Creating a Bright and Prosperous Future - Iyo Bank · Creating a bright and prosperous future for the region 2. ... buoyed by falling crude oil prices and the impact ... Prefecture

Annual Report 2015Year ended March 31, 2015

Creating a Bright and Prosperous Future

Tokyo 2

Okayama 3

Hiroshima 6

Yamaguchi 1

Fukuoka 2

Oita 6

Kochi 1Tokushima 1

Kagawa 5

Ehime 117

Aichi 1

Osaka 3

Hyogo 2

Head Of�ce

Profile

Founded in 1878, The Iyo Bank, Ltd. is a regional financial services institu-

tion boasting a solid operating base centered on the four prefectures of

Shikoku and the seven prefectures surrounding the Seto Inland Sea. With

branches in Tokyo and Nagoya as well, we are Japan’s No. 1 regional bank in

terms of broad regional coverage. In recent years, we have also enhanced our

network of overseas bases primarily in the ASEAN region to support the inter-

national business expansion of our clients. We at Iyo Bank are working to be

the region’s best partner for creating a prosperous, dynamic and bright future

by offering friendly and trustworthy financial services to customers.

1. Creating a bright and prosperous future for the region

2. Offering the best service and being worthy of people’s trust

3. Rendering our best service with gratitude in our hearts

Corporate Credo

Contents

Message from the President . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Corporate Governance / Compliance / Risk Management . . . . . . . 6

Financial Section . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Organization Chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

Subsidiaries and Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

Corporate Data / Directory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

Forward-Looking Statements:Statements contained in this report concerning plans, predic-tions, and strategies to improve future performance (“Forward-Looking Statements”) are based information currently available to the Bank’s management, and inevitably involve a certain element of risk and uncertainty .

Tokyo 2

Okayama 3

Hiroshima 6

Yamaguchi 1

Fukuoka 2

Oita 6

Kochi 1Tokushima 1

Kagawa 5

Ehime 117

Aichi 1

Osaka 3

Hyogo 2

Head Of�ce

1IYO BANK Annual Report 2015

Domestic Branch NetworkThe No. 1 regional bank in terms of broad regional coverage,

Iyo Bank’s network consists of 151 branches located in 13 prefectures.

No. 1 Market Share in Ehime

* The numbers next to the prefecture names denote number of branches

* These 151 domestic branches include our Internet branch

About Ehime Prefecture• Area 5,676.10 km2 (As of October 1, 2014)

• Population 1,386,887 (As of June 1, 2015)

• Number of households 601,515 (As of June 1, 2015)

Global NetworkOur global network comprehensively supports our clients’ overseas business endeavors.We support our customers’ efforts to globalize their businesses through trade operations, the establishment of local

corporations and fund procurement by leveraging our network of four overseas sites consisting of the Hong Kong branch

and three representative offices in New York, Shanghai and Singapore .

Our overseas network also involves business alliances with banks in China, Thailand, Indonesia, India, Philippines and

Taiwan as well as Nippon Export and Investment Insurance (NEXI), three insurance companies (Sompo Japan Nipponkoa

Insurance Inc ., Tokio Marine & Nichido Fire Insurance Co ., Ltd ., and Mitsui Sumitomo Insurance Company, Limited) and

Japan Finance Corporation (JFC) .

Dalian, China Business alliance with the Bank of Dalian

Shanghai, China Representative Office

Hong Kong, China Branch

Bangkok, Thailand Business alliance with Kasikorn Bank

Singapore Representative Office

Jakarta, Indonesia Business alliance with Bank Negara Indonesia

New York, U.S.A. Representative Office

Mumbai, India Business cooperation with the State Bank of India

Shanghai, China Business alliance with the Bank of Communications

Makati City, The Philippines Business alliance with the Metropolitan Bank

Taipei, Taiwan Business alliance with the CTBC Financial Holding

Our Overseas Business Support• Provision of various types of information about entering overseas markets

• Advice about entering overseas markets

• Advice about trade operations and fund settlements

• Support for funds procurement in the local area overseas

• Implementation of overseas business matching

• Holding of seminars about entering overseas markets

2 IYO BANK Annual Report 2015

Message from the President

Financial and Economic EnvironmentIn fiscal 2014, ended March 31, 2015, the Japanese economy continued to recover gradually . Personal consumption re-mained lackluster, due to a demand backlash following the consumption tax hike and worsening consumer sentiment . However, corporate earnings were firm, and the employment and income situations improved . Economic activity in Ehime Prefecture, the Bank’s principal operating base, was weak in some areas, but manufacturing activity gradually recovered, and the underlying tone was of modest recovery . Recovery in the corporate segment differed by industry category and company, due to increased cost burdens stemming from yen depreciation and personnel shortages, as well as to concerns about future demand uncer-tainty . Overall, however, we expect gentle economic recovery to continue, buoyed by falling crude oil prices and the impact of various government stimulus measures .

Business PerformanceUnder these circumstances, the Bank’s consolidated perfor-mance during the fiscal year under review was as follows . The term-end balance of deposits, including NCDs, increased

¥65 .7 billion over the previous fiscal year-end, to ¥5,264 .8 billion (US$43,812 million) . The loan balance at the end of the fiscal year rose ¥142 .9 billion from the previous fiscal year-end, to ¥3,851 .2 billion (US$32,048 million) . The balance of securities at the end of the fiscal year up ¥81 .7 billion from the previous fiscal year-end, to ¥1,831 .6 billion (US$15,242 million) . Ordinary income decreased ¥1,945 million on a consoli-dated basis year on year, to ¥123,930 million (US$1,031 million), due to a fall in a reduction in other operating income on proceeds from sales of securities . Meanwhile, ordinary expenses on a consolidated basis fell ¥3,495 million, to ¥76,601 million (US$637 million), with other ordinary expenses falling due to lower credit costs . As a result, net ordinary income grew ¥1,549 million, to ¥47,328 million (US$394 million), while net income expanded ¥866 million, to ¥26,999 million (US$225 million) . On a non-consolidated basis, core gross business profit recorded a rise of ¥439 million, to ¥86,600 million (US$721 million) due to higher commission income on loans and income on service transactions . Core net business profit fell ¥681 million, to ¥37,283 million (US$310 million), due to a rise in expenses . The decrease in core net business profit and the decline in credit costs prompted a ¥1,029 million increase in net ordinary income, to ¥44,562 million (US$371 million) . As a result, net income rose ¥983 million, to ¥26,497 million (US$220 million) . The capital ratio (Basel III standards), which measures bank prudence and soundness, stood at 15 .81% .

Bank Branches, Head Office Organiza-tion and SolutionsIyo Bank has a broad-ranging branch network that covers 13 prefectures in Japan, the largest number of prefectures covered by a regional bank . We have been upgrading and expanding our branches and strengthening customer service systems so that customers can use our services more effectively . In June 2014, to augment our consultation system using specialized staff, we opened the Iyogin Insurance Plaza within our Niihama branch, and in September 2014 we also built a new facility for and relocated the Higashino branch as a joint branch within a convenience store with café facilities, which is now a combination one-stop bank, convenience store and café . Regarding head office organization, we are working actively to increase our number of overseas financing and project financing projects in the aim of reinforcing investment capabili-ties . To specialize in these transactions, we set up a specialized Financial Market Business Department in Tokyo in April 2014 . In August 2014, we established the Women’s Career Promotion Office within the Personnel Division . This office will

Iwao Otsuka, President


further step up initiatives targeting women, aimed at cultivat-ing an environment in which women can work energetically . Furthermore, in March 2014 the Cabinet Office of Japan decided on the “Overall Strategy for Vitalization of Towns, People and Work .” In line with this strategy, we set up a Regional Vitalization Support Team to promote measures related to regional vitalization as part of our effort to fulfill the role expected for our group as a regional financial institution . Regarding solutions, in January 2015 we launched the “Iyogin Matsuyama Mirai School on Business Startups,” collaborating and cooperating with the city of Matsuyama to support the establishment of new businesses . At the same time, we held the “Iyogin Business Plan Contest 2014 .” Meanwhile, in September 2014 we collaborated with six other regional banks to hold the Japanese Food Trade Fair in Singapore 2014, providing an opportunity for business discus-sions between clients seeking to expand sales routes in the ASEAN region and local food companies . In addition, we have held a large number of trade fairs both in Japan and overseas . For instance, October 2014 marked the launch of the “Iyogin Food Show 2014,” an effort to encourage commercial discus-sions between our customers both within and outside Ehime Prefecture and various nationwide buyers .

Products and ServicesRegarding deposit products, in commemoration of “the Uwa-jima Date Family Nyu-bu 400 Years” and the 40th year of a sister city arrangement between Uwajima and Sendai, we sold a special “Ehime Uwajima Datena” time deposit between May and September 2014, accompanied by giveaways of products from the city of Uwajima and Miyagi Prefecture . Concerning loan products, in April 2014 we introduced a new housing loan for women . This loan, which has three benefits, allows principal payments for be delayed for up to two years during childbirth, childrearing and nursing care . Our women-only project team, called chocolabo, planned the “Tsubaki Fund to Promote the Success of Women,” which we began handling during the year . This investment trust invests in Japanese stocks selected on the basis of four themes aimed at promoting the success of women .

CSR ActivitiesIn addition to its financial activities, to realize its mission to create a “bright and prosperous future for the region,” Iyo Bank is undertaking a range of activities under the CSR Com-mittee as part of its corporate social responsibilities (CSR) . As a cross-organizational body at our head office, the CSR

Fiscal 2015 Medium-Term Management Plan

First StageThree-year strategy

for new growth


Second StageThree years for

transitioning to a new growth trend


Third StageThree years targeting

dramatic growth

10 years later

Goals for the future

Leading �nancial services group in the Setouchi

region in terms of customer satisfaction

Marketing shift toward the customer standard

Shift from a marketing focus on speci�c products to one of offering proposals tailored to

individual customers

Changing the business model

Further reinforce personal retail and fee-based

businesses

Augment combined Group capabilities

Undertake initiatives to strengthen Group ties and enter new �elds to re�ect

changes in the environment

Strengthen the management base and transform awareness

Operational reforms, cost reforms

Proactively take on new opportunities

150th anniversary of founding

150th anniversary of founding

The Bank’s sustainable growth and regional vitalization

Based on four core perspectives


Message from the President

Start of the Fiscal 2015 Medium-Term Management PlanPeriod: Three years, from April 2015 through March 2018

Core policy 1: Take on new growth strategies

Core policy 2: Optimize management resources

The Fiscal 2015 Medium-Term Management Plan Numerical Targets

Group ties

Enhance relations Promote solutions

Fiscal 2014 Results Fiscal 2017 Targets

Net income ¥26.4 billion ¥25.0 billion

Loans (average) ¥3,783.9 billion ¥4,065.0 billion

Deposits (average) ¥5,247.7 billion ¥5,540.0 billion

Consolidated assets on deposit ¥463.9 billion ¥570.0 billion

Core OHR 56.94% 60.0% or less

Equity ratio (BIS standard) 15.81% 15.0% or more

Ratio of non-performing loans 1.77% 2.0% or less

ROE (net asset basis) 7.48% 6.0% or more

We are positioning our new medium-term management plan as the first stage of our efforts toward our 150th anniversary of foundation . We aim to achieve sustainable growth, based on a long-term vision .

First Stage for 150

Create a new business

model that leverages ICT

Information and communications tech-nology (ICT) strategy

Configure our branch

network and sales structure

in response to new environ-

mental changes

Branch and sales structure strategy

Reform business processes

and boost productivity

Business process re-engineering (BPR)

strategy

Support individuals’ overall

life plans, building business

relationships across the

generations

Individual strategy

Grow with the region and

generate regional dynamism

Regional strategy

Provide support to companies

to match their stage of

business and contribute to

their business development

Corporate strategy

Ensure earnings sources

in new fields and create

a long-term, stable earnings

foundation

Market investment strategy

Cultivate human resources

motivated to grow and

reinforce diversity initiatives

Personnel strategy


Committee is proactively involved in cultural programs, social welfare activities, conservation and other issues . As cultural activities, we continued to provide aid under the “Regional Cultural Activity Assistance Program” and undertook initiatives targeting the financial education of the children who will take responsibility for future generations . As part of our social welfare activities, we continued to provide scholarships and donate welfare devices through the “Iyo Bank Social Welfare Fund .” In the area of environmental protection, we carried out tree planting as part of the activities of the Society to Promote the Creation of Forests in Towns, for which the Bank serves as the secretariat, together with other member companies and organizations . In October 2014, we opened the “Iyogin Challenge & Smile Workshop” to promote the employment of people with disabilities and provide a working environment that enables them to work enthusiastically and with peace of mind . Through ongoing employment, we are proactively supporting the efforts of people with disabilities to participate in society and become independent .

IR ActivitiesIyo Bank is proactively working to improve disclosure . To increase management transparency, we held annual results briefings for analysts and institutional investors in Tokyo in June and December 2014, and organized results briefings accompanied by a special lecture presentation in six locations around Ehime Prefecture in July 2014 . The Bank is rated highly, with an “AA-” rating by Rating and Investment (R&I), an influential Japanese credit rating agency, an “A” rating by Standard & Poor’s (S&P) and an “AA” rating by the Japan Credit Rating Agency (JCR) .

Risk Management and ComplianceAs part of our risk management initiatives, we are developing and continuously refining our business continuity manage-ment (BCM) so that we can continue or quickly resume operations in the event of a major earthquake or other large-scale disaster, or an outbreak of a new strain of influenza or other infectious disease . To prepare for the possibility of a large-scale disaster and ensure our ability to sustain or quickly recover our functions as a financial institution, in July 2014 we signed a mutual accord comprising ourselves, three other banks in Shikoku (the Awa Bank, 114Bank and Shikoku Bank) and the city of Matsuyama in October of the same year . With respect to compliance, we have taken appropriate steps to comply with all relevant rules and regulations .

IssuesThe overall Japanese economy is expected to remain in a mod-est recovery trend, supported by robust corporate earnings, improvements in labor and income conditions, falling crude oil prices and the impact of various government initiatives . At the same time, we recognize that the regional economy on which we depend is beset by the fundamental problems of a falling birthrate and a shrinking and increasingly elderly population, and globalization and regional disparities are likely to become more pronounced . Financial institutions also face increasing competition due to the emergence of Internet banks and banks with roots in the distribution sector . Amid this operating environment, in April 2015 Iyo Bank launched its Fiscal 2015 Medium-Term Management Plan: First Stage for 150 . In addition to its traditional strength in corporate loans, the new plan calls for enhanced initiatives in personal retail loans and regional vitalization, setting in place new growth strategies . The final year of this plan, ending in March 2018, will mark the Bank’s 140th anniversary of founding . Looking ahead toward our 150th anniversary, we are transitioning to a business model designed for sustainable growth as we strive to become the leading financial services group in the Setouchi region in terms of customer satisfaction . During the year, an incident came to light in which a former director was discovered to have borrowed money personally from a business partner of the bank, which is prohibited both by law and by the Bank’s internal regulations . We apologize sincerely to our customers and the local com-munity, as well as shareholders, for any inconvenience and concern this incident may have caused . The Bank’s directors and employees consider this a grave offence and accordingly are working together to ensure thorough compliance and further augmenting the internal management system to prevent any such incident from recurring . From here onward, while working to ensure sound management and further strengthening the Bank’s business operations, we will continue to put our full efforts into real-izing our mission as a regional bank—to create a “bright and prosperous future for the region .” In these endeavors, we ask for the ongoing support of our shareholders .

Iwao Otsuka, President


Corporate Governance / Compliance / Risk Management

Corporate GovernanceBasic PhilosophyTo ensure the unshakeable trust of our stockholders, cus-tomers and other stakeholders, we believe it is vital to raise enterprise value and ensure a more sound and transparent management system, while remaining mindful of our social responsibilities . For this purpose, the Bank is committed to taking steps to establish a corporate governance system appropriate to its business scale . The pace of the process toward realization of this corporate governance system will be coordinated with the Bank’s operating environment .

Internal Control Systems• At the General meeting of Stockholders on June 26, 2015,

a resolution was passed to revise the Articles of Incorpora-tion . Accordingly, as of that date the Bank transitioned to a company with the Audit and Supervisory Committee .

The Board of Directors’ granting of voting rights to direc-tors on auditing and the Audit and Supervisory Committee members that include multiple outside directors is expected to enhance the auditing and supervisory functions, as well as corporate governance . At the same time, we believe this delegation of authority will contribute to swifter decision-making and heightened management efficiency .

• The Bank has also separated the management decision-making and supervisory functions from business execution, thereby strengthening the Board of Directors’ decision-making function . To further enhance corporate governance, we have introduced an executive officer system .

• In principle, the Board of Directors meets once a month to decide on important matters stipulated in law and the Articles

of Incorporation, as well as to make important decisions related to management policy and management strategy .

As of the date of submission of the Bank’s securities report, the Board of Directors comprised 13 members, of whom six were members of the Audit and Supervisory Committee . Four of the six Audit and Supervisory Commit-tee members were outside directors . Furthermore, the four outside directors are designated as independent executives who provide appropriate advice from a neutral standpoint independent of management .

• In principle, the Audit and Supervisory Committee meets at least once each month . In accordance with the law, Articles of Incorporation and Audit and Supervisory Committee Regulations, this committee and the Board of Directors pro-vide a supervisory function, as well as auditing the execu-tion of business by directors . As of the date of submission of the Bank’s securities report, the Audit and Supervisory Committee comprised six members, four of whom were outside directors .

• In principle, the Executive Committee, consisting of manag-ing directors and higher-ranked directors, meets once a week to discuss important issues affecting all areas of operations, based on the fundamental policies decided upon by the Board of Directors . The Audit and Supervisory Committee members are standing members of the Executive Committee, where they provide appropriate statements and advice .

• To coordinate and strengthen legal observance and risk management, the Bank holds a quarterly meeting of the Compliance Committee (secretariat: the Compliance Division) and a monthly meeting of the ALM Committee (secretariat: the General Planning Division), both with the President as chairman . We have also established the Opera-tional Risk Administration Committee, under the Risk Man-agement Division, which meets quarterly, and the Credit Risk Management Committee . This committee, under the Risk Management Division, meets every second month . It is chaired by the director in charge of the Risk Management Division .

ComplianceAs an institution with a public profile and social responsibilities, the Bank regards a good compliance record as indispensable for deepening the trust and support of our customers, sharehold-ers and the communities we serve . We ensure not only that all our employees observe all laws, ordinances and regulations in their duties, but also meet the highest ethical standards .

