Citibank Japan Ltd. Annual Report

Transcription

Citibank Japan Ltd.
Annual Report
For the Fiscal Year Ended March 31, 2015
Table of Contents
Message from the CEO
1
Company Overview
2
Our History
5
Management Strategy
6
Business Outline
8
Risk Management Framework
15
Compliance Framework
17
Diversity and CSR Activities
18
List of CJL's branches in Japan
19
Citibank Japan Ltd. Financial Information under Japanese GAAP
For the Fiscal Year Ended March 31. 2015
20
1. Matters Related to Principal Business
2. Financial Statements
3. Market Value Information
4. Major Shareholders
5. Disclosure Items Based on Pillar 3 of Basel III
Message from the CEO
To Our Valued Customers,
On June 1, 2015, I assumed the role of President & CEO of Citibank Japan
Ltd. and I am honored to lead this company and proudly serve our clients
as we have been doing over our 113 year history in Japan. Over that time
Citibank Japan has built a reputation for providing innovative and high
quality services to clients across all of our businesses. I am determined to
work with our employees to further strengthen our business and continue to
improve the quality of our products and services for our clients in Japan
and around the world.
In late December 2014, Citi announced that it had reached a definitive
agreement to sell Citibank Japan’s entire retail banking business to
Sumitomo Mitsui Banking Corporation. Following the sale, expected to
close on November 1, 2015, Citibank Japan will continue to deliver the
power of Citi’s unrivalled global network to its Japanese and
non-Japanese corporate, institutional and governmental clients in Japan by focusing on its
corporate banking, markets and transaction services businesses.
Citibank Japan is committed to being a bank that meets local market expectations, with a strong
compliance and governance framework; to serving our clients; and to making our contribution as
part of Japan's society and economy.
Thank you very much for your continued patronage and support.
July 2015
Anthony P. Della Pietra, Jr.
Representative Director, President & CEO
Citibank Japan Ltd.
1
Company Overview
Company Profile
Company Name
Head Office Address
Bank Code
Head Office Branch Code
Telephone Number
Commencement of Operations
Business Overview
Number of Employees
Number of Locations
Directors and Statutory Auditors*
Representative Director, President
Representative Director
Director
Director
Director
Director
Statutory Auditor (full-time, outside)
Statutory Auditor (outside)
Statutory Auditor
Citibank Japan Ltd. (“CJL”)
Shin-Marunouchi Building,
5-1, Marunouch 1-Chome,
Chiyoda-ku, Tokyo, 100-6520
0401
730
0120-039-104 or 03-6897-5000
July 1, 2007 (International Banking Corporation, a
predecessor to Citibank, opened its Yokohama branch
in October 1902)
As one of Citi's core businesses in Japan, CJL is
engaged in banking services through the retail
banking business and the corporate banking
business.
1,728 (As of March 31, 2015)
37 (Head Office, Higashi Shinjuku, Okinawa, 32 for
Retail Banking, 2 for Corporate Banking)
Naoki Inoue
Shirish Apte
Phee Boon Kang
Ryozo Hayashi
Tatsuo Tanaka
Mamoru Sato
Toshiaki Kawashima
Hiroto Sakai
(*) Chronological order of appointment for the same title
Executive Officers
CEO
Chief Strategy & Planning Officer and Head of
Business Strategy & Planning Division
Deputy President and Head of Retail Banking
Division
Deputy President and Head of Corporate Banking
Division
Head of Transaction Services Division
Head of Markets Division
Head of Legal Division
Head of Compliance Division
Head of Finance Division
Head of Risk Management Division
Head of Human Resources Division
Head of Operations & Technology Division
Chief Auditor
Deputy Head of Business Strategy & Planning
Division
Naoki Inoue
Grant Carson
Gerald Keefe
Ravi Saxena
Kii Ko
Yasuto Hashinaga
Koichi Tanaka
Susan Aziz
Rajesh Paradkar
Minoru Kondo
Shankar Ramasami
Yuichi Ito
Hiroaki Nigo
(As of July 1, 2015 except for Number of Employees)
2

Organizational Structure
Shareholders
Meeting
Board of
Statutory Auditors
Board of
Directors
Management Committee
President & CEO
Retail Banking Division
Corporate Banking Division
Transaction Services Division
Markets Division
Chief Strategy & Planning Officer
Business Strategy & Planning Division
Chief Operating Officer
Legal Division
Compliance Division
Finance Division
Risk Management Division
Human Resources Division
Operations & Technology Division
Internal Audit Division
（As of July 1, 2015）

Financial Summary (From 09/2012 to 03/2015)
Ordinary income
Ordinary profit (loss)
Total Assets
Deposits
Total Net Assets
Capital Stock
Capital Adequacy Ratio

09/2012
31.7
△1.6
3,970.7
3,241.9
263.6
123.1
29.51%
03/2013
64.6
△1.5
4,374.5
3,541.5
262.8
123.1
28.47%
09/2013
34.7
1.4
4,536.0
3,906.9
262.1
123.1
28.62%
03/2014
68.3
2.8
4,513.9
3,636.0
256.3
123.1
25.72%
(Billions of Yen)
09/2014
03/2015
66.3
32.1
△3.4
△2.8
5,057.2
5,267.0
3,924.8
3,897.4
252.3
254.9
123.1
123.1
23.90%
30.26%
Credit Ratings
Rating
Citibank Japan Ltd.
Long Term
Short Term
Citigroup Inc.
Long Term
Short Term
Moody's
Outlook
S&P
Fitch
Rating
Outlook
Rating
Outlook
A1
P-1
Stable
A
A-1
Stable
A
F1
Positive
Baa1
P-2
Stable
AA-2
Negative
A
F1
Stable
A1
P-1
Stable
A
A-1
Stable
Citibank,N.A.
Long Term
Short Term
A+
Stable
F1
(As of July 1, 2015)
For further details, please refer to Citigroup Credit Ratings at
http://www.citigroup.com/citi/investor/rate.htm
3

Deposit Insurance
CJL has its head office located in Japan and is a member of the Deposit Insurance Corporation
(DIC). Pursuant to the Deposit Insurance System, non-interest-bearing Yen deposits for payment
and settlement purposes accepted by CJL are protected in full per depositor; and interest-bearing
Yen deposits accepted by CJL are protected up to a maximum of 10 million yen in principal plus
related interest thereon per depositor.

Bank Agency Service
Name of Bank Agent
Offices of Bank Agent
Service Coverage

Citigroup Global Markets Japan, Inc. (“CGMJ”)
CGMJ Tokyo Headquarters
Intermediary of certain produces offered by CJL’s Corporate
Banking Division (yen/foreign currency deposits and remittance
services)
Foreign Bank Agency Service
Name of Affiliated Foreign Citibank, N.A.
Bank
Offices of Bank Agent
CJL Head Office and Osaka Branch
Service Coverage
-Intermediation for acceptance of deposits or installment savings
-Intermediation for making of loans or negotiation of bills/notes
-Intermediation for exchange transactions
-Intermediation for issuance of bank guarantee and acceptance of
bills/notes
-Intermediations for other ancillary services（Letter of Credit related）

Designated Dispute Resolution Organization for CJL
Japanese Bankers Association (“JBA”)
Contact for consultation and exchange of views: JBA Customer Relations Center
0570-017109 or 03-5252-3772
CJL has concluded a Basic Contract for Implementation of Dispute Resolution Procedure with JBA,
the Designated Dispute Resolution Organization under the Banking Act. JBA runs the JBA
Customer Relations Center as a contact point to which customers can go for consultation and
inquiries or to which they can direct their opinions and complaints about banks. Refer to the JBA
website for more information. http://www.zenginkyo.or.jp/adr/
* JBA Customer Relations Center’s services are available only in Japanese.
4
Our History
1812
City Bank of New York established.
1902
International Banking Corporation opened its first branch in Yokohama.
1923
1973
1974
1977
1980
1991
1998
2007
2011
2012
International Banking Corporation opened Tokyo Branch (temporarily
closed in 1941, reopened in 1946).
First National City Corporation listed on Tokyo Stock Exchange (delisted in
1998 with the merger between Citicorp and Travelers Group).
First National City Corporation holding company changed its name to Citicorp.
Citibank N.A. launched Citicard Banking Centers, anchored by ATMs and
CitiCard. The 24-hour ATMs are for the first time used for more than
emergency cash.
Decades of innovation and expansion lead to Citibank operations in
90 countries.
Citibank Japan launches International Cash Card.
Citicorp and Travelers Group merge to form Citigroup Inc.
Citibank Japan starts internet banking.
Citibank Japan Ltd. commences operations as a locally incorporated bank.
Citigroup Inc.’s shares listed on the first section of the Tokyo Stock Exchange.
Citi expands its Japan Desk network around the globe, opening in cities
such as Dubai and Sao Paulo (10 locations as of January 1, 2015).
Citi celebrates its 200th anniversary globally and its 110th in Japan.
5
Management Strategy

Citi’s Mission: Enabling Progress
Citi works tirelessly to serve individuals, communities, institutions and nations. With 200 years of
experience meeting the world's toughest challenges and seizing its greatest opportunities, we strive to
create the best outcomes for our clients and customers with financial solutions that are simple, creative
and responsible. An institution connecting over 1,000 cities, 160 countries and millions of people, we
are your global bank; we are Citi.
The four key principles—the values that guide us as we perform our mission—are:

 Common Purpose
One team, with one goal: serving our clients and
stakeholders.
 Responsible Finance
Conduct that is transparent, prudent and dependable.
 Ingenuity
Enhancing our clients’ lives through innovation that
harnesses the breadth and depth of our information,
global network, and world-class products.
 Leadership
Talented people with the best training who thrive in a
diverse meritocracy that demands excellence,
initiative and courage.
Citibank Japan Management Strategy
Citibank Japan Ltd. (“CJL” or “Citibank Japan”) is a 100%-owned indirect
subsidiary of Citigroup Inc. (“Citigroup” or “Citi”). It was established on July 1, 2007
by succeeding the operations of the Japan Branches of Citibank, N.A., thus
becoming the first foreign bank in the Japanese market to locally incorporate its
banking operations. The bank’s presence in Japan dates back to 1902, when the
International Banking Corporation (a predecessor to Citibank) first opened a
branch office in Yokohama.
CJL’s goal, in line with global trends and the needs of client base, is to fully respond to the needs of our
clients by leveraging Citi’s global network and local footprint to offer innovative products and services.
CJL is uniquely positioned to connect and serve our Japanese clients that are global citizens. We strive
to provide seamless global financial solutions in line with our long terms strategy of being Japan’s true
global bank aligned with the three global trends of globalization, urbanization and digitization. With
strategic coordination across business lines and group companies, CJL aims to continually develop its
business and gain increased presence in the Japan market, leveraging its unique position as a locally
incorporated foreign bank.
CJL has a long and distinguished history of over 110 years in Japan. We have a
proud legacy as a bank of over 200 years of focusing our energy fully on our
customers, delivering new innovations and market firsts, bringing the best of the
world to our local clients, providing an excellent working environment, and
investing in future growth. CJL continually looks to improve customer experience
and operational excellence.
In CJL, the corporate banking business has a selected core group of relationships to which it leverages
and delivers Citi's global strengths, providing high quality financial products, services and advice to help
our clients succeed. For the retail banking business, on December 25, 2014, Citi announced that, as
part of its strategy of further streamlining its Global Consumer Bank, it reached a definitive agreement to
sell Citibank Japan Ltd.’s entire retail banking business to a trust bank subsidiary of Sumitomo Mitsui
6
Banking Corporation, including its Japan-wide network of retail branches, ATMs and about 740,000
customer accounts. The transaction is expected to close in late 2015, subject to regulatory approvals
and other customary closing conditions.
CJL is committed to handle earnestly any consultation from Small and Medium-sized Enterprises
customers related to business improvement or those related to the amendments to the existing lending
conditions, etc. In addition, CJL will continue its best efforts to fulfill corporate social responsibility to
local communities.
The Financial Service Agency of Japan (“FSA”) issued an administrative action against CJL on
December 16, 2011. In response, CJL submitted a business improvement plan to the FSA on January
31, 2012. CJL takes this administrative action very seriously and implements the business improvement
plan including all necessary measures to prevent future occurrence of the problems identified, and
endeavors to sustain this improvement actions within the organization.
CJL takes seriously its obligations to confront in a resolute manner any undue demands from anti-social
forces that threaten social order and safety.
CJL is committed to providing a working environment where its employees can thrive and achieve their
full potential. The diversity of our workforce is a core value and a source of strength and pride for CJL
and our clients. By attracting and training the best people, and providing them broad career
development opportunities at every level, we aim to foster an environment where employees are able to
provide our clients with outstanding financial products, services and advice that fit their needs over the
long term.
CJL is proud of its contributions to a broad range of diversity and community initiatives. Our community
activities focus broadly on improving access to financial education, assisting those with disabilities,
promoting environmental and social sustainability, as well as development of the communities in which
we operate. In addition we also continue to enhance the opportunities available to working parents
through our childcare center in the office.
7
Business Outline

Retail Banking Division
In addition to using Citibank’s global platform to offer a wide variety of products and services, such as an
ATM network that can be used overseas, market-leading foreign exchange transactions, and specially
selected deposits, mutual funds, insurance products, bonds, and loans, the Retail Banking Division also
provides customers in Japan with convenient services. Customers also think highly of the timely
financial information and advice that a global financial institution can provide.
Citigold and Citigold Premium customers also have access to exclusive Citigold Centers at major bank
branches, where specially trained dedicated representatives provide advice and services that are
personally tailored to them. We work to improve our products and services to effectively meet the
diverse needs and lifestyles of our affluent customers and boost customer satisfaction.
As of January 1, 2015, Citibank’s financial network encompasses 32 branches and mini branches
(including Kansai mini office), two call centers providing services 24
hours a day, 365 days a year, an internet banking platform providing
optimal services to customers, plus 98 Citibank ATMs. We also have
an operating base of affiliated ATM network, including Japan Post
Bank locations, major banks, regional banks, and convenience stores.
Citibank also strives to improve online services, as well as the
security, product selection, functionality, and ease of use of our
Citibank Online personal banking site. We use this operating base
and the opinions of our customers to meet the needs of affluent
customers in major urban areas.
<Major Business Activities>
As part of a truly global bank in Japan, the Retail Banking Division provides a wide
variety of financial services, from basic to highly specialized. These include a
CD/ATM network that can be used in Japan and overseas, market-leading
capabilities in foreign-currency transactions, a wide variety of investment
opportunities such as specially selected deposit and investment products,
insurance products, housing loans and other secured loans, and preferential
customer services, such as Citigold and Citigold Premium.
In addition, to serving our customer’s needs, we offer a variety of products based
on their risk tolerance. We analyze customer needs to strengthen our housing loan
products and insurance products. We are working to expand the offerings of
fixed-income bonds and structured notes for public issues and private placements.
Loans are one of Citibank’s primary services, and we are expanding our customer base by providing
real estate investment loans, commercial real estate loans, and loans on securities to Citigold and
Citigold Premium customers. And as of April 2014, in response to customer requests, we started selling
low-interest housing loans with a revised fee structure.
In addition, to help meet our clients’ needs for medium and long-term investments we have continued to
expand both the breadth of our Whole Life insurance product line-up denominated in both Japanese Yen
and foreign currency as well as our alliance with world leading insurance companies to provide expert
insurance specialists to better advise our customers regarding their insurance needs.
8

Corporate Banking Division
In corporate banking, CJL focuses on providing comprehensive global relationship management services
to a targeted set of Japan’s largest multi-national companies and institutions. We coordinate and leverage
Citi’s broad range of products and services, together with Citi’s unrivalled global network, in order to
support the growth ambitions of our clients both here in Japan and around the globe. CJL’s Corporate
Banking Division, located in Tokyo and Osaka, focuses on delivering innovative relationship-driven
solutions for our clients’ needs related to both their day-to-day operations and their strategic business
objectives.
Corporate Banking Division has a client group consisting of relationship managers and a product group
responsible for Corporate Finance product development and offering. Citibank Japan Ltd. also has product
groups in Transaction Services Division and in Markets Division. The client group and product groups
together provide solutions to the diversified client needs. Each client group and product group coordinates
across the respective global network within Citi, which enables us to build comprehensive relationships
with our clients and their affiliates both in Japan and overseas. This has been the unique and unrivalled
strength of Citi.
<Major Business Activities>
Our client coverage model consists of 5 departments: Global Industrials Dept., Global Corporates Dept.,
Financial Institutions Dept., Global Subsidiaries Group Dept. and Corporate Finance & Real Estate Dept.
Each client coverage department is committed to serving the unique needs of their client set, by combining
information and services with specialized Industry insight. By combining a deep understanding of each
client’s unique needs with a view of key industry trends, we are in a position to tailor structured solutions to
help our clients meet their growth ambitions. We focus on responding to our clients’ various day-to-day
needs, as well as strategic business objectives by offering financing alternatives and bank capital in an
effort to build and further deepen long term relationships.
Corporate Banking Division works closely with 3 product groups of Citibank Japan Ltd. - Transaction
Services Division, Markets Division and Corporate Finance and Real Estate Department - to serve our
clients and provide solutions that meet their needs.
<“Japan Desk”>
In coordination with "Japan Desks" within Citi's affiliates abroad, Corporate Banking Division has
strengthened our capability to support our Japanese clients around the globe. "Japan Desks" are located
in 10 countries and offer exclusive relationship management efforts by experienced bankers. Many of
these Japan Desks provide coverage to neighboring countries and jurisdictions. Japan Desk network has
become increasingly more available pan-regionally around the globe, covering North and South America,
Europe, Middle East, Africa, and Asia. Citi’s Japan Desk Network is an unrivalled and unique service to our
clients. Japan Desk bankers leverage their vast experiences in Japan, continue to build and further
deepen great relationships with our clients and colleagues around the globe, and support our clients to
meet their financial needs.
9
Global Relationship Management
Financial Advice
Raising Money
Managing Risks
Corporate Finance
Global Markets
Acquisition Finance
& Syndication Lending
Investing Money
Transaction Services
Moving Money
< Japan Desk Locations>
●
●
●
●
●
●
●
●
●
●
● Japan Desk Locations
Citi’s Japan Desks around the World
(As of July 1, 2015)
10
United Kingdom (London)
Singapore
Russia (Moscow)
China (Hong Kong)
India (Delhi)
United States (New York)
Thailand (Bangkok)
Brazil (Sao Paulo)
Indonesia (Jakarta)
United Arab Emirates (Dubai)
 Transaction Services Division
Transaction Services Division provides various services in the Treasury and Trade Solutions (TTS) and
Securities Services (SS) businesses. Our services integrate cash management, trade finance, and
securities services to multinational corporations, financial institutions and public sector clients in Japan
and around the world.
Transaction Services is closely aligned with three important on-going trends - globalization, urbanization
and digitization – and as the business world continues to internationalize and our clients continue to
expand globally, we have been stepping up support to assist our Japanese and other global clients
expand.
Capability
Leveraging the industry's largest proprietary network, we serve both the local and cross-border interests
of clients. As Japanese companies continue the process of rapid globalization, Citi is positioned to be
their partner and Global Bank. CJL Transaction Services is part of Citi’s global network servicing clients
in over 100 countries and top cities in the world.
Experience
Transaction Services is part of Citi’s legacy in Japan which dates back over 110 years to when we
opened our first Japanese branch. We strive to be a trusted advisor on industry issues such as local
securities markets, emerging markets, settlement risk, receivables and payment processes, securities
infrastructure and technology integration to our clients, regulatory organizations and third-party partners.
Innovation
Our on-line portal, CitiDirect BE and its mobile/tablet version are examples of Citi’s investments in
innovation that add to our offering of solutions in Japan. We introduced a Japanese language version of
our mobile smart phone application and tablet version, and provide our clients in Japan with treasury
analytics and technology tools to enhance their efforts to effectively manage their businesses.
< Major Business Activities >
Treasury and Trade Solutions
Citi serves our clients as an industry leader in cash management solutions. With 232 connections to
cash clearing systems across the globe, Citi has a global infrastructure providing a wide range of
innovative financial solutions. Our extensive network of qualified banking professionals provides a
combination of local knowledge and global expertise to help meet clients’ strategic business goals.
Citi's portfolio of global cash management products offers tailored solutions to help manage collection
and payment processes by establishing interfaces between the client’s treasury system and Citi's
payment systems.
Trade Finance and Services Unit provides web-based, simple and quick supplier financing services not
only for domestic purchases in Japan but also for purchases in foreign countries. Various risk-hedge
solutions are provided to clients’ exports to help them effectively manage their risk and supply chains.
In addition to traditional financial support for exports and investments from Japan, our Export & Agency
Finance Unit has started to provide new services such as medium-long term loans for overseas
Japanese subsidiaries’ exports to emerging markets and agricultural commodities imported by our
clients in Japan.
Securities Services
In Securities Services, CJL supports foreign investors’ investment in Japanese securities through our
stable capabilities in custody services. In addition to such traditional services, the introduction of
innovative Third Party Clearing offerings allow our resident intermediary clients to focus on what matters
most, to grow core businesses through our clearing and settlement outsourcing solutions. Our
proprietary network is the largest in the industry covering 61 markets surpassing our closest competitor
by over 20 markets.
11
Recent Global and Local Accolades and Awards

