hamashin annual report 2015 · 4 hamashin annual report 2015 president kenichiro mimuro director...

HAMASHIN Annual ReportFiscal year ended March 31, 2015 2015

TokyoHamamatsu

Shizuoka Prefecture

Nagoya

Kyoto

Osaka

1

HAMASHIN Annual Report 2015

Contents

About Hamamatsu Shinkin Bank 1

A Message from the President 2

Hamashin Corporate History 3

Board of Directors and Corporate Auditors/Organization Chart 4

Review of Operations 5

Compliance 7

Outline of Hamamatsu Shinkin Bank (As of March 31, 2015)

Head Offi ce: 114-8 Motoshiro-cho, Naka-ku, Hamamatsu, Shizuoka 430-0946, JapanEstablished: April 10, 1950 Deposits: ¥1,521.6 billion (including certifi cates of deposit) Loans and Bills Discounted: ¥853.8 billionShare Capital: ¥1.21 billion (74,896 members)

Employees: Hamamatsu Shinkin Bank (non-consolidated): 1,032Hamashin Group (total): 1,341Number of Branches: 59 branches, external ATM corners: 56

Principal Business Operations: Deposits, loans, investments in marketable securities, domestic exchange, foreign exchange, agency business

Business Region:Hamamatsu-city, Iwata-city, Fukuroi-city, Kosai-city, Kakegawa-city, Omaezaki-city, Kikugawa-city, Toyohashi-city, Makinohara-city, Shimada-city, Shuchi-gun, Yoshida-cho (Haibara-gun)

Overseas Offi ce:Bangkok Representative Offi ce

Established in 1950, Hamamatsu Shinkin Bank (the Bank) is a shinkin bank headquartered in Naka Ward of Hamamatsu-city in Shizuoka Prefecture. With western Shizuoka Prefecture, centering on Hamamatsu, as its business area, Hamamatsu Shinkin Bank ranks number-one in terms of the volume of deposits and loans among the 12 shinkin banks within Shizuoka Prefecture. Western Shizuoka Prefecture is situated in the geographic center of Japan and is noted for its mild climate, attributes that have helped spur the development of a diverse range of industries in the region over many years. Renowned as the birthplace of such leading companies as Suzuki Motor

Corporation, Yamaha Corporation and Honda Motor Co., Ltd., this region has witnessed the development of such industries as the automobile, musical instruments and machinery and metals industries, and has supported Japan’s economy as a manufacturing hub. Hamamatsu, the location of our Head Offi ce, is also home to numerous manufacturing plants and has attracted a large number of expat workers from overseas countries, which gives the city a rich international fl avor. The Bank is commonly referred to by local residents as “Hamashin” and has earned their patronage over the long course of more than 60 years.

About Hamamatsu Shinkin Bank

Supporting All Business Operators 8

Business Results 9

Non-Consolidated Balance Sheets 11

Non-Consolidated Statements of Income and Unappropriated Retained Earnings 12

Consolidated Balance Sheets 13

Consolidated Statements of Income and Retained Earnings 14

2


I would like to express my deepest appreciation to our cus-tomers for their loyal patronage of Hamamatsu Shinkin Bank, commonly referred to as “Hamashin.” We have prepared the Annual Report 2015, which explains the Bank’s fi scal 2015 business results and initiatives. We hope you will fi nd this report to be of interest.

During the fi scal year, the Japanese economy made steady strides toward recovery on the back of ongoing depreciation of the yen and a rise in stock prices resulting from the Japa-nese government’s growth strategies and bold monetary easing policies, as evidenced by an ongoing upturn in busi-ness performance mainly of large companies and an increase in personal assets. Toward the end of the fi scal year, the increased prospect of higher wages industry-wide spurred hopes for an autonomous economic recovery underpinned by an expansion of consumer spending.

The situation in the Bank’s service region, however, pre-cluded optimism, as lingering concerns about the regional

economy remained regarding an additional increase in the consumption tax planned in April 2017 along with facing a change in the industrial structure caused by an accelerated trend among companies to shift their bases overseas. Never-theless, as a result of the positive effects of the Japanese government’s overall policy package gradually becoming evident in the region, there was an upswing in corporate busi-ness performance in some sectors, thereby indicating signs of a recovery.

Amid this environment, we shifted our managerial focus to “going on the offensive to generate regional vitality” in fi scal 2015, which marked the third year of the Bank’s medium-term management plan, “Reform! Meet New Challenges.” In doing so, we strived to further enhance our support for customers to help them solve their respective issues while continuing to undertake initiatives to rebuild our management foundation and conduct a thorough review of our business operations.

