Financial Data
Consolidated Financial Statements
• Consolidated Balance Sheets
The Nanto Bank, Ltd. and Consolidated Subsidiaries as of March 31, 2024 and 2023
Thousands of | |
Millions of yen | U.S. dollars |
(Note 1) |
2024
20232024
Assets: | |||||||
Cash and due from banks (Notes 23 and 25) | ¥ | 963,526 | ¥ | 1,085,005 | $ | 6,363,687 | |
Call loans and bills bought (Note 25) | 1,892 | - | 12,495 | ||||
Debt purchased (Notes 25 and 26) | 1,494 | 1,503 | 9,867 | ||||
Money held in trust (Notes 25 and 26) | 40,967 | 43,579 | 270,569 | ||||
Securities (Notes 9, 10, 11, 14, 25 and 26) | 1,461,095 | 1,320,545 | 9,649,924 | ||||
Loans and bills discounted (Notes 10, 11, 12 and 25) | 4,170,554 | 3,944,387 | 27,544,772 | ||||
Foreign exchanges (Note 10) | 1,225 | 1,354 | 8,090 | ||||
Lease receivables and lease investment assets (Note 11) | 28,239 | 26,221 | 186,506 | ||||
Other assets (Notes 10, 11 and 15) | 79,357 | 72,006 | 524,119 | ||||
Tangible fixed assets (Note 13) | 41,795 | 40,493 | 276,038 | ||||
Buildings | 10,877 | 10,567 | 71,838 | ||||
Land | 23,782 | 23,647 | 157,070 | ||||
Construction in progress | 3,512 | 3,529 | 23,195 | ||||
Other tangible fixed assets | 3,622 | 2,749 | 23,921 | ||||
Intangible fixed assets | 4,842 | 4,674 | 31,979 | ||||
Software | 4,397 | 4,228 | 29,040 | ||||
Other intangible fixed assets (Note 11) | 444 | 446 | 2,932 | ||||
Deferred tax assets (Note 29) | 6,278 | 17,046 | 41,463 | ||||
Customers' liabilities for acceptances and guarantees (Note 10) | 7,216 | 8,759 | 47,658 | ||||
Reserve for possible loan losses (Notes 3 and 25) | (21,430) | (23,461) | (141,536) | ||||
Total assets | ¥ | 6,787,056 | ¥ | 6,542,117 | $ | 44,825,678 | |
Liabilities and net assets: | |||||||
Liabilities: | |||||||
Deposits (Notes 11 and 25) | ¥ | 5,797,765 | ¥ | 5,715,665 | $ | 38,291,823 | |
Negotiable certificates of deposit (Note 25) | 5,738 | 8,140 | 37,897 | ||||
Payables under securities lending transactions (Notes 11 and 25) | 253,137 | 139,161 | 1,671,864 | ||||
Borrowed money (Notes 11, 25 and 34) | 355,656 | 356,490 | 2,348,959 | ||||
Foreign exchanges | 797 | 806 | 5,263 | ||||
Borrowed money from trust account | 4,104 | 4,659 | 27,105 | ||||
Other liabilities (Note 34) | 51,073 | 32,699 | 337,315 | ||||
Liability for retirement benefits (Note 28) | 11,680 | 11,916 | 77,141 | ||||
Reserve for reimbursement of deposits | 190 | 76 | 1,254 | ||||
Reserve for contingent losses | 926 | 831 | 6,115 | ||||
Reserve for share-based payment | 123 | 96 | 812 | ||||
Reserve under special laws | 3 | 3 | 19 | ||||
Deferred tax liabilities (Note 29) | 11 | 11 | 72 | ||||
Acceptances and guarantees | 7,216 | 8,759 | 47,658 | ||||
Total liabilities | ¥ | 6,488,425 | ¥ | 6,279,318 | $ | 42,853,345 | |
Net assets (Note 7):
Common stock: Authorized 64,000 thousand shares in 2024 and 2023
Issued 33,025 thousand shares in 2024 and 2023 ...............
Capital surplus ...............................................................................................
Retained earnings ..........................................................................................
Less treasury stock: Issued 1,270 thousand shares in 2024
and 1,273 thousand shares in 2023...............................
Total stockholders' equity ..........................................................................
Valuation difference on available-for-sale securities (Note 26) .........................
Deferred gains or losses on hedges (Note 27) ................................................
Accumulated adjustments for retirement benefits (Note 28)............................
Total accumulated other comprehensive income ......................................
Total net assets ..........................................................................................
Total liabilities and net assets......................................................................
See Notes to Consolidated Financial Statements.
