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Annual Reportは、ごうぎんの決算や活動内容にて海外の皆様に知っていただくために作成しています

(k) Hedge Accounting(i) Hedge of interest rate riskThe Bank hedges the interest rate risk arising from the Bank’s financial assets and liabilities by individually matching interestrate swaps with fixed-interest rate loans. The Bank applies the deferral method of hedge accounting, under which gains or losseson derivatives are deferred until maturity of the hedged transactions, or the special treatment for interest rate swaps, underwhich the differential paid or received under the swap agreements are recognized and included in interest expenses or income.(ii) Hedge of foreign exchange riskIn accordance with the general provisions of the“Accounting and Auditing Treatment of Foreign Exchange Transactions forthe Banking Industry”(JICPA Industry Audit Committee Report No. 25), the Bank applies the deferral method to account forderivative instruments which hedge the foreign exchange risk on financial assets and liabilities denominated in foreigncurrency.The effectiveness of these transactions to hedge the foreign exchange risks of financial assets or liabilities denominatedin foreign currencies is assessed by comparing the foreign currency position of the hedged assets or liabilities with that of thehedging instruments.In addition, in order to hedge foreign exchange risks of foreign-currency denominated securities, except for debt securities,the Bank applies fair value hedges as comprehensive hedges on such conditions that the hedged securities are specified inadvance and these securities are not more than the hedging spot and forward liabilities denominated in foreign currencies.(l) Consumption TaxesTransactions subject to consumption taxes including the local consumption tax are recorded at amount exclusive ofconsumption taxes.(m) Cash and Cash EquivalentsFor the purpose of the consolidated statements of cash flows, cash and cash equivalents are defined as cash and due fromthe Bank of Japan.3. Accounting ChangeAccounting Standard for Retirement BenefitsFrom the beginning of this fiscal year, the Group has adopted ASBJ Statement No. 26“Accounting Standard for RetirementBenefits”issued on May 17, 2012 and ASBJ Guidance No. 25“Guidance on Accounting Standard for Retirement Benefits”issued on March 26, 2015 for the main clause of Article 35 of the accounting standard and the main clause of Article 67 of theguidance.Accordingly, the Group reviewed the calculation method of projected retirement benefit obligations and service cost, andchanged the method of attributing projected retirement benefit obligations to periods from the straight-line basis to the benefitformula basis. The Group also changed method to determine the discount rate, from the use of a single weighted averageyield corresponding a period over the average remaining years of service of the eligible employees, to the use of multiplediscount rate (yield curve) set for each estimated term of benefit payment.In accordance with transitional treatment as stipulated in Article 37 of the accounting standard, the impact from the changein calculation method of projected retirement benefit obligations and service cost was recognized as“retained earnings”at thebeginning of the this fiscal year.As a result, net defined benefit liability increased by \3,241 million ($26,970 thousand) and retained earnings decreasedby \2,095 million ($17,433 thousand) at the beginning of this fiscal year. Also, income before income taxes and minorityinterests increased by \171 million ($1,422 thousand) for this fiscal year.For the effects on per share information, please refer to note“27. Amounts per Share.”4. Loans and Bills DiscountedThe aggregate amount of loans and bills discounted as of March 31, 2014 and 2015 include the following risk managed loans.Thousands ofMillions of YenU.S. Dollars201420152015Loans to borrowers under bankruptcy proceedings (*1)\ 4,146\ 2,355$ 19,597Non-accrual past due loans (*2)59,83749,297410,227Loans past due for three months or more (*3)?78649Loans with altered lending conditions (*4)14,62314,762122,842Total\78,607\66,493$553,324(*1) Loans for which circumstances apply as stated in the Tax Law among non-accrual loans (excluding loan write-offs) forwhich payments of outstanding principal or interest have not been received for a substantial period or which have arisenfor other reasons.(*2) Loans for which payments of outstanding principal or interest have not been received for a substantial period, excludingloans to borrowers under bankruptcy proceedings and loans for which interest payments have been rescheduled withthe objective of assisting these borrowers in business restructuring.(*3) Loans for which payments of principal or interest have not been received for a period of three months or more from thenext day of the due date, and which are not included in loans to borrowers under bankruptcy proceedings or non-accrualpast due loans.19