Turning to the Bank’s business results, on a non-consoli-dated basis, there was an increase primarily in individual deposits, and the balance of deposits, including negotiable certifi cates of deposit, rose ¥60.9 billion from the end of the previous fi scal year to ¥1,521.6 billion. The year-end balance of loans and bills discounted rose ¥15.8 billion to ¥853.8 bil-lion, as we fl exibly supported funding needs, including those associated with solar power generation and for overseas advancement by our business operator customers, and pro-actively provided individual loans, mainly comprising residen-tial loans. As a result of these and other efforts, we posted net income of ¥2.6 billion in spite of the limited recovery in the regional economy during the fi scal year. Looking ahead, we will encourage development of new industries and businesses particularly in growth fi elds and assist our customers in setting up operations overseas and in improving management. Our aim is to help our local customers both in terms of solving issues and proactive fi nancing, and we will continue to focus on initiatives designed to vitalize the Bank’s service region.

To continue fulfi lling the Bank’s mission of growing and developing together with our service region, we will place emphasis on corporate social responsibility (CSR) and strive to further enhance our management soundness and compli-ance structure.

In the future as well, executives and regular employees of the Bank will redouble their efforts to ensure that “Hamashin” continues to serve as a vital force for and play a crucial role in regional development of the communities we serve. In work-ing toward this objective, we ask for your ongoing support and guidance.

Kenichiro Mimuro, Kenichiro Mimuro, PresidentPresident

A Message from the President

Basic Principles

Customer first principle We shall reflect the opinions of customers in our business operations and provide them with high-quality financial services.

Contribute to the regional community We shall contribute to the development of local communities as a member of the community.

Compliance

We shall undertake honest and sound business operations with respect for compliance and social norms.

Corporate vitality

We shall strive to raise the capabilities of executives and employees and foster a vibrant corporate culture.

3


Hamashin Corporate History

April 1950 Hamamatsu Credit Association established in accordance with the Small- and Medium-Sized Enterprise Cooperatives Act

May 1950 Head Office opened in Renjaku-cho (near the present Renjaku post office) and business commenced

November 1951 Reorganized as a shinkin bank and became Hamamatsu Shinkin Bank along with the Enforcement of the Shinkin Bank Act

December 1952 Head Office moved to Tenma-cho (location of the current Tenma-cho Branch)

March 1962 Established the Hamamatsu Shinkin Bank Basic Policies

October 1963 Deposits reach ¥10.0 billion

October 1968 Computers introduced and offline processing begins

October 1969 Head Office moved to newly constructed building in Motoshiro-cho

December 1974 Deposits reach ¥100.0 billion

October 1977 Operation Center moved to newly constructed building

April 1978 Logo mark established

October 1981 Third online system goes into operation and installation of automated teller machines (ATMs) commenced

June 1987 Hamashin Recreation Center completed

October 1989 Deposits reach ¥500.0 billion

July 1991 Hamashin Management Academy launched

April 1992 Hamashin Consultation Plaza opened in Nakazawa-cho as a specialized consultation counter

May 1997 Hamashin website established

August 1998 Internet banking (home banking/firm banking) transactions commenced

December 1999 Deposits reach ¥1,000.0 billion

April 2000 Marked the 50th anniversary of our establishment

November 2001 Inaugurated the Hamashin Housing Association

June 2005 Implemented the first major structural reforms in 28 years

April 2006 Established the Hamamatsu Shinkin Bank Basic Principles (revised version of the Basic Policies established in 1962)

January 2007 Established the corporate message “For your smile—We want to meet your smiling face”

July 2007 Held the 1st Hamashin Business Matching Fair

October 2007 Established the Shizuoka Prefecture Western Region Shinkin Economic Research Institute jointly with Enshu Shinkin Bank

October 2007 Birth of Hamashin image character “Hama-touch”

November 2008 Held the 1st Sanen-nanshin Shinkin Summit and the Sanen-nanshin Shinkin Product Exhibition

January 2009 Became a member of the Tokai Region Shinkin Joint Business Center and online system modified

April 2010 Marked the 60th anniversary of our establishment

April 2012 Launched the medium-term management plan “Reform! Meet New Challenges”

January 2014 Opened Bangkok Representative Office, the first overseas office

Business Guide when starting business

Citizen’s mailer (envelope) Citizen’s mailer

In 1952, we moved the Head Office to Tenma-cho (the original building of the Hamamatsu Branch of 35 Bank). Immediately prior to this move, the building was used as a movie theater (Hamamatsu Theater).

In 1969, the Head Office Sales Department/Headquarters was built across from Hamamatsu City Hall.

In 1977, we constructed the Operation Center in Wago-cho in preparation for extensive and more sophisticated use of computer systems.

In 1992, we opened the Hamashin Consultation Plaza in Nakazawa-cho, where specialist staff respond quickly and accurately to inquiries from customers.

