Citibank Japan Ltd.
Interim Disclosure Report as of September 30, 2013
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Table of Contents
Message from the CEO 1
Company Overview 2
Our History 5
Management Strategy 6
Business Outline 8
Risk Management Framework 17
Compliance Framework 19
Diversity and CSR Activities 20
Citibank Japan Ltd. Financial Information under Japanese GAAP 21 For six months ended September 30, 2013
1. Matters Related to Principal Business 22
2. Financial Statements 40
3. Market Value Information 53
4. Major Shareholders 58
5. Disclosure Items Based on Pillar III of Basel II 59
Message from the CEO To Our Valued Customers,
In 2012, Citi marked its 200th anniversary globally and has now embarked on its third century of business. In Japan, we have a history spanning more than 110 years, where Citibank Japan has built a reputation for providing innovative and high quality services to our retail, corporate and institutional customers. I am determined to work with our employees to further strengthen our business and continue to improve the quality of our products and services for our customers in Japan and around the world. The first half of fiscal year 2013 has seen moderate recovery in the Japanese economy, as several measures aimed at boosting the Japanese economy have taken effect. This has brought with it both opportunities and challenges for Japanese individuals and corporations. Citibank Japan is well positioned to help our customers succeed in such an environment. Citibank Japan is financially strong and well capitalized, and as a part of Citi is
a member of a global financial services group that does business in more than 160 countries and jurisdictions. Citibank Japan is committed to being a bank that meets local market expectations, with a strong compliance and governance framework; to serving Japanese consumers, corporations, governments and institutions; and to making our contribution as part of Japan's society and economy. Thank you very much for your continued patronage and support.
January 2014
Kazuya Jono Representative Director, President & CEO
Citibank Japan Ltd.
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Company Overview
Company Profile
Company Name Citibank Japan Ltd. (“CJL”) Head Office Address Citigroup Center
3-14 Higashi-Shinagawa 2-chome, Shinagawa-ku, Tokyo 140-8639
Bank Code 0401 Head Office Branch Code 730 Telephone Number 0120-039-104 or 03-5462-5000 Commencement of Operations July 1, 2007 (International Banking Corporation, a
predecessor to Citibank, opened its Yokohama branch in October 1902)
Business Overview As one of Citi's core businesses in Japan, CJL is engaged in banking services through the retail banking business and the corporate banking business.
Number of Employees 1,869 (As of September 30, 2013) Number of Branches (including head office) 39 (Head Office, Okinawa, 34 for Retail Banking, 3 for
Corporate Banking)
Directors and Statutory Auditors* Director, Chairman Masatsugu Nagato Representative Director, President Kazuya Jono Representative Director Anthony P. Della Pietra, Jr. Representative Director Naoki Inoue Director Peter B. Eliot Director Shirish Apte Director Phee Boon Kang Director Ryozo Hayashi Director Masahiko Uotani Statutory Auditor (full-time, outside) Mamoru Sato Statutory Auditor (outside) Toshiaki Kawashima Statutory Auditor Toshiaki Oikawa
(*) Chronological order of appointment for the same title Executive Officers
CEO and Head of Retail Banking Division Kazuya Jono Chief Operating Officer Anthony P. Della Pietra, Jr. Chief Strategy & Planning Officer and Head of Business Strategy & Planning Division Naoki Inoue
Head of Corporate Banking Division Gerald Keefe Head of Transaction Services Division Timothy Tynan Head of Markets Division Kii Ko Head of Corporate Treasury Division Nelson Thackery Co-Head of Business Strategy & Planning Division Tetsuo Matsugaki Head of Legal Division Yasuto Hashinaga Head of Compliance Division Koichi Tanaka Head of Enterprise Risk Management Division Seiji Ryusekido Head of Finance Division Susan Aziz Head of Risk Management Division Chae-ll Lee Head of Human Resources Division Minoru Kondo Head of Operations & Technology Division Shankar Ramasami Chief Auditor Yuichi Ito Head of Retail Banking Planning Department, Retail Banking Division Masahiko Sawairi
Deputy Head of Corporate Banking Division and Head of Corporate Banking Planning Department Katsuhisa Ishikawa
Deputy Head of Business Strategy & Planning Division and Head of Management Coordination Unit Hiroaki Nigo
(As of January 1, 2014 except for Number of Employees)
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Organizational Structure
Shareholders Meeting
Board of Statutory Auditors
Board of Directors
President & CEO Management Committee
Corporate B
anking Division
Operations &
Technology Division
Risk M
anagement D
ivision
Hum
an Resources D
ivision
Com
pliance Division
Legal Division
Finance Division
Business S
trategy & P
lanning Division
Enterprise R
isk Managem
ent Division
Transaction Services D
ivision
Internal Audit
Corporate Treasury D
ivision
Chief O
perating Officer
Chief S
trategy & P
lanning Officer
Retail B
anking Division
(As of January 1, 2014)
Markets
Division
Financial Summary (From 03/2011 to 09/2013)
(Billions of Yen) 03/2011 09/2011 03/2012 09/2012 03/2013 09/2013 Total Assets 4,244.8 4,070.7 4,336.5 3,970.7 4,374.5 4,536.0 Deposits 3,399.2 3,198.2 3,510.4 3,241.9 3,541.5 3,906.9 Total Net Assets 262.0 265.3 265.0 263.6 262.8 262.1 Capital Stock 123.1 123.1 123.1 123.1 123.1 123.1 Capital Adequacy Ratio
25.16% 26.46% 28.77% 29.51% 28.47% 28.62%
Credit Ratings
Moody's S&P Fitch Rating Outlook Rating Outlook Rating Outlook
Citibank Japan Ltd. Long Term A3 Stable A Stable A Stable Short Term P-2 A-1 F1
Citigroup Inc. Long Term Baa2 Stable A- Negative A Stable Short Term P-2 A-2 F1
Citibank,N.A. Long Term A2 Stable A Stable A+ Stable Short Term P-1 A-1 F1
(As of January 1, 2014)
For further details, please refer to Citigroup Credit Ratings at http://www.citigroup.com/citi/investor/rate.htm
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Deposit Insurance
CJL has its head office located in Japan and is a member of the Deposit Insurance Corporation (DIC). Pursuant to the Deposit Insurance System, non-interest-bearing Yen deposits for payment and settlement purposes accepted by CJL are protected in full per depositor; and interest-bearing Yen deposits accepted by CJL are protected up to a maximum of 10 million yen in principal plus related interest thereon per depositor.
Bank Agency Service
Name of Bank Agent Citigroup Global Markets Japan, Inc. (“CGMJ”) Offices of Bank Agent CGMJ Tokyo Headquarters Service Coverage Intermediary of certain produces offered by CJL’s Corporate
Banking Division (yen/foreign currency deposits and remittance services)
Foreign Bank Agency Service
Designated Dispute Resolution Organization for CJL
Japanese Bankers Association (“JBA”) Contact for consultation and exchange of views: JBA Customer Relations Center 0570-017109 or 03-5252-3772 CJL has concluded a Basic Contract for Implementation of Dispute Resolution Procedure with JBA, the Designated Dispute Resolution Organization under the Banking Act. JBA runs the JBA Customer Relations Center as a contact point to which customers can go for consultation and inquiries or to which they can direct their opinions and complaints about banks. Refer to the JBA website for more information. http://www.zenginkyo.or.jp/adr/ * JBA Customer Relations Center’s services are available only in Japanese.
Name of Affiliated Foreign Bank
Citibank, N.A.
Offices of Bank Agent CJL Head Office Shin-Marunouchi Representative Office and Osaka Branch
Service Coverage -Intermediation for acceptance of deposits or installment savings -Intermediation for making of loans or negotiation of bills/notes -Intermediation for exchange transactions -Intermediation for issuance of bank guarantee and acceptance of bills/notes
-Intermediations for other ancillary services(Letter of Credit related)
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Our History
1812 City Bank of New York established. 1902 International Banking Corporation opened its first branch in Yokohama. 1923 International Banking Corporation opened Tokyo Branch (temporarily closed
in 1941, reopened in 1946). 1973 First National City Corporation listed on Tokyo Stock Exchange (delisted in
1998 with the merger between Citicorp and Travelers Group). 1974 First National City Corporation holding company changed its name to Citicorp. 1977 Citibank N.A. launched Citicard Banking Centers, anchored by ATMs and
CitiCard. The 24-hour ATMs are for the first time used for more than emergency cash.
1980 Decades of innovation and expansion lead to Citibank operations in
90 countries. 1991 Citibank Japan launches International Cash Card. 1998 Citicorp and Travelers Group merge to form Citigroup Inc.
Citibank Japan starts internet banking. 2007 Citibank Japan Ltd. commences operations as a locally incorporated bank.
Citigroup Inc.’s shares listed on the first section of the Tokyo Stock Exchange. 2010 Citibank Japan Ltd. opens smart banking branches in Nihonbashi,
Tokyo Ekimae, and Nagoya. 2011 Citi expands its Japan Desk network around the globe, opening in cities
such as Manila, Dubai and Sao Paulo. 2012 Citi celebrates its 200th anniversary globally and its 110th in Japan.
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Management Strategy
Citi’s Mission: Enabling Progress
Citi works tirelessly to serve individuals, communities, institutions and nations. With 200 years of experience meeting the world's toughest challenges and seizing its greatest opportunities, we strive to create the best outcomes for our clients and customers with financial solutions that are simple, creative and responsible. An institution connecting over 1,000 cities, 160 countries and millions of people, we are your global bank; we are Citi. The four key principles—the values that guide us as we perform our mission—are:
Citibank Japan Management Strategy
Citibank Japan Ltd. (“CJL” or “Citibank Japan”) is a 100%-owned indirect subsidiary of Citigroup Inc. (“Citigroup” or “Citi”). It was established on July 1, 2007 by succeeding the operations of the Japan Branches of Citibank, N.A., thus becoming the first foreign bank in the Japanese market to locally incorporate its banking operations. The bank’s presence in Japan dates back to 1902, when the International Banking Corporation (a predecessor to Citibank) first opened a branch office in Yokohama.
CJL’s goal, in line with global trends and the needs of our client base, is to fully respond to the needs of its retail and corporate clients by leveraging Citi’s global network and local footprint to offer innovative products and services. CJL is uniquely positioned to connect and serve our Japanese corporate and individual clients that are global citizens. We strive to provide seamless global financial solutions in line with our long terms strategy of being Japan’s true global bank aligned with the three global trends of globalization, urbanization and digitization. With strategic coordination across business lines and group companies,
CJL aims to continually develop its business and gain increased presence in the Japan market, leveraging its unique position as a locally incorporated foreign bank. CJL has a long and distinguished history of over 110 years in Japan. We have a proud legacy as a bank of over 200 years of focusing our energy fully on our customers, delivering new innovations and market firsts, bringing the best of the world to our local clients, providing an excellent working environment, and investing in future growth. CJL continues to focus on a balanced growth strategy through its retail and corporate banking businesses. The retail banking business continually invests in new products, distribution and service innovations to grow its mass affluent customer base and expand its premier Citigold proposition. In addition to broadening the segments we serve and breadth and depth of products we offer, CJL continously strives to better grasp and respond to our customer’s needs as part of our broader startegy of lengthening and deepening our relationships to serve our customers better over time. The corporate banking business has a selected core group of relationships which it leverages to deliver Citi's global strengths, providing high quality financial
• Common Purpose One team, with one goal: serving our clients and stakeholders.
• Responsible Finance Conduct that is transparent, prudent and dependable.
• Ingenuity Enhancing our clients’ lives through innovation that harnesses the breadth and depth of our information, global network, and world-class products.
• Leadership Talented people with the best training who thrive in a diverse meritocracy that demands excellence, initiative and courage.
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products, services and advice to help our customers succeed. Both the retail and corporate businesses continually look to improve customer experience and operational excellence. CJL is committed to handle earnestly any consultation from Small and Medium-sized Enterprises customers related to business improvement, or those related to the amendments to the existing lending conditions, etc. In addition, CJL will continue its best efforts to fulfill corporate social responsibility to local communities. CJL has made concerted efforts to enhance its governance and internal control frameworks since the localization of its banking operations in July 2007. Nevertheless, the Financial Service Agency of Japan (“FSA”) issued an administrative action against CJL on December 16, 2011. In response, CJL submitted a business improvement plan to the FSA on January 31, 2012. CJL takes this administrative action very seriously and is committed to implementing all necessary measures to prevent future occurrence of the problems identified. CJL takes seriously its obligations to confront in a resolute manner any undue demands from anti-social forces that threaten social order and safety. CJL is committed to providing a working environment where its employees can thrive and achieve their full potential. The diversity of our workforce is a core value and a source of strength and pride for CJL and our clients. By attracting and training the best people, and providing them broad career development opportunities at every level, we aim to foster an environment where employees are able to provide our clients with outstanding financial products, services and advice that fit their needs over the long term. CJL is proud of its contributions to a broad range of diversity and community initiatives. Our community activities focus broadly on improving access to financial education, assisting those with disabilities, promoting environmental and social sustainability, as well as development of the communities in which we operate. In addition we also continue to enhance the opportunities available to working parents through our childcare center in our head office.
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Business Outline Retail Banking Division
CJL has long been bringing innovation to the banking industry in Japan, and is widely recognized for its unique customer services and products. Examples of our past successes include being the first bank in Japan to introduce “24-hour-a-day, 7-day-a-week” (“24x7”) ATMs and telephone banking services, as well as ATM cards that can be used at CDs/ATMs overseas. We also introduced the consultative model whereby CJL financial experts provide professional financial advice to our retail customers and were among the earliest providers of online banking services in Japan starting in 1998. We established a unique presence in the market by being highly responsive to changes in the business environment at a time of asset growth from foreign currency deposits and investment markets in Japan. As of January 1, 2014, CJL has a retail network of 34 branches and sub-branches (including its Kansai mini office), two “24x7” state-of-the-art call centers, a new best-in-class internet banking platform, and 102 proprietary ATMs. In addition, we offer access to ATMs across Japan through alliances with Japan Post Bank, city banks, regional banks and convenience stores, etc. This network is the backbone which helps CJL to seamlessly meet the needs of mass affluent retail clients in Japan’s major cities. CJL continues this tradition of innovation even today. Our approach to banking continues to leverage innovation to provide more effective servicing formats and a customer centric approach. We continue to enhance our virtual banking offering through our PC and mobile online systems and call centers that make banking simpler, and more accessible and convenient for the customers that we serve. CJL is continuing to strengthen our online banking service, enhancing content, functionality, and security. In addition to providing high levels of convenience in domestic banking services, CJL leverages its global platform to provide our customers with support overseas with cash services, global financial advice, and multiple foreign currency denominated products.
