The Norinchukin Bank VALUE REPORT 2020 VALUE REPORT 2020

2 3 Our work at The Norinchukin Bank won’t change the world overnight.

Our focus is on the agriculture, and forestry industries. This means that nature is our partner, and nothing in nature bears fruit overnight. Industries in this sector don’t make things —they produce and nurture life as a legacy for future generations.

This is precisely why we are dedicated to serving those who sustain these industries and their local communities, no matter how small the scale of their operations. As the financial institution wholly devoted to this sector —the very cornerstone of our nation, we strive consistently to generate solid outcomes in the global financial markets.

Our history spans more than 90 years.

But that alone is no longer enough. We must take on a greater role than ever before if this sector is to continue developing in response to the changing times.

We must harness our financial knowledge to make new contributions that extend beyond our past functions and scope. We must do our utmost to address on-the-ground issues. We must respond to the needs not only of producers, but also to those of processors, distributors and consumers.

The life generated by the agriculture, fishery and forestry industries sprouts the workings of all life well into the future.

Now is the time for each and every one of us to give our all. We aim to make the chain of life that connects us to the future more bounteous and more certain.

4 VALUE REPORT 2020 5 Contents

PART 1 Goals of The Norinchukin Bank 6 The Norinchukin Bank’s Value Creation Model 8 Our Features 10 Medium-Term Management Plan 12 Digital Innovation and Sustainability Management 14

PART 2 Three Value-Creating Businesses 16 Food & Agriculture Business 18 Retail Business 26 Investment Business 30

Corporate Data 35

4 VALUE REPORT 2020 5 PART 1 Goals of The Norinchukin Bank

6 VALUE REPORT 2020 7 6 VALUE REPORT 2020 7 The Norinchukin Bank’s Value Creation Model

Resources and Strengths The Norinchukin Bank’s Business

Abundant food and agriculture knowledge 97 years and leading-edge financial knowledge History of supporting the agriculture, fishery The Norinchukin Bank and forestry industries through finance Business Model 18 years Integrated management of JA Bank composed of 585 JAs and 32 JA Shinnorens Agriculture Investment Business Business Business

years Food & 22 Retail Got into globally diversified investments ahead of the times forestry industries into growth networks to turn the agriculture, fishery and business community and expands their Supports and connects producers the while achieving efficient management diverse financial needs in each region JA Bank and JF Marine meet management investments based on advanced risk to long term through globally diversified Ensures stable profit over the medium 3,477 groups Members of The Norinchukin Bank Stable deposits and financial base trillion yen

Network of 104.1 JA Bank savings balance

Cooperative INPUT system 2.6 trillion yen JF Marine Bank savings balance A (S&P) A1 (Moody’s) Credit rating

23.02 % Total capital ratio Corporate & Shared Services Supports the three business areas and promotes new initiatives such as digital innovation and sustainability management

28.8 billion yen

Expert human resources Total assets per employee (non-consolidated basis)

3,588 people Number of employees Our Mission

Supporting the Contributing to Facilitating funding advancement of for the agriculture, fishery the development of 119 people organizations the nation’s economy Number of employees and forestry industries who have studied overseas (= number of employees Our Vision who have obtained MBA/LLM) Leading bank that supports the agriculture, fishery and forestry industries, food production and consumption, and the daily lives of local communities

8 VALUE REPORT 2020 9 The Norinchukin Bank’s Value Creation Model

Value Provided Business Achievements to Society Turning the agriculture, fishery and forestry industries communities Revitalize local income Increase producers’ Seed money Support industries* for the AFF As the main bank Agricultural Consulting for leaders corporations

AgTech investment

Value provided to local communities, inhabitants and national land through collaboration with the cooperative system Turning the into growth industries agriculture, fishery and Enhance corporate value agriculture value chain Offer food and forestry OUTPUT Cooperation with regions

Connect and firms industries into of agricultural bank As the food and Japanese Procurement/development food and sustainable of sales channels agriculture growth companies industries Support for overseas expansion Providing return of profit and financial functions

business transactions Leading Asian food and agriculture food Bridge to the world based on Stable supply

fishery and forestry industries Business achievements related to the agriculture, of safe and Global investment network

Expand secure food

institution financial As a global Global Operation of food and food and agricultural fund agriculture companies Connecting Japanese companies

Revitalizing *AFF industries = Agriculture, Fishery and Forestry industries the infrastructure Agriculture-related loans (JA Bank overall) in rural areas Providing financial services

right across the country Total

2.5 trillion yen

JA JA Shinnoren The Norinchukin Bank 1.2 trillion yen 0.8 trillion yen 0.5 trillion yen Preserving local diversity

No.2 in Japan No.3in Japan 92 vehicles Total number of JA Bank JA Bank share of The number of mobile branches in Japan individual deposits branches introduced Protecting the land

Generating and marine

profits environment Approx. 400.0 billion yen Returns to members profits earned from the Investment Business and the Food & Agriculture Business Developing the economy through the agriculture, fishery and Our Value forestry

Dedicated to sustaining all life.

Our Foundation

One for all, all for one.

8 VALUE REPORT 2020 9 The Norinchukin Bank's HISTORY

Our Features

Constant Mission over 97 Years: Transforming Itself to Meet the Needs of the Times

1923- 1970- Meeting the demand for funding in the In light of the increase in JA agriculture, fishery and forestry Savings due to economic growth industries before and after World War II

Launched as the central bank for Japan’s industrial cooperatives Extending loans and investments into wider financial markets Supporting producers with in addition to the agriculture, financial services, including loans, fishery and forestry industries in through cooperative organizations with response to the needs of the times the spirit of helping one another

Producers involved in the agriculture, fishery and forestry Since the 1970s, when savings deposited by individual industries faced a shortage of funds before and after World members and local users increased considerably, we have War II until Japan’s era of high economic growth. Aiming been meeting Japan’s strong demand for funds through to solve such a situation, The Norinchukin Bank was estab- loans and investments for companies related to the agricul- lished in 1923. As the central body for agricultural, fishery ture, fishery and forestry industries, the supply of funds to and forestry cooperative organizations, The Norinchukin Japan’s short-term capital markets, and investment in Jap- Bank has supplied funds to agricultural, fishery and forestry anese government bonds. Moreover, from the latter half of cooperatives throughout Japan to provide loans to produc- the 1990s, we quickly moved into top gear on globally di- ers and met the demand for large-scale funding beyond the versified investments in global financial markets. We have capacity of individual cooperatives. The basis of these ac- returned stable earnings to members as JA, JF and JForest tions stems from our spirit of helping one another— “one even in a low interest rate environment. for all, all for one.”

10 VALUE REPORT 2020 11 Since its establishment in 1923, The Norinchukin Bank has been managed under special legislation, ini- tially, as the central bank for Japan’s industrial cooperatives, “Sangyo Kumiai,” and subsequently via the Norinchukin Bank Act. It is a cooperative private financial institution with a clear mission to “contribute to the development of the nation’s economy by supporting the advancement of Japan’s agriculture, fishery and forestry indus- tries by providing financial services for the members of the agricultural, fishery and forestry cooperative system.” Since its establishment, we have continued to provide support for everyone engaged in the agriculture, fishery and forestry industries for 97 years while constantly transforming in line with changes in the envi- ronment surrounding the agriculture, fishery and forestry industries.

2016 - 2019 -

A bridge between the agriculture, fishery and Medium-Term Management Plan forestry industries and the business community

Consumers’ and business communities’ needs

The Norinchukin Bank Catch the Winds of Change. Create New Value.

Supply of agriculture, fishery and forestry products that meet the needs

Trying Now!

Amid the ongoing significant changes in the nation’s needs The agriculture, fishery and forestry industries are not the for the agriculture, fishery and forestry industries, we be- only ones having to adapt to radical changes. The financial lieve that the delivery of safe and secure domestic produce, industry also faces rapid changes in the investment envi- which consumers, restaurants and food processing com- ronment and technologies. To address such non-continuous panies want, will pave the way to turning the agriculture, changes, the Bank has formulated a new Medium-Term fishery and forestry industries into growth industries. Lever- Management Plan, covering five years from fiscal 2019 aging our deep ties with producers in the agriculture, fishery through fiscal 2023, and set out to realize the plan. Viewing and forestry industries and longstanding business relation- changes in each of the three business areas—food and ag- ships with companies related to the agriculture, fishery and riculture, retail, and investment—as opportunities, the Bank forestry industries, we intend to “build” bridges between aims to achieve further growth together with the agriculture, primary industry and secondary and tertiary industries. In fishery and forestry industries in Japan. 2016, we had a full-scale launch of such an initiative. Our Food and Agriculture Business offers diverse solutions to both producers and consumers.