¥ | 37,924 | ¥ | 37,924 |
34,749 | 34,749 | ||
208,825 | 200,383 | ||
(3,413) | (3,418) | ||
278,085 | 269,639 | ||
14,232 | (6,537) | ||
6,575 | 95 |
- (398)
20,545(6,840)
298,631 | 262,798 |
¥ 6,787,056 | ¥ 6,542,117 |
$ 250,472
229,502
1,379,202
(22,541)
1,836,635
93,996
43,425
(1,730)
135,691
1,972,333
$ 44,825,678
88 Nanto Report 2024, the integrated report of Nanto Bank
About Nanto Bank | Nanto Group Corporate | Practicing Sustainable | Local Market | Strengthening | Control of Net Assets | Governance | Consolidated Financial |
Value Enhancement | Management | Revitalization | Profitability | Statements | |||
• Consolidated Statements of Income
The Nanto Bank, Ltd. and Consolidated Subsidiaries for the Fiscal Years Ended March 31, 2024 and 2023
Thousands of | |
Millions of yen | U.S. dollars |
(Note 1) |
2024
20232024
Income (Note 15): | |||||||
Interest income: | |||||||
Interest on loans and bills discounted | ¥ | 37,271 | ¥ | 34,474 | $ | 246,159 | |
Interest and dividends on securities | 10,241 | 10,865 | 67,637 | ||||
Other interest income | 3,281 | 1,523 | 21,669 | ||||
Trust fees | 28 | 16 | 184 | ||||
Fees and commissions | 25,652 | 23,662 | 169,420 | ||||
Other operating income (Note 16) | 2,787 | 4,268 | 18,406 | ||||
Other income (Note 17) | 6,586 | 3,043 | 43,497 | ||||
Total income | 85,848 | 77,853 | 566,990 | ||||
Expenses: | |||||||
Interest expense: | |||||||
Interest on deposits | 286 | 294 | 1,888 | ||||
Interest on borrowings and rediscounts | 2,971 | 1,408 | 19,622 | ||||
Interest on payables under securities lending transactions | 4,565 | 1,569 | 30,149 | ||||
Other interest expense | 34 | 469 | 224 | ||||
Fees and commissions | 14,327 | 12,916 | 94,623 | ||||
Other operating expenses (Note 18) | 3,686 | 12,914 | 24,344 | ||||
General and administrative expenses (Note 19) | 40,516 | 39,481 | 267,591 | ||||
Other expenses (Notes 20 and 21) | 2,834 | 2,483 | 18,717 | ||||
Total expenses | 69,223 | 71,537 | 457,189 | ||||
Income before income taxes | 16,625 | 6,316 | 109,801 | ||||
Income taxes (Note 29): | |||||||
Current | 5,906 | 1,380 | 39,006 | ||||
Deferred | (1,318) | 203 | (8,704) | ||||
Total income taxes | 4,587 | 1,584 | 30,295 | ||||
Net income | 12,037 | 4,731 | 79,499 | ||||
Net income attributable to owners of parent | ¥ | 12,037 | ¥ | 4,731 | $ | 79,499 | |
U.S. dollars | |||||||
Yen | (Note 1) | ||||||
Per share of common stock: | |||||||
Net income - basic (Note 32) | ¥ | 379.08 | ¥ | 147.75 | $ | 2.50 | |
Dividends (Note 7) | 114.00 | 113.00 | 0.75 | ||||
See Notes to Consolidated Financial Statements. |
• Consolidated Statements of Comprehensive Income
The Nanto Bank, Ltd. and Consolidated Subsidiaries for the Fiscal Years Ended March 31, 2024 and 2023
Thousands of | |
Millions of yen | U.S. dollars |
(Note 1) |
2024
20232024
Net income | ¥ | 12,037 | ¥ | 4,731 | $ | 79,499 | |
Other comprehensive income (loss) (Note 22): | |||||||
Valuation difference on available-for-sale securities | 20,770 | (21,659) | 137,177 | ||||
Deferred gains (losses) on hedges | 6,480 | (1,719) | 42,797 | ||||
Adjustments for retirement benefits (Note 28) | 135 | 147 | 891 | ||||
Total other comprehensive income (loss) | 27,385 | (23,231) | 180,866 | ||||
Total comprehensive income (loss) for the year | ¥ | 39,423 | ¥ | (18,499) | $ | 260,372 | |
Total comprehensive income (loss) attributable to: | |||||||
Owners of parent | ¥ | 39,423 | ¥ | (18,499) | $ | 260,372 |
See Notes to Consolidated Financial Statements.
Nanto Report 2024, the integrated report of Nanto Bank 89
Financial Data
Consolidated Financial Statements
• Consolidated Statements of Changes in Net Assets
The Nanto Bank, Ltd. and Consolidated Subsidiaries for the Fiscal Years Ended March 31, 2024 and 2023
Number of
shares of
common stock Common
(thousands) stock
Capital surplus
Millions of yen
Valuation difference on available-
Retained Less treasury for-sale
earnings stock securities
Deferred gains or losses on hedges
Accumulated adjustments for retirement benefits
Total net
assets
Balance at April 1, 2022 | 33,025 | ¥ | 37,924 | ¥ | 34,749 | ¥ | 199,208 | ¥ | (1,799) | ¥ | 15,121 | ¥ | 1,814 | ¥ | (546) | ¥ | 286,473 |
Cash dividends | |||||||||||||||||
(3,556) | (3,556) | ||||||||||||||||
Net income attributable to owners | 4,731 | 4,731 | |||||||||||||||
of parent | |||||||||||||||||
Purchase of treasury stock | (1,618) | (1,618) | |||||||||||||||
Disposition of treasury stock | (0) | 0 | 0 | ||||||||||||||
Transfer from retained earnings to | 0 | (0) | - | ||||||||||||||
capital surplus | |||||||||||||||||
Net changes in items other than | (21,659) | (1,719) | 147 | (23,231) | |||||||||||||
stockholders' equity | |||||||||||||||||
Balance at April 1, 2023 | 33,025 | ¥ | 37,924 | ¥ | 34,749 | ¥ | 200,383 | ¥ | (3,418) | ¥ | (6,537) | ¥ | 95 | ¥ | (398) | ¥ | 262,798 |
Cash dividends | (3,596) | (3,596) | |||||||||||||||
Net income attributable to owners | 12,037 | 12,037 | |||||||||||||||
of parent | |||||||||||||||||
Purchase of treasury stock | (4) | (4) | |||||||||||||||
Disposition of treasury stock | (0) | 9 | 9 | ||||||||||||||
Transfer from retained earnings to | 0 | (0) | - | ||||||||||||||
capital surplus | |||||||||||||||||
Net changes in items other than | 20,770 | 6,480 | 135 | 27,385 | |||||||||||||
stockholders' equity | |||||||||||||||||
Balance at March 31, 2024 (Note 7) | 33,025 | ¥ | 37,924 | ¥ | 34,749 | ¥ | 208,825 | ¥ | (3,413) | ¥ | 14,232 | ¥ | 6,575 | ¥ | (262) | ¥ | 298,631 |
Thousands of U.S. dollars (Note 1)
Common stock Capital surplus
Retained earnings
Less treasury
stock
Valuation | Accumulated | |
difference on | Deferred gains | adjustments |
available-for- | or losses on | for retirement |
sale securities | hedges | benefits |
Total net assets
Balance at April 1, 2023 | $ | 250,472 | $ | 229,502 | $ 1,323,446 | $ | (22,574) | $ | (43,174) | $ | 627 | $ | (2,628) | $ 1,735,671 |
Cash dividends | (23,750) | (23,750) | ||||||||||||
Net income attributable to owners | 79,499 | 79,499 | ||||||||||||
of parent | ||||||||||||||
Purchase of treasury stock | (26) | (26) | ||||||||||||
Disposition of treasury stock | (0) | 59 | 59 | |||||||||||
Transfer from retained earnings to | 0 | (0) | - | |||||||||||
capital surplus | ||||||||||||||
Net changes in items other than | 137,177 | 42,797 | 891 | 180,866 | ||||||||||
stockholders' equity | ||||||||||||||
Balance at March 31, 2024 (Note 7) | $ | 250,472 | $ | 229,502 | $ 1,379,202 | $ | (22,541) | $ | 93,996 | $ | 43,425 | $ | (1,730) | $ 1,972,333 |
See Notes to Consolidated Financial Statements.