4


Director Toshiharu Suzuki Director Hideto Tago*1President Kenichiro MimuroDirector Hisao MiwaSenior Managing Director Kazuhiro Suzuki Standing Corporate Auditor Hiroaki Sato

Director Masataka IchiharaManaging Director Masanori Takahashi Corporate Auditor Kenichi SuzukiDirector Yasuhiro YamanakaManaging Director Junichi Noda Corporate Auditor Masakuni Nakayama

Director Corporate AuditorManaging Director Tomoo TakahashiSeidai Hirai Yuji Kiyokawa*2

DirectorDirector Kazuhiro HashishitaMasahiko Tsujimura

Board of Directors and Corporate Auditors As of July 1, 2015

Organization Chart As of July 1, 2015Internal Audit Division

General Planning DepartmentStrategic Planning Division

Accounting Department

Legal Risk Management Department

Risk Management Department

Secretarial Office

Property Administration Department

Career Development Department

Fund & Securities Administration Department

General Affairs DepartmentGeneral Affairs Division

Personnel Department

Treasury & Securities Department

Mental Health Consultation Office

Bangkok Representative OfficeInternational Department

Board of Directors

President

Operations Department ⅠOperations Division

Systems DivisionSenior Managing Director

Operations Department Ⅱ

Managing Director

Planning & Development DepartmentGeneral Member’s Meeting

Management Committee

Operation & Administration Department

Area Planning & Business Support Office

Branch Management DepartmentBranch Management Division

Customer Service DepartmentBoard of Corporate Auditors

Corporate Auditor

Corporate Strategy Department

Corporate Business Division Regional Business Development Department

Retail-Banking DepartmentRetail-Banking Division

Loan Center

Corporate Credit DepartmentCredit Supervision Division

Personal Credit Department

Credit Assessment Department

Credit Supervision Committee

Credit Monitoring Department

Business Operations Department

Risk Management Committee

Business Support Department

Loan Operations Department

Business Support Division

Operations Support Division

Asset Liability Management Committee

Community Contributions Department

Compliance Committee

Risk Management Division

Innovation Division

Personnel Division

Treasury & Securities Division

Director

*1 Hideo Tago is an outside director appointed as provided for in the Industrial Agreement on Measures to Improve the Functionality of General Member’s Meeting adopted within the shinkin bank industry.*2 Yuji Kiyokawa is an outside corporate auditor appointed as provided for in Article 32-5 of the Shinkin Bank Act.

5


Economic conditionsDuring fi scal 2015, the government’s growth strategies and bold monetary easing policies had a positive impact on the Japanese economy and resulted in ongoing depreciation of the yen. This, coupled with the Nikkei Stock Average exceeding ¥19,000 for the fi rst time in 15 years, pushed up corporate busi-ness performance mainly of large companies. The growing prospect of higher wages across the industry and the expected ensuing increase in consumer spending will likely result in an autonomous economic recovery.

Industry trends in Hamashin’s business regionWith the effects of the government’s economic policy package gradually reaching the Bank’s service region, corporate busi-ness performance began to pick up in some sectors. However, the current situation continues to preclude optimism, as there remains uncertainty over the impact of an additional increase in the consumption tax planned in the future, along with the con-tinued accelerated trend among companies to move their bases overseas, which further causes a change in the industrial structure. As a regional fi nancial institution, we need to further strengthen and enhance our capability to provide consultation services to help both business operator customers and indi-vidual customers fi nd solutions to their respective issues, in addition to earnestly satisfying their funding needs. We also assume another increasingly crucial responsibility of proactively assisting companies taking on the challenge of extending their operations overseas or into new business fi elds.

In fi scal 2015, the third year of our new medium-term manage-ment plan, “Reform! Meet New Challenges,” we forged ahead with the rebuilding of our management foundation and a thor-ough review of our business operations while actively promot-ing the establishment of various systems to reinforce our cus-tomer support capabilities. In an effort directed toward shifting our managerial focus to “going on the offensive to generate regional vitality,” we undertook the following measures based on the key policies of our fi scal 2015 business plan.

1 HEART

– Hamashin seeks to win an overwhelming share within

the “hearts” of our customers. (i.e., Enhancing our issue-

solving functionality)

● We aimed to drive and invigorate the regional economy by supporting initiatives including those that create new industries, spur innovation and vitalize commerce within the region. While doing so, we worked to strengthen our ability to provide livelihood support for business operator customers and individual customers. Our efforts included enhancing our issue-solving functionality and proactively providing financing to counter individual issues faced by companies operating in our service region, from improving management to overseas advancement.

● To provide even greater assistance to local companies in set-ting up operations overseas by offering a range of financial services and providing relevant local information, we signed a memorandum of understanding concerning overseas business support with three overseas banks in 2014: PT Bank International Indonesia Tbk, a local bank in Indonesia, in October; Metropolitan Bank & Trust Company, a premier commercial bank in the Philippines, in November; and Joint Stock Commercial Bank for Foreign Trade of Vietnam (Viet-combank), a leading local bank in Vietnam, in December.