In addition to our local presence, global connectivity, and broad suite of banking products and services, CJL is able to provide our retail customers with global ATM access, market-leading foreign exchange capabilities, and a wide range of carefully selected deposit and investment opportunities. For Citigold customers, CJL also provides advice and services tailored for growth and protection of personal assets through specially trained Citigold Executives at exclusive Citigold Centers within CJL’s core branches. CJL continues to expand its core product offering to include insurance, bond, loan and structured deposits to enable our customers to access to a broader product suite to serve their long term needs more effectively. The competitive environment is intensifying as our competitors make efforts to follow our marketing strategies including a greater focus on our core target market, the retail mass affluent, as well as broadening their product offering to include foreign currency denominated products. It is with this in mind that we will simultaneously pursue both increasingly efficient business operations, and maintain our focus on continually improving both our products and service
offers to our mass affluent customers through deeper insight and customer centricity, and by expanding our sales network and upgrading our products.
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<Major Business Activities> We continued to serve our customers based on our positioning as Japan’s True Global Bank, offering a unique set of capabilities from basic banking services to more specialized wealth management offerings including local and global ATM access, market-leading foreign exchange capabilities, a wide range of carefully selected deposit and investment opportunities, insurance products, mortgages and other secured loans, and preferential “Citigold” and “Citigold Premium” services. CJL continues to focus on building out our online offering from both the point of view of expanding our business as offering a better customer experience. We continue to strive to serve our clients better online through enhancing the product selection, functionality, usability and security of Citibank Online, our online banking platform for retail customers. In order to better serve our customer’s long term needs we have enhanced our banking products and services line up to offer a broader range of products across the risk spectrum. We have not only enhanced our insurance products but also strengthened our range of lending products based upon an analysis of customers’ needs. In addition we have also put greater emphasis on publically offered and privately placed fixed income bonds and structured notes. One of our primary focus areas continued to be in lending activities. We broadened the range of customers eligible for our Real Estate Advantage Loan to include our Gold as well as Premium level customers. Also, we have newly launched an unsecured personal loan product from last year to meet customers' multi-purpose needs. In addition, to help meet our clients’ needs for medium and long-term investments we have continued to expand both the breadth of our Whole Life insurance product line-up denominated in both Japanese Yen and foreign currency as well as our alliance with world leading insurance companies to provide expert insurance specialists to better advise our customers regarding their insurance needs.
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<Retail Banking Network>
Retail Banking Network (As of January 1, 2014)
• “24x7” call centers• Internet banking platform• 34 branches and sub-branches (including Kansai mini office) • 102 proprietary ATMs • ATMs of affiliated financial Institutions (the Japan Post Bank, city banks, regional banks
and convenience stores, etc.)
Overseas Network
Citibank’s ATM Banking Card is usable at approximately 1.8 million CDs/ATMs in 200 countries worldwide allowing withdrawal of funds from a Yen Savings Account in the local currency of the country where the ATM is located.
Nationwide Branch and ATM NetworkBank Code : 0401
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Corporate Banking Division In corporate banking, CJL focuses on providing comprehensive global relationship management services to a targeted set of Japan’s largest multi-national companies and institutions. We coordinate and leverage Citi’s broad range of products and services, together with Citi’s unrivaled global network, in order to support the growth ambitions of our clients both here in Japan and around the globe. CJL’s Corporate Banking Division, located in Tokyo and Osaka, focuses on delivering innovative relationship-driven solutions for our clients’ needs related to both their day-to-day operations and their strategic business objectives. We are one of the leading finance providers in the syndicated loan market in Japan. Furthermore, CJL pioneered the structured finance market in Japan in the mid-1980’s and over the years has played a vitally important role as a market leader in providing innovative solutions to many of our clients. Corporate Banking Division has a client group consisting of relationship managers and a product group responsible for Corporate Finance product development and offering. Citibank Japan Limited also has product groups in Transaction Services Division and in Markets Division. The client group and product groups together provide solutions to the diversified client needs. Each client group and product group coordinates across the respective global network within Citi, which enables us to build comprehensive relationships with our clients and their affiliates both in Japan and overseas. This has been the unique and unrivaled strength of Citi. <Major Business Activities> Our client coverage model consists of 3 departments: Corporate Relationship Management Dept., Financial Institutions & Public Sector Relationship Management Dept. and Global Subsidiaries Group Relationship Management Dept. Each client coverage department is committed to serving the unique needs of their client set, by combining information and services with specialized Industry insight. By combining a deep understanding of each client’s unique needs with a view of key industry trends, we are in a position to tailor structured solutions to help our clients meet their growth ambitions. We focus on responding to our clients’ various day-to-day needs, as well as strategic business objectives by offering financing alternatives and bank capital in an effort to build and further deepen long term relationships. Corporate Banking Division works closely with 3 product groups of Citibank Japan Limited. - Transaction Services Division (Cash Management, Trade Finance, Securities Fund Services and Export Agency Finance), Markets Division (Foreign Exchange and Risk Treasury) and Corporate Finance Department (Structured Finance, Real Estate and Acquisition Finance & Syndicated Lending) - to serve our clients and provide solutions that meet their needs. We have further strengthened our capability to support our Japanese clients around the globe through “Japan Desks” offering exclusive relationship management efforts by experienced bankers. We are located in 11 countries. Many of these Japan Desks provide coverage to neighboring countries and jurisdictions. Our client support structure has become increasingly more available pan-regionally around the globe, covering North and South America, Europe, Middle East, Africa, and Asia. Citi’s Japan Desk Network is an unrivaled and unique service to our clients. Our bankers at Japan Desks leverage their vast experiences in Japan, continue to build and further deepen great relationships with our clients and colleagues around the globe, and support our clients to meet their financial needs.
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< Japan Desk Locations>
United Kingdom (London) Singapore
Russia (Moscow) China (Shanghai)
India (Delhi) United States (New York)
Thailand (Bangkok) Brazil (Sao Paulo)
Indonesia (Jakarta) United Arab Emirates (Dubai)
Philippines (Manila)
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● Japan Desk Locations
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Global Markets
Financial Advice
Acquisition Finance & Syndication Lending
Transaction Services
Managing Risks
Global Relationship Management
Investing Money Moving Money
Raising Money
Corporate Finance
Citi’s Japan Desks around the World (As of January 1, 2014)
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Transaction Services Division In January 2013, the Transaction Services Division was reorganized as a division within Citibank Japan Ltd. (CJL) The group provides various services in the Treasury and Trade Solutions (TTS) and Securities and Fund Services (SFS) businesses. Our services integrate cash management, trade finance, and securities services to multinational corporations, financial institutions and public sector clients in Japan and around the world.
Transaction Services is closely aligned with three important on-going trends - globalization, urbanization and digitization – and as the business world continues to get smaller and our clients continue to expand globally, we have been stepping up support to assist our Japanese and other global clients expand. Capability Leveraging the industry's largest proprietary network, we serve both the local and cross-border interests of clients. As Japanese companies continue the process of rapid globalization, Citi is positioned to be their partner and Global Bank. CJL Transaction Services is part of Citi’s global network servicing clients in over 100 countries and top cities in the world. Experience Transaction Services is part of Citi’s legacy in Japan which dates back over 110 years to when we opened our first Japanese branch. We strive to be a trusted advisor on industry issues such as local securities markets, emerging markets, settlement risk, receivables and payment processes, securities infrastructure and technology integration to our clients, regulatory organizations and third-party partners. Innovation Our on-line portal, CitiDirect BE and its mobile version are examples of Citi’s investments in innovation that add to our offering of solutions in Japan. We introduced a Japanese language version of our mobile smart phone application in 2013. We also provide our clients in Japan with Treasury analytics and technology tools to enhance their efforts to effectively manage their businesses.
< Major Business Activities >
Treasury and Trade Solutions Citi serves our clients in as an industry leader in cash management solutions. With 345 connections to Cash and Securities clearing systems across the globe, Citi has a global infrastructure providing a wide range of innovative financial solutions. Our extensive network of qualified banking professionals provides a combination of local knowledge and global expertise to help meet clients’ strategic business goals. Citi's portfolio of global cash management products offers tailored solutions to help manage collection and payment processes by establishing interfaces between the client’s treasury system and Citi's payment systems. Trade Finance and Services provides web-based, simple and quick supplier financing for not only domestic purchases but also cross-border international trade transactions. Various risk-hedge solutions are provided to clients’ exports to help them effectively manage their risk and supply chains. In addition to traditional financial support for exports and investments from Japan, our Export and Agency Finance group has started to provide new services such as medium-long term loans for overseas Japanese subsidiaries’ exporting and agricultural commodities imported by our clients in Japan. Securities Services In Securities Services、CJL supports foreign investors investment in Japanese securities through our stable capabilities in custody services. In addition to such traditional services, the introduction of innovative Third Party Securities Clearing offerings allow our resident intermediary clients to focus on what matters most, to grow core businesses through our Clearing and Settlement Outsourcing Solutions. Our proprietary network is the largest in the industry covering 61 markets surpassesing our closest competitor by over 20 markets.
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2013 Japan Awards Best Overall Internet Bank - Global Winner by Global Finance, World’s Best Internet Banks 2013 Best Corporate / Institutional Internet Bank – Global Winner by Global Finance, World’s Best Internet Banks
2013 Best Overall Trade Finance Bank in Asia Pacific – Trade Finance 2013 Trade Finance Deal of the Year for NEXI untied loan to Vinacomin – Trade Finance 2013 Top Rated in Japan for Leading Clients Category and Cross-Border/Non-Affiliate Category in Global
Custodian’s Agent Banks in Major Markets Survey 2013 Best Subcustodian in Japan for The Asset’s Triple A Asset Servicing Awards 2013
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Markets Division The Markets Division is a division, established in July 2013, with a mission to provide foreign exchange, money market and derivative products and services to the customers of the Corporate Banking Division and the Transaction Services Division. Prior to its establishment, these services were provided by the Markets Department in the Corporate Banking Division and the Treasury Division. An independent division was established to focus on market trades and aim to build a more robust transaction base for customers by providing more valuable information. The Markets Division consists of two departments, Market Sales and Risk Treasury. The Market Sales Department consists of two units, Corporate FX Sales Unit and Corporate Derivative Sales Unit, and conducts foreign exchange and derivative transactions for the customers of the Corporate Banking Division and the Transaction Service Division. The Corporate FX Sales unit leverages Citigroup’s international network and global resources to deliver real-time information to the customers. The unit also provides various types of risk-management related advices and foreign exchange transaction support, building on its well-established and powerful presence as a “market maker” in the foreign exchange market. The Corporate Derivative Sales unit offers a wide range of derivative solutions to the customers, in order to satisfy their diverse needs. The Risk Treasury Department leverages Citigroup’s extensive international network to provide money market transactions in various currencies, in order to meet the customers’ funding and investment needs. Risk Treasury also acts as a funding department in CJL. Based on the policy decisions of the Asset Liability Committee, a sub-committee of CJL’s Management Committee, Risk Treasury ensures appropriate liquidity management and conducts Banking account management as part of the comprehensive risk management framework, in coordination with the Corporate Treasury Division, which is responsible for liquidity risk management.
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List of CJL’s Major Activities
CJL provides the following services:
1. Acceptance of Deposits Current deposit, savings deposit, time deposit, negotiable certificate of deposit, foreign currency deposit, etc.
2. Fund Lending etc.
Loan on bills, loan on deeds, overdraft, discount of commercial bills, etc. 3. Fund Transfer, etc.
Outward/inward remittance, fund transfer and collection of payment 4. Foreign Exchange, etc.
Foreign exchange transactions (including foreign currency sales and purchase) 5. Others
(1) Guaranty of liabilities (acceptance of payments), issuance of letter of credit and acceptance of bills
(2) Arrangement for syndicated loan (3) Trade finance (purchase of trade notes, etc.) (4) Investment / Trading in securities (Japanese government bonds, etc.) (5) Acquisition or transfer of monetary claims, and securitization related services (6) Handling of receipt of money and other affairs pertaining to money of Government of Japan, local
public authorities, and companies, etc. (7) Dealing in financial derivatives (interest rate, currency, etc.) (8) Over-the-counter sales of mutual funds and insurance products (9) Safekeeping and transfer of securities, etc. (10) Brokerage for clearing of securities, etc. (11) Handling of private placement of securities (12) Financial instruments intermediary service (13) Money exchange (14) Foreign Bank Agency Service
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Risk Management Framework
Risk Management Structure CJL’s risk management framework balances strong corporate oversight by the Board of Directors with well defined oversight roles and responsibilities amongst the Control functions covering the various risk types. CJL has the following three layers of risk management or control:
1) Risk ownership by the business divisions 2) Oversight by the control functions 3) Independent Assessment by Internal Audit
All three layers of control work together to achieve CJL’s shared goals with the following particular items:
• To maintain a highly effective control environment and to establish efficient, proactive risk management; and
• To foster appropriate solutions for our customers and to facilitate business growth in accordance with agreed strategic goals and with the risk management capacity of CJL
CJL establishes fundamental principle “Comprehensive Risk Management Policy” which is approved by Board of Directors and it defines its risk management structure. Additionally, CJL establishes “Comprehensive Risk Management Rules” to define its risk management procedure. CJL adopts a comprehensive risk management approach and Comprehensive Risk Manager who oversees risks will ensure that Management Committee and the Board of Directors are kept advised of the risks of and to CJL in a comprehensive manner.
Type of risk to be managed CJL identifies credit risk, market risk, liquidity risk, and operational risk as major risks and those are subjected to manage.
• Credit Risk
1. Structure of Credit Risk Management: Credit risk is the risk of loss arising from decline in asset value attributable to deterioration of obligor’s credit condition. It includes the risk of difficulty to collect principal and interest due to default of obligor and decline in credit value due to increase of reserves arising from deterioration of obligor’s credit condition. CJL establishes “Credit Risk Management Policies” which defines fundamental principle to comprehensively manage its credit risk in Corporate Banking Division and Retail Banking Division. In terms of credit management in each division, CJL also establishes “Institutional Client Group Risk Management Manual”, “Global Consumer Credit and Fraud Risk Policies” and “Global Commercial Credit Policies” in order to set and govern credit risk management structure. Furthermore, Credit Risk Management Committee (“CRMC”) is established and managed by Head of the Risk Management Division to oversee CJL’s credit risk including the management of self-assessment of assets with further involvement of managements.
2. Procedure of Credit Risk Management: CJL manages credit risk based on obligor analysis and whole portfolio analysis, monitoring concentration of credit to certain industries, ratings, obligors on relationship basis and delinquency trend of a portfolio. Such portfolio view of our credit exposures is reviewed and reported to the Credit Risk Management Committee in a timely manner.
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• Market Risk / Liquidity Risk
1. Structure of Market Risk / Liquidity Risk Management: Market risk is the risk of loss resulting from fluctuating value of financial asset and debt position which CJL possesses or executes, reflecting market trend. Liquidity risk is the risk of loss resulting from unavailability to secure sufficient asset liquidity against debt due to rising financing costs or mismatch of use of funds and source of funds. In CJL, market risk and liquidity risk management structures are established and operated in accordance with the “Liquidity Risk Management Policy”, the “Market Risk Management Policy” or related management policies. Furthermore, CJL has established Asset Liability Committee (“ALCO”) which is chaired by President and Head of the Corporate Treasury Division to oversee market risk and liquidity risk, monitoring accrual portfolio and trading portfolio of CJL and managing balance sheet as well as capital adequacy.
