hamashin annual report 2017 - 浜松信用金庫 annual report fiscal year ended march 31, 2017 2017...

HAMASHIN Annual ReportFiscal year ended March 31, 2017 2017114-8 Motoshiro-cho, Naka-ku, Hamamatsu, Shizuoka 430-0946, Japan

TEL: +81-53-450-3250

Printed in Japan

TokyoHamamatsu

Shizuoka Prefecture

Nagoya

Kyoto

Osaka

1 2

HAMASHIN Annual Report 2017 HAMASHIN Annual Report 2017

Contents

About Hamamatsu Shinkin Bank 1

Latest Business Results and Future Prospects 2

Hamashin Corporate History 3

Board of Directors and Corporate Auditors/Organization Chart 4

Review of Operations 5

Compliance 7

Outline of Hamamatsu Shinkin Bank (As of March 31, 2017)

Head Office: 114-8 Motoshiro-cho, Naka-ku, Hamamatsu, Shizuoka 430-0946, JapanEstablished: April 10, 1950 Deposits: ¥1,606.3 billion (including certificates of deposit) Loans and Bills Discounted: ¥886.8 billionShare Capital: ¥1.21 billion (76,921 members)

Employees: Hamamatsu Shinkin Bank (non-consolidated): 1,074Hamashin Group (total): 1,381Number of Branches: 59 branches, external ATM corners: 56

Principal Business Operations: Deposits, loans, investments in marketable securities, domestic exchange, foreign exchange, agency business

Business Region:Hamamatsu-city, Iwata-city, Fukuroi-city, Kosai-city, Kakegawa-city, Omaezaki-city, Kikugawa-city, Toyohashi-city, Makinohara-city, Shimada-city, Shuchi-gun, Yoshida-cho (Haibara-gun)

Overseas Office:Bangkok Representative Office

Established in 1950, Hamamatsu Shinkin Bank (the Bank) is a shinkin bank headquartered in Naka Ward of Hamamatsu-city in Shizuoka Prefecture. With western Shizuoka Prefecture, centering on Hamamatsu, as its business area, Hamamatsu Shinkin Bank ranks number-one in terms of the volume of deposits and loans among the 12 shinkin banks within Shizuoka Prefecture. Western Shizuoka Prefecture is situated in the geographic center of Japan and is noted for its mild climate, attributes that have helped spur the development of a diverse range of industries in the region over many years. Renowned as the birthplace of such leading companies as Suzuki Motor

Corporation, Yamaha Corporation and Honda Motor Co., Ltd., this region has witnessed the development of such industries as the automobile, musical instruments and machinery and metals industries, and has supported Japan’s economy as a manufacturing hub. Hamamatsu, the location of our Head Office, is also home to numerous manufacturing plants and has attracted a large number of expat workers from overseas countries, which gives the city a rich international flavor. The Bank is commonly referred to by local residents as “Hamashin” and has earned their patronage over the long course of more than 60 years.

Latest Business Results and Future ProspectsAbout Hamamatsu Shinkin Bank

Basic Principles

Customer first principle We shall reflect the opinions of customers in our business operations and provide them with high-quality financial services.

Contribute to the regional community We shall contribute to the development of local communities as a member of the community.

Compliance

We shall undertake honest and sound business operations with respect for compliance and social norms.

Corporate vitality

We shall strive to raise the capabilities of executives and employees and foster a vibrant corporate culture.

Supporting All Business Operators 8

Business Results 9

Non-Consolidated Balance Sheets 11

Non-Consolidated Statements of Income and Unappropriated Retained Earnings 12

Consolidated Balance Sheets 13

Consolidated Statements of Income and Retained Earnings 14

Business ResultsOur business results on a non-consolidated basis for the fiscal year ended March 2017 were as follows. There was a steady increase primarily in individual deposits, and the year-end balance of deposits, including negotiable certificates of deposit, rose ¥51.1 billion, or 3.29%, over the pre-vious fiscal year to ¥1,606.3 billion. The year-end balance of loans and bills discounted rose ¥12.1 billion, or 1.38%, to ¥886.8 billion, due to a greater focus on initiatives such as undertaking proactive proposal activities as we conduct activities from a customer perspective based on a new performance evaluation system. At the profit level, we posted net income of ¥3.4 billion despite the various environmental changes faced by the regional econ-omy during the fiscal year.

Business Prospects and Our TasksThe regional economy is expected to continue encountering drastic changes, including a declining population and the hol-lowing out of industry. Under these circumstances, we believe that our most important mission as a regional financial institution is to achieve regional revitalization by committing ourselves to helping customers resolve their respective issues

and proactively providing financing.In fiscal 2018, we will start a new medium-term management plan, “Hamashin – The Bank to Co-Create Vibrancy.” The plan prescribes the Bank’s ideal future image as “a shinkin bank that serves customers, responds to all customer needs and leads the way in creating prosperous communities.” The plan is also based on the theme of building a “customer-first business model” that can generate regional vitality by carrying out even wider and deeper activities from a customer perspective and creating shared value with customers. For this purpose, the Bank will promote initiatives based on pil-lars such as “conduct activities from a customer perspective,” “raise the vitality of human resources,” “spur and continue inno-vation” and “expand business domains” as we aim to transition away from a traditional “old-style financial services business” toward a “comprehensive services business that fully utilizes human resources, information and community resources.” Based on these endeavors, we will carry through with the build-ing of a customer-first business model and establish a foothold for realizing the Bank’s ideal future image as we fulfill our social mission as a financial institution truly needed by customers and the local communities we serve.

