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 Forest Owners’ 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.

Operation of the Medium-Term Management Plan (FY2019-FY2023)

The environment surrounding the Bank and cooperatives is becoming increasingly harsh amid such developments as global profit margin compression and accelerating digitalization. Meanwhile, public interest in and expectations for turning the agriculture, fishery and forestry industries into growth industries are higher than ever before.

In light of the situation surrounding the Bank and cooperatives and the basic role of the Bank, we have formulated a Medium-Term Management Plan (fiscal 2019 through fiscal 2023), comprising management and business management policies for five years from fiscal 2019, and are engaged in business management based on the Plan.

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.

Chairman of the Supervisory Committee
Toru Nakaya

President and Chief Executive Officer
Kazuto Oku

Message from the CEO

Financial Results and Capital Adequacy in Fiscal 2019

In fiscal 2019, the Bank recorded an ordinary profit of ¥122.9 billion and profit attributable to owners of parent of ¥92.0 billion, showing steady profitability as a result of the decline in the foreign currency funding cost and our financial management efforts aiming at stable cash flow.

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 19.49%, a Tier 1 Capital Ratio of 23.02% and a Total Capital Ratio of 23.02%.

  FY2017 FY2018 FY2019

Ordinary Profit

171.0

124.5

122.9

Profit Attributable to Owners of Parent

147.6

103.5

92.0

Net Assets

6,746.0

7,473.2

7,261.6

Common Equity Tier 1 Capital Ratio

19.02%

16.59%

19.49%

Tier 1 Capital Ratio

19.02%

19.65%

23.02%

Total Capital Ratio

23.50%

19.65%

23.02%

Business Performance in Fiscal 2019

In fiscal 2019, as the first year of the Medium-Term Management Plan, which covers the five years through fiscal 2023, The Norinchukin Bank (the Bank) proceeded steadily with its business operations and continued to work toward its vision of becoming the leading bank that supports the agriculture, fishery and forestry industries, food production and consumption, and the daily lives of local communities. The Bank’s operations aim to establish value chains by offering solutions for various issues, provide functions toward the development of local communities and member organizations and realize the establishment of a sturdy business model resilient to economic fluctuations.

Concerning the financial markets, although the upward trend of stocks had continued mainly because of more than one preventive interest rate cut by the U.S. Federal Reserve System responding to rising geopolitical risk, due to the conservative investment trend and each country’s financial easing policy against the backdrop of the spread of COVID-19 since February 2020, the U.S. interest rate has declined further and the stock market has changed significantly, posing increasing uncertainty. In such circumstances, the Bank continued the stable return of profit to its stakeholders and worked to provide stable financing for the agriculture, fishery and forestry industries and related local communities—a foundation for the Bank’s operation.

In addition, the Bank undertook various measures throughout the fiscal year, including the offering of solutions to contribute to the growth of the agriculture, fishery and forestry industries and related communities, the expansion of agricultural financing, the expansion and reinforcement of its global trading base mainly in Asia, the enhancement of JA Bank’s business base and JF Marine Bank’s financing functions for the fishery industry, the performance of main-bank functions for JF and JForest, the expansion of ESG investments and the enhancement of corporate functions to support each business.

Measures to Address the Spread of COVID-19

The impact of the spread of COVID-19 on actual economies has begun unfolding with considerable uncertainty as to when this crisis ends. In such an environment, the Bank will continue to provide maximum support for the various agriculture, fishery and forestry industry-related stakeholders affected by this problem, as the mission of a financial institution that operates on the foundational agriculture, fishery and forestry industries and related local communities.

Outline of the Medium-Term Management Plan (FY2019-FY2023)

The Bank is conducting business operations based on its Medium-Term Management Plan “Catch the Winds of Change. Create New Value,” covering five years (fiscal 2019 through fiscal 2023).
We predict our business environment will face noncontinuous changes in the next 10 years, such as global profit margin compression; accelerating digitalization; aging leaders in the agriculture, fishery and forestry industries; the need for scale expansion; growth in Asia; and environmental and social issues. We recognize new issues such as the enhancement of profitability; the provision of comprehensive services that customers want; effective support for leaders in the agriculture, fishery and forestry industries; deepening our global business network; and offering value to society.
Based on such recognition, we will take on the challenge of creating new value to solve new issues.

Core Principle

To take on this challenge of creating new value, self-reform is necessary. Looking ahead to the next ten years, we will take a fresh look at the current operation and make necessary changes to the way we work. To achieve major reforms, we will implement the Medium-Term Management Plan as our vision for the Norinchukin Group in the next five years, based on the following Core Principle.