10 VALUE REPORT 2020 11 The Norinchukin Bank's Medium-term Management Plan

Medium-Term Management Plan (FY2019-FY2023)

Aiming to become a “leading bank that supports the agriculture, fishery and forestry industries, food production and consumption, and the daily lives of local communities,” we strive to catch the winds of change and create new value.

Environment Surrounding Us Core Principle

Global profit margin compression More customer-orientation Inevitable to build strategy under a new investment environment.

Rapid digitalization Lead AFF industries* Customer behavior will change drastically.

Change in member profile –aging Proactive digital innovation –business expansion needs Securing local production bases will become an issue. Forward looking business Growth of Asia transformation Business in Asia will expand further.

Environmental and social issues Establish a sustainable Offering value to society will be crucial. financial base

*AFF industries = Agriculture, Fishery and Forestry industries

Looking ahead to the next 10 years, we have formulated our vision of the Norinchukin Group “for the next five years.” Unprecedented changes are occurring in our business en- years, we have formulated our vision of the Norinchukin vironment such as global compression of profit margins, Group for the next five years—the new Medium-Term Man- rapid expansion of digitalization, change in the members’ agement Plan. To resolve these issues and tackle the chal- profile (aging and increasing demand for business expan- lenging task of creating new value, it is important to conduct sion), growth in Asia, and environmental and social issues. “customer-oriented business” and “lead the growth of the Although this era of non-continuous changes has resulted agriculture, fishery and forestry industries.” To this end, dig- in a severe environment for management, we believe that ital innovation, operational reform and sustainability of finan- changes and new trends in the society are providing oppor- cial base are indispensable. Therefore, these are set as the tunities for growth. core principles in the Medium-Term Management Plan. To address the new issues anticipated over the next 10

12 VALUE REPORT 2020 13 We believe that non-continuous changes will occur during the next 10 years. In such a situation, we need to optimize our operation to meet customer expectations and continue value creation. Looking ahead to the next 10 years, we reviewed our current operations thoroughly and formulated a five-year Medium-Term Management Plan (FY2019-FY2023), “Catch the Winds of Change. Create New Value.” to change our approach in conducting business and achieve significant innovation.

Priority Strategies

Enhance the food and agriculture Food & value chain Forward looking business transformation

Agriculture Establish a sustainable financial base Business Become the leading food and

Core Principle agriculture bank in Asia Digital innovation Reinforce the lending business/ Develop life-plan support business Retail Business Rebuild the point of contact with members and users

Increase portfolio resiliency to economic cycles Investment Business Enhance profitability

Offer diverse value to the society, cooperating with the cooperative groups.

Under the Medium-Term Management Plan we will share broad network of cooperative associations and a stable fi- the issues from the perspectives of individual members, us- nancial base. By maximizing these strengths, we will meet ers and customers and offer comprehensive services, aim- customer expectations, bridge domestic and global food and ing to solve those issues together with them by focusing agriculture value chains, enhance the convenience of cus- on our core strategies for each business. Furthermore, the tomers and our productivity, and continue to strengthen our Bank will strengthen the initiatives from a global perspective onsite capability and profitability. To fulfill our perpetual mis- to develop the agriculture, fishery and forestry industries, as sion, aiming to become a “leading bank that supports the well as food production and consumption, and revitalize local agriculture, fishery and forestry industries, food production communities. and consumption, and the daily lives of local communities,” In addition to our knowledge nurtured over many years we will strive to realize further sustainable growth and offer on food and agriculture, as well as finance, we possess a value to society together with our cooperative groups.

12 VALUE REPORT 2020 13 The Norinchukin Bank's Innovation & Sustainability Management

Digital Innovation and Sustainability Management

Toward the realization of technology-based reform and a sustainable society, we will promote future-oriented business management.

Innovation of food, agriculture and life

Startups

n Business idea n Cutting-edge technology Partner companies Partner

FinTech LifeTech JA Group n Personnel n Business n Operational support funds AgTech (collabora- n Data tion) n Know-how n Technical n Local Management FoodTech revitalization support

n Collaborative research n Issues n n JA Accelerator program Administrative backup n Data (e.g., startup support) Supporting companies Farmers Administration, universities Management support

JA Accelerator

Concept The JA Accelerator is a program with the slogan “Innovation of Food, Agriculture and Lifestyle” to support the growth of start-up companies with innovative ideas and technologies, leading to the development of new businesses and services.

Focus Areas 1 Agriculture and food 2 Lifestyle 3 Finance 4 Others

n  Ideas toward the sophis- n  tication of agriculture Toward community and food and to improve Use of cutting-edge revitalization Services and business n  efficiency ideas to improve the con- technologies in the field Innovative ideas across of finance (banking and these fields, utilizing the n  venience of people’s lives Efforts that help address insurance) the labor shortage at various assets of the JA farms Group

Support Customers and Communities via Open Innovation

We aim to create products and services that leverage the other technologies to enhance customer convenience. strengths of JA’s comprehensive businesses through ag- In fiscal 2019, AgVenture Lab was established via the JA gressive collaboration with various start-up and partner en- Group’s concerted efforts. With 15 companies selected for terprises, governmental administrations and universities and the JA Accelerator program, we are supporting young com- by promoting JA Group-wide open innovation. We intend to panies with innovative technologies and ideas mainly in the create comprehensive digital services that closely help the fields of finance, food and agriculture. agricultural, fishery and forestry industries and related local For details, https://agventurelab.or.jp (in Japanese only) communities through FinTech, AgTech and LifeTech and

14 VALUE REPORT 2020 15 VoiceInnovation and Sustainability as a Management Issue to Address

To create new value in the three businesses of “Food and Agriculture,” “Retail” and “Investment,” The Norinchukin Bank (the “Bank”) aggressively promotes the utiliza- tion of digital innovation and sustainable management. In response to the evolution of FinTech and AgTech, the Bank newly established AgVenture Lab in collaboration with the JA Group in fiscal 2019, as an effort to discover a new form of food and agricultural industries and financial business through collaboration with corporations, central government ministries and agencies, local municipalities and universities, etc. The lab-based JA Accelerator program has implemented two cours (courses) so far, helping the growth of 15 companies that were selected from among more than 350 applicants. Sustainability management, on the other hand, is a theme on which the Bank is fo- cused seriously as a financial institution founded on the agriculture, fishery and forestry industries and related local communities. In addition to the realization of the measures set out under the Medium-Term Management Plan (FY2019-FY2023), we are con- Kazuhiko Otake tinuing discussion to establish another medium-term goals that cover to about 2030 Head of Corporate with foresight even further to 2050. We are discussing how to increase sustainability & Shared Services in broad fields and perspectives, raising the priority level of “life,” which is included in our corporate brand. COVID-19 has changed society and economies significantly. We need to continue to address change, innovate change and change our ways, too, to ensure ongoing growth. We believe such an attitude is necessary.

Contribute to solving environmental and social Major SDGs to which the Bank contributes: Policies and issues through business activities and ensure the measures sustainability of the agriculture, fishery and forestry industries and related local communities.

FY2020 Priority Issues to Address Environmental and social common sense 14 “Sustainability Topics” covering (general common sense in society)

Five Sustainability Focus Areas Ensure the sustainability of the agriculture,

Stakeholder interview, etc. 1 Surrounding environment, fishery and forestry industries

Select Contribute to the realization of a circular gap analysis 2 society priority themes to Contribute to the development of local work on 3 communities during fiscal Conduct investments and financing activities with consideration 2020 4 to the environment and society (sustainable financing) Establish an organizational base toward 5 implementing sustainable management

Aim to Improve Sustainability in All Business Perspectives

As environmental and social issues become increasingly di- In fiscal 2020, based on issues surrounding the agriculture, verse and serious, global initiatives toward the and forestry industries, the Bank, as a financial insti- development of society are under way. Expectations are on tution founded from cooperative organizations of farmers, the rise for corporations to address environmental and so- fishers and foresters, set out five Priority Issues to Address. cial issues such as observing the Sustainable Development By including specific measures based on these priority is- Goals (SDGs) and the Paris Agreement. Understanding such sues in the management plan and implementing them, the changes, the Bank set out medium-term sustainability goals Bank will strive to contribute to ensuring the sustainability and is discussing initiatives to realize sustainability manage- of the agriculture, fishery and forestry industries and related ment at the Sustainability Committee under the Board of local communities. Directors. For details, https://www.nochubank.or.jp/en/about/sustainability/

14 VALUE REPORT 2020 15 PART 2 Three Value-Creating Businesses

The Norinchukin Bank continues to offer var- ious kinds of value to local communities, resi- dents and national land via collaboration with cooperative organizations consisting of Japan Agricultural Cooperatives (JA), Japan Fishery Cooperatives (JF) and Japan Forest Owners’ Cooperatives (JForest). Such value is created by our three businesses.

