Exhibit 4
| ChuoAoyama Audit Corporation | PRICEWATERHOUSECOOPERS | |
| Kasumigaseki Bldg. 32nd Floor | ||
3-2-5, Kasumigaseki, Chiyoda-ku, | ||
| Tokyo 100-6088, Japan | ||
Report of Independent Auditors
To the Governor of
Japan Bank for International Cooperation
We have audited the accompanying non-consolidated balance sheets of Japan Bank for International Cooperation as of March 31, 2003 and 2002, and the related non-consolidated statements of operations, equity, and cash flows for the years then ended, all expressed in Japanese Yen. These non-consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these non-consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards, procedures and practices generally accepted and applied in Japan. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the non-consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the non-consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall non-consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the non-consolidated financial statements referred to above present fairly, in all material respects, the non-consolidated financial position of Japan Bank for International Cooperation as of March 31, 2003 and 2002, and the non-consolidated results of its operations and its cash flows for the years then ended in conformity with accounting principles and practices generally accepted in Japan (see Note 1).
The amounts expressed in U.S. dollars, which are provided solely for the convenience of the reader, have been translated on the basis set forth in Note 1 to the accompanying non-consolidated financial statements.
/s/ ChuoAoyama Audit Corporation |
ChuoAoyama Audit Corporation |
Tokyo, Japan |
June 25, 2003 |
BALANCE SHEETS
JAPAN BANK FOR INTERNATIONAL COOPERATION
| In millions of yen | In millions of yen | In millions of dollars | ||||||||||
| March 31, 2003 | March 31, 2002 | March 31, 2003 | ||||||||||
Assets | ||||||||||||
Cash and due from banks | ¥ | 288,284 | ¥ | 452,933 | $ | 2,398 | ||||||
Securities | 122,912 | 124,273 | 1,022 | |||||||||
Loans | 20,164,343 | 22,027,407 | 167,757 | |||||||||
Miscellaneous assets | 367,673 | 350,481 | 3,059 | |||||||||
Premises and equipment | 28,449 | 29,480 | 237 | |||||||||
Deferred charges on bonds and notes | 2,267 | 2,596 | 19 | |||||||||
Customer’s liabilities for acceptances and guarantees | 629,082 | 574,763 | 5,234 | |||||||||
Allowance for possible loan losses | (308,163 | ) | (487,827 | ) | (2,564 | ) | ||||||
Allowance for possible investment losses | — | (1,119 | ) | — | ||||||||
Total assets | ¥ | 21,294,849 | ¥ | 23,072,990 | $ | 177,162 | ||||||
| In millions of yen | In millions of yen | In millions of dollars | ||||||||||
| March 31, 2003 | March 31, 2002 | March 31, 2003 | ||||||||||
Liabilities and equity | ||||||||||||
Liabilities | ||||||||||||
Bonds and notes | ¥ | 1,589,084 | ¥ | 1,587,696 | $ | 13,220 | ||||||
Borrowings | 11,218,681 | 12,274,479 | 93,333 | |||||||||
Miscellaneous liabilities | 321,126 | 781,342 | 2,672 | |||||||||
Allowance for employee bonuses | 754 | 596 | 6 | |||||||||
Allowance for employee retirement benefits | 18,090 | 16,024 | 151 | |||||||||
Acceptances and guarantees | 629,082 | 574,763 | 5,234 | |||||||||
Total liabilities | ¥ | 13,776,818 | ¥ | 15,234,902 | $ | 114,616 | ||||||
Equity | ||||||||||||
Capital of the International Financial Account | ¥ | 985,500 | ¥ | 985,500 | $ | 8,199 | ||||||
Capital of the Overseas Economic Cooperation Account | 6,504,344 | 6,285,244 | 54,113 | |||||||||
Reserve of the International Financial Account | 608,336 | 564,230 | 5,061 | |||||||||
Reserve of the Overseas Economic Cooperation Account | 280,719 | 182,296 | 2,335 | |||||||||
Accumulated deficit at the end of the current year | (860,868 | ) | (179,183 | ) | (7,162 | ) | ||||||
Total equity | ¥ | 7,518,031 | ¥ | 7,838,088 | $ | 62,546 | ||||||
Total liabilities and equity | ¥ | 21,294,849 | ¥ | 23,072,990 | $ | 177,162 | ||||||
See accompanying “Notes to Financial Statements” which are an integral part of these statements.
