Nanto Bank Profile
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Annual Report 2004 Year ended March 31, 2004 NANTO BANK PROFILE The Nanto Bank, Ltd. was established in 1934, with its head office in Nara City, Nara Prefecture, the ancient and first capital of Japan. Since its foundation, the Bank has built a solid business base as a regional bank offering services that benefit the regional community, and expanded its operations by pursuing sound management. With the main client base originating from Nara Prefecture, the Bank has 130 domestic offices, branches and sub-branches. Those extend its services into other prefectures such as Osaka, Kyoto, Wakayama, Mie, and the Tokyo Metropolitan Area. As of March 31, 2004, the Bank’s capital stood at ¥29.2 billion, with consolidated total assets amounting to ¥4,187.1 billion. CONTENTS 1 Financial Highlights 2 Message from the Management 4 Operating Review 12 Board of Directors and Corporate Auditors 13 Consolidated Financial Review Kyoto 15 Consolidated Balance Sheets 16 Consolidated Statements of Income Osaka 17 Consolidated Statements of Cash Flows 18 Notes to Consolidated Financial Statements 30 Independent Auditors’ Report 31 Capital Management Tokyo 32 Organization, Group Network Mie Prefecture 33 Affiliates and Subsidiaries, Bank Data Nara (Nara Prefecture) Wakayama Prefecture PROFILEFINANCIAL HIGHLIGHTS (CONSOLIDATED FIVE-YEAR SUMMARY) The Nanto Bank, Ltd. and Consolidated Subsidiaries. Years ended March 31 Thousands of Millions of Yen U.S. Dollars 2004 2003 2002 2001 2000 2004 For the year: Total income ........................................¥ 97,254 ¥ 112,769 ¥ 96,293 ¥ 110,930 ¥ 117,616 $ 920,181 Total expenses ......................................82,815 98,854 142,937 106,145 116,060 783,565 Income (loss) before income taxes ..........14,439 13,915 (46,644) 4,785 1,556 136,616 Net income (loss) ..................................4,652 5,906 (27,709) 2,235 1,090 44,015 At year-end: Total assets ............................................4,187,141 4,141,238 4,093,107 4,037,667 3,872,822 39,617,191 Loans and bills discounted ....................2,434,690 2,390,489 2,344,783 2,402,218 2,466,772 23,036,143 Securities ..............................................1,389,656 1,349,011 1,349,295 1,311,914 1,120,835 13,148,415 Deposits and negotiable certificates of deposit ..........................................3,770,888 3,770,886 3,667,841 3,627,709 3,516,847 35,678,758 Total liabilities ......................................3,996,081 3,968,507 3,925,710 3,839,754 3,691,391 37,809,452 Minority interest ....................................4,196 4,322 4,255 3,556 2,690 39,701 Total stockholders’ equity ......................186,863 168,407 163,141 194,356 178,741 1,768,029 Common stock ......................................29,249 29,249 27,586 26,962 26,925 276,743 Yen U.S. Dollars Per share data: Net income (loss) ..................................¥ 16.65 ¥ 21.67 ¥(102.76) ¥ 8.30 ¥ 4.05 $0.15 Stockholders’ equity ..............................669.12 602.89 597.99 721.11 663.67 6.33 Capital adequacy ratio (%) ....................9.51 9.41 9.04 10.16 9.53 9.51 Note: U.S.dollar amounts are included solely for the convenience of readers and are calculated at the exchange rate of ¥105.69 to US$1.00, the rate prevailing on March 31, 2004. Net Income Total Assets Total Stockholders’ Equity (Billions of yen) (Billions of yen) (Billions of yen) 1.0 2.2 -27.7 5.9 4.6 3,872 4,037 4,093 4,141 4,187 178.7 194.3 163.1 168.4 186.8 20002001 20022003 2004 2000 2001 2002 2003 2004 2000 2001 2002 2003 2004 THE NANTO BANK, LTD. ANNUAL REPORT 2004 1 MESSAGE FROM THE MANAGEMENT Left: Michitaka Sakamoto, Chairman Right: Hiromune Nishiguchi, President THE BUSINESS ENVIRONMENT AND THE BANK’S our relationship with the people of the region we serve. Management CURRENT POSITION and employees are working as one, redoubling our efforts to nurture Following a prolonged period of economic recession and price and and support local businesses in order to fulfill the Bank’s role of con- asset deflation, the Japanese economy is at long last showing signs of tributing to the activation of the regional economy. a turnaround and has entered a gradual but steady recovery phase. Translating this way of thinking into action, the Bank is putting in Nevertheless, despite the upturn in business confidence and corpo- place a comprehensive structure for providing support that appropri- rate performance in some sectors of the economy, harsh conditions ately meets every business banking need. The Bank believes that persist in regional economies. smoothly and efficiently providing funds is an important mission for a At Nanto Bank, we believe that in this adverse operating environ- regional bank. Accordingly, we are actively supporting business recov- ment we must further solidify our operating structure in the core ery by putting in place a structure for more rapidly