2. Procedure of Market / Liquidity Risk Management:
CJL Market Risk Management captures consolidated profiles of interest rates and durations of the financial assets and liabilities, performs risk monitoring process using gap analysis and interest rate factor sensitivity analysis, and reports the result to the ALCO meeting on a monthly basis. CJL’s market risk amount is measured by Value-at-Risk (“VaR”) method quantitatively and its regulated compliance status is monitored. ALCO is managing Liquidity Risk by monitoring various liquidity ratios such as Large Fund Provider concentration ratio, Total Customer Deposits / Total Customer Loans ratio. ALCO is also monitoring whether there is sufficient liquidity to meet all maturing obligations within 12 months under the Highly Stressed Market Disruption stress scenario.
• Operational Risk
1. Structure of Operational Risk Management: Operational risk is the risk of loss resulting from inadequate or failed internal processes, systems, or human factors, or from external events. It includes reputation and franchise risks associated with CJL’s business practices or market conduct. It also includes the risk of failing to comply with laws, regulations, ethical standards, regulatory administrative actions or Citigroup policies. To comprehensively manage operational risk, CJL establishes policies and rules for operational risk which clearly defines risks, control environment, as well as assessment and reporting procedures. CJL separately manages its Jimu risk and System risk in accordance with the established policies and standards. Moreover, CJL has established Enterprise Risk Management as a responsible division for comprehensive operational risk management. The status update of operational risk management is reported to Business Risk, Compliance & Control Committee (“BRCC”), and Jimu risk and System risk are reported to System and Operations Committee (“SOC”), with further involvement of management.
2. Procedure of Operational Risk Management: CJL adopts a Manager’s Control Assessment (“MCA”) program as a tool to manage ‘significant’ operational risk to self-assess key operational risks and controls and identify and address weaknesses in the design and/or effectiveness of internal controls that mitigate significant operational risks. Corrective actions are monitored continuously for full implementation. Results of MCA are reported managements through BRCC at quarter end. Critical operational processes of each business department are reviewed periodically in consideration of changes to the operational processes and regulatory environment, and latest information shall be reflected into MCA.
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Compliance Framework Basic Policy
As a bank, CJL fully recognizes the importance of its social responsibilities and the public nature of its business. We understand that conducting business with fairness and integrity based on the Code of Conduct and in compliance with laws and regulations, etc. is the basic principle of our management.
Compliance Management Framework
CJL’s Compliance Division covers compliance related matters and is independent from businesses. The Division consists of 5 units under the Head of Compliance Division; (i) Retail Banking Compliance Unit, (ii) Corporate Banking Compliance Unit, (iii) Anti-Money Laundering Compliance Unit, (iv) Infrastructure Unit and (v) Compliance Testing Unit. The first two units are responsible for compliance matters relevant to businesses, AML Compliance Unit covers matters relevant to anti-social forces and the prevention of money laundering, and Infrastructure Unit is responsible for matters relevant to overall banking operations. Compliance Testing Unit has responsibility for testing to assure that controls over compliance matters are reasonably designed and functioning effectively. The Compliance Division owns the Code of Conduct and, in accordance with Compliance Policy, promotes compliance and cultivates a compliance mindset, through following activities.
The Compliance Division reports compliance related issues and compliance status to the Business Risk, Compliance and Control Committee and the Management Committee on a regular and ad-hoc basis. Material issues are to be escalated to the Board of Director through the Management Committee.
Preventive Measures against Anti-Social Forces and Money Laundering
CJL considers that preventive measures against anti-social forces and money laundering are one of the most important parts of legal compliance as a financial institution with public nature, and has continued its efforts to establish a proper prevention framework.
Measures against the Breach of Legal Compliance
It is the responsibility of each of the directors and the employees to comply with the Code of Conduct that provides an overview of some of the key policies of which all need to be aware. We strongly encourage employees to raise concerns or questions regarding ethics and applicable laws, regulations and policies, and to report violations and suspected violations in accordance with the relevant internal policies. We believe that it is critical to identify issues at an early stage and proactively resolve those issues in order to maintain the highest standards of conduct required at a financial institution. CJL has established, in addition to the standard reporting procedures, an Ethics Hotline in order to properly take measures for a violation or a suspected violation of legal compliance.
• Advice and support related to Compliance • Creation and execution of internal rules related to Compliance • Oversees the development and maintenance of adequate risk management systems related to
Compliance • Education and training related to Compliance • Monitors legal and regulatory development that affect the Bank • Oversees the development and maintenance of adequate risk management systems related to
Anti-Money Laundering activities, including customer identification and matters related to Anti Social Forces
• Conducts Compliance Testing
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Environment
CJL believes that working to promote environmental and social sustainability is a good business practice. Under the banner of “Green Citi”, we are committed to protect the environment through the following initiatives: <Major Activities>
- The Equator Principles - The Carbon Principle (Citi was a drafting member and has adopted these principles) - Achieved LEED (Leadership in Energy and Environmental
Design) Certification Received Silver certification: Citibank Tokyo Call Center
(June 2009) Received Gold certification ・Aoyama Branch (May 2010) ・Nihonbashi Branch and Tokyo Ekimae Branch (July 2011) ・Nagoya Branch (October 2011) ・Shinjuku Higashiguchi Branch and Kobe Branch (April 2012) ・Ikebukuro branch (July 2012), Shinjuku Minamiguchi Branch (Sep. 2012)
- Office Initiatives Energy and Resource Savings Paperless processes Recycling in the office
Diversity and CSR Activities
CJL pursues Corporate Social Responsibility (“CSR”) activities in alignment with Citi’s global policies and priorities. We embrace the responsibility, as a socially responsible financial group, to make a difference in the community and to promote environmental and social sustainability by building positive relationships with customers, employees and their families, the community, and stakeholders. Through our CSR activities, we respond to corporate governance and compliance initiatives and also reinforce our commitment to Financial Education, Community Development, the Environment, and Diversity with employees from various backgrounds and nationalities.
Diversity
CJL values and promotes Diversity as a strategic activity. By respecting and accepting various values, ways of thinking and attributes such as nationality, age, gender, sexual orientation, language and religion, we create an environment where differences are respected. Creating an environment where Diversity thrives, actively encourages a wide range of thoughts and ideas in support of our business goals. We encourage our employees to participate and take responsibility for their engagement in Diversity activities, internally and externally which adds to the richness of the society in which we live. <Major Activities>
- Improving career development for women; Celebrating women’s success , International Women’s day 2013
- Work-Life Balance - Encourage the hiring of people with disabilities
Financial Education
Taking advantage of our business expertise, we provide various financial education programs ranging from elementary school to mature adults. We provide learning materials and support for financial education programs, so that the next generation of children can learn not just about money and the economy, but also how to think effectively, and ultimately plan their careers and lives in order to realize their dreams. We launched a new financial education program for mature women in 2011. <Major Activities>
- Student City - Travel to the Future - MESE (Management Economic Simulation Exercise) - National Economics Quiz Tournament - University Program - Financial Life Skills and - Money Management for Women
In part, funded by the Citi Foundation. The Citi Foundation supports the economic empowerment and financial Inclusion of people in the communities where Citi operates.
Community Development
CJL strives to make a difference where our employees live and work. We encourage and provide support for philanthropic activities undertaken by our employees and their families, leading many of them to participate actively in the community. <Major Activities>
- Support for the disaster-impacted areas: Volunteer activities by the employees and family, Relief Donations by the employees and the customers, Grants to NPO’s actively engaged in the disaster-impacted areas.
- United Nations World Food Program (WFP) School Feeding Initiatives through Cafeteria Charity Program "Share Your Lunch"
- FIT (Financial Industry in Tokyo) for Charity Run - YMCA Charity Run - Citi Volunteer Program - Global Community Day - Supporting NPOs and NGOs
20
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21
Citibank Japan Ltd.
Financial Information under Japanese GAAP For six months ended September 30, 2013
21
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1. Matters Related to Principal Business
< Business Overview>
• We had a net income of 0.6 billion yen for the 6 month ended September 30, 2013 compared to net loss of 1.4 billion yen for the same period of the prior fiscal year.
• Ordinary income totaled 34.7 billion yen, up by 2.9 billion yen from same period of the prior fiscal year.
� Interest income totaled 15.9 billion yen, down by 1.9 billion yen from the same period of the prior fiscal year.
� Fees and commissions totaled 10.0 billion yen, up by 2.8 billion yen from the same period of the prior fiscal year.
� Other ordinary income totaled 8.2 billion yen, up by 2.0 billion yen from the same period of the prior fiscal year.
• Ordinary expenses totaled 33.3 billion yen, down by 0.1 billion yen from the same period of the prior fiscal year.
� Interest expense totaled 1.9 billion yen, down by 0.6 billion yen from the same period of the prior
fiscal year. � Trading losses totaled 0.5 billion yen versus zero in the same period of the prior fiscal year. � General and administrative expenses totaled 29.2 billion yen, remain at the same level as in the
same period of the prior fiscal year.
• Ordinary profit was 1.4 billion yen compared to ordinary loss of 1.6 billion yen in the same period of the prior fiscal year.
• Income before income taxes (including extraordinary income and loss) was 1.4 billion yen compared to loss before income taxes of 1.9 billion yen in the same period of the prior fiscal year.
• As of September 30, 2013, total assets were 4,536.0 billion yen, up by 161.4 billion yen compared to March 31, 2013.
� Cash and deposits to other banks (due from banks) totaled 1,631.3 billion yen, down by 97.9
billion yen from the prior fiscal year end. � Call loans were 146.7 billion yen, down by 25.2 billion yen from the prior fiscal year end. � Receivables under resale agreements were 782.3 billion yen, up by 93.5 billion yen from the prior
fiscal year end. � Trading assets were 245.4 billion yen, up by 109.9 billion yen from the prior fiscal year end. � Available for sales securities (“AFS securities”) were 946.5 billion yen, up by 87.8 billion yen from
the prior fiscal year end. � Loans and bills discounted totaled 371.9 billion yen, up by 41.3 billion yen from the prior fiscal year
end.
• As of September 30, 2013, total liabilities were 4,273.8 billion yen, up by 162.1 billion yen compared to March 31, 2013.
� Deposits totaled 3,906.9 billion yen, up by 365.4 billion yen from the prior fiscal year end. � Negotiable certificates of deposit totaled 6.2 billion yen, down by 28.7 billion yen from the prior
fiscal year end. � Other liabilities totaled 139.7 billion yen, down by 148.2 billion yen from the prior fiscal year end.
• As of September 30, 2013, total net assets were 262.1 billion yen, down by 0.7 billion yen from the prior fiscal year end due to 1.3 billion yen decrease of Valuation difference on AFS securities.
22
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• Cash flows from operating activities in the year totaled 338.3 billion yen (Inflow). Cash from investment activities was 91.6 billion yen (Outflow). As a result, cash and cash equivalents as of the end of the period totaled 786.6 billion yen.
• The capital adequacy ratio (National standards) at the end of the period was 28.62% (28.47% as of March 31, 2013). 6,400 million yen (0.02 yen per share) as interim dividend paid on October 28, 2013, based on resolution of the Board of Directors Meeting held on October 10, 2013 was deducted from “Tier 1 Capital”. (Capital Adequacy Ratio ex-payment of interim dividend in October was 29.34%).
23
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<Summary of Principal Business/Financial Indicators>�
(Millions of Yen)
Ordinary income 40,320 31,781 34,767 75,908 64,668
Ordinary profit (loss) 4,981 (1,673) 1,454 5,847 (1,541)
Net income (loss) - Interim 2,236 (1,429) 677 - -
Net income (loss) - - - 1,796 (1,983)
Capital stock 123,100 123,100 123,100 123,100 123,100
Total Net assets 265,358 263,684 262,120 265,083 262,823
Total assets 4,070,784 3,970,761 4,536,018 4,336,501 4,374,568
Deposits 3,198,272 3,241,918 3,906,941 3,510,460 3,541,504
Loans and bills discounted 393,169 329,925 371,992 299,056 330,614
Available for sale (AFS) securities 721,206 729,766 946,529 826,775 858,729
Total shares issued (thousand shares) 244,200,000 244,200,000 244,200,000 244,200,000 244,200,000
Capital adequacy ratio (National standard) 26.46% 29.51% 28.62% 28.77% 28.47%
Number of employees 1,790 1,860 1,869 1,796 1,852
March 2013
Year end
(Apr. 1, 2012
- Mar. 31, 2013)
Interim Fiscal
Period ended
Sep. 2011
(Apr 1, 2011
- Sep 30, 2011)
Interim Fiscal
Period ended
Sep. 2012
(Apr 1, 2012
- Sep 30, 2012)
Interim Fiscal
Period ended
Sep. 2013
(Apr 1, 2013
- Sep 30, 2013)
March 2012
Year end
(Apr. 1, 2011
- Mar. 31, 2012)
(Note) Financial figures for interim period are unaudited.
24
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25
<Principal Business/Financial Indicators>
Gross operating profit
(Millions of Yen)
Domestic International Total Domestic International Total
Interest income 4,206 13,655 17,861 3,247 12,682 15,929
Interest expenses 194 2,403 2,598 96 1,864 1,960
Fees and commissions 3,218 4,002 7,221 5,992 4,046 10,038
Fees and commissions paid 995 146 1,141 912 264 1,176
Trading income 433 (36) 396 - - -
Trading losses - - - (210) 761 550
Other ordinary income 827 5,312 6,140 264 7,969 8,234
Other ordinary expenses - 0 0 254 - 254
7,495 20,383 27,878 8,452 21,808 30,260
0.82% 2.39% 1.58% 0.75% 2.40% 1.49%
Gross operating profit
Gross operating profit ratio
Interim Fiscal Period ended Sep. 2012
(Apr 1, 2012 - Sep 30, 2012)
Interim Fiscal Period ended Sep. 2013
(Apr 1, 2013 - Sep 30, 2013)
Interest income and expenses
Fees and commission
Trading income and losses
Other ordinary income and
expenses
�Notes�
1. Domestic operations are yen-denominated transactions and international operations are foreign currency-denominated transactions conducted in Japan. However, non-resident yen-denominated transactions and offshore account transactions, etc. are included in the international operations.