90 Nanto Report 2024, the integrated report of Nanto Bank
About Nanto Bank | Nanto Group Corporate | Practicing Sustainable | Local Market | Strengthening | Control of Net Assets | Governance | Consolidated Financial |
Value Enhancement | Management | Revitalization | Profitability | Statements | |||
• Consolidated Statements of Cash Flows
The Nanto Bank, Ltd. and Consolidated Subsidiaries for the Fiscal Years Ended March 31, 2024 and 2023
Thousands of | |
Millions of yen | U.S. dollars |
(Note 1) |
2024
20232024
Cash flows from operating activities | |||||||
Income before income taxes | ¥ | 16,625 | ¥ | 6,316 | $ | 109,801 | |
Depreciation | 3,507 | 3,412 | 23,162 | ||||
Impairment loss | 2 | 43 | 13 | ||||
Share of loss (profit) of entities accounted for using equity method | 22 | 14 | 145 | ||||
Increase (decrease) in reserve for possible loan losses | (2,031) | 976 | (13,413) | ||||
Increase (decrease) in liability for retirement benefits | (40) | 151 | (264) | ||||
Increase (decrease) in reserve for reimbursement of deposits | 113 | (28) | 746 | ||||
Increase (decrease) in reserve for contingent losses | 94 | (2) | 620 | ||||
Increase (decrease) in reserve for share-based payment | 26 | 35 | 171 | ||||
Interest income | (50,795) | (46,862) | (335,479) | ||||
Interest expense | 7,858 | 3,741 | 51,898 | ||||
Loss (gain) on securities | (4,229) | 7,820 | (27,930) | ||||
Loss (gain) on money held in trust | (47) | 152 | (310) | ||||
Foreign exchange losses (gains) | (15,614) | (7,736) | (103,123) | ||||
Losses (gains) on sales of fixed assets | 2 | (37) | 13 | ||||
Net decrease (increase) in loans and bills discounted | (226,166) | (73,613) | (1,493,732) | ||||
Net increase (decrease) in deposits | 82,099 | 68,258 | 542,229 | ||||
Net increase (decrease) in negotiable certificates of deposit | (2,401) | 600 | (15,857) | ||||
Net increase (decrease) in borrowed money | (833) | (352,737) | (5,501) | ||||
Net decrease (increase) in due from banks (excluding due from the Bank of Japan)... | (81) | (83) | (534) | ||||
Net decrease (increase) in call loans and bills bought | (1,883) | (36) | (12,436) | ||||
Net increase (decrease) in call money | - | (189,578) | - | ||||
Net increase (decrease) in payables under securities lending transactions ... | 113,975 | 36,729 | 752,757 | ||||
Net decrease (increase) in foreign exchange assets | 129 | 1,134 | 851 | ||||
Net increase (decrease) in foreign exchange liabilities | (9) | 332 | (59) | ||||
Net decrease (increase) in lease receivables and lease investment assets.... | (2,224) | (1,364) | (14,688) | ||||
Net increase (decrease) in borrowed money from trust account | (555) | (808) | (3,665) | ||||
Interest received | 48,730 | 47,352 | 321,841 | ||||
Interest paid | (6,819) | (2,645) | (45,036) | ||||
Other | 16,099 | (8,973) | 106,327 | ||||
Subtotal | |||||||
(24,444) | (507,436) | (161,442) | |||||
Income taxes paid | (1,659) | (6,428) | (10,957) | ||||
Net cash used in operating activities | (26,104) | (513,864) | (172,406) | ||||
Cash flows from investing activities | |||||||
Purchase of securities | (387,317) | (374,000) | (2,558,067) | ||||
Proceeds from sales of securities | 230,795 | 397,341 | 1,524,304 | ||||
Proceeds from maturities of securities | 66,979 | 91,188 | 442,368 | ||||
Increase in money held in trust | (4,843) | (321) | (31,985) | ||||
Decrease in money held in trust | 7,334 | 48 | 48,438 | ||||
Purchase of tangible fixed assets | (3,090) | (4,829) | (20,408) | ||||
Proceeds from sales of tangible fixed assets | 181 | 539 | 1,195 | ||||
Purchase of intangible fixed assets | (1,785) | (1,461) | (11,789) | ||||
Payments for asset retirement obligations | (2) | (48) | (13) | ||||
Other | (119) | (101) | (785) | ||||
Net cash provided by (used in) investing activities | (91,867) | 108,355 | (606,743) | ||||
Cash flows from financing activities | |||||||
Dividends paid | (3,593) | (3,553) | (23,730) | ||||
Purchase of treasury stock | (4) | (1,618) | (26) | ||||
Other | 9 | 0 | 59 | ||||
Net cash used in financing activities | (3,589) | (5,171) | (23,703) | ||||
Effect of exchange rate changes on cash and cash equivalents | 0 | 5 | 0 | ||||
Net increase (decrease) in cash and cash equivalents | (121,560) | (410,675) | (802,853) | ||||
Cash and cash equivalents at beginning of year | 1,083,159 | 1,493,835 | 7,153,814 | ||||
Cash and cash equivalents at end of year (Note 23) | ¥ | 961,599 | ¥ | 1,083,159 | $ | 6,350,960 | |
See Notes to Consolidated Financial Statements.
