on historical market fluctuations, and therefore, there may be cases
where market risk cannot be captured in such situations when market conditions change
dramatically beyond what was experienced historically.
(3) Liquidity risk management
The financing condition of the Bank is stable because the Bank raises most of its operational funds
from deposits.
The Financing Management Department, which is in the Market Financing Department, monitors
the Bank’s financing conditions on a daily, weekly and monthly basis and conducts adequate
market funding as needed.
The Risk Management Department, which is independent from the Financing Management
Department, monitors the Bank’s financing conditions on a daily basis, and endeavors to secure
available funding methods, such as preparation of market funding with holding securities to prepare
for contingencies.
The monitoring results of financing and market liquidity risks are reported to the Risk Management
Committee, and the study results of the Risk Management Committee are reported to the Board of
Directors.
(4) Derivative transaction risk management
As for derivative transactions, the basic policy of the Bank is to reduce market risks of loans and
securities.
Market risks and credit risks are inherent in derivative transactions used by the Bank.
Market risks include interest rate risks in interest-related derivative transactions, exchange rate
risks in currency-related derivative transactions and market price risks in security/bond-related
derivative transactions.
As for credit risks, the Bank handles trades with stock exchanges and only creditable banks and
securities companies, and reduces default risks appropriately by operational limits.
The Bank manages its risks mainly by checking whether the effective derivative transactions are
used to reduce asset and liability risks, such as fluctuations in interest rates and foreign exchange
rates. The basic policy is studied by the ALM Committee, and the transactions and management
are conducted by the Market Financing Department.25(d) Supplementary explanation of matters relating to fair value of financial instruments and
others
Fair values of financial instruments include values based on market prices, and values deemed to be
market prices obtained by a reasonable estimate when financial instruments do not have market
prices. Because certain assumptions are adopted for calculating such values, values may differ
when adopting different assumptions.
(e) Fair value of financial instruments
The following table summarizes the carrying amounts and the fair values of financial instruments
as of March 31, 2013 and 2012, together with their differences. Note that the following table does
not include unlisted equity securities and certain other securities for which fair value is extremely
difficult to determine.
Fair value of financial instruments
Millions of Yen
At March 31, 2013 Carrying amount Fair value
Unrealized
gains/losses
Assets
Cash and due from banks \ 88,937 \ 88,937 \
Call loans and bills purchased 21,632 21,632
Trading securities 182 182
Available-for-sale securities 1,156,780 1,156,780
Loans and bills discounted 2,272,324
Allowance for doubtful accounts (*1) (29,371)
2,242,953 2,277,140 34,187
Total \ 3,510,484 \ 3,544,671 \ 34,187
Liabilities
Deposits \ 3,144,798 \ 3,145,443 \ 645
Negotiable certificates of deposit 68,867 68,883 16
Call money and bills sold 20,785 20,785
Borrowed money 44,185 44,198 13
Total \ 3,278,635 \ 3,279,309 \ 674
Derivative transactions (*2)
Hedge accounting is not applied \ 141 \ 141 \
Hedge accounting is applied (455) (455)
Total \ (314) \ (314) \26Millions of Yen
At March 31, 2012 Carrying amount Fair value
Unrealized
gains/losses
Assets
Cash and due from banks \ 108,423 \ 108,423 \
Call loans and bills purchased 12,466 12,466
Trading securities 158 158
Available-for-sale securities 1,099,987 1,099,987
Loans and bills discounted 2,203,893
Allowance for doubtful accounts (*1) (26,247)
2,177,646 2,209,662 32,016
Total \ 3,398,680 \ 3,430,696 \ 32,016
Liabilities
Deposits 3,098,416 3,099,493 1,077
Negotiable certificates of deposit 52,980 52,994 14
Call money and bills sold 6,822 6,822
Payables under repurchase
transactions 55,964 55,964
Total \ 3,214,182 \ 3,215,273 \ 1,091
Derivative transactions (*2)
Hedge accounting is not applied 62 62
Hedge accounting is applied (557) (557)
Total \ (495) \ (495) \
Thousands of U.S. Dollars
At March 31, 2013 Carrying amount Fair value
Unrealized
gains/losses
Assets
Cash and due from banks $ 945,632 $ 945,632 $
Call loans and bills purchased 230,000 230,000
Trading securities 1,934 1,934
Available-for-sale securities 12,299,633 12,299,633
Loans and bills discounted 24,160,813
Allowance for doubtful accounts (*1) (312,287)
23,848,526 24,212,019 363,493
Total $ 37,325,725 $ 37,689,218 $ 363,493
Liabilities
Deposits 33,437,516 33,444,373 6,857
Negotiable certificates of deposit 732,241 732,404 163
Call money and bills sold 221,000 221,000
Borrowed money 469,804 469,947 143
Total $ 34,860,561 $ 34,867,724 $ 7,163
Derivative transactions (*2)
Hedge accounting is not applied 1,498 1,498
Hedge accounting is applied (4,843) (4,843)
Total $ (3,345) $ (3,345) $
(*1) Allowance for doubtful accounts relevant to loans and bills discounted have been deducted.