Compliance OrganizationsIn December 1999, we established a Compliance Committee chaired by the President . This committee deliberates matters relating to compliance, and seeks to foster a corporate culture

Cooperates

Cooperates

AccountingAudit

Audits/Supervises

Appoints/Dismisses Appoints/Dismisses

IndependentAuditors (CPAs)

Head Of�ce,Bank branches

Internal AuditDivision

ExecutiveCommittee

Audit andSupervisory

Committee’s Of�ce

ALM Committee

Compliance Committee

Credit RiskAdministration Committee

Operational RiskAdministration Committee

Business Executive Functions, Oversight and Internal Controls

Board of Directors

General Meeting of Stockholders

(Business Execution) Directors

AuditsInternally

Directs/Cooperates

Audit and Supervisory Committee


Board of Directors

Risk Management Division

Emergency Of�ce General Planning Division(Secretariat: General Planning Division)

Compliance Committee Chairman: President

(Secretariat: Compliance Division)

Audit and SupervisoryCommittee

Branches, Head Of�ce

Creditrisk

RiskCategories

Marketrisk

Liquidityrisk Administrative

riskSystem

risk Legalrisk

Human-errorrisk

Fixedasset risk

Reputationalrisk

InternalAudit

Division

RiskManagement

Division

Divisionsresponsiblefor eachtype of riskmanagement

Credit-Related

Divisions

Risk Management DivisionOperations

ManagementDivision

SystemsDevelopment

Division

ComplianceDivision

PersonnelDivision

GeneralAffairs Division

Customer’sVoiceCenter

ComplianceDivision

Credit Risk Administration Committee

(Secretariat: Risk Management Division)

ALM Committee(Secretariat: General

Planning Division)

Compliance

Executive Committee

Operational Risk Administration Committee(Secretariat: Risk Management Division)

Operational risk

Risk Management Framework

in which compliance-related information is shared by all employees from the branch level to top management . At all head office and branch business departments, we have appointed compliance officers, who assess progress in compliance-related matters and organize training and awareness-raising activities such as study groups . The Compliance Division, working closely with the Compli-ance Committee and compliance officers, integrates collection and management of compliance-related information .

Risk ManagementBasic PhilosophyIn its daily business operations, a bank is exposed to credit risks, market risks and other risks . These risks are growing in diversity and complexity as deregulation progresses and the business of banking grows ever more complex . Therefore, finding ways of appropriately managing risk has become a vital challenge for a bank . On the other hand, for a bank, risk-taking is essential for generation of revenue . Only by assuming a reasonable level of risk, it is possible to ensure acceptable earnings growth . Accordingly, the bank sets reasonable profit targets after factoring in all conceivable risks, and takes every precaution to manage risk Iyo Bank’s management treats risk management as a priority issue . Each fiscal year, the Board of Directors compiles risk man-agement policies, and, based on these policies, takes steps to strengthen risk management and improve the quality of risk management .

Risk Management FrameworkThe Bank’s risk management framework has four main pillars:

1 . Legal observance under the Compliance Committee 2 . Managing revenue-generating risk assets under the

ALM Committee 3 . The Credit Risk Administration Committee undertakes

risk management that focuses on curbing credit risk 4 . Management of operational risk to minimize administra-

tive and system risk, under the Operational Risk Adminis-tration Committee

The Bank’s risk exposure is assessed by the ALM commit-tee by quantifying market and credit risk, and optimal fund management and procurement structures are put in place to assure stable earnings over the medium and long term . The Credit Risk Administration Committee aims to achieve an optimal management and procurement structure as well as secure stable medium- to long-term income by quantifying the Bank’s credit risk . At the same time, the Operational Risk Administration Committee is taking measures to refine operational risk management through organization-wide discussion and monitoring regarding important topics arising from reviews of actual operational risk . With regard to administrative risk, system risk, legal risk, human-error risk, and fixed asset risk, which together constitute operational risk, organization-wide responses include establishment of offices for each category of risk, and rigorous risk management . At the same time, the Risk Management Division is responsible for coordination of risk management carried out by the departments in charge of each category of risk . Moreover the Risk Management Division, which coordi-nates overall risk management, manages verification of risk management at each department .


Financial Section

Financial HighlightsThe Iyo Bank, Ltd . and its Consolidated Subsidiaries

Millions of yen

Years ended March 31: 2015 2014 2013 2012 2011At Year-End:AssetsSecurities ¥1,831,611 ¥1,749,815 ¥1,827,529 ¥1,699,444 ¥1,586,855

Loans and bills discounted 3,851,235 3,708,249 3,636,072 3,549,031 3,478,287

Total assets 6,575,422 6,124,787 6,004,711 5,672,541 5,365,448

LiabilitiesDeposits 5,264,862 5,199,147 5,116,636 4,886,498 4,699,847

Total liabilities 5,977,820 5,617,266 5,528,386 5,258,112 4,987,472

For the Year:Total income ¥ 124,003 ¥ 126,352 ¥ 118,673 ¥ 124,562 ¥ 117,014

Total expenses 77,881 82,098 87,050 89,273 90,751

Income before income taxes and minority interests 46,122 44,253 31,623 35,288 26,262

Net income 26,999 26,133 18,377 18,413 15,076

Net cash provided by operating activities 348,931 (23,339) 134,275 110,580 109,747

Net cash provided by investing activities 18,680 95,693 (48,035) (95,368) (199,530)

Net cash provided by financing activities (25,065) (3,340) (4,635) (2,905) (2,610)

Cash and cash equivalents 602,299 259,700 190,656 109,012 96,710

Yen

Per Share Data:

Net income ¥ 85.41 ¥ 82 .69 ¥ 57 .90 ¥ 57 .71 ¥ 47 .24

Stockholders’ equity 1,825.62 1,548 .10 1,448 .56 1,246 .79 1,134 .33

Equity ratio (BIS standards) (%) 15.81 14 .41 13 .00 13 .06 12 .29

Return on equity (ROE) (%) 5.06 5 .51 4 .29 4 .84 4 .17

Price earnings ratio (PER) (Times) 16.70 11 .92 15 .35 12 .70 14 .66

Number of employee 2,977 2,937 2,872 2,857 2,888

Note: Japanese yen amounts, except net income per share, are presented in millions of yen and are rounded down to the nearest million .

Ratings [JCR] Evaluation gain on securities(Non-consolidated)

Equity ratio (BIS standards)

Iyo bank

Iyo bank has obtained one of the best ratings among Japanese banks including mega-banks by Japan Credit Rating Agency, Ltd. (JCR).

AA

AA-

A+

A

A-

BBB+

BBB

BBB-

0

60

120

180

240

300

201520142013201220110

4,000

8,000

12,000

16,000

20,000

0

8

10

12

14

16

20152014201320122011

(Billions of yen)

(March 31) (March 31)

(Yen) (%)

100.2

81.7

9,75510,083

12,397

14,827

19,206

175.6175.6

183.012.29

13.06 13.00

14.41

15.81

261.7

104.1

Management Discussion and Analysis of Operations

g Business EnvironmentIn fiscal 2014, ended March 31, 2015, the Japanese economy continued to recover gradually. Personal consumption re-mained lackluster, due to a demand backlash following the consumption tax hike and worsening consumer sentiment. However, corporate earnings were firm, and the employment and income situations improved. Economic activity in Ehime Prefecture, the Bank’s principal operating base, was weak in some areas, but manufactur-ing activity gradually recovered, and the underlying tone was of modest recovery. Recovery in the corporate segment differed by industry category and company, due to increased cost burdens stemming from yen depreciation and person-nel shortages, as well as to concerns about future demand uncertainty. Overall, however, we expect gentle economic recovery to continue, buoyed by falling crude oil prices and the impact of various government stimulus measures.

g Income AnalysisAs a result of the above factors, consolidated total income for fiscal 2014 declined ¥1,945 million year on year, to ¥123,930 (US$1,031 million). This reflected a reduction in other operating income on proceeds from sales of securities, and other factors. Consolidated total expenses fell ¥3,495 million, to ¥76,601 million (US$637 million) due in part to lower credit cost. As a result, net income on a consolidated basis in-creased ¥866 million, to ¥26,999 million (US$225 million). Net income per share grew ¥2.72 year on year, to ¥85.41 (US$0.71).

g Segment InformationThe Iyo Bank Group consists of the Iyo Bank and 13 consoli-dated subsidiaries. The Group’s operations center on com-mercial banking services, and also cover leasing and other financial services.

Banking OperationsOrdinary income came to ¥108,336 million (US$902 million). This was due to ordinary income from customers of ¥107,939 million and ordinary income from intersegment transactions of ¥396 million. Segment profit increased ¥1,071 million, to ¥46,163 million (US$384 million).

Leasing OperationsOrdinary income came to ¥14,583 million (US$121 million). This was attributable to ordinary income from customers of ¥14,098 million and ordinary income from intersegment transactions of ¥485 million. Segment profit increased ¥83 million, to ¥613 million (US$5 million).

Other BusinessesOrdinary income came to ¥3,618 million (US$30 million). This was a result of ordinary income from customers of ¥1,892 million, and ordinary income from intersegment transactions of ¥1,725 million. Segment profit increased ¥428 million, to ¥583 million (US$5 million).

Net Income Net Income per Share Loans and Bills Discounted

Deposits

(Billions of yen) (Yen) (Billions of yen) (Billions of yen)

0

8

16

24

32

201520142013201220110

25

50

75

100

201520142013201220110

1,000

2,000

3,000

4,000

201520142013201220110

1,500

3,000

4,500

6,000

20152014201320122011(FY) (FY) (March 31) (March 31)


g Balance Sheets AnalysisLoans and Bills DiscountedLoans and bills discounted at the end of fiscal 2014 grew increased ¥142,986 million (up 3.9%) to ¥3,851,235 million (US$32,048 million).

Loans by Industry

Millions of yen

2015 2014

Years ended March 31:Loans and bills

discounted outstanding Share (%)Loans and bills

discounted outstanding Share (%)

Manufacturing ¥ 600,832 15.60 ¥ 597,346 16.11

Agricultural and forestry 2,764 0.07 2,323 0.06

Fishing 13,427 0.35 11,177 0.30

Mining, quarrying and gravel extraction 3,289 0.09 3,809 0.10

Construction 122,883 3.19 126,157 3.40

Electricity, gas and water utilities, sewage 89,644 2.33 88,142 2.38

Communications 28,470 0.74 27,055 0.73

Transportation and postal service 655,624 17.02 655,351 17.67

Wholesale and retail 485,611 12.61 461,361 12.44

Finance and insurance 139,229 3.61 114,206 3.08

Real estate and rental 353,357 9.17 333,975 9.01

Service 353,745 9.19 327,327 8.83

Local authorities 224,755 5.84 203,645 5.49

Others 777,599 20.19 756,370 20.40

Total ¥3,851,235 100.00 ¥3,708,249 100.00

Total Assets Equity Ratio(BIS standards)

Return on Equity

(Billions of yen) (%) (%)

(March 31) (March 31) (March 31)0

2,000

4,000

6,000

8,000

201520142013201220110

4

8

12

16

201520142013201220110.0

1.5

3.0

4.5

6.0

20152014201320122011


Asset QualityThe balance of classified assets subject to mandatory disclo-sure under the Financial Revitalization Law decreased ¥4,507 million, to ¥71,303 million (US$593 million) at the end of fiscal 2014. The ratio of non-performing loans to total loans under the law dropped 0.19 percentage point, to 1.77%. Loans to bankrupt or effectively bankrupt borrowers de-creased ¥2,833 million from the previous year-end, to ¥3,836 million (US$32 million). Doubtful assets were down ¥1,656

million, to ¥50,257 million (US$418 million). Credit subject to specific risk management fell ¥18 million, to ¥17,209 million ($143 million). The coverage ratio (the ratio of the total sum of the reserve for possible loan losses and the amount deemed recoverable from collateral and guarantees to total credit exposure under the Financial Revitalization Law) stood at 74.18%, dropped 3.38 percentage point from the previous year-end.

Credit quality assessments are as follows (on a non-consolidated basis):

Millions of yen

2015 2014

March 31, Millions of yenPercentage

of loansMillions of U.S. dollars Millions of yen

Percentage of loans

Loans to bankrupt or effectively bankrupt borrowers ¥ 3,836 0.09 $ 32 ¥ 6,669 0.17

Doubtful assets 50,257 1.25 418 51,913 1.34

Credit subject to specific risk management 17,209 0.42 0.42 17,227 0.44

Total 71,303 1.77 593 75,810 1.96

Unclassified credit 3,937,657 98.22 32,767 3,779,843 98.03

Note: “Credit” refers collectively to the following: loans and bills discounted, securities loaned, foreign exchange (that due from foreign banks, foreign bills bought or receivable), customers’ liabilities for acceptances and guarantees, accrued interest, and suspense payments.

“Loss” refers to credit exposures which have been judged to be non-collectible or of no value. “Doubtful” refers to credit exposures where the borrower has not reached the point of financial collapse, but where his financial position and results are worsen-

ing, and where full payment including the payment of interest is judged to be unlikely. “Credit subject to specific risk management” refers to credit exposures where payment has been delayed for three months or more, or those where payment

conditions have been relaxed. “Unclassified credit” refers to credit exposures that have not been classified as “Loss,” “Doubtful,” or “Credit subject to specific risk management” due to the absence of any particular problem with the operating results or financial position of the creditor.

SecuritiesThe balance of securities at the end of the fiscal year was up ¥81,796 million, or 4.7% year on year, to ¥1,831,611 million (US$15,242 million).

DepositsThe balance of deposits, including NCDs, increased ¥65,715 million, or 1.3%, to ¥5,264,862 million (US$43,812 million) due to a steady increases in both individual and corporate deposits.

g Cash Flow AnalysisConsolidated Cash FlowsCash flow provided by operating activities jumped by ¥372,270 million over the previous term, to ¥348,931 million (US$2,904 million), due to an increasing in payables under securities lending transactions and other factors. Net cash provided by investing activities decreased by ¥77,013 million to ¥18,680 million (US$155 million). This was mainly attributable to the proceeds from sales of securi-ties and redemptions. Net cash used in financing activities decreased ¥21,725 million, to ¥25,065 million (US$209 million) due to the repay-ment of subordinated borrowings and other factors. As a result, cash and cash equivalents at the end of the term rose by ¥342,599 million, to ¥602,299 million (US$5,012 million).


Consolidated Balance SheetsThe Iyo Bank, Ltd. and its Consolidated Subsidiaries

March 31, 2015 and 2014

Millions of yenThousands of U.S.

dollars (Note 1)

2015 2014 2015

ASSETSCash and due from banks (Note 16) ¥ 623,917 ¥ 399,830 $ 5,191,953 Call loans and bills purchased (Note 16) 74,849 84,700 622,859 Monetary claims purchased (Notes 16, 17 and 19) 9,642 11,043 80,236 Trading account securities (Notes 16 and 17) 523 527 4,352 Money held in trust (Notes 16, 18 and 19) 9,321 8,062 77,565 Securities (Notes 6, 11, 16, 17 and 19) 1,831,611 1,749,815 15,241,832 Loans and bills discounted (Notes 4, 5, 7 and 16) 3,851,235 3,708,249 32,048,223 Reserve for loan losses (Note 16) (28,830) (32,569) (239,910)Foreign exchange (Note 5) 6,205 12,029 51,635 Lease receivables and investment assets (Note 6) 28,909 26,533 240,567 Other assets (Note 6) 36,684 30,369 305,267 Tangible fixed assets (Notes 8 and 9) 79,842 80,844 664,408 Intangible fixed assets 4,118 4,113 34,268 Net defined benefit asset (Note 21) 18,035 12,727 150,079 Deferred tax assets (Note 23) 700 917 5,825 Customers’ liabilities for acceptances and guarantees 28,654 27,592 238,445 Total assets ¥6,575,422 ¥6,124,787 $54,717,666

LIABILITIES AND NET ASSETSLiabilitiesDeposits (Notes 6 and 16) ¥5,264,862 ¥5,199,147 $43,811,783 Call money and bills sold (Notes 6 and 16) 111,105 62,454 924,565 Payables under securities lending transactions (Notes 6 and 16) 332,077 83,090 2,763,393 Borrowed money (Notes 6, 10 and 16) 98,581 130,353 820,346 Foreign exchange 38 38 316 Other liabilities (Note 6) 45,963 42,039 382,483 Accrued employees’ bonuses 2,074 2,004 17,258 Net defined benefit liability (Note 21) 13,194 14,268 109,794 Reserve for directors’ retirement benefits — 2 —Reserve for losses on repayment of dormant bank accounts 3,045 2,858 25,339 Reserve for contingent losses 420 443 3,495 Reserve under the special laws 0 0 0 Deferred tax liabilities (Note 23) 66,509 40,133 553,457 Deferred taxes on revaluation excess (Note 8) 11,291 12,837 93,958 Acceptances and guarantees 28,654 27,592 238,445 Total liabilities 5,977,820 5,617,266 49,744,695

Net assets (Note 26)Common stock Authorized — 600,000,000 shares Issued — 323,775,366 shares 20,948 20,948 174,319 Capital surplus 10,483 10,483 87,234 Retained earnings 344,637 320,766 2,867,912 Treasury stock (5,435) (5,488) (45,227) Total stockholders’ equity 370,634 346,710 3,084,247 Net unrealized holding gains (losses) on securities (Note 19) 178,840 118,582 1,488,225 Net deferred gains (losses) on derivatives under hedge accounting (57) (2) (474)Land revaluation excess (Note 8) 20,761 20,305 172,763 Remeasurements of defined benefit plans (Note 21) 6,892 3,632 57,352 Total accumulated other comprehensive income 206,437 142,517 1,717,874 Stock acquisition rights (Note 22) 329 288 2,737 Minority interests 20,200 18,003 168,095 Total net assets 597,602 507,520 4,972,971 Total liabilities and net assets ¥6,575,422 ¥6,124,787 $54,717,666 See Notes to Consolidated Financial Statements.


Consolidated Statements of IncomeThe Iyo Bank, Ltd. and its Consolidated Subsidiaries

For the years ended March 31, 2015 and 2014

Consolidated Statements of Comprehensive IncomeThe Iyo Bank, Ltd. and its Consolidated Subsidiaries



dollars (Note 1)

2015 2014 2015

INCOMEInterest and dividend income: Interest on loans and discounts ¥ 53,565 ¥ 55,474 $ 445,743 Interest and dividends on securities 32,224 30,448 268,153 Other interest income 867 826 7,214 Fees and commissions 12,301 11,665 102,363 Other operating income 18,765 21,143 156,153 Other income 6,278 6,794 52,242 Total income 124,003 126,352 1,031,896

EXPENSESInterest expense: Interest on deposits 4,741 5,039 39,452 Interest on borrowings and rediscounts 973 945 8,096 Interest on payables under securities lending transactions 165 71 1,373 Other interest expense 307 226 2,554 Fees and commissions 4,020 3,679 33,452 Other operating expenses 13,326 12,652 110,892 General and administrative expenses 50,678 50,156 421,719 Other expenses (Note 12) 3,667 9,328 30,515 Total expenses 77,881 82,098 648,090 Income before income taxes 46,122 44,253 383,806 Income taxes (Note 23): Current (12,156) (15,540) (101,156) Deferred (5,725) (1,463) (47,640)Income before minority interests 28,240 27,250 235,000 Minority interests (1,241) (1,116) (10,327)Net income ¥ 26,999 ¥ 26,133 $ 224,673

Per share of common stock (yen and U.S. dollars): Yen U.S. dollars (Note 1)

Basic net income ¥85.41 ¥82.69 $0.71 Diluted net income 85.29 82.59 0.70 Dividends 12.00 10.00 0.09 See Notes to Consolidated Financial Statements.


dollars (Note 1)

2015 2014 2015

Income before minority interests ¥28,240 ¥27,250 $235,000 Other comprehensive income (Note 13) 65,481 5,307 544,903 Net unrealized holding gains (losses) on securities 61,116 5,305 508,579 Net deferred gains (losses) on derivatives under hedge accounting (55) 1 (457) Land revaluation excess 1,160 — 9,652 Remeasurements of defined benefit plans 3,260 — 27,128 Comprehensive income ¥93,721 ¥32,557 $779,903 Comprehensive income attributable to: Owners of the parent company ¥91,623 ¥31,144 $762,444 Minority interests 2,098 1,412 17,458 See Notes to Consolidated Financial Statements.