Young members of Hamashin staff

3 4


Internal Audit Division

Hamashin Corporate History

April 1950 Hamamatsu Credit Association established in accordance with the Small- and Medium-Sized Enterprise Cooperatives Act

May 1950 Head Office opened in Renjaku-cho (near the present Renjaku post office) and business commenced

November 1951 Reorganized as a shinkin bank and became Hamamatsu Shinkin Bank along with the Enforcement of the Shinkin Bank Act

December 1952 Head Office moved to Tenma-cho (location of the current Tenma-cho Branch)

March 1962 Established the Hamamatsu Shinkin Bank Basic Policies

October 1963 Deposits reach ¥10.0 billion

October 1968 Computers introduced and offline processing begins

October 1969 Head Office moved to newly constructed building in Motoshiro-cho

December 1974 Deposits reach ¥100.0 billion

October 1977 Operation Center moved to newly constructed building

April 1978 Logo mark established

October 1981 Third online system goes into operation and installation of automated teller machines (ATMs) commenced

June 1987 Hamashin Recreation Center completed

October 1989 Deposits reach ¥500.0 billion

July 1991 Hamashin Management Academy launched

April 1992 Hamashin Consultation Plaza opened in Nakazawa-cho as a specialized consultation counter

May 1997 Hamashin website established

August 1998 Internet banking (home banking/firm banking) transactions commenced

December 1999 Deposits reach ¥1,000.0 billion

April 2000 Marked the 50th anniversary of our establishment

November 2001 Inaugurated the Hamashin Housing Association

June 2005 Implemented the first major structural reforms in 28 years

April 2006 Established the Hamamatsu Shinkin Bank Basic Principles (revised version of the Basic Policies established in 1962)

January 2007 Established the corporate message “For your smile—We want to meet your smiling face”

July 2007 Held the 1st Hamashin Business Matching Fair

October 2007 Established the Shizuoka Prefecture Western Region Shinkin Economic Research Institute jointly with Enshu Shinkin Bank

October 2007 Birth of Hamashin image character “Hama-touch”

November 2008 Held the 1st Sanen-nanshin Shinkin Summit and the Sanen-nanshin Shinkin Product Exhibition

January 2009 Became a member of the Tokai Region Shinkin Joint Business Center and online system modified

April 2010 Marked the 60th anniversary of our establishment

April 2012 Launched the medium-term management plan “Reform! Meet New Challenges”

January 2014 Opened Bangkok Representative Office, the first overseas office

June 2015 Opened a new branch with full banking capabilities (Fukuroi Branch) for the first time in 18 years

April 2017 Launched the new medium-term management plan “Hamashin – The Bank to Co-Create Vibrancy”

Director Toshiharu Suzuki

Director Hideto Tago*1

Director Takahiko ShimizuPresident Kenichiro Mimuro Director Hisao MiwaSenior Managing Director Junichi Noda

Standing Corporate Auditor Hiroaki SatoDirector Kazuhiro HashishitaManaging Director Masanori Takahashi

Corporate Auditor Kenichi Suzuki

Director Tomoo Takahashi

Corporate Auditor Satoshi Nakamura *2

Director

Corporate Auditor

Managing Director Mutsumi MuramatsuSeidai Hirai

Naoko Tatsumi *2Director Akihiko TsukuraMasahiko Tsujimura

Board of Directors and Corporate Auditors As of July 1, 2017

Organization Chart As of April 1, 2017

Life Design DivisionGeneral Planning Department

Strategic Planning DivisionAccounting Department

Legal Risk Management Department

Risk Management Department

Secretarial Office

Property Administration Department

Career Development Department

Fund & Securities Administration Department

General Affairs DepartmentGeneral Affairs Division

Personnel Department

Treasury & Securities Department

Mental Health Consultation Office

Bangkok Representative OfficeInternational Department

Board of Directors

President

Operations Department ⅠOperations Division

Systems DivisionSenior Managing Director

Operations Department Ⅱ

Managing Director

Planning & Development DepartmentGeneral Members’ Meeting

Management Committee

Operation & Administration Department

Area Planning & Business Support Office

Branch Management DepartmentBranch Management Division

Customer Service DepartmentBoard of Corporate Auditors

Corporate Auditor

Credit Supervision CommitteeCorporate Strategy Department

Corporate Business Division Regional Business Development Department

Retail-Banking DepartmentRetail-Banking Division

Loan Center

Corporate Credit DepartmentCredit Supervision Division

Personal Credit Department

Credit Assessment Department

Credit Monitoring Department

Business Operations Department

Risk Management Committee

Business Support Department

Loan Operations Department

Business Support Division

Operations Support Division

Asset Liability Management Committee

Community Contributions Department

Compliance Committee

Risk Management Division

Innovation Division

Personnel Division

Treasury & Securities Division

Director

*1 Hideo Tago is an outside director appointed as provided for in the Industrial Agreement on Measures to Improve the Functionality of General Members’ Meeting adopted within the shinkin bank industry.*2 Satoshi Nakamura and Naoko Tatsumi are outside corporate auditors appointed as provided for in Article 32-5 of the Shinkin Bank Act.