The three businesses are the Food and Agricul- ture Business to support, connect, and expand the food and agriculture value chain; the Retail Business to provide various financial functions as a member of JA Bank and JF Marine Bank; the Investment Business to ensure the stable return of profits via sophisticated fund manage- ment through globally diversified investments.

Food & Agriculture Business

Retail Investment Business Business

16 VALUE REPORT 2020 17 16 VALUE REPORT 2020 17 Food & Agriculture Business

Food & Agriculture Business

Aiming to be the “First Call Bank” in the Food and Agriculture Value Chain

Enhance the food and agriculture value chain

Production Processing, distribution Export and domestic Local communities and restaurants (Farmers, fishermen, foresters) consumption (Related firms and industries)

Advanced Enhanced corporate Overseas Local consumption Fostering leaders management value expansion

Japan institute of Green tourism Management consultant Agricultural Management M&A Advisory Local partnership Inbound Use of ICT New entrants

Providing funds

Combining and utilizing funds, information, and know-hows

We established the Food and Agriculture Business as one brings in the values, we will continue to contribute to turn of the new pillars of our businesses in fiscal 2016. the agriculture, fishery and forestry industries into growth By adding value to the entire food and agriculture value industries. chain covering the upstream (production), midstream Our goal is to be reliable for all those who make up the (food-related industries such as processing, distribution and food and agriculture value chain, that is, to become the “First restaurants) and downstream (domestic and overseas con- Call Bank,” the financial institution that people call on first. sumption), and supporting the local communities which

18 VALUE REPORT 2020 19 VoiceLeverage the Flexibility and Comprehensive Capabilities Used to Address COVID-19 to Achieve Our Long-Term Goals

We are working vehemently to support producers and business operators who are experiencing hardship due to COVID-19. Some case studies have shown that more advanced businesses, such as those in direct sales and tourism, have suf- fered considerable damage. We are focused on the quick provision of support, not only financing but also introducing buyers of accumulated inventories. At the launch of the Food and Agriculture Business five years ago, our goals were to grow with diverse customers constituting food and agricultural value chains and promote the sustainable development of local communities by turning the agricultural, fishery and forestry industries into growth industries. As a result of our efforts to perform three roles—“support,” “connect” and “expand”—in cooperation with the local JA, JF and JForest, successful cases have increased in both business performance and contribution to local communities. A recent case shows successful market expansion by “connecting” major companies (includ- ing overseas corporations) and domestic producers and business operators. To- ward the sustainable development of local communities and agriculture, we have started providing support for JA’s agricultural marketing and supply business. The Food and Agriculture Business clearly has plenty of room for growth. We Tetsuya Kanamaru will continue to focus not only on short-term issues such as quick response to the Head of Food & Agri Banking Business COVID-19 risk but also long-term issues such as labor, logistics, distribution and local communities.

The leading food and agriculture bank in Asia Our Solutions

Seed money Support As the main bank for Consulting for leaders the AFF industries* AgTech investment First Call Cooperation with regions Connect and firms Bank of Procurement/development of As the food and agri- sales channels culture food and Support for overseas expansion agriculture Global investment network

Expand Operation of food and As a global financial agriculture fund institution Connecting Japanese companies

*AFF industries = Agriculture, Fishery and Forestry industries Becoming a leading food and agriculture bank in Asia by supporting and connecting people, organizations and corporations and expanding their networks In our Food and Agriculture Business, we not only engage nect” and “expand.” In addition to providing these three in financing such as making loans and investments but also functions, we will support our customers’ overseas expan- provide support to expand consumption in local communi- sion aggressively to incorporate the growth in Asia into Ja- ties, help develop agricultural leaders through the Japan In- pan and link such initiatives to further develop Japan’s food stitute of Agricultural Management, and provide manage- and agriculture industries. Aiming to become a leading food ment consulting and M&A advisory services mainly for and agriculture bank in Asia that grows with our customers, agricultural corporations. we will continue to offer enhanced solutions. The keywords for these initiatives are “support,” “con-

18 VALUE REPORT 2020 19 Food & Agriculture Business

Case Studies of Our Food & Agriculture Business Our Food and Agriculture Business, which was launched in FY2016, has demonstrated significant performance of its functions to “Connect,” “Expand” and “Support” in numerous projects in Japan and overseas.

01 02 03 Connect Expand Support

01 Connect

Shipping and Processing of Kochi’s Special Produce Nira Sell “Miyagi Salmon” Worldwide Kochi (Oriental garlic or Chinese chives) Miyagi Increase the Value of Farmed Joint Establishment with Shimizu Corporation Kochi Prefecture is a major production Ginzake “Miyagi Salmon” is of high site of nira. The biggest bottleneck in quality, as each fish is treated carefully the shipment of nira is the soguri oper- using the method and shipped. ation—removing unnecessary leaves, The Bank, leveraging its national and measuring the weight and binding a overseas networks, connected JF Miy- predetermined volume of nira together agi and export trading companies and for shipping. To automate this soguri supported the full-scale export of Mi- operation line, SHIMIZU AGRI PLUS yagi Salmon to the United States for Inc. was established via a joint invest- the first time, contributing to further ment by Shimizu Corporation and the strengthening the brand power of the Bank. SHIMIZU AGRI PLUS’ operation ginzake produced in Miyagi Prefecture, is focused on this soguri operation via which enjoys the domestic top share. a contract to help maintain local pro- ducing areas.

Normally Unwanted Akamoku Seaweed Bring Kansai’s Food Ingredients to Midosuji! Ehime Osaka Can Be Kneaded in Sanuki Udon Hold a Summer Festival to Add Buzz to the City’s Central Area

Despite its high nutritional value, Toward Expo 2025 Osaka, Kansai, Ja- Akamoku seaweed is deemed undesir- pan, and Midosuji’s 100th anniversary able in western Japan, where people in 2037, the Bank, in alliance with normally do not eat Akamoku seaweed. Mitsui Fudosan Co., Ltd., and Midosuji Aiming to create new value, the Bank Town-Making Network, started work- connected Ehime Prefecture ing to add buzz to the local communi- Cooperative Association and a major ty. With the cooperation of the Osaka noodle manufacturer in Kagawa Pre- municipal government, various projects fecture and helped to develop Akamoku have begun to give Midosuji a boost, udon by kneading Akamoku seaweed offer local foods and culture, expand into Sanuki udon, special produce from consumption of products and services Kagawa Prefecture. produced by local municipalities and extend passenger transportation to var- ious locations.

Buzz-Filled Interaction Park “KADODE OOIGAWA” Will Open Naga- Green Tourism Experience Shizuo- Near Shin-Tomei Expressway Shimada-Kanaya Interchange in saki Support for JA Financing and Mutual Insurance ka November 2020 In alliance with JA Nagasaki Saikai, the With green tea, agriculture and tour- Bank supports school tourism for local ism as its themes, an experience-type parents and children, conducted by the food park, “KADODE OOIGAWA” is a Matsuura Railway, which operates in project via the collaboration of four the most western region of Japan, and entities—JA Ooigawa, Shimada City, the Nagasaki Prefectural Hokusho Agri- Oigawa Railway and NEXCO Central cultural High School. Through a facility Nippon Expressway. “KADODE OOIGA- and experience tour at the agricultural WA” includes a marche (market), which high school, the Bank connects multiple spreads in the prefecture’s largest stakeholders and contributes to edu- shopping area, and restaurants using cating community residents about the food ingredients directly from local attraction and value of local agriculture farms. Based on food and agriculture, and JA. this food park introduces the attraction of the area along the Oi River. The Bank supports the project through investing in it.