Priority Strategies

The Bank will take on the priority strategies under the Core Principle with a structure consisting of the “Food and Agriculture Business,” the “Retail Business” and the “Investment Business,” supported by “Corporate Shared Services.” The Bank will implement these strate gies jointly with JA Bank Medium-Term Management Strategy, JF Marine Bank Medium-Term Management Strategy and the JForest Cooperatives Action Policy, and achieve our goals in alliance with the entire cooperative groups.

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

Since our establishment in 1923 as a national-level financial institution to help our foundational entities—agricultural, fishery and forestry cooperative organizations—we have contributed to the development of the agricultural, fishery and forestry industries, and a key milestone—our 100th anniversary—is just around the corner. In our first hundred years, the environment surrounding the agriculture, fishery and forestry industries experienced significant changes over time, and unprecedented “non-continuous changes” are likely in the future. To continue to fulfill our mission of contributing to the development of the agriculture, fishery and forestry industries in such an environment, we will deepen dialogues with cooperative members and tackle our challenging “Catch the Winds of Change. Create New Value” plan. Through such efforts, together with our cooperative groups, we will strive to meet the expectations of our customers, realize sustainable growth and offer value to society.

Sustainability Management Initiatives

Reflecting the rapidly rising interest in the increase in the global population, the low birth rate and aging society in advanced countries, climate change and issues of economic disparity and poverty, global initiatives toward the sustainable development of society are under way, such as the “Sustainable Development Goals (SDGs)” by the United Nations and the “Paris Agreement,” which is a new framework of measures to address climate change. Against this backdrop, expectations are on the rise for corporations to address such social issues.

Based on an understanding of such changes in society, we have established 14 “Sustainability Topics” covering Five Sustainability Focus Areas (“Creating positive impact on the agriculture, fishery and forestry industries, food and local communities,” “Promoting responsible finance,” “Promoting sustainability management,” “Securing highly capable human resources” and “Maintaining customer trust as a financial institution”). In addition, the Bank’s initiatives and measures toward the implementation of Sustainability Management are discussed at the Sustainability Committee, which operates under the Board of Directors.

In fiscal 2020, toward ensuring the sustainability of the agriculture, fishery and forestry industries, and related local communities, the Bank has established five priority issues to address based on the issues surrounding the agriculture, fishery and forestry industries.

By clarifying specific measures based on this initiative in the Bank’s management plan and carrying them out, the Bank will contribute to ensuring the sustainability of the agriculture, fishery and forestry industries and related local communities.

Measures to Address Climate Change

The agriculture, fishery and forestry industries—the foundation of the Bank’s business—could be affected negatively by climate change, while at the same time possessing the underlying potential to increase climate change. Addressing climate change is part of the Bank’s mission to contribute to the development of these industries. In April 2019, the Bank announced the endorsement of the recommendations of the TCFD (Task Force on Climate-related Financial Disclosures), which was established by the Financial Stability Board (FSB). The Bank will appropriately address the impacts and risks of climate change on the Bank’s businesses, implement measures, and expand disclosures in line with the TCFD recommendations over time.

Governance to Address Climate Change

The Bank’s measures to address environmental and social issues including climate change are discussed at the Sustainability Committee, and the content discussed therein is reported periodically to the Board of Directors and the Supervisory Committee.

Managing Climate-Related Risks

The Bank conducts due diligence based on the Equator Principles (EPs) for large-scale development projects. In addition, amid the progressing global initiatives to transition toward a decarbonized society, regarding new loans for the coal-fired thermal power generation sector, the Bank, in principle, limits such loans only to ultra-supercritical (USC) coal-fired power generation or facilities with higher efficiency.

The Bank’s Sustainability Topics (Five Focus Areas and 14 Topics)

Five Focus Areas 14 Topics
(Focus Area 1)
Creating positive impact on the agriculture, fishery and forestry industries, food and local communities
> (Topic 1-1) Contributing to sustainable agriculture, fishery and forestry industries
> (Topic 1-2) Contributing to safe and secure food supply
> (Topic 1-3) Contributing to sustainable local communities
> (Topic 1-4) Conserving the natural environment as a foundation of the agriculture, fishery and forestry industries
> (Topic 1-5) Creating business innovation
(Focus Area 2)
Promoting responsible finance
> (Topic 2-1) Promoting sustainable finance
> (Topic 2-2) Contributing to sustainable energy utilization
> (Topic 2-3) Realizing financing for everybody
(Focus Area 3)
Promoting sustainability management
> (Topic 3-1) Ensuring a transparent organizational governing structure
> (Topic 3-2) Reinforcing the management of environmental and social risks
> (Topic 3-3) Reinforcing stakeholder engagement
(Focus Area 4)
Securing highly capable human resources
> (Topic 4-1) Improving diversity and equal opportunities
> (Topic 4-2) Enhancing human resources development
(Focus Area 5)
Maintaining customer trust as a financial institution
> (Topic 5-1) Further reinforcing the compliance framework

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