Consolidated Statements of Changes in Net AssetsThe Iyo Bank, Ltd. and its Consolidated Subsidiaries


Millions of yen

Stockholders’ equity

For the year ended March 31, 2015Common

stockCapital surplus

Retained earnings

Treasury stock

Total stockholders’

equity

Balance at the beginning of the accounting period ¥20,948 ¥10,483 ¥320,766 ¥(5,488) ¥346,710 Cumulative effects of changes in accounting policies (672) (672)Restated balance 20,948 10,483 320,094 (5,488) 346,038 Changes during the accounting period Dividends (3,160) (3,160) Net income 26,999 26,999 Purchase of treasury stock (3) (3) Disposal of treasury stock (0) 57 56 Transfer of loss on disposal of treasury stock 0 (0) — Reversal of land revaluation excess 704 704 Changes in items other than stockholders’ equity, net

Total changes during the accounting period — — 24,542 53 24,596 Balance at the end of the accounting period ¥20,948 ¥10,483 ¥344,637 ¥(5,435) ¥370,634

Thousands of U.S. dollars (Note 1)




Retained earnings

Treasury stock


equity

Balance at the beginning of the accounting period $174,319 $87,234 $2,669,268 $(45,668) $2,885,162 Cumulative effects of changes in accounting policies (5,592) (5,592)Restated balance 174,319 87,234 2,663,676 (45,668) 2,879,570 Changes during the accounting period Dividends (26,296) (26,296) Net income 224,673 224,673 Purchase of treasury stock (24) (24) Disposal of treasury stock (0) 474 466 Transfer of loss on disposal of treasury stock 0 (0) — Reversal of land revaluation excess 5,858 5,858 Changes in items other than stockholders’ equity, net

Total changes during the accounting period — — 204,227 441 204,676 Balance at the end of the accounting period $174,319 $87,234 $2,867,912 $(45,227) $3,084,247

Millions of yen

Total other comprehensive income

Stock acquisition

rightsMinority interests

Total net assetsFor the year ended March 31, 2015

Net unrealized

holding gains (losses) on securities

Net deferred gains (losses) on derivatives under hedge accounting

Land revaluation

excess

Remeasure-ments of defined

benefit plans

Total accumu-lated other comprehen-sive income

Balance at the beginning of the accounting period ¥118,582 ¥ (2) ¥20,305 ¥3,632 ¥142,517 ¥288 ¥18,003 ¥507,520 Cumulative effects of changes in accounting policies (672)Restated balance 118,582 (2) 20,305 3,632 142,517 288 18,003 506,848 Changes during the accounting period Dividends (3,160) Net income 26,999 Purchase of treasury stock (3) Disposal of treasury stock 56 Transfer of loss on disposal of treasury stock Reversal of land revaluation excess 704 Changes in items other than stockholders’ equity, net 60,258 (55) 456 3,260 63,919 41 2,196 66,157

Total changes during the accounting period 60,258 (55) 456 3,260 63,919 41 2,196 90,753 Balance at the end of the accounting period ¥178,840 ¥(57) ¥20,761 ¥6,892 ¥206,437 ¥329 ¥20,200 ¥597,602




Stock acquisition



Net unrealized



Land revaluation

excess


benefit plans


Balance at the beginning of the accounting period $ 986,785 $ (16) $168,968 $30,223 $1,185,961 $2,396 $149,812 $4,223,350 Cumulative effects of changes in accounting policies (5,592)Restated balance 986,785 (16) 168,968 30,223 1,185,961 2,396 149,812 4,217,758 Changes during the accounting period Dividends (26,296) Net income 224,673 Purchase of treasury stock (24) Disposal of treasury stock 466 Transfer of loss on disposal of treasury stock Reversal of land revaluation excess 5,858 Changes in items other than stockholders’ equity, net 501,439 (457) 3,794 27,128 531,904 341 18,274 550,528

Total changes during the accounting period 501,439 (457) 3,794 27,128 531,904 341 18,274 755,205 Balance at the end of the accounting period $1,488,225 $(474) $172,763 $57,352 $1,717,874 $2,737 $168,095 $4,972,971

Millions of yen




Retained earnings

Treasury stock


equity

Balance at the beginning of the accounting period ¥20,948 ¥10,483 ¥296,985 ¥(5,478) ¥322,939 Changes during the accounting period Dividends (3,318) (3,318) Net income 26,133 26,133 Purchase of treasury stock (20) (20) Disposal of treasury stock (1) 9 8 Transfer of loss on disposal of treasury stock 1 (1) — Reversal of land revaluation excess 966 966 Changes in items other than

stockholders’ equity, netTotal changes during the accounting period — — 23,780 (10) 23,770 Balance at the end of the accounting period ¥20,948 ¥10,483 ¥320,766 ¥(5,488) ¥346,710

Millions of yen


Stock acquisition



Net unrealized



Land revaluation

excess


benefit plans


Balance at the beginning of the accounting period ¥113,572 ¥(4) ¥21,272 ¥ — ¥134,840 ¥173 ¥18,371 ¥476,324 Changes during the accounting period Dividends (3,318) Net income 26,133 Purchase of treasury stock (20) Disposal of treasury stock 8 Transfer of loss on disposal of treasury stock Reversal of land revaluation excess 966 Changes in items other than

stockholders’ equity, net 5,009 1 (966) 3,632 7,676 115 (367) 7,424 Total changes during the accounting period 5,009 1 (966) 3,632 7,676 115 (367) 31,195 Balance at the end of the accounting period ¥118,582 ¥(2) ¥20,305 ¥3,632 ¥142,517 ¥288 ¥18,003 ¥507,520

See Notes to Consolidated Financial Statements.


Consolidated Statements of Cash FlowsThe Iyo Bank, Ltd. and its Consolidated Subsidiaries



dollars (Note 1)

2015 2014 2015Cash flows from operating activities Income before income taxes ¥ 46,122 ¥ 44,253 $ 383,806 Depreciation 4,482 4,568 37,297 Impairment losses 1,104 1,890 9,186 Gain on bargain purchases — (477) — Increase (decrease) in reserve for loan losses (3,739) 458 (31,114) Increase (decrease) in reserve for employees’ bonuses 70 431 582 Decrease (increase) in net defined benefit asset (5,308) (8,241) (44,170) Increase (decrease) in net defined benefit liability (1,073) 592 (8,929) Increase (decrease) in reserve for directors’ retirement benefits (2) — (16) Increase (decrease) in reserve for losses on repayment of dormant bank accounts 187 107 1,556 Increase (decrease) in reserve for contingent losses (23) 23 (191) Increase (decrease) in reserve under the special laws 0 0 0 Interest and dividend income (86,657) (86,749) (721,120) Interest expense 6,189 6,282 51,502 Securities losses (gains), net (3,208) (8,009) (26,695) Money in trust losses (gains), net (18) 22 (149) Foreign exchange losses (gains), net (23,334) (14,940) (194,174) Losses (gains) on disposal of tangible fixed assets, net 131 111 1,090 Net changes in loans and bills discounted (142,985) (72,177) (1,189,856) Net changes in deposits 65,714 82,511 546,841 Net changes in borrowed money (excluding subordinated borrowings) (9,772) (2,714) (81,318) Net changes in deposits with banks 118,511 (3,708) 986,194 Net changes in call loans 11,283 (48,617) 93,891 Net changes in call money 48,651 (39,569) 404,851 Net changes in payables under securities lending transactions 248,986 52,579 2,071,948 Net changes in foreign exchange assets 5,823 (3,006) 48,456 Net changes in foreign exchange liabilities (0) (87) (0) Net changes in lease receivables and investment assets (2,376) (3,332) (19,771) Interest income received 86,707 87,126 721,536 Interest expense paid (7,090) (7,878) (58,999) Other 7,886 7,264 65,623 Subtotal 366,263 (11,285) 3,047,873 Income taxes paid (17,331) (12,054) (144,220)Net cash provided by (used in) operating activities 348,931 (23,339) 2,903,644

Cash flows from investing activities Purchases of securities (182,701) (235,133) (1,520,354) Proceeds from sales of securities 84,848 241,321 706,066 Proceeds from maturities of securities 122,378 96,919 1,018,373 Increase in money held in trust (1,042) (600) (8,671) Decrease in money held in trust — 600 — Purchases of tangible fixed assets (4,359) (4,854) (36,273) Proceeds from sales of tangible fixed assets 623 20 5,184 Purchases of intangible fixed assets (1,067) (1,278) (8,879) Purchases of stocks of subsidiaries — (1,300) —Net cash used in investing activities 18,680 95,693 155,446

Cash flows from financing activities Decrease in subordinated borrowings (22,000) — (183,073) Proceeds from share issuance to minority shareholders 105 4 873 Cash dividends paid (3,160) (3,318) (26,296) Cash dividends paid to minority stockholders (7) (7) (58) Purchases of treasury stock (3) (20) (24) Proceeds from sales of treasury stock 0 0 0 Net cash provided by (used in) financing activities (25,065) (3,340) (208,579)

Foreign currency translation adjustments 53 30 441 Net increase (decrease) in cash and cash equivalents 342,599 69,043 2,850,952 Cash and cash equivalents at the beginning of year 259,700 190,656 2,161,105 Cash and cash equivalents at the end of year (Note 14) ¥ 602,299 ¥ 259,700 $ 5,012,057

See Notes to Consolidated Financial Statements.


Notes to Consolidated Financial StatementsThe Iyo Bank, Ltd. and Its Consolidated Subsidiaries


1. Basis of Presenting Consolidated Financial StatementsThe accompanying consolidated financial statements have been prepared in accordance with the provisions set forth in the Financial Instruments and Exchange Act and its related accounting regulations and in confor-mity with accounting principles generally accepted in Japan (“Japanese GAAP”), which are different in certain respects as to application and disclosure requirements from International Financial Reporting Standards. The accompanying consolidated financial statements have been re-structured and translated into English with certain expanded disclosures from the consolidated financial statements of The Iyo Bank, Ltd. (the “Bank”) prepared in accordance with Japanese GAAP and filed with the appropriate Local Finance Bureau of the Ministry of Finance as required by the Financial Instruments and Exchange Act. Some supplementary information included in the statutory Japanese language consolidated financial statements, but not required for fair presentation, is not presented in the accompanying consolidated financial statements. Translations of the Japanese yen amounts into U.S. dollar amounts were included solely for the convenience of readers outside Japan, using the prevailing exchange rate at March 31, 2015, which was ¥120.17 to U.S. $1.00. The translations should not be construed as representations that the Japanese yen amounts have been, could have been or could in the future be converted into U.S. dollars at this or any other rate of exchange.

2. Significant Accounting Policies(1) Principles of consolidationThe consolidated financial statements include the accounts of the Bank and the following 13 consolidated subsidiaries.• The Iyogin Credit Guaranty Company Limited• The Iyogin Business Service Company Limited• Iyogin Capital Company Limited• Iyogin Venture Fund Corporation Limited II• Iyogin Venture Fund Corporation Limited III• Iyo Evergreen Sixtiary Industrialization Support Fund Investment Busi-

ness Limited Partnership• Iyo Evergreen Agriculture Support Fund Investment Business Limited

Partnership• Iyo Evergreen Business Succession Support Fund Investment Business

Limited Partnership• Iyogin Regional Economy Research Center, Inc.• Iyogin DC Card Co., Ltd.• Iyogin Leasing Company Limited• Iyogin Computer Service Company Limited• Iyogin Securities Co., Ltd. In the consolidated fiscal year ended March 31, 2015, Iyo Evergreen Agriculture Support Fund Investment Business Limited Partnership and Iyo Evergreen Business Succession Support Fund Investment Business Limited Partnership, newly established companies, were included in the scope of consolidation. The consolidated financial statements include the accounts of five consolidated subsidiaries with fiscal years ended December 31. Ap-propriate adjustments are made for significant transactions during the period from December 31 to March 31, the date of the consolidated financial statements. All significant intercompany balances, transactions and unrealized profits and losses included in assets and liabilities have been eliminated.

(2) Net assetsUnder Japanese laws and regulations, including the Companies Act (the “Act”), the entire amount paid for new shares is required to be

designated as common stock. However, a company may, by a resolution of the Board of Directors, designate an amount not exceeding one half of the price of the new shares as additional paid-in capital, which is included in capital surplus. Under the Act and the Banking Law, in cases in which a dividend distribution of surplus is made, the smaller of an amount equal to 20% of the dividend or the excess, if any, of 100% of common stock over the total of additional paid-in capital and legal earnings reserve must be set aside as additional paid-in capital or legal earnings reserve. Legal earnings reserve is included in retained earnings in the accompanying consolidated balance sheets. Under the Act, legal earnings reserve and additional paid-in capital can be used to eliminate or reduce a deficit or can be capitalized by a resolution of the stockholders’ meeting. Additional paid-in capital and legal earnings reserve may not be distributed as dividends. Under the Act and the Banking Law, however, by resolution of the stockholders’ meet-ing, all additional paid-in capital and all legal earnings reserve may be transferred to other capital surplus and retained earnings, respectively, which are potentially available for dividends. The maximum amount that the Bank can distribute as dividends is calculated based on the unconsolidated financial statements of the Bank in accordance with Japanese laws and regulations. At the annual stockholders’ meeting held on June 26, 2015, the stockholders approved cash dividends amounting to ¥2,212 million ($18,407 thousand). The appropriation was not accrued in the consoli-dated financial statements as of March 31, 2015. Such appropriations are recognized in the period in which they are approved by the stockholders.

(3) Cash flow statementsIn preparing the consolidated statements of cash flows, cash on hand and deposits with the Bank of Japan are considered to be cash and cash equivalents.

(4) Foreign currency translationsForeign currency assets and liabilities and the accounts of overseas branches of the Bank are translated into yen at the rates prevailing at the consolidated balance sheet date. Consolidated subsidiaries’ foreign currency assets and liabilities are translated into yen at the rate prevailing at their respective balance sheet dates.

(5) Trading account securitiesTrading account securities of the Bank and its consolidated subsidiaries are stated at fair market value. Gains and losses realized on the disposal and unrealized gains and losses from market value fluctuations of these securities are recognized as gains and losses in the period of the change. Realized gains and losses on the sale of such trading account securities are computed using moving average cost.

(6) SecuritiesHeld-to-maturity debt securities are stated at amortized cost by the straight-line method. Available-for-sale securities with available fair market values are stated at fair market value. Realized gains and losses on the sale of such securities are computed using moving average cost. Available-for-sale securities with fair values that are extremely difficult to determine are carried at cost using moving average cost. Unrealized gains and losses on these securities are reported, net of applicable income taxes, as a separate component of net assets. Securities included in the money held in the trust account are carried in the same manner as the securities mentioned above.


(7) Reserve for possible loan lossesThe Bank and its consolidated subsidiaries write off loans and make provisions for possible loan losses. For loans to insolvent customers who are undergoing bankruptcy or other collection proceedings or who are in a similar financial condition, the reserve for possible loan losses is provided in the full amount of such loans, excluding amounts written off and the portion that is estimated to be recoverable due to the existence of security interests or guarantees. For the unsecured and unguaranteed portions of loans to customers not in the above circumstances but for who there is a high probability of so becoming, the reserve for possible loan losses is provided for the estimated unrecoverable amounts deter-mined after an evaluation of the customer’s overall financial condition. For other loans, such as normal loans and loans requiring special atten-tion, the reserve for possible loan losses is provided based on the Bank’s actual rate of loan losses in the past. Assessments and classifications are made by each business and credit supervision department and are audited by the Credit Administra-tion Department, an independent department. The reserve for possible loan losses is provided based on such procedures. The estimated unrecoverable portions of loans to insolvent custom-ers who are undergoing bankruptcy or other collection proceedings or who are in a similar financial condition are written off. The estimated un-recoverable amounts are determined after excluding amounts considered recoverable due to the existence of security interests or guarantees. As of March 31, 2015 and 2014, the estimated unrecoverable amounts were ¥24,455 million ($203,503 thousand) and ¥28,969 million, respectively. The consolidated subsidiaries write off loans and make provisions for possible loan losses based on the actual rate of loan losses in the past. However, unrecoverable amounts of loans to customers who have a high probability of becoming bankrupt are separately estimated and a reserve for possible loan losses is provided based on those estimations.

(8) Tangible and intangible fixed assets and lease assetsTangible and intangible fixed assets are generally stated at cost, less the accumulated depreciation and deferred gains on the sale of real estate. Depreciation of tangible fixed assets (except for lease assets) of the Bank and its consolidated subsidiaries is recorded using the declining bal-ance method. However, buildings acquired after April 1, 1998 are depreci-ated using the straight-line method. The estimated useful lives of these assets are 15 – 40 years for buildings and 5 – 10 years for equipment. Depreciation for intangible fixed assets (except for lease assets) of the Bank and its consolidated subsidiaries is recorded using the straight-line method. Internal use software costs of the Bank and its consolidated subsidiaries are depreciated using the straight-line method over the estimated useful life of mainly five years. Lease assets under finance leases that are not deemed to transfer the ownership of the lease property and that represent tangible or intangible assets are depreciated using the straight-line method over the lease term with zero residual value. In cases in which there is a residual value guarantee in the contract, the residual value is the guaranteed value. In other cases, it is deemed to be zero.

(9) Accrued employees’ bonusesAccrued employees’ bonuses are provided for the future payment of employees’ bonuses based on the estimated amounts of the future payments that are attributed to the current fiscal year.

(10) Reserve for losses on repayment of dormant bank accountsReserve for losses on repayment of dormant bank accounts which are derecognized as liabilities is provided for the possible losses on the future claims of withdrawal based on historical reimbursement experience.

(11) Reserve for directors’ retirement benefitsReserve for directors’ retirement benefits is provided for the payment of retirement benefits to directors and corporate auditors in the amount deemed accrued at the fiscal year-end.

(12) Reserve for contingent losses Reserve for contingent losses is maintained to provide against possible losses from contingencies which are not covered by other specific reserves. The balance is an estimate of the possible future losses consid-ered to require a reserve.

(13) Reserve under the special laws Reserve under special laws is provided for contingent liabilities from financial instruments and exchange. This is a reserve pursuant to Article 46-5 of the Financial Instruments and Exchange Act and Article 175 of Cabinet Office Ordinance on the Financial Instruments Business to indemnify losses incurred in connection with the purchase and sale of securities and derivatives and other transactions.