Nanto Report 2024, the integrated report of Nanto Bank 91
Financial Data
Consolidated Financial Statements
Notes to Consolidated Financial Statements
The Nanto Bank, Ltd. and Consolidated Subsidiaries
Fiscal Years Ended March 31, 2024 and 2023
1. BASIS OF PRESENTATION
The accompanying consolidated financial statements of The Nanto Bank, Ltd. (the "Bank") and its consolidated subsidiaries (together, the "Group") have been prepared in accordance with the provisions set forth in the Japanese Financial Instruments and Exchange Act and its related accounting regulations and the Ordinance for Enforcement of the Banking Law and in conformity with accounting principles generally accepted in Japan ("Japanese GAAP"), which are different in certain respects from the application and disclosure requirements of International Financial Reporting Standards.
The accompanying consolidated financial statements have been restructured and translated into English, with some expanded descriptions, from the consolidated financial statements of the Bank prepared in accordance with Japanese GAAP and filed with the appropriate Local Finance Bureau of the Ministry of Finance as required by the Financial Instruments and Exchange Act. Some supplemental information included in the statutory Japanese language consolidated financial statements, but not required for fair presentation, is not presented in the accompanying consolidated financial statements.
As permitted by the Financial Instruments and Exchange Act of Japan, amounts less than one million yen have been omitted. As a result, the totals shown in the financial statements do not necessarily agree with the sum of the individual amounts.
The translation of the Japanese yen amounts into U.S. dollar amounts is included solely for the convenience of readers outside Japan, using the prevailing exchange rate at March 31, 2024, which was ¥151.41 to US$1.00. The translations should not be construed as representations that the Japanese yen amounts have been, could have been or could in the future be converted into U.S. dollars at this or any other rate of exchange.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES a. Principles of consolidation
The accompanying consolidated financial statements include the accounts of the Bank and its eleven (eleven in 2023) subsidiaries at March 31, 2024. The Bank has five (four in 2023) unconsolidated subsidiaries in the fiscal year ended March 31, 2024, Nanto Sixth Industry Support Investment
Limited Partnership, Nanto Regional Vitality Creation Support Investment Limited Partnership, Nanto CVC No. 3 Akebono Investment Limited Partnership, Nanto TSUNAGU Fund Investment Limited Partnership and Nara Mirai Forestry Co., Ltd. The unconsolidated subsidiaries were excluded from the scope of consolidation because the portion of their assets, net income (loss), retained earnings, accumulated other comprehensive income and others that correspond to the Bank's equity were immaterial to the extent that their exclusion from the scope of consolidation did not preclude reasonable judgment of the Group's financial position and results of operations.
(Establishment of unconsolidated subsidiaries)
In the fiscal year ended March 31, 2024, Nara Mirai Forestry Co., Ltd. became an unconsolidated subsidiary due to its new establishment.
In the fiscal year ended March 31, 2023, Nanto TSUNAGU Fund Investment Limited Partnership became an unconsolidated subsidiary due to its new establishment.
The Bank had three (three in 2023) affiliates over which it had the ability to exercise significant influence over operating and financial policies, Nara Mirai Design Co., Ltd., Nara Kominka Machizukuri Partners Co., Ltd. and Frontier Nanto Investment LLC, and these affiliates were accounted for by the equity method.
(Changes in scope of the equity method)
In the fiscal year ended March 31, 2023, Frontier Nanto Investment LLC was included in the scope of the equity method due to its new establishment.
The Bank has five (four in 2023) unconsolidated subsidiaries that are not accounted for using the equity method in the fiscal year ended March 31, 2024, Nanto Sixth Industry Support Investment Limited Partnership, Nanto Regional Vitality Creation Support Investment Limited Partnership, Nanto CVC No. 3 Akebono Investment Limited Partnership, Nanto TSUNAGU Fund Investment Limited Partnership and Nara Mirai Forestry Co., Ltd. The Bank also had five (five in 2023) affiliates not accounted for by the equity method, Nanto CVC Investment Limited Partnership, Nanto CVC No. 2 Investment Limited Partnership and Nara Kominka Machizukuri Fund Investment Limited Partnership, Frontier Nanto Investment Limited Partnership and Yamato Social Impact Investment Limited Partnership. The unconsolidated subsidiaries and affiliates not accounted for by the equity method were excluded from the scope of the equity method because the effect of their exclusion on the consolidated financial statements would not have been significant in terms of the portion of net income (loss), retained earnings, accumulated other comprehensive income and others which correspond to the Bank's equity.
(Establishment of unconsolidated subsidiaries not accounted for by the equity method)
In the fiscal year ended March 31, 2024, Nara Mirai Forestry Co., Ltd. became an unconsolidated subsidiary that is not accounted for using the equity method due to its new establishment.
In the fiscal year ended March 31, 2023, Nanto TSUNAGU Fund Investment Limited Partnership became an unconsolidated subsidiary not accounted for by the equity method due to its new establishment.
(Establishment of affiliates not accounted for by the equity method)
In the fiscal year ended March 31, 2023, Frontier Nanto Investment Limited Partnership and Yamato Social Impact Investment Limited Partnership became affiliates not accounted for by the equity method due to their new establishment.