(*2) Derivatives recorded in "Other assets" and "Other liabilities" are aggregated and shown herein
in total. Derivative instruments are presented as net of assets and liabilities associated with
derivative transactions.27(f) Method used for determining the fair value of financial instruments
Assets
(1) Cash and due from banks
Fair values of cash and due from banks that have no maturity dates are approximately equivalent to
carrying amounts.
Regarding cash and due from banks with maturity dates, the fair values of certain products with
short maturities (less than one year) are approximately equivalent to the carrying amounts.
(2) Call loans and bills purchased
Fair values of call loans and bills purchased are approximately equivalent to carrying amounts
because of their short maturities.
(3) Trading securities
For securities, such as bonds that are held for trading, fair values are measured at the quoted market
prices in bond markets or the quoted prices obtained from financial institutions.
(4) Investment securities
Fair values of stocks are measured at the quoted market prices in stock markets. Fair values of
bonds are mainly measured at the quoted market prices in bond markets or the quoted prices
obtained from financial institutions.
Fair values of investment trusts are measured at the standard prices disclosed publicly.
See Note 4 for information related to securities by holding purpose.
(5) Loans and bills discounted
Because floating-rate loans are immediately affected by the movement of market rates, the fair
values of these loans are equivalent to carrying amounts in cases where the credit risk of debtors
has not significantly changed from the execution of the loans.
Fixed-rate loans are segmented by loan type, internal rating and period, and their fair value is
determined by discounting the total amount of principal and interest by the assumed interest rate on
new lending of a similar type.
For loans to debtors who are legally bankrupt, virtually bankrupt and possible bankrupt, an
allowance for doubtful accounts calculated from the current value of expected future cash flows or
from the amount expected to be collected through disposal of collateral or execution of guarantees
is provided. Therefore, the carrying amounts at the consolidated balance sheet date, net of reserve
amounts, are regarded as the fair values.
The carrying amounts of loans and bills discounted that do not have fixed maturities due to loan
characteristics, such as limited loan amounts within the value of pledged assets, approximate fair
value due to their expected repayment periods and interest rate conditions.28Liabilities
(1) Deposits
Fair value of demand deposits is recognized as the payment amount required at the balance sheet
date (i.e., carrying amounts). The fair value of time deposits is calculated by classifying them on
the basis of their terms and by discounting future cash flows. The discount rates used in such
calculations are interest rates used when accepting new deposits.
(2) Negotiable certificates of deposit
Fair value of fixed negotiable certificates of deposit is calculated by classifying them on the basis
of their terms and by discounting future cash flows. The discount rates used in such calculations
are interest rates used when accepting new negotiable certificates of deposit.
(3) Call money and bills sold
Fair values of call money and bills sold are equivalent to carrying amounts because of their short
maturities.
(4) Payables under repurchase transactions
Fair values of payables under repurchase transactions are approximately equivalent to carrying
amounts because of their short maturities.