(14) Accounting method for retirement benefits In calculating benefit obligation, the portion of projected benefit obliga-tion attributed to the current fiscal year is determined using the benefit formula method. Prior service cost is amortized using the straight-line method over 10 years. Actuarial differences are recognized as expenses using the straight-line method within the average of the estimated remaining service years of employees commencing in the following period. Some consolidated subsidiaries use a simplified method to calculate net defined benefit liability and retirement benefit cost. This simplified method assumes the Company’s retirement benefit obligations to be equivalent to the benefits payable upon the voluntary retirement of all employees at the fiscal year-end to calculate net defined benefit liability and retirement benefit cost.

(15) Derivatives and hedge accounting Derivative transactions are valued at fair value with changes in fair value included in current income. In order to hedge the interest rate risk associated with various financial assets and liabilities, the Bank and its consolidated subsidiaries apply the deferred hedge method stipulated in JICPA Industry Audit Committee Report No. 24, “Accounting and Auditing Treatment of Accounting Standards for Financial Instruments in Banking Industry.” The effectiveness of hedging is assessed for (i) each identified group of hedged deposits, loans and similar instruments and (ii) the correspond-ing group of hedging instruments, such as interest rate swaps, in the same maturity bucket. For certain assets and liabilities, the Bank and its consolidated subsid-iaries apply the exceptional treatment permitted for interest rate swaps. The Bank and its consolidated subsidiaries apply the deferred method of hedge accounting to hedge foreign exchange risks associ-ated with various foreign currency denominated monetary assets and liabilities as stipulated in JICPA Industry Audit Committee Report No. 25, “Treatment of Accounting and Auditing Concerning Accounting for Foreign Currency Transactions in the Banking Industry.” The effectiveness of the currency swap transactions, exchange swap transactions and similar transactions that hedge the foreign exchange risks of monetary


assets and liabilities denominated in foreign currencies is assessed based on a comparison of the foreign currency position of the hedged mon-etary assets and liabilities and the hedging instruments. The Bank and its consolidated subsidiaries also apply the fair value hedge method to portfolio hedges of the foreign exchange risks as-sociated with foreign currency denominated available-for-sale securities (other than bonds) identified as hedged items in advance, as long as the amount of spot and forward foreign exchange contracts payable exceeds the acquisition costs of the hedged securities in foreign currency.

(16) Finance leasesSales and cost of sales as lessor are recognized at the time of receiving lease payment. The fair book value of fixed assets for lease under leases that did not transfer ownership of the leased property to the lessee as of March 31, 2008 was regarded as the book value of the lease investment assets at the beginning of the year ended March 31, 2009, according to Article 81 of Guidance No. 16, “Guidance on Accounting Standard for Lease Transactions.” The affect on income before income taxes whether Article 80 or Article 81 of the “Implementation Guidance for Accounting Standard for Lease Transactions” was applied was minimal.

(17) Operating leasesLease related income is recognized on a straight-line basis over the full term of the lease based on the contractual amount of lease fees per month.

(18) Consumption taxesNational and local consumption taxes are accounted for mainly on a tax excluded basis.

(19) Application of consolidated tax reportingThe Bank and its wholly owned consolidated subsidiaries have adopted a consolidated tax return system.

(20) Per share dataNet income per share is based on the weighted average number of shares of common stock outstanding during the year, excluding treasury stock. Diluted net income per share reflects the potential dilution that could occur if stock options were exercised. Diluted net income per share of common stock assumes the full exercise of outstanding warrants at the time of issuance. Cash dividends per share shown in the accompanying consolidated statements of income represent dividends declared as applicable to the respective year.

(21) Changes in accounting policies(a) Effective from March 31, 2014, the Bank and its consolidated

subsidiaries apply the “Accounting Standard for Retirement Benefits” (ASBJ Statement No. 26 issued on May 17, 2012, hereinafter “the Standard”) and the “Guidance on Accounting Standard for Retire-ment Benefits” (ASBJ Guidance No. 25 issued on May 17, 2012, hereinafter “the Guidance”), excluding provisions set forth in the main clauses of Article 35 of the Standard and Article 67 of the Guidance. Accordingly, the Bank has recorded the amount calculated by deducting pension assets from retirement benefits obligations as net defined benefit liability or net defined benefit asset.

In accordance with the transitional treatment stipulated in Para-graph 37 of the Standard, unrecognized net actuarial gain (loss) and unrecognized prior service cost, after adjusting for tax effects, are reported as remeasurements of defined benefit plans in accumulated other comprehensive income as of March 31, 2014.

As a result, as of March 31, 2014, the Bank recorded a net defined benefit asset of ¥12,727 million and a net defined benefit li-ability of ¥14,268 million. In addition, deferred tax liabilities increased ¥1,990 million and accumulated other comprehensive income increased ¥3,632 million.

(b) Effective from the fiscal year ended March 31, 2015, the Bank and its consolidated subsidiaries apply the main clause of Article 35 of the “Accounting Standard for Retirement Benefits” (ASBJ Statement No. 26 issued on May 17, 2012, hereinafter “the Standard”) and the main clause of Article 67 of the “Guidance on Accounting Standard for Retirement Benefits” (ASBJ Guidance No. 25 issued on March 26, 2015, hereinafter “the Guidance”). Accordingly, the methods used to calculate retirement benefit obligation and service cost were changed. Specifically, the method used to determine the portion of projected benefit obligation attributed to periods of service was changed from the straight-line method to the benefit formula method. In addition, the method used to determine the discount rates applied in the calculation of projected benefit obligation was changed from the method in which bond duration as the basis for determining the discount rate is determined based on a number of years similar to the average remaining service period of employees to the method using the single weighted-average discount rate that reflects the estimated period and amount of benefit payment in each period.

The Standard and the Guidance were applied in accordance with the transitional treatment set forth in Article 37 of the Standard, and the effects of the change in methods used to calculate retirement benefit obligation and service cost were added to or deducted from retained earnings as of April 1, 2014.

As a result, net defined benefit asset decreased by ¥1,668 million ($13,880 thousand), net defined benefit liability decreased by ¥628 million ($5,225 thousand), deferred tax liabilities decreased by ¥368 million ($3,062 thousand) and retained earnings decreased by ¥672 million ($5,592 thousand) as of April 1, 2014. In addition, ordinary profits and income before income taxes and others for the fiscal year ended March 31, 2015 increased by ¥237 million ($1,972 thousand).

(22) Accounting standards not yet adopted“Accounting Standard for Business Combinations” (September 13, 2013)(i) OverviewThe accounting standard and the guidance were revised primarily in regard to (1) accounting for changes in a parent company’s ownership of a subsidiary in the event that the parent company retains control after an additional acquisition of stock in a subsidiary; (2) accounting for costs related to acquisitions; (3) provisional accounting treatment; and (4) presentation of net income and changes from minority interests to non-controlling interests.

(ii) Expected Date of ApplicationThe revised methods of calculation provided by the accounting standard and the guidance are expected to be adopted from the beginning of the consolidated fiscal year starting on April 1, 2015.

(iii) Impact of the Application of this Accounting Standard and GuidanceThe impact of the application of this accounting standard has yet to be determined.

3. Securities Lending TransactionsJapanese government bonds included ¥10,040 million ($83,548 thousand) of secured loan securities for which borrowers have the right to sell or pledge at March 31, 2015.


4. Loans and Bills DiscountedAt March 31, 2015 and 2014 loans and bills discounted included the following:

Millions of yen

Thousands of U.S. dollars

(Note 1)

2015 2014 2015Loans to bankrupt customers ¥ 1,172 ¥ 2,945 $ 9,752Non-accrual loans 55,185 57,822 459,224Loans overdue three months or more 2,384 3,391 19,838Restructured loans 14,878 13,893 123,807Total ¥73,620 ¥78,053 $612,632

Loans to bankrupt customers are loans to customers who are undergoing bankruptcy or similar proceedings or who are in similar financial condi-tions. Interest is not being accrued on these loans as there is a strong likelihood that the principal and interest will be uncollectible. Non-accrual loans are loans on which accrued interest income is not recognized, excluding loans to bankrupt customers and loans on which interest payments are deferred, in order to support the borrower’s recovery from financial difficulties. Loans overdue three months or more are loans not included in the above categories or in restructured loans for which payments are past due three months or more. Restructured loans are loans not included in the above categories for which the Bank has granted concessions such as reduced interest rates or deferral or waiver of interest and/or principal payments to support customers experiencing financial difficulties. Amounts described above are before the deduction of reserve for possible loan losses.

5. Commercial BillsBills discounted are accounted for as financing transactions in accor-dance with JICPA’s Industry Audit Committee Report No. 24, although the Bank has the right to sell or pledge them without restrictions. The total face value of commercial bills and purchased foreign exchange bills obtained as a result of discounting was ¥31,792 million ($264,558 thou-sand) and ¥35,659 million at March 31, 2015 and 2014, respectively.

6. Assets PledgedAt March 31, 2015 and 2014, assets pledged as collateral were as follows:

Millions of yen


(Note 1)

2015 2014 2015Securities ¥587,348 ¥350,557 $4,887,642Lease receivables and investment assets 9 36 74

The above pledged assets secure the following liabilities:

Millions of yen


(Note 1)

2015 2014 2015Deposits ¥ 32,391 ¥45,091 $ 269,543Payables under securities lending transactions 332,077 83,090 2,763,393Borrowed money 70,286 82,229 584,888Other liabilities 8 33 66

At March 31, 2015 and 2014, certain investment securities aggregating ¥68,570 million ($570,608 thousand) and ¥69,380 million, respectively, were pledged as collateral for settlement of exchange at the Bank of Japan. At March 31, 2015, other assets included guarantees of ¥66 million ($549 thousand) and security deposits of ¥328 million ($2,729 thousand). At March 31, 2014, other assets included guarantees of ¥61 million and security deposits of ¥339 million.

7. Commitment LinesCommitment line agreements related to loans are agreements which oblige the Bank and its consolidated subsidiaries to lend funds up to cer-tain limits agreed to in advance. The Bank and its consolidated subsidiar-ies will lend the funds upon the request of an obligor to draw down the funds under the loan agreement as long as there is no breach of the various terms and conditions stipulated in the relevant loan agreement. The unused commitment balances related to these loan agreements at March 31, 2015 and 2014 amounted to ¥998,334 million ($8,307,680 thousand) and ¥957,519 million, respectively. Of these amounts, ¥923,408 million ($7,684,180 thousand) and ¥895,163 million as of March 31, 2015 and 2014, respectively, related to loans in which the term of the agreement was one year or less or in which unconditional cancellation of the agreement was allowed at any time. In many cases, the term of the loan agreement runs its course without the loan ever being drawn down. Therefore, unused loan commitments do not necessarily affect future cash flows. Conditions are included in certain loan agreements which allow the Bank and its con-solidated subsidiaries either to decline the request for a loan draw-down or to reduce the agreed limit when there is due cause to do so, such as when there is a change in financial condition or when it is necessary to protect the Bank’s or its consolidated subsidiaries’ credit. The Bank and its consolidated subsidiaries take various measures to protect their credit. Such measures include having the obligor pledge collateral in the form of real estate, securities, etc., on signing the loan agreement or in accordance with the Bank and its consolidated subsidiaries’ established internal procedures for confirming the obligor’s financial condition, etc., at regular intervals.

8. Land Revaluation ExcessIn accordance with the Revaluation Act of Land Properties, the Bank revalued land used in the ordinary course of business as of March 31, 1998. The revaluation excess, net of deferred taxes, is shown as a sepa-rate component of net assets. At March 31, 2015 and 2014, the current market value of the revalued land was lower than the revalued amount by ¥23,026 million ($191,611 thousand) and ¥24,067 million, respectively.

9. Tangible Fixed AssetsAccumulated depreciation of tangible fixed assets at March 31, 2015 and 2014 amounted to ¥51,351 million ($427,319 thousand) and ¥50,452 million, respectively. The amounts that were directly offset against acquisition costs as of March 31, 2015 and 2014 were ¥8,467 million ($70,458 thousand) and ¥8,435 million, respectively. For the years ended March 31, 2015 and 2014, the capital gain offset from acquisition costs was ¥31 million ($257 thousand) and ¥39 million, respectively.


10. Borrowed MoneyBorrowed money at March 31, 2015 and 2014 consisted of the following:

Millions of yen


(Note 1)

2015 2014 2015Borrowings from banks ¥98,581 ¥130,353 $820,346Lease liabilities (due within one year) 422 417 3,511Lease liabilities (due after one year) 1,569 1,950 13,056

The weighted average interest rates on the outstanding balances at March 31, 2015 and 2014 were as follows:

2015 2014Borrowings from banks 0.38% 0.53%Lease liabilities (due within one year) — —Lease liabilities (due after one year) — —

(Note) The “average interest rate” is not shown for lease obligations because the Bank uses a method that includes amounts equal to the interest in the total capital lease obligations and that spreads the total amount equal to interest equally over each fiscal year of the lease period.

The following is a summary of the maturities of borrowed money at March 31, 2015.

Borrowings from banks Lease liabilities

Year ended March 31:Millions of

yen


(Note 1)Millions of

yen


(Note 1)

2016 ¥73,902 $614,978 ¥ 422 $ 3,5112017 2,978 24,781 422 3,5112018 2,511 20,895 422 3,5112019 1,819 15,136 344 2,8622020 1,075 8,945 212 1,764Thereafter 16,294 135,591 167 1,389Total ¥98,581 $820,346 ¥1,991 $16,568

Borrowed money included subordinated loans totaling ¥15,000 million ($124,823 million) at March 31, 2015.

11. Guarantee ObligationsGuarantee obligations for private placement bonds in securities in ac-cordance with the Article 2-3 of the Financial Instruments and Exchange Law amounted to ¥13,577 million ($112,981 thousand) and ¥12,367 million at March 31, 2015 and 2014, respectively.

12. Other Expenses(1) For the year ended March 31, 2015, other expenses included loans

written off in the amount of ¥79 million ($657 thousand) and securi-ties written off in the amount of ¥14 million ($116 thousand).

For the year ended March 31, 2014, other expenses included loans written off in the amount of ¥94 million and securities written off in the amount of ¥2 million.

(2) For the year ended March 31, 2015, the Bank reduced the book value of the following asset groups to the recoverable amounts and recognized impairment loss of ¥1,104 million ($9,186 thousand) due to a continuing decrease in real estate values and operating cash flow.

Millions of yen2015

Area Purpose of use Type

Total Impairment

loss Land BuildingsEhime area

Branches 12 branches

Land and buildings ¥1,046 ¥861 ¥184

Idle assets 3 items

Land and buildings 17 4 13

Others Branches 1 branch

Land12 12 —

Idle assets 1 item

Land28 28 —

Total ¥1,104 ¥907 ¥197

Thousands of U.S. dollars (Note 1)2015


Total Impairment


Branches 12 branches

Land and buildings $8,704 $7,164 $1,531

Idle assets 3 items



Land99 99 —

Idle assets 1 item

Land233 233 —

Total $9,186 $7,547 $1,639

The Bank allocates its assets to each branch or group of branches, which is the smallest unit of asset group in managerial accounting. Consoli-dated subsidiaries regard each entity as a unit in grouping their assets. The recoverable amounts of asset groups are measured at the higher of their net realizable value or value in use. The recoverable amount is calculated as net realizable value determined by appraisal values based on real estate appraisal standards less the expected disposal cost. For the year ended March 31, 2014, the Bank reduced the book value of the following asset groups to the recoverable amounts and recognized impairment loss of ¥1,890 million due to a continuous decrease in real estate values and operating cash flow.

Millions of yen2014


Total Impairment


Branches 7 branches

Land and buildings ¥ 860 ¥ 690 ¥169

Idle assets 5 items

Land21 21 —



Idle assets 5 items


Total ¥1,890 ¥1,563 ¥327

The Bank allocates its assets to each branch or a group of branches, which is the smallest unit of asset group in managerial accounting. Consoli-dated subsidiaries regard each entity as a unit in grouping their assets. The recoverable amounts of asset groups are measured at the higher of their net realizable value or value in use. The recoverable amount is calculated as net realizable value determined by appraisal values based on real estate appraisal standards less the expected disposal cost. Value in use is measured as the sum of anticipated future cash flows discounted by 0.91%.


13. Consolidated Statements of Comprehensive IncomeReclassification adjustments and the related tax effects concerning other comprehensive income

Millions of yen


(Note 1)

2015 2014 2015Net unrealized holding gains (losses) on securities Incurred during the period ¥ 83,841 ¥16,082 $ 697,686 Reclassification adjustments (3,223) (7,950) (26,820) Before tax effect

adjustments 80,618 8,131 670,866 Tax effect (19,502) (2,826) (162,286) Net unrealized holding

gains (losses) on securities 61,116 5,305 508,579

Net deferred gains (losses) on derivatives under hedge accounting Incurred during the period (253) (91) (2,105) Reclassification adjustments 172 94 1,431 Before tax effect

adjustments (81) 2 (674) Tax effect 26 (1) 216 Net deferred gains

(losses) on derivatives under hedge accounting (55) 1 (457)

Revaluation reserve for land Incurred during the period — — — Reclassification adjustments — — — Before tax effect

adjustments — — — Tax effect 1,160 — 9,652 Revaluation reserve for

land 1,160 — 9,652 Remeasurements of defined benefit plans Incurred during the period 5,317 — 44,245 Reclassification adjustments (683) — (5,683) Before tax effect

adjustments 4,634 — 38,562 Tax effect (1,373) — (11,425) Remeasurements of

defined benefit plans 3,260 — 27,128 The total amount of other comprehensive income ¥ 65,481 ¥ 5,307 $ 544,903

14. Cash and Cash EquivalentsCash and cash equivalents in the consolidated statements of cash flows included due from banks, except for deposits with the Bank of Japan, as follows:

Millions of yen


(Note 1)

2015 2014 2015Cash and due from banks in the balance sheets ¥623,917 ¥ 399,830 $5,191,953 Due from banks, except for deposits with the Bank of Japan (21,617) (140,129) (179,886)Cash and cash equivalents in the statements of cash flows ¥602,299 ¥ 259,700 $5,012,057

15. Lease TransactionsI. Finance Leases1. Finance leases that do not transfer ownership of the lease assets(1) Details of lease assets(a) Tangible fixed assets

Automatic teller machines(b) Intangible fixed assets

Not applicable(2) The method of depreciation for lease assetsSee Note 2 (8), “Significant Accounting Policies ‐ Tangible and intangible fixed assets and lease assets.”2. Finance leases which do not transfer ownership of the lease as-

sets to the lessee accounted for as operating lease transactions Not applicable

II. Operating LeasesFuture lease payment receivables required under non-cancelable operat-ing leases at March 31, 2015 and 2014 were as follows:As lessor

Millions of yen


(Note 1)

2015 2014 2015Due within one year ¥ 28 ¥ 28 $ 233 Due after one year 94 119 782 Total ¥123 ¥148 $1,023

16. Financial Instruments1. Financial instruments(1) Policy on financial instrumentsThe Bank and its consolidated subsidiaries engage mainly in the financial services business that includes deposit services and lending services as well as leasing services. Accordingly, the Bank holds financial assets and liabilities that are subject to interest rate fluctuations and undertakes asset and liability management (ALM) in order to curb any unfavorable impact from inter-est rate fluctuations. The Bank also engages in derivative transactions as part of its ALM.