2. Gross operating profit ratio �(gross operating profit / average balance of interest-earning assets) x 100 � (the number of days of
the period / 365)
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Average balance, Interest and Yield of Interest-Earning Assets / Interest-Bearing Liabilities
(Millions of Yen)
Domestic
operations
International
operations Total
Domestic
operations
International
operations Total
Average balance 1,817,426 1,694,630 3,512,057 2,237,708 1,808,607 4,046,315
Interest 4,206 13,655 17,861 3,247 12,682 15,929
Yield (%) 0.46 1.60 1.01 0.28 1.39 0.78
Average balance 173,900 144,443 318,343 174,801 164,090 338,891
Interest 1,170 978 2,148 1,023 1,136 2,159
Yield (%) 1.34 1.35 1.34 1.16 1.38 1.27
AFS securities Average balance 825,434 5,961 831,395 932,669 5,872 938,541
Interest 2,559 59 2,619 1,631 59 1,691
Yield (%) 0.61 2.00 0.62 0.34 2.03 0.35
Call loans Average balance 11,863 76,169 88,032 11,863 169,082 180,946
Interest 6 158 164 5 252 258
Yield (%) 0.10 0.41 0.37 0.09 0.29 0.28
Average balance 397,367 - 397,367 431,266 355,845 787,111
Interest 198 - 198 195 2,367 2,562
Yield (%) 0.09 - 0.09 0.09 1.32 0.64
Average balance 3,604 - 3,604 3,264 32 3,296
Interest 29 - 29 26 0 26
Yield (%) 1.62 - 1.62 1.62 1.07 1.62
Average balance 405,255 1,351,877 1,757,133 682,930 928,586 1,611,517
Interest 199 12,112 12,311 342 8,495 8,838
Yield (%) 0.09 1.78 1.39 0.10 1.82 1.09
Average balance 1,800,892 1,724,463 3,525,355 1,855,943 2,122,114 3,978,057
Interest 194 2,403 2,598 96 1,864 1,960
Yield (%) 0.02 0.27 0.14 0.01 0.17 0.09
Deposits Average balance 1,690,545 1,621,790 3,312,335 1,813,188 2,004,818 3,818,007
Interest 158 2,378 2,537 81 1,856 1,938
Yield (%) 0.01 0.29 0.15 0.00 0.18 0.10
Average balance 110,355 - 110,355 38,791 - 38,791
Interest 35 - 35 12 - 12
Yield (%) 0.06 - 0.06 0.06 - 0.06
Call money Average balance - 241 241 - 123 123
Interest - 0 0 - 0 0
Yield (%) - 0.15 0.15 - 0.14 0.14
Borrowed money Average balance 2 770 772 19 - 19
Interest - 7 7 0 - 0
Yield (%) - 2.03 2.03 0.25 - 0.25
Negotiable certificates
of deposit
Loans and bills
discounted
Interim Fiscal Period ended Sep. 2012
(Apr 1, 2012 - Sep 30, 2012)
Interim Fiscal Period ended Sep. 2013
(Apr 1, 2013 - Sep 30, 2013)
Interest-earning assets
Interest-bearing liabilities
Due from banks with
interest
Monetary claims
bought
Receivables under
resale agreements
(Notes) 1. Average balance of foreign currency-denominated transactions in Japan, which are classified as international operations, is
calculated based on the daily basis. 2. Average balance of and interest accrued from borrowing and lending between domestic and international operations are offset. 3. Due from bank without interest is excluded from Interest-earning assets and the amount equivalent to Money held in trust is
excluded from Interest-bearing liabilities.
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Analysis of interest received / paid
(Millions of Yen)
Domesticoperations
Internationaloperations
TotalDomesticoperations
Internationaloperations
Total
Volume-related increase (decrease) 166 (2,003) (897) 972 918 2,705
Rate-related increase (decrease) 70 (750) (1,620) (1,931) (1,891) (4,637)
Net increase (decrease) 236 (2,754) (2,517) (958) (973) (1,931)
Volume-related increase (decrease) 328 32 346 6 132 138
Rate-related increase (decrease) (160) (37) (184) (153) 25 (126)
Net increase (decrease) 167 (5) 162 (147) 158 11
AFS Securities Volume-related increase (decrease) 288 0 292 327 0 333
Rate-related increase (decrease) (192) 0 (196) (1,255) 0 (1,260)
Net increase (decrease) 95 - 95 (927) - (927)
Call loans Volume-related increase (decrease) 0 68 57 0 190 172
Rate-related increase (decrease) 0 (75) (64) 0 (96) (78)
Net increase (decrease) 0 (6) (6) 0 94 93
Volume-related increase (decrease) 9 - 9 15 2,367 175
Rate-related increase (decrease) 3 - 3 (18) - 2,188
Net increase (decrease) 13 - 13 (3) 2,367 2,364
Volume-related increase (decrease) 5 - 5 (2) 0 (2)
Rate-related increase (decrease) 0 - 0 0 - 0
Net increase (decrease) 5 - 5 (2) 0 (2)
Volume-related increase (decrease) (39) (2,751) (2,727) 125 (3,777) (1,014)
Rate-related increase (decrease) (10) (5) (78) 18 161 (2,458)
Net increase (decrease) (49) (2,756) (2,806) 143 (3,616) (3,473)
Volume-related increase (decrease) (90) 384 (172) 5 554 317
Rate-related increase (decrease) (203) (798) (536) (104) (1,093) (955)
Net increase (decrease) (294) (414) (708) (98) (539) (637)
Deposits Volume-related increase (decrease) (71) 378 (147) 6 556 380
Rate-related increase (decrease) (199) (786) (531) (83) (1,078) (978)
Net increase (decrease) (270) (408) (679) (76) (521) (598)
Volume-related increase (decrease) (18) - (18) (21) - (21)
Rate-related increase (decrease) (5) - (5) 0 - 0
Net increase (decrease) (23) - (23) (22) - (22)
Call money Volume-related increase (decrease) 0 4 0 - 0 0
Rate-related increase (decrease) - (5) (1) - 0 0
Net increase (decrease) 0 0 0 - 0 0
Borrowed Money Volume-related increase (decrease) - 7 - - (7) (7)
Rate-related increase (decrease) - - 7 0 - 0
Net increase (decrease) - 7 7 0 (7) (7)
Interim Fiscal Period ended Sep. 2013
(Apr 1, 2013 - Sep 30, 2013)
Negotiable
certificates of
deposit
Interim Fiscal Period ended Sep. 2012
(Apr 1, 2012 - Sep 30, 2012)
Interest received
Interest paid
Loans and bills
discounted
Receivables underresale agreements
Due from banks
with interest
Monetary claims
bought
�Note�Changes due to a combination of volume - and rate - related increase (decrease) have been included in rate - related � � � � � � � � � �
increase (decrease).
27
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Yield on interest-earning assets, Yield on interest-bearing liabilities, Net yield/Interest rate
(%)
Domestic International Total Domestic International Total
Yield on interest-earning
assets0.46 1.60 1.01 0.28 1.39 0.78
Yield on interest-bearing
liabilities including general
expenses
1.80 1.77 1.79 1.76 1.37 1.55
Net yield / Interest rate (1.34) (0.16) (0.77) (1.47) 0.02 (0.77)
Interim Fiscal Period ended Sep. 2012
(Apr 1, 2012 - Sep 30, 2012)
Interim Fiscal Period ended Sep. 2013
(Apr 1, 2013 - Sep 30, 2013)
Fees and commissions
(Millions of Yen)
Domestic International Total Domestic International Total
3,218 4,002 7,221 5,992 4,046 10,038
Fees and commissions on fund
transfer555 1,607 2,163 825 2,182 3,008
Other fees and commissions 2,662 2,395 5,058 5,166 1,863 7,030
995 146 1,141 912 264 1,176
Fees and commissions on fund
transfer231 109 341 213 154 368
Other fees and commissions 763 37 800 698 109 807
2,223 3,856 6,079 5,079 3,781 8,861Fees and commissions profit
Interim Fiscal Period ended Sep. 2012
(Apr 1, 2012 - Sep 30, 2012)
Interim Fiscal Period ended Sep. 2013
(Apr 1, 2013 - Sep 30, 2013)
Fees and commissions
Fees and commissions paid
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Trading income and losses
(Millions of Yen)
Domestic International Total Domestic International Total
Trading income 433 (36) 396 - - -
Gains on trading account
securities transactions- - - - - -
Gains on securities and
derivatives related to
trading transactions
130 (74) 55 - - -
Gains on trading-related
derivatives transactions302 38 340 - - -
Other trading income - - - - - -
Trading losses - - - (210) 761 550
Losses on trading
securities and Derivatives- - - - - -
Losses on securities and
derivatives related to
trading transactions
- - - (189) 382 193
Losses on trading-related
derivatives transactions- - - (21) 378 356
Other trading losses - - - - - -
Trading profit 433 (36) 396 210 (761) (550)
Interim Fiscal Period ended Sep. 2012
(Apr 1, 2012 - Sep 30, 2012)
Interim Fiscal Period ended Sep. 2013
(Apr 1, 2013 - Sep 30, 2013)
�
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Other ordinary income and expenses (Millions of Yen)
Domestic International Total Domestic International Total
Other ordinary income 827 5,312 6,140 264 7,969 8,234
Gains on foreign
exchange transactions- 5,312 5,312 - 7,245 7,245
Gains on sales of bonds 827 - 827 264 - 264
Gains on redemption of
bonds- - - - - -
Income from derivatives
other than for trading or
hedging
- - - - - -
Others - - - - 724 724
Other ordinary expenses - 0 0 254 - 254
Losses on foreign
exchange transactions- - - - - -
Losses on sales of
bonds- - - 254 - 254
Losses on redemption of
bonds- - - - - -
Losses on devaluation of
bonds- - - - - -
Expenses on derivatives
other than for trading or
hedging
- - - - - -
Others - 0 0 - - -
Other ordinary profit 827 5,312 6,140 10 7,969 7,979
Interim Fiscal Period ended Sep. 2012
(Apr 1, 2012 - Sep 30, 2012)
Interim Fiscal Period ended Sep. 2013
(Apr 1, 2013 - Sep 30, 2013)
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General and administrative expenses
(Mil lions of Yen)
Salary 10,108 10,442
Accrued pension cost 1,440 1,626
Welfare expenses 76 56
Depreciation cost 1,206 923
Rental fees on land, buildings, and machinery 2,699 2,673
Maintenance cost 88 56
Supplies cost 169 160
Utilities cost 71 62
Expenses of business trip 133 124
Communication charge 519 520
Advertising expenses 961 537
Membership, Contribution and Business promotion 92 96
Tax and public charges 316 599
Others 11,441 11,389
Total 29,326 29,271
Interim Fiscal Period ended Sep. 2012
(Apr 1, 2012 - Sep 30, 2012)
Interim Fiscal Period ended Sep. 2013
(Apr 1, 2013 - Sep 30, 2013)
Profit ratio
(%)
Ordinary profit to total assets (0.08) 0.06
Ordinary profit to capital (net assets) (1.26) 1.10
Net income to total assets (0.07) 0.02
Net income to capital (net assets) (1.07) 0.51
Interim Fiscal Period ended Sep. 2012
(Apr 1, 2012 - Sep 30, 2012)
Interim Fiscal Period ended Sep. 2013
(Apr 1, 2013 - Sep 30, 2013)
Ordinary profit / (Number of days of the period / 365)
Average balance of total assets (excl. customers' liabilities for acceptances and guarantees)
Ordinary profit / (Number of days of the period / 365)
(Beginning net assets + net assets)/2
Net income / (Number of days of the period / 365)
Average balance of total assets (excl. customers' liabilities for acceptances and guarantees)
Net income / (Number of days of the period / 365)
(Beginning net assets + net assets)/2
×100
= ×100
×100
×100
=
=
=
Ordinary profit to total assets
Ordinary profit to capital (net assets)
Net income to total assets
Net income to capital (net assets)
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<Indicators for Deposits>
Average balance by deposit type (Millions of Yen)
Domestic International Total Domestic International Total
Liquid deposits 1,552,432 - 1,552,432 1,698,082 - 1,698,082
Time deposits 132,813 - 132,813 109,351 - 109,351
Negotiable certificates of
deposit110,355 - 110,355 38,791 - 38,791
Others 5,299 1,621,790 1,627,089 5,755 2,004,818 2,010,573
Total 1,800,900 1,621,790 3,422,690 1,851,979 2,004,818 3,856,798
As of Sep. 30, 2012 As of Sep. 30, 2013
(Note) Liquid deposits � current deposits � ordinary deposits � saving deposits � deposits at notice
Time deposits balance by remaining tenor
(Millions of Yen)
Less
than
3 months
Over 3
months
,
less
than 6
months
Over 6
months
,
less
than 1
year
Over 1
year,
less
than 2
years
Over 2
years,
less
than 3
years
Over 3
yearsTotal
Less
than
3 months
Over 3
months
,
less
than 6
months
Over 6
months
,
less
than 1
year
Over 1
year,
less
than 2
years
Over 2
years,
less
than 3
years
Over 3
yearsTotal
Fixed interest
time deposits88,408 17,641 25,643 1,714 542 3 133,954 63,283 26,729 13,781 1,374 616 1 105,786
Floating
interest time
deposits
2,967 7,021 - 460 - 125 10,573 - - - - 125 - 125
Others - - - - - - - - - - - - - -
Total 91,375 24,662 25,643 2,174 542 129 144,528 63,283 26,729 13,781 1,374 741 1 105,912
As of Sep. 30, 2012 As of Sep. 30, 2013
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<Indicators for Loans and Bills Discounted>
Balance by loan type
(1) Balance at the end of period
Domestic International Total Domestic International Total
Loans on bills 31,631 42,425 74,057 24,524 440 24,964
Loans on deeds 128,991 101,519 230,510 117,133 178,331 295,464
Overdrafts 23,640 973 24,614 49,104 1,834 50,938
Bills discounted 742 - 742 624 - 624
Total 185,006 144,918 329,925 191,387 180,605 371,992
(Millions of Yen)
As of Sep. 30, 2012 As of Sep. 30, 2013
(2) Average balance
Domestic International Total Domestic International Total
Loans on bills 36,524 41,749 78,274 24,605 384 24,990
Loans on deeds 112,349 99,655 212,005 127,989 155,745 283,734
Overdrafts 24,651 3,038 27,689 21,840 7,960 29,800
Bills discounted 374 - 374 365 - 365
Total 173,900 144,443 318,343 174,801 164,090 338,891
(Millions of Yen)
As of Sep. 30, 2012 As of Sep. 30, 2013
Balance of loans and bills discounted by remaining tenor
(Millions of Yen)
Less
than
1 year
Over 1
year,
less
than 3
years
Over 3
years,
less
than 5
years
Over 5
years,
less
than 7
years
Over 7
yearsTotal
Less
than
1 year
Over 1
year,
less
than 3
years
Over 3
years,
less
than 5
years
Over 5
years,
less
than 7
years
Over 7
yearsTotal
Fixed interest
loans and bills discounted19,477 14,126 14,073 128 538 48,344 17,785 15,038 14,583 43 289 47,741
Floating interest
loans and bills discounted119,866 61,888 12,160 20,724 66,940 281,580 135,995 52,812 20,666 20,915 93,860 324,251
Total 139,343 76,015 26,234 20,853 67,479 329,925 153,781 67,851 35,250 20,958 94,150 371,992
As of Sep. 30, 2012 As of Sep. 30, 2013
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Balance of loans and bills discounted by collateral type���
�
(Millions of Yen)
As of Sep. 30, 2012 As of Sep. 30, 2013
Type of collateral pledged Loans and bills discounted Loans and bills discounted
Deposits 7,862 5,936
Securities 5,581 4,571
Claims - -
Commodities - -
Real estates 50,564 53,688
Foundations - -
Others 12,401 7,683
Sub-total 76,410 71,880
Guarantees 52,441 76,983
Clean credits 201,072 223,129
Total 329,925 371,992
Balance of customers’ liabilities for acceptances and guarantees by collateral type
(Millions of Yen)
As of Sep. 30, 2012 As of Sep. 30, 2013
Deposits 6,120 8,984
Securities 30,588 40,235
Claims - -
Commodities - -
Real estates - -
Foundations - -
Others - -
Sub-total 36,708 49,219
Guarantees - -
Clean credits 40,080 45,100
Total 76,789 94,320
Type of collateral pledgedCustomers' liabilities for acceptances
and guarantees
Customers' liabilities for acceptances
and guarantees
Balance of loans and bills discounted by use
(Millions of Yen)
As of Sep. 30, 2012 As of Sep. 30, 2013
Lending for equipments 97,713 137,299
Lending for operations 232,212 234,693
Total 329,925 371,992
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Balance of loans and bills discounted by industry���
�
(Millions of Yen)
Amount (%) Amount (%)
Domestic
Manufacturing 10,916 3.31% 20,006 5.38%
Agriculture / Forestry - - - -
Fishery - - - -
Mining - - - -
Construction - - - -
Electric/gas/heat supply/water - - - -
Information and telecommunications 27,686 8.39% 11,871 3.19%
Shipping / transportation 10,012 3.03% 10,500 2.82%
Wholesale / retail 75,376 22.85% 68,052 18.29%
Finance / insurance 59,276 17.97% 69,509 18.69%
Real estate 2,950 0.89% 9,616 2.59%
Other Services 7,759 2.35% 3,360 0.90%
Central / Local government - - - -
Individuals 61,922 18.77% 61,399 16.51%
Overseas 74,024 22.44% 117,674 31.63%
Total 329,925 100% 371,992 100%
As of Sep. 30, 2012 As of Sep. 30, 2013
Balance of loans and bills discounted for small and medium size businesses���
� (Millions of Yen)
As of Sep. 30, 2012 As of Sep. 30, 2013
Total loans and bills discounted (A) 329,925 371,992
Balance of loans for small and medium size
corporations etc. (B)145,109 172,538
(B) / (A) 43.98% 46.38% (Note) Small and medium size corporation etc. refers as followings;
- companies with its capital less than or equal to 300 million yen (100 million yen for wholesale businesses and 50 million yen for retail sale and services businesses), or
- companies with its full-time employees less than or equal to 300 on the payroll (100 for wholesale, 50 for retail sale and 100 for services), or
- individuals.