(5) Borrowed money
The carrying amount of borrowed money with floating interest rates approximates fair value
because the market rates are promptly reflected in the floating interest rate, and the credit risks of
the Bank and its consolidated subsidiaries have not changed significantly after borrowing. The
fair value of borrowed money with fixed interest rates is determined by discounting future cash
flows at the rate that would be applied for similar new contracts. Fair values of borrowed money
with maturities of less than one year are approximately equivalent to carrying amounts because of
their short maturities.
Derivatives
Please see Note 18 for the fair values of derivatives.
(g) Financial instruments whose fair value cannot be reliably determined
Carrying amount
Millions of Yen
Thousands of
U.S. Dollars
2013 2012 2013
Unlisted stocks (*1) (*2) \ 2,332 \ 2,169 $ 24,797
Investments in partnerships (*3) 1,332 1,749 14,163
Total \ 3,664 \ 3,918 $ 38,960
(*1) Equity securities without a readily available market price are outside the scope of the fair
value disclosure because their fair values cannot be readily determined.
(*2) During the year ended March 31, 2013, impairment losses on equity securities without a
readily available market price of 0円 million were recognized. During the year ended March
31, 2012, impairment losses on equity securities without a readily available market price of
70円 million were recognized.
(*3) Investments in partnerships, the assets of which comprise equity securities without a readily
available market price, are outside the scope of the fair value disclosure because the fair value
of those investments cannot be readily determined.29(h) Maturity analysis for financial assets and securities with contractual maturities
Millions of Yen
At March 31, 2013
Due in 1 year orlessDue from 1 to 3
years
Due from 3 to 5
years
Due from banks \ 47,894 \ \
Call loans and bills purchased 21,632
Available-for-sale securities 84,723 300,108 269,219
National government bonds 36,190 98,254 70,062
Local government bonds 17,685 32,910 20,756
Corporate bonds 26,337 155,566 137,676
Others 4,511 13,378 40,725
Loans and bills discounted (*) 695,223 449,649 383,407
Total \ 849,472 \ 749,757 \ 652,626
Millions of Yen
At March 31, 2013
Due from 5 to 7
years
Due from 7 to 10
years Due after 10 years
Due from banks \ \ \
Call loans and bills purchased
Available-for-sale securities 116,326 197,707 115,448
National government bonds 77,319 115,240 71,751
Local government bonds 7,828 10,445
Corporate bonds 16,379 70,798 43,697
Others 14,800 1,224
Loans and bills discounted (*) 208,044 178,890 325,808
Total \ 324,370 \ 376,597 \ 441,256
(*) Loans and bills discounted to borrowers who are legally bankrupt, virtually bankrupt and
possibly bankrupt amounting to 31,303円 million are excluded from the table above as of March
31, 2013.30Millions of Yen
At March 31, 2012
Due in 1 year orlessDue from 1 to 3
years
Due from 3 to 5
years
Due from banks \ 67,087 \ \
Call loans and bills purchased 12,466
Available-for-sale securities 122,317 264,224 305,394
National government bonds 31,146 121,354 98,836
Local government bonds 6,345 32,576 36,369
Corporate bonds 67,742 96,205 155,336
Others 17,084 14,089 14,853
Loans and bills discounted (*) 701,542 415,267 358,193
Total \ 903,412 \ 679,491 \ 663,587
Millions of Yen
At March 31, 2012
Due from 5 to 7
years
Due from 7 to 10
years Due after 10 years
Due from banks \ \ \
Call loans and bills purchased
Available-for-sale securities 169,377 153,967 21,324
National government bonds 110,796 96,512
Local government bonds 13,543 10,092
Corporate bonds 42,675 45,240 21,324
Others 2,363 2,123
Loans and bills discounted (*) 214,284 177,513 306,628
Total \ 383,661 \ 331,480 \ 327,952
(*) Loans and bills discounted to borrowers who are legally bankrupt, virtually bankrupt and possibly
bankrupt amounting to 30,464円 million are excluded from the table above as of March 31, 2012.