(2) Descriptions and risks of financial instrumentsThe financial assets of the Bank and its consolidated subsidiaries consist mainly of loans to customers, which are subject to default risk. Also, the Bank holds securities that are mainly stocks, bonds and mutual funds for investment, management or trading purposes. They are subject to the issuer’s credit risk, interest rate risk and market price risk. The foreign currency denominated financial assets and liabilities are subject to foreign currency risk. The Bank uses currency swaps to manage the risk. The Bank’s derivative transactions include interest rate swaps. The Bank applies hedge accounting to the interest on loans to hedge interest rate risks regarding the interest rate swaps as hedge instruments. The effectiveness is ensured by maintaining a balance of hedge instruments that does not exceed the balance of the hedged items, which are grouped by incidence and remaining period. Other transactions not qualifying for hedge accounting are exposed to foreign exchange and interest rate risks.

(3) Risk management system for financial products(a) Credit risk managementThe Bank prescribes its credit risk management policy in its “Risk Man-agement Plan,” which is issued by the Board of Directors biannually. In particular, the Bank diversifies credit risk by ensuring that credit granted


is not over concentrated in certain customers, groups or industries. The Bank periodically analyzes and evaluates the credit conditions classified by internal ratings, business area and industry. The Bank strives to opti-mize its credit portfolio by promoting effective credit risk management. Feedback regarding credit risk management is reported to the Board of Directors on a regular basis. The Bank manages each customer’s credit in compliance with its “Internal Rating System,” part of the Bank’s credit risk management. The Risk Management Division (RMD), which is completely independent from other banking business divisions, is responsible for planning and administrating the internal rating system and conducting, coordinating and monitoring the internal ratings. The Loan Group is responsible for supervising individual credit granted and examining customers’ finances, the purpose for their loan and their ability to repay. The group is independent from the business promotion group and is divided into 3 divisions: the Credit Division - responsible for general loans, Credit Management Division - responsible for planning of loan administration and troubled credit, and Corporate Consulting Division - responsible for supporting the rehabilitation of companies. The assets are initially assessed by each branch and then by the head office, followed by a validation by RMD, which is also responsible for the formulation of the assessment standard. The credit granted by the consolidated subsidiaries is managed for each customer along with the credit granted by the Bank. RMD also manages credit risk of issuers and counterparty risks in derivative transactions by monitoring and periodically evaluating credit information and market prices.

(b) Market risk managementIn order to properly manage market risk and maintain the Bank’s soundness and profitability, the Bank has established a comprehensive risk management structure set forth by the ALM Committee. The ALM Committee uses various measures such as the gap method, market value analysis, periodic income/loss simulation and the VaR method to control risk. The ALM Committee also coordinates risk management plans and hedging strategies by analyzing the profitability structure and forecasting the market and the economic environment. RMD, set up as an indepen-

dent supervisor, evaluates the appropriateness of market transactions dealt with by other divisions. The Bank sets limits on the quantity of risk that may be undertaken in its “Risk Management Plan,” which is established by the Board of Directors biannually. RMD monitors compliance with the plan and reports to the Board of Directors monthly.

(Quantitative information on market risk)The Bank measures market risk based on the VaR method. The variance co-variance model (holding period: 240 business days; confidence interval: 99.9%; and historical observation period: 1,200 business days) is applied in the measurement of VaR. The major market risks for the Bank are equity risk and interest rate risk. Financial instruments affected by interest rate risk are loans and bills discounted, available-for-sale securities, deposits, borrowed money, interest swap transactions and interest cap transactions among deriva-tive transactions. At March 31, 2015 and 2014, the quantity of market risk (expected loss), which includes equity risk and interest rate risk, amounted to ¥188.9 billion ($1,571 million) and ¥154.7 billion, respectively. The Bank confirms the validity of the measurement model by bian-nually performing back-testing, which compares VaR with actual fluctua-tions in profit and loss during the observation period. However, VaR, the quantity of market risk which is statistically measured with historical market fluctuations, may not reflect drastic changes in the market.

(c) Liquidity risk managementThe liquidity risk management of the Bank is conducted through asset-liability management (ALM) and the duration of funds procured with consideration for the market environment.

(4) Supplementary explanation of matters related to fair values of financial instruments and others

Fair values of financial instruments include values based on market prices and values reasonably estimated when the financial instruments do not have market prices. Since certain assumptions underlie the estimates of such values, the values may differ when other assumptions are applied.


2. Fair values of financial instrumentsThe following tables summarize book values, fair values and any differences between them as of March 31, 2015 and 2014. Unlisted stocks and others for which the fair value is deemed to be extremely difficult to determine are excluded from the table below (see Note ii).

Millions of yen Thousands of U.S. dollars (Note 1)

2015 2015Book value Fair value Difference Book value Fair value Difference

(1) Cash and due from banks ¥ 623,917 ¥ 623,917 ¥ — $ 5,191,953 $ 5,191,953 $ —(2) Call loans and bills purchased 74,849 74,849 — 622,859 622,859 —(3) Monetary claims purchased 9,642 9,642 — 80,236 80,236 —(4) Trading account securities Trading securities 523 523 — 4,352 4,352 —(5) Money held in trust 9,321 9,321 — 77,565 77,565 —(6) Securities Available-for-sale securities 1,818,126 1,818,126 — 15,129,616 15,129,616 —(7) Loans and bills discounted 3,851,235 3,831,332 32,048,223 31,882,599 Reserve for loan losses (*1) (27,694) (230,456)

3,823,541 3,831,332 7,790 31,817,766 31,882,599 64,824 Total assets ¥6,359,922 ¥6,367,713 ¥ 7,790 $52,924,373 $52,989,206 $64,824 (1) Deposits ¥4,904,340 ¥4,903,168 ¥(1,172) $40,811,683 $40,801,930 $ (9,752)(2) Negotiable certificates of deposit 360,522 360,519 (2) 3,000,099 3,000,074 (16)(3) Call money and bills sold 111,105 111,105 — 924,565 924,565 —(4) Payables under securities lending transactions 332,077 332,077 — 2,763,393 2,763,393 —(5) Borrowed money 98,581 98,598 16 820,346 820,487 133 Total liabilities ¥5,806,627 ¥5,805,469 ¥(1,157) $48,320,104 $48,310,468 $ (9,628)Derivative Transactions (*2) Derivative transactions to which hedge accounting

is not applied ¥ (891) ¥ (891) ¥ — $ (7,414) $ (7,414) $ —

Derivative transactions to which hedge accounting is applied (8,238) (8,238) — (68,552) (68,552) —

Total derivative transactions ¥ (9,129) ¥ (9,129) ¥ — $ (75,967) $ (75,967) $ —

(*1) General and specific reserves for loan losses relevant to loans and bills discounted are excluded.(*2) Derivative transactions recorded in other assets and liabilities are presented as a lump sum. Net claims and debts that arise from derivative transactions are presented

on a net basis.(*3) Immaterial items are omitted.

Millions of yen

2014Book value Fair value Difference

(1) Cash and due from banks ¥ 399,830 ¥ 399,830 ¥ —(2) Call loans and bills purchased 84,700 84,700 —(3) Monetary claims purchased 11,043 11,043 —(4) Trading account securities Trading securities 527 527 —(5) Money held in trust 8,062 8,062 —(6) Securities Available-for-sale securities 1,737,094 1,737,094 —(7) Loans and bills discounted 3,708,249 3,691,368 Reserve for loan losses (*1) (31,148)

3,677,101 3,691,368 14,267Total assets ¥5,918,360 ¥5,932,627 ¥14,267(1) Deposits ¥4,806,905 ¥4,805,480 ¥ (1,424)(2) Negotiable certificates of deposit 392,242 392,241 (0)(3) Call money and bills sold 62,454 62,454 —(4) Payables under securities lending transactions 83,090 83,090 —(5) Borrowed money 130,353 130,397 44Total liabilities ¥5,475,046 ¥5,473,664 ¥ (1,381)Derivative Transactions (*2) Derivative transactions to which hedge accounting

is not applied ¥ 758 ¥ 758 ¥ —

Derivative transactions to which hedge accounting is applied (2,332) (2,332) —

Total derivative transactions ¥ (1,573) ¥ (1,573) ¥ —

(*1) General and specific reserves for loan losses relevant to loans and bills discounted are excluded.(*2) Derivative transactions recorded in other assets and liabilities are presented as a lump sum. Net claims and debts that arise from derivative transactions are presented

on a net basis.(*3) Immaterial items are omitted.


Note i. Methods used to calculate fair value of financial instruments

Assets(1) Cash and due from banksThe fair value of due from banks with no maturity is considered to be equal to the book value since the fair value of these items approximates the book value. The fair value of due from banks with maturity is calcu-lated as the present value discounted at rates that reflect proper market risk and credit risk per contractual terms. The fair value of due from banks with short contractual terms (within one year) is considered to be equal to the book value since the fair value of these items approximates the book value.

(2) Call loans and bills purchasedThe fair value of call loans and bills purchased is considered to be equal to the book value since the contractual term is within one year and the fair value of these items approximates the book value.

(3) Monetary claims purchasedThe fair value of trustee beneficial rights in monetary claims purchased is based on the price quoted by corresponding financial instruments. For monetary claims purchased with short contractual terms (within one year), the fair value is considered to be equal to the book value since the fair value of these items approximates the book value.

(4) Trading account securitiesThe fair value of securities such as bonds that are held for trading is based on the market price or the price quoted by corresponding finan-cial institutions.

(5) Money held in trustThe fair value of money held in trust is based on the price quoted by corresponding financial institutions. Information on money held in trust classified by the purpose for which it is held is disclosed in Note 17, “Money held in trust.”

(6) SecuritiesThe fair value of stocks is based on market price. The fair value of bonds is based on market price or the price quoted by corresponding financial institutions. The fair value of investment trusts is based on the publicly disclosed base value. The fair value of private placement bonds is calculated as the present value discounted at a rate that reflects the proper market rate corresponding to the remaining period and credit risk based on the internal rating. The fair value of floating-rate Japanese government bonds is based on the reasonably calculated price at the end of the fiscal year, follow-ing a determination that current market price does not reflect the fair value. As a result, for Japanese government bonds included in securities at March 31, 2015 and 2014, the fair value of floating-rate Japanese government bonds was reported using market prices. The reasonably calculated price of floating-rate Japanese govern-ment bonds is determined by discounting the expected future cash flow from yields of the government bonds at rates referring to such yields. The price decision variables mainly include the yield of Japanese govern-ment bonds and the volatilities of swaptions. The Bank uses the price information quoted from independent third parties upon verification of its appropriateness. Information on securities classified by the purpose for which they are held is disclosed in Note 16, “Securities.”

(7) Loans and bills discountedThe fair value of loans and bills discounted with a floating rate are considered to be equal to the book value since the rate reflects the market rate in a short period and the fair value of these items ap-proximates the book value, unless the creditworthiness of the borrower changes significantly after the inception date. The fair value of loans and bills discounted with a fixed rate is calculated as the present value, discounting future cash flow at a rate that reflects the proper market rate corresponding to the remaining period and credit risk based on the internal rating. The fair value of loans and bills discounted with short contractual terms (within one year) is considered to be equal to the book value since the fair value of these items approximates the book value. In addition, the fair value of claims against bankrupt obligors, substantially bankrupt obligors and intensive control obligors approxi-mates the consolidated balance sheet amount as of the consolidated balance sheet date less the allowance for bad debt since the bad debt is calculated based on the present value of the expected future cash flow or the estimated collectable amount from collateral and/or guarantees. For loans and bills discounted, the fair value of loans and bills discounted with no maturity due to conditions such as limiting the loans to the value of pledged assets is deemed to be the book value since the fair value is expected to approximate the book value considering the estimated loan period, interest rate and other conditions.

Liabilities(1) Deposits and (2) Negotiable certificates of depositThe fair value of demand deposits is considered to be the payable amount as of the consolidated balance sheet date (the book value). In addition, the fair value of fixed-term deposits is calculated as the present value, discounting the future cash flow at a rate that reflects the proper market rate corresponding to the remaining period and credit risk of the Bank. The fair value of deposits with short contractual terms (within one year) is considered to be equal to the book value since the fair value of these items approximates the book value.

(3) Call money and bills sold and (4) Payables under securities lend-ing transactionsThe fair value of call money, bills sold and payables under securities lending transactions is considered to be equal to the book value since the contractual term is within one year and the fair value of these items approximates the book value.

(5) Borrowed moneyThe fair value of borrowed money with a floating rate is considered to be equal to the book value since the rate reflects the market rate in a short period, the creditworthiness of the Bank and the subsidiaries has not changed significantly since the inception date and the fair value of these items approximates the book values. The fair value of borrowed money with a fixed rate is calculated as the present value, discounting future cash flow at a rate that reflects the proper market rate corresponding to the remaining period and credit risk of the Bank.

Derivative TransactionsInformation on derivative transactions is disclosed in Note 19, “Deriva-tive Transactions.”


Note ii. Financial instruments whose fair value is deemed to be extremely difficult to determine are not included in “Available-for-sale-securities” in the table above.

Consolidated balance sheet amount (2015)

Category Millions of yen


(Note 1)

Unlisted stocks (*1) (*2) ¥11,916 $ 99,159Investments in partnerships (*3) 1,568 13,048Total ¥13,485 $112,216

(*1) Unlisted stocks are not included in the disclosure of fair value since the fair value is deemed extremely difficult to determine.

(*2) The amount of unlisted stock impairment during the year ended March 31, 2015 was ¥14 million ($116 thousand).

(*3) Investments in partnerships in which the partnership assets comprise unlisted stocks are not included in the disclosure of fair value since the fair value is deemed extremely difficult to determine.

Consolidated balance sheet

amount (2014)

Category Millions of yen

Unlisted stocks (*1) (*2) ¥11,735Investments in partnerships (*3) 985Total ¥12,720

(*1) Unlisted stocks are not included in the disclosure of fair value since the fair value is deemed extremely difficult to determine.

(*2) The amount of unlisted stock impairment during the year ended March 31, 2014 was ¥2 million.

(*3) Investments in partnerships in which the partnership assets comprise unlisted stocks are not included in the disclosure of fair value since the fair value is deemed extremely difficult to determine.

Note iii. Expected redemption of monetary claims and securities with maturities

Millions of yen

2015Within 1 year 1-3 years 3-5 years 5-7 years 7-10 years Over 10 years

Due from banks ¥ 584,957 ¥ — ¥ — ¥ — ¥ — ¥ —Call loans and bills purchased 74,849 — — — — —Monetary claims purchased 4,363 — — 473 1,400 3,310 Securities 150,440 363,217 392,353 325,103 91,644 50,741 Held-to-maturity debt securities — — — — — — Securities with maturities 150,440 363,217 392,353 325,103 91,644 50,741 Japanese government bonds 7,509 158,800 188,700 257,100 — 16,000 Municipal bonds 38,637 58,768 61,065 40,105 27,139 31,065 Corporate bonds 12,513 42,562 20,421 11,134 16,996 1,794 Loans and bills discounted (*) 1,083,818 719,795 535,548 371,920 391,464 653,308 Total ¥1,898,430 ¥1,083,013 ¥927,901 ¥697,497 ¥484,509 ¥707,360

Millions of yen


Due from banks ¥ 361,636 ¥ — ¥ — ¥ — ¥ — ¥ —Call loans and bills purchased 84,700 — — — — —Monetary claims purchased 4,328 2,097 — — 700 3,865Securities 104,769 313,390 340,339 362,594 189,165 51,177 Held-to-maturity debt securities — — — — — — Securities with maturities 104,769 313,390 340,339 362,594 189,165 51,177 Japanese government bonds 17,351 83,009 171,300 289,700 91,100 16,000 Municipal bonds 35,722 67,885 63,151 34,358 34,557 30,119 Corporate bonds 11,014 35,994 26,267 22,546 16,600 3,964Loans and bills discounted (*) 1,056,490 694,227 511,354 352,357 367,450 625,334Total ¥1,611,925 ¥1,009,716 ¥851,694 ¥714,951 ¥557,315 ¥680,378



Due from banks $ 4,867,745 $ — $ — $ — $ — $ —Call loans and bills purchased 622,859 — — — — —Monetary claims purchased 36,306 — — 3,936 11,650 27,544Securities 1,251,893 3,022,526 3,264,982 2,705,359 762,619 422,243 Held-to-maturity debt securities — — — — — — Securities with maturities 1,251,893 3,022,526 3,264,982 2,705,359 762,619 422,243 Japanese government bonds 62,486 1,321,461 1,570,275 2,139,469 — 133,144 Municipal bonds 321,519 489,040 508,155 333,735 225,838 258,508 Corporate bonds 104,127 354,181 169,934 92,652 141,432 14,928Loans and bills discounted (*) 9,019,039 5,989,806 4,456,586 3,094,948 3,257,585 5,436,531Total $15,797,869 $9,012,340 $7,721,569 $5,804,252 $4,031,863 $5,886,327

(*) Loans and bills discounted on which full repayment is not expected from debtors such as bankrupt obligors, substantially bankrupt obligors and intensively controlled obligors amounted to ¥56,357 million ($468,977 thousand) and ¥60,768 million at March 31, 2015 and 2014, respectively.


Note iv. Amounts to be repaid for borrowed money and other interest bearing liabilities

Millions of yen


Deposits (*) ¥4,435,438 ¥406,863 ¥54,642 ¥ 4,730 ¥2,665 ¥ —Certificates of deposit 359,642 880 — — — —Call money and bills sold 111,105 — — — — —Payables under securities lending transactions 332,077 — — — — —Borrowed money 73,902 5,490 2,894 15,475 605 213 Total ¥5,312,166 ¥413,233 ¥57,537 ¥20,206 ¥3,270 ¥213

Millions of yen


Deposits (*) ¥4,331,159 ¥406,829 ¥61,753 ¥ 1,879 ¥5,282 ¥ —Certificates of deposit 391,942 300 — — — —Call money and bills sold 62,454 — — — — —Payables under securities lending transactions 83,090 — — — — —Borrowed money 84,493 5,252 2,015 37,537 679 373Total ¥4,953,140 ¥412,382 ¥63,769 ¥39,417 ¥5,962 ¥373



Deposits (*) $36,909,694 $3,385,728 $454,705 $ 39,360 $22,176 $ —Certificates of deposit 2,992,776 7,322 — — — —Call money and bills sold 924,565 — — — — —Payables under securities lending transactions 2,763,393 — — — — —Borrowed money 614,978 45,685 24,082 128,775 5,034 1,772Total $44,205,425 $3,438,736 $478,796 $168,145 $27,211 $1,772

(*) Demand deposits are included in “Within 1 year.”

