Kyoto Financial Group,inc. TSE:5844

Kyoto Financial : Annual Report 2025 (Financial Date)

Published September 22, 2025 at 7:52 a.m. UTC

Source: MarketScreener

Annual Report

2025

Financial Data

(For the year ended March 31,2025)

Financial Section

Consolidated Balance Sheet Consolidated Statement of Income

Consolidated Statement of Comprehensive Income Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows

Notes to Consolidated Financial Statements

Corporate Profile

Kyoto Financial Group's Organization Group Companies

Board of Directors and Audit & Supervisory Board Members International Service Network (The Bank of Kyoto, Ltd.)

Published September 2025

Publisher: Corporate Planning Division, Kyoto Financial Group, Inc.

700, Yakushimae-cho, Karasuma-dori, Matsubara-Agaru, Shimogyo-ku, Kyoto, 600-8416 Japan Phone: +81-75-361-2292

https://www.kyoto-fg.co.jp/

Financial Section Consolidated Balance Sheet

Kyoto Financial Group, Inc. and Consolidated Subsidiaries As of March 31, 2025

Consolidated Statement of Income

Kyoto Financial Group, Inc. and Consolidated Subsidiaries Year Ended March 31, 2025

Millions of Yen

Thousands of

U.S. Dollars (Note 1)

Millions of Yen

Thousands of

U.S. Dollars (Note 1)

	2025	2024	2025
INCOME:
Interest income:
Interest on loans and discounts	¥ 63,992	¥ 53,034	$ 427,989
Interest and dividends on securities	41,460	37,176	277,293
Interest on call loans and bills bought	4,253	5,539	28,448
Other interest income	2,509	1,290	16,783
Trust fees	6	7	46
Fees and commissions	26,067	24,121	174,343
Other operating income (Note 22)	21,254	9,385	142,151
Other income:
Gains on sales of stocks and other securities	6,127	5,392	40,983
Other income (Note 23)	1,652	2,851	11,054
Total income	167,326	138,799	1,119,094
EXPENSES: Interest expenses: Interest on deposits Interest on borrowed money Other interest expenses Fees and commissions Other operating expenses (Note 24) General and administrative expenses Other expenses (Note 25)	17,395 451 10,035 7,642 17,724 61,284 2,304	12,681 7 4,418 6,777 9,419 58,064 3,456	116,343 3,017 67,115 51,116 118,543 409,875 15,410
Total expenses	116,838	94,823	781,423
INCOME BEFORE INCOME TAXES	50,488	43,976	337,670
INCOME TAXES (Note 28):
Current	13,445	11,657	89,921
Deferred	488	679	3,267
NET INCOME	36,554	31,638	244,480
NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS	2	66	15
NET INCOME ATTRIBUTABLE TO OWNERS OF THE PARENT	¥ 36,552	¥ 31,572	$ 244,465