Thousands of U.S. Dollars
At March 31, 2013
Due in 1 year orlessDue from 1 to 3
years
Due from 3 to 5
years
Due from banks $ 509,238 $ $
Call loans and bills purchased 230,000
Available-for-sale securities 900,830 3,190,945 2,862,509
National government bonds 384,800 1,044,699 744,945
Local government bonds 188,034 349,919 220,692
Corporate bonds 280,027 1,654,082 1,463,860
Others 47,969 142,245 433,012
Loans and bills discounted (*) 7,392,053 4,780,956 4,076,630
Total $ 9,032,121 $ 7,971,901 $ 6,939,139
Thousands of U.S. Dollars
At March 31, 2013
Due from 5 to 7
years
Due from 7 to 10
years Due after 10 years
Due from banks $ $ $
Call loans and bills purchased
Available-for-sale securities 1,236,848 2,102,156 1,227,515
National government bonds 822,110 1,225,310 762,897
Local government bonds 83,233 111,058
Corporate bonds 174,151 752,771 464,618
Others 157,354 13,017
Loans and bills discounted (*) 2,212,055 1,902,076 3,464,200
Total $ 3,448,903 $ 4,004,232 $ 4,691,71531(*) Loans and bills discounted to borrowers who are legally bankrupt, virtually bankrupt and
possibly bankrupt amounting to 332,843ドル thousand are excluded from the table above as of
March 31, 2013.
(i) Scheduled repayment amount after the balance sheet date for borrowed money and other
interest-bearing liabilities
Millions of Yen
At March 31, 2013
Due in 1 year orlessDue from 1 to 3
years
Due from 3 to 5
years
Deposits (*) \ 3,022,632 \ 110,455 \ 11,711
Negotiable certificates of deposit 68,837 30
Call money and bills sold 20,785
Borrowed money 39,513 3,547 1,110
Total \ 3,151,767 \ 114,032 \ 12,821
Millions of Yen
At March 31, 2013
Due from 5 to 7
years
Due from 7 to 10
years Due after 10 years
Deposits (*) \ \ \
Negotiable certificates of deposit
Call money and bills sold
Borrowed money 7 8
Total \ 7 \ 8 \
Millions of Yen
At March 31, 2012
Due in 1 year orlessDue from 1 to 3
years
Due from 3 to 5
years
Deposits (*) \ 2,982,053 \ 104,552 \ 11,811
Negotiable certificates of deposit 50,799 2,181
Call money and bills sold 6,822
Payables under repurchase
transactions 55,964
Total \ 3,095,638 \ 106,733 \ 11,811
Millions of Yen
At March 31, 2012
Due from 5 to 7
years
Due from 7 to 10
years Due after 10 years
Deposits (*) \ 0 \ \
Negotiable certificates of deposit
Call money and bills sold
Payables under repurchase
transactions
Total \ 0 \ \32Thousands of U.S. Dollars
At March 31, 2013
Due in 1 year orlessDue from 1 to 3
years
Due from 3 to 5
years
Deposits (*) $ 32,138,573 $ 1,174,425 $ 124,518
Negotiable certificates of deposit 731,922 319
Call money and bills sold 221,000
Borrowed money 420,134 37,712 11,806
Total $ 33,511,629 $ 1,212,456 $ 136,324
Thousands of U.S. Dollars
At March 31, 2013
Due from 5 to 7
years
Due from 7 to 10
years Due after 10 years
Deposits (*) $ $ $
Negotiable certificates of deposit
Call money and bills sold
Borrowed money 72 80
Total $ 72 $ 80 $
(*) Regarding deposits, demand deposits are included in deposits with maturity dates of one year
or less. Please see Note 12 for annual maturities of borrowed money.
18. Derivative Instruments
The Bank has entered into various transactions involving derivative instruments in the normal
course of business to meet the financing needs of its customers for risk management, the Bank’s
ALM and as a source of income. These derivative instruments involve, in varying degrees,
elements of credit and market risk. The Bank is exposed to credit losses in the event of
nonperformance by third parties. However, the Bank does not expect nonperformance by its
counterparties because the counterparties to these derivatives are limited to major international
financial institutions.
