jfc activities · new growth business development special finance which is a system for providing...

JFC Activities

Response to the Great East Japan Earthquake… …………………………………………………………16Provision of Policy-based Financing…………………………………………………………………………17Working towards Improved Customer Service that Reflects Comprehensive Capabilities… ……22Other Initiatives…………………………………………………………………………………………………27Overview of Operations in FY2014 and Outline of Financial Statements… …………………………28Funding……………………………………………………………………………………………………………30

15●JFC2015

JFC

Act

iviti

es

842.1

2,760.8

82 220.9 189.943.7

167,224

14,608 12,873

53,406

Nationwide disaster-related Loans

FY2010[March11-March31]

FY2011 FY2012 FY2013 FY2014

Number of loansAmount

0

2,000

1,500

1,000

500

2,500

3,000(Billion yen)

0

120,000

90,000

60,000

30,000

150,000

180,000( Number of Loans )

189.8

262.6

35

151.3 146.1

27.8

20,741

12,421 11,697

13,650

Disaster-related loans to the three disaster-stricken prefectures

0

200

150

100

50

250

300(Billion yen)

0

15,000

10,000

5,000

20,000

25,000( Number of Loans )


FY2010[March11-March31]

FY2011 FY2012 FY2013 FY2014

433

223

155

484

108

198

76

401

230

520

300

159 133

603

293

Loans to start-ups in the three disaster-stricken prefectures (Number of companies)Fukushima

Miyagi

Iwate

0

800

600

400

200

1,000

1,200(Number of companies)

FY2010 FY2011 FY2012 FY2013 FY2014

16 JFC2015●Response to the Great East Japan Earthquake

Earthquake-related loans in FY2014 numbered 12,873 loans (88% of the number in the previous fiscal year) with a value of 189.9 billion yen (86% of the value in the previous fiscal year), bringing the cumulative total (March 11, 2011 to March 31, 2015) to 248,548 loans with a value of 4,022.1 billion yen. Earthquake-related loans in the three affected prefectures (Iwate, Miyagi, and Fukushima) in FY2014 numbered 11,697 loans (94% of the number in the previous fiscal year) with a value of 146.1 billion yen (97% of the value in the previous fiscal year), bringing the cumulative total (March 11, 2011 to March 31, 2015) to 58,787 loans with a value of 753.5 billion yen. Amid a significant decrease at the national scale, the provision of loans in the three affected prefectures remains at a high level. A significant action in the three affected prefectures was the provision of start-up loans to 1,029 companies (105% compared to the previous fiscal year) in FY2014, increased to 146% compared with pre-disaster FY2010.

JFC has implemented a Special Disaster Measure for those people currently residing in a designated disaster-stricken area who have received a Disaster Victim Certificate (or a Disaster Certificate, etc., for those who received an evacuation order, etc., due to the nuclear power plant accident).

JFC underwrites insurance related to the Great East Japan Ear thquake Recover y Emergenc y Guarantee Program (commenced May 23, 2011), as well as the Disaster-related Guarantee Program provided by CGCs throughout Japan when SMEs and micro businesses that suffered damage from the earthquake borrow funds from financial institutions needed to rebuild their business, etc.

Development Bank of Japan Inc. and The Shoko Chukin Bank, Ltd. as designated financial institutions have been implementing Crisis Response Operations since Cases related to the Great East Japan Earthquake were designated as crises.

Educational Loans

Credit Insurance

Operations to Facilitate Crisis Responses

Supporting Reconstruction Following the Great East Japan Earthquake

Response to the Great East Japan Earthquake

JFC Activities

2,121.7

5,128.8

4,311.9

3,581.33,341.5

2,834.52,454.2

158,383

276,894

219,807195,837

171,195152,043

250,772

Safety Net-related Loans

0

4,000

3,000

2,000

1,000

5,000

6,000

0

200,000

100,000

300,000


Collapse of Lehman Brothers

(September 2008)

Special consultation services for measures against the strong yen

(September 2010)

Special consultation services for the Great East Japan Earthquake

(March 2011)

(Billion yen) ( Number of Loans )

FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014

50,000

150,000

250,000

104.2 109.7 101.2

133.2

182.1221.418,478

16,465

19,469

22,800

26,010

18,125

Prior to or Within 1 year of Start-up

0

150

100

50

200

250(Billion yen)

0

20,000

15,000

10,000

5,000

25,000

30,000(Number of companies)

FY2009 FY2010 FY2011 FY2012 FY2013 FY2014

Number of companiesAmount

Start-up loans to women, youth and senior entrepreneurs (total number of companies)

FY2012 FY2013 FY2014

Women 3,724 4,630 5,070Seniors

(aged 55 and older) 1,659 2,283 3,088Youth

(aged 30 and younger) 1,718 1,817 1,823

Total 7,101 8,730 9,981

Number of Start-up Support Network Establishments (total)

FY2013 FY2014

32 locations 222 locations

17Provision of Policy-based Financing●JFC2015

Safety Net-related loans (Note 1) in FY2014 numbered 152,043 loans (89% of the number in the previous fiscal year) with a value of 2,454.2 billion yen (87% of the value in the previous fiscal year). Management Support-type Safety Net Loans, which JFC began handling in March 2013 as an expansion of existing programs (Note 2), numbered 16,180 loans in FY2014 with a value of 912.3 billion yen.

(1)SupportforStart-upsandnewbusiness (i)Start-ups

Loans for start-ups in FY2014 were provided to 26,010 companies (114% of the number in the previous fiscal year), totaling 221.4 billion yen (122% of the value in the previous fiscal year), marking the highest total for the number of companies and loans for the previous 10 years. Loans to women, youth and senior entrepreneurs increased to approximately 10,000 companies (114% of the number in the previous fiscal year).

(ii) Establishment of Start-up Support NetworkTo enable people wanting to start-up their own businesses to receive one-stop startup support information, JFC is constructing a nationwide start-up support network in 222 locations in cooperation with municipalities, Chambers of Commerce and Industry, Societies of Commerce and Industry, and universities within each region.