STATEMENTS OF OPERATIONS
JAPAN BANK FOR INTERNATIONAL COOPERATION
| In millions of yen | In millions of yen | In millions of dollars | |||||||||
| Fiscal 2002 | Fiscal 2001 | Fiscal 2002 | |||||||||
Income | |||||||||||
Interest income | ¥ | 568,783 | ¥ | 708,360 | $ | 4,732 | |||||
Interest on loans | 533,388 | 696,274 | 4,438 | ||||||||
Interest and dividend income on securities | 2,659 | 2,761 | 22 | ||||||||
Interest income on reverse repurchase agreement | — | 3 | — | ||||||||
Interest on due from banks | 3,640 | 9,321 | 30 | ||||||||
Interest on swaps (net) | 29,095 | — | 242 | ||||||||
Fees and Commissions | 5,934 | 6,370 | 49 | ||||||||
Other operating income | — | 1,400 | — | ||||||||
Foreign exchange gains | — | 1,400 | — | ||||||||
Other ordinary income | 201 | 380 | 2 | ||||||||
Reversal of allowance for possible loan losses | 187,816 | 38,931 | 1,563 | ||||||||
Reversal of allowance for possible investment losses | — | 1,552 | — | ||||||||
Recovery of Written-off Claims | 4,119 | — | 34 | ||||||||
Profits on sales of premises and equipment | 11 | 5 | 0 | ||||||||
Total income | ¥ | 766,867 | ¥ | 757,001 | $ | 6,380 | |||||
Expenses | |||||||||||
Interest expenses | ¥ | 372,503 | ¥ | 462,690 | $ | 3,099 | |||||
Interest on bonds and notes | 71,881 | 82,019 | 598 | ||||||||
Amortization of discounts on bonds and notes | 5 | 5 | 0 | ||||||||
Interest on borrowings | 300,617 | 342,448 | 2,501 | ||||||||
Interest on swaps (net) | — | 38,217 | — | ||||||||
Fees and Commissions | 4,981 | 4,042 | 42 | ||||||||
Other operating expenses | 947 | 867 | 8 | ||||||||
Foreign exchange losses | 193 | — | 2 | ||||||||
Amortization of bonds and notes issuance costs | 567 | 574 | 5 | ||||||||
Others | 186 | 293 | 1 | ||||||||
General and administrative expenses | 27,425 | 26,137 | 228 | ||||||||
Other ordinary expenses | 401 | 1,421 | 3 | ||||||||
Write-off of loans | — | 489 | — | ||||||||
Write-off of equities, securities, etc. | 351 | 759 | 3 | ||||||||
Others | 49 | 171 | 0 | ||||||||
Losses on disposal of premises and equipment | 43 | 65 | 0 | ||||||||
ODA-loan related losses | 855,616 | — | 7,118 | ||||||||
Total expense | ¥ | 1,261,919 | ¥ | 495,225 | $ | 10,498 | |||||
Net (loss) income | ¥ | (495,051 | ) | ¥ | 261,776 | $ | (4,118 | ) | |||
See accompanying “Notes to Financial Statements” which are an integral part of these statements.
STATEMENTS OF CASH FLOWS
JAPAN BANK FOR INTERNATIONAL COOPERATION
| In millions of yen | In millions of yen | In millions of dollars | ||||||||||
| Fiscal 2002 | Fiscal 2001 | Fiscal 2002 | ||||||||||
Cash flows from operating activities | ||||||||||||
Net (loss) income | ¥ | (495,051 | ) | ¥ | 261,776 | $ | (4,118 | ) | ||||
Depreciation and amortization | 1,593 | 1,721 | 13 | |||||||||
Increase (decrease) in allowance for possible loan losses | (179,664 | ) | (40,172 | ) | (1,495 | ) | ||||||
Increase (decrease) in allowance for possible investment losses | (1,119 | ) | (1,642 | ) | (9 | ) | ||||||
Increase (decrease) in allowance for employee bonuses | 158 | 596 | 1 | |||||||||
Increase (decrease) in allowance for employee retirement benefits | 2,065 | 492 | 17 | |||||||||
Interest income | (568,783 | ) | (708,360 | ) | (4,732 | ) | ||||||
Interest expenses | 372,503 | 462,690 | 3,099 | |||||||||
Net loss (gain) on securities | 1,520 | 800 | 13 | |||||||||
Foreign exchange loss (gain) | (12,049 | ) | (10,572 | ) | (100 | ) | ||||||
Net loss (gain) on sales of premises and equipment | 31 | 60 | 0 | |||||||||
Net decrease (increase) in loans | 1,395,069 | 14,460 | 11,606 | |||||||||
Net increase (decrease) in bonds and notes | 51,465 | 71,522 | 428 | |||||||||
Net increase (decrease) in borrowings | (1,055,797 | ) | (540,433 | ) | (8,783 | ) | ||||||
Net decrease (increase) in due from banks (excluding cash equivalents) | 247,161 | (58,331 | ) | 2,056 | ||||||||
Net decrease (increase) in reverse repurchase agreement | — | 105,418 | — | |||||||||
Interest received | 551,275 | 715,939 | 4,586 | |||||||||
Interest paid | (396,384 | ) | (511,074 | ) | (3,298 | ) | ||||||
Others, net | 8,414 | (13,585 | ) | 70 | ||||||||
Net cash used in operating activities | ¥ | (77,589 | ) | ¥ | (248,694 | ) | $ | (646 | ) | |||
Cash flows from investing activities | ||||||||||||
Purchases of securities | ¥ | (474 | ) | ¥ | (1,240 | ) | $ | (4 | ) | |||
Sales of securities | 189 | 1,833 | 2 | |||||||||
Expenditures on premises and equipment | (629 | ) | (1,319 | ) | (5 | ) | ||||||
Proceeds from sales of premises and equipment | 37 | 42 | 0 | |||||||||
Net cash used in investing activities | ¥ | (876 | ) | ¥ | (683 | ) | $ | (7 | ) | |||
Cash flows from financing activities | ||||||||||||
Proceeds from issuance of capital from Government | ¥ | 219,100 | ¥ | 284,500 | $ | 1,823 | ||||||
Payment to National Treasury | (30,400 | ) | (46,314 | ) | (253 | ) | ||||||
Net cash provided by financing activities | ¥ | 188,699 | ¥ | 238,185 | $ | 1,570 | ||||||
Effect of exchange rate changes on cash and cash equivalents | ¥ | (1 | ) | ¥ | 0 | $ | (0 | ) | ||||
Net increase (decrease) in cash and cash equivalents | ¥ | 110,233 | ¥ | (11,192 | ) | $ | 917 | |||||
Cash and cash equivalents at the beginning of the fiscal year | ¥ | 7,437 | ¥ | 18,630 | $ | 62 | ||||||
Cash and cash equivalents at the end of the fiscal year | ¥ | 117,669 | ¥ | 7,437 | $ | 979 | ||||||
See accompanying “Notes to Financial Statements” which are an integral part of these statements.