(a) Derivative transactions to which hedge accounting is not applied at March 31, 2013 and 2012
Millions of Yen
Notional
principal or
contract
amounts
Contract
amount due
after one
year Fair value
Valuation
gains
(losses)
At March 31, 2013
Foreign exchange contracts:
Currency swaps \ 27,935 \ 27,935 \ 30 \ 30
Foreign exchange forward contracts
Forward exchange contracts written 175 (3) (3)
Forward exchange contracts purchased 157 5 533Millions of Yen
Notional
principal or
contract
amounts
Contract
amount due
after one
year Fair value
Valuation
gains
(losses)
At March 31, 2012
Foreign exchange contracts:
Currency swaps \ 31,611 \ 26,351 \ 38 \ 38
Foreign exchange forward contracts
Forward exchange contracts written 153 (4) (4)
Forward exchange contracts purchased 114 4 4
Thousands of U.S. Dollars
Notional
principal or
contract
amounts
Contract
amount due
after one
year Fair value
Valuation
gains
(losses)
At March 31, 2013
Foreign exchange contracts:
Currency swaps $ 297,024 $ 297,024 $ 319 $ 319
Foreign exchange forward contracts
Forward exchange contracts written 1,856 (32) (32)
Forward exchange contracts purchased 1,670 51 51
(b) Derivative transactions to which hedge accounting is applied at March 31, 2013 and 2012
Millions of Yen
Hedged item
Contract
amount
Contract
amount due
after one year Fair value
At March 31, 2013
Interest rate contracts:
Interest rate swaps-
receive floating and pay
Fixed
Loans and bills
discounted \ 11,908 \ 11,908 \ (455)
Millions of Yen
Hedged item
Contract
amount
Contract
amount due
after one year Fair value
At March 31, 2013
Foreign exchange:
Foreign currency
call loans
Forward contracts
\ 24,008 \ \ (3)34Millions of Yen
Hedged item
Contract
amount
Contract
amount due
after one year Fair value
At March 31, 2012
Interest rate contracts:
Interest rate swaps -
receive floating and pay
fixed
Loans and bills
discounted \ 14,086 \ 12,862 \ (557)
Millions of Yen
Hedged item
Contract
amount
Contract
amount due
after one year Fair value
At March 31, 2012
Foreign exchange:
Foreign currency
call loans
Forward contracts
\ 5,349 \ \ 0
Thousands of U.S. Dollars
Hedged item
Contract
amount
Contract
amount due
after one year Fair value
At March 31, 2013
Interest rate contracts:
Interest rate swaps -
receive floating and pay
fixed
Loans and bills
discounted $ 126,612 $ 126,612 $ (4,843)
Thousands of U.S. Dollars
Hedged item
Contract
amount
Contract
amount due
after one year Fair value
At March 31, 2013
Foreign exchange:
Foreign currency
call loans
Forward contracts
$ 255,268 $ $ (32)
The below interest rate swaps that qualify for hedge accounting and meet specific matching criteria
are not remeasured at market value but the differential paid or received under the swap agreements
is recognized and included in interest expense or income. In addition, the fair value of such
interest rate swaps in Note 17 is included in that of the hedged items (i.e., Loans and bills
discounted).
Millions of Yen
Hedged item
Contract
amount
Contract
amount due
after one year Fair value
At March 31, 2013
Interest rate contracts:
Interest rate swaps -
receive floating and pay
fixed
Loans and bills
discounted \ 40,586 \ 40,564 \35Millions of Yen
Hedged item
Contract
amount
Contract
amount due
after one year Fair value
At March 31, 2012
Interest rate contracts:
Interest rate swaps -
receive floating and pay
fixed
Loans and bills
discounted \ 54,955 \ 44,509 \
Thousands of U.S. Dollars
Hedged item
Contract
amount
Contract
amount due
after one year Fair value
At March 31, 2013
Interest rate contracts:
Interest rate swaps -
receive floating and pay
fixed
Loans and bills
discounted $ 431,534 $ 431,304 $
Note. Fair values are calculated based on the discounted cash flow method or other valuation method.