Notes: 1. The loans related to Safety Net Loans include Disaster Recovery Loans, Great East Japan Earthquake Recovery Special Loan, funds for changes in operating environments, funds for changes in financial environment, and funds for Safety Net Loans to agricultural, forestry, and fisheries businesses, etc.

2. Management Support-type Safety Net Loans are loans to support SMEs that have received guidance Management improvement support providers (certified support service providers) such as tax accountants or other accreditation support bodies that are accredited by the Small and Medium Enterprise Agency for the performance of support businesses requiring a high level of expertise.

Note: Women who also qualify as youth or seniors included in the Women category.

Exercising Safety Net Functions

Supporting Strategic Areas of Growth, etc.

Provision of Policy-based Financing

JFC

Act

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Performance Concerning Support for Revitalization

FY2012 FY2013 FY2014Compared to the previous

fiscal year

Corporate Revitalization Loan

Number of companies

1,011 companies

1,316 companies

1,329 companies 101%

Amount80.4

billion yen116.3

billion yen112.0

billion yen 96%

Capital Subordinated Loans (Revitalization-type)

Number of companies

405companies

654companies

535companies 82%

Amount27.0

billion yen56.1

billion yen41.2

billion yen 73%

DDS, DES(Note)

Number of companies

43companies

41companies

39companies 95%

Amount7.2

billion yen5.8

billion yen4.2

billion yen 72%

Note: DDS (Debt Debt Swap) is a financial technique for exchanging a part of an existing debt for a subordinated debt.

DES (Debt Equity Swap) is a financial method that seeks to improve companies' financial constitution by equitizing a portion of existing liabilities.

These results are calculated by adding up the number of companies and amounts agreed by JFC for the corresponding period.

28.3

35.7

47.8686 677

907

FY2012 FY2013 FY20140

40

30

20

10

50

60(Billion yen)

0

600

400

200

800

1,000(Companies)

Loans to Foster Growth of New Businesses Number of companiesAmount

State of Application of the New Growth Business Development Special Finance

FY2012 FY2013 FY2014 Compared to the previous fiscal year

Number of companies 16 companies

18 companies

18 companies 100%

Amount 0.52 billion yen

0.34 billion yen

0.27 billion yen 79%

18 JFC2015●Provision of Policy-based Financing

(iii) New businessLoans to Foster Growth of New Businesses in FY2014 were provided to 907 companies (134% of the number in the previous fiscal year), totaling 47.8 billion yen (134% of the value in the previous fiscal year), marking the highest total recorded. Capital Subordinated Loans (New business-type)(Note), which serve as “pump priming” for loans from private financial institutions, were provided to 369 companies (56% of the number in the previous fiscal year), totaling 22.7 billion yen (44% of the value in the previous fiscal year).

The Loans to Foster Growth of New Businesses includes a New Growth Business Development Special Finance which is a system for providing unsecured funds to venture companies seeking stock offerings through company-issued new stock acquisition rights acquired by JFC.

Cooperation with regional venture support institutionsWe are working on discovery and support for regional venture companies through information exchange events for venture support in local areas to help strengthen cooperation with regional venture support institutions (locally based venture capitalists, regional banks, brokerages, etc.).

(2)Supportforbusinessrevitalization,etc.The FY2014 Corporate Revitalization Loan, which continued to increase on FY2013 against a backdrop matured financial facilitation and high demand for business revitalization, came to: 1,329 companies (101% of the number in the previous fiscal year), 112.0 billion yen (96% of the value in the previous fiscal year).… In addition, in order to successfully facilitate business revitalization of SMEs, which sustain regional economies and employment, JFC has been implementing information exchange meetings on the topics business revitalization with private financial institutions and study meetings utilizing books, etc., published by JFC related to company revitalization. (In FY2014, meetings were held at a total of 185 organizations.)

Note: Capital Subordinated Loans is a program that supplies capital subordinated funds for the purpose of strengthening the financial constitution of SMEs, etc. Liabilities under the program are uncollateralized and unguaranteed, but are regarded as shareholder’s capital for purposes of financial inspections, and have properties including subordination to other liabilities in the event of legal bankruptcy proceedings, etc.

Information exchange event for venture support in Hokkaido

JFC Activities

Breakdown of business target countries and regions utilizing Loans for Overseas Investment

FY2012 FY2013 FY2014

Total Total Total

Number of companies Ratio Number of

companies Ratio Number of companies Ratio Compared to the

previous fiscal year

China 337 36% 248 27% 300 27% 121%ASEAN 351 38% 384 42% 384 34% 100%

Thailand 140 15% 122 13% 121 11% 99%Vietnam 82 9% 101 11% 86 8% 85%Indonesia 48 5% 53 6% 46 4% 87%The Philippines 24 3% 36 4% 37 3% 103%Other ASEAN countries 57 6% 72 8% 94 8% 131%

Others 238 26% 276 30% 432 39% 157%

Breakdown of Loans

FY2013 FY2014Compared to the previous

fiscal year

Number of social business loans(Note)

Number of loans 4,987 6,045 −


51.7 billion yen −

1. For NPOs

Number of loans 740 957 129％


7.3 billion yen 126％

2. For nursing care and welfare busi-nesses

Number of loans 4,759 5,379 113％


46.5 billion yen 107％

3. For companies addressing social issues

Number of loans − 383 −

Amount −3.4

billion yen −

Note: Prior to FY2013 total loans to social businesses included loans to (i) NPOs and (ii) Care and Welfare businesses (excluding duplicate loans to (i), (ii)). However, in FY2014 loans to (iii) businesses for the purpose of resolving social issues (excluding (i), (ii)) were added and therefore no comparison to the previous year is given.

