Annual Report Year Ended March 31, 2017 THE LINK SQUARE HEKIKAI

Transcription

1 Annual Report 27 Year Ended March 3, 27 THE LINK SQUARE HEKIKAI

2 Profile of The Hekikai Shinkin Bank The Hekikai Shinkin Bank (the Bank) was established in October 95 in Anjo City, Aichi Prefecture, which is located at almost central part of Japan. Since then, the Bank has been maintaining sound operations and steadily widening its business base. At present, the Bank s network covers Aichi Prefecture widely and has 76 branches. Hekikai, which literally means deep blue sea in Japanese, derives from the old name of the region, where the Bank was founded. Therefore the Bank is commonly referred to by local residents as Hekishin The business area of the Bank, namely Aichi Prefecture, is Japan s famous industrial centre. One of its most important characteristics is that automobile industry plays a major role in the region. Therefore, the Bank s many customers are engaged in manufacturing various automobile parts and are providing their parent companies, like DENSO, AISIN, even directly TOYOTA with their products. Although those customers are small and medium-sized enterprises, their technologies are highly valued by major Japanese automobile companies. Anjo city, the Bank's birthplace, prospered as an advanced agricultural area after the Meiji Restoration and previously was called Japan s Denmark. At present, as abovementioned, automobile industry has become the most important industrial sector in the region, but quite a few people are still engaged in agriculture. The region s transportation system is highly extensive and convenient. The Tokaido Shinkansen (world-famous bullet train") runs in the region. Besides it takes only 2 minutes from the Bank s headquarters to Nagoya, the capital of Aichi prefecture by using local commuter trains. Since the establishment of the Bank, the Bank has supported many small and medium-sized companies, mainly related to automobile industry, as well as local residents, and contributed to the region s economic development. The Bank earns high patronage from the local community and is regarded as an indispensable financial institution for the region. Hekikai Shinkin Bank Profile (As of March 3, 26) Date of Establishment October 25, 95 Total Assets 2,277.5 Billion Deposits,967.5 Billion Loans and Bills Discounted,2.7 Billion Paid in Capital,259 Million Capital Adequacy Ratio 6.98% (non-consolidated) Number of Branches 76 (includes one sub-branch) Number of Off-site ATM Corners 58 (includes joint ATM corners) Number of Officers and Employees,289 Address of Head Office 5- Miyukihonmachi, Anjo City Aichi, Japan Nagoya Toyota Toyota Motor Corporation s headquarters is located here. Anjo (Head Office) Aichi Prefecture

3 THE HEKIKAI SHINKIN BANK Annual Report 27 Top Message Masami Fukuda Chairman Sumio Ishikawa President Bangkok Representative Office launched (July 2, 24) The Hekikai Shinkin Bank Bangkok Representative Office 6th Floor, 66, Athenee Tower, 63Wireless Road, Lumpini,Pathumwan, Bangkok 33, Thailand TEL : +66-() First of all we would like to express our sincere gratitude for your continuous support and patronage to our bank. In 26 Japanese economy, we recognized moderate recovery by improvement of employment status and slight growth of individual income. However it seems to lack of robustness to lead natural and steady growth, as personal consumption and capital investment look still weak. Global Seminer promoted We made steady efforts in 26,which was the 2nd year of our 8th middle term business plan to enhance the management aiming for being "First Call Bank",to stay on reliable partner with customers' prosperity and growth and development of local communities. Eventually we could increase deposits and loan and successfully have more profit than the previous year. In spite of good signs of regional business recovery, we would not be so optimistic due to recent manpower insufficiency problem or other. In such situation,we would keep on making efforts to improve job productivity with customer oriented mind by focusing on direct contact with customers. By good consulting function and insight forbusiness evaluation, we would contribute to customers and regional economy. We would respectfully request your continuing support and cooperation. July, 27 JCR Rating A+ Acquired November. 26 Hekikai Shinkin Bank has acquired an [A+] rating as a long-term issuer rating for 2th consecutive years by the Japan Credit Rating Agency Ltd. *Please refer to JCR s web site ( for the rationale of Hekikai Shinkin Bank s rating. *JCR ratings are reviewed on an annual basis following acquisition. Corporation in the local Eco-commuter Service ANJO TANABATA festival AAA AA A BBB BB B CCC CC C D