19. Income Taxes
The tax effects of temporary differences that give rise to a significant portion of deferred tax assets
and liabilities at March 31, 2013 and 2012, were as follows:
Millions of Yen
Thousands of
U.S. Dollars
2013 2012 2013
Deferred tax assets:
Allowance for doubtful accounts \ 10,195 \ 9,043 $ 108,398
Provision for retirement
benefits 397 352 4,220
Provision for directors’ and audit &
supervisory board members’
retirement benefits 307 262 3,267
Provision for reimbursement of
deposits 217 236 2,311
Depreciation 322 365 3,423
Write-downs of investment securities 1,114 1,233 11,846
Unrealized losses on
available-for-sale securities 352 909 3,743
Losses on impairment of fixed assets
Other
2,399
2,202
2,312
2,363
25,510
23,400
Less, valuation allowance (3,898) (3,868) (41,442)
Subtotal 13,607 13,207 144,676
Deferred tax liabilities:
Unrealized gains on available-for-sale
securities (19,146) (11,457) (203,568)
Other (2,159) (1,973) (22,965)
Subtotal (21,305) (13,430) (226,533)
Net deferred tax assets (liabilities) \ (7,698) \ (223) $ (81,857)
A reconciliation of the differences between the Japanese statutory effective tax rate and the actual
effective tax rate on pretax income reflected in the accompanying consolidated statement of income
for the years ended March 31, 2013 and 2012, is as follows:36Percentage of pretax income2012Japanese statutory effective tax rate 40.4 %
Increase (decrease) due to:
Non-deductible expenses 0.7
Non-taxable income (1.8)
Effect of tax rate reduction 6.2
Resident tax per capital levy 0.2
Increase in valuation allowance 1.1
Other 0.3
Actual effective income tax rate 47.1 %
A reconciliation between the normal effective statutory tax rate for the year ended March 31, 2013,
and the actual effective tax rate reflected in the accompanying consolidated statement of income
was not required under Japanese accounting standards due to immaterial differences.
20. Other Comprehensive Income
The components of other comprehensive income for the year ended March 31, 2013, were as follows:
Millions of Yen
Thousands of
U.S. Dollars
2013 2013
Unrealized gains (losses) on available-for-sale securities
Gains arising during the year \ 25,161 $ 267,532
Reclassification adjustments to profit or loss (1,276) (13,572)
Amount before income tax effect 23,885 253,960
Income tax effect (8,245) (87,665)
Total \ 15,640 $ 166,295
Deferred gains (losses) on derivatives under hedge
accounting
Gains arising during the year \ (74) $ (790)
Reclassification adjustments to profit or loss 175 1,858
Amount before income tax effect 101 1,068
Income tax effect (36) (377)
Total \ 65 $ 691
Land revaluation surplus
Gains arising during the year \ $
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effect
Total \ $
Total other comprehensive income \ 15,705 $ 166,986
The corresponding information for the year ended March 31, 2012, was not required under the
accounting standard for presentation of comprehensive income as an exemption for the first year of
adopting that standard, and therefore, it is not disclosed herein.
21. Per Share Information
Net income per share, as presented in the consolidated statement of income, is based on the
weighted-average number of common shares outstanding during each year. The
weighted-average number of common shares outstanding for the years ended March 31, 2013 and
2012, was 209,882 thousand and 209,904 thousand, respectively.3722. Subsequent Events
Appropriation of retained earnings
The shareholders of the Bank approved the following appropriations of retained earnings at the
annual general meeting held on June 26, 2013:
Millions of Yen
Thousands of U.S.
Dollars
Cash dividends \ 944 $ 10,0413823. SEGMENT INFORMATION
Year Ended March 31, 2013
1. Description of reportable segments
The Group’s reportable segments are those for which separate financial information is available and regular evaluation by the Board of Directors is being performed in order to decide how resources are allocated among the Group.
The Bank concentrates on the banking business, and also conducts other financial services business including leasing. Therefore, the Group’s reportable segments consist of Banking and Leasing.