Global Finance World’s Best Treasury and Cash Management Providers 2014
Best Overall Bank for Cash Management – Global

Global Finance World’s Best Global Banks 2014
World’s Best Bank for Cash Management; Trade Finance

Global Finance 2014 World’s Best Internet Bank Awards
Best Overall Internet Bank- Global
Best Corporate/Institutional Internet Bank – Global

The Banker – Bank of the Year Awards 2013 – Global

Euromoney –Awards for Excellence 2014
Best Transaction Services House in Asia

GTR Leaders in Trade 2014
Best Export Finance Bank in Asia Pacific

The Banker –Innovation in Banking and Technology and Transaction Banking 2013
Innovation in Cash Management
Most Innovative Global Transaction Bank

The Asset Triple A, Treasury, Trade & Risk Management Awards 2014
Best Treasury & Cash Management Bank in Asia

Trade Finance – Awards for Excellence 2014- Best Trade Advisor in Asia

Asiamoney –Best Foreign Cash Management Bank in Japan 2014 as voted by Large Corporates

Asiamoney -#1 Global Cash Management Bank in Asia Pacific 2014 as voted by Large Corporates

Global Outperformer in Japan in Global Custodian's Agent Banks in Major Markets Survey 2014

Category Outperformer in Japan for Asset Servicing, Relationship & Client Service, Ancillary Services
and Value Delivered Category in Global Custodian's Agent Banks in Major Markets Survey 2014

The Asset’s Triple A Asset Servicing Awards 2014, Best Custodian – Asia Cross-Border

The Asset’s Triple A Asset Servicing Awards 2014, Best Domestic Custodian in Japan
12

Markets Division
The Markets Division has a mission to provide foreign exchange, money market and derivative products
and services to the customers of the Corporate Banking Division and the Transaction Services Division.
The division focuses on market trades and aims to build a more robust transaction base for customers
by providing more valuable information.
The Markets Division consists of two departments, Market Sales and Markets Treasury.
The Market Sales Department consists of two units, Corporate FX Sales Unit and Corporate Derivative
Sales Unit, and conducts foreign exchange and derivative transactions for the customers of the
Corporate Banking Division and the Transaction Services Division. The Corporate FX Sales unit
leverages Citigroup’s international network and global resources to deliver real-time information to the
customers. The unit also provides various types of risk-management related advice and foreign
exchange transaction support, building on its well-established and powerful presence as a “market
maker” in the foreign exchange market.
The Corporate Derivative Sales unit offers a wide range of derivative solutions to the customers, in order
to satisfy their diverse needs.
The Markets Treasury Department leverages Citigroup’s extensive international network to provide
money market transactions in various currencies, in order to meet the customers’ funding and
investment needs.
Markets Treasury also acts as a funding department in CJL. Based on the policy decisions of the Asset
Liability Committee, a sub-committee of CJL’s Management Committee, Markets Treasury ensures
appropriate liquidity management and conducts banking account management as part of the
comprehensive risk management framework, in coordination with the Corporate Treasury Unit, which is
responsible for liquidity risk management.
13
List of CJL’s Major Activities

CJL provides the following services:
1.
Acceptance of Deposits
Current deposit, savings deposit, time deposit, negotiable certificate of deposit, foreign currency
deposit, etc.
2.
Fund Lending etc.
Loan on bills, loan on deeds, overdraft, discount of commercial bills, etc.
3.
Fund Transfer, etc.
Outward/inward remittance, fund transfer and collection of payment
4.
Foreign Exchange, etc.
Foreign exchange transactions (including foreign currency sales and purchase)
5.
Others
(1)
Guaranty of liabilities (acceptance of payments), issuance of letter of credit and
acceptance of bills
(2)
Arrangement for syndicated loan
(3)
Trade finance (purchase of trade notes, etc.)
(4)
Investment / Trading in securities (Japanese government bonds, etc.)
(5)
Acquisition or transfer of monetary claims, and securitization related services
(6)
Handling of receipt of money and other affairs pertaining to money of Government of Japan,
local public authorities, and companies, etc.
(7)
Dealing in financial derivatives (interest rate, currency, etc.)
(8)
Over-the-counter sales of mutual funds and insurance products
(9)
Safekeeping and transfer of securities, etc.
(10) Brokerage for clearing of securities, etc.
(11) Handling of private placement of securities
(12) Financial instruments intermediary service
(13) Money exchange
(14) Foreign Bank Agency Service
(15) Transaction service for electronically recorded monetary claims
14
Risk Management Framework
Risk Management Structure

CJL’s risk management framework balances strong corporate oversight by the Board of Directors with
well defined oversight roles and responsibilities amongst the Control functions covering the various
risk types.
CJL has the following three layers of risk management or control:
1)
2)
3)
Risk ownership by the business divisions
Oversight by the control functions
Independent Assessment by Internal Audit
All three layers of control work together to achieve CJL’s shared goals with the following particular
items:

To maintain a highly effective control environment and to establish efficient, proactive risk
management; and
To foster appropriate solutions for our customers and to facilitate business growth in
accordance with agreed strategic goals and with the risk management capacity of CJL

CJL establishes a fundamental principle “Comprehensive Risk Management Policy” which is
approved by Board of Directors and it defines its risk management structure. Additionally, CJL
establishes “Comprehensive Risk Management Rules” to define its risk management procedures.
CJL adopts a comprehensive risk management approach and a Comprehensive Risk Manager who
oversees risks will ensure that Management Committee and the Board of Directors are kept advised
of the risks of and to CJL in a comprehensive management.

Type of risk to be managed
CJL identifies credit risk, market risk, liquidity risk, and operational risk as major risks and those are
subjected to manage.

Credit Risk
1.
Structure of Credit Risk Management:
Credit risk is the risk of loss arising from decline in asset value attributable to deterioration of
obligor’s credit condition. It includes the risk of difficulty to collect principal and interest due
to default of obligor and decline in credit value due to increase of reserves arising from
deterioration of obligor’s credit condition.
CJL establishes “Credit Risk Management Policies” which defines the fundamental principle
to comprehensively manage its credit risk in Corporate Banking Division and Retail Banking
Division.
In terms of credit management in each division, CJL also follows “Institutional Client Group
Risk Management Manual”, “Global Consumer Credit and Fraud Risk Policies” and “Global
Commercial Credit Policies” in order to set and govern credit risk management structure.
Furthermore, Credit Risk Management Committee (“CRMC”) is established and managed
by Head of the Risk Management Division to oversee CJL’s credit risk including the
management of self-assessment of assets with further involvement of management.
2.
Procedure of Credit Risk Management:
CJL manages credit risk based on obligor analysis and whole portfolio analysis, monitoring
concentration of credit to certain industries, ratings, obligors on relationship basis and
delinquency trend of a portfolio. Such portfolio view of our credit exposures is reviewed and
reported to the Credit Risk Management Committee in a timely manner.
15

Market Risk / Liquidity Risk
1.
Structure of Market Risk / Liquidity Risk Management:
Market risk is the risk of loss resulting from fluctuating value of financial asset and debt
position which CJL possesses or executes, reflecting market trend.
Liquidity risk is the risk of loss resulting from unavailability to secure sufficient asset liquidity
against debt due to rising financing costs or mismatch of use of funds and source of funds.
In CJL, market risk and liquidity risk management structures are established and operated in
accordance with the “Liquidity Risk Management Policy”, the “Market Risk Management
Policy” or related management policies. Furthermore, CJL has established Asset Liability
Committee (“ALCO”) which is chaired by President to oversee market risk and liquidity risk,
monitoring accrual portfolio and trading portfolio of CJL and managing balance sheet as well
as capital adequacy.
2. Procedure of Market / Liquidity Risk Management:
CJL Market Risk Management captures consolidated profiles of interest rates and durations
of the financial assets and liabilities, performs risk monitoring process using gap analysis
and interest rate factor sensitivity analysis, and reports the result to the ALCO meeting on a
monthly basis.
CJL’s market risk amount is measured by Value-at-Risk (“VaR”) method quantitatively and
its regulated compliance status is monitored.
ALCO is managing Liquidity Risk by monitoring various liquidity ratios such as Large Fund
Provider concentration ratio, Total Customer Deposits / Total Customer Loans ratio. ALCO is
also monitoring whether there is sufficient liquidity to meet all maturing obligations within 12
months under the Highly Stressed Market Disruption stress scenario.

Operational Risk
1.
Structure of Operational Risk Management:
Operational risk is the risk of loss resulting from inadequate or failed internal processes,
systems, or human factors, or from external events. It includes reputation and franchise
risks associated with CJL’s business practices or market conduct. It also includes the risk of
failing to comply with laws, regulations, ethical standards, regulatory administrative actions
or Citigroup policies.
To comprehensively manage operational risk, CJL establishes policies and rules for
operational risk which clearly defines risks, the control environment, as well as assessment
and reporting procedures. CJL separately manages its Jimu risk and System risk in
accordance with the established policies and standards. Moreover, CJL has established
Operational Risk Management Unit under Risk Management Division as a responsible unit
for comprehensive operational risk management. The status update of operational risk
management is reported to Business Risk, Compliance & Control Committee (“BRCC”), and
Jimu risk and System risk are reported to System and Operations Committee (“SOC”), with
further involvement of management.
2.
Procedure of Operational Risk Management:
CJL adoptｓ a Manager’s Control Assessment (“MCA”) program as a tool to manage
‘significant’ operational risks. The MCA is used to self-assess key operational risks and
controls and identify and address weaknesses in the design and/or effectiveness of internal
controls that mitigate significant operational risks. Corrective actions are monitored
continuously for full implementation. Results of MCA are reported to managements through
BRCC at quarter end.
Critical operational processes of each business department are reviewed periodically in
consideration of changes to the operational processes and regulatory environment, and
latest information shall be reflected into MCA.
16
Compliance Framework
Basic Policy

As a bank, CJL fully recognizes the importance of its social responsibilities and the public nature of its
business. We understand that conducting business with fairness and integrity based on the Code of
Conduct and in compliance with laws and regulations, etc. is the basic principle of our management.
Compliance Management Framework

CJL’s Compliance Division covers compliance related matters and is independent from businesses. The
Division consists of 5 units under the Head of Compliance Division; (i) Retail Banking Compliance Unit,
(ii) Corporate Banking Compliance Unit, (iii) Anti-Money Laundering Compliance Unit, (iv) Infrastructure
Unit and (v) Compliance Testing Unit. The first two units are responsible for compliance matters relevant
to businesses, AML Compliance Unit covers matters relevant to anti-social forces and the prevention of
money laundering, and Infrastructure Unit is responsible for matters relevant to overall banking
operations. Compliance Testing Unit has responsibility for testing to assure that controls over
compliance matters are reasonably designed and functioning effectively. The Compliance Division owns
the Code of Conduct and, in accordance with Compliance Policy, promotes compliance and cultivates a
compliance mindset, through following activities.







Advice and support related to Compliance
Creation and execution of internal rules related to Compliance
Oversees the development and maintenance of adequate risk management systems related to
Compliance
Education and training related to Compliance
Monitors legal and regulatory development that affect the Bank
Oversees the development and maintenance of adequate risk management systems related to
Anti-Money Laundering activities, including customer identification and matters related to Anti
Social Forces
Conducts Compliance Testing
The Compliance Division reports compliance related issues and compliance status to the Business Risk,
Compliance and Control Committee and the Management Committee on a regular and ad-hoc basis.
Material issues are to be escalated to the Board of Director through the Management Committee.

Preventive Measures against Anti-Social Forces and Money Laundering
CJL considers that preventive measures against anti-social forces and money laundering are one of the
most important parts of legal compliance as a financial institution with public nature, and has continued
its efforts to establish a proper prevention framework.

Measures against the Breach of Legal Compliance
It is the responsibility of each of the directors and the employees to comply with the Code of Conduct
that provides an overview of some of the key policies of which all need to be aware. We strongly
encourage employees to raise concerns or questions regarding ethics and applicable laws, regulations
and policies, and to report violations and suspected violations in accordance with the relevant internal
policies. We believe that it is critical to identify issues at an early stage and proactively resolve those
issues in order to maintain the highest standards of conduct required at a financial institution. CJL has
established, in addition to the standard reporting procedures, an Ethics Hotline in order to properly take
measures for a violation or a suspected violation of legal compliance.
17
Diversity and CSR Activities
CJL pursues Corporate Social Responsibility (“CSR”) activities in alignment with Citi’s global policies
and priorities. We embrace the responsibility, as a socially responsible financial group, to make a
difference in the community and to promote environmental and social sustainability by building positive
relationships with customers, employees and their families, the community, and stakeholders. Through
our CSR activities, we respond to corporate governance and compliance initiatives and also reinforce
our commitment to Financial Education, Community Development, the Environment, Disaster Relief,
and Diversity with employees from various backgrounds and nationalities.

Financial Education
Citi's philosophy provides that, with financial education,
everyone has the chance to make their dreams come
true. Citi feels that this creates a need for financial
education programs so that the next generation of
children can learn not just about money and the
economy, but also how to think effectively, and
ultimately plan their careers and lives in order to realize
their dreams.
Environment

We undertake various environmental activities by
mobilizing our employees to act for the benefit of the
earth and future generations. We aim to reduce our
environmental footprint by embedding eco-friendly
practices into our business and implementing green
building practices.
Citi supports the environment in three key areas


Environment Conservation Activities
Environmental and
Social Risk
Management
Environmentally
Sustainable
Operations


Community Development
Citi places value on its relationship with the community
where its employees and their families live and work.
Through participating in running and fundraising events
and helping out with community bazaars, we foster our
relationship with the community. We fulfill our social
responsibility by committing not only money but also by
participating in programs physically.




Children in Need
Community in General
People with Disabilities
Tohoku

Diversity

Disaster Relief
In addition to on-going philanthropic efforts, when
disaster strikes, Citi strives to support the victims of
natural catastrophes in a timely and compassionate
manner. In support of relief activities both locally and
in conjunction with global efforts, Citi employees give
their own time and resources to bring some order to
the lives of those affected. Citi in Japan supports
employee efforts by matching monetary donations
and helping organize non-monetary relief.
We see diversity as a source of strength. Therefore, we have made it a priority to foster a culture where the best
people want to work, where people are promoted on their merits, where we value and respect others and where
opportunities to develop are widely available to all - regardless of differences. We encourage our employees to
participate and take responsibility for their engagement in diversity activities, internally and externally, which adds to
the richness of the society in which we live.
<Major Activities>
 Improving career development for women;
Celebrating women’s success, International Women’s day 2015
 Work-Life Balance
 Encourage the hiring of people with disabilities
18
＜List of CJL's locations in Japan＞
As of July 2015
Locations (Head Office, Higashi-Shinjuku, Okinawa, 32 for Retail Banking, 2 for Corporate Banking) Total：37
（■ Retail Banking Manned Branch）
Head Office
Shin-Marunouchi Building, 5-1,
Marunouchi 1-chome, Chiyoda-ku,
Tokyo
Retail Banking
■Aoyama Branch
Ao, 3-11-7 Kita-Aoyama,
Minato-ku, Tokyo
■Akasaka Branch
Prudential Plaza, 2-13-10
Nagata-cho, Chiyoda-ku, Tokyo
■Ikebukuro Branch
G-Bldg. Minami Ikebukuro 01,
1-19-5 Minami-Ikebukuro,
Toshima-ku, Tokyo
■Ohtemachi Branch
Ote Center Bldg., 1-1-3
Ohtemachi, Chiyoda-ku, Tokyo
■Ginza Branch
Kurosawa Bldg.,6-9-2 Ginza,
Chuo-ku, Tokyo
■Gotanda Branch
Gotanda Hata Bldg., 2-2-3
Higashi-Gotanda, Shinagawa-ku,
Tokyo
■Shibuya Branch
Dogenzaka Kabuto Bldg., 2-25-12
Dogenzaka, Shibuya-ku, Tokyo
■Jiyugaoka Mini Branch
Okuzumi Bldg., 1-26-14
Jiyugaoka, Meguro-ku, Tokyo
■Shinjuku Higashiguchi Branch
Citibank Shinjuku Bldg.,
3-19-4 Shinjuku, Shinjuku-ku,
Tokyo
■Shinjuku Minamiguchi Branch
Kubo Bldg., 2-9-2 Yoyogi,
Shibuya-ku, Tokyo
■Shinjuku Minamiguchi Branch
Consulting Center
Shinjuku Maynds Tower, 2-1-1
Yoyogi, Shibuya-ku, Tokyo
■Kichijoji Mini Branch
Iwasaki Kichijoji Bldg., 1-15-9
Kichijoji-Honcho, Musashino-shi,
Tokyo
■Tachikawa Branch
Suzuharu Bldg., 2-7-16
Akebono-cho, Tachikawa-shi,
Tokyo
■Nihonbashi Branch
Nihonbashi Kato Bldg., 2-1-14
Nihonbashi, Chuo-ku, Tokyo
■Hiroo Branch
HIROO REEPLEX B’s, 5-15-27
Minami-Azabu, Minato-ku, Tokyo
■Yokohama Branch
Yokohama First Bldg., 1-6-1 Kita-Saiwai,
Nishi-ku, Yokohama-shi,
Kanagawa
■Aobadai Mini Branch
Aobadai Tokyu Square South-2, 1-7-1
Aobadai, Aoba-ku, Yokohama-shi,
Kanagawa
■Fujisawa Mini Branch
2002. K&S Bldg., 2-8 Minami-Fujisawa,
Fujisawa-shi, Kanagawa
■Chiba Branch
Sencity Tower, 1000 Shinmachi,
Chuo-ku, Chiba-shi, Chiba
■Urawa Branch
Urawa Nikko Bldg., 2-1-23 Takasago,
Urawa-ku, Saitama-shi, Saitama
■Umeda Branch
ABC-MART Umeda Bldg., 1-27
Chayamachi, Kita-ku, Osaka-shi, Osaka
■Osaka Ekimae Branch
Osaka Dai-ichi Seimei Bldg., 1-8-17
Umeda, Kita-ku, Osaka-shi, Osaka
■Shinsaibashi Branch
Midosuji Diamond Bldg., 2-1-2
Nishi-Shinsaibashi, Chuo-ku, Osaka-shi,
Osaka
■Sapporo Branch
Hokkaido Bldg., 1-banchi, Kita 2-jo,
Nishi 4-chome, Chuo-ku, Sapporo-shi,
Hokkaido
■Fukuoka Branch
Tenjin-nishidori Business Center
2-8-30 Tenjin, Chuo-ku, Fukuoka-shi,
Fukuoka
Internet Branch
Shinjuku Eastside Square, 6-27-30
Shinjuku, Shinjuku-ku, Tokyo
Kansai Mini Office
Osaka
Corporate Banking ･ Others
Osaka Branch
Osaka
Yamabuki Branch
Higashi-Shinjuku Sub-Branch
Okinawa Sub-Branch
Tomari Port Terminal Bldg.,3-25-1
Maejima, Naha-shi, Okinawa
■Ashiya Branch
Hotel Takezono Ashiya, 10-1
Ohara-cho, Ashiya-shi, Hyogo
■Kobe Branch
S.Yoshimatsu Bldg., 8-1-17 Gokodori,
Chuo-ku, Kobe-shi, Hyogo
■Kyoto Branch
K･I Shijo Bldg., 88 Kankoboko-cho,
Shijodori-Muromachi-Higashiiru,
Shimogyo-ku, Kyoto-shi, Kyoto
■Nagoya Branch
Sakae Parkside Place, 3-16-27
Nishiki, Naka-ku, Nagoya-shi, Aichi
■Nagoya Station Mini Branch
Office Tower, JR Central Towers,
1-1-4 Meieki, Nakamura-ku, Nagoya-shi,
Aichi
19
Citibank Japan Ltd.
Financial Information under Japanese GAAP
For the fiscal year ended March 31, 2015
20
1. Matters Related to Principal Business
< Business Overview>
Results of Operations for Fiscal Year ended March 31, 2015

We had a net loss of 4.4 billion yen for the year ended March 31, 2015 compared to net income of 1.3
billion yen for the prior fiscal year.