STATEMENT OF EQUITY
JAPAN BANK FOR INTERNATIONAL COOPERATION
| In millions of yen | |||||||||||||||||||||
| Capital of the International Financial Account | Capital of the Overseas Economic Cooperation Account | Reserve of the International Financial Account | Reserve of the Overseas Economic Cooperation Account | Accumulated deficit at the end of the current year | Total Equity | ||||||||||||||||
Balance at March 31, 2002 | ¥ | 985,500 | ¥ | 6,285,244 | ¥ | 564,230 | ¥ | 182,296 | ¥ | (179,183 | ) | ¥ | 7,838,088 | ||||||||
Transfer from net earnings accounted under the JBIC law to reserves | 44,105 | 98,422 | (142,528 | ) | — | ||||||||||||||||
Payment to National Treasury | (44,105 | ) | (44,105 | ) | |||||||||||||||||
Issuance of capital from Government | 219,100 | 219,100 | |||||||||||||||||||
Net income | (495,051 | ) | (495,051 | ) | |||||||||||||||||
Balance at March 31, 2003 | ¥ | 985,500 | ¥ | 6,504,344 | ¥ | 608,336 | ¥ | 280,719 | ¥ | (860,868 | ) | ¥ | 7,518,031 | ||||||||
Appropriations: | |||||||||||||||||||||
Transfer from net earnings to reserve of the International Financial Account | 30,246 | (30,246 | ) | — | |||||||||||||||||
Transfer from reserve of the Overseas Economic Cooperation Account | (260,051 | ) | 260,051 | — | |||||||||||||||||
Payment to National Treasury | (30,246 | ) | (30,246 | ) | |||||||||||||||||
Total | ¥ | 30,246 | (260,051 | ) | ¥ | 199,559 | ¥ | (30,246 | ) | ||||||||||||
Unappropriated Accumulated deficit | ¥ | (661,309 | ) | ||||||||||||||||||
See accompanying “Notes to Financial Statements” which are an integral part of these statements.
STATEMENT OF EQUITY
JAPAN BANK FOR INTERNATIONAL COOPERATION
| In millions of dollars | |||||||||||||||||||||
| Capital of the International Financial Account | Capital of the Overseas Economic Cooperation Account | Reserve of the International Financial Account | Reserve of the Overseas Economic Cooperation Account | Accumulated deficit at the end of the current year | Total Equity | ||||||||||||||||
Balance at March 31, 2002 | $ | 8,199 | $ | 52,290 | $ | 4,694 | $ | 1,516 | $ | (1,491 | ) | $ | 65,208 | ||||||||
Transfer from net earnings accounted under the JBIC law to reserves | 367 | 819 | (1,186 | ) | — | ||||||||||||||||
Payment to National Treasury | (367 | ) | (367 | ) | |||||||||||||||||
Issuance of capital from Government | 1,823 | 1,823 | |||||||||||||||||||
Net income | (4,118 | ) | (4,118 | ) | |||||||||||||||||
Balance at March 31, 2003 | $ | 8,199 | $ | 54,113 | $ | 5,061 | $ | 2,335 | $ | (7,162 | ) | $ | 62,546 | ||||||||
Appropriations: | |||||||||||||||||||||
Transfer from net earnings to reserve of the International Financial Account | 252 | (252 | ) | — | |||||||||||||||||
Transfer from reserve of the Overseas Economic Cooperation Account | (2,164 | ) | 2,164 | — | |||||||||||||||||
Payment to National Treasury | (252 | ) | (252 | ) | |||||||||||||||||
Total | $ | 252 | (2,164 | ) | $ | 1,660 | $ | (252 | ) | ||||||||||||
Unappropriated Accumulated deficit | . | $ | (5,502 | ) | |||||||||||||||||
See accompanying “Notes to Financial Statements” which are an integral part of these statements.
STATEMENT OF EQUITY
JAPAN BANK FOR INTERNATIONAL COOPERATION
| In millions of yen | ||||||||||||||||||||||||
| Capital of the International Financial Account | Capital of the Overseas Economic Cooperation Account | Reserve of the International Financial Account | Special Reserve of the International Financial Account | Reserve of the Overseas Economic Cooperation Account | Accumulated deficit at the end of the current year | Total Equity | ||||||||||||||||||
Balance at March 31, 2001 | �� | ¥ | 985,500 | ¥ | 6,000,744 | ¥ | 523,287 | ¥ | 5,423 | ¥ | 125,602 | ¥ | (302,367 | ) | ¥ | 7,338,190 | ||||||||
Transfer from net earnings accounted under the JBIC law to reserves | 40,943 | 11 | 56,694 | (97,648 | ) | — | ||||||||||||||||||
Payment to National Treasury | (5,435 | ) | (40,944 | ) | (46,379 | ) | ||||||||||||||||||
Issuance of capital from Government | 284,500 | 284,500 | ||||||||||||||||||||||
Net income | 261,776 | 261,776 | ||||||||||||||||||||||
Balance at March 31, 2002 | ¥ | 985,500 | ¥ | 6,285,244 | ¥ | 564,230 | — | ¥ | 182,296 | ¥ | (179,183 | ) | ¥ | 7,838,088 | ||||||||||
Appropriations: | ||||||||||||||||||||||||
Transfer from net earnings to reserve of the International Financial Account | 44,105 | (44,105 | ) | — | ||||||||||||||||||||
Transfer from net earnings accounted under the JBIC law to reserve of the Overseas Economic Cooperation Account | 98,422 | (98,422 | ) | — | ||||||||||||||||||||
Payment to National Treasury | (44,105 | ) | (44,105 | ) | ||||||||||||||||||||
Total | ¥ | 44,105 | ¥ | 98,422 | ¥ | (186,633 | ) | ¥ | (44,105 | ) | ||||||||||||||
Unappropriated Accumulated deficit | ¥ | (365,817 | ) | |||||||||||||||||||||
See accompanying “Notes to Financial Statements” which are an integral part of these statements.