● We made efforts to match our operations to the changing business environment and emerging social needs by taking appropriate measures to counter the impact of the higher consumption tax, ensuring barrier-free accessibility in our buildings and responding to environmental issues. Along with these efforts, we earnestly sought to provide services from a customer perspective in order to create an even larger base of Hamashin loyal customers, including both business operator customers and individual customers, who do busi-ness with us throughout their lives.

Economic and Financial Environment in Fiscal 2015 Fiscal 2015 Business Policies and Initiatives

Review of Operations

6


2 VALUE

– Hamashin is creating its own, unique structure to gener-

ate higher added value. (i.e., Rebuilding our management

foundation)

● We worked to strengthen operational management control and branch collaboration in each region (bloc) by firmly putting in place the plan-do-check-act (PDCA) cycle for rebuilding the sales structure and to verify the effects of sales strategies and by conducting reviews of overall branch func-tions and sales branch staff allocation. Our specific efforts, which were geared toward providing services tailored to the distinctive needs and characteristics of each community we serve, included assigning the nearest branch to remotely located customers and implementing an area partner sys-tem in the Noguchi Branch and Hikuma Branch in June 2014 and in the Higashi Branch, Mukoujuku Branch, Ekinan Branch, Uriuchi Branch, Itayamachi Branch and Tenmacho Branch in October of the same year.

● We launched the “Good Ideas Planning Program” in order to turn our operational review efforts from those driven by the Head Office to those promoting strong employee engage-ment, whereby employees of each sales branch pursue and take the initiative in implementing improved business opera-tions. Under the new program, all employees of the Bank made concerted efforts toward improvement, including elim-inating inefficient operations and procedures, to facilitate the selective channeling of management resources into priority areas, while also pursuing the proper implementation of the PDCA cycle.

● Through the centralization and streamlining of back office operations of sales branches, we further promoted the establishment of a low-cost and solid clerical work structure and focused our efforts on reinforcing our over-the-counter sales platform.

3 ENERGY

– Hamashin serves as a vital source for the Bank’s ser-

vice region. (i.e., Implementing CSR-based manage-

ment)

● As a means to ensure thorough implementation of effective compliance (adhering to laws and regulations) and strengthen our management control system for providing both customer convenience and protection, we continued to review and raise the sophistication of our internal control and risk management systems, our business continuity planning (BCP) and IT governance. Simultaneously, we sought to improve asset quality and capital efficiency by increasing the accuracy of risk and profit controls based on integrated risk management.

● We conducted a review of overall operations of our personnel systems, including a job category-based personnel system, age retirement system for managers and personnel per-formance assessment system, as well as our personnel development framework, with a view to improving our business vitality by ensuring job satisfaction, productivity and diversity in working styles. Required revisions will be implemented in April 2015.

7


Compliance

Compliance System

Board of Directors

1) Prohibits unlawful behavior of board members

2) Convenes the Board of Directors 3) Reports to the Board of Directors

4) Reports opinions to the General Member’s Meeting

5) Lists in the auditing report

Standing Corporate Auditor

Risk ManagementCommittee

DisciplinaryCommittee

Employees

LawyersCertified Public Accountant

Public interestreporting Report

Risk Management Division

1) Plans and prepares basic policies concerning compliance

2) Gathers and passes on information concerning compliance

3) Serves as consultation point for compliance 4) Reports to supervisory authorities on compliance 5) Convenes regular meetings on compliance 6) Serves as contact point for reporting accidents,

misconduct incidents and matters concerning pubic interest

7) Handles matters concerning sexual and power harassment

8) Handles matters concerning overall management of responses to anti-social forces and others

9) Handles matters concerning management of conflicts of interest

Internal Audit Division

1) Handles matters concerning auditing of compliance system

2) Handles matters concerning investigating and clarifying reports on reporting accidents, misconduct incidents and matters concerning pubic interest

Compliance Committee

Attendance by non-member executive or employee can be requested when deemed necessary.

Observer

Hotline (Risk Management Division)

Sexual and power harassment hotline (Risk Management Division)

Strategic Planning Division Operations Division

Business Support Division

Retail-Banking Division, Corporate BusinessDivision, Operations Support Division,Systems Division, Innovation Division,

Treasury & Securities Division

General Affairs Division1) Handles matters concerning responses to

anti-social forces and others2) Handles matters concerning business

entertainment, gift giving and others

Personnel Division1) Handles matters concerning punitive measures 2) Handles matters concerning compliance training 3) Promotes appropriate personnel rotations and

taking allotted time off

Branch Management Division1) Serve as a contact point for complaints and other matters from each branch 2) Handles matters concerning investigating and clarifying the cause of complaints and others

Representative Director/Directors 1) Convenes the Board of Directors 2) Reports to the Board of Directors

Head Office and Branches/Person promoting compliance implementation 1) Business operation compliance audits at branches2) Implement training on compliance3) Serve as contact point for consultations

concerning compliance with staff of branches 4) Record and report accidents and misconduct

5) Record and report external complaints6) Responses, whistle blowing, recording and

reporting on anti-social forces and others 7) Record and report on conflicts of interest.

