The Chiba Kogyo Bank, Ltd.

Transcription

1 For the Fiscal Year Ended March 31, 2014 Annual Select 2014 The Chiba Kogyo Bank, Ltd. 1-2, Saiwaicho 2-chome, Mihama-ku, Chiba (Securities Code: 8337) Corporate Profile Since its establishment in 1952, Chiba Kogyo Bank has contributed to the economic development of the local community under its corporate philosophy of Moving Forward with the Region, with Heartfelt Kindness Toward Customers. Chiba Prefecture, the Bank s business base, is a leading industrial prefecture located on the eastern coast of Japan's main island of Honshu, facing the Pacific Ocean. Adjoining Tokyo, the prefecture plays a key part in some of the capital s functions. As such, the Bank seeks to fulfill its role as a leading regional financial institution under its corporate mission of gaining the confidence of the local community through its high profitability, achieved with a small but select staff

2 I. Summary of Selected Financial Data (Consolidated) March Consolidated ordinary income (Millions of yen) 53,810 52,424 52,416 53,990 52,555 $510,639 Consolidated ordinary profit (Millions of yen) 6,301 6,736 9,859 11,046 11, ,274 Consolidated net income (Millions of yen) 5,432 7,436 8,066 8,675 8,555 83,123 Consolidated comprehensive income (Millions of yen) 4,223 8,543 16,482 7,960 77,342 Consolidated net assets (Millions of yen) 124, , , , ,493 1,229,042 Consolidated total assets (Millions of yen) 2,215,010 2,256,208 2,312,063 2,405,813 2,397,895 23,298,630 Net assets per share (Yen) (U.S. dollar) , , Net income per share (Yen) (U.S. dollar) Diluted net income per share (Yen) (U.S. dollar) Capital adequacy ratio (%) Consolidated capital adequacy ratio (under Japanese standards) (%) Consolidated return on equity (%) Consolidated price earnings ratio (Times) Cash flows from operating activities (Millions of yen) 40,188 59,087 (17,239) (28,331) 86, ,442 Cash flows from investing activities (Millions of yen) (40,375) (10,520) (27,856) 1,426 19, ,408 Cash flows from financing activities (Millions of yen) (1,421) (5,620) (1,419) 35,385 (67,456) (655,422) Cash and cash equivalents at end of (Millions of yen) 27,460 70,439 24,104 32,839 71,626 $695,939 Number of employees [Separately, average number of temporary employees] (Persons) 1,438 [1,101] 1,452 [1,096] 1,412 [1,103] 1,368 [1,095] 1,371 [1,115] Notes: 1. U.S. dollar amounts are the yen equivalent, calculated, for convenience only, at a rate of = U.S. $1, the approximate Tokyo foreign exchange market rate as of March 31, In the accounting treatment for consumption taxes and local taxes of the Bank and its consolidated subsidiaries, the tax-excluded method is used with the exception of some consolidated subsidiaries

3 3. In the calculation of Net assets per share, Net income per share and Diluted net income per share (hereinafter Per Share Information ), Accounting Standard for Earnings Per Share (ASBJ Statement No. 2) and Guidance on Accounting Standard for Earnings Per Share (ASBJ Guidance No. 4) are applied. 4. Capital adequacy ratio is calculated by dividing (total net assets at the end of current - subscription rights to shares at the end of current - minority interests at the end of current ) by total assets at the end of current