NOTES TO FINANCIAL STATEMENTS
JAPAN BANK FOR INTERNATIONAL COOPERATION
1. Basis of Presentation
The accompanying financial statements have been prepared from the accounts maintained by Japan Bank for International Cooperation (“JBIC”) in accordance with the provisions set forth in conformity with accounting principles and practices generally accepted in Japan, which are different in certain respects as to application and disclosure requirements from International Financial Reporting Standards.
The financial statements are not intended to present the financial position and results of operations in accordance with accounting principles and practices generally accepted in countries and jurisdictions other than Japan.
The Bank’s accounts are separated into International Financial Account and Overseas Economic Cooperation Account under Article 41 of the Japan Bank for International Cooperation Law (“JBIC Law”) whereby the accounting shall be separated in accordance with the categories of international financial operations and overseas economic cooperation operations and be recorded by establishing the respective account for each. In separating accounts, transactions directly related to either of the operations are attributed to the account for these operations and overhead expenses and others are allocated to both of the accounts by using a certain allocation rate.
Consolidated financial statements are not prepared because JBIC has no subsidiaries.
The amounts indicated in millions of yen are rounded down by omitting the figures less than one million. Totals may not add up exactly because of such omission.
Amounts in U.S. dollars are presented solely for the convenience of readers outside Japan. The rate of ¥120.20=$1.00, the exchange rate as of March 31, 2003, has been used in translation. The presentation of such amounts is not intended to imply that Japanese yen have been or could be readily converted, realized or settled into U.S. dollars at that rate or any other rate.
2. Significant Accounting Policies
(a) Cash and cash equivalents
“Cash and cash equivalents” as stated in the statements of cash flows consists of cash in hand and due from Bank of Japan included in “Cash and due from banks” in the balance sheets.
(b) Securities
All securities are classified as “Available-for-sale Securities” which have no market value and are carried at cost based on a moving average cost valuation.
(c) Valuation method for derivative financial instruments
All derivative financial instruments are carried at fair value.
(d) Hedge accounting
(i) Hedge accounting
JBIC applies the deferral method of hedge accounting.
(ii) Hedging instruments and hedged items
Hedging instrument: interest rate swaps
Hedged items: loans, bonds and notes
(iii) Hedging policy
To hedge interest rate risks, JBIC utilizes hedging instruments within the range of the hedged assets and liabilities.
(iv) Evaluation of hedge effectiveness
JBIC judges the effectiveness of the hedge by measuring and comparing the fluctuations of fair value or cumulative fluctuations of cash flows of hedging instruments and corresponding hedged items from the inception of the hedges to the judging point.
(e) Depreciation basis for fixed assets
(i) Premises and equipment
Premises and equipment are depreciated on the declining balance basis except for the buildings (excluding furniture and equipment) acquired on or after April 1, 1998, which are depreciated on the straight-line basis. The principal estimated useful lives are as follows:
Buildings: 38 years to 50 years
Equipment: 2 years to 20 years
(ii) Software
Software used by JBIC is amortized on the straight-line basis over its useful life (5 years).
(f) Method of amortization for deferred charges
“Discounts on Bonds and Notes” are amortized over terms of redemption, and “Bonds and Notes Issuance Costs” are amortized over 3 years, on the straight-line basis in accordance with the Commercial Code of Japan.
(g) Foreign currency translation and revaluation method
JBIC maintains its accounting records in Japanese yen. Assets and liabilities denominated in foreign currencies are translated into Japanese yen at the market exchange rate prevailing at the fiscal year end.
JBIC had adopted the “Temporary Treatment of Accounting and Auditing Concerning Accounting for Foreign Currency Transactions in the Banking Industry” (JICPA Industry Audit Committee Report No.20). Since the current fiscal year, however, JBIC have adopted the “Treatment of Accounting and Auditing Concerning Accounting for Foreign Currency Transactions in the Banking Industry” (JICPA Industry Audit Committee Report No.25). Foreign currency differences arising from futures currency transactions are recognized on the balance sheets on a net basis.
In accordance with the transitional applications described in JICPA Industry Audit Committee Report No.25, regarding foreign exchange swaps relating to lending and funding transactions, nominal amounts of money lent and nominal amounts of money funded are translated into yen using the exchange rates in effect at the fiscal year end and stated in the balance sheets on a net basis. Premiums or discounts reflecting interest rate differences between the two currencies are charged to or credited to the Statement of Operations on an accrual basis over the period from the spot transaction’s settlement date to the forward transaction’s settlement date, and stated as accrued income under Miscellaneous assets or accrued expenses under Miscellaneous liabilities on the balance sheets.