Ordinary income totaled 66.3 billion yen, down by 2.0 billion yen from the prior fiscal year.





Interest income totaled 27.9 billion yen, down by 2.3 billion yen from the prior fiscal year.
Fees and commissions totaled 20.9 billion yen, down by 0.5 billion yen from the prior fiscal year.
Other ordinary income totaled 16.6 billion yen, up by 1.4 billion yen from the prior fiscal year.
Other income totaled 0.5 billion yen, down by 0.6 billion yen from the prior fiscal year.
Ordinary expenses totaled 69.7 billion yen, up by 4.3 billion yen from the prior fiscal year.





Interest expense totaled 4.5 billion yen, up by 1.0 billion yen from the prior fiscal year.
Fees and commissions paid totaled 2.5 billion yen, up by 0.3 billion yen from the prior fiscal year.
Trading losses totaled 0.2 billion yen, down by 0.1 billion yen from the prior fiscal year.
General and administrative expenses totaled 61.4 billion yen, up by 2.7 billion yen from the prior
fiscal year.
Other expenses totaled 0.8 billion yen, up by 0.5 billion yen from the prior fiscal year.

Ordinary loss was 3.4 billion yen compared to ordinary profit of 2.8 billion yen in the prior fiscal year.

Extraordinary loss of 2.5 billion yen represents write-off of certain software pertaining the retail
business divestiture.

Loss before income taxes (including extraordinary income and loss) was 6.0 billion yen compared to
income before income taxes of 2.8 billion yen in the prior fiscal year.
Assets, liabilities, net assets, cash flows, and capital adequacy ratio were as follows;

As of March 31, 2015, total assets were 5,057.2 billion yen, up by 543.2 billion yen compared to
March 31, 2014.







Cash and deposits to other banks (due from banks) totaled 3,093.5 billion yen, up by 1,251.6
billion yen from the prior fiscal year end.
Call loans were 3.3 billion yen, down by 236.8 billion yen from the prior fiscal year end.
Receivables under resale agreements were 468.8 billion yen, down by 262.8 billion yen from the
prior fiscal year end.
Trading assets were 36.1 billion yen, down by 145.3 billion yen from the prior fiscal year end.
Available for sales securities (“AFS securities”) were 500.9 billion yen, down by 284.3 billion yen
from the prior fiscal year end.
Loans and bills discounted totaled 485.1 billion yen, up by 128.8 billion yen from the prior fiscal
year end.
As of March 31, 2015, total liabilities were 4,804.9 billion yen, up by 547.3 billion yen compared to
March 31, 2014.



Deposits totaled 3,924.8 billion yen, up by 288.8 billion yen from the prior fiscal year end.
Negotiable certificates of deposit totaled zero, down by 6.0 billion yen from the prior fiscal year end.
Foreign exchanges totaled 523.0 billion yen, up by 176.7 billion yen from the prior fiscal year end.
21
22

As of March 31, 2015, total net assets were 252.3 billion yen, down by 4.0 billion yen from the prior
fiscal year end.

Cash flows from operating activities in the year totaled 814.5 billion yen (Inflow). Cash from investing
activities was 281.8 billion yen (Inflow). As a result, cash and cash equivalents as of the end of the
period totaled 2,376.8 billion yen.