0

200

400

600

800

1,000

1,200

0

10

20

30

40

50

60

926 908

1,116

Loans for Overseas Investment

FY2012 FY2013 FY2014

(Companies)(Billion yen)

36.9

27.723.9

Number of companiesAmount


(3)SupportforsocialbusinessJFC supports those who seek to resolve regional and social issues, such as supporting the care and welfare of the elderly and disabled, child rearing, urban development, environmental conservation, and regional revitalization social businesses(Note)

that create stable and who undertake the continuous employment. In FY2014, loans related to social businesses came to 6,045 loans, 51.7 billion yen.

(4)Supportforoverseasexpansion… (i) Loans for Overseas Investment

Loans in FY2014 were provided to 1,116 companies (123% of the number in the previous fiscal year), totaling 23.9 billion yen (86% of the value in the previous year), which remained high due to the expansion of the loans for micro/small businesses. Of the business target countries and regions, China and ASEAN countries accounted for approximately 60% of the total.

Note: A variety of diverse social issues are emerging within local communities, from environmental protection and nursing care and welfare for seniors and persons with disabilities, to support for child-rearing, urban development, tourism, and other issues. Social businesses seek to resolve such issues by using business methods in cooperation with citizens, NPOs, companies, and other diverse parties. (From the Ministry of Economy, Trade and Industry website)

JFC

Act

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List of Support on FY2014

Country or Region of Export

Number of support

loansMain items of export

Singapore 18

Fruits (pears, grapes), vegetables (cabbage, Chinese cab-bage, sweet potatoes, tomatoes), organic green tea, pro-cessed foods (pickled goods, noodles, steamed tofu, fried foods), confectioneries (black sugar candy)

Malaysia (*) 8

Fruits (grapes, oranges), vegetables (sweet potatoes, tomatoes), processed foods (orange juice, tomato juice, onion dressing, leaf garlic sauce), confectioneries (cakes), seafood (frozen squid)

Hong Kong 5 Fruits (La France), vegetables (lettuce), processed foods (noodles)

Taiwan 5 Rice, processed foods (peach juice, grape juice)

US 4 Tea, processed foods (vegetable powders, processed rice products), confectioneries (black sugar candy)

China (*) 4 Processed food (Burdock root tea, dried vegetables, drink-

ing vinegar, pickled goods, plum fruit)

Thailand (*) 1 Fruits (apples)

Total 45

(*) Indicates countries or regions of export for which export was first provided in 2014.

20 JFC2015●Provision of Policy-based Financing

(iv) Trial Export Support Unit Performance on agricultural and fishery companies

In partnership with trading companies, the Trial Export Suppor t Unit (Note) has provided suppor t to domestic agricultural and food companies wanting to expand into exportation of their products. This has resulted in support for 45 cases of trial exports in FY2014. Countries to which product was exported includes Singapore, the largest with 18 trials, Malaysia with 8 trials, Hong Kong with 5 trials, and Taiwan also with 5 trials. Actual type of product exported include rice, grapes, pears, oranges and other fruit, tomatoes, taro, Chinese cabbage and other vegetables, fruit juice, dressing and other processed foods, seafood, and others.

21.5

60.1

10.87.6

71.2

14.6

7.46.9

Breakdown of industry type for Loans for Overseas Investment

Micro business sector Small and medium enterprises (SMEs) sector

0

80

60

40

20

100（%） Others

Services

Wholesale/Retail

Manufacturing

35

11

76

Utilization of the Standby Letter of Credit Program

FY2012 FY2013 FY20140

60

40

20

80(Companies)

(ii) Features by type of industy Micro business sector

Automobile parts, "Cool Japan"-related industries (food, alcohol, lacquered goods, etc.), wholesalers/retailers such as video content production firms, and service industries represent 68% of the micro business sector.

Small and medium enterprises (SMEs) sectorManufacturing companies represent 71% of the SME sector. Many SMEs are expanding abroad by establishing overseas subsidiaries to secure its production bases. However, the percentage of manufacturing companies has recently declined, and overseas expansion of non-manufacturing companies has been increasing. (FY2011 manufacturing industry ratio: 81% FY2014 manufacturing industry ratio: 71%)

(iii) Utilization of the Standby Letter of Credit ProgramAs for FY 2014, other than the financial institutions in Thailand, Republic of Korea, the Philippines and Indonesia, letters of credit were also issued to financial institutions in Vietnam, Malaysia and Singapore, being utilized by 76 companies. The cumulative usage (until March 2015) of this program since its start in FY2012 has reached 122 companies and the number tends to increase yearly. In addition to the 7 partnering overseas financial institutions, we have concluded a business cooperation agreement with Banorte Bank of Mexico in FY2014 and Taiwan Cooperative Bank of Taiwan in May 2015. Affiliated overseas financial institutions are to be further expanded.Note: The Standby Letter of Credit Program supports SMEs and micro businesses’

overseas subsidiaries’ and branches’ smooth procurement of long-term local currency denominated funds from JFC’s affiliated overseas financial institutions by using JFC’s standby letter of credit as a guarantee.

Note: As a part of business support services, it was established by JFC AFFF unit in FY2013, to support our customers who want to expand into exportation of agricultural, forestry and fishery products for the first time, cooperating with experienced trade companies in the exportation of those products.

JFC Activities

List of investees

NamePledged investment amount or

investment amount(of which invested by JFC)

Hokuyo Agricultural Support Fund Investment Limited Partnership

500 million yen(249 million yen)

Sangin Agricultural Corporation Investment Limited Partnership


Iyo Evergreen Agricultural Support Fund Investment Limited Partnership


Ehime Agrifund Investment Limited Partnership 500 million yen(245 million yen)

FFG Agricultural Corporation Investment Limited Partnership

1 billion yen(499 million yen)

The Agribusiness Investment & Consultation, Ltd. 4.07 billion yen(2.03 billion yen)

151.3

109.7

188.2

6,4206,028

4,454

Total Super L Loans

FY2012 FY2013 FY20140

200

100

300(Billion yen) (Number of clients) Number of clients

Amount

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

3.62.9

2.7

11.7

Number of clients

Amount

Of which the number of clients are based on the Young Farmer Business Start-up Loan, etc.