Such foreign exchange swaps relating to lending and funding transactions are swap transactions that are entered into for the purpose of loans which are sourced from funding in different currencies, where (1) the nominal amounts of funding or loans which are equal to the amounts of foreign exchange purchased or sold as spot transactions and (2) the amounts of future payment or proceed from loans or funding respectively, with the contractual interest payment or receipt denominated in foreign currency, are equal to the amounts of foreign exchange forward transaction sold or purchased.
With regard to flat currency swap transactions (including currency swap transactions for which the spot-forward is flat for each interest payment period) that are entered into for the purpose of loans which are sourced from funding in different currencies, where (1) the nominal amounts payable/receivable at the maturity date are equal to the nominal amounts receivable/payable at the contract date and where (2) the swap rate applied to the principal portion and the interest portion are rational, in accordance with the transitional applications described in JICPA Industry Audit Committee Report No.25, nominal amounts of money lent and nominal amounts of money funded are translated into yen using the exchange rates in effect at the fiscal year end and stated in the balance sheets on a net basis. An amount equivalent to the interest swapped are charged to or credited to the statements of operations on an accrual basis over the subject period, and stated as accrued income under Miscellaneous assets or accrued expenses under Miscellaneous liabilities on the balance sheets.
(h) Allowance for possible loan losses
JBIC provided “Allowance for possible loan losses” as follows:
The allowance for claims on debtors who are legally bankrupt (“Bankrupt Borrowers”) or substantially bankrupt (“Substantially Bankrupt Borrowers”) is provided based on the outstanding balance after the write-offs described in Note 5(h) and the deductions of the amount expected to be collected through the disposal of collateral and execution of guarantees.
The allowance for claims on debtors who are not legally bankrupt but are likely to become bankrupt (“Potentially Bankrupt Borrowers”) is provided based on an assessment of the overall solvency of the debtors after deducting the amount expected to be collected through the disposal of collateral or the execution of guarantees.
The allowance for claims on debtors other than the above (Bankrupt Borrowers, Substantially Bankrupt Borrowers and Potentially Bankrupt Borrowers) is provided primarily based on the default rate, which is calculated based on the actual defaults during a certain period in the past.
The allowance for possible losses on specific overseas loans is provided based on the expected loss amount considering the political and economic situations of these countries.
All claims are assessed initially by the operational departments and secondly by risk evaluation departments based on internal rules for self-assessment of asset quality. The internal audit department, which is independent from the operational departments, reviews these self-assessments, and the allowance is provided based on the results of the assessment.
(i) Allowance for possible investment losses
“Allowance for possible investment losses” is provided based on the estimated losses on non-marketable debt securities.
(j) Allowance for employee bonuses
“Allowance for employee bonuses” is set aside to pay employee bonuses with respect to the portion of estimated bonus payments to employees that correspond to the current period. Allowance for bonuses to executive directors included in as of March 31, 2002 are not included in as of March 31, 2003.
(k) Allowance for employee retirement benefits
Allowance for employee retirement benefits represents the future payment for pension and retirement to employees, and is recorded as the amount accrued at the fiscal year end, based on the projected benefit obligations, and the estimated pension plan asset amount at the fiscal year end. The method of accounting for prior service cost and net actuarial gains/losses is as follows:
Prior service cost is charged to net income of the year.
Net Actuarial Gains/Losses are charged to net income of the year.
“Allowance for employee retirement benefits” includes allowance for retirement benefits to executive directors.
(l) Consumption tax
Consumption tax including local consumption tax is excluded from the transaction amounts.
3. Cash and cash equivalents
The reconciliation between the balance of cash and cash equivalents at the end of each fiscal year and the amount of cash and due from banks reported in the balance sheets as of March 31, 2003 and 2002 are as follows:
March 31, 2003 (In millions of yen) | March 31, 2002 (In millions of yen) | March 31, 2003 (In millions of dollars) | ||||||||||
Cash and Due from Banks | ¥ | 288,284 | ¥ | 452,933 | $ | 2,398 | ||||||
Due from Banks (*) | (170,614 | ) | (445,496 | ) | (1,419 | ) | ||||||
Cash and Cash Equivalents | ¥ | 117,669 | ¥ | 7,437 | $ | 979 | ||||||
| (*) | Excluding Due from Bank of Japan |
4. Securities
Securities as of March 31, 2003 and 2002 are as follows:
March 31, 2003 (In millions of yen) | March 31, 2002 (In millions of yen) | March 31, 2003 (In millions of dollars) | |||||||
Equity | ¥ | 122,269 | ¥ | 123,578 | $ | 1,017 | |||
Other Securities | 642 | 695 | 5 | ||||||
| ¥ | 122,912 | ¥ | 124,273 | $ | 1,022 | ||||
5. Loans
All of Loans are loans on deeds. The amounts reported in the balance sheets as of March 31, 2003 and 2002 are as follows:
