Super Regional & Super Global
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Super Regional & Super Global Annual Report 2017 Year ended March 31, 2017 Contents Corporate Data Fundamentals Financial Section 1 Management Philosophy 24 Corporate Governance 46 Management’s Discussion and Analysis of Financial Condition and Results of Operations 1 Our Business 30 CSR (Corporate Social Responsibility) 68 Non-Consolidated Financial Statements 37 Measures to Improve 110 Financial Data Strategy Customer Satisfaction 150 JAPAN POST GROUP Charter of Corporate Conduct 2 To Our Stakeholders 38 Compliance 151 Corporate Information 10 Overview of the 39 Internal Auditing Medium-Term Management Plan 40 Measures to Support Management at SMEs and Vitalize Local 12 Business Strategies Communities Editorial Policy 15 Financial Highlights 42 Risk Management In order to foster a deeper understanding of JAPAN POST 44 Organization BANK’s corporate value among shareholders, investors and stakeholders, this report offers extensive information on Special report 1 management strategy as well as ESG (environmental, social, governance) and fi nancial information. 16 Assets as a source of value creation Period Covered Special report 2 Operating performance for the period from April 1, 2016 21 The progress of value creation to March 31, 2017. The report also includes some activities outside this period. Special report 1 Assets as a source of value creation Special report 2 The progress of value creation Cautionary Statement This report is not a solicitation for the shares or other securities of the JAPAN POST GROUP. Furthermore, this report contains forward-looking statements, such as the Bank’s forecasts and targets. These statements were written according to the Bank’s judgment based on information available, forecasts, and assumptions made at the time when the report was created; they therefore encompass risks and uncertainties, and are not a guarantee of future results. You should bear in mind that actual business results may differ from those described in this report, because they are subject to a wide range of risks and factors such as changes in the assumed conditions relating to the business environment, economic and business trends, changes in laws and regulations, the occurrence of major disasters, fl uctuations in the value of assets held by the Bank, and the impact of rumor and hearsay. The Bank undertakes no obligation to publicly update or revise any forward-looking statements in light of new information or future events. All fi gures and percentages in this report are rounded down for presentation, and therefore the totals may not be equal to the sum of the presented fi gures. The fi gures and percentages are information as of March 31, 2017, unless separately noted. Unless the context states otherwise, references in this report to “we,” “us,” “our,” the “Bank” or similar terms are to JAPAN POST BANK. JAPAN POST BANK Co., Ltd. Annual Report 2017 JAPAN POST BANK Co., Ltd. Annual Report 2017 Management Philosophy Corporate Data Inno- We comply with laws, regulations, and Trust We work sincerely to improve our vation other standards of behavior and value management and business operations in trusted relationships with customers, response to requests from customers and markets, shareholders, and employees changes in the business environment. Management Philosophy and consistently serve as a responsible corporate citizen. JAPAN POST BANK aims to become “the most accessible and trustworthy bank in Japan,” guided by the needs and expectations of our customers. We pursue improvements in speed Effi ciency Expertise We continually strive to strengthen our Strategy and effi ciency of our management and expertise for the aim of services meeting business operations in order to provide the expectations of our customers. customer-oriented fi nancial instruments and services. Our Business JAPAN POST BANK Co., Ltd. is engaged in banking operations as a member of the JAPAN POST GROUP. The principal operations comprise deposit-taking, syndicated loans and other lending, securities investment, domestic and foreign exchange, retail Creating Value Creating sales of Japanese government bonds and investment trusts as well as insurance products, intermediary services including mortgages, and credit card operations. JAPAN POST GROUP Japanese Government Must own more than 1/3 stake [Postal Service Privatization Act] JAPAN POST HOLDINGS*1 Fundamentals Obligated to hold While considering the impact on the management status of the two fi nancial 100% stake subsidiaries and the fulfi llment of the obligation to provide universal services, aims to dispose of all shares within the earliest possible timeframe [Postal Ser- [Postal Service Privatization Act] Shareholding of Japan Post Holdings vice Privatization Act] more than 50% New services: approval system To incrementally dispose of its holdings until its ownership is 50% or less reduced to around 50% as initial steps New services: notifi