Balance of specified overseas claims None
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Loans - to - deposits ratio
(%)
Domestic International Total Domestic International Total
Balance at the end of period 10.45 9.14 9.83 10.23 8.84 9.50
Average balance 9.65 8.90 9.30 9.43 8.18 8.78
As of Sep. 30, 2012 As of Sep. 30, 2013
(Note) Negotiable certificates of deposit are included in “deposits”.
Allowance for loan losses (Millions of Yen)
CategoryBeginning
balanceIncreased Decreased
Ending
Balance
Beginning
balanceIncreased Decreased
Ending
Balance
Allowance for general
loan losses1,335 1,405 1,335 1,405 1,159 1,059 1,159 1,059
Allowance for specific
loan losses3,053 2,976 3,053 2,976 2,266 1,324 2,266 1,324
Specified overseas claim
reserve account- - - - - - - -
Total 4,388 4,381 4,388 4,381 3,426 2,383 3,426 2,383
As of Sep. 30, 2012 As of Sep. 30, 2013
Loan write-offs
None
Risk management Loans�
��
�
(Millions of Yen)
As of Sep. 30, 2012 As of Sep. 30, 2013
Bankrupt loans 1,185 1,185
Past due loans/non-accrual loans 4,776 1,781
Past due loans (3 months or more) 328 1,496
Restructured loans 16 107
Total 6,307 4,571
(Notes) 1. “Bankrupt loans” are loans on which accrued interest income is not recognized as there is substantial doubt about the ultimate
collectability of either principal or interest because they are past due for a considerable period of time or for other reasons (excluding write-offs, hereinafter “non-accrual loans”), and as defined in Article 96-1-3 and 96-1-4 of the Enforcement Ordinance of the Japanese Corporate Tax Law.
2. “Past due loans/non-accrual loans” are loans on which accrued interest income is not recognized, excluding “Bankrupt loans” and loans on which interest payments are deferred in order to support the borrowers’ recovery from financial difficulties.
3. “Past due loans (3 months or more)” are loans on which the principal or interest is past due for three months or more from the next day of prescribed payment date, excluding “bankrupt loans” and “Past due loans/non-accrual loans”.
4. “Restructured loans” are loans on which terms and conditions have been amended in favor of the borrowers (e.g., reduction of the original interest rate, deferral of interest payments, extension of principal repayments or debt forgiveness) in order to support the borrowers’ recovery from financial difficulties, excluding “bankrupt loans,” “past due loans/non-accrual loans” and “past due loans (3 months or more)”.
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Claims under the Financial Reconstruction Law
(Millions of Yen)
As of Sep. 30, 2012 As of Sep. 30, 2013
Bankrupt / De facto Bankrupt 2,902 2,521
In Danger of Bankrupt 3,067 445
Need attention 345 1,604
Subtotal (A) 6,315 4,572
Normal 512,126 582,445
Total (B) 518,441 587,017
(A) / (B) 1.21% 0.77%
(Notes) 1. “Bankrupt / De facto Bankrupt” are claims to bankrupt borrowers in the event of filing for commencement of bankruptcy,
corporate reorganization, rehabilitation proceedings and loans pursuant to these proceedings. 2. “In Danger of Bankrupt” are claims of which borrowers are not in bankruptcy but their financial status and business performance
deteriorate, with a low collectability of principal and interest under the terms and conditions of the contract. 3. “Need attention” are past due loans (3 months or more) and restructured loans from “risk management loans” 4. “Normal” are claims classified as other than the credit listed in 1 to 3 above, with no problems seen with borrowers’ financial
status and business performance.
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<Indicators for Securities >
Average balance of securities related to trading transactions
(Millions of Yen)
As of Sep. 30, 2012 As of Sep. 30, 2013
Trading Japanese government bonds 250,644 170,527
Trading municipal bonds - -
Trading government guaranteed bonds - -
Other trading securities - 19,328
Total 250,644 189,856
Balance of AFS securities by remaining tenor (Millions of Yen)
CategoryUp to 1
year
1 - 5
years
5 - 10
years
Over 10
years
Indefinite
termTotal
Up to 1
year
1 - 5
years
5 - 10
years
Over 10
years
Indefinite
termTotal
Japanese
government bonds306,330 374,800 26,261 - - 707,392 150,962 770,073 4,202 - - 925,238
Municipal bonds - - - - - - - - - - - -
Corporate bonds - - - 16,422 - 16,422 - - - 15,442 - 15,442
Stocks - - - - - - - - - - - -
Foreign bonds - 5,952 - - - 5,952 - 5,848 - - - 5,848
Foreign stocks - - - - - - - - - - - -
Others - - - - - - - - - - - -
Total 306,330 380,753 26,261 16,422 - 729,766 150,962 775,922 4,202 15,442 - 946,529
As of Sep. 30, 2012 As of Sep. 30, 2013
Average balance of AFS securities
(Millions of Yen)
Domestic International Total Domestic International Total
Japanese government bonds 798,427 - 798,427 917,052 - 917,052
Municipal bonds - - - - - -
Corporate bonds 27,007 - 27,007 15,617 - 15,617
Stocks - - - - - -
Foreign bonds - 5,961 5,961 - 5,872 5,872
Foreign stocks - - - - - -
Others - - - - - -
Total 825,434 5,961 831,395 932,669 5,872 938,541
As of Sep. 30, 2012 As of Sep. 30, 2013
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AFS securities - to - deposits ratio
(%)
Domestic International Total Domestic International Total
Balance at the end of period 40.91 0.37 21.76 50.29 0.28 24.18
Average balance 45.83 0.36 24.29 50.36 0.29 24.33
As of Sep. 30, 2012 As of Sep. 30, 2013
(Note) Negotiable certificates of deposit are included in “deposits.”
39
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2. Financial Statements
<Balance Sheet>
(Millions of Yen)
As of September 30,2012 As of September 30,2013
Amount Amount
Assets
Cash and due from banks 1,714,400 1,631,348
Call loans 85,660 146,747
Receivables under resale agreements 505,963 782,348
Receivables under securities borrow ing transactions - 4
Monetary claims bought 3,477 3,148
Trading assets 292,232 245,478
Money held in trust 10 10
Securities 729,766 946,529
Loans and bills discounted 329,925 371,992
Foreign exchanges 107,605 116,781
Other assets 118,911 191,474
Others 118,911 191,474
Tangible f ixed assets 3,635 2,805
Intangible f ixed assets 2,866 2,164
Prepaid pension cost 3,780 1,594
Deferred tax assets 118 1,652
Customers’ liabilities for acceptances and guarantees 76,789 94,320
Allow ance for loan losses (4,381) (2,383)
Total assets 3,970,761 4,536,018
Liabilities
Deposits 3,241,918 3,906,941
Negotiable certif icates of deposit 111,000 6,230
Trading liabilities 42,024 29,680
Borrow ed money 1 3
Foreign exchanges 135,471 94,043
Other liabilities 97,025 139,768
Income taxes payable 274 720
Asset retirement obligations 708 718
Others 96,042 138,329
Provision for bonuses 1,450 1,398
Provision for directors' bonuses 160 164
Provision for retirement benefits 1,088 1,150
Provision for directors' retirement benefits 27 40
Other provision 119 154
Acceptances and guarantees 76,789 94,320
Total liabilities 3,707,077 4,273,897
Net Assets
Capital stock 123,100 123,100
Capital surplus 121,100 121,100
Legal capital surplus 121,100 121,100
Retained earnings 15,010 15,134
Legal retained earnings 2,000 2,000
Other retained earnings 13,010 13,134
���
Retained earnings brought forw ard 13,010 13,134
Total shareholders' equity 259,210 259,334
Valuation dif ference on AFS securities 4,478 2,786
Deferred gains or losses on hedges (4) -
Total valuation and translation adjustments 4,473 2,786
Total net assets 263,684 262,120
Total liabilities and net assets 3,970,761 4,536,018
Account Name
(Note) Financial figures are unaudited.
40
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< Statement of Income >
(Millions of Yen)
Ordinary income 31,781 34,767
Interest income 17,861 15,929
(Interest on loans and bills discounted) 2,148 2,159
(Interest and dividends on securities) 2,619 1,691
Fees and commissions 7,221 10,038
Trading income 396 -
Other ordinary income 6,140 8,234
Other income 161 564
�
Ordinary expenses 33,455 33,313
Interest expenses 2,598 1,960
(Interest on deposits) 2,537 1,938
Fees and commissions paid 1,141 1,176
Trading Losses - 550
Other ordinary expenses 0 254
General and administrative expenses 29,326 29,271
Other expenses 388 99
Ordinary profit (loss) (1,673) 1,454
Extraordinary income 19 -
Extraordinary loss 299 53
Income (loss) before income taxes (1,954) 1,400
Income taxes - current 150 689
Income taxes - deferred (675) 33
Total income taxes (524) 722
Net income (loss) (1,429) 677
Account NameFrom April 1, 2012
to September 30, 2012
From April 1, 2013
to September 30, 2013
(Note) Financial figures are unaudited.
41
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42
<Statement of Changes in Net Assets> (Mil l ions of Yen)
From April 1, 2012
to September 30,
2012
From April 1, 2013
to September 30,
2013
Shareholders' equity
Capital stock
Balance at beginning of the period 123,100 123,100
Changes in amounts during the interim period
Total changes in amounts during the interim period - -
Balance at the end of the current interim period 123,100 123,100
Capital surplus
Legal capital surplus
Balance at beginning of the period 121,100 121,100
Changes in amounts during the interim period
Total changes in amounts during the interim period - -
Balance at the end of the current interim period 121,100 121,100
Retained earnings
Legal retained earnings
Balance at beginning of the period 2,000 2,000
Changes in amounts during the interim period
Total changes in amounts during the interim period - -
Balance at the end of the current interim period 2,000 2,000
Other retained earnings
Retained earnings brought forward
Balance at beginning of the period 14,440 12,457
Changes in amounts during the interim period
Net income (loss) (1,429) 677
Total changes in amounts during the interim period (1,429) 677
Balance at the end of the current interim period 13,010 13,134
Total retained earnings
Balance at beginning of the period 16,440 14,457
Changes in amounts during the interim period
Net income (loss) (1,429) 677
Total changes in amounts during the interim period (1,429) 677
Balance at the end of the current interim period 15,010 15,134
Total shareholders' equity
Balance at beginning of the period 260,640 258,657
Changes in amounts during the interim period
Net income (loss) (1,429) 677
Total changes in amounts during the interim period (1,429) 677
Balance at the end of the current interim period 259,210 259,334
Valuation and translation adjustments
Valuation difference on AFS securities
Balance at beginning of the period 4,447 4,170
Changes in amounts during the interim period
Net changes in amounts other than shareholders' equity 30 (1,384)
Total changes in amounts during the interim period 30 (1,384)
Balance at the end of the current interim period 4,478 2,786
Deferred gains or losses on hedges
Balance at beginning of the period (4) (3)
Changes in amounts during the interim period
Net changes in amounts other than shareholders' equity 0 3
Total changes in amounts during the interim period 0 3
Balance at the end of the current interim period (4) -
Total valuation and translation adjustments
Balance at beginning of the period 4,443 4,166
Changes in amounts during the interim period
Net changes in amounts other than shareholders' equity 30 (1,380)
Total changes in amounts during the interim period 30 (1,380)
Balance at the end of the current interim period 4,473 2,786
Total net assets
Balance at beginning of the period 265,083 262,823
Changes in amounts during the interim period
Net income (loss) (1,429) 677
Net changes in amounts other than shareholders' equity 30 (1,380)
Total changes in amounts during the interim period (1,399) (702)
Balance at the end of the current interim period 263,684 262,120
Account Name
(Note) Financial figures are unaudited.