Managing Director

Director Hiroyasu HanbaBusiness Guide when starting business

Citizen’s mailer (envelope)

In 1952, we moved the Head Office to Tenma-cho (the original building of the Hamamatsu Branch of 35 Bank). Immediately prior to this move, the building was used as a movie theater (Hamamatsu Theater).

In 1969, the Head Office Sales Department/Headquarters was built across from Hamamatsu City Hall.

In 1977, we constructed the Operation Center in Wago-cho in preparation for extensive and more sophisticated use of computer systems.

In 1992, we opened the Hamashin Consultation Plaza in Nakazawa-cho, where specialist staff respond quickly and accurately to inquiries from customers.

5 6


Economic conditionsIn fiscal 2017, the Japanese government continued to imple-ment bold fiscal and monetary policies. In the first half of the fiscal year, the outlook of business performance became unclear at one point, as the yen strengthened in reaction mainly to the impact of the EU referendum held in the United Kingdom, in which Exit voters exceeded Remain voters. The exchange rate reversed in the latter half of the fiscal year upon rising expectations for the new Trump Administration policies and as a result of an increase in U.S. interest rates, spurring signs of recovery in business performance.

Industry trends in Hamashin’s business regionIn the Bank’s service region, the upswing in corporate business performance and growing tourism demand have been generat-ing certain favorable effects. However, the momentum of the overall Japanese economy has not yet reached a positive growth cycle in which an increase in wages leads to a rise in prices. Coupled with uncertainties about the implementation of policies by the Trump Administration and concerns for acceler-ated moves toward protectionism in the EU member countries, the situation still precludes optimism concerning the future of the regional economy.As a regional financial institution, we assume an increasingly crucial responsibility of proactively providing support to our customers and contributing to regional revitalization through such support. Specifically, we need to further strengthen and enhance our capability to provide consultation services to help customers find solutions to their respective issues in addition to flexibly satisfying their funding needs.

In fiscal 2017, the final year of our new medium-term manage-ment plan, “Reform! Meet New Challenges,” we demonstrated both internally and externally our drastic shift to strengthening activities from a customer perspective (“customer-perspective activities”). In doing so, we concentrated on establishing a system to provide a full-spectrum of consultation services, encouraging a work-life balance and promoting business innova-tion. Under the theme of “increasing our presence as a regional financial institution,” we undertook the following measures with a view to playing a greater role in regional revitalization.

1 HEART– Hamashin seeks to win an overwhelming share within the “hearts” of our customers. (i.e., Enhancing our issue-solving functionality)

◦ The regional economy is facing sweeping changes, such as a declining and aging population with a lower birthrate and a drop in the number of business operators causing a change in the industrial structure and the hollowing out of industry. Amid this environment, we made efforts to enhance our issue-solving functionality, including proactively providing financing to companies operating in our service region and to individual customers. For creating new industries within the region and countering individual issues faced by custom-ers, from improving management to overseas advancement and business succession, we strove to fulfill our three roles as a consultant, coordinator and producer in an integrated manner. First, we provided consulting services with a focus on business assessments. As a coordinator, we served to encourage collaboration between our customers and exter-nal support organizations and experts. Finally, we acted as a producer to create new value.

◦ With the STRATEGY CENTER OF REGIONAL REVITALIZA-TION established within the Corporate Business Division taking the lead, we rolled out specific measures for regional revitalization in fiscal 2017. Efforts included: participation in the Council to Promote Utilization of Hamamatsu FSC-Certi-fied Timber and CLT, a public-private initiative to promote the use of locally produced “Tenryu” timber certified by the Forest Stewardship Council (FSC) and cross-laminated timber (CLT); promotion of crowdfunding projects to support business start-ups and industrial revitalization; and facilitat-ing business tie-ups to help expand sales channels for excellent technologies and products of local medium- to small-size enterprises.

◦ To provide even greater assistance to business operator customers in setting up operations overseas by offering a

range of financial services and providing relevant local information, we formed a business alliance with State Bank of India, a leading commercial bank in India, in fiscal 2017, in addition to local banks in Indonesia, the Philippines and Vietnam.

◦ With a view to becoming a community exchange hub to form a link among local residents, each branch hosted various fun events to attract customers and facilitate the spirit of hospital-ity. In fiscal 2017, we renovated and reopened the Mishima Branch under the concept of “a safe and secure branch to connect people, information and people’s livelihood.” After the close of business on weekdays, the renovated branch makes its lobby space available for community members until 5 p.m. This also includes setting up a projector to provide audio and visual for customers to enjoy during their wait.

2 VALUE– Hamashin is creating its own, unique structure to gener-ate higher added value. (i.e., Rebuilding our management foundation)

◦ In April 2016, we introduced a new performance evaluation system that places greater emphasis on the process of activ-ities. The new system mainly evaluates our customer-per-spective activities, in which we increase customer contact to have an in-depth knowledge of our customers and offer solutions to their issues and needs.