The capital adequacy ratio (Basel3 National standards) at the end of the period was 30.26%.
(Basel3 National standards as of March 31, 2014 25.72%).
<Summary of Principal Business/Financial Indicators>
(Millions of Yen)
March 2011
Year end
(Apr. 1, 2010
- Mar. 31, 2011)
March 2012
Year end
(Apr. 1, 2011
- Mar. 31, 2012)
March 2013
Year end
(Apr. 1, 2012
- Mar. 31, 2013)
March 2014
Year end
(Apr. 1, 2013
- Mar. 31, 2014)
March 2015
Year end
(Apr. 1, 2014
- Mar. 31, 2015)
Ordinary income
96,399
75,908
64,668
68,305
66,302
18,132
5,847
(1,541)
2,867
(3,478)
Net income (loss)
12,509
1,796
(1,983)
1,339
(4,454)
Capital stock
123,100
123,100
123,100
123,100
123,100
Total Net assets
262,022
265,083
262,823
256,350
252,315
Total assets
4,244,847
4,336,501
4,374,568
4,513,946
5,057,241
Deposits
3,399,295
3,510,460
3,541,504
3,636,024
3,924,867
250,088
299,056
330,614
356,243
485,111
Loans and bills discounted
Available for sale (AFS) securities
Total shares issued (thousand shares)
Capital adequacy ratio (National standard)
Dividend payment ratio
Number of employees
756,974
826,775
244,200,000
244,200,000
858,729
244,200,000
785,273
500,962
244,200,000
244,200,000
25.16%
28.77%
28.47%
25.72%
30.26%
487.64%
-
-
477.77%
-
1,676
1,796
1,852
1,835
1,728
23
<Principal Business/Financial Indicators>
Gross operating profit
(Millions of Yen)
March 2014 Year end
(Apr. 1, 2013 - Mar. 31, 2014)
Domestic
International
March 2015 Year end
(Apr. 1, 2014 - Mar. 31, 2015)
Total
Domestic
International
Total
Interest income and expenses
Interest income
Interest expenses
6,126
24,180
30,306
5,888
22,021
27,909
156
3,361
3,517
133
4,455
4,588
12,488
9,033
21,522
13,308
7,659
20,968
1,569
721
2,291
1,698
899
2,598
Fees and commission
Fees and commissions
Fees and commissions paid
Trading income and losses
Trading income
Trading losses
(423)
-
-
383
(201)
182
(15)
315
299
858
434
14,898
15,267
731
15,967
16,699
254
2
11
13
60,599
18,494
39,765
58,259
Other ordinary income and
expenses
Other ordinary income
369
Other ordinary expenses
254
Gross operating profit
Gross operating profit ratio
17,428
0.74%
43,170
2.48%
1.49%
0.63%
2.35%
1.26%
（Notes）
1. Domestic operations are yen-denominated transactions and international operations are foreign currency-denominated transactions
conducted in Japan. However, non-resident yen-denominated transactions and offshore account transactions, etc. are included in
the international operations.
2. Gross operating profit ratio ＝(gross operating profit / average balance of interest-earning assets) x 100 ÷ (the number of days of
the period / 365)
24
Average balance, Interest and Yield of Interest-Earning Assets / Interest-Bearing Liabilities
(Millions of Yen)
March 2014 Year end
(Apr. 1, 2013 - Mar. 31, 2014)
Domestic
operations
Interest-earning assets
Average balance
Interest
Yield (%)
Loans and bills
discounted
Average balance
Interest
Yield (%)
AFS securities
Average balance
Interest
Yield (%)
Call loans
Average balance
Interest
Monetary claims
bought
1,735,540
4,061,136
2,926,124
1,688,220
4,614,345
6,126
24,180
30,306
5,888
22,021
27,909
0.26
1.39
0.74
0.20
1.30
0.60
168,665
182,506
351,172
152,565
336,380
488,946
1,929
2,462
4,391
1,681
5,742
7,423
1.14
1.34
1.25
1.10
1.70
1.51
887,739
5,852
893,591
685,877
5,759
691,636
2,883
120
3,004
2,184
120
2,304
0.32
2.06
0.33
0.31
2.09
0.33
12,087
177,520
189,607
10,373
88,614
98,988
546
557
8
324
333
0.29
0.08
0.36
0.33
383,691
367,692
751,383
293,042
428,577
721,620
Interest
323
4,835
5,159
167
5,487
5,654
Yield (%)
0.08
1.31
0.68
0.05
1.28
0.78
3,428
49
3,478
4,910
6
4,916
54
0
55
68
0
68
Average balance
Average balance
Interest
Average balance
Interest-bearing liabilities
Average balance
Interest
Yield (%)
1.59
1.07
1.58
1.39
1.02
1.39
868,896
821,516
1,690,412
1,777,874
653,676
2,431,551
888
15,503
16,392
1,757
9,732
11,490
0.10
1.88
0.96
0.09
1.48
0.47
1,884,837
2,127,235
4,012,073
2,071,235
2,403,316
4,474,552
Interest
156
3,361
3,517
133
4,455
4,588
Yield (%)
0.00
0.15
0.08
0.00
0.18
0.10
1,858,314
1,995,174
3,853,489
2,057,527
1,824,182
3,881,710
138
3,342
3,481
125
4,427
4,552
Average balance
Interest
Yield (%)
Negotiable certificates Average balance
of deposit
Interest
0.00
0.16
0.09
0.00
0.24
0.11
22,604
-
22,604
2,115
-
2,115
14
-
14
0
-
0
0.06
-
0.06
0.04
-
0.04
Average balance
-
166
166
378
1,355
1,733
Interest
-
0
0
0
1
1
Yield (%)
-
0.08
0.08
0.00
0.09
0.07
11
-
11
8
-
8
0
-
0
0
-
0
0.20
-
0.20
0.09
-
0.09
Yield (%)
Borrowed money
Total
2,325,595
0.30
Yield (%)
Call money
International
operations
10
Due from banks with
interest
Deposits
Domestic
operations
Total
0.08
Yield (%)
Receivables under
resale agreements
International
operations
March 2015 Year end
(Apr. 1, 2014 - Mar. 31, 2015)
Average balance
Interest
Yield (%)
(Notes)
1. Average balance of foreign currency-denominated transactions in Japan, which are classified as international operations, is
calculated based on the daily basis.
2. Average balance of and interest accrued from borrowing and lending between domestic and international operations are offset.
3. Due from bank without interest is excluded from Interest-earning assets and the amount equivalent to Money held in trust is
excluded from Interest-bearing liabilities.
25
Analysis of interest received / paid
(Millions of Yen)
March 2014 Year end
(Apr. 1, 2013 - Mar. 31, 2014)
Interest received
Loans and bills
discounted
AFS Securities
Call loans
Receivables under
resale agreements
Volume-related increase (decrease)
Domestic
operations
International
operations
1,889
522
(659)
(8,951)
(1,821)
(1,499)
(6,491)
(2,526)
(4,340)
(238)
(2,158)
(2,397)
(142)
454
291
(183)
2,061
1,722
Rate-related increase (decrease)
(244)
(51)
(274)
(65)
1,218
1,309
Net increase (decrease)
(386)
402
16
(248)
3,280
3,031
343
(645)
(1)
(2,153)
(53)
1
(1,810)
(699)
-
(699)
338
(2,148)
(1,810)
(1)
1
-
(666)
(33)
0
282
258
(1)
(266)
(262)
(1)
(77)
(55)
(1)
45
38
(1)
204
202
(2)
(221)
(223)
(3)
4,222
624
(72)
797
(202)
(54)
165
3,705
(84)
(146)
697
(57)
4,387
4,330
(156)
651
494
0
1
23
0
22
(1)
(9)
0
(9)
Due from banks
with interest
0
360
89
449
18
0
(8,279)
793
(7,486)
742
0
(831)
13
0
13
908
(3,155)
7,114
(6,205)
(39)
(2,615)
(12,016)
(7,037)
869
(5,771)
(4,902)
527
15
436
369
(201)
(1,749)
(1,716)
(38)
657
700
(182)
(1,006)
(1,189)
(23)
1,093
1,070
16
704
583
14
(151)
(1,695)
(1,709)
(135)
(991)
(44)
-
(3)
-
(48)
-
0
0
-
0
(273)
25
(28)
1,358
1,045
(1,126)
(13)
1,084
1,071
(44)
(12)
-
(3)
(1)
-
(1)
(48)
(14)
-
(14)
(12)
0
1
0
0
1
1
-
0
0
-
0
0
0
(7)
0
-
0
0
0
-
0
(7)
0
-
0
0
(7)
0
-
0
(7)
-
（Note）Changes due to a combination of volume - and rate - related increase (decrease) have been included in rate - related
increase (decrease).
26
4,093
(3,048)
0
Borrowed Money
1,582
(1,814)
Call money
4,610
Total
(3,703)
1
Negotiable
certificates of
deposit
International
operations
Deposits
Domestic
operations
Total
Monetary claims
bought
Interest paid
March 2015 Year end
(Apr. 1, 2014 - Mar. 31, 2015)
Yield on interest-earning assets, Yield on interest-bearing liabilities, Net yield/Interest rate
(%)
March 2014 Year end
(Apr. 1, 2013 - Mar. 31, 2014)
Domestic
International
March 2015 Year end
(Apr. 1, 2014 - Mar. 31, 2015)
Total
Domestic
International
Total
Yield on interest-earning
assets
0.26
1.39
0.74
0.20
1.30
0.60
Yield on interest-bearing
liabilities including
general expenses
1.73
1.35
1.53
1.59
1.31
1.44
(1.47)
0.04
(0.79)
(1.39)
(0.01)
(0.84)
Net yield / Interest rate
(Millions of Yen)
March 2014 Year end
(Apr. 1, 2013 - Mar. 31, 2014)
Domestic
Fees and commissions on fund
transfer
Other fees and commissions
Fees and commissions on fund
transfer
Fees and commissions profit
International
March 2015 Year end
(Apr. 1, 2014 - Mar. 31, 2015)
Total
Domestic
International
Total
12,488
9,033
21,522
13,308
7,659
20,968
1,671
4,391
6,062
1,771
3,677
5,448
10,816
4,642
15,459
11,537
3,982
15,520
1,569
721
2,291
1,698
899
2,598
436
307
744
459
311
771
1,133
413
1,546
1,238
587
1,826
10,918
8,312
19,231
11,610
6,759
18,370
27
Trading income and losses
(Millions of Yen)
March 2014 Year end
(Apr. 1, 2013 - Mar. 31, 2014)
Domestic
Trading income
Total
Domestic
International
-
-
Gains on trading account
securities transactions
-
-
-
Gains on securities and
derivatives related to
trading transactions
-
-
-
Gains on trading-related
derivatives transactions
-
-
-
-
-
-
Other trading income
-
-
-
-
-
-
(423)
858
Losses on trading
securities and Derivatives
-
Losses on securities and
derivatives related to
trading transactions
(386)
603
Losses on trading-related
derivatives transactions
(37)
255
Other trading losses
Trading profit
423
-
434
-
383
Total
-
Trading losses
28
International
March 2015 Year end
(Apr. 1, 2014 - Mar. 31, 2015)
-
383
(15)
(201)
-
(201)
315
182
-
182
299
-
-
-
217
-
-
-
217
(15)
-
-
(858)
(434)
399
315
299
-
-
(516)
(117)
Other ordinary income and expenses
(Millions of Yen)
March 2014 Year end
(Apr. 1, 2013 - Mar. 31, 2014)
Domestic
Gains on foreign
exchange transactions
Gains on sales of bonds
International
369
351
March 2015 Year end
(Apr. 1, 2014 - Mar. 31, 2015)
Total
Domestic
14,898
15,267
13,930
13,930
-
351
International
731
725
Total
15,967
16,699
14,092
14,092
-
725
Gains on redemption of
bonds
-
-
-
-
-
-
Income from derivatives
other than for trading or
hedging
-
-
-
-
-
-
Others
Losses on foreign
exchange transactions
Losses on sales of
bonds
17
254
254
968
-
986
5
1,875
1,881
254
2
11
13
254
2
-
2
Losses on redemption of
bonds
-
-
-
-
-
-
Losses on devaluation of
bonds
-
-
-
-
-
-
Expenses on derivatives
other than for trading or
hedging
-
-
-
-
-
-
Others
-
-
-
Other ordinary profit
115
14,898
15,013
0
11
11
729
15,956
16,685
29
General and administrative expenses
(Millions of Yen)
March 2014 Year end
(Apr. 1, 2013 - Mar. 31, 2014)
Salary
March 2015 Year end
(Apr. 1, 2014 - Mar. 31, 2015)
20,680
20,950
3,457
4,562
Welfare expenses
137
94
Depreciation cost
1,758
1,215
Rental fees on land, buildings, and machinery
5,348
5,660
Maintenance cost
131
215
Supplies cost
315
370
Utilities cost
134
134
Expenses of business trip
240
190
1,071
964
Advertising expenses
967
910
Membership, Contribution and Business promotion
187
188
Accrued pension cost
Communication charge
Tax and public charges
1,239
1,635
Others
22,975
24,344
Total
58,645
61,437
Profit ratio
(%)
March 2014 Year end
(Apr. 1, 2013 - Mar. 31, 2014)
March 2015 Year end
(Apr. 1, 2014 - Mar. 31, 2015)
Ordinary profit to total assets
0.06
(0.06)
Ordinary profit to capital (net assets)
1.10
(1.36)
Net income to total assets
0.02
(0.08)
Net income to capital (net assets)
0.51
(1.74)
Ordinary profit to total assets
=
Ordinary profit / (Number of days of the period / 365)
×100
Average balance of total assets (excl. customers' liabilities for acceptances and guarantees)
Ordinary profit to capital (net assets)
=
Net income to total assets
=
Ordinary profit / (Number of days of the period / 365)
（Beginning net assets + net assets）/2
Net income / (Number of days of the period / 365)
×100
×100
Average balance of total assets (excl. customers' liabilities for acceptances and guarantees)
Net income to capital (net assets)
30
=
Net income / (Number of days of the period / 365)
（Beginning net assets + net assets）/2
×100
<Indicators for Deposits>
Average balance by deposit type
(Millions of Yen)
As of Mar. 31, 2014
Domestic
Liquid deposits
Time deposits
Negotiable certificates of
deposit
Others
Total
As of Mar. 31, 2015
International
Total
Domestic
International
Total
1,744,069
-
1,744,069
1,953,558
-
1,953,558
108,068
-
108,068
97,020
-
97,020
22,604
-
22,604
2,115
-
2,115
6,176
1,995,174
2,001,351
6,948
1,824,182
1,831,131
1,880,919
1,995,174
3,876,094
2,059,642
1,824,182
3,883,825
(Note) Liquid deposits ＝ current deposits ＋ ordinary deposits ＋ saving deposits ＋ deposits at notice
Time deposits balance by remaining tenor
(Millions of Yen)
As of Mar. 31, 2014
As of Mar. 31, 2015
Over 3 Over 6
Over 1 Over 2
months months
Less
year, years,
,
,
Over 3
than
less
less
less
less
years
3 months
than 2 than 3
than 6 than 1
years years
months year
Fixed interest
time deposits
62,911 14,527 11,471
Over 3 Over 6
Over 1 Over 2
months months
Less
year, years,
,
,
Over 3
than
less
less
less
less
years
3 months
than 2 than 3
than 6 than 1
years years
months year
Total
1,416
408
4
90,739
70,496 12,205
Total
9,649
1,210
338
7
93,907
Floating
interest time
deposits
-
-
-
-
125
-
125
-
-
-
125
-
-
125
Others
-
-
-
-
-
-
-
-
-
-
-
-
-
-
62,911 14,527 11,471
1,416
534
4
90,865
70,496 12,205
9,649
1,336
338
7
94,033
Total
31
<Indicators for Loans and Bills Discounted>
Balance by loan type
(1) Balance at the end of period
(Millions of Yen)
As of Mar. 31, 2014
Domestic
Loans on bills
Loans on deeds
Total
Domestic
International
Total
8,318
1,287
9,605
10,565
1,645
12,210
116,585
198,057
314,642
116,084
288,810
404,894
20,479
10,816
31,295
14,959
52,412
67,372
699
-
699
632
-
632
146,082
210,161
356,243
142,243
342,867
485,111
Overdrafts
Bills discounted
Total
International
As of Mar. 31, 2015
(2) Average balance
(Millions of Yen)
As of Mar. 31, 2014
Domestic
Loans on bills
Loans on deeds
Total
Domestic
International
Total
22,588
601
23,189
9,864
1,432
11,297
123,322
170,823
294,145
119,617
290,993
410,610
22,400
11,082
33,482
22,343
43,955
66,299
Overdrafts
Bills discounted
Total
International
As of Mar. 31, 2015
354
-
354
739
-
739
168,665
182,506
351,172
152,565
336,380
488,946
Balance of loans and bills discounted by remaining tenor
(Millions of Yen)
As of Mar. 31, 2014
Less
than
1 year
Fixed interest
loans and bills discounted
As of Mar. 31, 2015
Over 1 Over 3 Over 5
year,
years, years,
Over 7
less
less
less
years
than 3 than 5 than 7
years
years
years
456
49,061
Floating interest
loans and bills discounted
121,921 36,348 30,802 20,078 98,031
Total
139,755 51,908 45,927 20,164 98,487
32
17,834 15,559 15,125
85
Total
Less
than
1 year
Over 1 Over 3 Over 5
year,
years, years,
less
less
less
than 3 than 5 than 7
years
years
years
17,508 15,138 14,073
98
Over 7
years
Total
124
46,943
307,182
118,315 68,819 73,738 57,439 119,854
438,168
356,243
135,823 83,957 87,812 57,538 119,979
485,111
Balance of loans and bills discounted by collateral type
(Millions of Yen)
As of Mar. 31, 2014
Type of collateral pledged
As of Mar. 31, 2015
Deposits
7,087
6,325
Securities
3,311
3,908
Claims
-
-
Commodities
-
-
Real estates
55,441
63,090
Foundations
-
-
Others
6,780
18,700
Sub-total
72,620
92,025
Guarantees
82,538
78,831
Clean credits
201,084
314,254
Total
356,243
485,111
Balance of customers’ liabilities for acceptances and guarantees by collateral type
(Millions of Yen)
Type of collateral pledged
As of Mar. 31, 2014
As of Mar. 31, 2015
Customers' liabilities for acceptances
and guarantees
Customers' liabilities for acceptances
and guarantees
Deposits
10,358
8,068
Securities
41,838
72,198
Claims
-
-
Commodities
-
-
Real estates
-
-
Foundations
-
-
Others
Sub-total
Guarantees
Clean credits
Total
-
-
52,197
80,267
-
-
48,433
58,848
100,630
139,115
Balance of loans and bills discounted by use
(Millions of Yen)
As of Mar. 31, 2014
As of Mar. 31, 2015
Lending for equipments
140,475
154,321
Lending for operations
215,767
330,789
Total
356,243
485,111
33
Balance of loans and bills discounted by industry
(Millions of Yen)
As of Mar. 31, 2014
As of Mar. 31, 2015
Amount
(%)
Amount
(%)
Domestic
Manufacturing
17,834
5.01%
59,582
12.28%
Agriculture / Forestry
-
-
-
-
Fishery
-
-
-
-
Mining
-
-
-
-
Construction
-
-
-
-
Electric/gas/heat supply/water
Information and telecommunications
Shipping / transportation
-
-
-
-
6,757
1.90%
540
0.11%
3.89%
7,000
1.96%
18,864
Wholesale / retail
51,420
14.43%
43,752
9.01%
Finance / insurance
70,277
19.72%
73,257
15.10%
Real estate
8,795
2.47%
13,122
2.71%
Other Services
4,255
1.21%
1,152
0.23%
Central / Local government
-
-
-
-
63,729
17.89%
65,942
13.60%
Overseas
126,174
35.41%
208,896
43.07%
Total
356,243
100%
485,111
100%
Individuals
Balance of loans and bills discounted for small and medium size businesses
(Millions of Yen)
As of Mar. 31, 2014
As of Mar. 31, 2015
Total loans and bills discounted (A)
356,243
485,111
Balance of loans for small and medium size
corporations etc. (B)
163,742
262,659
(B) / (A)
45.96%
54.14%
(Note) Small and medium size corporation etc. refers as followings;
- companies with its capital less than or equal to 300 million yen (100 million yen for wholesale businesses and 50 million yen
for retail sale and services businesses), or
- companies with its full-time employees less than or equal to 300 on the payroll (100 for wholesale, 50 for retail sale and 100
for services), or
- individuals.
Balance of specified overseas claims
None
34
Loans - to - deposits ratio
(%)
As of Mar. 31, 2014
Domestic
International
As of Mar. 31, 2015
Total
Domestic
International
Total
Balance at the end of period
7.85
11.79
9.78
7.10
17.82
12.35
Average balance
8.96
9.14
9.05
7.40
18.44
12.58
(Note) Negotiable certificates of deposit are included in “deposits”.
Allowance for loan losses
(Millions of Yen)
As of Mar. 31, 2014
Category
Beginning
balance
Increased
As of Mar. 31, 2015
Ending
Balance
Decreased
Beginning
balance
Increased
Ending
Balance
Decreased
Allowance for general loan
losses
1,159
1,014
1,159
1,014
1,014
1,245
1,014
1,245
Allowance for specific loan
losses
2,266
913
2,266
913
913
1,044
913
1,044
-
-
-
-
-
-
-
-
3,426
1,928
3,426
1,928
1,928
2,290
1,928
2,290
Specified overseas claim
reserve account
Total
Loan write-offs
None
Risk management Loans
(Millions of Yen)
As of Mar. 31, 2014
Bankrupt loans
As of Mar. 31, 2015
-
4
Past due loans/non-accrual loans
1,264
1,902
Past due loans (3 months or more)
1,181
459
Restructured loans
Total
36
175
2,482
2,542
(Notes)
1. “Bankrupt loans” are loans on which accrued interest income is not recognized as there is substantial doubt about the ultimate
collectability of either principal or interest because they are past due for a considerable period of time or for other reasons
(excluding write-offs, hereinafter “non-accrual loans”), and as defined in Article 96-1-3 and 96-1-4 of the Enforcement Ordinance
of the Japanese Corporate Tax Law.
2. “Past due loans/non-accrual loans” are loans on which accrued interest income is not recognized, excluding “Bankrupt loans” and
loans on which interest payments are deferred in order to support the borrowers’ recovery from financial difficulties.
3. “Past due loans (3 months or more)” are loans on which the principal or interest is past due for three months or more from the
next day of prescribed payment date, excluding “bankrupt loans” and “Past due loans/non-accrual loans”.
4.
“Restructured loans” are loans on which terms and conditions have been amended in favor of the borrowers (e.g., reduction of
the original interest rate, deferral of interest payments, extension of principal repayments or debt forgiveness) in order to support
the borrowers’ recovery from financial difficulties, excluding “bankrupt loans,” “past due loans/non-accrual loans” and “past due
loans (3 months or more)”.
35
Claims under the Financial Reconstruction Law
(Millions of Yen)
As of Mar. 31, 2014
As of Mar. 31, 2015
Bankrupt / De facto Bankrupt
769
911
In Danger of Bankrupt
495
995
Need attention
1,217
635
Subtotal (A)
2,483
2,542
Normal
571,122
754,372
Total (B)
573,605
756,915
(A) / (B)
0.43%
0.33%
(Notes)
1. “Bankrupt / De facto Bankrupt” are claims to bankrupt borrowers in the event of filing for commencement of bankruptcy,
corporate reorganization, rehabilitation proceedings and loans pursuant to these proceedings.
2. “In Danger of Bankrupt” are claims of which borrowers are not in bankruptcy but their financial status and business performance
deteriorate, with a low collectability of principal and interest under the terms and conditions of the contr act.
3. “Need attention” are Past due loans (3 months or more) and Restructured loans from “Risk management loans”.
4.
“Normal” are claims classified as other than the credit listed in 1 to 3 above, with no problems seen with borrowers ’ financial
status and business performance.
36
<Indicators for Securities >
Average balance of securities related to trading transactions
(Millions of Yen)
As of Mar. 31, 2014
Trading Japanese government bonds
As of Mar. 31, 2015
176,956
79,526
Trading municipal bonds
-
-
Trading government guaranteed bonds
-
-
17,555
16,916
194,512
96,442
Other trading securities
Total
Balance of AFS securities by remaining tenor
(Millions of Yen)
As of Mar. 31, 2014
Category
Japanese
government bonds
Up to 1
year
1-5
years
5 - 10
years
85,167 641,130
As of Mar. 31, 2015
Over 10 Indefinite
years
term
Up to 1
year
Total
38,147
-
- 764,446
1-5
years
5 - 10
years
120,408 358,983
Over 10 Indefinite
years
term
Total
2,093
-
-
481,484
Municipal bonds
-
-
-
-
-
-
-
-
-
-
-
-
Corporate bonds
-
-
-
15,022
-
15,022
-
-
-
13,779
-
13,779
Stocks
-
-
-
-
-
-
-
-
-
-
-
-
Foreign bonds
-
5,804
-
-
-
5,804
-
5,698
-
-
-
5,698
Foreign stocks
-
-
-
-
-
-
-
-
-
-
-
-
Others
-
-
-
-
-
-
-
-
-
-
-
-
2,093 13,779
-
500,962
Total
85,167 646,935
38,147 15,022
- 785,273
120,408 364,681
Average balance of AFS securities
(Millions of Yen)
As of Mar. 31, 2014
Domestic
Japanese government bonds
International
As of Mar. 31, 2015
Total
Domestic
International
Total
872,297
-
872,297
671,459
-
671,459
Municipal bonds
-
-
-
-
-
-
Corporate bonds
14,418
15,441
-
15,441
14,418
-
Stocks
-
-
-
-
-
-
Foreign bonds
-
5,852
5,852
-
5,759
5,759
Foreign stocks
-
-
-
-
-
-
Others
-
-
-
-
-
-
887,739
5,852
893,591
685,877
5,759
691,636
Total
37
AFS securities - to - deposits ratio
(%)
As of Mar. 31, 2014
Domestic
International
As of Mar. 31, 2015
Total
Domestic
International
Total
Balance at the end of period
41.90
0.32
21.56
24.74
0.29
12.76
Average balance
47.19
0.29
23.05
33.30
0.31
17.80
(Note) Negotiable certificates of deposit are included in “deposits.”
38
2. Financial Statements
Financial figures has been audited by KPMG AZSA LLC based on article 396, paragraph 1 of the Corporation
Act.
<Balance Sheet>
(Millions of Yen)
Account Name
Asset
Cash and due from banks
Cash
Due from banks
Call loans
Receivables under resale agreements
Monetary claims bought
Trading assets
Securities related to trading transactions
Derivatives of securities related to trading transactions
Trading-related financial derivatives
Securities
Government bonds
Corporate bonds
Other securities
Bills discounted
Loans on bills
Loans on deeds
Overdrafts
Foreign exchanges
Due from foreign banks (our accounts)
Due from foreign banks (their accounts)
Foreign bills bought
Foreign bills receivable
Other assets
Prepaid expenses
Accrued income
Accrued income tax refunds
Initial margins of futures markets
Variation margins of futures markets
Derivatives other than for trading-assets
Cash collateral paid for financial instruments
Others
Tangible fixed assets
Buildings
Construction in progress
Other tangible fixed assets
Intangible fixed assets
Softw are
Prepaid pension costs
Deferred tax assets
Customers’ liabilities for acceptances and guarantees
Allow ance for loan losses
Total assets
As of March 31, 2014
Amount
Amount
1,841,877
6,878
1,834,999
240,203
731,656
4,281
181,452
155,602
0
25,849
785,273
764,446
15,022
5,804
356,243
699
9,605
314,642
31,295
111,584
19,597
17,086
73,441
1,459
155,896
1,690
5,177
57
4
126,282
12,686
9,996
2,463
1,780
682
2,074
2,074
398
1,835
100,630
(1,928)
4,513,946
3,093,519
7,707
3,085,811
3,365
468,825
4,675
36,121
21,377
14,744
500,962
481,484
13,779
5,698
485,111
632
12,210
404,894
67,372
127,098
28,111
26,541
70,541
1,903
194,637
1,292
5,344
635
109
56
158,513
21,262