Potager Co., Ltd., of which the Bank owns between 20% and 50% of the voting rights (execution rights), was not recognized as an affiliate for the fiscal years ended March 31, 2024 and 2023 because it is held by the Bank's unconsolidated subsidiary for the purpose of incubating the investees and not for the purpose of controlling the entity.
All consolidated subsidiaries have fiscal years ending on March 31.
All significant intercompany accounts, transactions and unrealized profits on transactions are eliminated.
b. Cash and cash equivalents
In preparing the consolidated statements of cash flows, cash and cash equivalents represents cash and due from the Bank of Japan.
92 Nanto Report 2024, the integrated report of Nanto Bank
About Nanto Bank | Nanto Group Corporate | Practicing Sustainable | Local Market | Strengthening | Control of Net Assets | Governance | Consolidated Financial |
Value Enhancement | Management | Revitalization | Profitability | Statements | |||
c. Finance leases As lessor:
Finance leases are accounted for in a manner similar to that used for ordinary sale transactions. Revenue from finance lease transactions and related costs are recognized upon receipt of the lease payments. Finance leases in which the ownership of the leased assets is transferred to the lessee are recognized as lease receivables, and all finance leases in which the ownership of the leased assets is not transferred to the lessee are recognized as lease investment assets.
Fiscal Year Ended March 31, 2023
For finance leases which commenced before April 1, 2008 and in which the ownership of the leased assets is not transferred to the lessee, the appropriate book value (net of accumulated depreciation and amortization) in tangible and intangible fixed assets as of March 31, 2008 was recorded as the beginning balance of "Lease receivables and lease investment assets," and the total amount of interest equivalent for the remaining lease term after the adoption of the "Accounting Standard for Lease Transactions" (Accounting Standards Board of Japan ("ASBJ") Statement No. 13, issued on March 30, 2007) has been allocated over the remaining lease term using the straight-line method.
For the fiscal year ended March 31, 2023, differences between income before income taxes and income before income taxes calculated as if the accounting treatment for ordinary sale transactions had been applied to the finance leases in which the ownership of the leased assets is not transferred to the lessee were not material.
d. Securities
Trading securities are stated at fair value. Gains and losses realized on disposal and unrealized gains and losses from market value fluctuations are recognized as gains and losses in the period of the disposal or the change. Cost of sales for such securities is determined using the moving average method. Held-to-maturity debt securities are stated at amortized cost on a straight-line method, cost of which is determined using the moving average method. Stocks of affiliates accounted for by the equity method and unconsolidated subsidiaries and affiliates not accounted for by the equity method are stated at cost using the moving average method. Available-for-sale securities with available fair values are stated at fair value. Unrealized gains and losses on available-for-sale securities are reported, net of applicable income taxes, as a separate component of accumulated other comprehensive income. Equity securities, etc., with no market price included in available-for-sale securities are stated at moving average cost.
If the fair value of held-to-maturity debt securities or available-for-sale securities declines significantly, the securities are stated at fair value, and the difference between the fair value and the carrying amount is recognized as a loss in the period of the decline. In such a case, the fair value will be the carrying amount of the securities at the beginning of the next fiscal year.
Securities managed as trust assets in individually managed money held in trust primarily for securities management purposes are measured at fair value.
e. Derivatives and hedge accounting Derivatives are measured at fair value.
To account for hedging transactions in connection with interest rate risk arising from financial assets and liabilities, the Bank applies the deferred hedge accounting method stipulated in "Treatment for Accounting and Auditing of Application of Accounting Standard for Financial Instruments in the Banking Industry" (Japanese Institute of Certified Public Accountants ("JICPA") Industry Committee Report No. 24, March 17, 2022). The Bank assesses the effectiveness of such hedges in offsetting movement in the fair value from changes in interest rates by classifying the hedged items, such as loans and deposits, and the hedging instruments, such as interest rate swaps, by their maturity. The Bank assesses the effectiveness of cash flow hedges by verifying the correlation between the hedged items and the hedging instruments.
In order to hedge risk arising from the volatility of exchange rates for available-for-sale securities (excluding bonds) denominated in foreign currencies, the Bank applies fair value hedge accounting with the condition that the hedged available-for-sale securities are designated in advance and that sufficient on-balance (actual) or off-balance (forward) liability exposure exists to cover the cost of the hedged securities denominated in the same foreign currency.
f. Tangible fixed assets (except for leased assets)
Depreciation of tangible fixed assets of the Bank is computed by the declining balance method, except for buildings (excluding facilities attached to buildings and structures acquired on or before March 31, 2016, which are depreciated by the declining balance method) which are depreciated by the straight-line method. The estimated useful lives of major items are as follows:
Buildings | 6 to 50 years |
Others | 3 to 20 years |
Depreciation of the assets of the consolidated subsidiaries is computed principally by the declining balance method over the estimated useful life of the asset.
g. Intangible fixed assets (except for leased assets)
Amortization of intangible fixed assets is computed by the straight-line method. Acquisition costs of software to be used internally are capitalized and amortized by the straight-line method primarily over a useful life of five years.
h. Leased assets
Leased assets with respect to finance leases in which the ownership of tangible fixed assets and intangible fixed assets is not transferred to the lessee, are depreciated or amortized using the straight-line method with the assumption that the term of the lease is the useful life. The residual value of leased assets is the value guaranteed in the lease contract or zero for assets without such guaranteed value.
Nanto Report 2024, the integrated report of Nanto Bank 93
Financial Data
Consolidated Financial Statements
i. Reserve for possible loan losses
A reserve for possible loan losses is provided according to predetermined standards.
