Message from the Management

Message from the Management

The Basic Role of The Norinchukin Bank as the Central Organization for Cooperatives

As the national-level financial institution for agricultural, fishery and forestry cooperatives in Japan, the mission of The Norinchukin Bank (“the Bank”) is to contribute to the development of the agriculture, fishery and forestry industries and to national economic prosperity by facilitating access to financial resources. With the capital provided by Japan Agricultural Cooperatives (JA), Japan Fisheries Cooperatives (JF), Japan Forestry Cooperatives (JForest), etc., as well as the stable funding base through customer deposits at JA Bank and JF Marine Bank, the Bank, to achieve its mission, lends funds to its members, agricultural, fishery and forestry workers, and companies related to the agriculture, fishery and forestry industries. The Bank also conducts various lending and investment activities in Japan and abroad, efficiently manages funds, and stably returns profits to its members.

Moreover, the Bank provides various services for supporting the cooperative banking business of JA and JF, including the planning and implementation of policies, development of human resources, and provision of business infrastructure. The Bank also provides operational guidance for the cooperative banking business based on relevant rules and regulations, and is working to build a safety net for the JA Bank and JF Marine Bank Systems. The Bank continues to work to improve trust in its cooperative banking business, while playing the important role of strengthening and expanding the cooperative banking business.

New Medium-Term Management Plan Formulation

The environment surrounding the Bank and cooperatives is becoming increasingly harsh amid such developments as the revision of the Agricultural Co-operatives Act, the broad agreement on the Trans-Pacific Partnership (TPP) and the tightening of international financial regulations. On the other hand, public interest in and expectations for the agriculture, fishery and forestry industries are higher than ever before, including their transformation into growing industries.

In light of the situation surrounding the Bank and co- operatives and the basic role of The Norinchukin Bank we have formulated a new Medium-Term Management Plan (FY2016-FY2018) comprising management and business management policies for the next three years. JA Bank, JF Marine Bank, JForest Group and the Bank will continue to perform their roles and functions with the goal of becoming financial institutions and organizations that win the confidence of their customers, and contribute to the advancement of the agriculture, fishery and forestry industries and their rural communities.

Finally, we would like to ask you all for your continued support for JA Bank, JF Marine Bank, JForest Group and The Norinchukin Bank.

Message from the CEO

Toward a leading bank that supports the agriculture, fishery and forestry industries, food production and consumption, and the daily lives of local communities

Business Performance in Fiscal 2015

In fiscal 2015, as the final year of the Medium-Term Management Plan (fiscal 2013 through fiscal 2015) , the Bank implemented a series of initiatives in line with the following four policies:

1. Proactive efforts on new initiatives contributing to the development of the agriculture, fishery and forestry industries, food production and consumption, and revitalization of local communities
2. Planning and implementation of further initiatives for strengthening and expanding the cooperative banking business
3. Strengthening of profitability through appropriate risk management
4. Building up of organizational strengths through strategic use and enhancement of management resources

For “Proactive efforts on new initiatives contributing to the development of the agriculture, fishery and forestry industries, food production and consumption, and revitalization of local communities,” placing emphasis on encouraging new initiatives supporting reconstruction of disasteraffected areas of the Great East Japan Earthquake in 2011, strengthening of the ability to cater to leaders supporting the sustainable development of the agriculture, fishery and forestry industries, enhancement of the profitability of these industries, and revitalization of local communities through the agriculture, fishery and forestry industries.

For “Planning and implementation of further initiatives for strengthening and expanding the cooperative banking business,” we planned and implemented initiatives that contribute to expand the user base, strive to further initiatives to enhance business management arrangements and management foundation, built and operated business infrastructures which support the implementation of business strategies, and reinforced initiatives for the development of cooperative banking related human resources who can put business strategies into practice.

For “Strengthening of profitability through appropriate risk management,” we engaged in flexible and strategic asset allocation, secured a solid earnings base through stable funding, pursued new investment opportunities to enhance profitability, strengthened corporate finance, and implemented risk management that contributes to enhanced competitiveness.

For “Building up of organizational strengths through strategic use and enhancement of management resources,” we engaged in the development of human resources into key personnel at the Bank and cooperatives, the appropriate allocation of management resources, and the strengthening of compliance and business management systems.

Regarding financial management, we maintained ordinary profit, exceeding targets as a result of efforts to secure profit and strengthen financial conditions targeting the realization of sustainable and stable returns for all members.

In addition, as for self-reform efforts pursued by JA Bank as a whole in the context of an “in-depth initiative that will contribute to increased agricultural income and the revitalization of local communities”, we implemented, in concrete terms, the “Support Program for Increasing Agricultural Income and Revitalizing Local Communities” totaling support in the amount of ¥100 billion and provided assistance including support that contributes to lower management cost for leaders that are expanding in scale, addition of higher value to agricultural products and expansion of sales channels.

Financial Results and Capital Adequacy in Fiscal 2015

In fiscal 2015, the Bank recorded an ordinary profit of ¥324.9 billion and net income of ¥271.2 billion (both on a consolidated basis), and thus achieved the target profit level (around ¥100.0 billion).