	2025	2024	2025
ASSETS:
Cash and due from banks (Notes 6 and 29)	¥ 1,341,005	¥ 962,778	$ 8,968,734
Call loans and bills bought (Note 29)	58,666	368,746	392,366
Monetary claims bought	15,007	15,786	100,373
Trading securities	277	221	1,858
Money held in trust (Note 8)	6,306	6,226	42,175
Securities (Notes 7, 13, 18 and 29)	3,304,862	3,336,568	22,103,143
Loans and bills discounted (Notes 10, 13, 14 and 29)	7,268,234	6,717,532	48,610,447
Foreign exchanges (Note 11)	8,725	9,013	58,358
Lease receivables and investment assets (Note 26)	38,137	13,717	255,066
Other assets (Notes 13 and 29)	52,503	79,048	351,144
Tangible fixed assets (Note 12)	78,421	76,590	524,486
Buildings	27,610	28,157	184,657
Land (Note 15)	43,794	43,160	292,899
Construction in progress	2,488	555	16,646
Other tangible fixed assets	4,527	4,716	30,283
Intangible fixed assets	6,022	3,416	40,279
Software	4,007	2,291	26,800
Other intangible fixed assets	2,015	1,124	13,478
Goodwill	1,426		9,543
Asset for employees' retirement benefits (Note 27)	127		853
Deferred tax assets (Note 28)	1,064	1,046	7,120
Customers' liabilities for acceptances and guarantees (Note 18)	13,504	20,519	90,317
Allowance for loan losses (Note 3)	(33,153)	(34,660)	(221,730)
TOTAL ASSETS	¥12,161,140	¥11,576,552	$81,334,539
LIABILITIES AND EQUITY LIABILITIES: Deposits (Notes 13, 16 and 29) Call money and bills sold Payables under securities lending transactions (Notes 13 and 29) Borrowed money (Notes 13 and 17) Foreign exchanges (Note 11) Borrowed money from trust account Other liabilities (Note 29) Liability for employees' retirement benefits (Note 27) Liability for reimbursement of deposit losses Liability for contingent losses Reserves under special laws Deferred tax liabilities (Note 28) Deferred tax liabilities for land revaluation (Note 15) Acceptances and guarantees (Note 18)	¥ 9,572,031 64,293 634,502 437,330 225 3,727 92,530 12,092 97 956 0 243,209 3,445 13,504	¥ 9,365,326 1,714 500,070 193,750 743 3,990 59,382 23,592 157 761 0 262,112 3,349 20,519	$64,018,400 430,000 4,243,595 2,924,892 1,511 24,931 618,848 80,872 648 6,393 6 1,626,602 23,042 90,317
Total liabilities	11,077,946	10,435,470	74,090,065
EQUITY (Notes 19, 21 and 33):
Common stock-authorized, 800,000 thousand shares; issued, 301,362 thousand shares in 2025 and 303,362 thousand shares in 2024	40,000	40,000	267,522
Capital surplus	37,473	41,875	250,628
Stock acquisition rights	193	208	1,296
Retained earnings	458,718	441,188	3,067,942
Treasury stock-at cost, 11,388 thousand shares in 2025 and 11,199 thousand shares in 2024	(25,195)	(24,654)	(168,508)
Accumulated other comprehensive income:
Unrealized gain on available-for-sale securities (Note 9)	566,698	645,029	3,790,120
Deferred gain on derivatives under hedge accounting	430	28	2,879
Land revaluation surplus (Note 15)	(2,766)	(2,699)	(18,505)
Defined retirement benefit plans	7,434	105	49,722
Noncontrolling interests	205		1,374
Total equity	1,083,193	1,141,082	7,244,473
TOTAL LIABILITIES AND EQUITY	¥12,161,140	¥11,576,552	$81,334,539

Yen U.S. Dollars

2025

2024

2025

PER SHARE INFORMATION (Notes 2.s, 20 and 33):

Basic net income Diluted net income

Cash dividends applicable to the year

¥125.11 125.03

60.00

¥106.55 106.47

115.00

$0.83 0.83

0.40

See notes to consolidated financial statements.

Consolidated Statement of Comprehensive Income

Kyoto Financial Group, Inc. and Consolidated Subsidiaries Year Ended March 31, 2025

Millions of Yen

Thousands of

U.S. Dollars (Note 1)

	2025	2024	2025
NET INCOME	¥ 36,554	¥ 31,638	$ 244,480
OTHER COMPREHENSIVE (LOSS) INCOME (Note 31)	(70,694)	145,598	(472,808)
Unrealized (loss) gain on available-for-sale securities	(78,330)	143,158	(523,880)
Deferred gain (loss) on derivatives under hedge accounting	402	(198)	2,689
Land revaluation surplus	(98)		(657)
Defined retirement benefit plans	7,332	2,638	49,040
COMPREHENSIVE (LOSS) INCOME	¥ (34,139)	¥177,237	$ (228,328)
TOTAL COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO: Owners of the parent Noncontrolling interests	¥ (34,145) 6	¥177,075 161	$ (228,368) 40

See notes to consolidated financial statements.

Consolidated Statement of Changes in Equity

Kyoto Financial Group, Inc. and Consolidated Subsidiaries Year Ended March 31, 2025

Consolidated Statement of Cash Flows

Kyoto Financial Group, Inc. and Consolidated Subsidiaries Year Ended March 31, 2025