International Financial Account | March 31, 2003 (In millions of yen) | March 31, 2002 (In millions of yen) | March 31, 2003 (In millions of dollars) | ||||||
Bankrupt Loans | ¥ | 665 | ¥ | 2,641 | $ | 5 | |||
Non-accrual Loans | 147,029 | 310,446 | 1,223 | ||||||
Past Due Loans (3 Months or More) | 92,620 | 39,044 | 771 | ||||||
Restructured Loans | 372,451 | 172,754 | 3,099 | ||||||
| ¥ | 612,767 | ¥ | 524,887 | $ | 5,098 | ||||
Overseas Economic Cooperation Account | March 31, 2003 (In millions of yen) | March 31, 2002 (In millions of yen) | March 31, 2003 (In millions of dollars) | ||||||
Bankrupt Loans | ¥ | — | ¥ | — | $ | — | |||
Non-accrual Loans | 90,596 | 381,146 | 754 | ||||||
Past Due Loans (3 Months or More) | 51,186 | 81,880 | 426 | ||||||
Restructured Loans | — | 900 | — | ||||||
| ¥ | 141,783 | ¥ | 463,928 | $ | 1,180 | ||||
| (a) | “Bankrupt Loans”, which are placed non-accrual status, are loans to borrowers who have begun bankruptcy, composition, reorganization, winding-up or special liquidation proceedings under the Bankruptcy Law, the Corporate Reorganization Law, the Civil Rehabilitation Law, the Commercial Code or other similar laws of Japan, or who have had their transactions with the promissory note clearinghouse suspended, or loans to borrowers who have begun similar proceedings under any foreign law. Those loans are categorized as loans to “Bankrupt Borrowers” under self-assessment of asset quality. |
| (b) | “Non-accrual Loans” are loans which are placed non-accrual status and are other than “Bankrupt Loans.” Those loans are categorized as loans to “Substantially Bankrupt Borrowers” or “Potentially Bankrupt Borrowers” under self-assessment of asset quality. |
| (c) | “Past due Loans (3 months or more)” are loans whose principal and/or interest is past due three months or more counted from the date following the scheduled payment date, and are other than “Bankrupt Loans” and “Non-accrual Loans.” Those loans are also categorized as loans to “Watch Borrowers” under self-assessment of asset quality. |
| (d) | “Restructured Loans” are loans whose contracts were amended in favor of obligors (e.g. reduction of or exemption from stated interest, deferral of interest payments, extension of maturity dates, renunciation of claims) in order to assist or facilitate restructuring processes of the obligors in financial difficulties, and are other than “Bankrupt Loans”, “Non-accrual Loans”, and “Past due Loans (3 months or more)”. Those loans are also categorized as loans to “Watch Borrowers” under self-assessment of asset quality. |
| (e) | The amounts of Loans indicated above are the gross amounts prior to reduction of allowance for possible loan losses. |
| (f) | In the event that a debtor country which becomes temporarily difficult to pay and requests debt rescheduling with respect to external public debt (whose creditors are nations, Trade Insurance Institutions and Export Credit Institutions, etc.) because of the unfavorable balance of international payment, meetings of creditor countries (the “Paris Club”) would be held to discuss debt relief measures (rescheduling). When creditor countries agree on debt relief measures, debt-rescheduling agreements between the creditors and a debtor are agreed, and temporary liquidity assistance is made according to the agreements. Since the debtor carries out Economic Restructuring Program which was agreed with the International Monetary Fund (“IMF”) and continues to make repayments of the debt, those loans are excluded, in principle, from the above amounts. The principal amount of loans for which JBIC has agreed to provide debt relief pursuant to the Paris Club agreements is as follows: |
March 31, 2003 (In millions of yen) | March 31, 2002 (In millions of yen) | March 31, 2003 (In millions of dollars) | |||||||
International Financial Account | ¥ | 363,922 | ¥ | 430,269 | $ | 3,028 | |||
Overseas Economic Cooperation Account | 1,203,975 | 1,265,900 | 10,016 | ||||||
The Government of Japan has provided debt relief under TDB (the Trade and Development Board) scheme in the form of grant aid for eligible ODA loan recipients in exchange for repayments of ODA loans based on the resolution of TDB of the UNCTAD in 1978. Therefore, JBIC’s ODA Loans to eligible TDB countries had been substantially secured by matching grant aid for debt relief provided by the Government of Japan in the amount equivalent to repayment amount of principal and interest owed by such eligible TDB countries.
On the other hand, public creditors agreed to support the countries, which were regarded as Heavily Indebted Poor Countries (“HIPCs”) by the World Bank and the IMF and also were identified as the “HIPCs Initiative” and “Enhanced HIPCs Initiative”, which was qualified and agreed to reduce a part of the debt of HIPCs after the establishment of economic reform programs by the international financial institutions (IMF, World Bank, etc.) in Lyon Summit in June, 1996 and in Cologne Summit in June, 1999 respectively. After the debtor countries agreed to the economic reform programs, the Paris Club creditors agreed to the application of the (Enhanced) HIPCs Initiative. JBIC’s ODA Loans to the HIPCs Initiative countries are substantially secured by matching grant aid for debt relief provided by the Government of Japan to the HIPCs , because, as to debt reduction of ODA Loans to HIPCs, Japanese government announced, in “Statements by Chief Cabinet Secretary on Japan’s proposal for the Debt Initiative for the Heavily Indebted Poor Countries” dated April 28,1999, expansion of bilateral grant aid for debt relief to the HIPCs.