Banking consists of a deposit business, loan business, foreign (domestic) exchange business, and securities business.
Leasing consists of a leasing business.
2. Methods of measurement for the amounts of ordinary income, profit (loss), assets and other items for each reportable segment
The accounting policies of each reportable segment are consistent with those disclosed in Note 2, "Summary of Significant Accounting Policies."
3. Information about ordinary income, profit (loss), assets and other items is as follows.
Millions of Yen2013Reportable segment
Banking Leasing Total Other Total Reconciliations Consolidated
Ordinary income:
Outside customers \ 65,000 \ 11,754 \ 76,754 \ 1,608 \ 78,362 \ \ 78,362
Intersegment 233 1,185 1,418 535 1,953 (1,953)
Total 65,233 12,939 78,172 2,143 80,315 (1,953) 78,362
Segment profit 12,461 890 13,351 813 14,164 (39) 14,125
Segment assets 3,647,466 29,970 3,677,436 14,138 3,691,574 (24,769) 3,666,805
Other:
Depreciation \ 5,265 \ 213 \ 5,478 \ 17 \ 5,495 \ \ 5,495
Interest income and dividends 48,055 37 48,092 159 48,251 (155) 48,096
Interest expenses 2,296 187 2,483 3 2,486 (242) 2,24439Millions of Yen2012Reportable segment
Banking Leasing Total Other Total Reconciliations Consolidated
Ordinary income:
Outside customers \ 65,520 \ 12,370 \ 77,890 \ 1,420 \ 79,310 \ \ 79,310
Intersegment 243 1,252 1,495 523 2,018 (2,018)
Total 65,763 13,622 79,385 1,943 81,328 (2,018) 79,310
Segment profit 16,299 1,106 17,405 691 18,096 (44) 18,052
Segment assets 3,541,909 29,761 3,571,670 13,699 3,585,369 (24,412) 3,560,957
Other:
Depreciation \ 5,110 \ 341 \ 5,451 \ 14 \ 5,465 \ \ 5,465
Interest income and dividends 50,757 35 50,792 191 50,983 (162) 50,821
Interest expenses 2,803 224 3,027 3 3,030 (270) 2,760
Thousands of U.S. Dollars2013Reportable segment
Banking Leasing Total Other Total Reconciliations Consolidated
Ordinary income:
Outside customers $ 691,127 $ 124,980 $ 816,107 $ 17,098 $ 833,205 $ $ 833,205
Intersegment 2,479 12,607 15,086 5,697 20,783 (20,783)
Total 693,606 137,587 831,193 22,795 853,988 (20,783) 833,205
Segment profit 132,500 9,472 141,972 8,652 150,624 (423) 150,201
Segment assets 38,782,200 318,656 39,100,856 150,323 39,251,179 (263,354) 38,987,825
Other:
Depreciation $ 55,978 $ 2,261 $ 58,239 $ 183 $ 58,422 $ $ 58,422
Interest income and dividends 510,950 391 511,341 1,687 513,028 (1,643) 511,385
Interest expenses 24,408 1,993 26,401 38 26,439 (2,577) 23,862
Note: 1. The "Other" segment contains business that is not included in these reportable segments, such as the guarantee and credit card business.
2. Reconciliations were eliminations of intersegment transactions.
3. Segment profit represents profit that is deducted for certain special income and loss from income before income taxes and minority interests in the accompanying consolidated statement of income.40Related Information for the year ended March 31, 2013
Segment information by services
Millions of Yen2013Loan
business
Securities
investment
business
Leasing
business Other Total
Ordinary income from
external customers \ 37,855 \ 14,510 \ 11,639 \ 14,358 \ 78,362
Millions of Yen2012Loan
business
Securities
investment
business
Leasing
business Other Total
Ordinary income from
external customers \ 39,600 \ 12,824 \ 12,082 \ 14,804 \ 79,310
Thousands of U.S. Dollars2013Loan
business
Securities
investment
business
Leasing
business Other Total
Ordinary income from
external customers $ 402,496 $ 154,282 $ 123,757 $ 152,670 $ 833,205