Of which the amounts are based on the Young Farmer Business Start-up Loan, etc.

154

451

284

138

Loans to new farmers, new entrants to agriculture

0

20

10

30(Billion yen) (Number of clients)

0

100

200

300

400

500

FY2012 FY2013 FY2014

47.652.3

85.3

735

864

1,166

0

60

40

20

80

100(Billion yen) (Number of clients)

0

300

600

900

1,200

Loans to those engaged in Sixth Industrialization

Number of clients

Amount

FY2012 FY2013 FY2014


Note: Businesses providing management and technical guidance by acquisition/holding of stock from agricultural corporations based on the Act on Special Measures to Facilitate In Agricultural corporations.

(5) Support for newexpansionbyagricultural,forestry,andfisheriesbusinesses… (i) Supporting Leaders of Agriculture (new entry farmers,

large family run businesses, corporations)Within Agricultural Management Framework Reinforcement Loan (name: Super L Loan) in FY2014, came to: 6,028 clients (94% of the number in the previous fiscal year), 188.2 billion yen (124% of the value in the previous fiscal year).

Note: Interest-free loans to support authorized new farmers certified by municipalities under the Young Farmers Plan as young people engaging in new farming businesses.

In FY2014, loans to new agricultural business, including people changing their occupation to farming and new entry farmers, increased to: 451 clients (293% compared to the previous fiscal year), 11.7 billion yen (319% compared to the previous fiscal year). From FY2014, newly started loans to Agricultural Employment Fund for Youth, Etc.,(Note) came to: 284 clients, 2.7 billion yen.

(ii) Supporting Sixth Industrialization activitiesFY2014 loans to activities due to improved management by sixth industrialization (e.g., processing, sales, and other business undertaken integrally by agricultural, forestry, and fishery businesses to increase the added value of products) increased to: 1,166 clients (135% compared to the previous fiscal year), 85.3 billion yen (163% compared to the previous fiscal year).

(iii) Providing Investment Support to agricultural corporations by private financial institutions, etc.… …At the end of FY2014, investments came to 5 Limited Partnerships (LPS) (pledged investment amount by JFC: 1.38 billion yen), established by private financial institutions based on agricultural corporation investment development businesses(Note) and 1 limited company (investment amount by JFC: 2.03 billion yen).

JFC

Act

iviti

es

117

46

241

7872

44

18134

90

136

37

263

0

200

100

300

The number of project participation by cooperative partnershipsOthers (public agencies, etc.)

Municipal

Prefectural

FY2012 FY2013 FY2014

(projects)

New businesses, new specializations, start-ups and venture support − 33%

SME policies, such as management innovation and company location − 14%

Regional resource and tourism support − 11%

Urban development, commercial revitalization − 7%

Manufacturing,technical support − 4%

Growth strategies (participation in agriculture, sixth industrialization, overseas) − 12%

Others(**Prefecture Growth Strategy, Safety Net Loans, etc.) − 19%

Total263

Breakdown of participation projects by policy (Note)

Note: Classification by JFC

●Formulation of a “Comprehensive Capability Promotion Plan” for each branch, based on local conditions and requirements

● Provision of even higher quality �nancial services, from the perspectives of both funding and information

● Complete utilization of the various managerial r e s o u r c e s ( n e t w o r k o f 1 5 2 b r a n c h e s nationwide, network of customers, expertise, etc.) controlled by the three business units

152 Branches throughout Japan

Japa

n Fi

nanc

e Co

rpor

atio

n Br

anch

es

Micro Business and Individual Unit

Micro Business and Individual Unit

Agriculture, Forestry, Fisheries and Food

Business Unit

Small and Medium Enterprise Unit Demonstrating

Comprehensive Capabilities

Contribution to local and regional revitalization by active participation in regional projects

Strengthening of �nancial services by multi-business uni�cation.Provision of useful information consistent to customer and local needs

● Participation in regional projects implemented by regional public organizations with the aim of revitalizing local industry and utilization of regional produce, etc.

● Comprehensive funding support utilizing our the 3-business loan system, providing guidance to meet local needs and holding of system explanation meetings

● Promotion of cooperation with private �nancial institutions to establish cooperative loans, composition and partnership opportunities when participating in regional projects

In particular, active participation in formulating local comprehensive strategies and contribution to promoting and implementing such measures

● Contribution to promoting and implementing measures by active cooperation and participation to requests from local government concerning the formulation of local comprehensive strategies created by prefectural and municipal governments under the national People-Town-Work Creation Comprehensive Strategy

● Present information (by creating Publications and Branch newsletters) to Connect with those working in Policy and businesses● Responding to multi-business joint loans tailored to customer requirements● Matching customers through business partnerships● Holding of consultancy meetings and seminars attended by customers from multiple businesses● Hosting of High School Student Business Plan Grand Prix by three business uni�cation

22 JFC2015●Working towards Improved Customer Service that Reflects Comprehensive Capabilities

Improving Customer Service that Exercises our Comprehensive Capabilities

Participation in Local projects

In order to offer beneficial information, etc. matched to the needs of customers and regions, JFC’s business units are coordinating to mutually leverage their expertise and information and enhance our services.

● JFC is attentively responding to regional challenges by formulating Plans for Promoting the Demonstration of Collective Strength at 152 branches nationwide.

● In FY2014 JFC participated(Note) in a total of 263 regional projects nationwide. Cooperative partnerships include: 90 prefectural partners, 136 municipal partners; partnership projects include: new businesses, new specializations, start-ups and venture support, which at 33% was the highest to date.

Note: The branches within the disaster-stricken regions actively participated in activities oriented towards disaster recovery.