However, the above-mentioned grant aid for debt relief under TDB and HIPCs scheme was replaced by a waiver of loans provided by JBIC in accordance with the “Changes in Debt Relief Method” announced by the Government of Japan on December 10, 2002. JBIC thus has written off all amounts of corresponding ODA loans to eligible TDB countries except for scheduled repayments within the fiscal year 2002 which is covered by TDB scheme and all amounts of corresponding ODA loans to the Enhanced HIPCs Initiative countries. JBIC has also provided 100% allowance for corresponding ODA loans to the HIPCs Initiative countries which are not determined to be applied by the Enhanced HIPCs Initiative.
| (g) | As JBIC’s debtors need mostly long-term loans, JBIC generally enters into commitment line contracts with these debtors. JBIC is committed to lend necessary funds up to the predetermined amount, which shall be within the borrowers’ financing needs for the projects and up to the agreed maximum to lend, upon borrowers’ request, provided that the request meets terms and conditions for disbursement prescribed in the Loan Agreement. The total balance of unused commitment lines as of March 31, 2003 and 2002 are ¥5,907,279 million ($49,145 million) and ¥6,497,410 million respectively. |
| (h) | With respect to the claims with collateral or guarantees on debtors who are legally or substantially bankrupt (“Bankrupt Borrowers and Substantially Bankrupt Borrowers”), the remaining booked amount of the claims after deduction of the amount which is deemed collectible through the disposal of collateral or the execution of guarantees was written-off against the respective claims. The amount of the accumulated write-offs as of March 31, 2003 and 2002 are ¥7,870 million ($65 million) and ¥4,645 million respectively. |
6. Miscellaneous assets
Miscellaneous assets as of March 31, 2003 are as follows:
(a) Accrued income | “Accrued income” includes ¥278,593 million ($2,318 million) of accrued interest on loans and ¥15,011 million ($125 million) of accrued interest on swaps and others. |
(b) Other assets | “Other assets” includes ¥607 million ($5 million) of other accounts receivable and others.
A part of the net earnings on the General Account of the International Financial Account is paid to the National Treasury, pursuant to Article 44 of the JBIC Law. Preliminary payment to the National Treasury, made on a best estimation basis for the year ended March 31, 2003 amounted to ¥10,971 million ($91million) and accounted for under Miscellaneous assets on the balance sheets (See Note 16).
| |
Miscellaneous assets as of March 31, 2002 are as follows: | ||
(a) Accrued income | “Accrued income” includes ¥263,967 million of accrued interest on loans and ¥12,105 million of accrued interest on swaps and others. | |
(b) Other assets | “Other assets” includes ¥42 million of suspense payments and others.
A part of the net earnings on the General Account of the International Financial Account is paid to the National Treasury, pursuant to Article 44 of the JBIC Law. Preliminary payment to the National Treasury, made on a best estimation basis for the year ended March 31, 2002 amounted to ¥24,677 million and accounted for under Miscellaneous assets on the balance sheets (See Note 16). | |
7. Premises and equipment
Premises and equipment as of March 31, 2003 and 2002 are as follows:
March 31, 2003 (In millions of yen) | March 31, 2002 (In millions of yen) | March 31, 2003 (In millions of dollars) | |||||||
Tangible Fixed Assets | |||||||||
Land | ¥ | 12,672 | ¥ | 12,574 | $ | 105 | |||
Buildings | 26,235 | 26,088 | 218 | ||||||
Equipment | 5,234 | 5,328 | 44 | ||||||
Construction in Progress | 237 | 227 | 2 | ||||||
Total | ¥ | 44,379 | ¥ | 44,218 | $ | 369 | |||
Less - Accumulated Depreciation | 17,127 | 16,079 | 142 | ||||||
Net Book Value | ¥ | 27,252 | ¥ | 28,139 | $ | 227 | |||
Intangible Fixed Assets | |||||||||
Software | ¥ | 1,081 | ¥ | 1,020 | $ | 9 | |||
Guarantee deposit | 497 | 495 | 4 | ||||||
Others | 66 | 66 | 1 | ||||||
Total | ¥ | 1,646 | ¥ | 1,582 | $ | 14 | |||
Less - Accumulated Depreciation | 438 | 228 | 4 | ||||||
Net Book Value | ¥ | 1,207 | ¥ | 1,354 | $ | 10 | |||
8. Deferred charges on bonds and notes
Deferred charges on bonds and notes as of March 31, 2003 and 2002 are as follows:
March 31,2003 (In millions of yen) | March 31,2002 (In millions of yen) | March 31,2003 (In millions of dollars) | |||||||
Deferred discount on bonds and notes | ¥ | 1,302 | ¥ | 1,873 | $ | 11 | |||
Deferred bonds and notes issuance costs | 965 | 722 | 8 | ||||||
| ¥ | 2,267 | ¥ | 2,596 | $ | 19 | ||||
9. Allowance for possible loan losses
Allowance for possible loan losses as of March 31, 2003 and 2002 are as follows:
March 31,2003 (In millions of yen) | March 31, 2002 (In millions of yen) | March 31,2003 (In millions of dollars) | |||||||
General Allowance for Possible Loan Losses | ¥ | 172,304 | ¥ | 313,006 | $ | 1,434 | |||
Specific Allowance for Possible Loan Losses | 132,346 | 166,343 | 1,101 | ||||||
| Allowance for Possible Losses on Specific Overseas Loans | 3,512 | 8,478 | 29 | ||||||
| ¥ | 308,163 | ¥ | 487,827 | $ | 2,564 | ||||
10. Bonds and notes
Bonds and notes as of March 31, 2003 and 2002 are as follows:
Description of | Issue date | Currency and (In millions) | Interest Rate(%) | Maturity date | March 31, 2003 (In millions of yen) | March 31, 2002 (In millions of yen) | March 31, 2003 (In millions of dollars) | ||||||||||
Export-Import Bank of Japan Bonds guaranteed by Japan 27-30, 32, 33, 35-37, 39, 40, 42, 44-46 | May June 1999 | JPY USD EUR GBP | 2.875~ 8.250, LIBOR -0.0625 | July 2003- June 2008 | ¥ | 843,484 | ¥ | 1,062,946 | $ | 7,017 | |||||||
Japan Bank for International Cooperation Bonds guaranteed by Japan 1-4 | November 1999- March 2003 | JPY USD | 0.350~ 7.125, LIBOR +0.0625 | June 2005- November 2009 | 420,600 | 399,750 | 3,499 | ||||||||||
FILP Agency Bonds 1-6 (*) | October 2001- September 2002 | JPY 300,000 | 0.350~ 1.520 | September 2006- September 2012 | 300,000 | 100,000 | 2,496 | ||||||||||
Overseas Economic Cooperation Fund Bonds guaranteed by Japan 8,9 | December 1995- November 1996 | JPY 25,000 | 2.9~3.0 | December 2005- November 2006 | 25,000 | 25,000 | 208 | ||||||||||
| ¥ | 1,589,084 | ¥ | 1,587,696 | $ | 13,220 | ||||||||||||
| (*) | Non-government guaranteed bonds issued in domestic market. |
Bonds and notes with redemption of 5 years or less are shown in the following table.