◦ With the Innovation Division established in April 2015 taking the lead, we forged ahead with business innovation for increasing customer satisfaction and convenience and steadily undertook relevant activities, including the develop-ment of an IT system and establishment of a structure necessary for implementing the system. We have also been facilitating the proactive engagement of branch employees in our business innovation efforts. By leveraging the Good Ideas Planning System, a scheme to propose business reform, we have been fostering their sense of ownership and encouraging them to take action to increase customer satisfaction and convenience.

◦ We organized a committee to consider the benchmarking of financial intermediation services with a plan to use the result-ing benchmarks in formulating our original business model, which aims to attain regional revitalization by undertaking customer-perspective activities. The committee has been examining appropriate benchmarks for use as evaluation indices in building such a business model.

◦ In response to the rapid evolution of Fintech (financial technology), we set up the Fintech Utilization Study Group in July 2016 to gather relevant information and improve our IT literacy with a view to utilizing the technology in the future.

3 ENERGY– Hamashin serves as a vital source for the Bank’s service region. (i.e., Implementing CSR-based management)

◦ As a means to ensure thorough implementation of effective compliance (adhering to laws and regulations) and further strengthen our management control system for providing both customer convenience and protection, we continued to review and raise the sophistication of our internal control and risk management systems, business continuity planning (BCP) and IT governance. Simultaneously, we continuously reviewed our risk management method and increased the accuracy of various risk and profit controls based on integrated risk management.

◦ In accordance with the revised Industrial Agreement on Measures to Improve the Functionality of General Members’ Meeting, we reviewed and adjusted the process to deter-mine persons to serve on a selection committee, which will select general members. The revision to the Industrial Agree-ment has been made to facilitate further improvements in management of the General Members’ Meeting and in the management control functionality assumed mainly by the Directors and Corporate Auditors.

◦ In seeking to improve our business vitality by respecting diversity in working styles, we established the Life Design Division in April 2016 as part of our efforts to encourage a work-life balance for employees through better time man-agement. In addition, the Project Team for Promoting Women’s Participation, which aims to promote the active participation of all employees regardless of their gender, has been steadily undertaking activities since its establishment and has defined our specific course of action.

Economic and Financial Environment in Fiscal 2017 Fiscal 2017 Business Policies and Initiatives

Review of Operations

7 8


Compliance Supporting All Business Operators

Overseas Business Support Services

Compliance System

Board of Directors

1) Prohibits unlawful behavior of board members

2) Convenes the Board of Directors 3) Reports to the Board of Directors

4) Reports opinions to the General Members’ Meeting

5) Lists in the auditing report

Standing Corporate Auditor

Risk ManagementCommittee

DisciplinaryCommittee

Employees

LawyersCertified Public Accountant

Public interestreporting Report

Risk Management Division

1) Plans and prepares basic policies concerning compliance

2) Gathers and passes on information concerning compliance

3) Serves as consultation point for compliance 4) Reports to supervisory authorities on compliance 5) Convenes regular meetings on compliance 6) Serves as contact point for reporting accidents,

misconduct incidents and matters concerning pubic interest

7) Handles matters concerning sexual and power harassment

8) Handles matters concerning overall management of responses to anti-social forces and others

9) Handles matters concerning management of conflicts of interest

Internal Audit Division

1) Handles matters concerning auditing of compliance system

2) Handles matters concerning investigating and clarifying reports on reporting accidents, misconduct incidents and matters concerning pubic interest

Compliance Committee

Attendance by non-member executive or employee can be requested when deemed necessary.

Observer

Hotline (Risk Management Division)

Sexual and power harassment hotline (Risk Management Division)

Strategic Planning Division Operations Division

Business Support Division

General Affairs Division1) Handles matters concerning responses to

anti-social forces and others2) Handles matters concerning business

entertainment, gift giving and others

Personnel Division3) Handles matters concerning punitive measures 4) Handles matters concerning compliance training 5) Promotes appropriate personnel rotations and

taking allotted time off

Branch Management Division1) Serves as a contact point for complaints and other matters from each branch 2) Handles matters concerning investigating and clarifying the cause of complaints and others

Representative Director/Directors 1) Convenes the Board of Directors 2) Reports to the Board of Directors

(Management Committee)

Head Office and Branches/Person promoting compliance implementation 1) Business operation compliance audits at branches2) Implement training on compliance3) Serve as contact point for consultations

concerning compliance with staff of branches 4) Record and report accidents and misconduct

5) Record and report external complaints6) Responses, whistle blowing, recording and

reporting on anti-social forces and others 7) Record and report on conflicts of interest.

Life Design Division, Treasury & Securities Division, Innovation Division, Systems Division,

Corporate Business Division, Retail-Banking Division, Operations Support Division

Hamashin’s Business Support Structure

Cust

omer

s

Cust

omer

s

We offer support appropriately tailored to each stage of the corporate lifecycle.

Consultation on business startups and launch of new businesses

Consultation on expansion of sales channels

Consultation on business management in general

Consultation on business succession and M&A

As of July 1, 2017

Compliance involves observing various rules beginning with a series of laws and regulations as well as social norms in carrying out daily operations. Hamashin designates thorough compliance as a top management issue and is working to strengthen its compliance system with the aim of becoming a financial institution earning greater trust from customers.