7,423
2,090
1,381
275
433
573
573
3,435
139,115
(2,290)
5,057,241
39
(Millions of Yen)
Account Name
Liabilities
Deposits
Current deposits
Ordinary deposits
Time deposits
Other deposits
Negotiable certificates of deposit
Call money
Trading liabilities
Amount
Amount
3,636,024
273,435
1,479,005
90,865
1,792,717
6,000
26,155
3,924,867
285,034
1,609,135
94,033
1,936,663
1,803
14,865
2
26,153
4
4
346,211
18
14,847
7
7
523,010
Due to foreign banks (their accounts)
339,263
523,010
Due to foreign banks (our accounts)
6,948
-
0
140,701
339
1,417
2,965
1,279
0
125,322
3,995
719
4,663
447
94
1,044
51
229
100,630
4,257,595
197,861
297
218
3,775
1,259
165,130
19,481
683
7,013
459
77
2,481
50
325
139,115
4,804,926
123,100
121,100
121,100
9,396
2,000
7,396
7,396
253,596
2,753
2,753
256,350
4,513,946
123,100
121,100
121,100
5,503
2,000
3,503
3,503
249,703
2,612
2,612
252,315
5,057,241
Derivatives of securities related to trading transactions
Trading-related financial derivatives
Borrow ed money
Borrow ings from other banks
Foreign exchanges
Foreign bills payable
Other liabilities
Domestic exchange settlement account (credit)
Income taxes payable
Accrued expenses
Unearned revenue
Variation margins of futures markets
Derivatives other than for trading-liabilities
Cash collateral received for financail instruments
Asset retirement obligations
Others
Provision for bonuses
Provision for directors' bonuses
Provision for retirement benefits
Provision for directors' retirement benefits
Other provision
Acceptances and guarantees
Total liabilities
Net Assets
Capital stock
Capital surplus
Legal capital surplus
Retained earnings
Legal retained earnings
Other retained earnings
Retained earnings brought forw ard
Total shareholders' equity
Valuation difference on AFS securities
Total valuation and translation adjustm ents
Total net assets
Total liabilities and net assets
40
< Statement of Income >
Account Name
Ordinary income
Interest income
Interest on loans and bills discounted
Interest and dividends on securities
Interest on call loans
Interest on receivables under resale agreements
Interest on deposits with banks
Other interest income
Fees and commissions on fund transfer
Trading income
Gains on securities and derivatives related to trading transactions
Gains on foreign exchange transactions
Gains on sales of bonds
Others
Other income
Reversal of allowance for loan losses
Recoveries of written-off claims
Gain on investments in money held in trust
Others
Ordinary expenses
Interest expenses
Interest on deposits
Interest on negotiable certificates of deposit
Interest on call money
Interest on borrowings and rediscounts
Interest on interest swaps
Other interest expenses
Fees and commissions on fund transfer
Trading Losses
Losses on securities and derivatives related to trading transactions
Losses on trading-related derivatives transactions
Losses on sales of bonds
Others
General and administrative expenses
Other expenses
Provision of allowance for loan losses
Others
Extraordinary income
Extraordinary loss
Losses on disposal of fixed assets
Others
Income (loss) before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
Net income (loss)
From April 1, 2013
to March 31, 2014
68,305
30,306
4,391
3,004
557
5,159
16,392
801
21,522
6,062
15,459
15,267
13,930
351
986
1,208
653
6
0
548
65,437
3,517
3,481
14
0
0
1
19
2,291
744
1,546
434
217
217
254
254
58,645
294
294
2,867
28
28
2,839
1,624
(124)
1,499
1,339
(Millions of Yen)
From April 1, 2014
to March 31, 2015
66,302
27,909
7,423
2,304
333
5,654
11,490
702
20,968
5,448
15,520
182
182
16,699
14,092
725
1,881
542
4
537
69,780
4,588
4,552
0
1
0
33
2,598
771
1,826
299
299
13
2
11
61,437
842
396
445
(3,478)
2,557
1,174
1,382
(6,036)
54
(1,636)
(1,582)
(4,454)
41
<Statement of Changes in Net Assets>
From April 1, 2013 to March 31, 2014
(Millions of Yen)
Shareholders' equity
Valuation and translation adjustments
Total net
assets
Capital stock
Capital surplus
Retained earnings
Total
Valuation
Deferred gains Total valuation
Legal capital Total Capital
Legal
Other retained Total retained shareholders' difference on
or losses on and translation
surplus
surplus
retained
earnings
earnings
equity
AFS securities
hedges
adjustments
earnings
Retained
earnings
brought forward
Balance at beginning
of the period
123,100
121,100
121,100
2,000
12,457
14,457
258,657
4,170
(3)
4,166
262,823
(6,400)
(6,400)
(6,400)
(6,400)
1,339
1,339
1,339
1,339
Changes in amounts
during the period
Dividends of
retained earnings
Net income
Net changes in
amounts other
than
shareholders'
equity
Total changes in
amounts during the
period
Balance at the end
of the current period
-
-
-
-
123,100
121,100
121,100
2,000
(5,060)
(5,060)
7,396
9,396
(5,060)
253,596
(1,416)
3
(1,412)
(1,412)
(1,416)
3
(1,412)
(6,472)
2,753
-
2,753
256,350
From April 1, 2014 to March 31, 2015
(Millions of Yen)
Shareholders' equity
Valuation and translation adjustments
Capital stock
Total
Valuation
Deferred gains Total valuation
Capital surplus
Retained earnings
shareholders'
difference
on
or losses on and translation
Legal capital Total Capital
Legal
Other retained Total retained
equity
AFS securities
hedges
adjustments
surplus
surplus
retained
earnings
earnings
earnings
Retained
earnings brought
forward
Balance at beginning
of the period
123,100
121,100
121,100
2,000
Cumulative effects
of changes in
accounting policies
Restated balance
123,100
121,100
121,100
2,000
7,396
9,396
253,596
560
560
560
7,957
9,957
254,157
(4,454)
(4,454)
2,753
-
2,753
Total net
assets
256,350
560
2,753
-
2,753
256,911
Changes in amounts
during the period
Net loss
(4,454)
Net changes in
amounts other
than
shareholders'
equity
Total changes in
amounts during the
period
Balance at the end
of the current period
42
(4,454)
(141)
-
-
-
-
123,100
121,100
121,100
2,000
(4,454)
(4,454)
3,503
5,503
(4,454)
249,703
(141)
2,612
-
-
(141)
(141)
(141)
(4,595)
2,612
252,315
< Statement of Cash Flows >
(Millions of Yen)
Account Name
From April 1, 2013
to March 31, 2014
From April 1, 2014
to March 31, 2015
Cash flows from operating activities
Income (loss) before income taxes
2,839
(6,036)
Depreciation
1,758
1,215
Increase (decrease) in allowance for loan losses
(1,497)
361
Increase (decrease) in provision for bonuses
(93)
11
Increase (decrease) in provision for retirement benefits
(46)
1,437
Interest income
Interest expenses
Losses (gains) on sales of AFS securities
Losses (gains) on foreign exchanges
Losses (gains) on dispositions of fixed assets
(30,306)
(27,909)
3,517
4,588
(97)
(110)
28
(723)
(33)
1,174
Net decrease (increase) in trading assets
(45,923)
145,331
Net increase (decrease) in trading liabilities
(25,192)
(11,289)
Net decrease (increase) in money held in trust
Net decrease (increase) in loans and bills discounted
Net increase (decrease) in deposits
10
(128,867)
94,519
288,843
Net increase (decrease) in negotiable certificates of deposit
(29,000)
Net decrease (increase) in due from banks (excluding cash equivalents)
627,970
Net decrease (increase) in call loans
(68,165)
Net increase (decrease) in call money
-
Net increase (decrease) in borrowed money
2
Net decrease (increase) in foreign exchanges - assets
Net increase (decrease) in foreign exchanges - liabilities
-
(25,628)
6,437
(6,000)
(155,269)
236,838
1,803
2
(15,513)
240,071
176,799
Interest received - cash basis
35,559
30,124
Interest paid - cash basis
(3,521)
(3,842)
Net increase (decrease) in reserve for others
Net decrease (increase) in receivables under resale agreements
Net decrease (increase) in monetary claims bought
Net decrease (increase) in other assets
Net increase (decrease) in other liabilities
Others, net
Sub-total
Income taxes paid - cash basis
Income taxes refunded - cash basis
Net cash provided by (used in) operating activities
(107)
77
(42,818)
262,831
(899)
(393)
87,701
(36,797)
(147,643)
57,613
1
679,365
(1,022)
(10)
816,367
(1,855)
364
-
678,707
814,512
Cash flows from investing activities
Purchases of AFS securities
(420,914)
(102,755)
Proceeds from sales of AFS securities
199,177
348,826
Proceeds from redemption of AFS securities
290,696
36,299
Purchases of tangible fixed assets
Proceeds from sales of tangible fixed assets
Purchases of intangible fixed assets
Others, net
Net cash provided by (used in) investing activities
(253)
1
(530)
68,176
(346)
(158)
(39)
281,826
Cash flows from financing activities
Dividend paid
(6,400)
Net cash provided by (used in) financing activities
(6,400)
Effect of foreign exchange rate changes on cash and cash equivalents
-
110
33
Net increase (decrease) in cash and cash equivalents
740,595
1,096,371
Cash and cash equivalents at the beginning of the fiscal year
539,843
1,280,438
1,280,438
2,376,810
Cash and cash equivalents at the end of the fiscal year
43
Amounts less than one million yen have been omitted.
Accounting Policies
1.
Standard for valuation of trading assets and trading liabilities / booking of income and losses for trading
purposes transaction
Transactions for trading purposes, such as seeking gains arising from short-term changes in interest rates, foreign
exchange rates, or securities prices and other market related indices or from variation among markets (hereinafter
referred to as “Trading Purposes”), are included in “Trading assets” or “Trading liabilities” on the balance sheet on a
trade date basis. Income and Expenses on trading-purpose transactions are recognized on a trading date basis,
and recorded as “Trading income” and “Trading losses”.
Securities and monetary claims purchased for trading purposes are stated at the fiscal year-end market value, and
financial derivatives such as swaps, futures and options are stated at amounts that would be settled if the
transactions were terminated at the fiscal year-end.
“Trading income” and “Trading losses” include interest received or paid during the fiscal year. The year-on-year
valuation differences of securities and money claims are also recorded in the above-mentioned accounts. As for the
derivatives, assuming that the settlement will be made in cash, the year-on-year valuation differences are also
recorded in the above-mentioned accounts.
2.
Standard and method for valuation of AFS securities
AFS securities that have market prices are carried at their balance sheet date market prices (cost of securities sold
is calculated using primarily the moving-average method). Net unrealized gains/losses on AFS securities, net of
income taxes, are included in “Net assets”.
3.
Standard and method for valuation of derivative transaction
Derivative transactions (excluding those for trading purposes) are carried at fair value.
4.
Depreciation method for fixed assets
(1) Tangible fixed assets
Tangible fixed assets are depreciated using the declining-balance method.
The estimated useful lives are as follows:
Buildings:
3 to 18 years
Others:
3 to 20 years
(2) Intangible fixed assets
Intangible fixed assets are depreciated using the straight-line method. Capitalized software for internal use is
depreciated over its estimated useful life (mainly 5 years).
5. Standard for the translation into Japanese yen
Assets and liabilities denominated in foreign currencies are translated into Japanese yen at the exchange rate
prevailing at the balance sheet date.
6. Standard for Allowance
(1) Allowance for loan losses
Allowance for loan losses is provided as detailed below in accordance with the internal standards for write-offs
and provisioning.
For claims on borrowers that have entered into bankruptcy, special liquidation proceedings or similar legal
proceedings (“bankrupt borrowers”) or borrowers that are not legally or formally insolvent but are regarded as
substantially in the same situation (“effectively bankrupt borrowers”), an allowance is provided based on the
amount of claims, after the write-off stated in the additional paragraph below, net of the expected amount of
recoveries from collateral and guarantees. For claims on borrowers that are not currently bankrupt but are
perceived to have a high risk of falling into bankruptcy, an allowance is provided in the amount deemed
necessary based on an overall solvency assessment of the claims, net of the expected amount of recoveries
from collateral and guarantees. For other claims, an allowance is provided based on the expected loan-loss
ratio assigned to each risk rating.
Responsible divisions for Self-Assessment and Front office mutually conduct assessment of all claims in
accordance with the internal rules for self-assessment of assets, and the Internal Audit Division, independently
audits their assessment. The allowance is provided based on the results of these assessments.
(2) Provision for bonuses
Provision for bonuses is reported in preparation for the payment of bonuses to the employees at the amount
estimated for the payment of bonuses to the employees during the fiscal year.
44
(3) Provision for directors’ bonuses
Provision for directors’ bonuses is reported in preparation for the payment of bonuses to the directors at the
amount estimated for the payment of bonuses to the directors during the fiscal year.
(4) Provision for retirement benefits
Provision for retirement benefits is reported in preparation for the payment of employee retirement allowance in
the amount deemed accrued at the period, based on the projected retirement benefit obligation and the fair
value of plan assets at the fiscal year-end. The basis for period recognition for the estimated retirement benefits
adopts the benefit formula prorates approach. The unrecognized prior service cost and actuarial differences are
recognized as profit and loss as follows;
Unrecognized prior service cost:
Amortized using the straight-line method for a period, primarily over 7 years, within the employees’
average remaining service period, commencing on the fiscal year in which the services are provided.
Actuarial differences:
Amortized using the straight-line method, primarily over 7 years, within the employees’ average
remaining service period, commencing from the next fiscal year of incurrence.
(5) Provision for directors’ retirement benefits
Provision for directors’ retirement benefits is reported in preparation for the payment of director retirement
allowance out of directors’ estimated allowance for the amount allocable to the period.
7.
Method for hedge accounting
The exceptional method is applied to certain interest rate swaps that meet the criteria for the exceptional
treatments. No assessment is performed for hedge effectiveness of qualifying interest rate swaps accounted for by
the exceptional treatments, as it is ascertained that the criteria for the exceptional treatments are continually met.
8.
Accounting for consumption taxes
National and Local Consumption Taxes are excluded from transaction amounts.
Changes in Accounting policies
(Accounting Standard for Retirement Benefits)
CJL has adopted the body of Paragraph 35 of the “Accounting Standard for Retirement Benefits” (ASBJ Statement
No. 26, May 17, 2012) and the body of Paragraph 67 of the “Application Guideline for Accounting Standard Related to
Retirement Benefits” (ASBJ Guideline No. 25, May 17, 2012) from this fiscal year. The calculation method for
retirement benefit obligation and service costs were changed, where the basis for period recognition for the estimated
retirement benefits was changed from the total service prorate approach to the benefit formula prorate approach. In
addition, the method for determining the discount rate was changed from a method based on the expected average
years of the future benefit payment for the plan to a method based on the single weighted average discount rate that
reflects the estimated period and amount of benefit payment in each period.
As for the application of the Accounting Standard for Retirement Benefits, etc., in accordance with Paragraph 37 of
the same Standard that specifies transitional arrangements, the amount of financial impact resulting from the change
in calculation method of retirement benefit obligations and service costs were added to or deducted from retained
earnings at the beginning of this fiscal year.
As a result, the amount of Prepaid pension costs increased by 871 million yen and the amount of Retained earnings
increased by 560 million yen at the beginning of fiscal year. The impacts on Ordinary loss and Loss before income
taxes for this fiscal year are immaterial.
45
Notes to Balance Sheet
1.
For securities held as collateral under “receivables under resale agreements” and “derivative transactions” which
can be sold or pledged without restrictions, 10,410 million yen were pledged and 492,994 million yen were held by
CJL as of March 31, 2015.
2.
Bankrupt loans were 4 million yen and Past due loans/non-accrual loans were 1,902 million yen.
“Bankrupt loans” are loans on which accrued interest income is not recognized as there is substantial doubt about
the ultimate collectability of either principal or interest because they are past due for a considerable period of time
or for other reasons (excluding write-offs, hereinafter “non-accrual loans”), and as defined in Article 96-1-3 and 961-4 of the Enforcement Ordinance of the Japanese Corporate Tax Law.
“Past due loans/non-accrual loans” are loans on which accrued interest income is not recognized, excluding
“Bankrupt loans” and loans on which interest payments are deferred in order to support the borrowers’ recovery
from financial difficulties.
3.
Past due loans (3 months or more) totaled 459 million yen.
“Past due loans (3 months or more)” are loans on which the principal or interest is past due for three months or
more, excluding “Bankrupt loans” and “Past due loans/non-accrual loans”.
4.
Restructured loans totaled 175 million yen.
“Restructured loans” are loans on which terms and conditions have been amended in favor of the borrowers (e.g.
reduction of the original interest rate, deferral of interest payments, extension of principal repayments or debt
forgiveness) in order to support the borrowers’ recovery from financial difficulties, excluding “Bankrupt loans,” “Past
due loans/non-accrual loans” and “Past due loans (3 months or more)”.
5.
The total amount of “Bankrupt loans”, “Past due loans/non-accrual loans”, “Past due loans (3 months or more)” and
“Restructured loans” were 2,542 million yen.
Claims shown from 2 to 5 are the amounts before the appropriate allowance.
6.
Bills discounted are treated as financial transactions in accordance with JICPA Industry Audit Committee Report
No.24. CJL has rights to sell or pledge bank acceptance bought, commercial bills discounted, documentary bills and
foreign bills bought without restrictions. The total face value was 71,174 million yen.
7.
AFS securities of 481,484 million yen and Trading assets of 3,348 million yen were pledged as collateral for
settlements of FX transactions. In addition, other assets include Cash collateral paid for financial instruments of
21,262 million yen, initial margins of futures markets 109 million yen and other guarantee deposits of 4,350 million
yen.
8.
Overdraft facilities and commitment line contracts on loans are agreements to lend to customers up to a prescribed
amount, as long as there is no violation of any condition established in the contracts.
The amount of unused commitments was 392,000 million yen and the amount of those with remaining period within
one year was 311,377 million yen.
Since many of these commitments are expected to expire without being drawn upon, the total amount of unused
commitments does not necessarily represent actual future cash flow requirements. Many of these commitments
include clauses under which we can reject an application from customers or reduce the contract amounts in the
event that economic conditions change, we need to secure claims, or other events occur. In addition, we may
request the customers to pledge collateral such as premises and securities at the time of the contracts, and take
necessary measures such as monitoring customers’ financial positions, revising contracts when need arises and
securing claims after contracts are made on a periodic basis.
9.
Accumulated depreciation on tangible fixed assets: 6,960 million yen.
10. Non-cancellable operating lease is as follows;
Future minimum rental payments;
Within one year 721 million yen
Over one year
333 million yen
11. Monetary assets to affiliates amounted to 850,444 million yen.
12. Monetary liabilities to affiliates amounted to 1,010,997 million yen.
46
13. Dividend is subject to the limitation of article 18 of the Banking law. Under the Banking law of Japan, 20% of the
retained earnings decreased by dividends shall be appropriated as a Legal retained earnings until the aggregate
amount of Legal capital surplus and Legal retained earnings equals the amount of Capital stock.
47
Notes to Statement of Income
1.
Others shown in Extraordinary loss is mainly software related expenses derived from retail business divestiture.
2.
Income from transactions with affiliates
Total income of funding transaction
Total income of fees and commissions
Total income of other ordinary transactions
Total income of other transactions
Expenses from transactions with affiliates
Total expenses of funding transaction
Total expenses of fees and commissions
Total expenses of other ordinary transactions
9,658 million yen
1,665 million yen
14,264 million yen
5,440 million yen
2,242 million yen
292 million yen
11 million yen
5,870 million yen
Total expenses of other transactions
3.
Information with respect to related party transaction is as follows.
Relation
Name
Address
Capital
Business
Percentage of
stocks owned
Content of relations
Directors
Business
Description of
transaction
Amount
(million yen)
Name of
account
Business
transaction
&
interest
611,057
(*2)
Due from banks
Fx
&
Derivative
Business
transaction
&
interest
Parent
Citibank, N.A.
South
Dakota,
United
States of
America
USD 751
Million
Banking
100%
(indirect)
―
Funding /
Lending
Settlement of
foreign exchange
Fx
&
Derivative
Guarantees
&
fee
701,855
9,404
Accrued
income
2,108
87,218
(*3)
Other
Assets
87,218
348,086
(*2)
Deposit
459,754
Accrued
expenses
860
489,084
(*2)
Due to
foreign banks
(their accounts)
441,958
91,649
(*3)
Other
liabilities
91,649
―
Customers’
liabilities for
acceptances and
guarantees
2,218
4
*1 Condition of transactions and its policy are decided as same as third party transactions.
*2 Average balance for amount of transaction
*3 Valuation difference based on year end market rate.
48
Balance at
Year end
(million yen)
Unearned
revenue
9,565
14
Notes to Statement of Changes in Net Assets
The types and number of our shares outstanding are as follows:
(Thousands of Shares)
Number of shares
Number of shares
Number of shares Number of shares
at beginning of the
increased during
decreased during
at end of the
period
the period
the period
period
Common stock
244,200,000
－
－
244,200,000
Total
244,200,000
－
－
244,200,000
Memo
Notes to Statement of Cash flow
Cash and Cash Equivalents consist of cash and due from Bank of Japan included in Cash and Due from Banks on the
balance sheet.
Cash and Due from Banks
Due from Banks excluding Bank of Japan
Cash and Cash Equivalents
(Millions of Yen)
3,093,519
(716,708)
2,376,810
49
Notes related to Financial Instruments
1．Disclosure on Financial Instruments
(1) Policy on Financial Instruments
CJL is engaged in banking operations such as taking deposits, extending credits such as loans, fund transfer
and cash clearing in the Yen and foreign currencies and investment of funds in such assets as marketable