Working towards Improved Customer Service that Reflects Comprehensive Capabilities

JFC Activities

23Working towards Improved Customer Service that Reflects Comprehensive Capabilities●JFC2015

List of main participation projects in FY2014

Prefecture Partner Project name

Hokkaido Obihiro City Food Valley Tokachi

Hokkaido Hakodate City • Hakodate Regional Industry Promotion Organization Hakodate Start-up Business Support Project

Aomori Aomori Pref. Indulgence in Food Project

Iwate Iwate Pref. Stricken SME facility and equipment maintenance support project

Miyagi Kurokawa District Interest Subsidies Introduction Project in the Towns and Villages within the Kurokawa District of Miyagi

Akita Akita Pref. Akita City Start-up Business Support Project

Yamagata Yamagata Pref. Agriculture, Forestry, and Fisheries Business Operators Originality and Ingenuity Business Support Project

Fukushima Fukushima Pref. Agriculture, Forestry, and Fisheries Business Operators Revitalization Project

Ibaraki Ibaraki Pref. Support for overseas expansion project

Tochigi Tochigi Pref. Power-up Tochigi Project (General Policy)

Gunma Gunma Pref. Habatake Gunma Economic Strategy Project

Saitama Saitama Pref. FY2013 Snow Disaster Relief Project

Saitama Saitama Pref. Vibrant Services Industry Operators Support Project

Chiba Tateyama City Porttown Development Project

Tokyo Tokyo Toyosu New Market Relocation Support Project

Kanagawa Yokohama City Start-up and Venture Company Support Enhancement Project

Niigata Niigata Pref. R10 Project (Rice Powder Promotion Project)

Toyama Toyama Pref. • Toyama New Industries Organization Agriculture-Commerce-Industry Collaboration Fund Project

Ishikawa Ishikawa Pref. • Ishikawa Sunrise Industries Creation Organization Ishikawa Industrial Resource Utilization Promotion Fund Project

Fukui Fukui Pref. • Fukui Industrial Support Center Fukui New Economic Strategy

Yamanashi Yamanashi Pref. SME Innovation Support Program

Nagano Nagano Pref. Shinshu Wine Valley Initiative

Gifu Gifu Pref. Subsidiary Business Utilization Project

Shizuoka Shizuoka Pref. Shizuoka Comprehensive Special Zone Plan

Aichi Aichi Pref. Eat more Aichi products movement

Mie Mie Pref. • Mie Industry and Enterprise Support Center Mie Agriculture-Commerce-Industry Partnership Subsidy Fund Project, etc.

Shiga Otsu City, etc. Start-up Support in Partnership with Otsu and Ryukoku University

Kyoto Kyoto Pref. • Kyoto Industrial Support Organization 21 Kyoto Business Continuity and Start-up Support Network

Osaka Toyonaka City, Suita City, Settsu City Start-up Support Network

Hyogo Yabu City Hilly and Mountain Areas Agricultural Reform Special Zone Project

Nara Nara Pref. Various maintenance projects for life enhancement

Wakayama Wakayama Pref. Wakayama Industry Promotion Foundation Hosting regional meetings in Wakayama

Tottori Tottori Pref. Tottori is on its way! Sixth Industrialization Comprehensive Support Project

Shimane Shimane Pref. Shimane Manufacturing Industry Revitalization Project

Okayama Okayama Pref. Land of Clear-sky Okayama Live Lively Plan

Hiroshima Hiroshima Pref. Future Creation Plan for Depopulated Areas Follow-up Project

Yamaguchi Yamaguchi Pref. V-Project 2014

Tokushima Tokushima Pref. Innovation Creation Support Project

Kagawa Kagawa Industry Support Foundation Food and Commerce Meeting Hosting Project

Ehime Ehime Pref. • Ehime Industry Promotion Foundation Ehime Community-based Business Creation Fund Projects, etc.

Kochi Kochi Pref. Kochi strategy for Overcoming Population Decline and Vitalizing Local Economy

Fukuoka Fukuoka City Start-up Support Project in Fukuoka's Employment Zones

Saga Saga Prefectural Regional Industry Support Center Saga Venture Exchange Network Project

Nagasaki Nagasaki Pref. Local Company Support Fund Project

Kumamoto Kumamoto Pref., etc. South Kumamoto Food Valley Initiative

Oita Oita Pref. Enhanced Business Competitiveness, Energy Policy Development, and Evolution of Industrial Clusters Projects

Miyazaki Miyazaki Pref. Development of Strong Industries to Lead Local Industries Project

Kagoshima Kagoshima Pref. New Farmers and Employment Comprehensive Support Project

(as of March 31, 2015)

JFC

Act

iviti

es

75 318180 458

1,107

1,092

9661,468

1,562

1,439

1,470

1,374

1,536

498

1,565

2,058

3,030 2,909 2,910

FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY20140

2,500

2,000

1,500

1,000

500

3,000

3,500(Pairs)

FY2014 second half

FY2014 first half

Business matching partnership numbers


Strengthen Financial Services by Multi Business Untits Unification and Provision of Useful Information Consistent to Customer and Local Needs

● Improve customer service by utilizing the variety of loans available from multi business units (integrated loans) to better meet customer needs.

● Improve customer service by coordination between JFC business units to mutually leverage their expertise and information as well as conducting business discussion meetings and seminars to facilitate appropriate product matching for customers engaged in market and product development.

● The FY2014 number of customer matching partnerships formed by cross business unit collaboration came to: 2,910 partnerships (100% compared to the previous fiscal year).

● The number of business meetings, such as Agri-Food EXPO and National Business Discussion Meeting, etc. held in FY2014 in all regions nationwide came to: 367 meetings 92% of the number in the previous fiscal year).

● Through its Internet business matching site, JFC provides a forum offering expanded business opportunities to customers, including the securing of new buyers and new suppliers of raw materials.

The 9th Agri-Food EXPO Tokyo 2014

The 8th Agri-Food EXPO Osaka 2015Farmers New Product Booth

Agri-Food EXPO

The AFFF Unit again hosted the Agri-Food EXPO, Japan's agricultural product exhibit and business fair, in Tokyo (August 2014) and in Osaka (February 2015). Held since FY2006, the Agri-Food EXPO is the nation's largest exhibition and business fair for providing business matching opportunities that link farmers and food processors, which are looking for market expansion, together with buyers. Highlights of the event in Tokyo, 2014 include the "Farmers New Product Booth" a new feature developed to allow buyers to taste-test newly developed processed foods from farmers and then provide feedback to these farmers. 25 farming organizations participated in the event together with 372 buyers who performed the taste-testing and provided feedback to farmers.