Compliance Policy Hamashin hereby stipulates its Basic Policy on Compliance to be observed in undertaking business operations in order to ensure that we comply with all laws, government and ministerial ordinances and official notices, fulfill a public mission and social responsibilities assigned to us, and protect the interests of customers.

Public mission and social responsibilities1. Always recognizing the significance of a public mission and

social responsibilities of a financial institution, we conduct business operations in a sound and appropriate manner and strive to earn trust from all stakeholders, including customers.

Hamashin

Branches Headquarters International Department

Regional BusinessDevelopment Department

Corporate Strategy Department

Business Support Department

■ Hamamatsu Chamber of Commerce and Industry

■ Organization for SME Support, JAPAN

■ Hamamatsu Agency for Innovation■ Shizuoka Prefecture Western

Region Shinkin Economic Research Institute

■ Shizuoka Guarantee■ Shizuoka Prefecture Small-

and Medium-sized Enterprise Revitalization Support Council, etc.

Overall management support■ Shizuoka University■ Hamamatsu University School of

Medicine■ Shizuoka Institute of Science

and Technology ■ Seirei Christopher University ■ Shizuoka Sangyo University ■ Hamamatsu Gakuin University■ Shizuoka University of Art

and Culture ■ Tokoha University ■ Toyohashi University of

Technology

Affiliated universities■ Small- and medium-

size enterprise management consultants

■ IT coordinators■ Certified tax

accountants■ Certified public

accountant ■ Attorneys and judicial

scriveners■ Former company

employees, etc.

Consultants and experts

Cooperation with external support institutions and experts

Domestic

Overseas business support■ Japan External Trade Organization (JETRO)■ Shizuoka International Business Association (SIBA)■ Hamamatsu-city■ Shinkin Central Bank■ Affiliated non-life insurance companies ■ Affiliated leasing companies■ Affiliated consultants, etc.

■ Shinkin Central Bank’s business bases in Asia■ Local financial institutions■ Local consultant firms■ Accounting firms■ Temporary employment agencies■ Industrial complex management firms, etc.

Overseas

Establishment of a compliance system2. We pledge to comply with all laws, including the Shinkin Bank

Act, as well as government and ministerial ordinances and official notices, and undertake honest and sound business operations.

Establishment of an internal control system3. We work to prevent violations of laws and regulations by

establishing a high-quality internal control system.

Protection of customer information4. We strictly manage customer information while complying

with all relevant laws and regulations and strive to prevent external leakage and other incidents.

Exclusion of anti-social forces5. We do not conduct business with and are determined to fight

against anti-social forces, which violate laws and disturb public order and are a threat to public safety.

* In this policy, the term “customers” means customers and potential customers of Hamashin.

* In this policy, the term “business operations” refers to general and all operations of a financial institution.

To support local business operations of customers operating over-seas, we regularly hold a business operator customers information exchange meeting (“Hamashin-kai”) at a venue outside Japan. During fiscal 2017, we held Jakarta Hamashin-kai and Bangkok Hamashin-kai, in which a total of some 150 persons from our busi-ness operator customers participated. These exchange meetings were well received by the participants as a very useful opportunity to gather information.Jakarta Hamashin-kai held on February 13, 2017

Address: 19th Floor, 1901, Athenee Tower, 63 Wireless Road, Lumpini, Pathumwan, Bangkok 10330, Thailand

TEL: +66-(0)2-168-8303

FAX: +66-(0)2-168-8305

Business hours: 9:00 to 17:00 (local time), Monday to Friday (excluding Thai national holidays)

Bangkok Representative Office

The Hamashin Overseas Business Support Center collaborates with such external support organizations as the Japan External Trade Organization (JETRO), local governments and Shinkin Central Bank to offer overseas business support services matched to customer needs. Our service lineup includes providing information on local business and other conditions and assisting in the formulation of plans for setting up operations overseas.In March 2017, we signed a memorandum of understanding (MOU) concerning a business alliance with State Bank of India, a leading commercial bank in India. This was our fourth MOU concluded with an overseas bank, following Indonesia, Vietnam and the Philippines. These business alliances have enabled us to provide even more effective support to our customers wishing to operate overseas through the provision of various financial services and relevant local information.

1,200,000

1,100,000

0

1,300,000

1,400,000

1,500,000

1,700,000

1,600,000

Millions of yen/Figures in parentheses are a year-on-year comparison.