17. Securities(1) The following tables summarize acquisition costs, book values and fair values of securities with available fair values as of March 31, 2015.(a) Trading securities:

Millions of yen


(Note 1)

2015 2015Unrealized gains (losses) included in profit and loss for the fiscal year ¥3 $24

(b) Held-to-maturity debt securities: None


(c) Available-for-sale securities:


2015 2015

Book valueAcquisition

cost Difference Book valueAcquisition

cost DifferenceSecurities with unrealized gains Equity securities ¥ 288,198 ¥ 95,386 ¥192,812 $ 2,398,252 $ 793,758 $1,604,493 Bonds 1,015,638 972,283 43,354 8,451,676 8,090,896 360,772 Japanese government bonds 658,787 629,712 29,074 5,482,125 5,240,176 241,940 Municipal bonds 259,185 247,480 11,704 2,156,819 2,059,415 97,395 Corporate bonds 97,665 95,090 2,575 812,723 791,295 21,427 Other 435,498 403,807 31,690 3,624,015 3,360,297 263,709 Total ¥1,739,335 ¥1,471,477 ¥267,857 $14,473,953 $12,244,961 $2,228,983

Securities with unrealized losses Equity securities ¥ 2,550 ¥ 3,036 ¥ (486) $ 21,219 $ 25,264 $ (4,044) Bonds 19,796 19,900 (104) 164,733 165,598 (865) Municipal bonds 9,627 9,634 (7) 80,111 80,169 (58) Corporate bonds 10,169 10,265 (96) 84,621 85,420 (798) Other 61,997 62,406 (409) 515,910 519,314 (3,403) Total 84,343 85,343 (1,000) 701,864 710,185 (8,321)Total ¥1,823,678 ¥1,556,820 ¥266,857 $15,175,817 $12,955,146 $2,220,662

(d) Available-for-sale securities sold in the year ended March 31, 2015


2015 2015Amount sold Gains Losses Amount sold Gains Losses

Equity securities ¥ 1,757 ¥ 524 ¥ — $ 14,620 $ 4,360 $ —Bonds 40,932 2,353 — 340,617 19,580 — Japanese government bonds 25,438 2,272 — 211,683 18,906 — Municipal bonds 15,378 80 — 127,968 665 — Corporate bonds 115 0 — 956 0 —Other 10,604 596 90 88,241 4,959 748 Total ¥53,295 ¥3,475 ¥90 $443,496 $28,917 $748

(e) Available-for-sale securities which have a readily determinable fair value are devalued to the fair value, and the difference between the acquisition cost and the fair value is treated as loss for the fiscal year (impairment (devaluation)) if the fair value has significantly deterio-rated compared with the acquisition cost, unless it is deemed that there is a possibility of a recovery in the fair value.

The amount of impairment (devaluation) for the year ended March 31, 2015 was ¥184 million ($1,531 thousand), including ¥184 million ($1,531 thousand) of other.

A security is deemed to have “significantly deteriorated” if the fair value has decreased to 50% or less of the acquisition cost.

If the fair value exceeds 50% but is 70% or less of the acquisi-tion cost, the security may be deemed “significantly deteriorated” considering the quoted market price transition during a certain period in the past, business performance and other factors.

(2) The following tables summarize acquisition costs, book values and fair values of securities with available fair values as of March 31, 2014:

(a) Trading securitiesMillions of yen

2014Unrealized gains (losses) included in profit and loss for the fiscal year ¥3

(b) Held-to-maturity debt securities None

(c) Available-for-sale securities

Millions of yen

2014

Book valueAcquisition

cost DifferenceSecurities with unrealized gains Equity securities ¥ 212,771 ¥ 90,646 ¥122,125 Bonds 1,083,037 1,035,795 47,241 Japanese govern-

ment bonds 699,360 666,377 32,983 Municipal bonds 274,603 263,153 11,449 Corporate bonds 109,073 106,265 2,808 Other 354,089 334,785 19,303 Total ¥1,649,898 ¥1,461,227 ¥188,670

Securities with unrealized losses Equity securities ¥ 6,805 ¥ 7,869 ¥ (1,064) Bonds 15,963 16,036 (73) Japanese govern-

ment bonds 2,996 2,998 (2) Municipal bonds 2,987 2,999 (12) Corporate bonds 9,980 10,038 (58) Other 71,460 72,543 (1,082) Total 94,230 96,450 (2,220)Total ¥1,744,128 ¥1,557,677 ¥186,450


(d) Available-for-sale securities sold in the year ended March 31, 2014

Millions of yen

2014Amount sold Gains Losses

Equity securities ¥ 2,496 ¥ 671 ¥ 8Bonds 149,005 3,939 265 Japanese government

bonds 121,740 3,894 —

Municipal bonds 27,052 42 265 Corporate bonds 211 1 —Other 36,808 3,264 83Total ¥188,309 ¥7,875 ¥358

(e) Available-for-sale securities which have readily determinable fair value are devalued to the fair value, and the difference between the acquisition cost and the fair value is treated as loss for the fiscal year (impairment (devaluation)) if the fair value has significantly deterio-rated compared with the acquisition cost, unless it is deemed that there is a possibility of a recovery in the fair value.

A security is deemed to have “significantly deteriorated” if the fair value has decreased to 50% or less of the acquisition cost.

If the fair value exceeds 50% but is 70% or less of the acquisi-tion cost, the security may be deemed “significantly deteriorated” considering the quoted market price transition during a certain period in the past, business performance and other factors.

18. Money Held in Trust(1) The following tables summarize the book values (fair values) and

amounts of unrealized gains and losses for money held in trust included in profit and loss for the fiscal year ended March 31, 2015.

Millions of yen


(Note 1)

2015 2015Money held in trust for investment Book value (fair value) ¥5,975 $49,721 Amount of net unrealized gain (loss)

included in profit and loss for the fiscal year ¥ (0) $ (0)

Other money held in trust Book value (fair value) 3,346 27,843 Acquisition cost 3,022 25,147 Difference 324 2,696 Unrealized gains 324 2,696 Unrealized losses — —

(2) The following table summarizes the book values (fair values) and amounts of net unrealized gains and losses included in the income statement for money held in trust as of March 31, 2014.

Millions of yen

2014Money held in trust for investment Book value (fair value) ¥5,862 Amount of net unrealized gain (loss)

included in the income statement ¥ (0)Other money held in trust Book value (fair value) 2,200 Acquisition cost 2,086 Difference 113 Unrealized gains 113 Unrealized losses —

19. Unrealized Holding Gains on SecuritiesAt March 31, 2015 and 2014, unrealized holding gains on securities were as follows:

Millions of yen


(Note 1)

2015 2014 2015Valuation gains Available-for-sale

securities ¥266,857 ¥186,450 $2,220,662 Other money held in

trust 324 113 2,696 Deferred tax liabilities (85,531) (66,029) (711,750)Net unrealized holding gains on securities (before adjustment for minority interests) 181,650 120,534 1,511,608 Minority interests (2,809) (1,952) (23,375)Net unrealized holding gains on securities ¥178,840 ¥118,582 $1,488,225


20. Derivative TransactionsI. At March 31, 20151. Derivative transactions to which hedge accounting was not appliedDerivative transactions to which hedge accounting was not applied are set forth in the tables below. These items do not reflect the market risk of the derivative transactions themselves.(1) Interest rate contracts


2015 2015

Contract amount

Portion maturing over

one year Fair value

Recognized gains

(losses)Contract amount


one year Fair value

Recognized gains

(losses)Over-the-counter transactions:Swaps: Receive fixed rate and pay

floating rate ¥44,008 ¥43,868 ¥ 1,840 ¥ 1,840 $366,214 $365,049 $ 15,311 $ 15,311 Receive floating rate and pay

fixed rate 44,008 43,868 (1,688) (1,688) 366,214 365,049 (14,046) (14,046) Total — — ¥ 152 ¥ 152 — — $ 1,264 $ 1,264

The above transactions are measured at fair value, and recognized gains (losses) are charged to the consolidated statements of income. The fair value of over-the-counter transactions is calculated based on the discounted present value and option pricing models.

(2) Currency and foreign exchange contracts


2015 2015

Contract amount


one year Fair value

Recognized gains

(losses)Contract amount


one year Fair value

Recognized gains

(losses)Over-the-counter transactions:Currency swaps ¥798,332 ¥610,386 ¥ 248 ¥ 248 $6,643,355 $5,079,354 $ 2,063 $ 2,063 Forward exchange contracts: Sell 205,260 15,955 (5,588) (5,588) 1,708,080 132,770 (46,500) (46,500) Buy 48,148 15,711 4,295 4,295 400,665 130,739 35,741 35,741 Currency options: Sell 34,576 22,824 1,667 219 287,725 189,930 13,872 1,822 Buy 34,576 22,824 1,667 61 287,725 189,930 13,872 507 Total — — ¥ 2,291 ¥ (762) — — $ 19,064 $ (6,341)

The above transactions are measured at fair value, and recognized gains (losses) are charged to the consolidated statements of income. The fair value of over-the-counter transactions is calculated based on discounted present value.

2. Derivative transactions to which hedge accounting was appliedDerivative transactions to which hedge accounting was applied are set forth in the tables below. These items below do not reflect the market risk of the derivative transactions themselves.(1) Currency and foreign exchange contracts


2015 2015

Hedged itemContract amount


one year Fair valueContract amount


one year Fair valueFundamental method of hedge accountingCurrency swaps Foreign currency

monetary assets¥ 88,989 ¥60,192 ¥(6,151) $740,525 $500,890 $(51,185)

Fund related swaps 105,544 — (2,086) 878,289 — (17,358) Total — — ¥(8,238) — — $(68,552)

The above transactions are accounted for by the deferral hedge accounting treatment stipulated in JICPA Industry Audit Committee Report No. 25, “Treatment for Accounting and Auditing of Accounting for Foreign Currency Transactions in the Banking Industry.” The fair value was calculated based on the discounted present value.


II. At March 31, 20141. Derivative transactions to which hedge accounting was not appliedDerivative transactions to which hedge accounting was not applied are set forth in the tables below. These items do not reflect the market risks of the derivative transactions themselves.(1) Interest rate contracts

Millions of yen

2014

Contract amount


one year Fair value

Recognized gains

(losses)Over-the-counter transactions:Swaps: Receive fixed rate and pay floating

rate ¥43,220 ¥41,578 ¥ 1,610 ¥ 1,610 Receive floating rate and pay fixed

rate 43,220 41,578 (1,473) (1,473) Total — — ¥ 137 ¥ 137

The above transactions are measured at fair value, and recognized gains (losses) are charged to the consolidated statements of income. The fair value of over-the-counter transactions is calculated based on the discounted present value and option pricing models.

(2) Currency and foreign exchange contracts

Millions of yen

2014

Contract amount


one year Fair value

Recognized gains

(losses)Over-the-counter transactions:Currency swaps ¥405,354 ¥273,370 ¥ 293 ¥ 293 Forward exchange contracts: Sell 138,911 4,982 (555) (555) Buy 31,534 4,666 882 882 Currency options: Sell 35,480 26,014 1,745 751 Buy 35,480 26,014 1,745 (271) Total — — ¥4,112 ¥1,100

The above transactions are measured at fair value, and recognized gains (losses) are charged to the consolidated statements of income. The fair value for over-the-counter transactions is calculated based on discounted present value.

2. Derivative transactions to which hedge accounting was appliedDerivative transactions to which hedge accounting was applied are set forth in the tables below. These items below do not reflect the market risk of the derivative transactions themselves.(1) Currency and foreign exchange contracts

Millions of yen

2014

Hedged itemContract amount


one year Fair valueFundamental method of hedge accounting Foreign currency

monetary assetsCurrency swaps ¥35,163 ¥4,277 ¥(1,408)Fund related swaps 81,819 — (923) Total — — ¥(2,332)

The above transactions are accounted for by the deferral hedge accounting treatment stipulated in JICPA Industry Audit Committee Report No. 25, “Treatment for Accounting and Auditing of Accounting for Foreign Currency Transactions in the Banking Industry.” The fair value was calculated based on the discounted present value.

21. Retirement BenefitsI. For the year ended March 31, 20151. Outline of retirement and severance benefits plans The retirement benefits systems of the Bank consist of a defined benefit corporate pension fund plan and a retirement lump-sum grant system. Extra retirement benefits may be paid upon the retirement of employees. In addition, the Bank set up a retirement benefit trust.

On April 1, 2014, the Bank transformed its corporate pension fund plan to a cash balance plan and established a defined contribution pension plan. Consolidated subsidiaries use the simplified method in calculating net defined benefit liability and retirement benefit expenses for their retirement lump-sum grant systems.


2. Defined benefit plan(1) Reconciliation of retirement benefit obligations between the

beginning and the end of the period

Millions of yen


(Note 1)

2015 2014 2015Retirement benefit obligations at the beginning of the period ¥62,035 ¥66,843 $516,227 Cumulative effects

of changes in accounting policies 1,040 — 8,654

Balance as of the beginning of the period reflecting changes in accounting policies 63,075 — 524,881 Service cost 1,831 2,159 15,236 Interest cost 615 866 5,117 Actuarial differences

incurred 3,034 (118) 25,247 Retirement benefits paid (3,211) (2,882) (26,720) Prior service costs

incurred — (4,833) —Retirement benefit obligations at the end of the period 65,345 62,035 543,771

(2) Reconciliation of pension assets between the beginning and the end of the period

Millions of yen


(Note 1)

2015 2014 2015Pension assets at the beginning of the period ¥60,494 ¥52,516 $503,403 Expected return on

pension assets 864 1,152 7,189 Actuarial differences

incurred 8,352 5,737 69,501 Employer’s contributions 2,515 3,058 20,928 Retirement benefits paid (2,039) (1,970) (16,967)Pension assets at the end of the period 70,186 60,494 584,055

(Note) Pension assets include retirement benefit trust.

(3) Reconciliation of retirement benefit obligations and pension as-sets at the end of the period to net defined benefit liability and net defined benefit asset in the consolidated balance sheets

Millions of yen


(Note 1)

2015 2014 2015Retirement benefit obligations of the savings plan ¥ 65,089 ¥ 61,817 $ 541,641 Pension assets (70,186) (60,494) (584,055)

(5,096) 1,322 (42,406)Retirement benefit obligations of the non-savings plan 255 218 2,121 Net liabilities and assets recorded on the consolidated balance sheets (4,840) 1,541 (40,276)Net defined benefit liability 13,194 14,268 109,794 Net defined benefit asset (18,035) (12,727) (150,079)Net liabilities and assets in the consolidated balance sheets (4,840) 1,541 (40,276)

(Note) Pension assets include retirement benefit trust.

(4) Retirement benefit cost and its breakdown

Millions of yen


(Note 1)

2015 2014 2015Service cost ¥1,663 ¥1,970 $13,838 Interest cost 615 866 5,117 Expected return on pension assets (864) (1,152) (7,189)Recognized actuarial differences (114) 204 (948)Amortization of prior service cost (569) (133) (4,734)

730 1,755 6,074

(Note 1) Retirement benefit costs of consolidated subsidiaries using the simplified method are included in “Service cost.”

(Note 2) Employee’ contribution to the corporate pension fund is deducted from “Service cost.”

(5) Remeasurements of defined benefit plansThe breakdown of items included in remeasurements of defined benefit plans (before applicable tax effects) is as follows:

Millions of yen


(Note 1)

2015 2014 2015Prior service cost ¥ (569) ¥— $ (4,734)Actuarial differences 5,203 — 43,296 Total 4,634 — 38,562

(6) Remeasurements of defined benefit plansThe breakdown of items included in remeasurements of defined benefit plans (before applicable tax effects) is as follows:

Millions of yen


(Note 1)

2015 2014 2015Unrecognized prior service cost ¥ (4,309) ¥(4,878) $(35,857)Unrecognized actuarial differences (5,947) (743) (49,488)Total (10,256) (5,622) (85,345)

(7) Pension assets(i) Pension asset portfolio

2015 2014Bonds 50.8% 56.3%Equity securities 43.5% 37.2%Other 5.7% 6.5%Total 100.0% 100.0%

(Note) 29.2% of the total pension assets as of March 31, 2015 (25.5% as of March 31, 2014) represent retirement benefit trust for corporate pension fund. 3.5% of it as of March 31, 2015 (3.1% as of March 31, 2014) corresponds to lump-sum grants system.

(ii) Determination of the long-term expected rate of return on pension assetsThe long-term expected rate of return on pension assets is determined based on the average investment yield on the pension assets for the past three years. When the average rate is below 1.25% or above 2.0%, it is determined as 1.25% and 2.0%, respectively.


(8) Actuarial assumptionsThe weighted-average rate for assumptions used for the actuarial computation of the retirement benefit obligations for the year ended March 31, 2015 is as follows:

2015 2014(i) Discount rates Retirement lump-sum

grant system 0.30% 1.30% Corporate pension

fund plans 0.80% 1.30%(ii) Long-term expected

return on assets Pension assets of

corporate pension fund 2.00% 3.00% Retirement benefit trust

(Retirement lump-sum grant systems and corporate pension fund plans) 0.00% 0.00%

(Note) A point system is applied to substantive portion of the retirement lump-sum system and a cash balance plan to defined benefit corporate pension fund plan, respectively. “Estimated salary increase rate” is not disclosed due to its insignificant impact on calculation of retirement benefit obligations.

3. Defined contribution plan The amount required to be contributed by the Bank is ¥302 million ($2,513 thousand) at March 31, 2015.

22. Stock OptionsI. Stock options to be expensed

Millions of yen


(Note 1)

2015 2014 2015General and administrative expenses ¥119 ¥124 $990

II. Amount of profit by non-exercise of stock options

Millions of yen


(Note 1)

2015 2014 2015Gain on reversal of stock acquisition of rights ¥21 ¥— $174

III. Outline of stock options and changes1. Outline of stock options

2014 Stock Options 2013 Stock options 2012 Stock options 2011 Stock options

Title and number of grantees Directors of the Bank: 16 Executive Officers of the Bank: 4

Directors of the Bank: 18 Directors of the Bank: 17 Directors of the Bank: 17

Number of stock options (*) Common shares: 123,100 Common shares: 140,900 Common shares: 199,500 Common shares: 156,800Grant date 16-Jul-14 16-Jul-13 17-Jul-12 15-Jul-11Conditions for vesting N.A. N.A. N.A. N.A.Requisite service period N.A. N.A. N.A. N.A.Exercise period July 17, 2014 to

July 16, 2044July 17, 2013 to

July 16, 2043July 18, 2012 to

July 17, 2042July 16, 2011 to

July 15, 2041

(*) Reported in terms of shares of stock

2. Stock options granted and changesThe table below represents stock options outstanding at the year-end and the number of stock options is converted into the number of stock.(1) Number of stock options

2014 Stock options shares




Before vested Previous fiscal year-end — 140,900 191,900 122,700 Granted 123,100 — — — Forfeited 7,700 9,000 13,300 6,300 Vested — 22,200 32,800 26,200 Outstanding 115,400 109,700 145,800 90,200After vested Previous fiscal year-end — — — — Vested — 22,200 32,800 26,200 Exercised — 22,200 32,800 26,200 Forfeited — — — — Exercisable — — — —

(2) Price information

2014 Stock options Yen (U.S. dollars)




Exercise price ¥ 1 ($0) per share ¥ 1 ($0) per share ¥ 1 ($0) per share ¥ 1 ($0) per shareAverage exercise price — ¥1,036 ($8) per share ¥1,036 ($8) per share ¥1,036 ($8) per shareFair value at the grant date ¥989 ($8) per share ¥ 918 ($7) per share ¥ 550 ($4) per share ¥ 704 ($5) per share

IV. Valuation technique used for valuating the fair value of stock optionsStock options granted in the fiscal year were valuated using the following valuation techniques.1. Valuation technique: Black-Scholes option pricing model


2. Principal parameters used in the option pricing model


Expected volatility (*1) 25.056%Average expected life (*2) 6.28 yearsExpected dividends (*3) ¥10 ($0) per shareRisk free interest rate (*4) 0.210%

(*1) Calculated based on actual weekly stock prices from April 5, 2008 to July 16, 2014.