The 7th Nationwide Business Discussion Meeting

JFC Activities

25Working towards Improved Customer Service that Reflects Comprehensive Capabilities●JFC2015

JFC hosted the 2nd Infinite ∞ Creativity High School Student Business Plan Grand Prix for all high school students across the country.… The numbers of entrants in the event came to: 207 schools, 1,717 entrants (compared to 151 schools, 1,546 entrants in the 1st Grand Prix). By cooperation of three businesses and implementing well-known activities in schools, such as supporting business plan creation by conducting traveling business classes at 148 high schools (82 high schools in the first program) centering on nationwide start-up support centers throughout the country.… At the final screening meeting held in January 2015, ten finalist pairs engaged in heated presentations. The "Butterfly Effect - How your one yen coin can save the world" entry from Gojo High School in Aichi Prefecture won the Grand Prix and garnered significant attention from the media. From here onwards also, JFC will be helping to foster human resources who have the spirit to start-up business to support Japan's future by sowing the seeds of new business creation for the younger generation of high school students, etc.

<Schedule for the 3rd High School Student Business Plan Grand Prix>July 1 to October 16, 2015Contest application period: Early December, 2015Announcement of finalists (final committee participants): January 10, 2016Final judging and second award ceremonyHosting of the High School Student Business Plan Grand Prix

Please visit the JFC website for more information. http://www.jfc.go.jp/n/grandprix/index.html

Hosting of the 2nd High School Student Business Plan Grand Prix

Final judging presentation

Aichi Prefectural Gojo High School - Grand Prix winners

Final judges and award presenters

JFC

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Cooperative loans by institution (April, 2014 to March, 2015)

City banks Regional banks

Regional banks II

Shinkin banks

Credit coopera-

tivesOthers Total

Number of loans 885 3,385 1,488 3,972 502 482 10,714


227.8 billion yen

56.3 billion yen

90.6 billion yen

10.5 billion yen

51.2 billion yen

535.4billion yen

Case examples of newly created commodities

Construction date

Name of financial institutions Commodity name Business

sector

April 2014 Kuwana Shinkin Bank Bridge Multiple

sectors

May 2014 The Kyoto Shinkin Bank Established from JFC Start-ups

July 2014 Uwajima Shinkin Bank Uwashin/JFC Support Loan Multiple

sectors

August 2014 Hirakata Shinkin Bank

Hirashin/JFC Start-ups Support Collaborative Loan Start-ups

October 2014 The Tokyo Tomin Bank Lady Go!

SMEs (Career Opportunities for Women)

October 2014 Yamato Shinkin Bank

Yamashin/JFC Start-ups Support Loan Start-ups

November 2014 Nara Shinkin Bank Narashin/JFC Start-ups Support Loan Start-ups

January 2015 The Kanazawa Shinkin Bank Nadeshiko Shine

SMEs (Career Opportunities for Women)

Number of financial institutions that have concluded MOUs on business partnerships and collaboration (as of March 31, 2015)


Regional banks II

Shinkin banks

Credit coopera-

tivesOthers Total

Number of financial institutions 3 61 39 257 54 44 458

(Reference)

Total number of financial

institutions(Note)4 64 41 267 110 − −

Business category by construction

percentage75％ 95％ 95％ 96％ 49％ − −

Note: The total number of financial institutions that are credit cooperatives excluding work and occupational credit cooperatives.

Number of financial institutions constructed by cooperative loan schemes by institution type (as of March 31, 2015)


Regional banks II

Shinkin banks

Credit coopera-

tivesOthers Total

Number of financial institutions 1 46 34 199 41 3 324

(Reference)

Total number of financial

institutions(Note)4 64 41 267 110 − −

Business category by construction

percentage25％ 72％ 83％ 75％ 37％ − −

Note: The total number of financial institutions that are credit cooperatives excluding work and occupational credit cooperatives.


Working in Cooperation with private financial institutions

(1) MOU conclusion status on business partnerships and collaboration

Based on the premise of completion with private financial institutions, we have been promoting business partnerships with more private financial institutions than ever before. As of March 31, 2015, MOUs on business partnerships and collaboration have been concluded with 458 financial institutions.

New commodities have also been established by combined loan systems of the institutes within the cooperative loan scheme.… As an example of such a new commodity, female employees working at JFC and private financial institutions who are engaged in actively promoting career opportunities for women have, based on on-site voices, created ‘Lady Go!’ for female entrepreneurs.

(3) Total cooperative loansFY2014 JFC cooperative loans with private financial institutions(Note) came to: 10,714 loans, 535.4 billion yen.Note: Loans (guarantees) that are executed or decided by both parties after consultation

by JFC and private financial institutions for loan plans with identical objectives (and calculated by JFC. Including loans made on different dates).

(2) Cooperative loan scheme constructionSince FY2014, JFC has been focusing on constructing loan schemes in partnership and cooperation with private financial institutions to enhance partnership effectiveness in sectors where partnerships are highly sought after by private f inancial inst i tut ions, such as star t-ups and business revitalization, agriculture, forestry and fisheries, and even strategic areas of growth, etc. The number of private financial institutions constructed by the cooperative loan schemes(Note) increased 181 institutions in FY2014 and climbed to 324 institutions as of March 31, 2015.Note: A system for agreeing specific introduction rules for projects treated as

cooperative loans.