Initiatives to strengthen compliance system Financial institutions have considerable social responsibilities and a public mission to be of service to regional economic soci-ety. Based on this understanding, each and every executive and employee has a duty to carry out respective operations with social common sense and a high level of corporate ethics. Hamashin’s compliance system is managed centered on the Compliance Committee, which is mainly comprised of directors. Additionally, the Legal Risk Management Department in the Risk Management Division is responsible for comprehending the compliance status of laws and regulations and other relevant matters as well as conducting legal checks for new operations, new products and other relevant matters, thereby thoroughly observing all relevant laws and regulations and rules. Hamashin

As of July 1, 2015

Compliance involves observing various rules beginning with a series of laws and regulations as well as social norms in carrying out daily operations. Hamashin designates thorough compliance as a top management issue and is working to strengthen its compliance system with the aim of becoming a fi nancial institu-tion earning greater trust from customers.

also has established a Compliance Manual stipulating the prin-ciples of action and code of conduct. Accordingly, personnel are assigned at each department and branch to promote the imple-mentation of compliance and repeatedly conduct training and study sessions in order to develop a high level of ethics and enhance compliance awareness. During fi scal 2016, we will focus on smooth fi nancing, a com-pliance system including laws and regulations, and management systems such as customer protection. Under these initiatives, we will take various measures to reinforce compliance such as appropriate responses to the SME Financing Facilitation Act, thorough observance of confi dentiality, strengthening response to anti-social forces, prevention of abuse of a dominant bargain-ing position, enforcement of response to the Act on the Preven-tion of Transfer of Criminal Proceeds (individual identifi cation and suspicious transactions), prevention of insider trading, ensuring the effectiveness of control systems relevant to customer expla-nations, comprehensive management of customer information, ensuring management adequacy including customer support (claims, consultations, requests and inquiries) and appropriate management of transactions involving confl icts of interest.

8


Supporting All Business Operators

Overseas Business Support Services

Hamashin’s Business Support Structure

Cust

omer

s

Cust

omer

s

We offer support appropriately tailored to each stage of the corporate lifecycle.

Consultation on business startups and launch of new businesses

Consultation on expansion of sales channels

Consultation on business management in general

Consultation on business succession and M&A

Hamashin

Branches Headquarters International Department

Regional BusinessDepartment Department

Corporate Strategy Department

Business Support Department

■ Hamamatsu Chamber of Commerce and Industry

■ Organization for SME Support, JAPAN

■Hamamatsu Agency for Innovation■ Shizuoka Prefecture Western

Region Shinkin Economic Research Institute

■ Shizuoka Guarantee■ Shizuoka Prefecture Small-

and Medium-sized Enterprise Revitalization Support Council, etc.

Overall management support■ Shizuoka University■ Hamamatsu University School of

Medicine■ Shizuoka Institute of Science

and Technology ■ Seirei Christopher University ■ Shizuoka Sangyo University ■Hamamatsu Gakuin University■ Shizuoka University of Art

and Culture ■ Tokoha University ■ Toyohashi University of

Technology

Affi liated universities■ Small- and medium-

size enterprise management consultants

■ IT coordinators■ Certified tax

accountants■ Certified public

accountant ■ Attorneys and judicial

scriveners■ Former company

employees, etc.

Consultants and experts

Cooperation with external support institutions and experts

DomesticOverseas business support

■ Japan External Trade Organization (JETRO)■Shizuoka International Business Association (SIBA)■ Hamamatsu-City■ Shinkin Central Bank■ Affiliated non-life insurance companies ■ Affiliated leasing companies■ Affiliated consultants, etc.

■ Shinkin Central Bank’s business bases in Asia■ Local financial institutions■ Local consultant firms■ Accounting firms■ Temporary employment agencies■ Industrial complex management firms, etc.

Overseas

Address: 19th Floor, 1901, Athenee Tower, 63 Wireless Road, Lumpini, Pathumwan, Bangkok 10330, Thailand

TEL: +66-(0)2-168-8303

FAX: +66-(0)2-168-8305

Business hours: 9:00 to 17:00 (local time), Monday to Friday (excluding Thai national holidays)

We hope make our offi ce a place for our customers from western Shizuoka Prefecture to exchange information. Please feel free to use our offi ce at any time before leaving for the airport or meeting with your business partners in Bangkok.