securities. For the Banking Book Portfolio arising across these business activities, CJL conducts Asset and
Liability Management (“ALM”), that is comprehensive management of its assets and liabilities, with the objective
of management of liquidity risk arising from mismatch of the duration of assets and liabilities, reduction of funding
cost and enhancement of efficiency in the investment activities. As part of this effort, CJL enters into certain
derivative transactions. In its management of the Banking Book Portfolio, CJL’s principal source of funding is
deposits from its retail and institutional customers. The funds acquired from these sources are invested primarily
in securities (mainly in Japanese government bonds), loans to customers and deposits to Citibank, N.A. entities.
(2) Types of and Risks associated with Financial Instruments
Financial assets CJL holds are principally loans to institutional and retail customers in Japan and overseas,
marketable securities and placements to the bank subsidiaries of Citigroup Inc. to which CJL belongs. Of these
financial assets, loans exposes CJL to credit risk as well as risks arising from material adverse changes in
economic, political, and social environments.
Marketable securities are mainly in Japanese government bonds with low credit risk. These are exposed to
interest rate risk and market price risk.
As to funding, CJL’s funding sources are stable, consisting of deposits from retail and institutional customers,
and group companies. These funding activities associate liquidity risk in which CJL may not be able to repay
timely on maturities and interest rate risk.
Derivative contracts include interest rate swaps, currency swaps, and forward FX for ALM purposes.
In addition, we have trading bonds as well as trading positions that include interest rate related derivatives and
currency related derivatives. These financial products expose CJL to such risks as interest rate risk, foreign
exchange rate risk, price risk and credit risk.
(3) Risk Management System relating to Financial Instruments
① Credit Risk Management
CJL establishes consistent risk management framework and controls credit risks related to loans etc. by credit
analysis conducted on transaction basis, controlling credit line, credit information, internal obligor risk rating,
pledge of guarantee and collateral and managing classified or delinquent accounts, in accordance with Credit
Risk Management Policy and related standards and procedures.
Credit risk management is undertaken by Risk Management Division and the status is reported periodically to
Credit Risk Management Committee (“CRMC”, as a sub-committee of the Management Committee) and
Board of Directors’ meeting (“BOD”). In addition, the status of the credit management is reviewed by internal
auditors periodically.
Issuer credit risk and credit risk of derivatives counterparties are managed through Credit Risk Management
Services Unit and Portfolio Management Unit in Risk Management Division obtaining credit information and
marked-to market exposures periodically
② Market Risk Management
(A) Risk Management of Banking Book
CJL manages interest-rate risks on banking book through ALM. The risk management methods and
procedures are clearly described in the "Market Risk Management for Accrual Portfolios Policy and
Standards". CJL monitors and reviews its activity implementation status, also discusses action plans in the
monthly Asset Liability Committee (“ALCO”) meeting as per the ALCO Regulation which has been
approved by the Management Committee.
On a day to day basis, Market Risk Management Unit captures consolidated profiles of interest rates and
durations of the financial assets and liabilities, performs risk monitoring process using the gap analysis and
interest rate factor sensitivity analysis, and reports the results to the ALCO meeting on a monthly basis. For
the purpose of hedging interest rate risks, CJL transacts some derivative trades such as interest rate swaps.
50
(B) Risk Management of Trading Book
CJL mainly manages interest-rate risks and foreign exchange price risks on trading book following the
Market Risk Management Policy and ALCO Regulation approved by Management Committee. CJL's
market risk amount is measured by Value-at-Risk (“VaR”) method and its regulated compliance status is
monitored and reported to ALCO meeting on a monthly basis.
(C) Quantitative information on Market Risks
a) Trading purpose financial instruments
CJL adopted the Monte Carlo Method that simulates variance and covariance estimated from the historical
times series data for VaR calculation (holding period of one day, with the confidence level of 99%) for
trading purpose securities and trading purpose derivative products.
CJL market risk amount for trading activities (probable loss amount) as of March 31, 2015 was 64 million
yen.
CJL also conducts VaR back testing which is a comparative analysis of the VaR result calculated by the
validated model against the actual profit and loss (P&L). As per the VaR back testing result for the period of
April 2014 through March 2015, no exception was observed. However, VaR still may not pick up all
probability of event under unpredictable market conditions so long as it is based on the certain probability
calculated by statistical method using historical market movement.
b) Non-trading purpose financial instruments
In CJL, the main financial instruments which to be influenced by interest rates as one of the key risk
variables are, “Placements”, "Loans and bills discounted", "AFS securities", "Deposits", “Negotiable
certificate of deposits”, "Borrowings" and "Reverse Repo". On the financial Assets and Liabilities, CJL
calculates the effect amounts on profits and losses in the next one year when simulating reasonably
expected moving range in the quantitative analysis for the purpose of managing interest rate risks. With
respect to the revenue effect amount calculation, CJL splits respective financial asset and liability balances
into groups of fixed or floating rate groups by tenor buckets responding to holding maturities and applies the
interest rate moves by tenors. CJL has exercised results that the net income before taxes would increase
by 1,941 million yen on the scenario that interest rate to increase by 100 basis points (1%) for total portfolio,
by 3,726 million yen on the scenario that benchmark JPY interest rate to increase by 100 basis points (1%)
as of March 31, 2015. On the same basis, CJL's net income before taxes would decrease by 1,938 million
yen on the scenario that benchmark USD interest rate to increase by 100 basis points (1%). These results
are based on the stable risk variables excluding interest rates, and no correlation between interest rates
and other risk variables are considered in the calculation. In case of any unexpected moves over the 100
basis points (1%) moving range, there can be larger effect than the reported effect amounts on P&L.
③ Management of Liquidity Risk associated with Funding Activities
Liquidity risk management has been regulated by related policies and procedures. ALCO, which is subject to
supervision of the Management Committee, has been constituted to ensure that CJL maintains adequate
liquidity, has sufficient capital to meet regulatory and business needs, has appropriate funding for business
growth. ALCO's monitoring and reviewing of capital, liquidity, balance sheet and the banking account
management is an integral part of the overall risk management framework of CJL.
(4) Supplement Explanation for Fair Value of Financial Instruments
Fair value of financial instruments includes market prices as well as reasonably calculated prices in cases where
there are no market prices available. Since the calculations of such prices are implemented under certain
conditions and assumptions, the result of calculations may vary if different assumptions are used.
51
2．Fair Value of Financial Instruments
Fair value and balance sheet amount of financial instruments as of March 31, 2015 are shown below.
(Millions of Yen)
Balance sheet
amount
(1)
(2)
(3)
(4)
(5)
(6)
(7)
Cash and due from banks
Call loans
Receivables under resale agreements
Monetary claims bought　(*1)
Trading assets
Trading securities
Securities　(*1)
Other securities
Allowance for loan losses　(*1)
(8) Foreign exchange　(*1)
Total Assets
(1) Deposits
(2) Call money
(3) Foreign exchange
Total Liabilities
Derivative transactions　(*2)
Trading
Total derivative transactions
Others
Overdraft facilities and commitment line（*3）
Fair value
Difference
3,093,519
3,365
468,825
4,666
3,097,614
3,365
467,718
4,666
4,095
(1,106)
-
21,377
21,377
-
500,962
-
493,391
127,029
4,716,125
3,925,946
1,803
523,010
4,450,760
10,222
13,210
1,078
1,078
500,962
485,111
(1,941)
483,169
127,029
4,702,914
3,924,867
1,803
523,010
4,449,682
(6,682)
(6,682)
Contract amount
392,000
(6,682)
(6,682)
-
Fair value
1,428
(*1) General allowance for loan losses and specific allowance for loan losses provided to “Loans and bills discounted”
are separately shown in the above table. Allowance for loan losses provided to “Monetary claims bought”,
“Securities” and “Foreign exchange” are directly deducted from the book value due to immateriality.
(*2) Derivatives included in “Trading assets”, “Trading liabilities”, “Other assets” and “Other liabilities” are shown
together. Negative amount indicates in case of liabilities exceeding the assets.
(*3) Contract amount of Overdraft facilities and commitment line are unused amount.
(Notes) Valuation method of financial instruments
(Assets)
(1) Cash and due from banks
For due from banks without maturity, the carrying amount is presented as the fair value, as the fair value
approximates such carrying amount. For due from banks with maturity, fair value is determined as present value
of total future cash flows, discounted by interest rate that would be applied to new acceptances. Total future cash
flows are contractual payment of principal and interest. For due from banks with short remaining period (within 1
year), the carrying amount is presented as the fair value, as the fair value approximates such carrying amount.
(2) Call loans
For Call loans, the carrying amount is presented as the fair value, as the fair value approximates such carrying
amount because they have short remaining period (within 1 year).
(3) Receivables under resale agreements
For Receivables under resale agreements with remaining period exceeding 1 year, fair value is determined as
present future cash flows, discounted by interest rate that would be applied to new acceptance. Total future cash
flows are contractual payment of principal and interest.
For Receivables under resale agreements with short remaining period (within 1 year), the carrying amount is
presented as the fair value, as the fair value approximates such carrying amount.
52
(4) Monetary claims bought
For monetary claims bought, the carrying amount is presented as the fair value, as the fair value approximates
such carrying amount because they have short remaining period (within 1 year).
(5) Trading assets
For securities such as bonds that are held for trading, the fair value is calculated based on their market prices.
(6) Securities
For securities such as bonds that are available for sale, the fair value is calculated based on their market prices.
(7) Loans and bills discounted
For loans without maturity, the carrying amount is presented as the fair value, as the fair value approximates
such carrying amount because of their estimated maturity length and the interest rate conditions. For loans with
short remaining period (within 1 year), the carrying amount is presented as the fair value, as the fair value
approximates such carrying amount.
For loan with remaining period exceeding 1 year, fair value is determined as present value of total future cash
flows, discounted by interest rate that would be applied to newly accepted loans. Total future cash flows are
contractual payment of principal and interest.
As for the loans to bankrupt, de facto bankrupt, and potentially bankrupt borrowers, credit loss is estimated
based on factors such as the present value of expected future cash flow or the expected amount to be collected
from collaterals and guarantees. Since the fair value of these items approximates the carrying amount net of the
currently expected credit loss amount, such carrying amount is presented as the fair value.
Foreign exchanges consist of foreign currency deposits with other banks (due from other foreign banks), shortterm loans involving foreign currencies (due from other foreign banks), export bills etc. (purchased foreign bills),
and loans on notes using import bills (foreign bills receivables). For these items, the carrying amount is
presented as the fair value, as the fair value approximates such carrying amount because most of these items
are deposits without maturity or have short contract term (within 1 year).
(Liabilities)
(1) Deposits
For demand deposits, the amount payable on demand as of balance sheet date is considered to be the fair value.
Time deposits are grouped by certain maturity lengths. The fair value of such deposits is the present value
discounted by expected future cash flow. The discount rate is the risk free rates adjusted with funding spread of
CJL as of balance sheet date. For deposits with short remaining period (within 6 months), the carrying amount is
presented as the fair value as the fair value approximates such carrying amount.
(2) Call money
For Call money, the carrying amount is presented as the fair value, as the fair value approximates such carrying
amount because they have short remaining period (within 1 year).
Among foreign exchange contracts, foreign currency deposits accepted from other banks and non-resident yen
deposits are deposits without maturity. Furthermore, foreign currency short-term borrowing have no maturity.
Thus, for the foreign exchanges, the carrying amount is presented as the fair value as the fair value
approximates such carrying amount.
53
(Derivative transactions)
Derivatives include interest rate related instruments (interest rate futures, interest rate options, interest rate swaps,
etc.), currency related instruments (forward foreign exchange, currency options, currency swaps, etc.) and bond
related instruments (bond futures, bonds future options, etc.). Fair value of these derivatives are based on market
prices at exchanges, discounted present values, or amount calculated under the option pricing model. Derivative
for hedge accounting is interest rate swap with exceptional treatment and the fair value of this hedging swap is
included in the hedged loan.
(Others)
For overdraft facilities and commitment line, fair value is the present value discounted by the difference between
the expected future cash flow calculated by contractual rate and fee rate that would be applied to newly
acceptance at the balance sheet date for the contract with remaining period exceeding 1 year.
54
Notes related to Deferred tax accounting
1. The main causes for the deferred tax assets and deferred tax liabilities are as follows:
Deferred tax assets
Loss carry forward
(Millions of Yen)
1,033
Provision for retirement benefits
807
Allowance for loan losses
758
Accrued expense
573
Fixed Assets
459
Unearned Commission
251
Asset Retirement Obligations
204
Other
584
Deferred tax assets total
4,672
Deferred tax liabilities
Valuation difference on AFS securities
Other
1,218
18
Deferred tax liabilities total
1,237
Net deferred tax assets
3,435
2. A reconciliation of the actual ratio of income taxes reflected in income statement to the effective statutory tax rate
Omitted as loss before income taxes was recorded.
3. According to the promulgation of the “Law for Partial Amendment of the Income Tax Law, etc.” (Law No. 9, 2015)
and the “Law for Partial Amendment of the Local Tax Law, etc.” (Law No. 2, 2015) on March 31, 2015, the corporate
income tax rate will be lowered from the fiscal years beginning on and after April 1, 2015. In conjunction with this
change, the effective statutory tax rate used to measure deferred tax assets and deferred tax liabilities have
changed for the timing differences expected to be resolved on the fiscal year beginning on April 1, 2015, and for the
timing differences expected to be resolved on and after the fiscal years beginning on April 1, 2016, from the former
35.64% to 33.10% and 32.34%, respectively. As a result of this change, the amount of deferred tax assets has
decreased by 256 million yen and the amount of valuation difference on AFS securities has increased by 126 million
yen and the amount of income taxes-deferred has increased by 382 million yen.
Indicators by Share
1.
2.
Net assets per share: 1.03 yen
Net income per share: 0.01 yen
55
Major subsequent events
Major subsequent events, etc. concerning the business divestiture
Outline of the business divestiture
(1) Name of the company to which the business was divested
SMBC Trust Bank Ltd., a 100% subsidiary of Sumitomo Mitsui Banking Corporation
56
(2)
Businesses to be divested
CJL's retail banking business
(3)
Main reason for the divestiture
Citigroup Inc. (“Citigroup”), the parent company which is the 100% indirect owner of CJL, announced strategic
actions to transform its Global Consumer Banking ("GCB") business by streamlining the GCB's footprint to 24
markets on October 14, 2014. As a result, Citigroup intends to exit from its consumer businesses in 11
markets including Japan. The sale of CJL's retail banking business represents another step in this strategy.
(4)
Date of business divestiture
November 1, 2015 (Scheduled)
(5)
Other information of the divestiture including its legal form
The business divestiture will be conducted subject to the approvals of the relevant authorities, etc. under
applicable laws and regulations. The divestiture will be effected in a transaction that involves an absorptiontype corporate demerger of the business.
3. Market Value Information
<Securities>
Matters concerning securities market value, valuation difference, etc. are as follows. As well as “Securities“ in balance
sheet and “Securities related to trading transactions” under “Trading assets” are included.
(1) Securities classified as trading purpose
(Millions of Yen)
As of Mar. 31, 2014
Securities classified as
trading purposes
As of Mar. 31, 2015
Balance sheet
amounts
Valuations gains (losses)
included in P/L during the
Previous Period
Balance sheet
amounts
Valuations gains (losses)
included in P/L during the
Current Period
155,602
104
21,377
56
(2) Other securities
(Millions of Yen)
As of Mar. 31, 2014
Balance sheet
amounts
Type
Bonds
Balance sheet
amounts
exceeding
acquisition cost
Valuations
gains/(losses)
Balance sheet
amounts
Acquisition
cost
Valuations
gains/(losses)
670,572
666,560
4,012
495,264
491,599
3,664
Japanese
Government Bonds
655,550
652,435
3,115
481,484
478,774
2,710
Corporate Bonds
15,022
14,125
896
13,779
12,825
954
5,804
5,500
304
5,698
5,500
198
676,377
672,060
4,316
500,962
497,099
3,863
108,896
108,933
(37)
-
-
-
Japanese
Government Bonds
108,896
108,933
(37)
-
-
-
Sub total
108,896
108,933
(37)
-
-
-
785,273
780,994
4,278
500,962
497,009
3,863
Others
Sub total
Balance sheet
amounts
equal or
less than
acquisition cost
Acquisition
cost
As of Mar. 31, 2015
Bonds
Total
(Note) The figures are based on market value.
(3) Other securities sold during the fiscal year
(Millions of Yen)
March 2014 Year end
(Apr 1, 2013 - Mar 31, 2014)
Sold amount
Gains on sales
March 2015 Year end
(Apr 1, 2014 - Mar 31, 2015)
Losses on sales
Sold amount
Gains on sales
Losses on sales
Bonds
199,177
351
254
348,826
725
2
Japanese
Government Bonds
199,177
351
254
348,826
725
2
199,177
351
254
348,826
725
2
Total
57
<Derivatives Market Value Information>
(1) Interest rate-related transactions
(Millions of Yen)
As of Mar. 31, 2014
Category
Exchangetraded
Over-the counter
Type
Over 1 year
Market
in contract
value
amount
Contract
amount
As of Mar. 31, 2015
Revaluation
gains/losses
Over 1 year
Market
in contract
value
amount
Contract
amount
Revaluation
gains/losses
Futures
205,955
-
(2)
(2)
120,211
-
(37)
(37)
Sell
102,977
-
(9)
(9)
120,211
-
(37)
(37)
Buy
102,977
-
6
6
-
-
-
-
Future Options
-
-
-
-
-
-
-
-
Sell
-
-
-
-
-
-
-
-
Buy
-
-
-
-
-
-
-
-
Forward rate agreements
-
-
-
-
-
-
-
-
Sell
-
-
-
-
-
-
-
-
Buy
-
-
-
-
(300)
(300)
Interest rate swaps
535,619
535,619
Receive fixed
/ pay floating swaps
167,544
167,544
9,238
Receive floating
/ pay fixed swaps
367,601
367,601
473
473
Receive floating
/ pay floating swaps
-
-
-
-
(65)
(65)
405,192
405,192
9,238
137,606
137,606
8,093
8,093
(9,539)
(9,539)
267,586
267,586
(8,158)
(8,158)
-
-
-
-
-
-
Receive fixed
/pay fixed swaps
-
-
-
-
-
-
-
-
Interest rate options
-
-
-
-
-
-
-
-
Sell
-
-
-
-
-
-
-
-
Buy
-
-
-
-
-
-
-
-
-
-
(303)
(303)
-
-
(102)
(102)
Total
(Notes)
1. These transactions were marked to market, and revaluation gains and losses are reported on the statemen t of income. In
accordance with “Treatment for Accounting and Auditing of Application of Accounting Standard for Financial Instruments in
Banking Industry” (JICPA Industry Audit Committee Report No. 24), derivatives transactions to which the hedge accounti ng
method is applied are excluded.
2. Calculation of market value
Market value is calculated based on closing/final price of the Tokyo International Financial Futures Exchange (TIFFE) etc. for
exchange-traded transactions, and on discounted cash flow method or option price calculation models for over-the-counter
(OTC) transactions.
58
(2) Currency-related transactions
(Millions of Yen)
As of Mar. 31, 2014
Type
Category
Futures
Exchange　Sell
traded
Buy
Currency Swaps
Over-the counter
Over 1 year
in contract
amount
Contract
amount
Market
value
As of Mar. 31, 2015
Revaluation
gains/losses
Over 1 year
in contract
amount
Contract
amount
Market
value
Revaluation
gains/losses
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
379,977
359,939
Forward contracts 14,889,180
399,424
(0)
Sell
8,868,197
226,518
(68,167)
Buy
69,126
958
(0)
215,127
196,753
17,105,124
362,322
(6,622)
(6,622)
(68,167)
9,945,759
203,358
(14,094)
(14,094)
7,471
958
0
0
6,020,983
172,905
69,126
7,159,365
158,964
7,471
Currency options
629,918
216,635
(0)
32
685,434
273,318
5
Sell
314,959
108,317
(6,947)
545
342,717
136,659
(10,069)
Buy
314,959
108,317
6,947
(513)
342,717
136,659
10,074
6,505
(6,617)
(6,589)
Total
-
-
958
991
-
-
33
(6,472)
(Notes)
1.
These transactions were marked to market, and revaluation gains and losses are reported on the statement of income. In
Banking Industry” (JICPA Industry Audit Committee Report No. 24), derivatives transactions to which the hedge accounting
2.
Calculation of market value
Market value is calculated based on discounted cash flow method or option price calculation models for over-the-counter (OTC)
transactions.
(3) Stock-related transactions
None
59
(4) Bond-related transactions
(Millions of Yen)
As of Mar. 31, 2014
Over 1
Contract
year
amount in contract
amount
Market
value
As of Mar. 31, 2015
Over 1
Contract
year
amount in contract
amount
Revaluation
gains/losses
Market
value
Revaluation
gains/losses
Category
Type
Exchangetraded
Bond futures
10,951
-
(1)
(1)
3,606
-
(18)
(18)
Sell
10,951
-
(1)
(1)
3,606
-
(18)
(18)
Over-the counter
Buy
-
-
-
-
-
-
-
-
Bond future options
-
-
-
-
-
-
-
-
Sell
-
-
-
-
-
-
-
-
Buy
-
-
-
-
-
-
-
-
Bond OTC options
-
-
-
-
-
-
-
-
Sell
-
-
-
-
-
-
-
-
Buy
-
-
-
-
-
-
-
-
Total
-
-
(1)
(1)
-
-
(18)
(18)
(Notes)
1.