42
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43
< Statement of Cash Flows >
(Millions of Yen)
Cash flows from operating activities
Income (loss) before income taxes (1,954) 1,400
Depreciation 1,206 923
Goodwill amortization 720 -
Increase (decrease) in allowance for loan losses (7) (1,042)
Increase (decrease) in provision for bonuses 969 858
Increase (decrease) in provision for retirement benefits (230) 60
Interest income (17,861) (15,929)
Interest expenses 2,598 1,960
Losses (gains) on sales of AFS securities (827) (10)
Losses (gains) on foreign exchanges 45 (54)
Losses (gains) on dispositions of fixed assets 299 53
Net decrease (increase) in trading assets (62,848) (109,948)
Net increase (decrease) in trading liabilities 18 (21,667)
Net decrease (increase) in loans and bills discounted (30,868) (41,377)
Net increase (decrease) in deposits (268,542) 365,437
Net increase (decrease) in negotiable certificates of deposit (44,000) (28,770)
Net decrease (increase) in due from banks (excluding cash equivalents) 138,706 344,707
Net decrease (increase) in call loan 15,814 25,290
Net increase (decrease) in borrowed money (929) 1
Net decrease (increase) in foreign exchange assets (9,227) 1,240
Net increase (decrease) in foreign exchange liabilities (6,076) (12,096)
Interest received - cash basis 19,731 18,471
Interest paid - cash basis (2,878) (2,125)
Net increase (decrease) in reserve for others 32 (123)
Net decrease (increase) in receivables under resale agreements 98,134 (93,509)
Net decrease (increase) in receivables under securities borrowing transactions 18 (4)
Net decrease (increase) in monetary claims bought 163 233
Net decrease (increase) in prepaid pension costs 988 1,188
Net decrease (increase) in other assets 35,473 51,336
Net increase (decrease) in other liabilities (39,319) (147,729)
Others, net 353 0
Sub-total (170,294) 338,771
Income taxes paid - cash basis - (774)
Income taxes refunded - cash basis 1,215 364
Net cash provided by (used in) operating activities (169,079) 338,360
Cash flows from investing activities
Purchases of AFS securities (99,988) (314,735)
Proceeds from sales of AFS securities 40,723 29,006
Proceeds from redemption of AFS securities 155,660 194,519
Purchases of tangible fixed assets (478) (186)
Purchases of intangible fixed assets (511) (216)
Net cash provided by (used in) investing activities 95,405 (91,613)
Cash flows from financing activities
Net cash provided by (used in) financing activities - -
Effect of foreign exchange rate changes on cash and cash equivalents (45) 54
Net increase (decrease) in cash and cash equivalents (73,719) 246,802
Cash and cash equivalents at the beginning of the fiscal year 517,089 539,843
Cash and cash equivalents at the end of the interim fiscal year 443,370 786,645
Account NameFrom April 1, 2013
to September 30, 2013
From April 1, 2012
to September 30, 2012
43
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44
Amounts less than one million yen have been omitted.
Accounting Policies 1. Standard for valuation of trading assets and trading liabilities / booking of income and losses for trading
purposes transaction
Transactions for trading purposes, such as seeking gains arising from short-term changes in interest rates, foreign
exchange rates, or securities prices and other market related indices or from variation among markets (hereinafter
referred to as “Trading Purposes”), are included in “Trading assets” or “Trading liabilities” on the balance sheet on a
trade date basis. Income and Expenses on trading-purpose transactions are recognized on a trading date basis,
and recorded as “Trading income” and “Trading losses”.
Securities and monetary claims purchased for trading purposes are stated at the interim fiscal year-end market
value, and financial derivatives such as swaps, futures and options are stated at amounts that would be settled if
the transactions were terminated at the interim fiscal year-end.
“Trading income” and “Trading losses” include interest received or paid during the interim fiscal year. The year-on-
year valuation differences of securities and money claims are also recorded in the above-mentioned accounts. As
for the derivatives, assuming that the settlement will be made in cash, the year-on-year valuation differences are
also recorded in the above-mentioned accounts.
2. Standard and method for valuation of AFS securities
AFS securities that have market prices are carried at their balance sheet date market prices (cost of securities sold
is calculated using primarily the moving-average method). Net unrealized gains/losses on AFS securities, net of
income taxes, are included in “Net assets”.
3. Standard and method for valuation of derivative transaction
Derivative transactions (excluding those for trading purposes) are carried at fair value.
4. Depreciation method for fixed assets
(1) Tangible fixed assets
Tangible fixed assets are depreciated using the declining-balance method.
The estimated useful lives are as follows:
Buildings: 3 to 18 years
Others: 2 to 20 years
(2) Intangible fixed assets
Intangible fixed assets are depreciated using the straight-line method. Capitalized software for internal use is
depreciated over its estimated useful life (5 years).
5. Standard for Allowance
(1) Allowance for loan losses
Allowance for loan losses is provided as detailed below in accordance with the internal standards for write-offs
and provisioning.
For claims on borrowers that have entered into bankruptcy, special liquidation proceedings or similar legal
proceedings (“bankrupt borrowers”) or borrowers that are not legally or formally insolvent but are regarded as
substantially in the same situation (“effectively bankrupt borrowers”), an allowance is provided based on the
amount of claims, after the write-off stated in the additional paragraph below, net of the expected amount of
recoveries from collateral and guarantees. For claims on borrowers that are not currently bankrupt but are
perceived to have a high risk of falling into bankruptcy, an allowance is provided in the amount deemed
necessary based on an overall solvency assessment of the claims, net of the expected amount of recoveries
from collateral and guarantees. For other claims, an allowance is provided based on the expected loan-loss
ratio assigned to each risk rating.
Responsible divisions for Self-Assessment and Front office mutually conduct assessment of all claims in
accordance with the internal rules for self-assessment of assets, and the Internal Audit Division, independently
audits their assessment. The allowance is provided based on the results of these assessments.
(2) Provision for bonuses
Provision for bonuses is reported in preparation for the payment of bonuses to the employees at the amount
estimated for the payment of bonuses to the employees during the interim fiscal year.
(3) Provision for directors’ bonuses
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45
Provision for directors’ bonuses is reported in preparation for the payment of bonuses to the directors at the
amount estimated for the payment of bonuses to the directors during the interim fiscal year.
(4) Provision for retirement benefits
Provision for retirement benefits is reported in preparation for the payment of employee retirement allowance in
the amount deemed accrued at the interim fiscal year-end, based on the projected retirement benefit obligation
and the fair value of plan assets at the interim fiscal year-end. The unrecognized prior service cost and
actuarial differences are reported as expenses as follows;
Unrecognized prior service cost:
Amortized using the straight-line method for a period, primarily over 7 years, within the employees’
average remaining service period, commencing on the fiscal year in which the services are provided.
Actuarial differences:
Amortized using the straight-line method, primarily over 7 to 8 years within the employees’ average
remaining service period, commencing from the next fiscal year of incurrence.
(5) Provision for directors’ retirement benefits
Provision for directors’ retirement benefits is reported in preparation for the payment of director retirement
allowance out of directors’ estimated allowance for the amount allocable to the period.
6. Standard for the translation into Japanese yen Assets and liabilities denominated in foreign currencies are translated into Japanese yen at the exchange rate
prevailing at the balance sheet date.
7. Method for hedge accounting
For the hedge accounting method applied to hedging transactions for interest rate risk arising from financial assets
and liabilities, the deferred hedge accounting method is applied.
As for the portfolio hedges to net market fluctuation, effectiveness of such hedges are assessed by classifying the
hedged items (such as loans) and the hedging instruments (such as interest rate swaps) by each item.
8. Accounting for consumption taxes
National and Local Consumption Taxes are excluded from transaction amounts.
Changes in presentation
(Balance Sheet)
As a result of adoption of the appended form of ”Ordinance for Enforcement of the Banking Act” (Finance Ministry
Ordinance No. 10, 1982) which had been revised by “Cabinet Office Ordinance Partially Revising Regulations on
Ordinance for Enforcement of the Banking Act” (Cabinet Office Ordinance No. 63, September 27, 2013), “Prepaid
Pension Cost” which had been included in “Others “of Other assets up to the prior interim fiscal year has been
separately listed effective from the current interim period. Balance sheet as of September 30, 2013 shown in
above includes the reclassification from this change.
As a result, 122,691 million yen of ”Others” in Other assets shown in balance sheet disclosed in prior interim period
are reclassified to 3,780 million yen of “Prepaid Pension Cost” and 118,911 million yen of “Others”.
45
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46
Notes to Balance Sheet
1. For securities held as collateral under “receivables under resale agreements”, “securities borrowing transactions
with cash collateral” and “derivative transactions” which can be sold or pledged without restrictions, 11,908 million
yen were pledged and 805,631 million yen were held by CJL as of September 30, 2013.
2. Bankrupt loans were 1,185 million yen and Past due loans/non-accrual loans were 1,781 million yen.
“Bankrupt loans” are loans on which accrued interest income is not recognized as there is substantial doubt about
the ultimate collectability of either principal or interest because they are past due for a considerable period of time
or for other reasons (excluding write-offs, hereinafter “non-accrual loans”), and as defined in Article 96-1-3 and 96-
1-4 of the Enforcement Ordinance of the Japanese Corporate Tax Law.
“Past due loans/non-accrual loans” are loans on which accrued interest income is not recognized, excluding
“Bankrupt loans” and loans on which interest payments are deferred in order to support the borrowers’ recovery
from financial difficulties.
3. Past due loans (3 months or more) totaled 1,496 million yen.
“Past due loans (3 months or more)” are loans on which the principal or interest is past due for three months or
more, excluding “Bankrupt loans” and “Past due loans/non-accrual loans”.
4. Restructured loans totaled 107 million yen.
“Restructured loans” are loans on which terms and conditions have been amended in favor of the borrowers (e.g.
reduction of the original interest rate, deferral of interest payments, extension of principal repayments or debt
forgiveness) in order to support the borrowers’ recovery from financial difficulties, excluding “Bankrupt loans,” “Past
due loans/non-accrual loans” and “Past due loans (3 months or more)”.
5. The total amount of “Bankrupt loans”, “Past due loans/non-accrual loans”, “Past due loans (3 months or more)” and
“Restructured loans” were 4,571 million yen.
Claims shown from 2 to 5 are the amounts before the appropriate allowance.
6. Bills discounted are treated as financial transactions in accordance with JICPA Industry Audit Committee Report
No.24. CJL has rights to sell or pledge bank acceptance bought, commercial bills discounted, documentary bills and
foreign bills bought without restrictions. The total face value was 73,235 million yen.
7. AFS securities of 925,238 million yen and Trading assets of 190,863 million yen were pledged as collateral for
settlements of FX transactions. In addition, other assets include Cash collateral paid for financial instruments of
48,057 million yen, initial margins of futures markets 82 million yen and other guarantee deposits of 5,374 million
yen.
8. Overdraft facilities and commitment line contracts on loans are agreements to lend to customers up to a prescribed
amount, as long as there is no violation of any condition established in the contracts.
The amount of unused commitments was 377,450 million yen and the amount of those with remaining period within
one year was 280,563 million yen.
Since many of these commitments are expected to expire without being drawn upon, the total amount of unused
commitments does not necessarily represent actual future cash flow requirements. Many of these commitments
include clauses under which we can reject an application from customers or reduce the contract amounts in the
event that economic conditions change, we need to secure claims, or other events occur. In addition, we may
request the customers to pledge collateral such as premises and securities at the time of the contracts, and take
necessary measures such as monitoring customers’ financial positions, revising contracts when need arises and
securing claims after contracts are made on a periodic basis.
9. Accumulated depreciation on tangible fixed assets: 6,976 million yen.
10. Non-cancellable operating lease is as follows;
Future minimum rental payments;
Within one year 794 million yen
Over one year 1,329 million yen
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Notes to Statement of Income Other income include 466 million yen of Reversal of allowance for loan losses.
Notes to Statement of Changes in Net Assets
The types and number of our shares outstanding are as follows:
(Thousands of Shares)
Number of shares
at beginning of the
period
Number of shares
increased during
the period
Number of shares
decreased during
the period
Number of shares
at end of the
period
Memo
Common stock 244,200,000 � � 244,200,000
Total� 244,200,000 � � 244,200,000
Notes to Statement of Cash flow
Cash and Cash Equivalents consist of cash and due from Bank of Japan included in Cash and Due from Banks on the
balance sheet.
As of September 30, 2013 (Millions of Yen)
Cash and Due from Banks 1,631,348
Due from Banks excluding Bank of Japan (844,703)
Cash and Cash Equivalents 786,645
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Notes related to Financial Instruments
1����Disclosure on Financial Instruments
(1) Policy on Financial Instruments
CJL is engaged in banking operations such as deposit taking business, credit extension business including loans, fund transfer and clearing business both in Yen and foreign currencies and investment business including marketable securities. The ALM, Asset and Liability Management, in CJL has related across these listed businesses. CJL has conducted integrated management of the Banking Portfolio, as ALM, for the purpose of managing interest rate and foreign exchange rate risk associated with market movement and liquidity risk from mismatch of future cash flows. Also it aims to minimize funding cost and maximize investment returns. As part of this effort, we enter into certain derivative transactions. As the banking portfolio in CJL, liabilities are sourced mainly from customer deposits both retail and corporate customers. And in asset, it has invested into securities, mainly in JGBs, loans to customers and deposits to Citibank, N.A. entities.
(2) Types of and Risks associated with Financial Instruments
A majority of financial assets that CJL holds are Securities and placements to the banks in our group companies. Out of the customer related assets, loans to corporate customers in Japan and overseas, for which CJL is exposed to credit risks potentially arising from the obligors' default and also there are risks on material adverse changes in economics, politics, and social environments. Securities are mainly low credit risk Japanese government bonds, etc. held for pure investment or trading purposes. These are exposed to interest rate risk and market price risks. Deposits are from retail and corporate customers, and group companies. They are exposed to liquidity risk where we may not be able to be repaid timely on maturities. Interest rate exposure is managed by establishing risk limits, etc. Derivative contracts include interest rate swaps, currency swaps, and FX forward for ALM purpose. In addition, we have trading bonds as well as trading positions that include interest rate related derivatives and currency related derivatives. These financial products are exposed to interest rate risk, foreign exchange rate risk, price risk and credit risk, etc.
(3) Risk Management System relating to Financial Instruments
� Credit Risk Management
CJL establishes consistent risk management framework and controls credit risks related to loans etc. by credit analysis conducted on transaction basis, controlling credit line, credit information, internal obligor risk rating, pledge of guarantee and collateral and managing classified or delinquent accounts, in accordance with Credit Risk Management Policy and related rules and procedures. Credit risk control aforementioned is conducted by Risk Management Division and will be reported to Credit Risk Management Committee (“CRMC”) and Board of Directors’ meeting (“BOD”), which is taken place regularly. Moreover, the process of credit risk control is assessed by internal auditor periodically. Credit risk of issuers and counterparty risk of derivatives are controlled and monitored by Credit Risk Management Services Unit and Portfolio Management Unit in Risk Management Division by obtaining credit information and marked-to market periodically.
� Market Risk Management
(A) Risk Management of Banking Book CJL manages interest rate risks on banking book through ALM. The risk management methods and procedures are clearly described in the "Market Risk Management for Accrual Portfolios Policy and Standards". CJL monitors and reviews its activity implementation status, also discusses action plans in the monthly Asset Liability Committee (“ALCO”) meeting as per the ALCO Regulation which has been constituted by the Management Committee. On a day to day basis, Market Risk Management Unit captures consolidated profiles of interest rates and durations of the financial assets and liabilities, performs risk monitoring process using the gap analysis and interest rate factor sensitivity analysis, and reports the results to the ALCO meeting on a monthly basis. For the purpose of hedging interest rate risks, CJL transacts some derivative trades such as interest rate swaps.
(B) Risk Management of Trading Book
CJL mainly manages interest rate risks and foreign exchange price risks on trading book following the Market Risk Management Policy and ALCO Regulation determined by Management Committee. CJL's market risk amount is measured by Value-at-Risk (“VaR”) method and its regulated compliance status is monitored and reported to ALCO meeting on a monthly basis.