(*2) Estimated based on an average an assumption of the periods of directors of the Bank.

(*3) Expected dividends are based on the actual dividends on common stock for the year ended March 31, 2014.

(*4) Japanese government bond yield corresponding to the average expected life.

V. Method of estimating number of stock options vestedOnly the actual number of forfeited stock options is reflected because it is difficult to rationally estimate the number of stock options that will be forfeited in the future.

23. Income TaxesThe Bank and its consolidated subsidiaries are subject to a number of taxes based on income, including corporation tax, inhabitants tax and enterprise tax.(1) A reconciliation of the statutory tax rate and the effective tax

rate for the years ended March 31, 2015 and 2014 is as follows:2015 2014

Statutory tax rate 35.4% —% Entertainment

expenses and other expenses not deductible permanently for income tax purposes 0.3 —

Dividend income and other income excluded permanently for income tax purposes (2.1) —

Adjustment on deferred tax assets due to changes in income tax rates 4.6 —

Other 0.6 —Effective income tax rate 38.8 —

For the fiscal year ended March 31, 2014, the reconciliation of the statu-tory tax rate of the Bank to the effective income tax rate is not stated as the difference between the two is less than 5% of the statutory tax rate.

Significant components of deferred tax assets and liabilities as of March 31, 2015 and 2014 were as follows:

Millions of yen


(Note 1)

2015 2014 2015Deferred tax assets: Excess reserve for loan

losses ¥ 14,548 ¥ 18,061 $ 121,061 Reserve for losses on

repayments of dormant bank accounts 983 1,011 8,180

Excess depreciation 743 850 6,182 Write-down of securities 736 1,213 6,124 Accrued employees’

bonuses 679 — 5,650 Net defined benefit

liability 672 2,960 5,592 Other 2,617 3,879 21,777 Valuation reserve (541) (532) (4,501) Total deferred

tax assets 20,440 27,444 170,092

Deferred tax liabilities: Unrealized holding

gains on securities ¥(85,313) ¥(65,704) $(709,935) Deferred gains on real

property (935) (955) (7,780) Total deferred

tax liabilities (86,249) (66,660) (717,724)Net deferred tax assets (liabilities): ¥(65,809) ¥(39,216) $(547,632)

(Change in presentation)“Accrued employees’ bonuses” included in “Other” of the deferred tax assets in the previous fiscal year amounting to ¥707 million is separately presented in the current fiscal year.

(2) Amendments to deferred tax assets and deferred tax liabilities as a result of revisions to the rates of income taxes

As a result of the promulgation of an act to revise certain income taxes in March 31, 2015, the corporate tax rate and other rates have been lowered from the fiscal year beginning on or after April 1, 2015. Due to this change, the effective statutory tax rate used for the calculation of deferred tax assets and deferred tax liabilities has been revised from the previous rate of 35.4%. The rate of 32.8% has been applied to the temporary difference expected to be either deductible, taxable or expired in the fiscal year beginning on April 1, 2015, and the rate of 32.1% has been applied to the temporary difference rate expected to be either deductible, taxable, or expired in or after the fiscal year beginning on April 1, 2016. As a result, deferred tax assets decreased by ¥2,136 million, de-ferred tax liabilities decreased by ¥9,064 million, net unrealized holding gains (losses) on securities increased by ¥8,633 million, net deferred gains (losses) on derivatives under hedge accounting decreased by ¥2 million, remeasurements of defined benefit plans increased by ¥266 million, minority interests increased by ¥67 million and deferred income taxes increased by ¥2,036 million. Deferred taxes on revaluation excess decreased by ¥1,160 million and land revaluation excess increased by the same amount.


(3) Information about reported ordinary income, profits and losses, amounts of assets, debts and other items Segment information as of and for the years ended March 31, 2015 and 2014 was as follows:

Millions of yen

2015Reportable segments

Other businesses Total Adjustments

Consolidated total

Commercial banking Leasing Total

Ordinary income Customers ¥ 107,939 ¥14,098 ¥ 122,037 ¥1,892 ¥ 123,930 ¥ — ¥ 123,930 Intersegment 396 485 882 1,725 2,608 (2,608) —Total ¥ 108,336 ¥14,583 ¥ 122,919 ¥3,618 ¥ 126,538 ¥ (2,608) ¥ 123,930Segment profit ¥ 46,163 ¥ 613 ¥ 46,776 ¥ 583 ¥ 47,359 ¥ (31) ¥ 47,328Segment assets ¥6,554,321 ¥48,446 ¥6,602,767 ¥8,583 ¥6,611,351 ¥(35,928) ¥6,575,422Segment debt ¥5,970,809 ¥33,643 ¥6,004,453 ¥3,190 ¥6,007,643 ¥(29,823) ¥5,977,820Other items Depreciation ¥ 4,460 ¥ 38 ¥ 4,499 ¥ 65 ¥ 4,564 ¥ (81) ¥ 4,482 Interest income received 86,717 73 86,790 3 86,794 (136) 86,657 Interest expense paid 6,152 164 6,316 0 6,317 (128) 6,189 Extraordinary income 73 — 73 — 73 — 73 Gain on disposal of non-current assets (43) — (43) — (43) — (43) Gain on reversal of subscription rights to shares (21) — (21) — (21) — (21) Other extraordinary income (8) — (8) — (8) — (8) Extraordinary losses 1,278 0 1,279 0 1,279 — 1,279 Losses on disposal of fixed assets (174) (0) (174) (0) (174) — (174) Impairment losses (1,104) — (1,104) — (1,104) — (1,104) Provision of reserve for financial products

transaction liabilities — — — (0) (0) — (0)Tax expenses 17,486 226 17,713 171 17,885 (3) 17,881 Increase in tangible fixed assets and intangible fixed assets 5,543 12 5,556 30 5,586 (118) 5,467

Notes:1. Ordinary income is presented as the counterpart of sales of companies in other industries.

The difference between ordinary income and operating income in the consolidated statements of income is in “Adjustments.” 2. “Other businesses” includes, software development and information processing which are not included in the reported segments.3. Adjustments are as below. (1) Adjustment of segment profit includes eliminations of intersegment transactions of negative ¥31 million ($257 thousand). (2) Adjustment of segment assets includes eliminations of intersegment transactions of negative ¥35,928 million ($298,976 thousand). (3) Adjustment of segment debt includes eliminations of intersegment transactions of negative ¥29,823 million ($248,173 thousand). (4) Eliminations of intersegment transactions includes adjustment of depreciation of negative ¥81 million ($674 thousand), adjustment of interest income received of

negative ¥136 million ($1,131 thousand), adjustment of interest expenses paid of negative ¥128 million ($1,065 thousand), adjustment of tax expenses of negative ¥3 million ($24 thousand) and adjustment of increase in tangible fixed assets and intangible fixed assets of negative ¥118 million ($981 thousand).

24. Segment Information(1) Summary of reportable segmentsReportable segments are components for which separate financial information is available and is subject to periodic examination by the Board of Directors to determine the allocation of management resources and assess performances. The Bank and 13 consolidated subsidiaries (11 consolidated subsidiaries as of March 31, 2014) are engaged mainly in the financial services business that includes commercial banking services as well as leasing services. Therefore, the Bank and its consolidated subsidiaries reportable segments comprise ‘Commercial banking’ and ‘Leasing’ and are distinguished by the financial services provided in financial services. ‘Commercial banking’ includes deposit services, lending services, securi-ties investment services and exchange services. ‘Commercial banking’ represents the Bank’s banking service as well as the consolidated subsidiaries’ business support services, credit guarantee services, credit

card services, securities trading services and fund management services. ‘Leasing’ includes leasing services by Iyogin Leasing Company Limited, one of the consolidated subsidiaries.

(2) Methods used to calculate ordinary income, profit and loss, amounts of assets, debts and other items by reportable segment

The accounting policies in Note 2, “SIGNIFICANT ACCOUNTING POLI-CIES,” have been adopted for the reportable segments. Reportable segment profit corresponds to ordinary profits. Ordinary income arising from intersegment transactions is based on arm’s length prices. As in Note 2 (21) “Changes in accounting policies,” effective from the fiscal year ended March 31, 2015, the Bank and its consolidated subsidiaries changed the methods used to calculate retirement benefit obligation and service cost of the business segment, and, accordingly, segment profit in the ‘Commercial banking’ segment for the fiscal year ended March 31, 2015 increased by ¥237 million ($1,972 thousand).


Millions of yen



Consolidated total


Ordinary income Customers ¥ 111,125 ¥13,326 ¥ 124,451 ¥1,423 ¥ 125,875 ¥ — ¥ 125,875 Intersegment 324 402 727 1,474 2,202 (2,202) —Total ¥ 111,450 ¥13,728 ¥ 125,178 ¥2,898 ¥ 128,077 ¥ (2,202) ¥ 125,875Segment profit ¥ 45,092 ¥ 530 ¥ 45,622 ¥ 155 ¥ 45,778 ¥ 1 ¥ 45,779Segment assets ¥6,107,557 ¥43,650 ¥6,151,208 ¥7,760 ¥6,158,968 ¥(34,181) ¥6,124,787Segment debt ¥5,612,543 ¥30,037 ¥5,642,581 ¥2,777 ¥5,645,359 ¥(28,092) ¥5,617,266Other items Depreciation ¥ 4,456 ¥ 142 ¥ 4,598 ¥ 62 ¥ 4,660 ¥ (92) ¥ 4,568 Interest income received 86,814 57 86,871 3 86,875 (125) 86,749 Interest expense paid 6,238 158 6,397 1 6,399 (116) 6,282 Extraordinary income — — — — — 477 477 Gains on disposal of fixed assets — — — — — (477) (477) Extraordinary losses 2,002 0 2,002 0 2,002 — 2,002 Losses on disposal of fixed assets (111) (0) (111) (0) (111) — (111) Impairment losses (1,890) — (1,890) — (1,890) — (1,890) Provision of reserve for financial products

transaction liabilities — — — (0) (0) — (0)Tax expenses 16,703 207 16,911 90 17,002 1 17,003Increase in tangible fixed assets and intangible fixed assets 7,419 3 7,422 51 7,473 (116) 7,357

Notes:1. Ordinary income is presented as the counterpart of sales of companies in other industries.

The difference between ordinary income and operating income in the consolidated statements of income is in “Adjustments.” 2. “Other businesses” includes, software development and information processing which are not included in the reported segments.3. Adjustments are as below. (1) Adjustment of segment profit includes eliminations of intersegment transactions of ¥1 million. (2) Adjustment of segment assets includes eliminations of intersegment transactions of negative ¥34,181 million. (3) Adjustment of segment debt includes eliminations of intersegment transactions of negative ¥28,092 million. (4) Eliminations of intersegment transactions includes adjustment of depreciation of negative ¥92 million, adjustment of interest income received of negative ¥125 mil-

lion, adjustment of interest expenses paid of negative ¥116 million, adjustment of tax expenses of ¥1 million and adjustment of increase in tangible fixed assets and intangible fixed assets of negative ¥116 million.




Consolidated total


Ordinary income Customers $ 898,219 $117,317 $ 1,015,536 $15,744 $ 1,031,289 $ — $ 1,031,289 Intersegment 3,295 4,035 7,339 14,354 21,702 (21,702) —Total $ 901,522 $121,353 $ 1,022,875 $30,107 $ 1,052,991 $ (21,702) $ 1,031,289 Segment profit $ 384,147 $ 5,101 $ 389,248 $ 4,851 $ 394,100 $ (257) $ 393,842 Segment assets $54,542,073 $403,145 $54,945,219 $71,423 $55,016,651 $(298,976) $54,717,666 Segment debt $49,686,352 $279,961 $49,966,322 $26,545 $49,992,868 $(248,173) $49,744,695 Other items Depreciation $ 37,114 $ 316 $ 37,438 $ 540 $ 37,979 $ (674) $ 37,297 Interest income received 721,619 607 722,226 24 722,260 (1,131) 721,120 Interest expense paid 51,194 1,364 52,558 0 52,567 (1,065) 51,502 Extraordinary income 607 — 607 — 607 — 607 Gain on disposal of non-current assets (357) — (357) — (357) — (357) Gain on reversal of subscription rights to shares (174) — (174) — (174) — (174) Other extraordinary income (66) — (66) — (66) — (66) Extraordinary losses 10,634 0 10,643 0 10,643 — 10,643 Losses on disposal of fixed assets (1,447) (0) (1,447) (0) (1,447) — (1,447) Impairment losses (9,186) — (9,186) — (9,186) — (9,186) Provision of reserve for financial products

transaction liabilities — — — (0) (0) — (0)Tax expenses 145,510 1,880 147,399 1,422 148,830 (24) 148,797 Increase in tangible fixed assets and intangible fixed assets 46,126 99 46,234 249 46,484 (981) 45,493


(4) Related informationFor the year ended March 31, 2015Information by service

Millions of yen

2015

LoanSecurities

investment LeaseOther

businesses TotalOrdinary income customers ¥56,944 ¥35,851 ¥14,098 ¥17,036 ¥123,930

Millions of yen

2014

LoanSecurities


businesses TotalOrdinary income customers ¥57,653 ¥38,943 ¥13,326 ¥15,952 ¥125,875


2015

LoanSecurities


businesses TotalOrdinary income customers $473,862 $298,335 $117,317 $141,765 $1,031,289

Millions of yen


Other businesses Total


Impairment loss ¥1,104 ¥— ¥1,104 ¥— ¥1,104

Millions of yen




Impairment loss ¥1,890 ¥— ¥1,890 ¥— ¥1,890





Impairment loss $9,186 $— $9,186 $— $9,186

(5) Gain on bargain purchases by reportable segmentFor the year ended March 31, 2014, the Group recorded gain on bargain purchases amounting to ¥477 million arising from additional investment in Iyogin Leasing Company Limited, a consolidated subsidiary.

25. Transactions with Related Parties(1) For the year ended March 31, 2015(a) Transactions with related partiesThere were no relevant transactions with related parties to report. (b) Holding company and subsidiariesThere were no relevant matters to report.

(2) For the year ended March 31, 2014(a) Transactions with related partiesThere were no relevant transactions with related parties to report.(b) Holding company and subsidiariesThere were no relevant matters to report.


26. Changes in Net Assets(1) Type and number of shares issued and treasury stock Type and number of shares issued and treasury stock in the year ended March 31, 2015 were as follows:

Thousands

Number of shares at the beginning of the accounting period

Increase in number of shares during the accounting period

Decrease in number of shares during the accounting period

Number of shares at the end of the accounting period

Shares issued Common stock 323,775 — — 323,775Total 323,775 — — 323,775Treasury stock Common stock 7,757 2 81 7,679Total 7,757 2 81 7,679

The increase in number of shares of treasury stock was from the purchase of fractional shares (2 thousand shares). The decrease in number of shares of treasury stock was due to the exercise of stock acquisition rights.

The type and number of shares issued and treasury stock in the year ended March 31, 2014 were as follows:

Thousands

Number of shares at the beginning of the accounting period

Increase in number of shares during the accounting period

Decrease in number of shares during the accounting period

Number of shares at the end of the accounting period

Shares issued Common stock 323,775 — — 323,775Total 323,775 — — 323,775Treasury stock Common stock 7,751 20 13 7,757Total 7,751 20 13 7,757

The increase in number of shares of treasury stock was from the purchase of fractional shares (20 thousand shares). The decrease in number of shares of treasury stock was due to the exercise of stock acquisition rights.

(2) Stock acquisition rights and own stock acquisition rights

DivisionDetails of stock

acquisition rightsType of shares to

be issued

Number of shares subject to stock acquisition rights Closing balance

Beginning balance Increase Decrease Closing balance Millions of yen


The Bank Stock acquisition rights as stock options — 329 2,737

Total — 329 2,737

(3) DividendsThe following dividends were paid in the year ended March 31, 2015.

Date of resolution Type of shares

Amount of dividends Cash dividends per share

Record date Effective dateMillions of yenThousands of U.S.

dollars (Note 1) YenU.S. dollars

(Note 1)Annual meeting of stockholders held on June 27, 2014 Common stock ¥1,580 $13,148 ¥5.00 $0.04 March 31, 2014 June 30, 2014

Directors’ meeting held on November 7, 2014 Common stock ¥1,580 $13,148 ¥5.00 $0.04 September 30,

2014December 10,

2014

The following dividends were paid in the year ended March 31, 2014.

Date of resolution Type of shares

Amount of dividends

Cash dividends per share

Record date Effective dateMillions of yen YenAnnual meeting of stockholders held on June 27, 2013 Common stock ¥1,738 ¥5.50 March 31, 2013 June 28, 2013

Directors’ meeting held on November 8, 2013 Common stock ¥1,580 ¥5.00 September 30,

2013December 10,

2013


Dividends whose record date is attributable to the year ended March 31, 2015 but which became effective after March 31, 2015.

Date of resolutionType of shares

Amount of dividendsSource of dividends


Record date Effective dateMillions of yenThousands of U.S.

dollars (Note 1) YenU.S. dollars

(Note 1)Annual meeting of stockholders held on June 26, 2015

Common stock ¥2,212 $18,407 Retained

earnings ¥7.00 $0.05 March 31, 2015 June 29, 2015

Dividends whose record date is attributable to the year ended March 31, 2014 but which became effective after March 31, 2014.

Date of resolutionType of shares

Amount of dividends Source of

dividends


Record date Effective dateMillions of yen YenAnnual meeting of stockholders held on June 27, 2014

Common stock ¥1,580 Retained

earnings ¥5.00 March 31, 2014 June 30, 2014



Quarterly Result (Unaudited)The Iyo Bank, Ltd. and its Consolidated Subsidiaries

March 31, 2015 and 2014

Millions of yen

2015First quarter

(from April 1, 2014 to June 30, 2014)

Second quarter (from July 1, 2014

to September 30, 2014)

Third quarter (from October 1, 2014 to December 31, 2014)

Fourth quarter (from January 1, 2015 to March 31, 2015)

Ordinary income ¥34,672 ¥64,558 ¥95,450 ¥123,930 Income before income taxes 15,606 26,550 38,908 46,122 Net income 10,219 16,850 24,844 26,999

Yen

2015First quarter






Net income per share ¥32.33 ¥20.97 ¥25.28 ¥6.81


2015First quarter






Ordinary income $288,524 $537,222 $794,291 $1,031,289 Income before income taxes 129,866 220,937 323,774 383,806 Net income 85,037 140,218 206,740 224,673

U.S. dollars (Note 1)

2015First quarter






Net income per share $0.26 $0.17 $0.21 $0.05


Nonconsolidated Balance Sheets (Unaudited)The Iyo Bank, Ltd.