20 VALUE REPORT 2020 21 02 Expand

Thai- Established a Business Partnership with Kasikorn Bank United Supported the M&A of a Subsidiary of JA Zen-Noh Jointly with land Cooperation in Food and Agriculture, Technology and Finance States Coöperatieve Rabobanks U.A., the Netherlands

In February 2020, the Bank established To help Zen-Noh Grain Corporation a business partnership with Kasikorn (ZGC), a subsidiary of JA Zen-Noh, ac- Bank, one of the largest banks in Thai- quire 35 inland grain collection equip- land. Via this business partnership, we ment units operated by Bunge North not only offer local currencies, provide America, Inc., in the United States, the syndicated loans and offer sophisticat- Bank, jointly with Coöperatieve Rabo- ed services in the M&A advisory field banks U.A., provided an M&A advisory to customers of both banks but also service. By strengthening the supply facilitate the technological interaction chain from inland production sites in the Agri-Food tech field and work to export ports, the Bank expects to to establish sustainable agriculture to make a significant contribution to the solve the social issues of Japan and stable supply of the raw ingredients of Thailand. mixed feed.

Selling Saroma Wagyu in the Middle East Exporting Sweet Potatoes for DON Hakurei DONKI Southeast UAE Helped Develop a Sales Channel for Wagyu—Beef Produced Helping Cause a Yakiimo (Roasted Sweet Potato) Buzz from Asia in Japan the Aspect of Procurement The Gulf Japan Food Fund is an invest- The Bank conducted business match- ment fund that the Bank established ing, connecting the PPIH Group’s DON in cooperation with Mizuho Bank. A Yakima DONKI stores under a business wholesale meat company in the UAE, model suited for Southeast Asia and in which the Bank has invested via this agricultural firms in Kyushu, a major fund, used to sell mainly Australian area for producing sweet potatoes. beef. However, through a collaboration While supporting stable procurement among the Bank, ZEN-NOH Internation- for DON Yakima DONKI, causing a al Corporation and Hokuren, this whole- yakiimo buzz in and other saler has begun handling Hokkaido Sa- countries in Southeast Asia, the Bank roma wagyu, thereby developing a new supports agricultural firms that are export sales channel from Japan to the striving to expand sales channels over- Middle East. seas as well.

03 Support

Investing in an Agricultural Firm Cultivating JA Zen-Noh’s Toyama Ehime Historical High Investment in Bejoy, a Pork Producer Proprietary Cherry Tomatoes

In alliance with JA Zen-Noh, the Bank The Bejoy Group is a corporate group has supported the cultivation and ship- operating pig and chicken farms and ment of JA Zen-Noh’s original cherry producing, processing and selling tomatoes, “Angeles,” for the first time meat for human consumption within in Toyama Prefecture. We advertised the prefecture. With the Bejoy Group Angeles using media and helped ex- having business expansion plans pand the seeding area. In addition to such as constructing a large-scale pig investment, by leveraging its consult- farming facility, the Bank has contrib- ing function, the Bank conducts total uted to the group’s fund diversification coordination of business management, through investments, offered solutions thereby realizing an increase in produc- for improving productivity and helped ers’ income. strengthen the collaboration with the JA and JF Groups.

A Major Vegetable Distributor Has Entered the Restaurant Okaya- Free Lodging by Helping at the Destination Business Aomori ma Securing Labor During the Peak Harvesting Season Brokered Vegetables Produced by Female Farmers When the Kuraka Group, a wholesaler This project is a collaboration between of vegetables and fruits and a produc- JA and a start-up company Otetsutabi er/seller of cut vegetables, entered the (Otetsudai [help] + tabi [trip]), matching restaurant business, the Bank proposed farms in need of short-term labor and development of a menu using agricul- young people who want to visit the tural ingredients produced by Okayama countryside. The Bank is working to Nogyo Joshi (a women’s agricultural solve issues faced by the agriculture, organization), which consists of female fishery and forestry industries and lo- farmers in the prefecture, thereby im- cal communities by strengthening the proving the number of restaurant visi- collaboration with Otetsutabi, which tors and raising the recognition of local participates in JA Accelerator. agricultural produce.

20 VALUE REPORT 2020 21 23 - - - - - JA The Bank Norinchukin JFC Iitate Village For example, the Fukushima Branch sup For example, the Fukushima facility was inau new cattle Yamada’s Mr. pan Finance Corporation (JFC), together withpan Finance Corporation JA. the village government and get a subsidized To ported business planning. grant, the applicantloan or a government a 15-year plan.needs to prepare and present extensive plan thatAlthough a meticulous and of mother cows, thecovers from the purchase of calves to the re birth of calves and the sale placement of mother cows was required, the Fukushima Branch staff provided tenacious procure fund successful in resulting support, ment. gurated in April 2019. A new cattle facility of lives with his family Amano, who already Mr. in Iitate village, is scheduled to be completed in the fall of 2020 on the land he acquired. The endeavors of these two young men in their 30s will help revitalize a livestock farm ing village and accelerate the revival of the Foreseeing “Iitate Beef” brand significantly. the future incorporation of these two men’s businesses, the Bank will continue to support them together with the village government and JA-Fukushima Mirai. *Recompiled version of Newsletter No. 14 issued in February 2020 ------of an Iitate cow, which was a coveted limited edition sold within which was a coveted limited edition sold within Objet d’art of an Iitate cow, the village before the earthquake. The cattle facility was built as a property of Iitate village. Mr. Yamada and Mr. Amano, who started Amano, and Mr. Yamada Mr. On the other hand, Mr. Amano was born in On the other hand, Mr. Although he was able to continue rice cul port from the village government office and local JA-Fukushima Mirai. They planned land acquisition and construction of beef cattle facil Fukushima Branch ities, for which the Bank’s supported the funding in collaboration with Ja tivation and livestock farming because Somabecause farming livestock and tivation City was outside the evacuation area, he had a hard time finding a site large enough to ex he heard from a Then pand the cattle facility. livestock farmer from Iitate village who had evacuated to Soma City that the evacuation order was soon to be lifted, which would make livestock farming again possible in the village. that there are many Amano also learned Mr. highly skilled breeders in the village and that solid measures are in place to address radia tion, which made him feel safe. operationsbreeding cattle beef on working and agriculture in Iitate village, received sup eration. into the worldSaitama Prefecture. He jumped grandfather operate aof agriculture to help his rice cultivation busi beef cattle breeding and Prefecture. Fukushima ness in Soma City, Amano decided to increase the number Mr. circular agricultureof cows aiming to realize that uses rice straw to feed cattle and cattle droppings to fertilize rice paddies and agricul Amano was planning to tural fields. Just as Mr. Great East Japan the expand the cattle facility, Earthquake and nuclear power plant accident occurred. the reopening of the beef cattle breeding op breeding cattle beef the of reopening the ------Supporting Young Livestock Farmers Devoted to Revitalizing Iitate Devoted to Revitalizing Farmers Livestock Young Supporting with Municipalities, in Collaboration Farming Village, Livestock Institutions Financial JA and Governmental ith a population of approximately 6,000ith a population of approximately beef cattleresidents including 200 VALUE REPORT 2020 REPORT VALUE Recognizing that agriculture and livestock Yutaka Yamada (age 37) and Hiroki Amano (age 37) and Yamada Yutaka Although the nuclear power plant accidentAlthough the nuclear power Agriculture Beef Production @Iitate Village Case Studies of Our Food & Agriculture Business of Our Food & Agriculture Case Studies W Mr. Yamada (left) and Mr. Amano chatting in Mr. Yamada’s cattle facility, which was inaugurated before Mr. Amano’s which was inaugurated before Mr. cattle facility, Yamada’s Amano chatting in Mr. (left) and Mr. Yamada Mr. ada took a job at a meat shop in Kyoto, want ing to stay in work related to beef even though his real job was on hold. In 2016, he returned to Fukushima City with his wife and children to live with his parents and began to pursue farming were impossible for a while, Mr. Yam farming were impossible for a while, Mr. tion,” Mr. Yamada received overseas training. received Yamada tion,” Mr. he purchased immediately after However, high-quality mother cows, the nuclear power accident occurred (March 11, 2011). functional operation of cattle breeding and cultivation of tobacco after graduating from college. Aiming to “make the cattle breeding operation the main business of his genera (32) started a beef cattle breeding business in a native of this Yamada, this village in 2019. Mr. multi Iitate village, participated in his father’s forced the cattle farmers to relocate or sus forced the cattle farmers pend business operation, the evacuation or der was lifted at the end of March 2017. As village residents and producers are returning to the village, the current population is 1,200 residents with eight beef cattle breeders, one beef cattle breeder/grower and one milk cattle signs of a comeback showing grower/breeder, for this livestock farming village. clear Power Plant disaster. breeders and 12 beef cattle growers, this growers, beef cattle breeders and 12 used to be avillage in Fukushima Prefecture Beef” brand meatstrong producer of “Iitate Daiichi Nu and calves before the Fukushima 22