Thousands Millions of Yen

Accumulated Other Comprehensive Income

	2025	2024	2025
OPERATING ACTIVITIES:
Income before income taxes	¥ 50,488	¥ 43,976	$ 337,670
Depreciation	4,585	3,354	30,670
Losses on impairment of long-lived assets	24	73	161
Amortization of goodwill	70		469
Equity in earnings of an affiliated company	(6)	(3)	(42)
Increase in allowance for loan losses	(1,509)	(2,708)	(10,095)
Increase in asset for employees' retirement benefits	(2)		(17)
Decrease in liability for employees' retirement benefits	(894)	(287)	(5,984)
Decrease in liability for reimbursement of deposit losses	(60)	(62)	(401)
Increase in liability for contingent losses	195	182	1,304
Interest income	(112,216)	(97,040)	(750,514)
Interest expense	27,882	17,106	186,477
Gains on securities	(2,843)	(2,213)	(19,016)
Gains on money held in trust	(80)	(226)	(538)
Foreign exchange losses (gains)	1,687	(11,885)	11,284
Losses (gains) on sales of fixed assets	402	(476)	2,694
Net (increase) decrease in trading securities	(56)	0	(379)
Net increase in loans	(550,701)	(419,451)	(3,683,127)
Net increase in deposits	439,153	454,034	2,937,090
Net decrease in negotiable certificates of deposit	(232,448)	(162,879)	(1,554,631)
Net increase (decrease) in borrowed money (excluding subordinated loans)	195,320	(60,340)	1,306,313
Net decrease in due from banks (excluding due from Bank of Japan)	14,925	568	99,824
Net decrease in call loans and bills bought	310,858	46,843	2,079,043
Net increase in call money	62,579	1,714	418,536
Net increase in payables under securities lending transactions	134,432	107,569	899,090
Net decrease (increase) in foreign exchanges (assets)	287	(1,254)	1,923
Net (decrease) increase in foreign exchanges (liabilities)	(517)	510	(3,462)
Net increase in lease receivables and investment assets	(2,921)	(1,075)	(19,542)
Net decrease in borrowed money from trust account	(263)	(183)	(1,759)
Interest and dividends received (cash basis)	113,344	95,877	758,056
Interest paid (cash basis)	(25,528)	(16,654)	(170,739)
Other-net	88,240	(21,707)	590,158
Subtotal	514,426	(26,638)	3,440,516
Income taxes - paid	(12,810)	(10,121)	(85,678)
Net cash provided by (used in) operating activities-(Forward)	¥ 501,615	¥ (36,759)	$ 3,354,838
INVESTING ACTIVITIES:
Purchases of securities	¥(1,327,383)	¥ (960,078)	$ (8,877,631)
Proceeds from sales of securities	1,010,940	501,641	6,761,241
Proceeds from redemption of securities	241,298	280,063	1,613,817
Proceeds from withdraw money held in trust		7,305
Purchases of tangible fixed assets	(4,377)	(3,811)	(29,279)
Proceeds from sales of tangible fixed assets	133	1,234	893
Purchases of intangible fixed assets	(1,901)	(1,699)	(12,716)
Payments for asset retirement obligations		(27)
Purchase of shares of subsidiaries resulting in change in scope of consolidation	(3,292)		(22,023)
Other-net	(294)	(189)	(1,969)
Net cash used in investing activities	(84,877)	(175,561)	(567,666)
FINANCING ACTIVITIES:
Purchases of treasury stock	(5,028)	(13,011)	(33,633)
Dividends paid by the Company	(18,991)	(11,896)	(127,018)
Dividends paid by subsidiaries to noncontrolling shareholders		(3)
Purchase of shares of subsidiaries not resulting in change in scope of consolidation		(535)
Net cash used in financing activities	(24,020)	(25,446)	(160,651)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	392,717	(237,767)	2,626,520
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR	929,545	1,167,312	6,216,862
CASH AND CASH EQUIVALENTS AT END OF YEAR (Note 6)	¥ 1,322,262	¥ 929,545	$ 8,843,382

Millions of Yen

Thousands of

U.S. Dollars (Note 1)

Outstanding of Shares of

Unrealized Gain on

Deferred Gain on

Common Stock

Common

Capital

Stock

Acquisition Retained

Treasury

Available-for- Derivatives Land Sale under Hedge Revaluation

Defined Retirement

Noncontrolling

Total

(Note 20)