Yutaka YoshidaGeneral Manager,The Hamamatsu Shinkin Bank Bangkok Representative Offi ce

Bangkok Representative Offi ce

Overseas business support services provided by our Bangkok Representative Office

Information service Service to provide referrals to supporting organizationsSite visit support service Business partner referral service

The Hamashin Overseas Business Support Desk collaborates with such external support organizations as local governments, chambers of commerce, commerce and industry associations and Shinkin Central Bank to offer overseas business support services matched to customer needs. Our service lineup includes providing information on local business and other conditions and assisting in the formulation of plans for setting up operations overseas.　Following the opening of the Bangkok Representative Offi ce as a base in Southeast Asia in January 2014, we signed a memorandum of understanding concerning overseas business support in October 2014 with PT Bank International Indonesia Tbk (Indonesia) and thereafter with Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank, Vietnam) and Metropolitan Bank & Trust Company (the Philippines). Under these alliances, we have established a system to provide direct and strong support to our business operator customers in respective countries.

1,200,000

1,100,000

0

1,300,000

1,400,000

1,500,000

1,600,000Millions of yen/Figures in parentheses are a year-on-year comparison.

FY2015FY2013 FY2014

1,521,674（4.17%）

1,460,752（3.63%）

1,409,555（2.91%）

Millions of yen/Figures in parentheses are a year-on-year comparison.

FY2015

700,000

0

800,000

900,000

FY2014FY2013

837,999（2.48%）

853,849（1.89%）

817,698（1.32%）

9


With visible, though modest, signs of recovery in the regional economy toward the fi scal year end, we posted net income of ¥2.6 billion, and net business profi t, which is obtained through our main business, amounted to ¥5.7 billion.

The balance of deposits, including negotiable certifi cates of deposit, increased steadily with the support of customers and residents of the region.

The balance of loans and bills discounted increased from the end of the previous fi scal year as a result of the Bank’s efforts to proac-tively provide fi nancing and contribute to the regional development.

Business Results


FY2015FY2013 FY20140

4,000

8,000

6,000

2,000

3,752（-35.95%）

6,052（61.29%）

3,593（-40.62%）

■Ordinary profi t


FY2015FY2013 FY20140

4,000

8,000

6,000

2,000

6,509（-13.30%）

4,987（-23.38%）

5.799（16.27%）

■Net business profi t


FY2015FY2013 FY20140

2,000

3,000

1,000

5,000

4,000

2,700（-24.70%）

4,119（52.54%）

2,600（-36.86%）

■Net income

Growth in profi ts Balance of deposits (including certifi cates of deposit)

Balance of loans and bills discounted

Status of fi nancing for region

As of March 31, 2015

Capital investment¥247.6 billion

¥14.6 billion

Working capital¥281.4 billion

Residential loans¥277.2 billion

Local government entitiesOther individual loans¥32.7 billion

Business operators¥529.1 billion

Individuals¥310.0 billion

10


Hamashin also acquired an upper rank “A” in issuer ratings for fi scal 2015 from Rating and Investment Information, Inc. (R&I), which is a rating institution. The current rank was received in recognition of our enhanced shareholders’ equity, fi nancial stability, fi nely tuned customer response capabilities and other relevant aspects.

Hamashin’s non-consolidated capital adequacy ratio was 15.09% as of the end of March 2015, which markedly sur-passed 4.00% of the domestic standard of fi nancial institutions operating in Japan and signifi es sound management. Sound-ness is also evidenced by the majority of shareholders’ equity comprised of a reserve for retained earnings from profi ts.

Although the economic climate began to show faint signs of recovery, the rate of recovery varies among the companies with which we do business. As such, Hamashin continued to focus on supporting their management and on providing smooth fi nancing. In fi scal 2015, risk monitored loans totaled ¥63,378 million, which accounted for 7.42% of total loans and bills dis-counted. Additionally, the coverage ratio due to collateral and guarantees and reserve for possible loan losses was 92.9%. To prepare for the accrual of losses in the future, Hamashin reserves ¥10,931 million as a reserve for possible loan losses in addition to securing ¥129,400 million of net assets (sharehold-ers’ equity in a broad sense) by making efforts to reinforce its

retained earnings through earning stable profi ts every term. Going forward, Hamashin will improve and thoroughly pro-mote its risk control system while also undertaking concerted efforts to contribute to rebuilding and improving the manage-ment of client companies as a primary responsibility of a regional fi nancial institution.

Hamashin’s Ratings

Non-Consolidated Capital Adequacy Ratio

Risk-Monitored Loans for Fiscal 2015

R&I Rating Symbols and Definitions（Issuer Rating）Highest creditworthiness supported by many excellent factors.

Creditworthiness is sufficient, though some factors require attention in times of major environmental changes.

An obligation is in default or highly likely to default. The obligation in default may only be partially recovered.

An obligation is in default or likely to default. The obligation in default may not be recovered in full.

Creditworthiness is questionable and some factors require constant attention.

Creditworthiness is sufficient for the time being, though some factors require due attention in times of environmental changes.

Very high creditworthiness supported by some excellent factors.