Food & Agriculture Business Case Studies of Our Food & Agriculture Business

Forestry Wood Solution Network to Expand and Accelerate the Use of Lumber Produced Domestically Wood Solution Network

lanting cutting shipping out WSN, which collaborates with this research earthquake and fire resistance, and noise can- P lumber production processing department. The WSN is a platform that aims cellation quality. distribution consumption. Whether pillars to solve various issues with a goal to expand Also, at the Mutual Understanding Subcom- of a house or furniture, or a pair of chopsticks, the lumber use with the participation of 31 mittee, JForest, which is on the supplier side, all products made from trees undergo such a companies and organizations related to trees has provided direct hearing opportunities for process to reach consumers. The Wood Solu- such as forester organizations, lumber manu- processing and distributing companies, on the tion Network (WSN) is a platform with ongoing facturers engaging in the processing and dis- demand side, regarding consumer needs. The activities via collaboration among industries, tribution of lumber, furniture makers, trading effectiveness of this activity was reflected in a academic organizations and financial institu- companies, general contractors and housing comment from a JForest associate: “I deeply tions, pursuing a goal to expand demand and builders. felt the seriousness toward the use of lumber boost related industries and local communities These companies and organizations par- produced in Japan.” throughout this wood value chain, which helps ticipate in activities of the WSN’s Structural The second cours of WSN’s activities started raise the value of lumber produced in Japan. Materials Subcommittee, Interior Materials in October 2019 with the promotion of various The number of wooden buildings has been Subcommittee and Mutual Understanding initiatives toward expanding the use of wood increasing since around the beginning of the Subcommittee. For example, in fiscal 2019 in alliance with member companies and organ- 2000s mainly in Europe and the United States. the Structural Materials Subcommittee pro- izations. Specifically, dissemination activities Given the strong social demand for corpora- duced a guidebook for builders to promote progressed by targeting government agencies tions to address environmental issues, the the use of wood for non-residential buildings using the guidebook produced during the first construction field is also undergoing a shift—a titled “Seize the Current Trend! Incorporate cours, and WSN adopted and started working shift to the use of wood, which has a lower Wood Construction and Sustainable Lumber on new themes suited to current trends (e.g., environmental burden compared to steel and Use into Management Strategy to Increase the effective utilization of the Forest Environ- concrete. Japan also has seen the emergence Corporate Value” toward the dissemination of ment Transfer Tax, strategies to explore over- of various wooden buildings in actual construc- non-residential medium- to large-scale wooden seas demand for lumber produced in Japan tion and planning in recent years. buildings. and the use of lumber from the perspective of That said, demand for lumber in Japan has With some representative non-residen- investing in SDGs/ESGs). yet to increase significantly. Total demand for tial wooden buildings in Japan as examples, A major part of the Bank’s support activities lumber in 2018 was 82.48 million cubic me- the guidebook explains that costs can be re- related to “trees” had been focused on forest ters, up 0.8% year over year, slightly higher duced even with wooden buildings and that improvement or such upstream-side support. than two-thirds of the peak demand of 121.02 such buildings are eligible for a government In contrast, WSN has become an important million cubic meters in 1973. A major factor subsidy and have merits related to taxes and platform in addressing the downstream side— in this sluggish growth is the decline in the accounting. It also corrects the common mis- exploring the demand for lumber. number of new housing construction starts understandings related to construction costs, due to the decreasing population. Now that forests planted after World War II are ready for Wood Value Chain harvesting, we need to create lumber demand for buildings other than detached residential Trees’ Added-Value Chain from Cutting and Shipping Out, Lumber Production, Processing and Distribution to Consumption homes. Cutting and shipping out Lumber production and processing Distribution Consumption Against such a backdrop, in October 2016, (including second-stage processing)

the Bank contributed to the establishment of n Privately owned forests, n Lumber trading companies n General contractors n Lumber production factories government-owned forests n Construction lumber n Housing and furniture an endowed research department at the Uni- n Plywood factories, etc. n JForest, etc. trading companies, etc. makers, etc. versity of for the study of lumber-using systems. At the same time, the Bank launched Strengthen the forestry and related industries as well as local communities by expanding the final demand for lumber

Two guidebooks issued by the WSN with the aim of promoting non- residential wooden buildings and the use of wood for interiors (Both are downloadable on the WSN Web site in Japanese only.)

The Bunka-Koryu (cultural interaction) Center of Otsuchi Town in Iwate Prefecture is a large-scale three-story glass-walled wooden building *Recompiled version of Newsletter No. 9 issued in September 2019

22 VALUE REPORT 2020 23 25 - Mr. Suzuki, President, who Suzuki, President, who Mr. promoted the collaboration of six companies Mr. Suzuki, President, chuckles, stating: Suzuki, President, Mr. The breakdown of the loan amount was ¥200 million from The Norinchukin Bank and ¥348 million from Japan Finance Corporation with The Norinchukin Bank as its agent. poration, the Bank executed a loan amountingporation, the Bank to ¥548 million* for constructing the first new boat. “The Bank keeps spanking me, telling us to discuss sixth industry products.” This new with its new business development, company, aims to cause a ripple effect throughout the expectations are that end, To local community. higher than ever for the Bank to provide both financial and non-financial support. * of the eight fishing boats owned by the sixof the eight fishing boats In addition, companies to the new company. fishing boats, thetoward replacing the old a construction planBank has helped formulate “Lucrativethe under approval acquire and by the MinistryBusiness” Subsidy Program Fisheries (MAFF)of Agriculture, Forestry and fishingcommon-use new three construct to Japan Finance Cor boats. Coordinating with *Recompiled version of Newsletter No. 11 issued in November 2019 ------Caught Kesennuma Fishing Port, a good port made by Kesennuma Fishing Port, a good port made by nature A new company, Kesennuma Kanae Fish A new company, Initial voices proposed moderate collabora Initial voices proposed moderate was con when an experiment However, He is especially thankful for “Norinchukin’s He is especially thankful for “Norinchukin’s ment of a new company and business integra tion—six companies are working in tandem. Octoberin inaugurated was Corporation, ery 2018, realizing an initial catch in September 2019, followed by the first sailing of its new fishing boat, Kanaemaru, in December 2019. About these accomplishments, Ichiro Suzuki, President, representing these six companies, come so far thanks to thestates: “We’ve Norinchukin, who followed through the consul quake. When a local fishery revitalization com quake. When a local fishery was a conditionmittee was launched, which collaborationbusiness aid, the receiving for was on the agenda. or a fishery pro tion such as group operation consideringFishermen cooperative. duction about letting gocollaboration were concerned assets. of their own fishing boats—important ducted under a “Ganbaru Fishery” initiative of six companies sharing fishery information suc was trial the purchasing, joint making and fishingand fuel for costs reducing in cessful volume tools. By reallocating each company’s of catch according to the level of demand, fish prices were stabilized and then increased. the ultimate collaboration—establish Toward tation with kindness and sincerity.” advice leveraging its know-how as an indus try-specialized financial institution” when ne gotiations stalled facing issues such as the companynew the of structure management and the appropriate pricing for the transfer ------Collaboration among Six Competing Companies at Kesennuma Fishing Port at Kesennuma Companies among Six Competing Collaboration Purchase of a through the of a New Company the Establishment Supported Boat New Fishing he Kesennuma Fishing Port in Miyagihe Kesennuma Fishing fishery basePrefecture is a renowned VALUE REPORT 2020 REPORT VALUE To address this worsening management en To However, the number of nearshore longline the number of nearshore However, The main species caught by “nearshoreThe main species caught T Fishery Kanae FisheryKesennuma Corporation@Miyagi Case Studies of Our Food & Agriculture Business of Our Food & Agriculture Case Studies New nearshore longline tuna fishing boat Kanaemaru (149 tons) of Kesennuma Kanae Fishery Corporation boasting a ¥15.4 billion annual catch, whichboasting a ¥15.4 billion in the nation, and aranks as the 10th highest highest in the na 65,000-ton catch, the 11th men who experienced damage from the earth ing, grinding) Fishery Revitalization Support the Japanesefiscal 2016 for Project” No. 2 in government to supply relief funds for fisher vironment, six companies that had competedhad that companies six vironment, in nearshore longline tuna fishing, sharing the whichcollaborating, begun have risks, same was triggered by the start of “Ganbaru (striv creased, the plunge in tuna prices, aging fish ermen, aging fishing boats and the increase in the number of fishermen who quit the fishing fishingbusiness or reduced their number of boats. During this declining trend, the Great East Japan Earthquake occurred. ing decline was due to the shift in the speciesin shift the to due was decline ing fishermen caught as the number of tuna de tuna fishing boats in Kesennuma declined from more than 120 boats at the peak in the 1970s to 12 boats in and after 2015. This ongo longline tuna fishing” are swordfish and bluelongline tuna fishing” are harvest for season peak the that Given shark. peakthe from different is species these ing season for catching other species by differ ent fishing methods (e.g., Pacific saury and theto contribute differences these bonito), marketfish of the Kesennuma stable revenue throughout the year. tion (fiscal 2019). 24