For loans to insolvent customers who are undergoing bankruptcy or other special liquidation ("bankrupt borrowers") or who are in a similar financial condition ("effectively bankrupt borrowers"), the reserve for possible loan losses is provided based on the amount of the claims net of the amount expected to be recovered from collateral and guarantees and net of the deducted amount mentioned below. For the unsecured and unguaranteed portions of loans to customers not presently in the above circumstances but for whom there is a high probability of so becoming ("likely to become bankrupt borrowers"), the Bank deducts the estimated future cash flows and the amount expected to be recovered from collateral and guarantees from the loan amount and of that remainder reports the amount that it recognizes to be necessary after comprehensively judging the customer's ability to pay.
For loans pertaining to customers other than the above, the Bank reports mainly the anticipated loss for the next one or three years. The anticipated loss is calculated by region using the loss rate based on the average value in a fixed past period of the loan loss ratio with the actual loan loss of one or three years as its foundation with necessary adjustments such as future prospects, etc.
All claims are assessed by the operating divisions based on the self-assessment criteria for asset quality, and the assessment results are audited by the asset audit division, which is independent from the operating divisions.
For claims against "bankrupt borrowers" and "effectively bankrupt borrowers," the amount exceeding the estimated value of collateral and guarantees is deemed uncollectible and is deducted directly from those claims in principle. At March 31, 2024 and 2023, the deducted amounts were ¥6,572 million ($43,405 thousand) and ¥5,367 million, respectively.
The reserve for possible loan losses of the consolidated subsidiaries is provided for general claims by the amount deemed necessary based on the historical loan loss ratio and for certain doubtful claims by the amount deemed uncollectible based on an assessment of each claim.
j. Employee retirement benefits
In calculating projected benefit obligations, expected benefits are attributed to each period by the benefit formula basis. Prior service costs are recognized as profit or loss at the time of occurrence.
Actuarial gains and losses are amortized from the fiscal year following the year in which the gains and losses are recognized by the straight-line method over a fixed period (ten years) within the average remaining service years of the current employees.
Consolidated subsidiaries applied the simplified method where the amount to be required for voluntary termination at the fiscal year-end is recorded as projected benefit obligations in the calculation of the liability for retirement benefits and retirement benefit costs.
k. Reserve for reimbursement of deposits
A reserve for reimbursement of deposits which were derecognized as liabilities under certain conditions is provided for possible losses on future claims of withdrawal based on historical reimbursement experience.
l. Reserve for contingent losses
To pay its contribution to the Credit Guarantee Corporation, the Bank provides a reserve for contingent liabilities not covered by other reserves in an amount deemed necessary based on estimated future losses.
m. Reserve for share-based payment
To prepare for the delivery of the Bank's shares through the Director Remuneration BIP (Board Incentive Plan) Trust, the estimated amount of shares to be delivered in proportion to the points allocated to the Directors in accordance with the stock benefit rules is recorded as reserve for share-based payment.
n. Reserve under special laws
Reserve under the special laws represents Financial Instruments Transaction Liability Reserve prescribed in Article 46-5, Paragraph 1 of the Financial Instruments Exchange Act. The amount is recorded as determined by the consolidated subsidiaries in accordance with the provisions of Article 175 of the Cabinet Office Order on Financial Instruments Business, etc., in order to provide for losses arising from security related accidents.
o. Foreign currency translations
Foreign currency assets and liabilities are translated at fiscal year-end exchange rates.
p. Income taxes
Deferred income taxes are recorded to reflect the tax effects of temporary differences between the carrying amounts of assets and liabilities for tax and financial reporting purposes.
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 of assets and liabilities for financial reporting purposes and the amounts for income tax purposes.
q. Criteria for recognizing lease income and costs for finance leases Lease income and costs are recognized at the time of receiving lease fees.
94 Nanto Report 2024, the integrated report of Nanto Bank
About Nanto Bank | Nanto Group Corporate | Practicing Sustainable | Local Market | Strengthening | Control of Net Assets | Governance | Consolidated Financial |
Value Enhancement | Management | Revitalization | Profitability | Statements | |||
r. Criteria for recognizing revenue from contracts with customers
The Group has adopted the "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29, March 31, 2020) and the "Implementation Guidance on Accounting Standard for Revenue Recognition" (ASBJ Guidance No. 30, March 26, 2021), and recognizes revenue when control of promised goods or services is transferred to a customer in an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services.
The Bank and its consolidated subsidiaries recognize information on transactions with customers based on the following five steps: Step 1: Identify the contract(s) with customers.
Step 2: Identify the performance obligations in the contract.
Step 3: Determine the transaction price.
Step 4: Allocate the transaction price to the performance obligations in the contract.
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.
Revenue from transactions with customers of the Bank and its consolidated subsidiaries, etc. relates mainly to transaction services that are recognized when control of the promised goods or services is transferred to the customer and includes fees and commissions related to deposit services, lending services, exchange services and others.
3. SIGNIFICANT ACCOUNTING ESTIMATES
Those items whose amounts have been recognized in the consolidated financial statements for the current consolidated fiscal year based on accounting estimates which could have a material impact on the consolidated financial statements for the next consolidated fiscal year are as follows.
(1) Reserve for possible loan losses
Credit operations are one of the major operations of the Group, and assets with credit risk, such as loans, occupy a very important place in consolidated net assets on the consolidated balance sheet. So recognition of the reserve for possible loan losses has a large impact on the operating results and financial position and is judged to be material in the accounting estimates.
(2) Amount recognized in the consolidated financial statements
The reserve for possible loan losses recognized in the consolidated balance sheets as of March 31, 2024 and 2023 was as follows:
Thousands of | |
Millions of yen | U.S. dollars |
2024
20232024
Reserve for possible loan losses | ¥ | 21,430 | ¥ | 23,461 | $ | 141,536 |
The details concerning the accounting estimates adopted when making the calculation are set forth below.