Stock

Surplus

Rights

Earnings

Stock

Securities

Accounting

Surplus

Benefit Plans Total

Interests

Equity

BALANCE AT APRIL 1, 2023	74,345	¥42,103	¥34,158	¥264	¥421,490	¥ (8,521)	¥501,966	¥ 227	¥(2,677)	¥(2,533) ¥	986,479	¥ 2,747 ¥	989,226
Changes by stock split	227,522
Changes by share transfer		(2,103)	6,261			(4,157)
Purchase of shares of consolidated subsidiaries			1,475			895					2,370		2,370
Net income attributable to owners of the parent					31,572						31,572		31,572
Cash dividends, ¥160.00 per share*					(11,896)						(11,896)		(11,896)
Purchases of treasury stock	(9,829)					(13,011)					(13,011)		(13,011)
Disposals of treasury stock	126		(19)			139					119		119
Reversal of land revaluation surplus					21						21		21
Net change in the year				(55)			143,062	(198)	(21)	2,638	145,425	(2,747)	142,677
BALANCE AT MARCH 31, 2024	292,163	40,000	41,875	208	441,188	(24,654)	645,029	28	(2,699)	105	1,141,082		1,141,082

Net income attributable to owners of the parent					36,552				36,552		36,552
Purchase of shares of consolidated subsidiaries
Cash dividends, ¥65.00 per share					(18,991)				(18,991)		(18,991)
Purchases of treasury stock	(2,227)					(5,028)			(5,028)		(5,028)
Disposals of treasury stock	38		1			84			86		86
Cancellation of treasury stock			(4,402)			4,402
Reversal of land revaluation surplus					(30)				(30)		(30)
Net change in the year				(14)		(78,330)	402	(67)	7,328 (70,682)		205 (70,476)
BALANCE AT MARCH 31, 2025	289,974	¥40,000	¥37,473	¥193	¥458,718	¥(25,195) ¥566,698	¥ 430	¥(2,766)	¥ 7,434 ¥1,082,988	¥	205 ¥1,083,193

Thousands of U.S. Dollars (Note 1)

Accumulated Other Comprehensive Income

Unrealized Gain on

Deferred Gain on

Stock

Available-for- Derivatives

Land

Defined

Common

Capital

Acquisition Retained

Treasury

Sale

under Hedge Revaluation Retirement

Noncontrolling

Total

Stock

Surplus

Rights

Earnings

Stock

Securities

Accounting

Surplus

Benefit Plans Total

Interests

Equity

BALANCE AT APRIL 1, 2024 $267,522 $280,064 $1,393 $2,950,700 $(164,890) $4,314,001 $ 189 $(18,052) $ 707 $7,631,637 $7,631,637

Net income attributable to owners of the parent			244,465			244,465	244,465
Purchase of shares of consolidated subsidiaries
Cash dividends, $0.43 per share			(127,018)			(127,018)	(127,018)
Purchases of treasury stock			(33,633)			(33,633)	(33,633)
Disposals of treasury stock		10	568			578	578
Cancellation of treasury stock		(29,446)	29,446
Reversal of land revaluation surplus			(204)			(204)	(204)
Net change in the year			(97) (523,880)	2,689	(453)	49,014 (472,726)	$1,374 (471,351)
BALANCE AT MARCH 31, 2025	$267,522	$250,628	$1,296 $3,067,942 $(168,508) $3,790,120	$2,879	$(18,505)	$49,722 $7,243,098	$1,374 $7,244,473

See notes to consolidated financial statements.

Notes to Consolidated Financial Statements

Kyoto Financial Group, Inc. and Consolidated Subsidiaries Year Ended March 31, 2025