4 Corporate History of The Hekikai Shinkin Bank October 25, 95 January 9, 952 July 3, 963 June 29, 966 December 22, 966 November 8, 969 November 3, 969 March 27, 974 August 27, 975 December 27, 976 November 3, 978 December 2, 98 July, 982 April, 983 February, 984 June, 987 November 3, 987 October 25, 993 March 3, 994 November 25, 997 October 28, 2 April 2, 2 April 2, 2 February 2, 22 October 3, 25 November 4, 25 July 8, 26 July, 27 June 3, 28 January, 22 April 4, 23 May 26, 23 February 4, 24 March 7, 24 April 3, 24 July 2, 24 October, 25 Hekikai Credit Association was established with the business license granted in accordance with the Small and Medium-Sized Enterprise Cooperatives Act Reorganized as a shinkin bank and became Hekikai Shinkin Bank in accordance with the Shinkin Bank Act with Shohei Sugimoto as the initial Chairman Deposits reached billion Opened current account with the Bank of Japan Designated as a revenue agent of the Bank of Japan Host computer introduced and business processing began Deposits reached billion Money exchange business launched st Cash Dispenser (CD) installed at Head Office Lending from the Bank of Japan commenced Operation Center building completed ATMs installed in all branches Gold trading commenced OTC sales of government bonds commenced Foreign exchange transactions commenced Dealing operations commenced Deposits reached 5 billion with 5 branches Operations started at New Head Office Deposits reached trillion Hekishin website established Held anniversary celebration commemorating the 5 th anniversary of our establishment OTC sales of investment trust funds commenced OTC sales of non-life insurance products commenced Defined contribution pension plan business commenced Securities brokerage business commenced A + long-term issuer rating affirmed by Japan Credit Rating Agency (JCR) Began to issue Hekishin IC cash cards Selected as the sole designated financial institution by Anjo city Deposits reached.5 trillion International Division established Entered into business tie-up agreement with PT Bank International Indonesia Tbk (BII) (Now, renamed PT Bank Maybank Indonesia Tbk ) License for providing direct loans to overseas subsidiaries of customers granted by the Tokai Local Finance Bureau Provided direct loans to overseas subsidiaries of customers Entered into business tie-up agreement with Bank for Investment and Development of Vietnam (BIDV) Provided loans to overseas subsidiaries of customer through co-financing with Japan Bank for International Cooperation (JBIC) Bangkok Representative Office launched Entered into business tie-up agreement with Nippon Export and Investment Insurance (NEXI) Head Office building in 953 Head Office building from 993 to now Entered into business tie-up agreement with PT Bank International Indonesia Tbk (BII) (April 4, 23) Entered into business tie-up agreement with Bank for Investment and Development of Vietnam (BIDV) (March 7, 24) Bangkok Representative Office located in Athenee Tower December 29, 25 Loan balance reached trillion

5 THE HEKIKAI SHINKIN BANK Annual Report 27 Board of Directors and Corporate Auditors As of July, 27 Chairman President Senior Managing Director Senior Managing Director Managing Director Managing Director Masami Fukuda Sumio Ishikawa Makoto Fukaya Masayuki Yamauchi Shuichi Jinno Koji Kawada Director Director Director Director Director (External) Atsushi Koyama Soichiro Takasaki Hiroyasu Horie Takeshi Kunita Kazuo Hironaka Standing Corporate Auditor Standing Corporate Auditor Corporate Auditor (External) Corporate Auditor (External) Hideyuki Komatsu Masashi Ogino Tsutomu Wakabayashi Hiroshi Yamada Organizational Chart As of July, 27 General Affairs Division Personnel Development Division General Affairs Group Secretarial Group Personnel Development Group Personnel Group Health Care Promotion Office Securities and Treasury Division Banking Unit International Division Treasury Group Securities Management Group International Business Group Bangkok Representative Office Banking Business Promotion Group Corporate Banking Division Corporate Solution Group Business SuccessionM&A Group Board of Corporate Auditors Corporate Auditors Retail Banking Division Retail Banking Support Group Asset Management Promotion Group Retail Loan Promotion Group Board of Directors Executive Committee Chairman Nagoya Banking Division Management Group Banking Group Credit Group General Members Meeting President Senior Managing Directors Credit Division Personal Loan Credit Group Credit Management Group Managing Directors Collateral Evaluation & Analysis Group Directors Board of Executive Officers Risk Management Division Risk Management Group Compliance Group Customer Service Group Credit Control Group Corporate Planning Division Operation Center Corporate Planning Group Accounting Group IT Planning Group Operations Division Administrative Guidance Group Operations Group Central Operations Group Central Operations Division Operations Processing Group EB Support Group Operations Management Division Caeh Management Group Operations Management Group Internal Audit Division Internal Audit Group