(3) Accounting estimates
(a) Methods for calculating amounts
Calculation methods are stated in the Notes (SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES i. Reserve for possible loan losses). The asset appraisals stated in the reserve for possible loan losses recognition standards refer to individually analyzing and considering the assets held and classifying them based on the degree of nonrecovery risk and loss of value risk. Appropriate write-off and reserves are implemented based on the category of borrowers (normal, need attention, likely to become bankrupt, effectively bankrupt and bankrupt).
(b) Major assumptions used in calculating amounts
The Bank assumes that losses nearly equivalent to historical loan losses for each category of borrowers would be incurred. For the claims equivalent to normal claims and claims which need attention, the Bank calculated the required reserve amount for each region using the expected loss rate taking into consideration the necessary adjustments to the average value of the loan loss ratio for a fixed period in the past.
The determination of the borrower category is based on the credit rating determined by the rating models and the borrower's repayment ability based on their substantial financial position, financing capacities, and profitability, etc., and the terms and conditions of the loans and payment status of the borrower. Also, the Bank comprehensively considers the outlook on sustainability and profitability of their businesses, and ability to service their obligations based on their annual repayable amount, appropriateness of their business improvement plans, and other factors in light of the borrower's industry characteristics.
Furthermore, in the case that management reconstruction is thought to be proceeding in line with a drastic and highly feasible business improvement plan and a reasonable and highly feasible business improvement plan, the loans shall be deemed not to qualify as claims corresponding to restructured loans or claims likely to become bankrupt borrowers.
Note that, at the end of the fiscal year ended March 31, 2024, though the COVID-19's category under the Infectious Diseases Control Law has been reclassified as Class 5 and socio-economic activities are normalizing, the Bank expected that the tough situation will persist for a certain period of time due to the expiry of repayment grace periods of the COVID-19 related loans, a rise in prices and a labor shortage. Considering these uncertainties, the Bank has provided for possible loan losses by judging the category of each borrower and reviewing it as necessary based on the available information after taking into account of the characteristics of the industrial sector, the possibility of recovery from the short-term business performance, and cash flow status, etc.
At the end of the fiscal year ended March 31, 2023, the Bank anticipated that the impact of the COVID-19 would continue for a certain period of time, and the individual category of borrowers was determined based on the available information after taking into account of the characteristics of the industrial sector, the possibility of recovery from the short-term business performance, and cash flow status, etc. Accordingly, an additional reserve was not provided.
(c) The impact on the consolidated financial statements for the next fiscal year
The uncertainties of the material estimates are included in the major assumptions used for the calculation of the amount of the reserve for possible loan losses, including the expected loss rate by region and by borrower category, the category of borrowers as of the end of the current fiscal year, the amount expected to be recovered using collateral and guarantees, the Russia-Ukraine situation and changes in geopolitical situations, and effects of foreign exchange rate.
The major assumptions concerning the estimates of the reserve for possible loan losses are determined based on the available information. However, if the business condition of a major customer worsens or incidents occur which affect the economy, there is a possibility that such events would have an impact on the operating results and financial position for the next fiscal year may change, such as an increase in the reserve for possible loan losses.
Nanto Report 2024, the integrated report of Nanto Bank 95
Financial Data
Consolidated Financial Statements
4. CHANGES IN ACCOUNTING POLICIES
Fiscal year ended March 31, 2024
There was no information to be reported on changes in accounting policies.
Fiscal year ended March 31, 2023
Application of implementation guidance on accounting standard for fair value measurement
The Group has applied the "Implementation Guidance on Accounting Standard for Fair Value Measurement" (ASBJ Guidance No. 31, June 17, 2021) from the beginning of the fiscal year ended March 31, 2023 and will prospectively apply the new accounting policies stipulated by the Implementation Guidance on Accounting Standard for Fair Value Measurement in accordance with the transitional treatment prescribed in Paragraph 27-2 of the guidance. There was no effect on the consolidated financial statements due to this application.
5. STANDARDS AND GUIDANCE NOT YET ADOPTED
The following standards and guidance were issued but not yet adopted.
- "Accounting Standard for Current Income Taxes" (ASBJ Statement No. 27, October 28, 2022)
- "Accounting Standard for Presentation of Comprehensive Income" (ASBJ Statement No. 25, October 28, 2022)
- "Implementation Guidance on Accounting Standard for Tax Effect Accounting" (ASBJ Guidance No. 28, October 28, 2022)
- Overview
These standards and guidance set forth the accounting classification of current income taxes in the case where other comprehensive income is taxable, as well as the treatment of tax effect accounting on sale of shares of subsidiaries, etc. under the group taxation regime.
(2) Effective date
The Group is scheduled to apply the standards and guidance from the beginning of the fiscal year ending March 31, 2025.
(3) Effects of the application of the standards and guidance
The Group is currently evaluating the effects of the application of these standards and guidance.
6. ADDITIONAL INFORMATION
Director Remuneration BIP (Board Incentive Plan) Trust
The Bank has introduced a Director Remuneration BIP Trust for directors of the Bank (excluding outside directors, directors who are Audit & Supervisory Board Members, and nonresidents in Japan; hereinafter "the Bank's directors").
(1) Overview of transaction
The Director Remuneration BIP Trust is a board incentive plan designed to motivate the Bank's directors to contribute to achieving mid- to long- term performance improvement and increasing corporate value. This is a stock-based compensation plan in which points are awarded to the Bank's directors based on their position and achievement of performance targets, etc. The Bank's shares corresponding to the points and a cash payment equivalent to the value of the Bank's shares are delivered or paid to the Bank's directors at the time of their retirement from office (including the case when he/she resigns as a Director, who is not an Audit & Supervisory Board Member and assumes the position of Director and Audit & Supervisory Board Member).
(2) Accounting treatment for transactions in which the Bank's shares are delivered through the Trust
The Bank has followed the "Practical Solution on Transactions of Delivering the Company's Own Stock to Employees, etc., through Trusts" (Practical Issues Task Force No. 30, March 26, 2015) with respect to the accounting treatment of this trust agreement.