The Bank’s capital adequacy ratios on a consolidated basis were maintained at a high level, with a Common Equity Tier 1 Capital Ratio of 18.94%, a Tier 1 Capital Ratio of 18.99% and a Total Capital Ratio of 25.07%.

Summary of Earnings

(Billions of Yen)

Reviewing the Previous Medium-Term Management Plan

Towards becoming a “leading bank that supports the agriculture, fishery and forestry industries, food production and consumption, and the daily lives of local communities,” the Bank had been engaging in the Medium- Term Management Plan (FY2013-FY2015).

We assess that the Bank has progressed generally as planned for the past three years. The earnings reached a record high in FY2014 primarily due to a favorable market environment, and generally solid progress has been made with regard to supporting reconstruction of disaster-affected areas of the Great East Japan Earthquake in 2011, and strengthening the cooperative banking business.

The environment surrounding the Bank and cooperatives is becoming increasingly harsh amid such developments as the revision of the Agricultural Co-operatives Act, the broad agreement on the Trans-Pacific Partnership (TPP) and the tightening of international financial regulations.

Over the next three years, the Bank will proactively work on management issues while accurately ascer-taining the change for these substantial turning points.

Based on the view that it will be a crucial period in which the Bank will be put to the test, we have formulated a new Medium-Term Management Plan (fiscal 2016 through 2018).

Basic Policy of a New Medium-Term Management Plan

Under the next three-year Medium-Term Management Plan that begins this fiscal year as the first year, we aim to the achieve three objectives of “contributing fully as the bank rooted with the agriculture, fishery and forestry industries and food businesses, turning the agriculture, fishery and forestry industries into growing industries, “reinforcing the cooperative banking business platform,” and “achieving stable returns to our members through the sophistication of the current globally diversified investment strategy,” namely, by establishing the three business areas of “food and agriculture business,” “retail business,” and “investment business,” which we defined as the basic policy for overall control and enhancement of the supporting corporate functions.

Based on our mission to realize turning the agriculture, fishery and forestry industries into growing industries with certainty, we will continue to challenge self-reform towards becoming a “leading bank that supports the agriculture, fishery and forestry industries, food production and consumption, and the daily lives of local communities.”

Specific Initiatives of Food and Agriculture Business

Among these, for the“food and agriculture business,” we aim to further contribute to turning the agriculture, fishery and forestry industries into growing industries by leveraging our strengths in Japan and overseas networks as a financial institution developing business globally, many years of transactions with food and agriculture- related companies and deep connections with farmers, fishermen and foresters.

The “food and agriculture business” has been positioned as a key business area in this Medium-Term Management Plan so that the initiatives for the sustainable development of the agriculture, fishery and forestry industries in Japan and the transformation of these industries into growing industries will be developed into a business segment comparable to our conventional retail and investment businesses.

Specific actions to be taken in expanding the “food and agriculture business” will involve further developing initiatives that create bonds with a wide range of stakeholders including cooperatives, leaders and the business community by serving as a bridge between agricultural, fishery and forestry workers and the business community, and at the same time, building up initiatives based on a flexible, future-oriented perspective while cherishing existing and conventional norms and frameworks.

Headquarters System Introduction

In addition, the Bank defined the “food and agriculture business,” the “retail business” and the “investment business” as three business areas and introduced a headquarters system from the perspective of achieving quick decision-making, policy development and implementation and the flexible use of management resources within initiatives to enhance corporate functions that control these three businesses.

Specifically, we established a structure to promote these three business areas also at the organizational level by launching four headquarters, three of which are front-office headquarters, namely, “Food & Agri Banking Business” (in charge of the “food and agriculture business”), “Retail Banking Business” (in charge of promoting and strengthening JA Bank and JF Marine Bank’s “retail business”) and “Global Investments” (in charge of the “investment business” aimed at the further evolution of the “globally diversified investments”), and one of which is “Corporate & Shared Services” (in charge of the management infrastructure that supports the aforementioned three headquarters).

The Bank will make every effort to meet member expectations and realize strong results in each of these areas.

Targeted Management Objectives

Within the period of the Medium-Term Management Plan, the Bank aims to achieve ordinary profit of around ¥150.0 billion.

Looking ahead, the economic and financial environment is expected to remain harsh given the prospect of interest rate hikes in the United States, the introduction of the negative interest rate policy in Japan and the continued high cost of foreign currency funding, among others. The Bank will strive to achieve targets based on appropriate financial management.

In Conclusion

In 2023, the Bank will commemorate 100 years since its founding. To become a “leading bank that supports the agriculture, fishery and forestry industries, food production and consumption, and the daily lives of local communities” depicted in its Future Vision toward the 100th Anniversary, all directors and employees of the Bank are committed to yielding concrete results in their respective positions and thereby contributing to the transformation of the agriculture, fishery and forestry industries into continuous growing industries. We ask our members and all others concerned for understanding and support.

Messages from the Each Business Head

Toward a “leading bank that supports the agriculture, fishery and forestry industries, food production and consumption, and the daily lives of local communities”

In June 2016, the Bank introduced a new headquarters system.

Food & Agri Banking Business

Retail Banking Business

Global Investments

Corporate & Shared Services

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