BASIS OF PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements of Kyoto Financial Group, Inc. (the "Company") and consolidated subsidiaries have been prepared in accordance with the provisions set forth in the Japanese Financial Instruments and Exchange Act and its related accounting regulation and the Enforcement Regulation for the Banking Law and in accordance with accounting principles generally accepted in Japan (Japanese GAAP), which are different in certain respects as to the application and disclosure requirements of IFRS Accounting Standards.
In preparing these consolidated financial statements, certain reclassifications and rearrangements have been made to the consolidated financial statements issued domestically in order to present them in a form which is more familiar to readers outside Japan.
The consolidated financial statements for the fiscal year ended March 31, 2024, were prepared by taking over the consolidated financial statements of The Bank of Kyoto, Ltd. (the "Bank"), which became a wholly owned subsidiary through a sole-share transfer. Therefore, the consolidated financial statements for the fiscal year ended March 31, 2024, include the consolidated financial statements for the six months ended September 30, 2023, of the Bank.
The consolidated financial statements are stated in Japanese yen, the currency of the country in which the Company is incorporated and operates. All yen figures for 2025 have been rounded down to millions of yen. Also, U.S. dollar amounts have been rounded down to thousands of dollars.
The translation of Japanese yen amounts into U.S. dollar amounts is included solely for the convenience of readers outside Japan and has been made at the rate of ¥149.52 to $1, the approximate rate of exchange at March 31, 2025. Such translation should not be construed as a representation that the Japanese yen amounts could be converted into U.S. dollars at that or any other rate.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1. Consolidation - The consolidated financial statements as of March 31, 2025, include the accounts of the Company and its eleven significant subsidiaries (together, the "Group").
  Under the control and influence concepts, those companies in which the Company, directly or indirectly, is able to exercise control over operations are fully consolidated, and those companies over which the Group has the ability to exercise significant influence are accounted for by the equity method.
  Kyoto Turnaround Servicer Co., Ltd. is included in the scope of consolidation from the current fiscal year due to the new establishment, and Sekisui Lease Co., Ltd. is included in the scope of consolidation from the current fiscal year through the acquisition of shares.
  Investments in one affiliated company is accounted for by the equity method.
  Investments in the remaining unconsolidated subsidiaries and an affiliated company are stated at cost. The effect on the consolidated financial statements of not applying the equity method is immaterial.
  All significant intercompany balances and transactions have been eliminated in consolidation. All material unrealized gains included in assets resulting from transactions within the Group is also eliminated.
2. Cash Equivalents - For purposes of the consolidated statement of cash flows, the Group considers deposits with the Bank of Japan which are included in "Cash and due from banks" in the consolidated balance sheet, to be cash equivalents.
3. Trading Securities - Trading securities, which are held for the purpose of primarily earning capital gains in the short term, are reported at fair value and the related unrealized gains and losses are included in the consolidated statement of income.
4. Securities - Securities are classified and accounted for, depending on management's intent, as follows: (1) held-to-maturity debt securities, which are expected to be held to maturity with the positive intent and ability to hold to maturity, are reported at amortized cost and (2) available-for-sale securities, which are not classified as held-to-maturity debt securities, are reported at fair value, with unrealized gains and losses, net of applicable taxes, reported in a separate component of equity. Nonmarketable available-for-sale equity securities are stated at cost determined by the moving-average method. For other-than-temporary declines in fair value, securities are reduced to net realizable value by a charge to income. Money held in trust classified as trading is reported at fair value and the related unrealized gains and losses are included in the consolidated statement of income.
5. Derivatives and Hedging Activities - Derivatives are classified and accounted for as follows: (a) all derivatives (other than those used for hedging purposes) are recognized as either assets or liabilities and measured at fair value at the end of the fiscal year and the related gains or losses are recognized in the accompanying consolidated statement of income and (b) for derivatives used for hedging purposes, if such derivatives qualify for hedge accounting because of high correlation and effectiveness between the hedging instruments and the hedged items, the gains or losses on the derivatives are deferred until maturity of the hedged transactions.
  To manage interest rate risk associated with financial assets and liabilities, the Bank applies hedge accounting by matching specific items to be hedged with specific hedging instruments or applying deferral hedge accounting (cash flow hedge) based on the "Treatment of Accounting and Auditing of Application of Accounting Standard for Financial Instruments in the Banking Industry" (Japanese Institute of Certified Public Accountants (the "JICPA") Industry Committee Practical Guidelines No. 24, March 17, 2022).
  The Bank applies deferral hedge accounting based on the "Treatment of Accounting and Auditing Concerning Accounting for Foreign Currency Transactions in the Banking Industry" (JICPA Industry Committee Practical Guidelines No. 25, October 8, 2020) to manage its exposures to fluctuations in foreign exchange rates associated with assets and liabilities denominated in foreign currencies.
6. Tangible Fixed Assets - Tangible fixed assets are stated at cost less accumulated depreciation. Depreciation of tangible fixed assets of the Bank is computed using the declining-balance method while the straight-line method is applied to buildings acquired on or after
  April 1, 1998, and building improvements and structures acquired on or after April 1, 2016, at rates based on the estimated useful lives of the assets. The range of useful lives is principally from 8 to 50 years for buildings and from 3 to 20 years for other tangible fixed assets. Depreciation of tangible fixed assets of the Company and other consolidated subsidiaries is computed substantially by the declining-balance method at rates based on the estimated useful lives of the assets.
7. Intangible Fixed Assets - Depreciation of intangible fixed assets is computed using the straight-line method. Software costs for the Group's internal use are capitalized and amortized by the straight-line method over the estimated useful life of 5 years.