●Developmentofnewcommoditieswithinstitutionsconstructedbythecooperativeloanscheme

JFC Activities

27Other initiatives●JFC2015

Cooperation with APEC Financial Institutions Dealing with SMEsTo promote cooperation with SME-related financial institutions within the APEC region, JFC signed an MOU(Note) with 14 financial institutions in the region, including the Taiwan Cooperative Bank and the Small and Medium Enterprise Development Bank of Thailand (SME Bank). JFC attends the annual meeting and engages in technical cooperation and information exchange.Note: Memorandum of Understanding on Economic Cooperation among APEC (Asia–

Pacific Economic Cooperation) Financial Institutions Dealing with SMEs

International Exchange Initiatives

The 11th Annual Meeting of APEC Financial Institutions Dealing with SMEs (Taiwan)

Other initiatives

JFC

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Profit and Loss Statement (FY2013: from April 1, 2013 to March 31, 2014; FY2014: from April 1, 2014 to March 31, 2015)… (Unit: billion yen)

Ordinary income Ordinary expenses Ordinary profit (loss) Net income (loss)

FY endedMarch 31,

2014

FY endedMarch 31,

2015

FY endedMarch 31,

2014

FY endedMarch 31,

2015

FY endedMarch 31,

2014

FY endedMarch 31,

2015

FY endedMarch 31,

2014

FY endedMarch 31,

2015

Japan Finance Corporation 788.2 503.3 824.0 717.4 (35.8) (214.0) (35.9) (134.7)

Micro Business and Individual Unit (Account for Micro Business and Individual Operations) 152.7 150.8 145.3 119.7 7.4 31.0 7.8 79.4

Agriculture, Forestry, Fisheries and Food Business Unit (Account for Agriculture, Forestry, Fisheries and Food Business Operations) 58.7 47.3 58.1 57.0 0.5 (9.7) 0.0 0.0

Small and Medium Enterprise (SME) Unit

Account for SME Loan Programs and Securitization Support Programs (Guarantee-type Operations) 114.0 116.0 128.6 55.9 (14.5) 60.0 (14.5) 77.2

Account for Securitization Support Programs (Purchase-type Operations) 0.3 0.3 0.0 0.0 0.3 0.3 0.3 0.3

Account for Credit Insurance Programs 415.0 154.2 428.3 435.0 (13.2) (280.8) (13.2) (276.8)

Operations to Facilitate Crisis Responses (Account for Operations to Facilitate Crisis Responses) 47.5 41.9 63.8 56.8 (16.3) (14.9) (16.3) (14.9)

Operations to Facilitate Specific Businesses Promotion, etc. (Account for Operations to Facilitate Specific Businesses Promotion, etc.) 0.4 0.4 0.4 0.4 (0.0) (0.0) (0.0) 0.0

28 JFC2015●Overview of Operations in FY2014 and Outline of Financial Statements

Looking back at the Japanese economy in FY2014, although affected by consumption tax hike, Japan's economy has continued its moderate recovery trend supported by the improvement in the employment and income situation. During such a time, Japan Finance Corporation (JFC) continued to improve customer service, demonstrate safety net functions such as reconstruction support following the Great East Japan Earthquake, and contribute to growth strategies and other areas, etc. In efforts to improve customer service, in addition to the attentive support given to customers, in order to address the various management issues faced by customers, JFC also worked on strengthening its consulting functions, strengthening its cooperation with private financial institutions in terms of both information and funding demonstrating the comprehensive capabilities of JFC. Promoting the demonstration of the comprehensive capability, JFC participated in 263 local projects spearheaded by regional public organizations as measures for regional revitalization. We have been promoting business partnerships with private financial institutions to increase effectiveness. We have focused on creating corporate loan schemes in business sectors such as business establishment and revitalization or support for agricultural, forestry, and fishery businesses that require collaboration with private financial institutions. We have provided such loans to 324 institutions as of March 31, 2015. As a result of these efforts, we provided 10,714 total cooperative loans

in FY2014, which totaled 535.4 billion yen. JFC provided various loans such as the Great East Japan Earthquake Recovery Special Loan to our customers affected by the Great East Japan Earthquake, responding quickly and meticulously to requests for financing and repayment from these loan recipients. As a result of these efforts, earthquake-related financing in FY2014 totaled 189.9 billion yen, post-earthquake cumulative financing totaled 4,022.1 billion yen. JFC is proactively engaged in major government growth strategy initiatives. One of these is to provide support for challenges faced by women and young people, etc. engaging in star t-ups and new businesses. Another i s to provide reconstruction support in cooperation with regional financial institutions. Yet another is social business support for NPOs. Other of these initiatives include support for overseas expansion and support of new development for agriculture, forestry, fisheries and food businesses in anticipation of major changes in agricultural policies. In addition, all projects under the comprehensive system optimization plan that has been in force since 2010 were completed by January of 2015. As a result, we have completely eliminated the mainframe that was present at each head office and have moved to a highly flexible and scalable common system infrastructure. We have also reduced the number of servers to significantly reduce system operation costs.

Outline of Financial Statements for FY2014

Overview of Operations in FY2014

1. Profit and LossAt the closing of FY2014 (ended March 31, 2015), JFC recorded a loss of 98.8 billion yen over the previous fiscal year, for a net loss of 134.7 billion yen. The key factors are the change and sophistication in estimate reserve for insurance policy liabilities for the Account for Credit Insurance Programs, which resulted in a loss of 263.6 billion yen over the previous term for a total of 276.8 billion yen. Exemption from the obligation to repay the past portion of the welfare pension funds resulted in a gain on return of 80.6 billion yen as extraordinary income.