6 Performance Highlights Balance of Deposits / Loans and Bills Discounted Thanks to the patronage of our valued customers,the bank's total balance of deposits increased to be billion. This is 2.4 % bigger than the balance at previous fiscal year end. As for total balance of loans and bills discounted, It resulted 2.7 billion. It also increased by.5% mainly due to increase of individual home mortgages. Balance of deposits by castomer category ( 27,hundred million yen, percentage in boxes represent ratio against total deposits) Publice office % Financiel Institute 8.% Corpration 4,43 2.5% Total 9,675 Total balance of deposits and loans and bills discounted (Hundred million yen) Deposits Loans and bills discounted Individuals 4, % 2, 8,583 9,29 9,675 Balance of loans and bills discounted by type of business ( 27, hundred million yen) 5,, 9,74,63,27 For Individual accounts 3,43 Consumer loan/other 264 Home mortgages 3,65 Total,27 Individual lessors,334 Real estate,88 Other 545 Manufacturing,57 5, Local governments 365 other 33 Service,23 Construction 578 Financial Institute/insurance Co. 387 Transportation 26 For Business 6,422 Wholesale trade/retail 742 Balance of profits and losses As a result of sound business operations under a severe business environment, the bank reported core net business income of 4.9 billion, ordinary income of 5.6 billion and net income of 4. billion. Income breakdowns (Hundred million yen) 8 Net Business Income Ordinary Income Net Income Reference Net Business Income : Income related to basic services, including financing. Ordinary Income : Income from regular business activities. This is an important income component when looking at recurring earnings capacity. Net Income : Income based on adjustments to ordinary income for extraordinary gains or losses, and deductions of income taxes, etc. This is also referred to as final net profit

7 THE HEKIKAI SHINKIN BANK Annual Report 27 Balance of net assets The bank s has net assets of 78.4 billion, and retained earnings of 6.3 billion. One of the Bank s characteristics is that its retained earnings account for a high percentage of net assets. It represent the high quality of the Bank s net assets. Balance of securities investments The fiscal year ending balance for securities is billion. Regarding securities investments, the bank follows an investment policy that emphasizes safety, in which investments are principally conducted through government bonds, local government bonds, highly-rated corporate bonds, and securities such as foreign securities. Net assets and retained earnings (Hundred million yen) Retained earnings are included in net assets Net assets Retained earnings,795,784,72,6,63,533,573,2 8 4 Breakdown of securities ( 27, hundred million yen) Other securities 448 Foreign securities Government bonds Stocks 4 Finance bonds, Industrial bonds, etc.,793 Corporate bonds 3,66 Authority bonds,272 Total 6,953 Local government bonds, Balance of capital adequacy ratio The bank s capital adequacy ratio, which is an indicator that expresses the soundness of a financial institution, was 6.98%. This ratio far surpasses the domestic standard 4%, and therefore, the bank s financial safety is in extremely high. Balance of non-performing loans Non-performing loans based on Financial Reconstruction Law were 32.2 billion, with a non-performing loan ratio of 3.4%. All non-performing loans do not necessarily lead to losses, and are covered by collateral, guarantees and reserve for possible loan losses. As the bank possesses net assets of 78.4 billion, the impact of non-performing loans on business operations is insignificant. Capital adequacy ratio (%) Capital adequacy ratio Non-performing loans and non-performing loan ratio (hundred million yen, %) Balance of non-performing loans Non-performing loan ratio Domestic standard Reference Capital adequacy ratio = (shareholders interests risk assets) (%)

8 Non-Consolidated Balance Sheets Millions of yennote Millions of U.S.dollarsNote 2 As of March 3,27 and Assets Cash and due from banks 59, ,487 4,629 Monetary claims purchased,4 9 Money held in trust 3, Trading account securities Securities 695,369 68,996 6,98 Loans and bills discounted,2,795,6,36 9,8 Foreign exchanges,8 536 Other assets,73,62 5 Premises and equipment 23,444 22,6 29 Deferred tax assets Customers' liabilities for acceptance and guarantees 2,37 2,426 2 Reserve for possible loan losses 2,655 2, Total assets 2,277,53 2,27,597 2,3 Liabilities and net assets Liabilities Deposits,967,57,92,957 7,537 Foreign exchanges 78 6 Other liabilities 23,27 5,975,98 Reserve for employee bonuses Retiring allowance reserve Other reserves 5,296 7,67 47 Acceptance and guarantees 2,37 2,426 2 Total liabilities 2,99,85 2,38,82 8,7 Net assets Paid-in capital,259,253 Legal reserve,253,242 Voluntary reserves 55,557 5,545,387 Unappropriated profit 4,568 4,56 4 Total members' equity 62,638 58,6,45 Revaluation differential 5,788 2,93 4 Total net assets 78,427 79,55,59 Total liabilities and net assets 2,277,53 2,27,597 2,3 Notes.Amounts of less than one million yen have been omitted. 2.U.S. dollar amounts are converted for convenience only at 2.9 per U.S.., the rate prevailing on March 3,27.