4 II. Message from the President As always, I would like to extend my sincerest appreciation for your patronage of Chiba Kogyo Bank. On this occasion, we have formulated the Annual Select 2014 The Chiba Kogyo Bank, Ltd. with a view to deepening stakeholders understanding of the Bank s activities. We discuss the Bank s management policies, its recent earnings performance and a business overview, and have tried our utmost to do so in a manner that is as easy to understand as possible. We take pleasure in releasing this report for stakeholders perusal. In terms of recent economic development, a raft of political measures geared toward economic recovery is beginning to take effect, as evidenced by signs of improvement in the business climate for small- and medium-sized companies in Chiba Prefecture. While there has been some adverse impact from the consumption tax hike, we are at a point where full-scale recovery can be expected in the second half of FY2014. With your strong support, the Bank will undertake a number of initiatives to fulfill its obligation as a regional financial institution, in working toward a robust recovery in the prefectural economy. Currently, the Bank is actively deploying the strategic measures outlined in its three-year (FY ) Medium-Term Management Plan, named 2nd Stage of Transformation and Growth Strategy. With the aim of remaining the best consultant for our customers in the region and a bank that continues to be chosen, with an absolute presence indispensable to the area and our customers, we intend to mobilize all the resources at the Chiba Kogyo Bank Group s disposal and push ahead with our tasks. In July 2013 the Bank repaid the remainder of the public funds it owed, enabling the resumption of dividends in FY2013. In this matter, too, we are extremely grateful for your support. I would like to end by once again extending my heartfelt gratitude in anticipation of your unwavering support and patronage. Shunichi Aoyagi President (CEO) - 4 -

5 III. Business Performance In FY2013 ended March 31, 2014, the Japanese economy recovered modestly as a raft of political measures geared toward economic recovery contributed to improved earnings (especially at export-related companies), higher capital expenditure, and a brighter employment climate. Similarly, signs of recovery could be seen in the Chiba Prefecture s economy, which forms the basis for Chiba Kogyo Bank s operations. These bright spots took the form of increases in the number of new vehicle registrations and new housing starts, improved employment figures, and a low incidence of company collapses. Against this financial and economic backdrop, the Bank actively deployed specific strategic measures to meet the management challenges under its three-year (FY ) Medium-Term Management Plan, named 2nd Stage of Transformation and Growth Strategy. As a result, the Group s performance was as follows. From an operational standpoint, deposits totaled 2,199.0 billion, an increase of 45.7 billion compared with the end of FY2012, primarily due to an increase in individual deposits. As a result of the Bank actively responding to the funding needs of customers while also leveraging consulting capacity to tap new demand for funds, loans and bills discounted amounted to 1,720.1 billion, an increase of 65.1 billion from a year earlier. Securities holdings amounted to billion, down 20.1 billion from the end of FY2012 owing to a reduction in some bond holdings with a view to enhancing portfolio quality. From a profit and loss standpoint, the Bank strove to offer solutions that precisely met customers asset management needs, the result being higher sales of investment trusts and insurance products, and accompanying growth in fees and commissions. On the other hand, although there was growth in loans and bills discounted as a consequence of the Bank actively engaging in consulting aimed at providing companies and sole proprietors with the information and solutions needed to resolve management issues, there was a fall in interest income recognized on the statements of income reflecting the impact of lower market interest rates. Ordinary income decreased billion year on year, to billion, owing to lower gain on sale of government bonds. Ordinary expenses decreased billion compared with the previous fiscal year, to billion. Two factors were behind this decrease: a decline in loss related to securities; and the non-recurrence of the year-earlier booking of trust beneficiary rights depreciation and amortization, along with the costs of issuing new stock associated with the fourth issue of class 4 preferred stock. As a result of these factors, ordinary profit totaled billion, a year-on-year increase of 818 million. In addition, total income taxes increased from the previous fiscal year, due to the reversal of deferred tax assets accompanying tax reform. As a result, net income decreased 119 million to billion. Business performance by segment was as follows. (Effective from the interim of FY2013, the Bank adopted a new reporting segment structure. To create the prior-year comparisons outlined below, figures from the previous fiscal year have been restated to match the reported segment classification after the change.) Ordinary income from banking business decreased billion from the previous year, to billion, and segment profit increased 450 million to billion. Ordinary income from leasing business rose 413 million year on year to billion, and segment profit increased 339 million to 440 million. Ordinary income from credit guarantee and credit card business increased 188 million from a year earlier, to billion, and segment profit decreased 46 million to billion. Ordinary income from other business segment declined 151 million year on year, to billion, and segment profit decreased 5 million to 149 million. On the Basel III domestic standard basis adopted from the end of March, 2014, the consolidated capital adequacy ratio was 8.91%