FY2017

FY2017

700,000

0

800,000

900,000

FY2015 FY2016

FY2016FY2015


FY2017FY2015 FY20160

2,000

3,000

1,000

5,000

4,000

1,555,158（2.20%）1,521,674

（4.17%）

1,606,351（3.29%）

853,849（1.89%）

874,695（2.44%）

886,840（1.38%）

3,521（35.38%）

3,422（-2.80%）

2,600（-36.86%）


FY2017FY2015 FY20160

4,000

8,000

6,000

2,000

5,011（39.46%）

4,966（-0.90%）

3,593（-40.62%）


FY2017FY2015 FY20160

4,000

8,000

6,000

2,000

5,989（3.28%） 5,639

（-5.85%）5,799

（16.27%）

1,200,000

1,100,000

0

1,300,000

1,400,000

1,500,000

1,700,000

1,600,000



FY2017

FY2017

700,000

0

800,000

900,000

FY2015 FY2016

FY2016FY2015


FY2017FY2015 FY20160

2,000

3,000

1,000

5,000

4,000

1,555,158（2.20%）1,521,674

（4.17%）

1,606,351（3.29%）

853,849（1.89%）

874,695（2.44%）

886,840（1.38%）

3,521（35.38%）

3,422（-2.80%）

2,600（-36.86%）


FY2017FY2015 FY20160

4,000

8,000

6,000

2,000

5,011（39.46%）

4,966（-0.90%）

3,593（-40.62%）


FY2017FY2015 FY20160

4,000

8,000

6,000

2,000

5,989（3.28%） 5,639

（-5.85%）5,799

（16.27%）

9 10


Even though the economic trends in Japan remained slow, we posted net income of ¥3.4 billion, and net business profit, which is obtained through our main business, amounted to ¥5.6 billion.

The balance of deposits, including negotiable certificates of deposit, increased steadily with the support of customers and residents of the region.

The balance of loans and bills discounted increased from the end of the previous fiscal year as the Bank endeavored to provide solutions to varying needs and issues of customers as part of its efforts to contribute to regional development.

Hamashin also acquired an upper rank “A” in issuer ratings for fiscal 2017 from Rating and Investment Information, Inc. (R&I), which is a rating institution. The current rank was received in recognition of our enhanced shareholders’ equity, financial stability, finely tuned customer response capabilities and other relevant aspects.

Hamashin’s non-consolidated capital adequacy ratio was 14.45% as of the end of March 2017, which markedly surpassed 4.00% of the domestic standard of financial institutions operating in Japan and signifies sound management. Sound-ness is also evidenced by the majority of shareholders’ equity comprised of a reserve for retained earnings from profits.

Various changes in the economic environment precluded a uniform recovery in business performance of our business operator customers, and we focused on providing managerial support and smooth financing. As a result, in fiscal 2017, risk- monitored loans totaled ¥58,636 million, which accounted for 6.61% of total loans and bills discounted. Additionally, the coverage ratio due to collateral and guarantees and reserve for possible loan losses was 91.8%.To prepare for the accrual of losses in the future, Hamashin reserves ¥10,823 million as a reserve for possible loan losses in addition to securing ¥133.7 billion of net assets (shareholders’ equity in a broad sense) by making efforts to reinforce its

retained earnings through earning stable profits every term.Going forward, Hamashin will improve and thoroughly promote its risk control system while also undertaking concerted efforts to contribute to rebuilding and improving the management of client companies as a primary responsibility of a regional financial institution.

Hamashin’s Ratings

Non-Consolidated Capital Adequacy Ratio

Risk-Monitored Loans for Fiscal 2017

R&I Rating Symbols and Definitions（Issuer Rating）AAA

AA

BBB

BB

B

CCC

CC

A

Highest creditworthiness supported by many excellent factors.

Creditworthiness is suf�cient, though some factors require attention in times of major environmental changes.

An obligation is in default or highly likely to default. The obligation in default may only be partially recovered.

An obligation is in default or likely to default. The obligation in default may not be recovered in full.

Creditworthiness is questionable and some factors require constant attention.

Creditworthiness is suf�cient for the time being, though some factors require due attention in times of environmental changes.

Very high creditworthiness supported by some excellent factors.

An obligation is in default and may hardly be recovered. C

High creditworthiness supported by a few excellent factors.

FY2015 FY2016 FY20170

12.00

15.00

18.00

9.00

6.00

3.00

0

100,000

120,000

80,000

60,000

40,000

20,000

Shareholders’ equity (Millions of yen)

Non-consolidatedcapital adequacy

ratio (%)

■ ■ Shareholders’ equity Non-consolidated capital adequacy ratio

15.09% 14.77% 14.45%

115,675118,387

122,256

Domestic standard

4.00%

* In accordance with the revision of Financial Services Agency Notice No. 21, which provides the calculation method for the capital adequacy ratio, Hamashin calculates the ratio based on the Basel III standard.

* Amount covered by collateral and guarantees includes loans to bankrupt borrowers, delinquent loans, specific reserve as well as general reserve for loans past due three months or more and restructured loans.

Business Results

Ratings Ratings are carried out by rating institutions as a means of ranking whether or not the payment of principal and interest of bonds and deposits are made to investors and/or depositors according to respective agreements or to rank the level of security and credit rating of a company from a fair standpoint.

Risk-monitored loansRisk-monitored loans are loans and bills discounted (assets for financial institutions) for which bor-rowers may not be able to pay back due to various reasons such as the deterioration of business condition. In this respect, in tandem with the FSA’s Financial Inspection Manual, Hamashin pro-motes initiatives to comprehend the status of borrowers and appropriately conducts write-offs or transfer to a reserve for possible loan losses through a strict and fair asset assessment.

Capital adequacy ratio The capital adequacy ratio indicates the percentage of capital among total credit risk assets and is a representative indicator of factors that include the security and soundness of management as well as corporate vitality (resistance to risk). The capital adequacy ratio serves as the benchmark for the Financial Services Agency (FSA) to make official announcements including orders to undertake business improvement initiatives or suspend business.