Food & Agriculture Business 24 VALUE REPORT 2020 25 Retail Business

Retail Business

Providing a range of financial functions as a member of JA Bank and JF Marine Bank

Flow of funds at JA Bank What is JA Bank? Members and local users JA Bank is the collective name for a financial group composed of JA, Interest Savings JA Shinnoren, and The Norinchukin Bank. JA Bank

Loans Borrowers JA Members, agricultural corporations, (banking business) local residents, local companies, Interest local governments and public entities, etc.

Funds after making loans, etc. Investment Funds after making profits loans, etc. Investment profits Loans Borrowers JA Shinnoren Agriculture industry groups, agricultural corporations, agriculture (Prefectural Banking Federations industry-related companies, local of Agricultural Cooperatives) Interest companies, local governments and public entities, etc.

Investment Funds after making profits loans, etc.

Loans and investments Investees and borrowers The Norinchukin Bank Agriculture, fishery and forestry Interest and dividends industry groups, agricultural corporations, agriculture, fishery and forestry industry-related companies, Investment general companies, etc. profits Investment

JF Marine Bank Global financial markets JF Marine Bank provides community-based financial services with a similar division of roles. Developing businesses effectively as JA Bank and JF Marine Bank, while meticulously addressing the needs of each region

JA and JF in regions all around the country provide meticu- are deposited with JA Shinnoren at the prefectural level and lous services to meet financial needs varying in each region used to make loans to large-scale farmers and agricultural as independent financial institutions. To provide these servic- corporations and companies within the prefecture. Funds es more efficiently and effectively, JA Shinnoren and JF after that are deposited with us. Shingyoren are responsible at the prefectural level, and The As the manager of such deposited funds, we make loans to Norinchukin Bank, cooperating with other entities and lever- and investments in agriculture, fishery and forestry industry aging economies of scale, is responsible at the national level groups, agricultural corporations, agriculture, fishery and in the Retail Business. forestry industry-related companies and other corporations in Among the JA cooperative organizations, The Norinchukin general in addition to investing in to global financial market Bank, together with JA and JA Shinnoren, forms a financial with a diversified portfolio, returning profit acquired through group called “JA Bank.” such investments to JA Shinnoren and JA. The savings are first used by JA itself to meet local funding Also, in the fishery field, JF, JF Shingyoren and The Norin- needs, mainly to provide loans for local farmers, agricultural chukin Bank are collectively known as “JF Marine Bank,” corporations and users. Funds after such fund management developing businesses efficiently in a similar way to JA Bank.

26 VALUE REPORT 2020 27 VoiceTo Support Customers Facing Changes Directly, We Continue to Change Ourselves, Too.

The goals of our Retail Business are for JA Bank and JF Marine Bank nation- wide to continue to be financial institutions trusted and chosen by residents in local communities, offer new value to local residents’ lives and grow together with the members and users. To realize these goals, in fiscal 2019, JA Bank of- fered the life-plan support; JF Marine Bank reinforced financing for the fishery business and accelerated an initiative to strengthen and reorganize its business base through inter-regional integration of JF Shingyoren. From the end of fiscal 2019 through fiscal 2020, COVID-19 has caused sig- nificant unanticipated changes such as volatile financial markets and increased difficulty in sales activities. Therefore, JA Bank has strengthened its ongoing measures to be able to continue to offer appropriate services and products to each customer. We have strengthened the contact point with members and users by reestablishing face-to-face transaction channels and strengthening and expanding non-face-to-face transaction channels; improved our functions and capabilities to address broader needs by offering asset building and man- agement methods such as investment trusts other than deposits, even ad- dressing inheritance and business succession plans; and continued to provide Shozo Goto further support for producers, business operators and local communities facing Head of Retail Banking Business direct COVID-19 risks. To address a broad range of issues, we are striving to accelerate changes in our measures and initiatives.

*Prefectural Banking Federations of Fishery Cooperatives

JA Bank by numbers Introducing the performance and initiatives of JA Bank (JA, JA Shinnoren, The Norinchukin Bank)

Number of members in JA Bank Number of JA cooperative members JA The JA Shinnoren Norinchukin Bank 585 32 1 1,049million 618 groups operate business in an integrated manner (April 1, 2020) (Source) Comprehensive Agricultural Cooperatives Statistical Tables (2018), (Source) The Norinchukin Bank research Ministry of Agriculture, Forestry and Fisheries

Total number of branches nationwide JA Bank’s share of deposits from individuals

No.2in Japan No. 3in Japan (7,670 branches nationwide, Others 14.2% domestic share) 3.7% JAPAN POST BANK (Source) The Financial Journal Special Edition 2020 20.5% Other Japanese banks JA Bank savings balance The number of mobile 33.6% Shinkin Banks branches introduced 12.6% Mizuho Financial Group trillion 5.0% JA Bank 104.1 yen 92 (March 31, 2020) (March 31, 2020) Sumitomo Mitsui Mitsubishi UFJ Financial Group Financial Group 10.3% 5.4% 8.8% (September 30, 2019) (Source) Prepared by The Norinchukin Bank based on Bank of Japan materials and results briefing materials of each financial institution

26 VALUE REPORT 2020 27 Retail Business

Offering new value to daily lives of local communities

Meet all types of needs from asset management to inheritance/business succession

Deposit, prepare, grow and leave money Borrow money

Services offered through comprehensive business Agriculture-related Fishery-related funds Deposit Save funds Ordinary deposits Mutual aid Time deposits Insurance Local money Mortgage loans Loans for house circulation renovations Estate Auto loans Educational loans planning Grow Will trust Mutual funds Mutual aid for By further demonstrating our financial intermediation calendar year Loans for all function, we will promote the agriculture Credit card loans purpose bestowal and fishery industries and revitalize the local communities

Needs of members and users

Establish an optimal structure to address the needs of members and users

Non-face-to-face transaction channels (digital transactions) Face-to-face transaction channels (in-person transactions)

Branch Yorisoi Plaza PCs, smartphones ATM providing Community (outlets with Mobile branch Fureai auto- comprehensive branch office ATMs and mated branch services assistants) Maintain and strengthen the contact point with users

Strengthen ATMs owned by proposal Internet banking App banking Own ATMs partner financial capability institutions

Conducting a life-plan support business to realize the life plan desired by individual members and customers and fulfill their needs

JA Bank conducts “life-event sales,” which offers financial next generation. products and services timely and appropriately to accommo- To address the needs of these members and users, we are date individual members and customers’ life events such as strengthening and expanding the non-face-to-face transaction starting work, getting married, buying a house and retiring channel by enhancing the functions of JA online banking and from work, and furthermore offers “life-plan consulting” to JA Bank App, etc. propose stable asset building and management. In addition, we are reestablishing a face-to-face transaction These services are collectively called the “life-plan support channel including “branch offices providing comprehensive business.” By making proposals tailored to the life plans and services” equipped with public relations personnel and needs of individual members and customers, we strive to help specialists and “Yorisoi Plaza” to strengthen the contact point them achieve their desired life plan and fulfill their needs. with users while enhancing efficiency. Specifically, in addition to various financial services such as JF Marine Bank also is engaged in a life-plan support savings, settlements and housing loans, JA Bank provides business targeting fishery workers, utilizing its knowledge as mutual fund and will trust services. Combining the services a fishery-dedicated financial institution. Specifically, JF Marine of other businesses operated by JA, we provide services that Bank provides support such as consulting services for inheri- are possible only by businesses providing comprehensive tance, life support loans according to life events and business services for all customers from the silver generation to the succession.