March 31, 2015 and 2014

Millions of yenThousands of U.S. dollars

2015 2014 2015

ASSETSCash and due from banks ¥ 623,883 ¥ 399,763 $ 5,191,670 Call loans 74,849 84,700 622,859 Monetary claims purchased 9,642 11,043 80,236 Trading account securities 523 527 4,352 Money held in trust 7,816 7,462 65,041 Securities 1,830,967 1,750,974 15,236,473 Loans and bills discounted 3,869,920 3,725,385 32,203,711 Reserve for loan losses (24,176) (27,487) (201,181)Foreign exchange 6,205 12,029 51,635 Other assets 21,367 16,238 177,806 Tangible fixed assets 78,967 79,911 657,127 Intangible fixed assets 4,057 3,995 33,760 Prepaid pension cost 7,831 6,838 65,166 Customers’ liabilities for acceptances and guarantees 28,654 27,592 238,445 Total assets ¥6,540,511 ¥6,098,976 $54,427,153

LIABILITIES AND NET ASSETSLiabilitiesDeposits ¥5,281,758 ¥5,215,811 $43,952,384 Call money 111,105 62,454 924,565 Payables under securities lending transactions 332,077 83,090 2,763,393 Borrowed money 91,226 125,473 759,141 Foreign exchange 38 38 316 Other liabilities 38,313 33,456 318,823 Accrued employees’ bonuses 1,940 1,871 16,143 Employees’ severance and retirement benefits 12,992 13,783 108,113 Reserve for losses on repayment of dormant bank accounts 3,045 2,858 25,339 Reserve for contingent losses 420 443 3,495 Deferred tax liabilities 62,509 37,929 520,171 Deferred taxes on revaluation excess 11,291 12,837 93,958 Acceptances and guarantees 28,654 27,592 238,445 Total liabilities 5,975,373 5,617,642 49,724,332

Net assetsCommon stock Authorized — 600,000,000 shares Issued — 323,775,366 shares 20,948 20,948 174,319 Capital surplus 10,480 10,480 87,209 Legal reserve 20,948 20,948 174,319 Other retained earnings 320,493 297,141 2,666,996 Treasury stock (7,075) (7,146) (58,874)Net unrealized holding gains (losses) on securities 178,308 118,368 1,483,797 Net deferred gains (losses) on hedging instruments (57) (2) (474)Land revaluation excess 20,761 20,305 172,763 Stock acquisition rights 329 288 2,737 Total net assets 565,137 481,333 4,702,812 Total liabilities and net assets ¥6,540,511 ¥6,098,976 $54,427,153


Nonconsolidated Statements of Income (Unaudited)The Iyo Bank, Ltd.


Millions of yenThousands of U.S. dollars

2015 2014 2015

INCOMEInterest and dividend income: Interest on loans and discounts ¥ 53,638 ¥ 55,526 $446,351 Interest and dividends on securities 32,095 30,356 267,079 Other interest income 861 820 7,164 Fees and commissions 10,747 10,271 89,431 Other operating income 3,501 7,090 29,133 Other income 6,305 6,357 52,467 Total income 107,150 110,423 891,653

EXPENSESInterest expense: Interest on deposits 4,745 5,043 39,485 Interest on borrowings and rediscounts 935 901 7,780 Interest on payables under securities lending transactions 165 71 1,373 Other interest expense 304 222 2,529 Fees and commissions 5,722 5,589 47,615 Other operating expenses 275 351 2,288 General and administrative expenses 48,742 48,391 405,608 Other expenses 2,903 8,323 24,157 Total expenses 63,795 68,893 530,872 Income before income taxes 43,354 41,529 360,772 Income taxes: Current (11,240) (14,705) (93,534) Deferred (5,615) (1,309) (46,725)Net income ¥ 26,497 ¥ 25,514 $220,495

Yen U.S. dollars

Basic net income per share ¥83.83 ¥80.73 $0.69 Diluted net income per share 83.71 80.63 0.69


Nonconsolidated Statements of Changes in Net Assets (Unaudited)The Iyo Bank, Ltd.


Millions of yen


For the year ended March 31, 2015 Common stock

Capital surplus Retained earnings

Capital reserveOther capital

surplusTotal capital

surplus Legal reserve

Balance at the beginning of the accounting period ¥20,948 ¥10,480 ¥ — ¥10,480 ¥20,948 Cumulative effects of changes in accounting policiesRestated balance 20,948 10,480 — 10,480 20,948 Changes during the accounting period Dividends Reversal of deferred gains on real property Provision of reserve for reduction entry Provision for general reserve Net income Purchase of treasury stock Disposal of treasury stock (17) (17) Transfer of loss on disposal of treasury stock 17 17 Reversal of land revaluation excess Changes in items other than stockholders’

equity, netTotal changes during the accounting period — — — — —Balance at the end of the accounting period ¥20,948 ¥10,480 ¥ — ¥10,480 ¥20,948








Balance at the beginning of the accounting period $174,319 $87,209 $ — $87,209 $174,319 Cumulative effects of changes in accounting policiesRestated balance 174,319 87,209 — 87,209 174,319 Changes during the accounting period Dividends Reversal of deferred gains on real property Provision of reserve for reduction entry Provision for general reserve Net income Purchase of treasury stock Disposal of treasury stock (141) (141) Transfer of loss on disposal of treasury stock 141 141 Reversal of land revaluation excess Changes in items other than stockholders’

equity, netTotal changes during the accounting period — — — — —Balance at the end of the accounting period $174,319 $87,209 $ — $87,209 $174,319

Millions of yen


Retained earnings

Treasury stockTotal stockholders’

equity

Other retained earnings

Total retained earningsFor the year ended March 31, 2015

Deffered gains on real property General reserve

Retained earnings brought forward

Balance at the beginning of the accounting period ¥1,743 ¥268,594 ¥ 26,804 ¥318,090 ¥(7,146) ¥342,372 Cumulative effects of changes in accounting policies (672) (672) (672)Restated balance 1,743 268,594 26,132 317,418 (7,146) 341,700 Changes during the accounting period Dividends (3,160) (3,160) (3,160) Reversal of deferred gains on real property (30) 30 — Provision of reserve for reduction entry 267 (267) — Provision for general reserve 23,000 (23,000) — Net income 26,497 26,497 26,497 Purchase of treasury stock (3) (3) Disposal of treasury stock 74 56 Transfer of loss on disposal of treasury stock (17) (17) — Reversal of land revaluation excess 704 704 704 Changes in items other than stockholders’ equity, net

Total changes during the accounting period 236 23,000 787 24,023 71 24,095 Balance at the end of the accounting period ¥1,979 ¥291,594 ¥ 26,920 ¥341,442 ¥(7,075) ¥365,795




Retained earnings


equity





Balance at the beginning of the accounting period $14,504 $2,235,116 $ 223,050 $2,647,000 $(59,465) $2,856,553 Cumulative effects of changes in accounting policies (5,592) (5,592) (5,592)Restated balance 14,504 2,235,116 217,458 2,641,408 (59,465) 2,843,471 Changes during the accounting period Dividends (26,296) (26,296) (26,296) Reversal of deferred gains on real property (249) 249 — Provision of reserve for reduction entry 2,221 (2,221) — Provision of general reserve 191,395 (191,395) — Net income 220,495 220,495 220,495 Purchase of treasury stock (24) (24) Disposal of treasury stock 615 466 Transfer of loss on disposal of treasury stock (141) (141) — Reversal of land revaluation excess 5,858 5,858 5,858 Changes in items other than stockholders’ equity, net

Total changes during the accounting period 1,963 191,395 6,549 199,908 590 200,507 Balance at the end of the accounting period $16,468 $2,426,512 $ 224,015 $2,841,324 $(58,874) $3,043,979

Millions of yen

Valuation and translation adjustments

Subscription rights to shares Total net assetsFor the year ended March 31, 2015

Valuation difference on

available-for-sale securities

Deferred gains and losses on

hedgesRevaluation

reserve for land

Total valuation and translation

adjustments

Balance at the beginning of the accounting period ¥118,368 ¥ (2) ¥20,305 ¥138,671 ¥288 ¥481,333 Cumulative effects of changes in accounting policies (672)Restated balance 118,368 (2) 20,305 138,671 288 480,661 Changes during the accounting period Dividends (3,160) Reversal of deferred gains on real property Provision of reserve for reduction entry Provision of general reserve Net income 26,497 Purchase of treasury stock (3) Disposal of treasury stock 56 Transfer of loss on disposal of treasury stock Reversal of land revaluation excess 704 Changes in items other than stockholders’ equity, net 59,939 (55) 456 60,340 41 60,381

Total changes during the accounting period 59,939 (55) 456 60,340 41 84,476 Balance at the end of the accounting period ¥178,308 ¥(57) ¥20,761 ¥199,012 ¥329 ¥565,137







hedgesRevaluation

reserve for land


adjustments

Balance at the beginning of the accounting period $ 985,004 $ (16) $168,968 $1,153,956 $2,396 $4,005,433 Cumulative effects of changes in accounting policies (5,592)Restated balance 985,004 (16) 168,968 1,153,956 2,396 3,999,841 Changes during the accounting period Dividends (26,296) Reversal of deferred gains on real property Provision of reserve for reduction entry Provision of general reserve Net income 220,495 Purchase of treasury stock (24) Disposal of treasury stock 466 Transfer of loss on disposal of treasury stock Reversal of land revaluation excess 5,858 Changes in items other than stockholders’ equity, net 498,785 (457) 3,794 502,121 341 502,463

Total changes during the accounting period 498,785 (457) 3,794 502,121 341 702,970 Balance at the end of the accounting period $1,483,797 $(474) $172,763 $1,656,087 $2,737 $4,702,812


Millions of yen







Balance at the beginning of the accounting period ¥20,948 ¥10,480 ¥— ¥10,480 ¥20,948 Changes during the accounting period Dividends Reversal of deferred gains on real property Provision of reserve for reduction entry Provision of general reserve Net income Purchase of treasury stock Disposal of treasury stock (4) (4) Transfer of loss on disposal of treasury stock 4 4 Reversal of land revaluation excess Changes in items other than stockholders’

equity, net Total changes during the accounting period — — — — —Balance at the end of the accounting period ¥20,948 ¥10,480 ¥— ¥10,480 ¥20,948

Millions of yen


Retained earnings


equity





Balance at the beginning of the accounting period ¥1,753 ¥253,594 ¥ 18,635 ¥294,931 ¥(7,139) ¥319,221 Changes during the accounting period Dividends (3,318) (3,318) (3,318) Reversal of deferred gains on real property (19) 19 — Provision of reserve for reduction entry 9 (9) — Provision of general reserve 15,000 (15,000) — Net income 25,514 25,514 25,514 Purchase of treasury stock (20) (20) Disposal of treasury stock 12 8 Transfer of loss on disposal of treasury stock (4) (4) — Reversal of land revaluation excess 966 966 966 Changes in items other than stockholders’

equity, net Total changes during the accounting period (10) 15,000 8,168 23,158 (7) 23,151 Balance at the end of the accounting period ¥1,743 ¥268,594 ¥ 26,804 ¥318,090 ¥(7,146) ¥342,372

Millions of yen






hedgesRevaluation

reserve for land


adjustments

Balance at the beginning of the accounting period ¥113,468 ¥(4) ¥21,272 ¥134,736 ¥173 ¥454,131 Changes during the accounting period Dividends (3,318) Reversal of deferred gains on real property Provision of reserve for reduction entry Provision of general reserve Net income 25,514 Purchase of treasury stock (20) Disposal of treasury stock 8 Transfer of loss on disposal of treasury stock Reversal of land revaluation excess 966 Changes in items other than stockholders’ equity, net 4,899 1 (966) 3,934 115 4,050

Total changes during the accounting period 4,899 1 (966) 3,934 115 27,202 Balance at the end of the accounting period ¥118,368 ¥(2) ¥20,305 ¥138,671 ¥288 ¥481,333


Organization Chart(As of June 26, 2015)

Head Of�ce Business Department

Regional Economy Collaborative Department

General Secretariat

Tokyo Representative Of�ce

Group Branches

Branches

General Meeting ofStockholders

Executive Committee

General Planning Division

Public Relations & CSR Department

Risk Management Division

Systems Development Division

Personnel Division

General Affairs Division

Audit and Supervisory Committee

Board of Directors Internal Audit Division

Audit and Supervisory Committee’s Of�ce

Compliance Division

Ship Finance Of�ce

Consumer Loan Center

Chairman

President

Deputy President

Senior Managing Directors

Managing Directors

Overseas Business Support Department

Overseas Representative Of�ces

Operations Center

Financial Instruments Business Administration Department

Funds Operation & Securities Division

Financial Market BusinessDepartment

International Division

Customer Satisfaction Enhancement Department

Corporate Development Support Department

Growth Industry Support Department

Direct Marketing Center

Card Business Department

Business Support Center

Branch Banking Support Division

Business Promotion & Solution Department

Business Planning & Promotion Division

Public Institutions Business Division

Branch Banking Group

Customer’s Voice Center

Subsidiaries & Af�liates Of�ce

Woman’s Career Promotion Of�ce

ICT Strategy Of�ce

Credit Division

Operations ManagementDivision

Loan Management Department

Corporate Consulting Division

Mortgage Valuation Department


Subsidiaries and Affiliates(As of March 31, 2015)

Company Name Address ActivitiesEquity

(¥ in million)Share

(Percent)Date

Established

Iyogin LeasingCompany Limited

12-1, Sanban-cho 4-chome,Matsuyama Leasing 80 25.00 Sept. 1974

Iyogin Computer ServiceCompany Limited

2-5, Takasago-cho 2-chome,Matsuyama Computing services 10 5.00 Jan. 1975

The Iyogin Credit GuarantyCompany Limited

12-1, Sanban-cho 4-chome,Matsuyama Guaranteeing of loans 30 5.00 Sept. 1978

The Iyogin Business ServiceCompany Limited

1, Minami-Horibata-cho,Matsuyama

Clerical work for parentcompany 10 100.00 Dec. 1979

Iyogin CapitalCompany Limited

1, Minami-Horibata-cho,Matsuyama Investment 320 5.00 Aug. 1985

Iyogin Regional EconomyResearch Center, Inc.

10-1, Sanban-cho 5-chome,Matsuyama Research and surveys 30 5.00 Apr. 1988

Iyogin DC Card Co., Ltd. 12-1, Sanban-cho 4-chome,Matsuyama Credit card services 50 5.00 Aug. 1988

Iyogin Venture FundCorporation Limited Ⅱ

1, Minami-Horibata-cho,Matsuyama Venture fund 500 — Dec. 2005

Iyogin Venture FundCorporation Limited Ⅲ

1, Minami-Horibata-cho,Matsuyama Venture fund 500 — Mar. 2008

Iyogin Securities Co., Ltd. 10-1, Sanban-cho 5-chome,Matsuyama Securities business 3,000 100.00 Feb. 2012

Iyo Evergreen Sixtiary Industrialization Support Fund Investment Business Limited Partnership

1, Minami-Horibata-cho, Matsuyama

Sixtiary Industrialization Support Fund 173 — Apr. 2013

Iyo Evergreen Agriculture Support Fund Investment Business Limited Partnership


Agriculture Support Fund 48 — Sept. 2014

Iyo Evergreen Business Succession Support Fund Investment Business Limited Partnership


Business Succession Support Fund 3 — Oct. 2014



Corporate Data(As of March 31, 2015)

Directory

Year of Foundation1878

Common StockAuthorized 600,000,000 sharesIssued 323,775,366 sharesCapital ¥20,948 million

Number of Stockholders14,252

Major Stockholders

NameShares

(thousands) %

Japan Trustee Services Bank, Ltd . 40,214 12 .72Nippon Life Insurance Company 8,878 2 .80Meiji Yasuda Life Insurance Company 8,867 2 .80The Bank of Tokyo-Mitsubishi UFJ, Ltd . 6,647 2 .10Sompo Japan Nipponkoa Insurance Inc . 6,293 1 .99Sumitomo Forestry Co ., Ltd . 5,911 1 .87The Master Trust Bank of Japan, Ltd . 5,702 1 .80Sumitomo Life Insurance Company 5,415 1 .71Employee stock ownership of Iyo Bank 4,323 1 .36Nichia Corporation 3,730 1 .18

Number of Employees(The Iyo Bank, Ltd . and its Consolidated Subsidiaries)2,977

Number of Branches(As of March 31, 2015)152 (Domestic 151, Foreign 1)

Head Office1, Minami-Horibata-cho, Matsuyama 790-8514Tel: (089) 941-1141http://www .iyobank .co .jp/

International DivisionTel: (089) 931-9899 Fax: (089) 946-9101SWIFT Address: IYOBJPJT

Funds Operation and Securities DivisionTel: (089) 941-1447 Fax: (089) 941-1458SWIFT Address: IYOBJPJT

Hong Kong BranchSuite 801, The Hong Kong Club Building, 3A Chater Road Central, Hong KongTel: 2869-0466 Fax: 2525-4186SWIFT Address: IYOBHKHH

Shanghai Representative OfficeRoom 1603 Shanghai International Trade Center, 2201 Yan-anRoad (West), Shanghai 200336, People’s Republic of ChinaTel: (021) 6270-7488 Fax: (021) 6270-7268

New York Representative Office780 Third Avenue, 18th Floor, New York, N .Y . 10017, U .S .A .Tel: (212) 688-6031 Fax: (212) 688-6420

Singapore Representative Office65 Chulia Street #37-05, OCBC Centre, Singapore 049513, SingaporeTel: (65) 6532-2618 Fax: (65) 6532-2621

Board of Directors and Corporate Auditors(As of June 26, 2015)

Director and Senior Adviser Koji Morita

President Iwao Otsuka

Senior Managing Director Ippei Nagai

Managing Directors Shuichi Miyazaki Kenji Takata Muneaki Todo Takaya Iio

Directors Koji Kubota(Audit and Supervisory Kazutaka KozuCommittee Members) Kaname Saeki Takeshi Ichikawa Yasunobu Yanagisawa Soichiro Takahama

Managing Executive Officers Tetsuo Takeuchi Shiro Hirano Haruhiro Kono Takaya Beppu Eiji Shigematsu Kenji Morioka Kenji Miyoshi Hideyo Nishimoto Yuichi Matsuura

Executive Officers Satoru Kishikawa Kazutomi Hirai Tetsuya Yagi Shinya Fujita Kensei Yamamoto

Printed in Japan

HEAD OFFICE1, Minami-Horibata-cho, Matsuyama 790-8514 Tel: (089) 941-1141URL: http://www.iyobank.co.jp/

Documents

Creating a Bright and Prosperous Future - Iyo Bank · Creating a bright and prosperous future for the region 2. ... buoyed by falling crude oil prices and the impact ... Prefecture