Overview of Operations in FY2014 and Outline of Financial Statements

JFC Activities

Balance Sheet (as of March 31, 2015) (Unit: billion yen)

Assets Liabilities and net assets

Items Amount Items Amount

Fiscal year endedMarch 31, 2014




Cash and deposits 3,732.5 4,095.0 Borrowed money 16,397.1 15,428.6

Securities 460.1 23.1 Corporate bonds 2,058.4 1,865.6

Loans and bills discounted 20,660.4 19,648.6 Trust funds 31.4 30.5

Other assets 59.5 50.6 Reserve for insurance payments 1,371.3 1,480.0

Property, plant and equipment 199.4 196.9 Other liabilities 41.7 36.5

Intangible assets 14.8 18.8 Provision for bonuses 4.3 4.6

Customers’ guaranteed liabilities 3.7 6.5 Provision for directors’ bonuses 0.0 0.0

Allowance for loan losses (477.3) (430.8) Provision for retirement benefits 199.3 95.9

Provision for directors’ retirement benefits 0.0 0.0

Provision for loss compensation 37.9 32.9

Guaranteed liabilities 3.7 6.5

Total liabilities 20,145.6 18,981.6Capital stock 3,709.5 3,855.0

Capital surplus 2,051.7 2,147.2

Retained earnings (1,253.4) (1,375.0)

Total net assets 4,507.7 4,627.3Total assets 24,653.4 23,608.9 Total liabilities and net assets 24,653.4 23,608.9

… (Unit: billion yen)

At end of previous fiscal year(March 31, 2014)

At end of current fiscal year(March 31, 2015) Change

Total assets 24,653.4 23,608.9 (1,044.4)Total liabilities 20,145.6 18,981.6 (1,164.0)

Total net assets 4,507.7 4,627.3 119.5

29Overview of Operations in FY2014 and Outline of Financial Statements●JFC2015

2. AssetsTotal assets were 23,608.9 billion yen, the majority of which were loans and bills discounted. Loans and bills discounted decreased 1,011.7 billion yen from March 31, 2014, to 19,648.6 billion yen. The key factor of the decrease was that loans and bills discounted of Account for Operations to Facilitate Crisis Responses decreased 875.8 billion yen from March 31, 2014. Total net assets stood at 4,627.3 billion yen, taking into account an increase from having received capital contributions from the government of 254.3 billion yen, against a net loss of 134.7 billion yen.

JFC

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Breakdown of Funding Sources… (Unit: billion yen)

FY2015 budget FY2014 budget FY2014 results

Borrowings from Fiscal Loan Fund, etc. 4,558.6 4,991.3 3,097.2

Government-guaranteed Bonds 385.0 385.0 110.0

Capital contributions from the government 103.5 264.4 254.3

Funding from the government(percentage of overall funding)

5,047.2(94%)

5,640.8(95%)

3,461.5(94%)

FILP Agency Bonds 300.0 320.0 215.0

Total funding 5,347.2 5,960.8 3,676.5

Notes: 1. The FY2014 budget amounts are the revised levels following the supplementary budget. 2. The item “borrowings from Fiscal Loan Fund, etc.” refers to borrowings from the Fiscal Loan Fund, borrowings from the FILP Special Account (Investment Account) of the

national budget, and entrusted funds from the Agriculture, Forestry and Fisheries Credit Foundations.

Japan Finance Corporation (JFC)Fi

nanc

ial M

arke

ts

The FILP Special Account (Fiscal Loan Fund Account)

General AccountSpecial Account for Reconstruction from the Great East Japan Earthquake

The FILP Special Account (Investment Account)

Borrowings

Capital contributions

Borrowings

Capital contributions

FILP Agency Bonds

Government-guaranteed Bonds*

FILP Bonds

* Government-guaranteed bonds with a redemption period of �ve years or more are included in FILP.

Funding Sources

Fiscal Investment and Loan Program (FILP)

30 JFC2015●Funding

JFC obtains funds through various sources such as borrowings from the Fiscal Loan Fund, Government-guaranteed Bonds, FILP Agency Bonds, and capital contributions from the government.

Funding Sources

Funding

JFC Activities

… (Unit: billion yen)

Fiscal yearMaturity

FY2015 FY2014 FY2013 FY2012

Budget Budget Results Budget Results Budget Results

10-year bond 60.0 60.0 30.0 50.0 45.0 40.0 30.0

6-year bond 125.0 125.0 80.0 135.0 80.0 145.0 90.0

Less than 5-year bond 200.0 200.0 − 200.0 − 900.0 −

Long-term bonds subtotal 385.0 385.0 110.0 385.0 125.0 1,085.0 120.0

Short-term bonds − − − 200.0 − 200.0 −

Total 385.0 385.0 110.0 585.0 125.0 1,285.0 120.0

Notes: 1. The budget amounts for each fiscal year, except FY2015, are the revised levels following the respective supplementary budgets. 2. Apart from short-term bonds, the budget amounts for each fiscal year are the issue-amount limits, that is, the maximum amount of the government guaranty in the

relevant fiscal year. 3. The budget amounts for short-term bonds are the maximum outstanding balances for the relevant fiscal year.

　… (Unit: billion yen)

Fiscal year FY2015 FY2014 FY2013 FY2012

Amount of issue

(Budget 300.0) (Budget 320.0) (Budget 340.0) (Budget 375.0)

Month of issue / Maturity Results 70.0 Results 215.0 Results 230.0 Results 295.0

Month of issue May May September November March May August September November May August September October February

20-year bond − − − − − − − − − − − − − −

10-year bond − − − − − 10.0 − − − 15.0 − − 10.0 −

5-year bond − − − − − 30.0 − − 20.0 30.0 − − 20.0 −

3-year bond − − 20.0 − − − − 30.0 − − − − −

2-year bond 70.0 50.0 25.0 70.0 50.0 50.0 40.0 − 50.0 50.0 50.0 30.0 50.0 40.0

Notes: 1. The budget amounts for each fiscal year, except FY2015, are the revised levels following the respective supplementary budgets. 2. The budget amounts for each fiscal year are the issue-amount limits in the relevant fiscal year. 3. The issue-result amounts for FY2015 are the amounts issued as at the end of May 2015.

Ratings of JFC (as of May 31, 2015)

Rating and Investment Information (R&I) AA+ (Stable)

Moody’s Japan (Moody’s) A1 (Stable)

31Funding●JFC2015

JFC has issued government-guaranteed general mortgage bonds within the issue-amount limits of the budget.

JFC has issued general mortgage bonds within the issue-amount limits of the budget.

Government-guaranteed Bonds

FILP Agency Bonds

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