28 VALUE REPORT 2020 29 JA Bank’s agriculture-related loans

Breakdown of JA Bank’s agriculture-related loans Breakdown Loans to agriculture trillion trillion trillion 64.8 billion yen Agriculture-related yen yen yen loans 1.2 0.8 0.5 Loans to agriculture-related JA The groups 408.0 billion yen JA Shinnoren Norinchukin Bank Total trillion Japan Finance Corporation 2.5 yen Loans Loans Loans entrusted funds (agriculture) 85.3 billion yen The Norinchukin Bank’s lending to agriculture amounts to 64.8 bil- lion yen under the Bank of Japan’s narrow industry classification. Small-scale farmers and This is 0.33% of its total lending of approximately 20 trillion yen. agricultural corporations Apart from this, total agriculture-related loans amount to 558.0 Large-scale farmers and billion yen combining lending to agriculture-related groups such agricultural corporations as JA Zen-Noh and funds entrusted with Japan Finance Corpora- tion (Excludes the source fund for financing facilities extended to JA Bank, such as the Bank of Japan’s loan support program and other policy-based loans). Trends in the amount of new agricultural loans executed and the number of agricultural corporations as business partners Balance of agriculture-related loans

(Number of (Billion yen) corporations) (Billion yen) 500 8,643 10,000 3,000 7,736 7,246 2,500 400 6,509 8,000 5,875 2,000 2,590.8 2,435.4 2,342.1 2,366.1 2,496.2 2,562.4

300 6,000 2,585.0 331.1 375.3 410.8 267.9 412.2 1,500 200 4,000 1,000

100 2,000 500 Started “Self-Reform of JA Bank” initiatives 0 0 0 FY2015 FY2016 FY2017 FY2018 FY2019 2014.3 2015.3 2016.3 2017.3 2018.3 2019.3 2020.3

Investments in agricultural corporations through the Agribusiness Investment & Consultation Co., Ltd.

Cumulative Number of Investments Cumulative Amount of Investments

(Number) (Billion yen) 580 9.8 600 548 10 8.9 499 500 7.7 8 6.7 400 377 351 6 5.5 300 275 4.5 4 200 100 2 0 0 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019

Strengthening the provision of loans and investments in the “Agriculture” field JA Bank continues to be the main bank for the agriculture industry

JA, JA Shinnoren and The Norinchukin Bank are playing each we strengthened this approach. role as JA Bank in the area of agricultural loans. JA meets Furthermore, JA Bank not only provides loans but also the funding needs of small-scale family farmers and agricul- makes investments. For example, it actively invests in agricul- tural corporations in each region, whereas JA Shinnoren and tural firms that have technological capability but do not have The Norinchukin Bank play a central role in meeting funding sufficient capital to stabilize their financial position, supplying needs for farmers and agricultural corporations running large- risk money according to the growth stage of such firms. scale operations. Through this initiative, the number of investment projects and As a result, JA Bank’s agriculture-related loans total \2.5 tril- the amount of investments executed via the Agribusiness lion (including loans facilitated by JA Bank on commission for Investment & Consultation Co., Ltd., which was established Japan Finance Corporation) with ¥1.2 trillion at JA, ¥0.8 trillion by the JA Group jointly with Japan Finance Corporation, are at JA Shinnoren and ¥0.5 trillion at The Norinchukin Bank. on a steady rise. Although a slight decline occurred in the balance of agri- Moreover, JA Bank and JF Marine Bank, as the main bank culture-related loans of JA Bank for a few years, the balance operating in agricultural and fishery local communities, re- shifted to an increase on a year-on-year basis as of March 31, spectively, started handling low-interest loans nationwide for 2017, thanks to strengthened efforts at approaching agricul- customers affected by the spread of COVID-19 and consult- tural corporations. The amount of newly made agricultural ing on various relief methods including revision of repayment loans also has continued to increase since fiscal 2016, when terms for existing loans. 28 VALUE REPORT 2020 29 Investment Business

Investment Business

Pursuing stable profit as the ultimate manager of funds for JA Bank and JF Marine Bank

Carry out globally diversified investments by building a global network

Bonds Stocks

Credit and others

Ample and stable funds Advanced Substantial capital of JA Bank and JF Marine Bank risk management

Ensuring stable profit over the medium to long term through globally diversified investments based on advanced risk management

We play a role as the ultimate manager of funds entrusted Sydney. We control the risks of our overall portfolio by with JA Bank and JF Marine Bank. To fulfill this role, the conducting due diligence with ample information and diversi- Investment Business engages in efficient management fying our investments in assets with different risk-return taking advantage of economies of scale while continuing to characteristics rather than concentrating investments in ensure stable profit over the medium to long term and return limited asset classes. it to our members as the ultimate objective. In particular, we utilize hedging for the risk of exchange Aiming to achieve this objective, given the era of low-inter- rates, which fluctuate considerably, as much as possible for est rates that began some 20 years ago in Japan, the Invest- investment in foreign currency denominated assets. ment Business has worked on “globally diversified invest- To pursue the utmost stability of profits for the medium ments” at an early stage in the global financial markets. We and long-term, we constantly review our investment methods have built a global network using overseas sites including and risk management and will continue taking on the chal- New York, , Singapore, Hong Kong, Beijing and lenge of upgrading our globally diversified investments.

30 VALUE REPORT 2020 31 Voice Continuous Evolution and Deepening of Globally Diversified Investments Pursuit of Profitability in an Environment Where Rapid Changes Could Occur

Our Investment Business has two major themes, one of which is how to diver- sify investments to stabilize overall profitability. Injecting substantial resources into overseas investments and expanding investments from traditional asset categories to new asset types, we have evolved our globally diversified in- vestments in our own way. Regarding project finance, we newly established overseas subsidiaries, striving to ensure many investment opportunities. In the previous fiscal year, we strengthened our initiatives in real estate and private equity. In addition to purchasing existing financial products, we are focusing on accessing the source of profitability itself directly. Likewise, by diversifying our investment assets and deepening risk management, we will strive to fully address the market volatility caused by COVID-19. The second theme is investments from the perspective of ESGs and SDGs. In addition to adopting the Equator Principles and endorsing the TCFD*, we aim to contribute to ensuring sustainability through financing— by investing in Sustainable Development Bonds, for example. *Task Force on Climate-related Financial Disclosures, which was established by the Financial Stability Board (FSB). Keito Shimbu Head of Global Investments

Progress in globally diversified investments (%) 10 Interest rate on Japanese government bond (10-year maturity)

8 Fundamental review after • Deploy an executive Full-scale adoption officer overseas the Global Financial Crisis of asset allocation • Established a local [Expansion of asset classes, such as project subsidiary in Australia 6 [Establishment of a structure to optimize finance, and sophistication of investment • Established the bank the entire portfolio] methods and risk management] subsidiary in Europe

4 Introduction of the concept of globally 1998 2 diversified investments 2001 2008 [Expansion of asset classes]

0 -1 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

We introduced the “globally diversified investments” in fiscal Afterward, we engaged in the expansion of asset class and 1998. To address the impact of low interest rates and intensi- the sophistication of investment methods and risk manage- fied competition in investments and loans in Japan, we aimed ment as well as structural improvement. We entered project to expand asset classes to enhance our asset management finance business (see page 45) and other investments. capability.1989 1991 1993 1995 1997 1999 2001 2003 2005 From2007 fiscal2009 2017,2011 we have2013 been2015 strengthening2017 2019our opera- In fiscal 2001, we introduced the concept of asset alloca- tional structure by sending our Board members to overseas tion on a full scale and established an asset management business bases as resident officers. We also have newly structure to optimize our entire portfolio. Since fiscal 2008, established a local subsidiary in Australia to conduct mainly the year when the finance crisis occurred, we made a funda- project finance businesses and a local subsidiary in the mental review of our asset class selection method and strove Netherlands to operate the Bank’s banking business in to establish a sturdy portfolio with low volatility (changes in Europe (see p. 33). prices).