An obligation is in default and may hardly be recovered.

High creditworthiness supported by a few excellent factors.

FY2013 FY2014 FY20150

16.00

20.00

12.00

8.00

4.00

0

100,000

80,000

60,000

40,000

20,000

Shareholders’equity (Millions of yen)

Non-consolidatedcapital adequacy

ratio (%)

■ ■ Shareholders’ equity Non-consolidated capital adequacy ratio

109,587

16.14% 15.61%15.09%

113,906 115,675

Domestic standard

4.00%

Previous Standard New Standard* In accordance with the revision of Financial Services Agency Notice No. 21, which

provides the calculation method for the capital adequacy ratio, Hamashin calculates the ratio based on the Basel III standard from FY2014.

* Amount covered by collateral and guarantees includes loans to bankrupt borrowers, delinquent loans, specifi c reserve as well as general reserve for loans past due three months or more and restructured loans.

Ratings Ratings are carried out by rating institutions as a means of ranking whether or not the payment of principal and interest of bonds and deposits are made to investors and/or depositors according to respective agreements or to rank the level of security and credit rating of a company from a fair standpoint.

Risk-monitored loansRisk-monitored loans are loans and bills discounted (assets for fi nancial institutions) for which bor-rowers may not be able to pay back due to various reasons such as the deterioration of business condition. In this respect, in tandem with the FSA’s Financial Inspection Manual, Hamashin pro-motes initiatives to comprehend the status of borrowers and appropriately conducts write-offs or transfer to a reserve for possible loan losses through a strict and fair asset assessment.

Capital adequacy ratio The capital adequacy ratio indicates the percentage of capital among total credit risk assets and is a representative indicator of factors that include the security and soundness of management as well as corporate vitality (resistance to risk). The capital adequacy ratio serves as the benchmark for the Financial Services Agency (FSA) to make offi cial announcements including orders to undertake business improvement initiatives or suspend business.

Risk-monitored loans (coverage ratio)

FY2015

649

58,978

—

3,750

63,378

100.0%

95.3%

—

53.2%

92.9%

Unit: Millions of yen

Risk-monitored loans

Total risk-monitored loans

Amount covered by collateral and guarantees

Ratio to total amount of loans

Loans to bankrupt borrowers

Delinquent loans

Loans past due three months or more

Restructured loans

Potentially bankrupt borrowers

Substandard borrowers

Bankrupt borrowers

Effectively bankrupt borrowers

58,854

7.42%

FY2014

1,494

59,590

3

6,847

67,935

100.0%

95.9%

100%

42.0%

90.6%

61,535

8.11%

Borrower classification under self-assessment

11


Non-Consolidated Balance Sheets

As of March 31, 2015 and 2014 2015 2014 2015

Assets

Cash and Due from Banks ¥ 234,744 ¥ 254,072 $ 1,953,433

Call Loans － 234 －

Monetary Claims Bought 254 288 2,114

Money Held in Trusts 1,000 1,000 8,322

Securities 592,182 499,649 4,927,869

Loans and Bills Discounted 853,849 837,999 7,105,342

Foreign Exchanges 1,003 1,036 8,347

Other Assets 8,204 8,000 68,270

Fixed Assets 16,846 15,353 140,185

Prepaid Pension Cost 533 348 4,435

Deferred Tax Assets －－－

Customers’ Liabilities for Acceptances and Guarantees 20,142 18,375 167,613

Reserve for Possible Loan Losses (10,931) (10,228) (90,963)

Total Assets ¥ 1,717,830 ¥ 1,626,131 $ 14,294,999

Liabilities and Net Assets

Liabilities

Deposits ¥ 1,512,253 ¥ 1,452,626 $ 12,584,281

Certificates of Deposit 9,421 8,126 78,397

Foreign Exchanges 11 －－

Other Liabilities 40,890 20,215 340,268

Reserve for Employee Bonuses 1,305 1,089 10,860

Reserve for Employee Retirement Benefits 1,130 1,204 9,403

Other Reserves 1,237 1,297 10,294

Deferred Tax Liabilities 1,978 575 16,460

Acceptances and Guarantees 20,142 18,375 167,613

Total Liabilities 1,588,371 1,503,512 13,217,700

Net Assets

Share Capital 1,201 1,194 9,994

Legal Reserve 1,194 1,184 9,936

Special Reserve 108,613 104,613 903,828

Unappropriated Retained Earnings 3,029 4,509 25,206

Total Members’ Equity 114,037 111,501 948,964

Net Unrealized Gains on Available-for-Sale Securities 15,420 11,117 128,318

Total Net Assets 129,458 122,619 1,077,291

Total Liabilities and Net Assets ¥ 1,717,830 ¥ 1,626,131 $ 14,294,999

Notes 1. Amounts of less than one million yen have been omitted. 2. U.S. dollar amounts are converted for convenience only at ¥120.17 per U.S.$1.00, the rate prevailing on March 31, 2015.