1,200,000

1,100,000

0

1,300,000

1,400,000

1,500,000

1,700,000

1,600,000



FY2017

FY2017

700,000

0

800,000

900,000

FY2015 FY2016

FY2016FY2015


FY2017FY2015 FY20160

2,000

3,000

1,000

5,000

4,000

1,555,158（2.20%）1,521,674

（4.17%）

1,606,351（3.29%）

853,849（1.89%）

874,695（2.44%）

886,840（1.38%）

3,521（35.38%）

3,422（-2.80%）

2,600（-36.86%）


FY2017FY2015 FY20160

4,000

8,000

6,000

2,000

5,011（39.46%）

4,966（-0.90%）

3,593（-40.62%）


FY2017FY2015 FY20160

4,000

8,000

6,000

2,000

5,989（3.28%） 5,639

（-5.85%）5,799

（16.27%）

■Ordinary profit

1,200,000

1,100,000

0

1,300,000

1,400,000

1,500,000

1,700,000

1,600,000



FY2017

FY2017

700,000

0

800,000

900,000

FY2015 FY2016

FY2016FY2015


FY2017FY2015 FY20160

2,000

3,000

1,000

5,000

4,000

1,555,158（2.20%）1,521,674

（4.17%）

1,606,351（3.29%）

853,849（1.89%）

874,695（2.44%）

886,840（1.38%）

3,521（35.38%）

3,422（-2.80%）

2,600（-36.86%）


FY2017FY2015 FY20160

4,000

8,000

6,000

2,000

5,011（39.46%）

4,966（-0.90%）

3,593（-40.62%）


FY2017FY2015 FY20160

4,000

8,000

6,000

2,000

5,989（3.28%） 5,639

（-5.85%）5,799

（16.27%）

■Net business profit

1,200,000

1,100,000

0

1,300,000

1,400,000

1,500,000

1,700,000

1,600,000



FY2017

FY2017

700,000

0

800,000

900,000

FY2015 FY2016

FY2016FY2015


FY2017FY2015 FY20160

2,000

3,000

1,000

5,000

4,000

1,555,158（2.20%）1,521,674

（4.17%）

1,606,351（3.29%）

853,849（1.89%）

874,695（2.44%）

886,840（1.38%）

3,521（35.38%）

3,422（-2.80%）

2,600（-36.86%）


FY2017FY2015 FY20160

4,000

8,000

6,000

2,000

5,011（39.46%）

4,966（-0.90%）

3,593（-40.62%）


FY2017FY2015 FY20160

4,000

8,000

6,000

2,000

5,989（3.28%） 5,639

（-5.85%）5,799

（16.27%）

■Net income

Growth in profits Balance of deposits (including certificates of deposit)

Balance of loans and bills discounted

Risk-monitored loans (coverage ratio)

FY2017

621

54,548

3

3,462

58,636

100.0%

94.4%

100.0%

49.4%

91.8%

Unit: Millions of yen

Risk-monitored loans

Total risk-monitored loans

Amount covered by collateral and guarantees

Ratio to total amount of loans

Loans to bankrupt borrowers

Delinquent loans

Loans past due three months or more

Restructured loans

Potentially bankrupt borrowers

Substandard borrowers

Bankrupt borrowers

Effectively bankrupt borrowers

53,814

6.61%

FY2016

1,243

55,533

5

3,420

60,202

100.0%

94.8%

100.0%

46.6%

92.2%

55,483

6.88%

Borrower classification under self-assessment

11 12


Non-Consolidated Balance Sheets Non-Consolidated Statements of Income

Unappropriated Retained Earnings

As of March 31, 2017 and 2016 2017 2016 2017

Assets

Cash and Due from Banks ¥ 263,931 ¥ 223,311 $ 2,352,535

Call Loans －－－

Monetary Claims Bought 112 275 998

Money Held in Trusts －－－

Securities 659,871 640,281 5,881,727

Loans and Bills Discounted 886,840 874,695 7,904,804

Foreign Exchanges 1,368 820 12,193

Other Assets 10,638 10,987 94,821

Fixed Assets 16,544 16,806 147,464

Prepaid Pension Cost 252 448 2,246

Deferred Tax Assets －－－

Customers’ Liabilities for Acceptances and Guarantees 23,810 21,957 212,229

Reserve for Possible Loan Losses (10,823) (10,291) (96,470)