These transactions were marked to market, and revaluation gains and losses are reported on the statement of income. In
Banking Industry” (JICPA Industry Audit Committee Report No. 24), derivatives transactions to which the hedge accounting
2.
Calculation of market value
Market value is calculated based on closing/final price of the Tokyo Stock Exchange (TSE) etc. for exchange-traded transactions.
(5) Commodity-related transactions
None
(6) Credit derivatives transactions
None
60
4. Major Shareholders
<Major Shareholders>
(As of March 31, 2015)
Name of shareholder
Numbers of shares
Shareholding ratio
Citibank Overseas Investment Corporation
244,200,000 thousand shares
100%
Total
244,200,000 thousand shares
100%
61
5. Disclosure Items Based on Pillar 3 of Basel lll
This section describes the information consistent with FSA Notification Number 7 based on Article 19.2.1.5d of the Bank
Law Enforcement Rule (Refer to Ministry of Finance Ordinance Number 10).
With regard to the calculation of the capital adequacy ratio, KPMG AZSA LLC conducted certain procedures as an
independent audit firm in accordance with “Treatment in implementing examination by agreed-upon procedures for
calculating capital adequacy ratio”(Industry Committee Practical Guideline No. 30 of the Japanese Institute of Certified
Public Accountants).
The certain procedures performed on our internal control framework for calculating the capital ratio are based on
procedures agreed upon by CJL and the external auditor. This agreed-upon procedures engagement does not
constitute an audit engagement for the audit of the financial statements and are not a validation of appropriateness of
the capital ratio itself or opinion on the internal controls related to the capital ratio calculation.
COMPOSITION OF CAPITAL DISCLOSURE
Basel lll
（Millions of Yen)
Item
as of Mar.31,
2015
Amounts excluded
under transitional
arrangements
as of Mar.31,
2014
Amounts excluded
under transitional
arrangements
Core Capital Basic Components （１）
Directly issued qualifying common share or mandatory convertible preference share plus related capital
surplus and retained earnings
249,703
253,596
244,200
244,200
of w hich : retained earnings
5,503
9,396
of w hich : treasury stock (-)
-
-
of w hich : national specific regulatory adjustments (earnings to be distributed) (-)
-
-
of w hich : other than above
-
-
-
-
1,245
1,014
1,245
1,014
-
-
-
-
-
-
-
-
of w hich : capital and capital surplus
Subscription rights to common shares or mandatory convertible preference shares
Total of general allow ance for loan losses and eligible provisions included in Core Capital Basic Components
of w hich: general allow ance for loan losses
of w hich: eligible provisions
Qualifying non-cumulative perpetual preferred stock subject to transitional arrangements included in Core
Capital Basic Components
Eligible capital instruments subject to transitional arrangements included in Core Capital Basic Components
Capital instruments issued by public agency under capital enhancement action included in Core Capital
Basic Components
45% equivalent of the difference betw een the revaluated amount of the land and the book value immediately
prior to revaluation included in Core Capital Basic Components
Amount of Core Capital Basic Components　(A)
Core Capital Adjustments （２）
Total intangible assets
(net of related tax liability, excluding those relating to mortgage servicing rights)
of w hich : goodw ill (net of related tax liability)
of w hich : other intangibles other than goodw ill and mortgage servicing rights
(net of related tax liability)
Deferred tax assets that rely on future profitability excluding those arising from temporary differences (net
of related tax liability)
-
-
250,948
254,611
573
-
2,074
-
-
-
-
-
573
-
2,074
-
1,028
-
-
-
Shortfall of eligible provisions to expected losses
-
-
-
-
Securitization gain on sale
-
-
-
-
Gains and losses due to changes in ow n credit risk on fair valued liabilities
-
-
-
-
Defined-benefit pension fund net assets (prepaid pension costs)
-
-
256
-
Investments in ow n shares (excluding those reported in the Net assets section)
-
-
-
-
Reciprocal cross-holdings in common equity
-
-
-
-
-
-
-
-
-
-
-
-
of w hich: significant investments in the common stock of financials
-
-
-
-
of w hich: mortgage servicing rights
-
-
-
-
of w hich: deferred tax assets arising from temporary differences (net of related tax liability)
-
-
-
-
Investments in the capital of banking, financial and insurance entities that are outside the scope of
regulatory consolidation, net of eligible short positions, w here the bank does not ow n more than 10% of the
issued share capital (amount above 10% threshold)
Amount exceeding the 10% threshold on specified items
62
（Millions of Yen)
Item
Amount exceeding the 15% threshold on specified items
of w hich: significant investments in the common stock of financials
of w hich: mortgage servicing rights
of w hich: deferred tax assets arising from temporary differences (net of related tax liability)
Amount of Core Capital Adjustments (B)
Capital
Capital amount （（A）－（B））　(C)
Risk w eighted assets　（３）
Credit risk w eighted assets
of w hich: Total of items in risk w eighted assets subject to transitional arrangements
of w hich: intangible assets (net of related tax liability, excluding those relating to mortgage
servicing rights)
of w hich: deferred tax assets that rely on future profitability excluding those arising from
temporary differences ( net of related tax liability)
of w hich: defined-benefit pension fund net assets (prepaid pension costs)
of w hich: investments in the capital banking, financial and insurance entities
none of the above
Total amount of Market Risk equivalent divided by 8%
Total amount of Operational Risk equivalent divided by 8%
Credit risk w eighted assets adjustments
Operational risk w eighted assets adjustments
Total amount of Risk w eighted assets　（D）
Capital Adequacy Ratio
Total Capital Adequacy Ratio　（（C） / （D））
as of Mar.31,
2015
1,602
Amounts excluded
under transitional
arrangements
as of Mar.31,
2014
-
2,331
249,345
252,280
699,381
-
819,725
-
-
-
11,430
113,041
823,854
43,001
117,867
980,594
30.26%
25.72%
Amounts excluded
under transitional
arrangements
-
63
QUALITATIVE DISCLOSURE
(1) Types of Capital Instruments
CJL’s capital is solely funded through issuance of common stocks.
(2) Capital Adequacy Assessment Process
Regulatory capital and risk assets are reported to Management on a monthly basis for verification of the
appropriateness of CJL’s capital adequacy. We believe the current level of CJL’s capital adequacy to be sufficiently
high. We aim to maintain our regulatory capital ratio above 10.5%, in accordance with the capital plan approved by the
Board of Directors (“BOD”).
(3) Credit Risk Management Policies and Procedures
1. Overview of risk management policies and procedure
CJL manages its credit risk in accordance with the established “Credit Risk Management Policies.”
We manage credit risk based on credit risk analysis of each customer and also manage credit risk on a portfolio
basis, monitoring concentration of credit to certain industries, ratings, clients or industrial groups and delinquency
trend of a portfolio. Such a portfolio view of our credit exposures is reviewed and discussed at the Credit Risk
Management Committee (“CRMC”) on a monthly basis, and reported to the MC and BOD. CJL may sell loans
(risk participation) when there is a client’s needs in excess of the “Limit of Granting of Credit, etc to One Person”
provided in the Article 13 of the Banking Act take, sell loans once CJL provided as is the case with loan
syndication, or sell loans or obtain bank guarantee in order to reduce the amount of risk capital, however, CJL is
not involved in any of measures such as exchange of portfolio or securitization of its own assets at present. For
details, please refer to Quantitative Disclosure (1) for Capital Adequacy and (2) for Credit Risk Exposure as of the
fiscal year-end.
CJL applies the Standardized Approach for the Basel III calculation of credit risk assets.
(Corporate Banking Division)
On all the customers to whom credit is extended, CJL assigns Obligor Risk Ratings (“ORR”). On all the credit
facilities established, a Facility Risk Rating (“FRR”) is assigned based on the types or nature of a transaction. An
FRR can differ from the ORR of the customer in case there is a credit enhancement on that credit facility, etc.
The assignment of ORR and establishment of credit facilities are done at the time of initiating a credit relationship.
After the credit relationship is initiated, ORR and credit facilities are reviewed at least once a year. For approval of
credit facilities (“Credit Approval”), the Credit Policy requires sign off by at least two Credit Officers (“CO”s) or
Senior Credit Officers (“SCO”s).
COs and SCOs are Bank officers who are given the authority to approve credit. SCOs are appointed by the CRMC
and COs are appointed by an SCO. The appointment to CO/SCO is based on Risk Management Department’s
assessment on working experience in credit-related job functions, experience in credit risk training, credit judgment
skills, knowledge, and aptitude.
The amount of credit an SCO can approve depends on the authorized “Approval Level”. CRMC determines the
Approval Level based on each officer’s experience and past record.
The Level required for Credit Approval is determined by the matrix of the risk rating assigned to the customer and
the amount of credit facilities proposed. The lower (worse) the risk rating and the larger the proposed credit
facilities amount, the higher the required Approval Level.
Of the minimum two credit officers required for Credit Approval, at least one must be a Business Sponsoring
Officer of the client, who is the account officer for the customer, and the other must be a Risk Management
CO/SCO who is independent from business divisions. This requirement is aimed to establish and maintain check
and balance mechanism within CJL.
(Retail Banking Division)
In the Retail Banking Division, the credit approval authority is determined on a product-by-product basis. Credit
extension must be approved by COs/SCOs. At least one of the credit officers approving the credit must hold the
Approval Level for the amount of the proposed credit. Credit approval authority is not granted to officers belonging
to Sales, Marketing, Management Control or bank branches.
64
COs and SCOs are Bank officers who are given the authority to approve credit. SCOs are appointed by the
CRMC and COs are appointed by a SCO. The appointment to CO/SCO is based on the Retail Banking Credit Risk
Management’s assessment on working experience in credit-related job functions, experience in credit risk training,
credit judgment skills, knowledge, and aptitude.
The Approval Level that is required for Credit Approval is determined by the loan amount and the deviation of a
transaction from the prescript credit criteria. The higher the loan amount and the larger the deviation, the higher the
required Approval Level.
As a part of portfolio level risk management, risk profile of applications and loan disbursements, credit
performance are being monitored.
Standard for Allowance for loan losses is described in (1) Allowance for loan losses, Article 6. Standard Allowance,
under Accounting Policies of Section 2. Financial Statements, Financial Information for the fiscal year ended
March 31, 2015.
2. The following items on portfolios are subject to the standardized approach
A. Name of the eligible credit rating agency, etc. used to calculate the risk weights
Standard & Poor’s Ratings Services (“S&P”), Moody’s Investors Service, Inc. (“Moody’s”) and Organization for
Economic Co-operation and Development (“OECD”)
B. Relationship between the type of exposure and eligible credit rating agency, etc., used by type of exposure.
The eligible External Credit Assessment Institutions (“ECAI”) etc., we use by the type of credit exposure are
as shown below.
i. OECD - Country Risk Score
- Exposures to the central government and central bank
- Exposures to the Government of Japan and the Bank of Japan
- Exposures to financial institution and regulatory security firm that apply to the standards of capital ratio
provided by Basel Committee on Banking Supervision or similar standards to this.
ii. External Rating of S&P and Moody’s
- Exposures to corporates
- Exposures to financial institutions and regulatory security firm that don't apply to the standards of
capital ratio provided by Basel Committee on Banking Supervision or similar standards to this.
(4) Credit Risk Mitigation Policies and Procedures
1. Overall Credit Risk Mitigation
CJL applies a comprehensive Credit Risk Mitigation approach based on the Standardized Approach for the Basel
III calculation of credit risk assets. Its credit risk assets and regulatory capital ratio are calculated based on the risk
weights and the net exposures, reflected the revaluation of exposures and the devaluation of collaterals. These
evaluations are utilized by the haircut value reflecting its volatility risks.
2. Overall Credit Risk Mitigation Control Process
CJL reviews credit facilities at least once a year, and collaterals and ability to perform guarantees are also
evaluated periodically for securing its portfolio. Types of collaterals and guarantees are shown in 3. Risk Mitigation
Techniques below.
At present, CJL does not use credit derivatives in its calculation of its risk assets and regulatory capital ratio.
CJL takes into account bilateral netting agreements as risk mitigation measures for derivatives and repo
transactions, if they are effective in light of the regulation, etc. of the jurisdiction where the counterparty of the
transaction is domiciled.
3. Risk Mitigation Techniques
A. Eligible financial assets as collaterals
The following assets that satisfy all the conditions stipulated by the FSA Notice No.19 of 2006 Article 89 and
90 are used as eligible collateral to reduce risk assets.
Cash, deposits with CJL, gold, debt securities and equity securities.
65
B. Guarantees
The guarantee provided by the government, the central bank, government agencies which meet all the
conditions stipulated by the FSA Notice No.19 of 2006 Article 118, 119, and 122 must be met.
C. On-balance netting
Exposures that are used to calculate capital ratio shall be netted with deposits if whose exposures meet all the
conditions stipulated by the FSA Notice No.19 of 2006 Article 117.
(5) Policies and Procedures for Counterparties of Derivative Products and Transactions with a
Long-Horizon Settlement Period
1. Credit risks of counterparties
Credit risk of a counterparty of derivative transactions, etc. is defined as the sum of current replacement costs
based on mark-to-market and a simulated amount of potential increase due to the future fluctuation of market value
until settlement date.
2. Management of credit facilities
Counterparty credit facilities for derivative transactions, etc. are managed as part of total credit facilities, together
with all credit facilities on-balance sheet transactions.
3. Protection by collateral and policy for loss reserve
CJL has ISDA Credit Support Annex (“CSA”) concluded with a number of financial institutions.
CJL carries Derivative Transactions at fair value, for which CJL does not establish loss reserve.
CJL does not have Transactions with a Long-Horizon Settlement Period.
(6) Securitization Exposure Risk Management Policies and Procedures
1. CJL’s engagement for securitization transactions
CJL’s engagement in securitization transactions can be described as follows:
A. Originator
CJL is not engaged in any securitization transaction of loan receivables for its own funding purposes or
balance sheet management.
B. Investor
CJL has a framework to hold securitization exposure through arranging and providing funds to various
securitization transactions (ABL, Asset Backed Commercial Paper (“ABCP”), etc.) that its clients undertake for
funding purpose.
C. Swap provider
CJL may provide foreign exchange forwards or interest rate swaps to mitigate the issuer’s foreign exchange
or interest rate in the securitization transactions arranged by CJL.
D. Others
CJL provides certain types of commitment lines related to liquidity facilities covering securitization transactions
arranged by CJL, in connection with the ABCP business, etc.
2. Overview of risk management policies, risk characteristics, and monitoring system (including its
operational status)
With regard to holding securitization exposure, CJL applies internal ratings and makes evaluations by assessing
each such transactions and carefully managing the exposure together with other direct loan assets, in addition to
capturing accurate understanding of the actual risk profile through due diligence from the viewpoint of investors.
CJL will analyze and periodically monitor the credit risk amount of securitization transaction in the same manner as
with other standard credit exposures.
66
Also, CJL recognizes that credit risks related to CJL’s securitization transactions include those associated with
committed facilities, in case CJL commits to supply funds when funding through the ABCP market becomes
unavailable for certain reasons. In the case of such committed facilities provided to securitization transactions, the
primary source of repayment is cash, etc to be collected from the securitized assets. Therefore, the credit risk of
committed facilities provided to securitization transactions is defined as the risk of being unable to recover the
amount of credit extended from the securitized assets in the full amount.
CJL manages credit risk in the case of committed facilities provided to securitization transactions through: (1)
setting the ratio of the future cash flows from the securitized assets to the securitization exposure amount
sufficiently high to cover expected credit loss (over-collateralization); (2) ensuring any other necessary credit
enhancement; and (3) monitoring appropriately after the execution. Such risk management procedures are the
same for the loans extended to securitization transactions arranged by CJL
CJL mainly uses special purpose companies (SPC) or Japanese Trusts as the securitization conduit when
undertaking securitization transactions associated with third party assets.
As to credit risk management of foreign exchange forwards or interest rate swaps associated with securitization
transactions, the policies and procedures are the same as for those transactions not associated with securitization
transactions
3. Name of the approach used by CJL to calculate the amount of credit risk assets in securitization
exposures
The Standardized Approach
4. Accounting policies for securitization transactions
CJL complies with Accounting Standard Board of Japan Statement No. 10, Accounting Standard for Financial
Instruments (Business Accounting Council, January 22, 1999) in recognizing, evaluating, and booking the
occurrence or extinguishment of financial assets or liabilities related to securitization transactions.
5. Names of the eligible credit rating agency used in the assessment of risk weight in securitization
exposures (the reason if there has been a change in the eligible credit rating agency used) and the
relationship between the type of securitization exposure and the eligible credit rating agency used
As for the eligible external credit agencies, CJL refer to S&P, Moody’s and Fitch Ratings Ltd. in determining
securitization exposure risk weight.
(7) Market Risk Management Policies and Procedures
1. Overview of risk management policies and procedures
The Market Risk Management Unit (“MRM”), is independent from the business divisions and is given control
authority by the Board to identify interest rate, foreign exchange rate or other types of risk factors which impact
assets and liabilities (including off-balance sheet assets and liabilities) in the banking and trading books; establish
evaluation methods (factor sensitivity or VaR etc.); and monitor risk exposures (including stress tests and market
risk limit utilization) based on the defined CJL “Market Risk Management Policy”. MRM also coordinates
management reporting to Asset-Liability Committee (“ALCO"), in addition to providing recommendations in risk
analysis on a regular and timely basis.
2. Name of the approach used to calculate the market-risk-equivalent amount. Range of portfolios
using each model where the standardized approach or internal model approach is used.
Standardized method
3. Methodology on Mark-to-Market calculation for Trading products based on its nature considering
expected holding period and the possibility of exceeding expected holding period.
CJL limits trading products to highly liquid securities, foreign exchange or derivative transactions, and performs
mark-to-market evaluation by applying theoretical prices based on market prices and other market data for the
trading book. Target transactions and the method of the mark-to-market evaluation are defined by internal
procedures.
4. Assumptions and valuation method for internal evaluation of capital adequacy on market risk
67
Risk Capital is calculated based on VaR and Stress test, and Capital Adequacy is measured together with
Operational Risk and Credit Risk.
(8) Operational Risk Management Policies and Procedure
1. General Description of Operational Risk Management Policy and Procedures
Operational risk refers to the risk of loss resulting from inadequate or failed internal processes, systems, human
factors or from external events. As with other risk types, operational risk is managed through an overall framework
with checks and balances that includes:
• Recognized ownership of the risk by the business divisions;
• Oversight by Control Functions; and
• Independent review by the Internal Audit Division.
CJL’s approach to operational risk is defined in the CJL “Operational Risk Management Policy”. Specific
operational risks - IT Risk, Jimu Risk, and Continuity of Business Risk - are subject to additional specialized
policies and regulations. The objective of the Policy is to establish a consistent, value-added framework for
assessing and communicating operational risk and the overall effectiveness of the internal control environment.
CJL adopts Manager’s Control Assessment (“MCA”) as a comprehensive tool to identify, evaluate qualitatively and
monitor operational risk. MCA was established as the process whereby ‘significant’ risks inherent in business
activities are identified by senior business and functional managers and the effectiveness of the key controls over
those risks are evaluated and monitored. In MCA processes, Annual Risk Assessment is conducted to identify
significant processes; define significant risks and controls; identify optimum monitoring methods and assessment
activities to assess the extent to which processes and control continue to operate effectively. These significant
processes are reviewed periodically in consideration of changes to the operational processes and regulatory
environment, and latest information shall be reflected in to MCA. On a quarterly basis, the results of assessment of
overall effectiveness of internal controls are reviewed and approved at Business Risk, Compliance & Control
(“BRCC”) Committee, and including in periodic management reporting.
Since operational risk is inherent throughout the activities of CJL, all activities are subject to the Operational Risk