6 IV. Consolidated Financial Statements (1) Consolidated Balance Sheets (Millions of yen) (Thousands of U.S. dollars)* As of March 31, 2013 As of March 31, 2014 As of March 31, 2014 Assets Cash and due from banks 40,493 78,146 $759,289 Call loans and bills bought 80,000 5,000 48,581 Monetary claims bought 8,507 1,327 12,894 Trading account securities ,069 Securities 541, ,051 5,062,680 Loans and bills discounted 1,654,970 1,720,148 16,713,447 Foreign exchanges 2,169 2,823 27,429 Other assets 29,048 28, ,460 Tangible fixed assets 20,204 20, ,832 Buildings, net 6,434 6,608 64,205 Land 10,937 10, ,267 Leased assets, net Construction in progress 50 Other tangible fixed assets 2,729 2,558 24,854 Intangible fixed assets 2,784 2,763 26,846 Software 2,332 2,321 22,551 Leased assets Other intangible fixed assets ,780 Deferred tax assets 17,715 16, ,806 Customers liabilities for acceptances and guarantees 22,766 14, ,662 Allowance for loan losses (14,193) (13,526) (131,422) Total assets 2,405,813 2,397,895 23,298,

7 Liabilities As of March 31, 2013 (Millions of yen) As of March 31, 2014 (Thousands of U.S. dollars)* As of March 31, 2014 Deposits 2,153,266 2,199,040 21,366,498 Negotiable certificates of deposit 5,170 8,540 82,977 Borrowed money 21,563 19, ,641 Foreign exchanges Other liabilities 14,293 20, ,892 Provision for retirement benefits 6,149 Net defined benefit liability 8,672 84,260 Provision for directors retirement benefits ,691 Provision for reimbursement of deposits ,589 Acceptances and guarantees 22,766 14, ,662 Total liabilities 2,224,072 2,271,401 22,069,578 Net assets Capital stock 57,941 57, ,971 Capital surplus 64,792 4,566 44,365 Retained earnings 48,991 55, ,353 Treasury shares (64) (66) (641) Total shareholders equity 171, ,260 1,149,048 Valuation difference on available-for-sale securities 8,289 7,363 71,541 Remeasurements of defined benefit plans (1,251) (12,155) Total accumulated other comprehensive income 8,289 6,112 59,386 Minority interests 1,790 2,120 20,599 Total net assets 181, ,493 1,229,042 Total liabilities and net assets 2,405,813 2,397,895 $23,298,630 * Please refer to the note 1 on page

8 (2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income (Consolidated Statements of Income) March 31, 2013 (Millions of yen) March 31, 2014 (Thousands of U.S. dollars)* March 31, 2014 Ordinary income 53,990 52,555 $510,639 Interest income 31,775 30, ,394 Interest on loans and discounts 25,951 25, ,784 Interest and dividends on securities 5,486 4,564 44,345 Interest on call loans and bills bought Interest on deposits with banks ,525 Other interest income ,089 Fees and commissions 8,387 8,897 86,446 Other ordinary income 3,609 2,208 21,454 Other income 10,217 11, ,326 Recoveries of written off claims 1,514 1,711 16,625 Other 8,703 9,335 90,702 Ordinary expenses 42,943 40, ,365 Interest expenses 1,391 1,342 13,039 Interest on deposits 1,121 1,078 10,474 Interest on negotiable certificates of deposit Interest on call money and bills sold Interest on payables under securities lending transactions 0 0 Interest on borrowings and rediscounts ,390 Other interest expenses Fees and commissions payments 2,498 2,699 26,224 Other ordinary expenses 1, ,118 General and administrative expenses 25,255 25, ,481 Other expenses 12,792 11, ,483 Provision of allowance for loan losses 1, ,493 Other 11,598 10,290 99,981 Ordinary profit 11,046 11, ,274 Extraordinary losses Loss on disposal of non-current assets Impairment loss Income before income taxes and minority interests 10,918 11, ,419 Income taxes - current ,191 Income taxes - deferred 1,212 2,059 20,006 Total income taxes 2,102 2,903 28,206 Income before minority interests 8,816 8,873 86,213 Minority interests in income ,080 Net income 8,675 8,555 $83,123 * Please refer to the note 1 on page