8. Long-Lived Assets - The Group reviews its long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset or asset group may not be recoverable. An impairment loss is recognized if the carrying amount of an asset or asset group exceeds the sum of the undiscounted future cash flows expected to result from the continued use and eventual disposition of the asset or asset group. The impairment loss would be measured as the amount by which the carrying amount of the asset exceeds its recoverable amount, which is the higher of the discounted cash flows from the continued use and eventual disposition of the asset or the net selling price at disposition.
  Accumulated impairment losses are directly deducted from the respective fixed assets.
9. Allowance for Loan Losses - The amount of the allowance for loan losses is determined based on management's judgment and assessment of future losses based on the self-assessment system of the Bank. This system reflects past experience of credit losses, possible future credit losses, business and economic conditions, the character, quality and performance of the portfolio, and other pertinent indicators.
  The quality of all loans is assessed by branches and the Credit Examination Division with a subsequent audit by the Asset Review and Inspection Division in accordance with the standards for
  self-assessment of asset quality of the Bank.
  The Bank has established a credit rating system under which its customers are classified into five categories. The credit rating system is used in the self-assessment of asset quality.
  The five categories for self-assessment purposes are "normal," "caution,""possible bankruptcy,""virtual bankruptcy" and "legal bankruptcy."
  For claims to debtors classified as "legal bankruptcy" or "virtual bankruptcy," a full reserve is provided after deducting amounts collectible through the disposal of collateral or execution of guarantees.
  For claims to debtors classified as "possible bankruptcy," a specific reserve is provided to the necessary extent for the net amount of loans and estimated collectible amounts by collateral or guarantees.
  For large debtors with a certain amount of credit or more who are classified as "possible bankruptcy" and debtors with restructured loans, if the cash flows from collection of the principal and interest
  can be reasonably estimated, the reserve is provided based on the difference between the present value of expected future cash flows discounted at the contracted interest rates and the carrying amounts of the loans (the DCF method).
  Debtors classified as "caution" are the ones that the Bank pays attention to due to a certain level of concern about their operation and repayment of the loans. Among the debtors classified as "caution," for claims to debtors to whom the Bank pays more attention due to a higher level of concern, an allowance is provided for expected losses for the subsequent 3 years. Expected losses are estimated using the expected loss rate which is based on the average rate of historical loan loss experience for the past 3 years with the long-term perspective. For claims to debtors classified as "caution" excluding the above and as "normal" who do not have specific operational and financial problems, an allowance is provided for expected losses for the subsequent 1 year. Expected losses are estimated using the expected loss rate which is based on the rate of historical loan loss experience for the past 1 year with the long-term perspective. The Bank also uses certain assumptions to estimate the possible credit loss for debtors who are classified as "caution" because of significant uncertainty regarding the feasibility of implementing a management improvement plan. For those debtors, the Bank assumed the risk of credit loss is equal to the risk of credit loss for the debtors under possible bankruptcy and calculated the allowance for loan losses using the same credit loss rate with the one applied to the estimated unsecured portion of claims for the debtors under possible bankruptcy.
  Other consolidated subsidiaries provide an allowance for general
  claims based on their historical loan loss experience and for specific claims at the amounts individually estimated to be uncollectible.
10. Reserves under Special Laws - The reserves under special laws represents financial instruments transaction liability reserve recorded by a consolidated subsidiary as determined in accordance with the provisions of Article 46-5 of the Financial Instruments and Exchange Act and Article 175 of the Cabinet Office Ordinance on Financial Instruments Business to provide for losses arising from security-related accidents.
11. Liability for Employees' Retirement Benefits - The Bank has a contributory funded pension plan, an unfunded lump-sum severance payment plan and a defined benefit corporate pension plan. A part of consolidated subsidiaries have unfunded lump-sum severance payment plans and defined contribution pension plans. They apply the simplified method to calculate the liability for employees' retirement benefits and retirement benefit expenses.
  The Bank accounts for the liability for employees' retirement benefits based on the projected benefit obligations and plan assets at the balance sheet date. The projected benefit obligations are attributed to periods on a benefit formula basis. Actuarial gains and losses that are yet to be recognized in profit or loss are recognized within equity (accumulated other comprehensive income), after adjusting for tax effects and are recognized in profit or loss over 10 years no longer than the expected average remaining service period of the employees.
12. Liability for Reimbursement of Deposit Losses - A liability for reimbursement of deposits which was derecognized as a liability, is provided for estimated losses on future claims of withdrawal from depositors of inactive accounts.
13. Liability for Contingent Losses - A liability for contingent losses is provided for possible losses from contingent events related to the enforcement of the "responsibility-sharing system" on October 1, 2007. The liability is calculated by estimating future burden charges and other payments to the Credit Guarantee Corporation.
14. Foreign Currency Transactions - Foreign currency-denominated
  stock. Diluted net income per share of common stock assumes full conversion of the outstanding convertible notes and bonds at the beginning of the year (or at the time of issuance) with applicable adjustment for related interest expense, net of tax, and full exercise of outstanding warrants.
  Cash dividends per share presented in the accompanying consolidated statement of income are dividends applicable to the respective fiscal year including dividends to be paid after the end of the year. Also "Cash dividends per share" for the fiscal year ended March 31,2024, is stated at the amount before stock splits (see Note 20).
  1. Effective date
    It is scheduled to be applied from the beginning of the fiscal year ending March 31, 2028.
  2. Impact of the application of the accounting standards, etc. The amount of the impact on the consolidated financial statements is currently being assessed.