Total Assets ¥ 1,852,546 ¥ 1,779,293 $ 16,512,576

Liabilities and Net Assets

Liabilities

Deposits ¥ 1,596,652 ¥ 1,545,625 $ 14,231,678

Certificates of Deposit 9,698 9,532 86,442

Foreign Exchanges 0 4 0

Other Liabilities 84,381 58,578 752,125

Reserve for Employee Bonuses 1,098 1,065 9,786

Reserve for Employee Retirement Benefits 1,124 1,120 10,018

Other Reserves 953 1,123 8,494

Deferred Tax Liabilities 1,088 3,606 9,697

Acceptances and Guarantees 23,810 21,957 212,229

Total Liabilities 1,718,808 1,642,614 15,320,510

Net Assets

Share Capital 1,212 1,209 10,803

Legal Reserve 1,209 1,201 10,776

Special Reserve 114,613 111,113 1,021,597

Unappropriated Retained Earnings 3,814 3,972 33,995

Total Members’ Equity 120,849 117,496 1,077,181

Net Unrealized Gains on Available-for-Sale Securities 12,889 19,183 114,885

Total Net Assets 133,738 136,679 1,192,067

Total Liabilities and Net Assets ¥ 1,852,546 ¥ 1,779,293 $ 16,512,576

For the Years Ended March 31, 2017 and 2016 2017 2016 2017

Income

Interest on: ¥ 19,357 ¥ 19,786 $ 172,540

Loans and Bills Discounted 12,773 13,375 113,854

Securities 5,934 5,754 52,898

Others 649 656 5,787

Fees and Commissions 2,932 3,073 26,137

Other Income 2,212 1,028 19,723

Total Income 24,502 23,888 218,400

Expenses

Interest on: 577 797 5,148

Deposits 535 718 4,773

Other 42 79 375


General and Administrative Expenses 15,842 15,815 141,214

Other Expenses 1,509 610 13,451

Total Expenses 19,778 18,958 176,295

Income Before Income Taxes 4,723 4,929 42,105

Income Taxes

Current 1,482 1,183 13,210

Deferred (180) 224 (1,612)

Net Income ¥ 3,422 ¥ 3,521 $ 30,506

Notes 1. Amounts of less than one million yen have been omitted. 2. U.S. dollar amounts are converted for convenience only at ¥112.19 per U.S.$1.00, the rate prevailing on March 31, 2017.

Thousands of U.S. dollars (Note 2)Millions of yen (Note 1)


At Beginning of the Year ¥ 3,814 ¥ 3,972 $ 33,999

Appropriation 3,574 3,580 31,865

Transfer to Legal Reserve 2 8 22

Cash Dividends for Member Common Shares 72 72 645

Special Reserve 3,500 3,500 31,197

At End of the Year ¥ 239 ¥ 391 $ 2,134




13 14


Consolidated Balance Sheets Consolidated Statements of Income

Retained Earnings


Income

Operating Income ¥ 19,348 ¥ 19,776 $ 172,458

Loans and Bills Discounted 12,767 13,368 113,803

Securities 5,931 5,752 52,867

Others 649 656 5,787


Other Income 5,767 4,368 51,404

Total Income 28,170 27,340 251,100

Expenses

Operating Expenses 577 797 5,145

Deposits 535 718 4,771

Others 41 79 374


General and Administrative Expenses 15,606 15,595 139,109

Other Expenses 5,104 3,976 45,497

Total Expenses 23,004 21,987 205,050

Income Before Income Taxes 5,166 5,353 46,049

Income Taxes

Current 1,609 1,302 14,348

Deferred (166) 247 (1,479)

Minority Interests in Income 61 51 547

Net Income ¥ 3,661 ¥ 3,750 $ 32,632

As of March 31, 2017 and 2016 2017 2016 2017

Assets

Cash and Due from Banks ¥ 264,583 ¥ 223,963 $ 2,358,347

Call Loans －－－

Monetary Claims Bought 112 275 998

Monetary Held in Trusts －－－

Securities 659,662 640,063 5,879,864

Loans and Bills Discounted 885,390 873,295 7,891,879

Foreign Exchanges 1,368 820 12,193

Other Assets 21,249 20,796 189,401

Fixed Assets 16,027 16,514 142,855

Prepaid Pension Cost 252 448 2,246

Deferred Tax Assets 114 129 1,016

Customers’ Liabilities for Acceptances and Guarantees 23,810 21,957 212,229

Reserve for Possible Loan Losses (11,017) (10,498) (98,199)

Total Assets ¥ 1,861,555 ¥ 1,787,769 $ 16,592,878

Liabilities and Net Assets

Liabilities

Deposits ¥ 1,594,870 ¥ 1,543,895 $ 14,215,794

Certificates of Deposit 8,678 8,512 77,350

Other Liabilities 92,183 66,094 821,668

Foreign Exchanges 0 4 0

Reserve for Employee Bonuses 1,150 1,122 10,250

Reserve for Employee Retirement Benefits 1,229 1,224 10,954

Other Reserves 968 1,138 8,628

Deferred Tax Liabilities 1,088 3,606 9,697

Acceptances and Guarantees 23,810 21,957 212,229

Total Liabilities 1,723,982 1,647,555 15,366,628

Net Assets

Share Capital 1,212 1,209 10,803

Retained Earnings 122,697 119,109 1,093,653

Total Members’ Equity 123,909 120,318 1,104,456

Net Unrealized Gains on Available-for-Sale Securities 12,889 19,183 114,885

Minority Interests 773 712 6,890

Total Net Assets 137,572 140,214 1,226,241

Total Liabilities and Net Assets ¥ 1,861,555 ¥ 1,787,769 $ 16,592,878


Thousands of U.S. dollars (Note 2)Millions of yen (Note 1) Thousands of U.S. dollars (Note 2)Millions of yen (Note 1)


At Beginning of the Year ¥ 119,109 ¥ 115,429 $ 1,061,672

Changes during the Year 0 0 0

Net Income 3,661 3,750 32,632

Cash Dividends for Member Common Shares 72 71 642

Decrease by Merger －－－At End of the Year ¥ 122,697 ¥ 119,109 $ 1,093,662



hamashin annual report 2017 - 浜松信用金庫 annual report fiscal year ended march 31, 2017 2017...

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