9 (Consolidated Statements of Comprehensive Income) (Millions of yen) (Thousands of U.S. dollars)* March 31, 2013 March 31, 2014 March 31, 2014 Income before minority interests 8,816 8,873 $86,213 Other comprehensive income 7,666 (913) (8,871) Valuation difference on available-for-sale securities 7,666 (913) (8,871) Comprehensive income 16,482 7,960 $77,342 Comprehensive income attributable to Comprehensive income attributable to owners of parent 16,295 7,630 74,135 Comprehensive income attributable to minority interests * Please refer to the note 1 on page ,

10 (3) Consolidated Statements of Changes in Equity March 31, 2013 Balance at beginning of current Changes of items during Shareholders equity Capital stock Capital surplus Retained earnings Treasury shares (Millions of yen) Total shareholders equity 57,941 32,792 41,735 (64) 132,406 Issuance of new shares 16,000 16,000 32,000 Transfer to other capital surplus from capital stock (16,000) 16,000 Dividends of surplus (1,419) (1,419) Net income 8,675 8,675 Purchase of treasury shares (0) (0) Net changes of items other than shareholders equity Total changes of items during Balance at end of current 32,000 7,255 (0) 39,255 57,941 64,792 48,991 (64) 171,661 Balance at beginning of current Changes of items during Valuation difference on available-for-sale securities Accumulated other comprehensive income Remeasurements of defined benefit plans Total accumulated other comprehensive income Minority interests Total net assets , ,678 Issuance of new shares 32,000 Transfer to other capital surplus from capital stock Dividends of surplus (1,419) Net income 8,675 Purchase of treasury shares (0) Net changes of items other than shareholders equity Total changes of items during Balance at end of current 7,620 7, ,807 7,620 7, ,063 8,289 8,289 1, ,

11 March 31, 2014 Balance at beginning of current Changes of items during Shareholders equity Capital stock Capital surplus Retained earnings Treasury shares (Millions of yen) Total shareholders equity 57,941 64,792 48,991 (64) 171,661 Dividends of surplus (1,727) (1,727) Net income 8,555 8,555 Purchase of treasury shares (60,228) (60,228) Retirement of treasury shares Net changes of items other than shareholders equity Total changes of items during Balance at end of current (60,226) 60,226 (60,226) 6,827 (1) (53,400) 57,941 4,566 55,819 (66) 118,260 Balance at beginning of current Changes of items during Valuation difference on available-for-sale securities Accumulated other comprehensive income Remeasurements of defined benefit plans Total accumulated other comprehensive income Minority interests Total net assets 8,289 8,289 1, ,741 Dividends of surplus (1,727) Net income 8,555 Purchase of treasury shares (60,228) Retirement of treasury shares Net changes of items other than shareholders equity Total changes of items during Balance at end of current (925) (1,251) (2,177) 329 (1,847) (925) (1,251) (2,177) 329 (55,247) 7,363 (1,251) 6,112 2, ,

12 March 31, 2014 Balance at beginning of current Changes of items during Shareholders equity Capital stock Capital surplus Retained earnings Treasury shares (Thousands of U.S. dollars)* Total shareholders equity 562, , ,010 (622) 1,667,907 Dividends of surplus (16,780) (16,780) Net income 83,123 83,123 Purchase of treasury shares (585,192) (585,192) Retirement of treasury shares Net changes of items other than shareholders equity Total changes of items during Balance at end of current (585,173) 585,173 (585,173) 66,333 (10) (518,850) 562,971 44, ,353 (641) 1,149,048 Balance at beginning of current Changes of items during Valuation difference on available-for-sale securities Accumulated other comprehensive income Remeasurements of defined benefit plans Total accumulated other comprehensive income Minority interests Total net assets 80,538 80,538 17,392 1,765,847 Dividends of surplus (16,780) Net income 83,123 Purchase of treasury shares (585,192) Retirement of treasury shares Net changes of items other than shareholders equity Total changes of items during Balance at end of current * Please refer to the note 1 on page 2. (8,988) (12,155) (21,152) 3,197 (17,946) (8,988) (12,155) (21,152) 3,197 (536,796) 71,541 (12,155) 59,386 20,599 1,229,