30 VALUE REPORT 2020 31 Investment Business

Today’s globally diversified investments by Norinchukin

It has been approximately 20 years since the introduction vestments—each with different investment targets, of the concept of globally diversified investments and which are described below. more than 10 years since the collapse of Lehman Broth- In line with the expansion of asset class, the explora- ers. During that time, our globally diversified investments tion for investment opportunities is also expanding. Our have continued to evolve and deepen, which is reflected directors and staff in charge of Global Investments have in our current portfolio. visited as many as 66 countries/regions worldwide for in- The portfolio consists of roughly four kinds of asset vestigation and the number of such locations is expected classes—bonds, stocks, credit assets and alternative in- to increase going forward.

n Bonds Investment in high-rating bonds such as Establishment of a portfolio based on the characteristics of assets the government bonds of Japan, the United Market investment portfolio by asset class Market investment portfolio by currency States and Europe, aiming at stable interest income Others 5% n Stocks Investment in listed stocks to acquire cap- ital gains Euro n Credit Assets Yen Credit 15% Investment in securitized products backed and others * Market 28% trillion by U.S. or European corporate bonds or 21.6 yen investment Bonds portfolio trillion 37.4 yen corporate or retail loans, and conduct proj- 62.2 trillion yen ect finance to turn credit risks into profits U.S. dollar n Alternative Investments 51% Investment in real estate, infrastructure, private equities and hedge funds, etc., Stocks trillion which are different from traditional assets, 3.2 yen aiming to expand the profit base by diversi- * “Credit and others” includes Credit Assets and Alternative Investments. (March 31, 2020) fying investment assets

Search for investment opportunities Countries and regions visited by Global Investments staff for investigation and/or negotiations for investment projects

Asia North Europe 16 America 22 countries/ 2 countries regions countries

n n n United Kingdom China United States of n n Germany Hong Kong America n n n France Taiwan Canada n n Netherlands South Korea n n Ireland India n Central and n Thailand Belgium South America n n Italy Indonesia n n Spain Philippines 9 n countries n Denmark Malaysia n n Vietnam Sweden n Brazil n n Myanmar Norway Middle n Mexico n n East Singapore Finland n Peru n n Bangladesh Monaco 9 n Chile n n countries Macau Czech n Argentina n n Kazakhstan Croatia n Colombia n n n United Arab Emirates Uzbekistan Poland n Panama n n Kuwait Hungary Africa n Dominican Republic n n Romania Saudi Arabia n Oceania Uruguay 6 n n Ukraine countries Turkey n Russia n Qatar 2 n n countries Portugal n South Africa Oman n n Luxembourg n Egypt Bahrain n n Australia n Morocco Israel n n New Zealand n Mozambique Jordan (This map is a simplified one.) n Botswana n Kenya

32 VALUE REPORT 2020 33 Approaching the Source of Profitability —The Norinchukin Bank’s Business in Europe In the Investment Business, we are working on an ap- Norinchukin Bank Europe N.V., in the Netherlands, where proach to chase the source of profitability. For example, continuing growth is expected as a source of profitability in fiscal 2017 the Bank established a local subsidiary in both in financial and non-financial businesses in Europe, Australia, a lucrative place with many projects in the field which is experiencing significant changes due to Brexit of project finance, which provides financing for specific and other issues. The local subsidiary in the Netherlands businesses/projects such as infrastructure improvement. will develop a wide range of businesses in tandem with In fiscal 2019, the Bank launched a local subsidiary, the existing London Branch of the Bank.

Major Operations of Norinchukin Bank Europe N.V.

1 To provide stable funding of foreign currencies for Euro-denominated investments

2 To offer financial and non-financial services to Japanese companies operating in Europe

3 To participate in Europe-centered project finance

COLUMN Birth of a Subsidiary of the Bank in the Netherlands to Address Changes in a Turbulent Europe Quickly

The Brexit issue, which had been looming since 2016, than 10 countries. This group of diverse professionals, reached a milestone at the end of January 2020 when while sharing the Norinchukin identity, could trigger a the United Kingdom departed from the European Union “chemical reaction” creating unprecedented initiatives (EU) formally, marking a new era for European econo- for the Bank.—Atsushi Yasutake (President and CEO) mies and businesses. At that time, the Bank established states the following: a subsidiary, Norinchukin Bank Europe N.V (NBE), in “While working to establish NBE, I keenly viewed di- Amsterdam, the Netherlands. NBE was approved by the versity as a source of creativity. Given the COVID-19 risk, European Central Bank (ECB) in August 2019, becom- Europe is experiencing tremendous changes at a daz- ing the only overseas banking business subsidiary of the zling speed. Despite such turbulence, our greatly diverse Bank. team can cope with such a situation.” The existing London Branch is the Bank’s outlet oper- The speed and scale of changes in Europe is exempli- ating mainly the financial business in international finan- fied by the ongoing acceleration of the shift to non-fossil cial market in London, whereas NBE is a “local bank” fuel by each country’s government and companies upon that develops the Bank’s Investment Business and Food receiving the EU’s decision to reduce CO2 emissions and Agriculture Business in Europe as a member of the down to actual zero within the EU member countries by Norinchukin Group. 2050. “Experience that we accumulate in tackling radical The Netherlands was chosen as the location of the changes in Europe using our diversity as a weapon will Bank’s subsidiary mainly because of Europort—Europe’s provide significant knowledge that will also change the largest port for commerce that is used by many Japa- entire Norinchukin Bank. NBE has such a role as well,” nese companies—being located in Rotterdam, with easy says President Yasutake. access to Germany and Belgium, where the European business bases of many Japanese companies are locat- ed. Moreover, the Netherlands is the central operational base of Coöperatieve Rabobank U.A., a business partner of the Bank and an international giant in agricultural fi- nancing. NBE’s major operations are 1) to provide stable funding of foreign currencies for Euro-denominated in- vestments; 2) to offer financial and non-financial services to Japanese companies operating in Europe; and 3) to participate in Europe-centered projects in project finance. Preparation is under way toward full-scale operation. To take on a broad range of business operations, NBE is equipped with specialists in various fields with differ- Staff at Norinchukin Bank Europe and President Yasutake (second row, fifth person from ent backgrounds. The staff totals less than 40 from more the right)

32 VALUE REPORT 2020 33 34 VALUE REPORT 2020 35 Corporate Data

Consolidated financial results highlights

Fiscal 2017 Fiscal 2018 Fiscal 2019

Ordinary Profits 171.0 billion yen 124.5 billion yen 122.9 billion yen

Profit Attributable to 147.6 billion yen 103.5 billion yen 92.0 billion yen Owners of Parent

Net Assets 6,746.0 billion yen 7,473.2 billion yen 7,261.6 billion yen Common Equity Tier 1 Capital Ratio 19.02% 16.59% 19.49% Tier 1 Capital Ratio 19.02% 19.65% 23.02%

Total Capital Ratio 23.50% 19.65% 23.02%

Name The Norinchukin Bank

A national financial institution of cooperative organizations whose members include agricultural, fishery Role and forestry cooperatives which contributes to the advancement of Japan’s agriculture, fishery and forestry industries

Date of establishment December 20, 1923

Representative President & Chief Executive Officer: Kazuto Oku Paid-in capital ¥4,040.1 billion (As of March 31, 2020) Total assets (On a consolidated basis) ¥105,482.0 billion (As of March 31, 2020) Japan Agricultural Cooperatives (JA), Japan Fishery Cooperatives (JF), Japan Forest Owners’ Cooperatives Members (JForest), and related federations, as 3,477 groups (Shareholders) well as other agricultural, fishery and forestry cooperative organizations that have invested in the Bank (As of March 31, 2020)

Number of employees 3,588 people (As of April 1, 2020)

(In Japan) Head office: 1 Number of business Branch: 19 25 sites (Overseas) Branch: 3 locations Representative office: 2 (As of April 1, 2020)

Departments and titles of persons appearing in this report are those as of the time of each interview, in principle.

The Norinchukin Bank VALUE REPORT 2020 Published in October 2020 by the Coordination Division

34 VALUE REPORT 2020 35

The Norinchukin Bank VALUE REPORT 2020 REPORT REPORT 2020 VALUE