SIGNIFICANT ACCOUNTING ESTIMATES

Allowance for Loan Losses

Allowance for loan losses at March 31, 2025 and 2024, was as follows:

Thousands of

Overview of business combination

Name and business description of the company to be acquired Name: Sekisui Leasing Co., Ltd.
Business description: General leasing business

Primary reason for business combination

In order to realize the Group's vision of becoming a "comprehensive solutions provider that drives community growth and creates the future together," the Group is working to expand the range of solutions it can provide. Sekisui Leasing Co., Ltd. is a company that operates a stable leasing business with the SEKISUI CHEMICAL Group as its primary customer. This share acquisition will expand the Group's leasing business and help us

	2025	2024	2025
Allowance for loan losses	¥33,153	¥34,660	$221,730

assets and liabilities are translated into Japanese yen at the exchange rates prevailing at the balance sheet date. The foreign exchange gains and losses from translation are recognized in the consolidated statement of income.

t. Business Combinations - Business combinations are accounted for using the purchase method.

Acquisition-related costs, such as advisory fees or professional

fees, are accounted for as expenses in the periods in which the costs

Millions of Yen

U.S. Dollars

offer our customers a greater range of solutions by allowing us to leverage the know-how and trading base, etc. of Kyogin Lease Co., Ltd., a subsidiary of the Company and Sekisui Leasing Co., Ltd. In doing this, we will strive to help customers find solutions

Amortization of Goodwill
Goodwill is amortized using the straight-line method over 16 years.
Stock Options - Compensation expense for employee stock options, which were granted on and after May 1, 2006, are recognized based on the fair value at the date of grant and over the vesting period as consideration for receiving goods or services in accordance with Accounting Standards Board of Japan (the "ASBJ") Statement No. 8, "Accounting Standard for Stock Options." In the balance sheet, stock options are presented as stock acquisition rights as a separate component of equity until exercised.
Leases
Lessee
Finance lease transactions are capitalized to recognize lease assets and lease obligations in the balance sheet.
All other leases are accounted for as operating leases.
Lessor
Finance leases that are deemed to transfer ownership of the leased property to the lessee are recognized as lease receivables, and finance leases that are not deemed to transfer ownership of the leased property to the lessee are recognized as investments in lease.
Income Taxes - The provision for income taxes is computed based on the pretax income included in the consolidated statement of income. The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. Deferred taxes are measured by applying currently enacted income tax rates to the temporary differences.
Per Share Information - Basic net income per share is computed by dividing net income available to common shareholders by the weighted-average number of shares of common stock outstanding for the period, retroactively adjusted for stock splits.

Diluted net income per share reflects the potential dilution that could occur if securities are exercised or converted into common

are incurred.

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the business combination occurs, an acquirer shall report in its financial statements provisional amounts for the items for which the accounting is incomplete.