13 (4) Consolidated Statements of Cash Flows (Millions of yen) (Thousands of U.S. dollars)* March 31, 2013 March 31, 2014 March 31, 2014 Cash flows from operating activities Income before income taxes and minority interests 10,918 11,776 $114,419 Depreciation 2,036 2,240 21,764 Impairment loss Increase (decrease) in allowance for loan losses (669) (666) (6,471) Increase (decrease) in provision for retirement benefits 543 Increase (decrease) in net defined benefit liability 587 5,703 Increase (decrease) in provision for directors retirement benefits (2) Increase (decrease) in provision for reimbursement of deposits ,798 Gain on fund management (31,775) (30,402) (295,394) Financing expenses 1,391 1,342 13,039 Loss (gain) related to securities (1,636) (1,676) (16,284) Foreign exchange losses (gains) (255) (146) (1,419) Loss (gain) on disposal of non-current assets Net decrease (increase) in trading account securities Net decrease (increase) in loans and bills discounted (44,544) (65,177) (633,278) Net increase (decrease) in deposit 42,839 45, ,743 Net increase (decrease) in negotiable certificates of deposit (990) 3,370 32,744 Net increase (decrease) in borrowed money (excluding subordinated borrowings) Net decrease (increase) in deposit (excluding deposit paid to Bank of Japan) 2,744 3,248 31, ,132 10,999 Net decrease (increase) in call loans (39,730) 82, ,475 Net decrease (increase) in foreign exchanges - assets 392 (654) (6,354) Net increase (decrease) in foreign exchanges - liabilities Proceeds from fund management 32,075 31, ,120 Payments for finance (1,677) (1,413) (13,729) Other, net (59) 4,332 42,091 Subtotal (28,010) 87, ,039 Income taxes paid (321) (679) (6,597) Net cash provided by (used in) operating activities (28,331) 86, ,442 Cash flows from investing activities Purchase of securities (150,656) (142,884) (1,388,302) Proceeds from sales of securities 90,968 93, ,169 Proceeds from redemption of securities 63,649 70, ,234 Purchase of tangible fixed assets (1,481) (1,158) (11,251) Proceeds from sales of tangible fixed assets 3 Purchase of intangible assets (1,056) (765) (7,433) Net cash provided by (used in) investing activities 1,426 19, ,

14 Cash flows from financing activities March 31, 2013 (Millions of yen) March 31, 2014 (Thousands of U.S. dollars)* March 31, 2014 Increase in subordinated borrowings 5,000 Decrease in subordinated borrowings (5,500) (53,440) Proceeds from issuance of common shares 31,805 Cash dividends paid (1,419) (1,727) (16,780) Purchase of treasury shares (0) (60,228) (585,192) Net cash provided by (used in) financing activities 35,385 (67,456) (655,422) Effect of exchange rate change on cash and cash equivalents ,419 Net increase (decrease) in cash and cash equivalents 8,735 38, ,856 Cash and cash equivalents at beginning of 24,104 32, ,073 Cash and cash equivalents at end of 32,839 71,626 $695,939 * Please refer to the Note 1 on page

15 V. Consolidated Subsidiaries (As of March 31, 2014) Chiba Kogin Card Service Co., Ltd. Main business line: Credit card business, guarantees of housing and other loans Established: April 1979 Capital: 100 million Equity share of the Bank and subsidiaries: 100.0% Chiba Kogin Business Service Co., Ltd. Main business line: Clerical operations for the Bank Established: January 1986 Capital: 10 million Equity share of the Bank and subsidiaries: 100.0% Chiba General Lease Co., Ltd. Main business line: Leasing, loans Established: December 1982 Capital: 90 million Equity share of the Bank and subsidiaries: 26.1% Chiba Kogin Computer Soft Co., Ltd. Main business line: Development, sale and maintenance of computer systems Established: July 1991 Capital: 30 million Equity share of the Bank and subsidiaries: 55.0% VI. Organization Chart (As of June 30, 2014) General Meeting of Shareholders Board of Directors President (CEO) Deputy President (COO) Managing Directors Board of Corporate Auditors Standing Corporate Auditors Corporate Auditors Compliance Committee Management Liaison Committee Risk Management Division General Secretariat Management Planning Division Tokyo Liaison Office Auditing Division Personnel Division General Administration Division Branch Support Division Business Administration Division Customer Service Promotion Division Business Strategy Division Credit Supervision Division Business Procedures and Operations Division Treasury Division Financial Markets Division Head Office and Branches Office of Corporate Auditors