9 THE HEKIKAI SHINKIN BANK Annual Report 27 Non-Consolidated Statements of Income Millions of yennote Millions of U.S.dollarsNote 2 For the years ended March 3,27 and Income Interest on: Loans and bills discounted 2,67 2,868 8 Securities 6,483 6, Other,27,466 Fees and commissions 2,87 2, Other income 2,54 2, Total Income 25,28 25, Expenses Interest on: Deposits,74 2,97 6 Other General and administrative expenses 5,675 5,444 4 Fees and commissions,72,592 5 Other expenses Transfer to reserves 49 Total expenses 9,59 2,8 75 Income before income taxes 5,68 5,572 5 Provision for income taxes,357,485 2 Corporate tax and other adjustment amounts 54 2 Net income 4,5 4,89 37 Non-Consolidated Statements of Appropriation of Profit Millions of yennote Millions of U.S.dollarsNote 2 For the years ended March 3,27 and Balance at the end of the year 4,582 4,563 4 Balance bought forward Net income 4,5 4,89 37 Special depreciation reserve decrease 4 3 Appropriation of earned surplus 4,55 4, 36 Legal reserve 5 Cash dividends Other 5 Transfer to reserves 4, 4, 36 Balance to be carried forward Notes.Amounts of less than one million yen have been omitted. 2.U.S. dollar amounts are converted for convenience only at 2.9 per U.S.., the rate prevailing on March 3,

10 Consolidated Balance Sheets Millions of yennote Millions of U.S.dollarsNote 2 As of March 3,27 and Assets Cash and due from banks 59,37 496,488 4,629 Monetary claims purchased,4 9 Money held in trust Trading account securities Securities 694,49 68,7 6,9 Loans and bills discounted,2,66,4,882 9,97 Foreign exchanges,8 536 Other assets 5,838 5,75 4 Premises and equipment 23,66 22,37 2 Deferred tax assets Customers' liabilities for acceptance and guarantees 2,37 2,426 2 Reserve for possible loan losses 2,73 3,64 24 Other reserves Total assets 2,279,659 2,29,49 2,32 Liabilities and net assets Liabilities Deposits,963,5,97,942 7,52 Foreign exchanges 78 6 Other liabilities 25,927 8,562,22 Reserve for employee bonuses Retiring allowance reserve Other reserves Deferred tax liability 4,452 6,29 4 Acceptance and guarantees 2,37 2,426 2 Total liabilities 2,97,734 2,36,563 8,698 Net assets Paid-in capital,259,253 Consolidated surplus 64,877 6,76,47 Total member's equity 66,36 62,3,48 Revaluation differential 5,788 2,93 4 Minority equity Total net assets 8,925 82,926,622 Liabilities and net assets 2,279,659 2,29,49 2,32 Notes.Amounts of less than one million yen have been omitted. 2.U.S. dollar amounts are converted for convenience only at 2.9 per U.S.., the rate prevailing on March 3,27.

11 THE HEKIKAI SHINKIN BANK Annual Report 27 Consolidated Statements of Income Millions of yennote Millions of U.S.dollarsNote 2 For the years ended March 3,27 and Income Operating income 9,748 2, Loans and bills discounted 2,54 2,856 7 Securities 6,422 6,22 57 Other,27,466 Fees and commissions 2,833 2, Other income 4,437 4,79 4 Total Income 27,9 27, Expenses Operating expenses,84 2,27 6 Deposits,74 2,96 6 Other General and administrative expenses 5,76 5,52 4 Fees and commissions,72,59 5 Other expenses,932 2,324 7 Transfer to reserves 5 Total expenses 2,236 2, Income before income taxes 5,782 5,52 52 Corporate tax,etc,46,545 3 Corporate tax and other adjustment amounts Minority shareholder's profit 33 Net income 4,9 3,9 37 Consolidated Statements of Retained Earnings Millions of yennote Millions of U.S.dollarsNote 2 For the years ended March 3,27 and Consolidated balance at the beginning of the year 6,564 56,737,43 Increase in consolidated surplus 4,9 3,9 37 Net income 4,9 3,9 37 Decrease in consolidated surplus Dividends Bonuses to directors Ending balance of consolidated surplus 64,682 6,564,468 Notes.Amounts of less than one million yen have been omitted. 2.U.S. dollar amounts are converted for convenience only at 2.9 per U.S.., the rate prevailing on March 3,27.

12 5- Miyuki-honmachi Anjo-city Aichi-pref., Japan TEL; Printed in Japan