During the measurement period, which shall not exceed one year from the acquisition, the acquirer shall retrospectively adjust the provisional amounts recognized at the acquisition date to reflect new information obtained about facts and circumstances that existed as of the acquisition date and that would have affected the measurement of the amounts recognized as of that date.

Such adjustments shall be recognized as if the accounting for the business combination had been completed at the acquisition date.

The Company completed the purchase price allocation by the end of the reporting period. A parent's ownership interest in a subsidiary might change if the parent purchases or sells ownership interests in its subsidiary.

The carrying amount of noncontrolling interest is adjusted to reflect the change in the parent's ownership interest in its subsidiary while the parent retains its controlling interest in its subsidiary.

Any difference between the fair value of the consideration received or paid and the amount by which the noncontrolling interest is adjusted is accounted for as capital surplus as long as the parent retains control over its subsidiary.

u. Unapplied Accounting Standard and Implementation Guidance "Accounting Standard for Leases" (ASBJ Statement No. 34 issued on September 13, 2024)

"Implementation Guidance on Accounting Standard for Leases" (ASBJ Guidance No. 33 issued on September 13, 2024), etc.

In addition, related accounting standards, guidelines for application of accounting standards, practical response reports, and transfer guidelines have been revised.

(1) Overview

In line with international accounting standards, it stipulates the treatment of all leases of a lessee such as recording assets and liabilities.

Information concerning important accounting estimates

Method of calculating allowance for loan losses is described in the Note 2.i.

The debtor classification is determined based on the financial information about the debtors. For debtors with poor financial results, the rating may rely on judgment as to how reasonable and feasible their business improvement plans are. Therefore, debtors have been classified using certain assumptions about their business outlook and the business environment.

Under these assumptions, the Bank has recorded an allowance for loan losses factoring in potential losses due to change in the assumed business outlook and current business environment. For specific debtors in situations where there remains significant uncertainty regarding the feasibility of implementing a management improvement plan, the Bank assumed their risk of credit loss is equal to the risk of credit loss for debtors under possible bankruptcy and calculated the allowance for loan losses using the same credit loss rate with the one applied to the estimated unsecured portion of claims for debtors under possible bankruptcy.

The allowance for loan losses is provided based on the debtors' rating, after asset assessments for all loans based on the self-assessment standards. However, the estimates made for the allowance for loan losses have high uncertainty because debtors' financial situation constantly changes and especially as business improvement plans usually take a long period of time to carry out. In addition, drastic changes in economic conditions may significantly affect the amount of allowance for loan losses on the consolidated financial statements for the following fiscal year.

CHANGES IN ACCOUNTING POLICIES
The "Accounting Standards for Current Oncome Taxes" (ASBJ Statement No. 27 issued on October 28, 2022), etc. have been applied since the beginning of the current fiscal year.
There will be no impact on consolidated financial statements.
BUSINESS COMBINATION

Corporate Acquisition through Share Acquisition

Based on the share transfer agreement concluded on February 29, 2024, the Company acquired shares in Sekisui Leasing Co., Ltd. and converted the company into its subsidiary on June 3, 2024.

to management issues while also further increasing the corporate value of the Group.

1. Date of business combination June 3, 2024
2. Legal form of business combination
  Share acquisition in consideration for cash
3. Name of the company after combination Unchanged
4. Ratio of voting rights before and after acquisition Voting rights ratio before change: 0.0% Voting rights ratio after change: 90.0%
5. Basis of determining the company to be acquired
  It is based on the fact that the Company acquired 90% of voting rights by means of share acquisition in consideration for cash.
The period of financial performance of the acquired company Since June 30, 2024 is the deemed acquisition date, the performance from July 1, 2024 to March 31, 2025, is included.
Acquisition cost and breakdown by type of consideration Consideration (cash): ¥3,293 million ($22,023 thousand) Acquisition cost: ¥3,293 million ($22,023 thousand)
Description and amount of major acquisition-related expenses
Advisory fees, etc.: ¥118 million ($790 thousand)
Amount of goodwill, the reason for the goodwill arising, amortization method, and amortization period
1. Amount of goodwill
  ¥1,497 million ($10,012 thousand)
2. Reason for the goodwill arising
  The goodwill has arisen because the acquisition cost exceeded the fair value of the net assets of the acquired company at the time of business combination.
3. Amortization method and amortization period Equal amortization over 16 years