(C) Quantitative information on Market Risks a) Trading purpose financial instruments
CJL adopted the Monte Carlo Method that simulates variance and covariance estimated from the historical times series data for VaR calculation (holding period of one day, with the confidence level of 99%) for trading purpose securities and trading purpose derivative products.
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CJL market risk amount for trading activities (probable loss amount) as of September 30, 2013 was 100 million yen. CJL also conducts VaR back testing which is a comparative analysis of the VaR result calculated by the validated model against the actual profit and loss (P&L). As per the VaR back testing result for the period of October 2012 through September 2013, one exception was observed. However, VaR still may not pick up all probability of event under unpredictable market conditions so long as it is based on the certain probability calculated by statistical method using historical market movement.
b) Non-trading purpose financial instruments
In CJL, the main financial instruments which to be influenced by interest rates as one of the key risk variables are, “Placements”, "Loans and bills discounted", "AFS securities", "Deposits", “Negotiable certificate of deposits”, "Borrowings" and "Hedge Swaps". On the financial Assets and Liabilities, CJL calculates the effect amounts on profits and losses in the next one year when simulating reasonably expected moving range in the quantitative analysis for the purpose of managing interest rate risks. With respect to the revenue effect amount calculation, CJL splits respective financial asset and liability balances into groups of fixed or floating rate groups by tenor buckets responding to holding maturities and applies the interest rate moves by tenors. CJL has exercised results that the net income before taxes would increase by 1,451 million yen on the scenario that interest rate to increase by 100 basis points (1%) for total portfolio, by 1,402 million yen on the scenario that benchmark JPY interest rate to increase by 100 basis points (1%) as of September 30,2013. On the same basis, CJL's net income before taxes would increase by 37 million yen on the scenario that benchmark USD interest rate to increase by 100 basis points (1%). These results are based on the stable risk variables excluding interest rates, and no correlation between interest rates and other risk variables are considered in the calculation. In case of any unexpected moves over the 100 basis points (1%) moving range, there can be larger effect than the reported effect amounts on P&L.
� Management of Liquidity Risk associated with Funding Activities
Liquidity risk management has been regulated by related policies and procedures. ALCO, which is subject to supervision of the Management Committee, has been constituted to ensure that CJL maintains adequate liquidity, has sufficient capital to meet regulatory and business needs, has appropriate funding for business growth. ALCO's monitoring and reviewing of capital, liquidity, balance sheet and the banking account management is an integral part of the overall risk management framework of CJL.
(4) Supplement Explanation for Fair Value of Financial Instruments
Fair value of financial instruments includes market prices as well as reasonably calculated prices in cases where there are no market prices available. Since the calculations of such prices are implemented under certain conditions and assumptions, the result of calculations may vary if different assumptions are used.
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2����Fair Value of Financial Instruments
Fair value and balance sheet amount of financial instruments as of September 30, 2013 are shown below.
(Millions of Yen)
Balance sheet
amountFair value Difference
(1) Cash and due from banks 1,631,348 1,634,369 3,020
(2) Call loans 146,747 146,747 -
(3) Receivables under resale agreements 782,348 778,135 (4,212)
(4) Monetary claims bought�(*1) 3,140 3,140 -
(5) Trading assets
Trading securities 215,325 215,325 -
(6) Securities�(*1)
Other securities 946,528 946,528 -
(7) Loans and bills discounted 371,992
������������������� �(*1) (2,074)
369,918 375,279 5,361
(8) Foreign exchange�(*1) 116,727 116,727 -
Total Assets 4,212,086 4,216,255 4,169
(1) Deposits 3,906,941 3,906,100 (841)
(2) Negotiable certificates of deposits 6,230 6,230 -
(3) Foreign exchange 94,043 94,043 -
Total Liabilities 4,007,215 4,006,373 (841)
Derivative transactions�(*2)
Trading 751 751 -
Total derivative transactions 751 751 -
Others Contract amount Fair value
Overdraft facilities and commitment line (*3) 377,450 (2,513)
(*1) General allowance for loan losses and specific allowance for loan losses provided to “Loans and bills discounted”
are separately shown in the above table. Allowance for loan losses provided to “Monetary claims bought”, “Securities” and “Foreign exchange” are directly deducted from the book value due to immateriality.
(*2) Derivatives included in “Trading assets”, “Trading liabilities”, “Other assets” and “Other liabilities” are shown together. Negative amount indicates in case of liabilities exceeding the assets.
(*3) Contract amount of Overdraft facilities and commitment line are unused amount. (Notes) Valuation method of financial instruments
(Assets) (1) Cash and due from banks
For due from banks without maturity, the carrying amount is presented as the fair value, as the fair value approximates such carrying amount. For due from banks with maturity, fair value is determined as present value of total future cash flows, discounted by interest rate that would be applied to new acceptances. Total future cash flows are contractual payment of principal and interest. For due from banks with short remaining period (within 1 year), the carrying amount is presented as the fair value, as the fair value approximates such carrying amount.
(2) Call loans
For Call loans, the carrying amount is presented as the fair value, as the fair value approximates such carrying amount because they have short remaining period (within 1 year).
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(3) Receivables under resale agreements For Receivables under resale agreements with remaining period exceeding 1 year, fair value is determined as present future cash flows, discounted by interest rate that would be applied to new acceptance. Total future cash flows are contractual payment of principal and interest. For Receivables under resale agreements with short remaining period (within 1 year), the carrying amount is presented as the fair value, as the fair value approximates such carrying amount.
(4) Monetary claims bought
For monetary claims bought, the carrying amount is presented as the fair value, as the fair value approximates such carrying amount because they have short remaining period (within 1 year).
(5) Trading assets
For securities such as bonds that are held for trading, the fair value is calculated based on their market prices.
(6) Securities For securities such as bonds that are available for sale, the fair value is calculated based on their market prices.
(7) Loans and bills discounted
For loans without maturity, the carrying amount is presented as the fair value, as the fair value approximates such carrying amount because of their estimated maturity length and the interest rate conditions. For loans with short remaining period (within 1 year), the carrying amount is presented as the fair value, as the fair value approximates such carrying amount. For loan with remaining period exceeding 1 year, fair value is determined as present value of total future cash flows, discounted by interest rate that would be applied to newly accepted loans. Total future cash flows are contractual payment of principal and interest. As for the loans to bankrupt, de facto bankrupt, and potentially bankrupt borrowers, credit loss is estimated based on factors such as the present value of expected future cash flow or the expected amount to be collected from collaterals and guarantees. Since the fair value of these items approximates the carrying amount net of the currently expected credit loss amount, such carrying amount is presented as the fair value.
(8) Foreign exchange Foreign exchanges consist of foreign currency deposits with other banks (due from other foreign banks), short-term loans involving foreign currencies (due from other foreign banks), export bills etc. (purchased foreign bills), and loans on notes using import bills (foreign bills receivables). For these items, the carrying amount is presented as the fair value, as the fair value approximates such carrying amount because most of these items are deposits without maturity or have short contract term (within 1 year).
(Liabilities) (1) Deposits (2) Negotiable certificate of deposits
For demand deposits, the amount payable on demand as of balance sheet date is considered to be the fair value. Time deposits are grouped by certain maturity lengths. The fair value of such deposits is the present value discounted by expected future cash flow. The discount rate is the risk free rates adjusted with funding spread of CJL as of balance sheet date. For deposits with short remaining period (within 6 months), the carrying amount is presented as the fair value as the fair value approximates such carrying amount.
(3) Foreign exchange Among foreign exchange contracts, foreign currency deposits accepted from other banks and non-resident yen deposits are deposits without maturity. Furthermore, foreign currency short-term borrowing have no maturity. Thus, for the foreign exchanges, the carrying amount is presented as the fair value as the fair value approximates such carrying amount.
(Derivative transactions)
Derivatives include interest rate related instruments (interest rate futures, interest rate options, interest rate swaps, etc.), currency related instruments (forward foreign exchange, currency options, currency swaps, etc.) and bond related instruments (bond futures, bonds future options, etc.). Fair value of these derivatives are based on market prices at exchanges, discounted present values, or amount calculated under the option pricing model.
(Others)
For overdraft facilities and commitment line, fair value is the present value discounted by the difference between the expected future cash flow calculated by contractual rate and fee rate that would be applied to newly acceptance at the balance sheet date for the contract with remaining period exceeding 1 year.
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Notes related to Deferred tax accounting
The main causes for the deferred tax assets and deferred tax liabilities are as follows:
Deferred tax assets (Millions of Yen)
Allowance for loan losses 849
Fixed Assets 615
Provision for bonuses 531
Accrued expense 503
Provision for retirement benefits 415
Asset Retirement Obligations 211
Other 816
Deferred tax assets total� � 3,943
Deferred tax liabilities
Valuation difference on AFS securities 1,514
Prepaid pension cost 575
Other� � 200
Deferred tax liabilities total� � � � 2,291
Net deferred tax assets� � � � � � � 1,652
Indicators by Share 1. Net assets per share: 1.07 yen
2. Net income per share: 0.00 yen
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3. Market Value Information
<Securities> Matters concerning securities market value, valuation difference, etc. are as follows. As well as “Securities“ in balance sheet and “Securities related to trading transactions” under “Trading assets” are included.
(1) Securities classified as trading purpose
(Millions of Yen)
Balance sheet
amounts
Valuations gains (losses)
included in P/L during the
Previous Period
Balance sheet
amounts
Valuations gains (losses)
included in P/L during the
Current Period
Securities classified as
trading purposes243,251 15 215,325 109
As of Sep. 30, 2012 As of Sep. 30, 2013
(2) Other securities (Millions of Yen)
TypeBalance sheet
amounts
Acquisition
cost
Valuations
gains/(losses)
Balance sheet
amounts
Acquisition
cost
Valuations
gains/(losses)
Bonds 723,814 717,243 6,570 785,090 780,972 4,117
Japanese
Government Bonds707,392 701,677 5,714 769,647 766,370 3,277
Corporate Bonds 16,422 15,565 856 15,442 14,602 839
Others 5,952 5,500 452 5,848 5,500 348
Sub total 729,766 722,743 7,023 790,938 786,472 4,465
Bonds - - - 155,591 155,720 (129)
Japanese
Government Bonds- - - 155,591 155,720 (129)
Sub total - - - 155,591 155,720 (129)
729,766 722,743 7,023 946,529 942,193 4,335
As of Sep. 30, 2013
Total
As of Sep. 30, 2012
Balance sheet
amounts
exceeding
acquisition cost
Balance sheet
amounts
equal or
less than
acquisition cost
(Note) The figures are based on market value.
(3) Other securities sold during the fiscal year
(Millions of Yen)
Sold amount Gains on sales Losses on sales Sold amount Gains on sales Losses on sales
Bonds 40,723 827 - 29,006 264 254
��
Japanese
��
Government Bonds40,723 827 - 29,006 264 254
Total 40,723 827 - 29,006 264 254
Interim Fiscal Period ended Sep. 2012
(Apr 1, 2012 - Sep 30, 2012)
Interim Fiscal Period ended Sep. 2013
(Apr 1, 2013 - Sep 30, 2013)
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<Money Held in Trust> Money Held in Trust for Investment
(Millions of Yen)
Balance sheet amounts
Valuations gains (losses)
included in P/L during the
Previous Period
Balance sheet amounts
Valuations gains (losses)
included in P/L during the
Current Period
Money Held in trust for
Investment10 - 10 -
As of Sep. 30, 2012 As of Sep. 30, 2013
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<Derivatives Market Value Information> (1) Interest rate-related transactions
(Millions of Yen)
Category TypeContract
amount
Over 1
year in
contract
amount
Market
value
Revaluation
gains/losses
Contract
amount
Over 1
year in
contract
amount
Market
value
Revaluation
gains/losses
Exchange-
tradedFutures 81,109 - 0 0 - - - -
�Sell 81,109 - 0 0 - - - -
�Buy - - - - - - - -
Future Options - - - - - - - -
�Sell - - - - - - - -
�Buy - - - - - - - -
Over-the -
counterForward rate agreements - - - - - - - -
�Sell - - - - - - - -
�Buy - - - - - - - -
Interest rate swaps 763,213 685,621 (616) (616) 754,323 754,323 (384) (384)
�
Receive fixed
/ pay floating swaps347,396 347,396 13,052 13,052 278,305 278,305 10,537 10,537
�
Receive floating
/ pay fixed swaps415,459 337,868 (13,668) (13,668) 475,567 475,567 (10,922) (10,922)
�
Receive floating
/ pay floating swaps356 356 0 0 450 450 0 0
�
Receive fixed
/pay fixed swaps- - - - - - - -
Interest rate options - - - - - - - -
�Sell - - - - - - - -
�Buy - - - - - - - -
Total - - (616) (616) - - (384) (384)
As of Sep. 30, 2012 As of Sep. 30, 2013
(Notes) 1. These transactions were marked to market, and revaluation gains and losses are reported on the statement of income. In
accordance with “Treatment for Accounting and Auditing of Application of Accounting Standard for Financial Instruments in Banking Industry” (JICPA Industry Audit Committee Report No. 24), derivatives transactions to which the hedge accounting method is applied are excluded.
2. Calculation of market value Market value is calculated based on closing/final price of the Tokyo International Financial Futures Exchange (TIFFE) etc. for exchange-traded transactions, and on discounted cash flow method or option price calculation models for over-the-counter (OTC) transactions.
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(2) Currency-related transactions
(Millions of Yen)
CategoryContract
amount
Over 1 year
in contract
amount
Market
value
Revaluation
gains/losses
Contract
amount
Over 1 year
in contract
amount
Market
value
Revaluation
gains/losses
Futures - - - - - - - -
�
Sell - - - - - - - -
�
Buy - - - - - - - -
Currency Swaps 577,379 472,760 7,570 7,570 400,381 380,854 885 885
Forward contracts 11,718,096 661,909 10,616 10,616 12,617,735 352,057 250 250
�
Sell 7,006,426 424,735 26,045 26,045 7,316,616 203,077 (10,951) (10,951)
�
Buy 4,711,669 237,173 (15,429) (15,429) 5,301,118 148,979 11,201 11,201
Currency options 679,266 235,684 0 53 514,331 220,828 0 63
�
Sell 339,633 117,842 (4,643) 3,886 257,165 110,414 (6,533) 564
�
Buy 339,633 117,842 4,643 (3,833) 257,165 110,414 6,533 (501)
Total - - 18,186 18,239 - - 1,136 1,199
Over-the -
counter
As of Sep. 30, 2012 As of Sep. 30, 2013
Type
Exchange-
traded
(Notes) 1. These transactions were marked to market, and revaluation gains and losses are reported on the statement of income. In
accordance with “Treatment for Accounting and Auditing of Application of Accounting Standard for Financial Instruments in Banking Industry” (JICPA Industry Audit Committee Report No. 24), derivatives transactions to which the hedge accounting method is applied are excluded.
2. Calculation of market value Market value is calculated based on discounted cash flow method or option price calculation models for over-the-counter (OTC) transactions.
