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About SCB Financial Infomation Preferred Shares

SCB is the central bank of the shinkin bank sector. Its funds are raised mostly through deposits mainly from shinkin banks and the issuance of debentures. SCB invests these funds in securities and lends them out as loans, and uses the resulting profits to support the activities of shinkin banks.

Business Overview

Earnings Performance

Reviewing the SCB’s operating results for fiscal 2012, operating income increased by ¥13 billion (equivalent to $145 million) or 3.6% to ¥383 billion (equivalent to $4,079 million). This result was mainly attributable to such factors as an increase in gain on sales of bonds. Meanwhile, operating expenses increased by ¥8 billion (equivalent to $86 million) or 2.4 % to ¥342 billion (equivalent to $3,642 million). This result was mainly attributable to such factors as a increase in expenses on derivatives other than for trading or hedging.
As a result, ordinary income increased by ¥5 billion (equivalent to $59 million) from the previous fiscal year to a profit of ¥41 billion (equivalent to $437 million). Net income increased by ¥3 billion (equivalent to $32 million) from the previous fiscal year to a net profit of ¥32 billion (equivalent to $340 million).

Funding

During fiscal 2012, the total amount of funding was ¥28,491 billion (equivalent to $302,778 million) at the end of the fiscal year, which was almost the same amount in fiscal year 2011.
Deposits received during the fiscal year was ¥22,010 billion (equivalent to $233,904 million). This result was mainly attributable to such factors as an increase in gain on callable deposits.
The SCB issued ¥579 billion (equivalent to $6,162 million) worth of debentures during the fiscal year. The outstanding amount of debentures decreased by ¥417 billion (equivalent to $4,436 million), or 10.5%, to ¥3,548 billion (equivalent to $37,708 million).

Asset Management

The amount of assets under management in fiscal 2012 increased by ¥335 billion (equivalent to $3,564 million) or 1.1% to ¥29,988 billion (equivalent to $318,684 million).
Owing to a decrease in government bonds, the outstanding amount of invested securities decreased by ¥943 billion (equivalent to $10,021 million), or 4.5%, during the fiscal year, to ¥19,681 billion (equivalent to $209,152 million) at the end of the fiscal year.
Owing to an increase by national or governmental agencies and organizations, loans and bills discounted increased by ¥85 billion (equivalent to $908 million) or 1.5% during the fiscal year to ¥5,460 billion (equivalent to $58,025 million) at the end of the fiscal year.
The outstanding amount of short-term money market assets increased by ¥1,182 billion (equivalent to $12,567 million), or 38.3%, during the fiscal year, to ¥4,267 billion (equivalent to $45,353 million). This increase primarily reflected increases in current deposit.

Securities

As of March 31, 2013, the outstanding amount of securities was ¥19,681 billion (equivalent to $209,152 million). Government bonds, corporate bonds and other domestic securities accounted for ¥15,094 billion (equivalent to $160,412 million) while foreign securities accounted for ¥4,586 billion (equivalent to $48,739 million). In foreign securities, the SCB mainly invests in safe assets which include government-secured financial institution bonds and government-agency bonds in major developed countries.
In order to advance its diversified investment portfolio, the SCB also invests in risk assets such as stocks & investment trust funds not subject to interest risk, and takes steps to optimize its portfolio in response to shifts in the financing and investment environment.

Loans and Bills Discounted

The SCB has conducted a variety of loan businesses. As of March 31, 2013, the outstanding amount of loans and bills discounted was ¥5,460billion (equivalent to $58,025 million).
Out of the total loans and bills discounted, agency loans to shinkin bank customers (small and medium-sized businesses) through shinkin banks accounted for ¥275 billion (equivalent to $2,932 million), while direct loans to parties such as national or governmental agencies and organizations, regional public corporations and charitable organizations accounted for ¥2,493 billion (equivalent to $26,495 million). Direct loans to business corporations accounted for ¥2,181 billion (equivalent to $23,184 million).

Credit Ratings (As of July 31,2013)

  Moody's S&P R&I JCR
Long-Term Credit Rating A1 A+ A+ AA

Symbols such as "A1" or "A+"or"AA" indicating credit rating are assigned by each rating agency.

Annual Reports/Documents

What Are Shinkin Banks?

Shinkin banks are cooperative financial institutions. Their membership is composed of local residents and small and medium-sized companies. Shinkin banks' distinctive characteristics are (1) they are close and convenient, (2) they offer fine-tuned and personalized services and (3) they have a strong relationship of mutual trust with their customers and communities.
Cooperative financial institutions are organizations that operate under the fundamental principle of mutual support.
Shinkin banks limit their lending, in principle, to members. However, their functions are almost the same as those of commercial banks, and they also deal with many people who are not members, accepting deposits, providing exchange services, accepting various payments including those for public utilities, and engaging in over-the-counter sales of public bonds, investment trusts, and insurance.
Shinkin banks not only provide deposit, lending and exchange services, but also offer a diverse range of services to customers and other members of the local community in such areas as support for management improvement and enterprise renewal, business succession support, business start-up support and local-area revitalization.

Note: U.S. dollar amounts are converted for convenience only, at ¥94.10 per dollar, the prevailing rate on March 31, 2013.

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