Thousands of U.S. dollars (Note 2)Millions of yen (Note 1)

12


Non-Consolidated Statements of Income

Unappropriated Retained Earnings

For the Years Ended March 31, 2015 and 2014 2015 2014 2015

Income

Interest on: ¥ 20,013 ¥ 19,846 $ 166,539

Loans and Bills Discounted 13,698 14,181 113,989

Securities 5,653 4,928 47,042

Others 662 737 5,509

Fees and Commissions 2,898 2,857 24,116

Other Income 1,890 2,452 15,728

Total Income 24,803 25,156 206,399

Expenses

Interest on: 796 753 6,624

Deposits 724 688 6,025

Other 71 65 591


General and Administrative Expenses 15,917 15,588 132,454

Other Expenses 2,860 1,241 23,800

Total Expenses 21,303 19,283 177,274

Income Before Income Taxes 3,499 5,872 29,117

Income Taxes

Current 1,082 1,205 9,004

Deferred (183) 547 (1,523)

Net Income ¥ 2,600 ¥ 4,119 $ 21,636


At Beginning of the Year ¥ 3,029 ¥ 4,509 $ 25,206

Appropriation 2,578 4,081 21,453

Transfer to Legal Reserve 6 10 50

Cash Dividends for Member Common Share 71 71 591

Special Reserve 2,500 4,000 20,804

At End of the Year ¥ 451 ¥ 428 $ 3,753




13


Consolidated Balance Sheets

As of March 31, 2015 and 2014 2015 2014 2015

Assets

Cash and Due from Banks ¥ 235,526 ¥ 255,348 $ 1,959,940

Call Loans － 234 －

Monetary Claims Bought 254 288 2,114

Monetary Held in Trusts 1,000 1,000 8,322

Securities 591,965 499,430 4,926,063

Loans and Bills Discounted 852,369 836,519 7,093,027

Foreign Exchanges 1,003 1,036 8,347

Other Assets 17,430 16,784 145,045

Fixed Assets 16,384 14,769 136,340

Prepaid Pension Cost 533 348 4,435

Deferred Tax Assets 153 170 1,273

Customers’ Liabilities for Acceptances and Guarantees 20,142 18,375 167,613

Reserve for Possible Loan Losses (11,163) (10,506) (92,893)

Total Assets ¥ 1,725,600 ¥ 1,633,801 $ 14,359,657

Liabilities and Net Assets

Liabilities

Deposits ¥ 1,510,796 ¥ 1,451,371 $ 12,572,156

Certificates of Deposit 8,401 7,106 69,909

Other Liabilities 47,641 26,903 396,447

Foreign Exchanges 11 － 92

Reserve for Employee Bonuses 1,395 1,182 11,609

Reserve for Employee Retirement Benefits 1,267 1,336 10,543

Other Reserves 1,252 1,317 10,419

Deferred Tax Liabilities 1,978 576 16,460

Acceptances and Guarantees 20,142 18,375 167,613

Total Liabilities 1,592,887 1,508,170 13,255,280

Net Assets

Share Capital 1,201 1,194 9,994

Retained Earnings 115,429 112,713 960,548

Total Members’ Equity 116,630 113,908 970,542

Net Unrealized Gains on Available-for-Sale Securities 15,420 11,117 128,318

Minority Interests 661 604 5,501

Total Net Assets 132,712 125,630 1,104,369

Total Liabilities and Net Assets ¥ 1,725,600 ¥ 1,633,801 $ 14,359,657



14


Consolidated Statements of Income

Retained Earnings


Income

Operating Income ¥ 20,001 ¥ 19,834 $ 166,439

Loans and Bills Discounted 13,689 14,172 113,914

Securities 5,649 4,924 47,008

Others 662 737 5,509


Other Income 5,155 5,578 42,898

Total Income 28,171 28,371 234,426

Expenses

Operating Expenses 795 753 6,616

Deposits 724 688 6,025

Others 71 65 591


General and Administrative Expenses 15,726 15,456 130,865

Other Expenses 6,142 4,316 51,111

Total Expenses 24,295 22,105 202,172

Income Before Income Taxes 3,875 6,266 32,246

Income Taxes

Current 1,197 1,313 9,961

Deferred (166) 572 (1,381)

Minority Interests in Income 50 56 416

Net Income ¥ 2,793 ¥ 4,323 $ 23,242


At Beginning of the Year ¥ 112,713 ¥ 108,460 $ 937,946

Changes during the Year

Net Income 2,793 4,324 23,242

Cash Dividends for Member Common Share 71 70 591

Decrease by merger 6 － 50

At End of the Year ¥ 115,429 ¥ 112,713 $ 960,548




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hamashin annual report 2015 · 4 hamashin annual report 2015 president kenichiro mimuro director...

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