16 VII. Board of Directors, Corporate Auditors and Executive Officers (As of June 27, 2014) President (CEO): Deputy President (COO): Managing Directors: Managing Executive Officers: Standing Corporate Auditors: Corporate Auditors: Executive Officers: Shunichi Aoyagi Seiji Umemura Satoshi Hoshino Shigeo Okamoto Shigeto Katoh Yoshiaki Tateno Hironari Itoh Naoki Tanaka Yasumi Inaba Hideo Haraguchi Nobuya Suzuki Kazuto Matsui Ryu-ichiro Ochi Masakazu Ohba Masatoshi Itohiya Yasuo Toda Shigeki Ikeda Hitoshi Yokoyama Hitoshi Umeda VIII. Major Shareholders (Common Stock) (As of March 31, 2014) Name Number of Shares Owned Proportion of Total Shares (%) Mizuho Bank, Ltd. 9,583, Meiji Yasuda Life Insurance Co. 1,498, Japan Trustee Services Bank, Ltd. (trust account) 1,257, Sakamoto Shiryo Co., Ltd. 1,249, Sompo Japan Insurance Inc. 1,088, The Master Trust Bank of Japan, Ltd. (trust account) 975, Mizuho Trust & Banking Co., Ltd. 926, Chiba Kogyo Bank Employee Ownership 764, Japan Trustee Services Bank, Ltd. (trust account-4) 665, Keiyo Gas Co., Ltd. 587, Note: On July 1, 2013, there was a merger between two shareholders of the Bank: Mizuho Bank Ltd. (absorbed company in absorption-type merger) and Mizuho Corporate Bank Ltd. (surviving company in absorption-type merger). In the merger, all shares of the Bank owned by Mizuho Bank Ltd. were transferred to Mizuho Corporate Bank, Ltd. As a result, Mizuho Corporate Bank, Ltd. became a major shareholder of the Bank. Mizuho Corporate Bank, Ltd. changed its trade name to Mizuho Bank, Ltd. on the same date of the merger

17 IX. Corporate Outline (As of March 31, 2014) Date of Establishment: January 1952 Head Office: 1-2, Saiwaicho 2-chome, Mihama-ku, Chiba Telephone: Financial Market Division: 2-2, Saiwaicho 2-chome, Mihama-ku, Chiba Telephone: SWIFT Address: CHIK JP JT Fax Number: Network Head Office and Branches: 72 Number of Employees: 1,247 Stock Exchange Listing: 1st Section of Tokyo Stock Exchange Paid-in Capital: 57,941 million Number of Common Stock: Authorized: 296,000 thousand shares Issued and outstanding: 50,722,045 shares Number of Common Stock Shareholders: 11,454 The Chiba Kogyo Bank, Ltd. is an affiliate under the equity method of Mizuho Financial Group, Inc. Name Location Business category Mizuho Financial Group, Inc. Chiyoda-ku, Tokyo Holding company for financial service companies Capital (Millions of yen) 2,254,972 Founded Jan. 8, 2003 Percentage of voting rights of the Bank 20.8% (20.8%) Note: Figures in parentheses in the column Percentage of voting rights of the Bank represent the Bank s shares held by subsidiaries of Mizuho Financial Group, Inc. * Annual Select is an English-language disclosure format developed by ZAIHON, INC. to increase the level of convenience of investors outside Japan based on Japanese-language statutory disclosure material, timely disclosure material prescribed by securities exchanges and voluntarily disclosed IR material. Annual Select is a registered trademark of ZAIHON, INC. Reproduction or copying without prior permission is prohibited. * While every best effort has been made to provide a translation meeting the quality standards required of professionals, the Company does not guarantee it is 100% accurate. Therefore, please verify the original Japanese text for any final judgments made based on this information