cation system JAPAN POST*1 Shareholding Shareholding 89%*2 89% Postal and domestic logistics business JAPAN POST BANK JAPAN POST INSURANCE International logistics business Payment of commissions Financial Section Postal counter Banking counter Insurance counter operations operations operations *1 Obligation to provide universal services *2 Shareholding relating to shares with voting rights excluding treasury stock JAPAN POST BANK Co., Ltd. Annual Report 2017 JAPAN POST BANK Co., Ltd. Annual Report 2017 1 To Our Stakeholders Leveraging Our Strengths and Aiming to Be a “New Bank” Norito Ikeda Director, President and Representative Executive Offi cer I have spent one year as the head of JAPAN POST BANK. During that period, I steered the execution of our Medium-Term Management Plan, strongly emphasizing to executives and employees the “do” component of the PDCA (plan, do, check, act) cycle. At the same time, setting aside the Bank’s operations to date, we held repeated deliberations on the Bank’s expected vision, and announced our directions in this regard on March 31, 2017. Going forward, we will devote ourselves to deploying specifi c strategies and tactics in order to enhance the Bank’s corporate value and realize growth for our stakeholders. I thank you for your continuous support. July 2017 Performance Business Bolstering and Development for Our Business Forecasts Future Growth Foundation 2 JAPAN POST BANK Co., Ltd. Annual Report 2017 JAPAN POST BANK Co., Ltd. Annual Report 2017 Performance and Forecasts Corporate Data Operating Performance for the Fiscal Year Ended March 31, 2017 Looking back on the economic 2016, U.S. long-term interest environment in the fi scal year rates rose, foreign exchange ended March 31, 2017, the markets were characterized by yen economies of advanced countries depreciation and stock prices rose in continued to grow at a modest Japan and the United States. pace, particularly in Europe and For the fi scal year ended the United States, while growth March 31, 2017, net income deceleration in China and other decreased by ¥12.8 billion year Strategy emerging-market economies on year, to ¥312.2 billion. In the showed signs of easing. Buoyed by adverse business environment with the recovery in the global economy, yen interest rates remained at a low the Japanese economy continued to level, we experienced a decrease in grow modestly, recording positive net interest income, which accounts growth for fi ve consecutive quarters for the majority of the Bank’s gross starting from the fi rst quarter of operating profi t. While net income 2016. decreased year on year, results In fi nancial and capital markets, were buoyed by such factors as domestic long-term interest rates an increase in net other operating remained around zero percent, as income. Accordingly, net income the Bank of Japan maintained its exceeded our earnings forecasts Value Creating policy of monetary easing. In this of ¥300.0 billion by ¥12.2 billion, environment, following the U.S. or 4.0%, for the fi scal year ended presidential election in November March 31, 2017. Forecasts for the Fiscal Year Ending March 31, 2018 For the fi scal year ending March ensure stable profi ts by working dividends per share of common stock 31, 2018, we forecast net ordinary to strengthen fee businesses and of ¥50 (including an interim dividend income of ¥490.0 billion and net further promoting sophisticated and of ¥25) for the fi scal year ended income of ¥350.0 billion. In the diversifi ed investments, etc. March 31, 2017. For the fi scal year adverse business environment As a result of our general ending March 31, 2018, we intend Fundamentals characterized by such factors as policy to provide for both an annual to pay total dividends per share of persistent extremely low yen interest dividend and an interim dividend from common stock of ¥50 (including an rates, etc., the Bank expects to our retained earnings, we set the total interim dividend of ¥25). Net Ordinary Income Net Income Dividends per Share For the fi scal year ended March 31, For the fi scal year ended March 31, For the fi scal year ended March 31, (¥ billion) (¥ billion) (yen) 481.9 490.0 500.0 442.0 400.0 350.0 60 50 50 325.0 312.2 25 25 250.0 200.0 30 25 Financial Section 25 25 0 0 0 2016 2017 2018 2016 2017 2018 2016 2017 2018 (forecast) (forecast) (forecast) Annual dividend Interim dividend JAPAN POST BANK Co., Ltd. Annual Report 2017 JAPAN POST BANK Co., Ltd. Annual Report 2017 3 Business Development for Future Growth JAPAN POST BANK’s Vision Since having assumed the POST BANK” (Grand Design and its our inherent strengths. I consider position of Director, President and business development), and got to it my duty to aggressively drive Representative Executive Officer the stage of wanting to initiate action. our operations forward, using the in April 2016, I have been taking I believe the Bank’s strengths aforementioned three pillars as a long-term perspective and are twofold. First, we have our core engines for management.