(3) Stock-related transactions
None
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(4) Bond-related transactions
(Millions of Yen)`
CategoryContract
amount
Over 1
year
in contract
amount
Market
value
Revaluation
gains/losses
Contract
amount
Over 1
year
in contract
amount
Market
value
Revaluation
gains/losses
Exchange-
tradedBond futures 2,023 - 2 2 12,829 - (29) (29)
�
Sell 1,011 - 0 0 12,829 - (29) (29)
�
Buy 1,011 - 1 1 - - - -
Bond future options - - - - - - - -
�
Sell - - - - - - - -
�
Buy - - - - - - - -
Over-the -
counterBond OTC options - - - - - - - -
�
Sell - - - - - - - -
�
Buy - - - - - - - -
Total - - 2 2 - - (29) (29)
As of Sep. 30, 2012 As of Sep. 30, 2013
Type
(Notes) 1. These transactions were marked to market, and revaluation gains and losses are reported on the statement of income. In
accordance with “Treatment for Accounting and Auditing of Application of Accounting Standard for Financial Instruments in Banking Industry” (JICPA Industry Audit Committee Report No. 24), derivatives transactions to which the hedge accounting method is applied are excluded.
2. Calculation of market value Market value is calculated based on closing/final price of the Tokyo Stock Exchange (TSE) etc. for exchange-traded transactions.
(5) Commodity-related transactions None
(6) Credit derivatives transactions
None
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4. Major Shareholders
<Major Shareholders>
(As of September 30, 2013)
Name of shareholder Numbers of shares Shareholding ratio
Citibank Overseas Investment Corporation 244,200,000 thousand shares 100%
Total 244,200,000 thousand shares 100%
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5. Disclosure Items Based on Pillar III of Basel II
This section describes the information consistent with FSA Notification Number 15 based on Article 19.2.1.5d of the Bank Law Enforcement Rule (Refer to Ministry of Finance Ordinance Number 10). With regard to the internal controls structures governing calculation of the capital adequacy ratio, KPMG AZSA LLC conducted certain procedures as an independent audit firm. The certain procedures performed on our internal control framework for calculating the capital ratio are based on procedures agreed upon by CJL and the external auditor and are not a validation of appropriateness of the capital ratio itself or opinion on the internal controls related to the capital ratio calculation.
QUANTITATIVE DISCLOSURE (1) Outline of means of Raising Equity Capital
Tier 1
Capital 123,100 123,100
Surplus capital 121,100 121,100
Retained earnings 15,010 15,134
(Estimated distributed income) - 6,400
(Valuation loss of other securit ies) 0 0
New share reservation rights - -
(Trade rights equivalent) - -
(Goodwill equivalent) - -
(Intangible fixed asset equivalent reported by business combination) - -
(Equity capital equivalents increased due to securitization transaction) - -
Subtotal ��� 259,210 252,934
Preferred securities with step-up interest rate clauses - -
Tier 2
Amount equivalent to 45% of the land revaluation excess - -
General allowance for loan losses 1,405 1,059
Eligible provision in excess of expected loss - -
Debt capital instruments etc. - -
Perpetual subordinated debt - -
Fixed-term perpetual subordinated debt and fixed-term preferred stocks - -
(Exclusion from Tier 2 capital) - -
Total 1,405 1,059
of which included in Capital ��� 1,405 1,059
Deductible item ��� 10 10
Capital �A�+�B�-�C� ��� 260,605 253,984
(Millions of Yen)
as of Sep. 30, 2012 as of Sep. 30, 2013
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(2) Capital adequacy Amount of Required Capital for Credit Risk
On balance sheet asset items
Cash 0 0 0 0
Exposures to Japanese government and central bank 0 0 0 0
Exposures to foreign government and central bank 660 26 636 25
Exposures to the Bank for International Settlements - - - -
Exposures to local authorities - - - -
Exposures to overseas public sectors other than central
government3,898 155 2,648 105
Exposures to the International Bank for Reconstruction and
Development0 0 - -
Exposures to Japan finance organization for municipal
enterprises- - - -
Exposures to Japan government-affiliated organization 3,116 124 2,923 116
Exposures to land development corporation, local housing
corporations, local public road corporations- - - -
Exposures to financial institutions and regulated securities
companies280,665 11,226 221,408 8,856
Corporate exposures 212,558 8,502 251,438 10,057
Exposures to small and medium size enterprises and
individuals- - - -
Residential mortgage exposures 12,160 486 13,903 556
Retail exposures related to real-estate acquisition 4,603 184 11,245 449
Exposures three months or more in arrears 5,345 213 3,643 145
Bills before collection 283 11 39 1
Exposures to the Credit Guarantee Association etc. - - - -
Exposures guaranteed by Industrial Revitalization Corporation
of Japan- - - -
Exposures to investment - - - -
Securitization exposures (originator) - - - -
Securitization exposures (other than the originator) - - - -
Assets backed up with several assets (so-called funds) which
individual asset is ungraspable- - - -
Others 36,808 1,472 32,436 1,297
On-balance sheet asset items total 560,100 22,404 540,323 21,612
Off-balance sheet asset items
Derivative transactions 66,480 2,659 75,853 3,034
Others 81,236 3,249 105,145 4,205
Off-balance sheet asset items total 147,717 5,908 180,999 7,239
Total 707,817 28,312 721,322 28,852
(Millions of Yen)
as of Sep. 30, 2012 as of Sep. 30, 2013
Risk weighted
exposureRequired capital
Risk weighted
exposureRequired capital
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Amount of Required Capital for Market Risk
Standardized method of which
Interest Rate Risk - 34,778 1,391 - 41,559 1,662
Equity Risk - - - - - -
Foreign Exchange Risk - 2,528 101 - 2,846 113
Commodity Risk - - - - - -
Total - 37,307 1,492 - 44,405 1,776
(Millions of Yen)
as of Sep. 30, 2012 as of Sep. 30, 2013
Specific
Risk
General
Market Risk
Required
Capital
Specific
Risk
General
Market Risk
Required
Capital
Amount of Required Capital for Operational Risk
137,790 5,511 121,554 4,862Basic Indicator Approach
(Millions of Yen)
as of Sep. 30, 2012 as of Sep. 30, 2013
Operational Risk Required Capital Operational Risk Required Capital
Total Capital Adequacy Ratio and Tier I Capital Ratio
Tier 1 ��� 259,210 252,934
Tier 2 ��� 1,405 1,059
Deductible item ��� 10 10
Total Capital �A)��B���C� ��� 260,605 253,984
Risk assets
���On balance sheet transaction 560,100 540,323
���Off-balance sheet transaction 147,717 180,999
Credit Risk exposure 707,817 721,322
Operational Risk exposure divided by 8% 137,790 121,554
Market Risk exposure divided by 8% 37,307 44,405
Total ��� 882,914 887,282
Tier 1 Capital Ratio �A���E�×100 29.35 28.50
Total Capital Adequacy Ratio�D���E�×100 29.51 28.62
Total required Capital (Domestic Criteria) �E�×4� 35,316 35,491
(Millions of Yen, %)
as of Sep. 30, 2012 as of Sep. 30, 2013
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(3) Credit Exposure (Millions of Yen)
Loans etc. Derivatives Loans etc. Derivatives
Domestic
Manufacturing 69,867 - 6,523 76,391 85,304 - 7,942 93,247
Agriculture and
Forestry- - - - - - - -
Fishery - - - - - - - -
Mining - - - - - - - -
Construction 39 - 355 394 36 - 394 431
Electric power, gas,
water supply0 - 136 136 - - 3 3
Information and
communication33,102 - 54 33,157 17,903 - 89 17,993
Transportation 10,760 - 780 11,540 11,082 - 235 11,317
Wholesale and retail 149,416 - 1,600 151,017 154,416 - 2,888 157,305
Financial Institutions
and Insurance756,020 15,870 44,276 816,167 1,062,796 14,618 63,103 1,140,519
Real estate 2,950 - - 2,950 14,511 - - 14,511
Other Services 8,474 - 614 9,089 4,038 - 716 4,755
Central, Local
government434,806 714,891 - 1,149,697 779,449 922,403 - 1,701,852
Individuals 60,932 - 1,618 62,550 61,130 - 506 61,636
Others 29,679 - - 29,679 26,821 - - 26,821
Overseas
Sovereign 36,203 3,003 1,011 40,218 43,664 3,003 - 46,667
Financial Institutions 1,278,147 - 69,325 1,347,472 939,205 - 38,591 977,796
Others 39,110 2,500 345 41,955 82,542 2,500 269 85,312
Total 2,909,512 736,266 126,642 3,772,421 3,282,902 942,525 114,742 4,340,171
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Loans etc. Securities Derivatives Total Loans etc. Securities Derivatives Total
To 1 year 2,169,875 305,904 61,829 2,537,608 2,190,071 150,680 96,510 2,437,262
1 to 3 years 423,432 188,211 61,140 672,784 288,620 553,009 13,078 854,709
3 to 5 years 149,804 200,929 - 350,733 532,236 220,107 3,559 755,903
Over 5 years 98,697 41,221 3,671 143,591 173,075 18,728 1,593 193,397
Undefined 67,702 - - 67,702 98,898 - - 98,898
Total 2,909,512 736,266 126,642 3,772,421 3,282,902 942,525 114,742 4,340,171
as of Sep. 30, 2012 as of Sep. 30, 2013
Securities Total Securities Total
(by Remaining Tenor)
as of Sep. 30, 2012 as of Sep. 30, 2013
(Millions of Yen)
Past-due over 3 months or Default Exposure
Domestic
Corporate 1,897 144
Individuals 826 659
Overseas 6,822 6,090
Total 9,545 6,894
(Millions of Yen)
as of Sep. 30, 2012 as of Sep. 30, 2013
(Note) "Past-due over 3 months or default exposure" is the exposure either in principal or interest payment is delayed more than 3�months or risk weight is 150% before the consideration of loan loss reserve.
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Allowance for Loan Losses
Specific Reserve
Corporate 726 453 1,179 726 420 1,147 1,147 (824) 323
Individuals 2,253 (498) 1,754 2,253 (1,175) 1,078 1,078 (86) 991
Others 73 (32) 41 73 (32) 41 41 (32) 9
General Reserve 1,335 70 1,405 1,335 (175) 1,159 1,159 (100) 1,059
Loan loss reserve for restructuring country Not applicable.
(Millions of Yen)
as of Sep. 30, 2012 as of Mar. 31, 2013 as of Sep. 30, 2013
EndingChange Ending Beginning ChangeBeginning Change Ending Beginning
Credit Risk Exposure after Credit Risk Mitigation by Risk weight under Standardized Approach
(Millions of Yen)
Rated Unrated Rated Unrated
0% - 1,148,320 29 1,707,725
20% 1,386,948 72,561 933,363 149,704
35% - 34,744 - 39,723
50% 92,845 9,651 94,220 9,664
75% - - - -
100% 85,423 261,468 89,545 330,458
150% 9 921 - 909
Deduction from Capital - - - -
Total 1,565,227 1,527,667 1,117,159 2,238,185
as of Sep. 30, 2012 as of Sep. 30, 2013
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(4) Credit Risk Mitigation
Eligible Financial Collateral
Cash 73,496 90,172
Bonds 535,297 800,917
Stocks 511 241
Others - -
Guarantee and Credit Derivatives
Guarantee 70,221 93,495
Credit Derivatives - -
Total 679,526 984,826
as of Sep. 30, 2012 as of Sep. 30, 2013
(Millions of Yen)
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(Note) On-balance netting was adopted for the interbank Money Market transaction with Citibank, N.A. overseas main branches.
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(5) Counterparty Credit Risk of OTC Derivatives �
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i�Measurement of Credit exposure Current Exposure Method
ii�Total amount of gross positive fair value 126,622 150,734
iii�Credit exposure before Credit Risk Mitigation
FX related 123,560 112,984
Interest rate related 2,069 1,758
Total 125,630 114,742
iv�The amount deducting iii from sum of ii and gross add-on
(Reduction by Netting agreements)
122,436 166,497
(Millions of Yen)
as of Sep. 30, 2012 as of Sep. 30, 2013
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v. Collateral type None vi. Credit exposure after Credit Risk Mitigation Same as iii vii. Notional amount of credit derivatives which have counterparty risk None viii. Notional amount of credit derivatives which cover exposures by Credit Risk Mitigation None�
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(6) Securitization
i�Securitization exposure as Originator
None���
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�. Securitization exposure as Investor
a. Information by Type of Underlying Assets
as of Sep. 30, 2012 as of Sep. 30, 2013
Claims on corporate customers - -
Residential Mortgage Loan - -
Claims on individual customers
(ex. Residential Mortgage Loan)- -
Others 10 10
Total 10 10
(Millions of Yen)
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b. Exposure by Risk Weight Category and Amount of Required Capital
c. Deduction Amount from Capital Pursuant to Article 247 of the FSA Capital Adequacy Ratio Notification by Type of Underlying Assets
d. Credit Risk-Weighted Assets Calculated Pursuant to Article 15 of Supplementary Provisions of the FSA Capital Adequacy Ratio
Notification None�
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(7) Market Risk (under Internal Model Approach)
None
(8) Equity Exposure in Banking Book
None
(9) Amount in regarded exposure under the Accord article 167
None���
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(10) Interest Rate Risk in the Banking Book - the increase/(decrease) in economic value for 1% upward rate shocks according to internal management's method.
Exposure Required Capital Exposure Required Capital
20% - - - -
50% - - - -
100% - - - -
350% - - - -
Deduction from Capital 10 10 10 10
Total 10 10 10 10
as of Sep. 30, 2012 as of Sep. 30, 2013
(Millions of Yen)
as of Sep. 30, 2012 as of Sep. 30, 2013
Claims on corporate customers - -
Residential Mortgage Loan - -
Claims on individual customers
(ex. Residential Mortgage Loan)- -
Others 10 10
Total 10 10
(Millions of Yen)
as of Sep. 30, 2012 as of Sep. 30, 2013
Japanese Yen 14,949 11,702
US Dollar 2,025 (1,558)
Euro 1,253 468
Others (177) (265)
Total 18,050 10,347
(Millions of Yen)
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Confirmation
January 31, 2014
Representative Director, President & CEO Kazuya Jono I confirm, to the best of my knowledge, the following matters concerning the Citibank Japan Ltd. financial statements for the Period from April 1, 2013 to September 30, 2013:
1. Matters concerning the financial statements are in conformity with “The Regulations regarding Terminology, Format and Method of Preparation of Financial Statements, etc” and “Enforcement Regulation of the Banking Law” and others, and the financials present fairly in all material respects.
2. Citibank Japan Ltd. establishes and maintains the appropriate internal control systems as below,
and fairly presents financial statements based on it.
(1) Assignment of duties and the corresponding units in charge are clearly defined, and the system for accomplishment of operation is appropriately established.
(2) Internal Audit Division assesses the appropriateness and effectiveness of internal control systems for each responsible unit, and reports the material matters to the Management and Board of Statutory Auditors.
(3) All material information concerning Citibank Japan Ltd. is adequately reported to the Management and Board of Directors as necessary.
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www.citibank.co.jp
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