process. Operational risk issues and trends are reported at the CJL Risk Oversight Committees responsible for
operational risk management – BRCC and System and Operations Committee (“SOC”).
2. Methodology to Calculate Operational Risk
Basic Indicator Approach
(9) Equity Exposure Risk Management Policies and Procedures
There is no Equity Exposure.
(10)
Banking Book Interest Rate Risk Management
1. Overview of risk management policies and procedures
The Market Risk Management Unit (“MRM”), is independent from the business divisions and is given control
authority by the Board to manage interest rate risk in the banking; and based on the defined CJL “Market Risk
Management Policy”. MRM also coordinates management reporting to Asset-Liability Committee (“ALCO"), in
addition to providing recommendations in risk analysis on a regular and timely basis.
2. Banking book interest rate risk calculation method for internal management purpose
CJL measures interest rate risks in the banking book on a daily basis by applying the re-pricing ladder method, and
considers changes of economic value per 1% interest rate increase for each currency as an index for internal
control. CJL’s holding assets and liabilities are constructed into ladders sorted by the remaining durations for fixed
rate items and by the durations till next re-pricing period for variable rate items, respectively. Liquid deposits,
which do not have a clearly defined re-pricing period, or prepayment of housing loans require practical
assumptions on runoff tenors and balances, and the independent market risk manager approves their relevancy.
The monitored amount of interest rate risks for internal control purpose is not necessarily identical with the total
amount of interest rate risks calculated in a form of the outlier ratio as per the Standardized Approach.
68
QUANTITATIVE DISCLOSURE
(1) Outline of means of Raising Equity Capital
Amount of Required Capital for Credit Risk
(Millions of Yen)
as of Mar. 31, 2014
Risk weighted
exposure
as of Mar. 31, 2015
Required
Capital
Risk weighted
exposure
Required
Capital
On balance sheet asset items
Cash
-
-
-
Exposures to Japanese government and central bank
-
-
-
-
624
24
600
24
Exposures to the Bank for International Settlements
-
-
-
-
Exposures to Local Authorities
-
-
-
-
3,076
123
3,339
133
-
-
-
-
Exposures to foreign government and central bank
Exposures to overseas public sectors other than central
government
Exposures to the International Bank for Reconstruction and
Development
-
Exposures to Japan Finance Organization for Municipal
Enterprises
-
-
-
-
Exposures to Japan Government-affiliated organization
2,828
113
2,567
102
-
-
-
-
177,164
7,086
125,122
5,004
221,632
8,865
238,543
9,541
-
-
-
-
Exposures to land development corporation, local housing
corporations, Local Public Road Corporations
Exposures to financial institutions and Regulated securities
companies
Corporate exposures
Exposures to small and medium size enterprises and
individuals
Residential Mortgage Exposures
15,245
609
16,553
662
Retail Exposures related to real-estate acquisition
9,101
364
13,440
537
Exposures three months or more in arrears
2,020
80
2,300
92
82
3
-
-
Exposures to the Credit Guarantee Association
-
-
-
-
Exposures guaranteed by Industrial Revitalization Corporation
of Japan
-
-
-
-
Exposures to Investment
-
-
-
-
Securitization exposures (originator)
-
-
-
-
Securitization exposures (other than the originator)
-
-
16,502
660
Bills before collection
Assets backed up with several assets (so-called funds) which
individual asset is ungraspable
-
-
-
-
36,464
1,458
31,790
1,271
468,241
18,729
450,762
18,030
99,748
3,989
103,644
4,145
Others
102,109
4,084
96,192
3,847
Off-balance sheet asset items total
201,858
8,074
199,837
7,993
CVA risk asset
149,622
5,984
48,775
1,951
CCP
2
819,725
0
32,789
6
699,381
0
27,975
Others
On-balance sheet asset items total
Off-balance sheet asset items
Derivative transactions
Total
Amount of Required Capital for exposures relating to funds
None
69
Amount of Required Capital for Market Risk
(Millions of Yen)
as of Mar. 31, 2014
Specific
Risk
General
Market Risk
as of Mar. 31, 2015
Required
Capital
Specific
Risk
General
Market Risk
Required
Capital
Standardized method of which
Interest Rate Risk
-
35,902
1,436
-
9,317
Equity Risk
-
-
-
-
-
-
Foreign Exchange Risk
-
7,098
283
-
2,113
84
Commodity Risk
-
-
-
-
-
-
Options
-
-
-
-
-
-
-
43,001
1,720
-
11,430
457
Total
372
Amount of Required Capital for Operational Risk
(Millions of Yen)
as of Mar. 31, 2014
Operational Risk
Basic Indicator Approach
117,867
as of Mar. 31, 2015
Required Capital
Operational Risk
Required Capital
4,714
113,041
4,521
Total Amount of Required Capital
(Million of Yen)
as of Mar. 31, 2014
as of Mar. 31, 2015
819,725
699,381
43,001
11,430
117,867
113,041
Risk assets
Credit Risk exposure
Market Risk exposure divided by 8%
Operational Risk exposure divided by 8%
Total of items in risk weighted assets subject to transitional arrangements
Total
Total required Capital (National Standard) （E）×4％
70
(A)
-
-
980,594
823,854
39,223
32,954
(2) Credit Exposure
(Millions of Yen)
as of Mar. 31, 2014
as of Mar. 31, 2015
Loans etc.
Securities
Derivatives
75,846
-
9,146
-
-
-
Total
Loans etc.
Securities
Derivatives
Total
84,993
111,340
-
6,558
117,899
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
19
-
381
400
21
-
2,381
2,402
-
-
-
-
-
-
-
-
14,492
-
31
14,523
11,727
-
182
11,910
Domestic
Manufacturing
Agriculture and
Forestry
Fishery
Mining
Construction
Electric power, gas,
water supply
Information and
communication
Transportation
7,282
-
329
7,611
19,286
-
593
19,879
Wholesale and retail
136,192
-
4,481
140,673
132,600
-
4,413
137,014
Financial Institutions
and Insurance
1,134,186
14,141
97,102
1,245,429
638,510
12,839
80,463
731,813
12,788
-
-
12,788
17,086
-
-
17,086
5,250
-
669
5,920
2,251
-
301
2,553
1,273,560
762,111
-
2,035,672
2,369,103
479,285
25
2,848,414
63,676
-
660
64,337
66,138
-
487
66,626
25,873
-
-
25,873
22,338
-
-
22,338
48,913
5,504
-
54,418
50,451
5,504
-
55,956
594,975
-
43,952
638,927
799,722
-
58,288
858,010
Real estate
Other Services
Central, Local
government
Individuals
Others
Overseas
Sovereign
Financial Institutions
Others
Total
90,589
-
167
90,757
95,852
-
498
96,351
3,483,648
781,757
156,921
4,422,327
4,336,432
497,629
154,195
4,988,257
(by Remaining Tenor)
(Millions of Yen)
as of Mar. 31, 2014
as of Mar. 31, 2015
Loans etc.
Securities
Derivatives
2,393,811
85,183
146,778
1 to 3 years
399,744
475,349
6,184
881,277
727,682
3 to 5 years
461,677
168,913
654
631,244
338,851
Over 5 years
152,303
52,311
3,304
207,918
190,259
14,828
4,306
209,394
76,111
-
-
76,111
123,637
-
-
123,637
3,483,648
781,757
156,921
4,422,327
4,336,432
497,629
154,195
4,988,257
To 1 year
Undefined
Total
Total
2,625,774
Loans etc.
Securities
Derivatives
2,955,999
120,387
138,233
3,214,620
Total
224,474
8,905
961,062
137,940
2,750
479,542
(Note) 1. Figures are without taking into account the effects of credit risk mitigation techniques. Furthermore, figures do not include
any securitization exposure, exposures relating to funds or exposures relating to central clearing funds.
2. Loans etc. include loans, commitments and other non-derivative off balance sheet exposure.
Past-due over 3 months or Default Exposure
(Millions of Yen)
as of Mar. 31, 2014
as of Mar. 31, 2015
Domestic
Corporate
9
Individuals
344
219
Overseas
4,867
4,625
Total
5,221
5,491
645
71
(Note) 1.
Figures are without taking into account the effects of credit risk mitigation techniques. Furthermore, figures do not include
any securitization exposure, exposures relating to funds or exposures relating to central clearing funds.
2. "Past-due over 3 months or default exposure" is the exposure either in principal or interest payment is delayed more than 3
months or risk weight is 150% before the consideration of loan loss reserve.
Allowance for Loan Losses
(Millions of Yen)
Fiscal Year ended Mar. 2014
Interim Fiscal Period ended Sep. 2014
Beginning
Change
Specific Reserve
Corporate
1,147
(1,141)
5
5
(5)
-
5
Individuals
1,078
(172)
905
905
(122)
783
905
Others
General Reserve
Ending
Beginning
Change
Ending
Fiscal Year ended Mar. 2015
Beginning
Change
Ending
342
347
(210)
694
41
(38)
2
2
-
2
2
-
2
1,159
(144)
1,014
1,014
263
1,278
1,014
230
1,245
Loan loss reserve for restructuring country
Not applicable
Credit Risk Exposure after Credit Risk Mitigation by Risk weight under Standardized Approach
(Millions of Yen)
as of Mar. 31, 2014
Rated
0%
as of Mar. 31, 2015
Unrated
Rated
Unrated
28
2,047,792
-
2,856,146
20%
708,747
126,621
515,006
11,595
35%
-
43,563
-
47,294
50%
115,503
17,359
149,420
11,896
75%
-
-
-
-
100%
77,366
302,483
49,931
349,542
150%
-
648
-
542
250%
-
3,467
-
3,625
1250%
-
-
-
-
Deduction from Capital
Total
-
-
-
-
901,646
2,541,935
714,358
3,280,641
(Note) 1. Figures are taking into account the effects of credit risk mitigation techniques and do not include any securitization exposure.
(3) Credit Risk Mitigation
(Millions of Yen)
as of Mar. 31, 2014
as of Mar. 31, 2015
Eligible Financial Collateral
Cash
119,123
347,528
Bonds
754,636
534,532
Stocks
210
163
Others
-
-
Guarantee
104,775
111,033
Credit Derivatives
978,745
993,257
Guarantee and Credit Derivatives
Total
(Note) On-balance netting was adopted for the interbank Money Market transaction with Citibank, N.A. overseas main branches.
72
(4) Counterparty Credit Risk of OTC Derivatives
i．Measurement of Credit exposure
Current Exposure Method
(Millions of Yen)
as of Mar. 31, 2014
ii．Total amount of gross positive fair value
as of Mar. 31, 2015
145,457
166,342
152,678
153,994
iii．Credit exposure before Credit Risk Mitigation
FX related
Interest rate related
Total
4,243
201
156,921
154,195
iv．The amount deducting iii from sum of ii and gross add-on
(Reduction by Netting agreements)
138,217
182,450
v. Collateral type
None
vi. Credit exposure after Credit Risk Mitigation
Same as iii
vii. Notional amount of credit derivatives which have counterparty risk
None
viii. Notional amount of credit derivatives which cover exposures by Credit Risk Mitigation
None
(5) Securitization
i．Securitization exposure as Originator
None
ⅱ. Securitization exposure as Investor
a. Information by Type of Underlying Assets
(Millions of Yen)
as of Mar. 31, 2014
as of Mar. 31, 2015
Claims on corporate customers
-
-
Residential Mortgage Loan
Claims on individual customers
(ex. Residential Mortgage Loan)
Others
-
-
-
82,513
-
-
Total
-
82,513
There was no re-securitization exposure as of March 31, 2014 and 2015.
73
b. Exposure by Risk Weight Category and Amount of Required Capital
(Millions of Yen)
as of Mar. 31, 2015
as of Mar. 31, 2014
Exposure
20%
50%
100%
350%
1250%
Deduction from Capital
Total
Required Capital
-
Exposure
-
82,513
82,513
Required Capital
660
660
There was no re-securitization exposure as of March 31, 2014 and 2015.
c. Amount of securitization exposure and type of underlying asset which 1250% risk weight should be adopted in accordance with
Paragraph 1, Article 247 of FSA Notice No.19
None
d.Credit risk mitigation for resecuritization exposure.
None
e. Credit Risk-Weighted Assets Calculated Pursuant to Article 15 of Supplementary Provisions of the FSA Capital Adequacy Ratio
Notification
None
ⅲ. Securitization exposure subject to measurement of comprehensive risk (as Originator)
None
ⅳ. Securitization exposure subject to measurement of comprehensive risk (as Investor)
None
(6) Market Risk (under Internal Model Approach)
None
(7) Equity Exposure in Banking Book
None
(8) Amount in regarded exposure under the Accord article 167
None
(9) Interest Rate Risk in the Banking Book - the increase/(decrease) in economic value for 1%
upward rate shocks according to internal management's method.
(Millions of Yen)
Japanese Yen
US Dollar
Euro
Others
Total
74
as of Mar. 31, 2014
as of Mar. 31, 2015
16,114
11,603
2,340
(6,280)
336
(356)
18,434
1,003
(409)
5,917
DISCLOSURE OF REMUNERATIONS
(1) Matters relating to the development of the remuneration and other systems of the Subject
Officer and Employee of Citibank Japan Ltd. (hereafter, “CJL”)
1. The scope of “Subject Officer and Employee”
The scope of "Subject Officer" and "Subject Employee, etc." (collectively, "Subject Officer and Employee") for
which the remuneration announcement stipulates the disclosure is as below.
A. The scope of “Subject Officer”
Subject Officers are Directors and Statutory Auditors of CJL, excluding Outside Directors, Outside Statutory
Auditors, and part-time Directors not receiving remuneration or other payments.
B. The scope of “Subject Employee, etc.”
Among (a) officers other than Subject Officers, (b) employees of CJL, and (c) officers and employees of the
major consolidated subsidiaries, etc, who are categorized into either "those who receive a large remuneration,
etc.” and “those who have a significant influence on the management and the status of the property of CJL and
the major consolidated subsidiaries, etc” are disclosed as "Subject Employees, etc.”
i
The scope of “major consolidated subsidiaries, etc ”
CJL has no consolidated subsidiaries.
ii
The scope of “those who receive a large remuneration, etc”
"Those who receive a large remuneration, etc.” are persons who receive remuneration more than the
“average of the Subject Officers’ remunerations” calculated by dividing the total amount of the remunerations
the “Subject Officers” received for the fiscal year by “the number of the Subject Officers”. For this calculation,
“Subject Officers” who newly-appointed and retires during fiscal year are excluded.
iii The scope of “those who have a significant influence on the management and the status of the property of
CJL ”
The scope of “those who have a significant influence on the management and the status of the property of
CJL” is designated as the same criteria as “Covered Employees” which is determined by Citi’s Independent
Risk. The Covered Employees are comprised of “Individual Covered Employees” and “Group Covered
Employees”. “Individual Covered Employees” are employees who, acting individually, have influence over the
material risks of CJL or Business Units of Citi. “Group Covered Employees” are other employees who are
compensated similarly and who acting together could have influence over the material risks of CJL or the
material risks of a material business unit. Covered Employees can include Subject Officers, Subject
Employees and persons in charge of the Risk Management Division and Markets Treasury. For the purpose
of this section iii only, “Covered Employees” excluding Subject Officers is considered to be “those who have a
significant influence on the management and the status of the property of CJL”.
2. Determination of the remuneration for the Subject Officer
A. Determination of the remuneration for the Subject Officer
The total amount of Director and Statutory Auditors remunerations (the maximum limited amount) is determined
at the general meeting of shareholders. As for the remuneration for the Subject Officer, determination is made
according to the Rules Concerning Remuneration for Officers (Yakuin).
Additionally, all Directors’ annual remuneration (basic annual remuneration, bonus and equity compensation) is
reviewed in respect of the appropriateness of the amount by the Chief Executive Officer, Compliance Head and
Human Resources Head of CJL.
B. Determination of the remuneration for the Subject Employee, etc.
The remuneration for an employee of CJL is determined and paid according to our remuneration rules. For the
rules, their system design and documentation have been conducted by Human Resources Division, which is
independent from Unit/department responsible for business execution.
Additionally, any employee with an annual remuneration (basic annual remuneration, bonus and stocks)
exceeding 30-million yen or 300-thousand US dollar is reviewed in respect of the appropriateness of the
amount by the Chief Executive Officer, Compliance Head and Human Resources Head of CJL.
75
3. Determination of the remunerations for the employees in Risk Management Division and
Compliance Division
The remunerations for the employees in Risk Management Division and Compliance Division are determined
according to the remuneration rules of CJL and each payment amount is fixed according to the performance
appraisal ultimately decided by the each division head. In that way, their remunerations are decided independently
from Unit/department responsible for business execution.
4. The total remuneration amount paid to the Remuneration Committee members and the number of
meetings held
There is not Remuneration Committee or an equivalent organization within CJL.
(2) Matters relating to the assessment of the appropriateness of the design and operation of
the remuneration and other systems of the Subject Officer and Employee of CJL
1. Remuneration policy
A. Policy of the remuneration for the “Subject Officer”
With respect to the remunerations for Officers, Officer Remuneration Plan has been established according to
the Rules Concerning Remuneration for Officers (Yakuin).
Specifically, the Plan determines the composition of the remuneration:
・
・
・
・
・
・
Annual base remuneration
Bonus
Various allowances
Equity Compensation (or options to purchase shares) of Citigroup stock
Retirement benefits
Cash denominated awards (that earn notional investment returns).
Annual base remuneration is determined based on the roles, profile, performance, etc. as an officer, while
bonus is determined based on the performance of CJL. Stocks (shares of Citigroup Inc. listed in the United
States) are provided to align officer’s or employee’s interests with those of shareholders, clients and other
stakeholders.
B. Policy of the remuneration for the “Subject Employee, etc.”
The remuneration for an officer or an employee of CJL is determined depending on the role, personnel
evaluation, ability and performance according to the remuneration rules of CJL.
2. Significant change in the remuneration system design and operation
There is no significant change in the remuneration system design and operation.
(3) Consistency of the remuneration system of the Subject Officer and Employee and the risk
management, and matters relating to linkage of the remuneration and performance
1. Methodology to take the risk into account for determining the compensation
For Individual Covered Employees, there is an annual control function review process pursuant to which the control
functions (Compliance, Finance, Independent Risk, Internal Audit, and Legal) provide an evaluation of risk
behaviors.
2. Performance-linked portion to determine the remuneration for the Subject Officer and Employee
A. Calculation method for the performance-linked portion
The rating from the independent review process is included in the performance evaluation system to inform the
performance review conducted by the employees’ manager. The performance evaluation system includes
formal risk goals for covered senior managers as well as a formal manager-provided risk rating. When incentive
compensation recommendations are made, both the individual goals and risk performance goals are included
in the compensation worksheet for consideration.
76
B. Methodology to make adjustment to the performance linked portion
For Covered Employees, provisions also allow for the cancellation of deferred incentive compensation awarded
in the event of serious financial or reputational harm to Citi, and can allow for cancellation if a failure to
supervise or monitor risks results in such significant responsibility. Separately if the global reference business
of a Covered Employee has pre-tax losses in any year of the deferral period, the portion of the deferred stock
award that is scheduled to vest in the year following the loss year will be reduced.
C. Confirmation as to whether the compensation system is not too focused on the linkage to the short-term
performance
It is confirmed that the compensation system is not too focused on the linkage to the short-term performance as
the structure of annual incentive awards made to Covered Employees discourages imprudent risk-taking. Also
the risk mitigates include substantial deferrals; vesting periods, broad-based clawbacks, and management
discretion to clawback nonvested deferred compensation for improper risk-taking behavior.
D. Ensuring effective controls and risk-adjustment procedures including monitoring individual manipulation of risk
when determining compensation
Compensation is determined based on year-end performance evaluations that focus on mission-critical goals
with an emphasis on risk management. Performance evaluations reflect multiple inputs including multiperspective feedback; review of performance against key business financial, risk and client metrics as well as
qualitative and/or non-financial elements of performance; manager’s review of qualitative risk behavior; and
independent review of qualitative risk behavior conducted by the Control Functions (Independent Risk,
Compliance, Internal Audit, Legal and Finance)
3. Adjustment of the deferred payment
Please refer to 2B “Methodology to make adjustment to the performance linked portion”.
(4) Matters such as the categories of the remunerations for the Subject Officer and Employee
of CJL and the amounts and payment methods.
The total amount of remunerations for the Subject Officers and Employees (from April 1, 2014 to March 31, 2015)
(Millions of Yen)
Categories
Head
Count
Remunerati
on, etc. in
total
Fixed
Stocks/
Remuneration Basic
Stock
Remuneration
Option
Other
Variable
Remunera
tion
Basic
Bonus
Remuneration
Retirement
Benefits
Other
Subject
Officers
(excluding
outside
officers,etc
.)
6
703
366
155
0
211
321
0
313
8
16
Subject
Employees
, etc.
1
140
57
44
0
13
83
0
83
0
0
(Note)
1. Other fixed remuneration includes housing or other allowances provided to the expatriated from Citigroup entities overseas .
Subject Officers HC 6 includes one director who retired at middle of fiscal year.
2. Other variable remuneration includes deferred remunerations, Equity Compensation, etc.
(5) Other information relevant to the remuneration and other systems of the Subject Officers
and Employees of CJL.
There is not reportable information other than the above.
77
Confirmation
July 31, 2015
Representative Director, President & CEO
I confirm, to the best of my knowledge, the following matters concerning the Citibank Japan Ltd. financial
statements for the Period from April 1, 2014 to March 31, 2015:
1.
Matters concerning the financial statements are in conformity with “The Regulations regarding
Terminology, Format and Method of Preparation of Financial Statements, etc” and “Enforcement
Regulation of the Banking Law” and others, and the financials present fairly in all material respects.
2.
Citibank Japan Ltd. establishes and maintains the appropriate internal control systems as below,
and fairly presents financial statements based on it.
(1)
(2)
(3)
78
Assignment of duties and the corresponding units in charge are clearly defined, and the system
for accomplishment of operation is appropriately established.
Internal Audit Division assesses the appropriateness and effectiveness of internal control
systems for each responsible unit, and reports the material matters to the Management and
Board of Statutory Auditors.
All material information concerning Citibank Japan Ltd. is adequately reported to the
Management and Board of Directors as necessary.
www.citibank.co.jp

Citibank Japan Ltd. Annual Report

Transcription

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