supplying the funds business territory of Nara Prefecture and construct a business frame- our customers need and enhancing the Bank’s financial soundness. work that will remain unshakable in any economic environment. In April 2003, we launched “The Bank of Choice” Medium-Term PROGRESS WITH THE MEDIUM-TERM Management Plan and have worked to build a more solid business MANAGEMENT PLAN framework and to maintain and deepen the trust of customers in the The theme of the Bank’s medium-term management plan is “The region we serve. Bank of Choice.” The theme expresses the Bank’s readiness in an In March 2003, the Financial Services Agency announced the adverse operating environment to build a rock-solid business struc- Action Program Concerning Enhancement of Relationship Banking ture and make further strides forward as a bank that enjoys unshak- Functions. Under this program, the two-year period until March able trust and an excellent reputation among the people in the region 2005 has been designated an “intensive improvement period” during it serves, its customers and shareholders. The key objectives are to be which local financial institutions are required to work to revitalize a bank whose financial position is highly transparent and that rapidly local businesses and activate regional economies while at the same responds to customer needs. To achieve these twin goals we will time solving the problem of non-performing loans. The Bank’s man- improve asset quality and engage in proactive information disclosure agement policy is to render service to promote regional development, while at the same time working to provide high-quality services and and in the conduct of business we have long placed importance on put in place a comprehensive business support structure. 2 THE NANTO BANK, LTD. ANNUAL REPORT 2004 The Bank has set forth improvement of profitability and finan- SOCIAL CONTRIBUTION ACTIVITIES IN THE REGION cial soundness and the enhancement of customer satisfaction as the As a bank that grows in tandem with and is supported by the local basic policies to be pursued to achieve these goals. We will steadily community, we not only strive to contribute to regional economic implement a focused strategy grounded in these policies and strive development through the provision of financial services, but also con- to become “the bank of choice” with a more powerful presence in sider it our social mission to assist in the creation of cheerful, highly the region we serve. Specifically, in fiscal 2004, we have set numeri- livable local communities. The Bank cooperates in public welfare activ- cal targets of net business profit of ¥21.0 billion or higher and a ities, promotes the Small Kindness movement and supports public capital adequacy ratio of 9.30% or higher. In fiscal 2004 (the year welfare and cultural activities such as scholarship and grant assistance. ending March 31, 2005), the final year of the medium-term man- The head office and all branches are active in the environmental pro- agement plan, management and employees will work in unison to tection movement, engaging in initiatives based on the ISO14001 achieve these targets. environmental management system to help preserve the abundant nat- ural wonders and priceless historical assets of the Nara area and partici- REBUILDING THE BUSINESS BASE pating in the Kansai Eco-Office Declaration Movement. Ever since its establishment, the Bank has made Nara Prefecture and neighboring areas its primary business base and has grown and COMMEMORATION OF THE SEVENTIETH ANNIVERSARY developed by serving this region. Over the years we have built a OF THE BANK’S FOUNDING solid business base in the territory: our share of deposits and loans In June 2004, the Bank celebrated the 70th anniversary of its found- within Nara Prefecture exceeds 50%, and nearly all local govern- ing. To commemorate the anniversary, thank the people of the com- ments in the prefecture have designated Nanto Bank as an author- munities we serve for the warm support over the years and position ized financial institution. fiscal 2004 as the year the Nanto Bank makes a new start toward a At the same time, since April 2002 the Bank has aggressively bright future hand in hand with the residents of the Nara region, the invested management resources into establishing corporate banking Bank established the Tourism Planning Office to activate tourism in divisions in Osaka and Kyoto—areas with close ties to Nara the Nara region. And, as a special tribute to the land, the Bank is Prefecture—and upgrading those divisions into branches. In June promoting tree-planting activities as the 70th anniversary memorial 2004 we established a new corporate banking division in Sakai project. Through these commemorative projects, the management City, Osaka and are working to establish relationships with busi- and employees desire to increase awareness of the Bank as a financial nesses in Sakai.