(3) Matters on Bank's shares held by the Trust
- The book value of the Bank's shares held by the Trust as of March 31, 2024 and 2023 was ¥134 million ($885 thousand) and ¥143 million, respectively.
- The Bank's shares held by the Trust are recorded as treasury stock under stockholders' equity.
- The numbers of shares as of March 31, 2024 and 2023 were 68 thousand and 73 thousand, respectively, and the average numbers of shares during the fiscal years ended March 31, 2024 and 2023 were 69 thousand and 73 thousand, respectively.
- The numbers of shares at the end of the fiscal years ended March 31, 2024 and 2023 and the average numbers of shares during the respective fiscal years are included in treasury stock to be deducted for computing per share information.
96 Nanto Report 2024, the integrated report of Nanto Bank
About Nanto Bank | Nanto Group Corporate | Practicing Sustainable | Local Market | Strengthening | Control of Net Assets | Governance | Consolidated Financial |
Value Enhancement | Management | Revitalization | Profitability | Statements | |||
7. CHANGES IN NET ASSETS
(1) Type and numbers of shares issued and treasury stock for the fiscal years ended March 31, 2024 and 2023
(Thousands of shares) | Remarks | ||||
2024 | |||||
April 1, 2023 | Increase | Decrease | March 31, 2024 | ||
Shares issued | |||||
Common stock | 33,025 | - | - | 33,025 | |
Total | 33,025 | - | - | 33,025 | |
Treasury stock | |||||
Common stock | 1,273 | 1 | 4 | 1,270 | Notes 1, 2 & 3 |
Total | 1,273 | 1 | 4 | 1,270 |
Notes: 1. The number of shares of treasury stock as of March 31, 2024 includes 68 thousand shares of the Bank's stock held by the Director Remuneration BIP Trust.
- The increase of 1 thousand shares in common stock of treasury stock is due to the purchase of shares of less than one unit.
- The decrease of 4 thousand shares in common stock of treasury stock is attributable to a decrease of 4 thousand shares due to the delivery of the Bank's shares by the Director Remuneration BIP Trust and a decrease of 0 thousand shares due to the sale of shares of less than one unit.
(Thousands of shares) | Remarks | ||||
2023 | |||||
April 1, 2022 | Increase | Decrease | March 31, 2023 | ||
Shares issued | |||||
Common stock | 33,025 | - | - | 33,025 | |
Total | 33,025 | - | - | 33,025 | |
Treasury stock | |||||
Common stock | 472 | 801 | 0 | 1,273 | Notes 1, 2 & 3 |
Total | 472 | 801 | 0 | 1,273 |
Notes: 1. The number of shares of treasury stock as of March 31, 2023 includes 73 thousand shares of the Bank's stock held by the Director Remuneration BIP Trust.
- The increase of 801 thousand shares in common stock of treasury stock is attributable to an increase of 800 thousand shares due to the acquisition of treasury stock, which was resolved by the Board of Directors, and an increase of 1 thousand shares due to the purchase of shares of less than one unit.
- The decrease of 0 thousand shares in common stock of treasury stock is due to the sale of shares less than one unit.
- Stock acquisition rights
Fiscal years ended March 31, 2024 and 2023
Not applicable.
(3) Information on dividends is as follows:
(a) Dividends paid in the fiscal year ended March 31, 2024
Millions of yen (thousands of U.S. dollars), except per share amount (yen (U.S. dollars))
Aggregate amount of | Cash dividends per | |||||
Resolution | Type of shares | dividends | share | Record date | Effective date | |
Annual stockholders' meeting held on | Common stock | ¥2,323 ($ | 15,342) | ¥73.00 ($ 0.48) | March 31, 2023 | June 30, 2023 |
June 29, 2023 | ||||||
Board of Directors' meeting held on | Common stock | ¥1,272 ($ | 8,401) | ¥40.00 ($ 0.26) | September 30, | December 5, 2023 |
November 13, 2023 | 2023 | |||||
Notes: 1. Aggregate amount of dividends resolved by the Annual stockholders' meeting on June 29, 2023 includes dividends for the Bank's shares held by the Director Remuneration BIP Trust of ¥5 million ($33 thousand).
2. Aggregate amount of dividends resolved by the Board of Directors on November 13, 2023 includes dividends for the Bank's shares held by the Director Remuneration BIP Trust of ¥2 million ($13 thousand).
- Dividends paid in the fiscal year ended March 31, 2023
Millions of yen, except per share amount (yen) | ||||||||
Aggregate amount of | Cash dividends per | |||||||
Resolution | Type of shares | dividends | share | Record date | Effective date | |||
Annual stockholders' meeting held on | Common stock | ¥2,283 | ¥70.00 | March 31, 2022 | June 30, 2022 | |||
June 29, 2022 | ||||||||
Board of Directors' meeting held on | Common stock | ¥1,273 | ¥40.00 | September 30, | December 5, 2022 | |||
November 11, 2022 | 2022 | |||||||
(c) Dividends to be paid in the fiscal year ending March 31, 2025 | ||||||||
Millions of yen (thousands of U.S. dollars), except per share amount (yen (U.S. dollars)) | ||||||||
Aggregate amount of | Source of Cash dividends per | |||||||
Resolution | Type of shares | dividends | dividends | share | Record date | Effective date | ||
Annual stockholders' meeting held on | Common stock | ¥2,354 ($15,547) | Retained | ¥74.00 ($0.48) | March 31, 2024 | June 28, 2024 | ||
June 27, 2024 | earnings | |||||||
Note: Aggregate amount of dividends includes dividends for the Bank's shares held by the Director Remuneration BIP Trust of ¥5 million ($33 thousand).
Nanto Report 2024, the integrated report of Nanto Bank 97