Fiscal 2003 | ¥ | 329,943 million | $ | 2,745 million | ||
2004 | 145,945 | 1,214 | ||||
2005 | 291,360 | 2,424 | ||||
2006 | 305,980 | 2,546 | ||||
2007 | 206,069 | 1,714 |
11. Borrowings
Borrowings as of March 31, 2003 and 2002 are as follows:
| Average interest rate | Due date of repayment | March 31, 2003 (In millions of yen) | March 31, 2002 (In millions of yen) | March 31, 2003 (In millions of dollars) | |||||||||
Long-term borrowings | |||||||||||||
Borrowings from the Government Fund for Fiscal Investment and Loan Program | 2.34 | May 2003 - December 2017 | ¥ | 10,934,283 | $ | 11,917,669 | $ | 90,967 | |||||
Borrowing from the Government Post Office Life Insurance Special Account | 2.50 | 284,398 | 356,810 | 2,366 | |||||||||
| ¥ | 11,218,681 | ¥ | 12,274,479 | $ | 93,333 | ||||||||
Long-term borrowings with maturities within 5 years outstanding as of March 31, 2003 are as follows:
Fiscal 2003 | ¥ | 1,408,756 | million | $ | 11,720 | million | ||
2004 | 1,302,190 | 10,834 | ||||||
2005 | 1,264,845 | 10,523 | ||||||
2006 | 1,266,559 | 10,537 | ||||||
2007 | 1,549,437 | 12,890 |
12. Miscellaneous Liabilities
Miscellaneous liabilities as of March 31, 2003 are as follows:
| (a) Accrued expenses | “Accrued expenses” includes ¥52,575 million ($437 million) of accrued interest on borrowings and ¥26,320 million ($219 million) of accrued interest on bonds and notes and others. | |
| (b) Other liabilities | “Other liabilities” includes ¥178,104 million ($1,482 million) of deferred foreign exchange and ¥5,947 million ($49 million) of suspense receipts and others.
Deferred hedged gains is net realized or unrealized gains from hedging instruments. The gross amounts of deferred hedge gains and losses before netting are ¥273,907 million ($2,279 million) and ¥258,536 million ($2,151 million) as of March 31, 2003, respectively | |
Miscellaneous liabilities as of March 31, 2002 are as follows:
| (a) Accrued expenses | “Accrued expenses” includes ¥64,832 million of accrued interest on borrowings and ¥34,852 million of accrued interest on bonds and notes and others. | |
| (b) Deferred income | “Deferred income” includes ¥3,289 million of unearned interest on bonds and notes and others. | |
| (c) Other liabilities | “Other liabilities” includes ¥636,295 million of deferred foreign exchange and ¥2,940 million of suspense receipts and others.
Deferred hedged gains is net realized or unrealized gains from hedging instruments. The gross amounts of deferred hedge gains and losses before netting are ¥377,303 million and ¥346,221 million as of March 31, 2002, respectively. | |
13. Employee Retirement Benefits
JBIC has defined benefit pension plans which consist of welfare pension fund plan and lump-sum severance indemnity plan.
(a) The Funded Status of the Pension Plans
Disposition | March 31, 2003 (In millions of yen) | March 31, 2002 (In millions of yen) | March 31, 2003 (In millions of dollars) | |||||||||||
Projected Benefit Obligation | (A) | ¥ | (22,334 | ) | ¥ | (20,589 | ) | $ | (186 | ) | ||||
Fair Value of Plan Assets | (B) | 4,244 | 4,565 | 35 | ||||||||||
Unfunded Pension Obligation | (C)=(A)+(B) | (18,090 | ) | (16,024 | ) | (151 | ) | |||||||
Unrecognized Net Obligation at Transition | (D) | — | — | — | ||||||||||
Unrecognized Net Actuarial Gains/Losses | (E) | — | — | — | ||||||||||
Unrecognized Prior Service Cost | (F) | — | — | — | ||||||||||
Net Amount Recognized on the Balance Sheet | (G)=(C)+(D)+(E)+(F) | (18,090 | ) | (16,024 | ) | (151 | ) | |||||||
Prepaid Pension Cost | (H) | — | — | — | ||||||||||
Allowance for Employee Retirement Benefits | (G)-(H) | ¥ | (18,090 | ) | ¥ | (16,024 | ) | $ | (151 | ) | ||||
(Note) The above Projected Benefit Obligations include a portion in which the pension fund acts for the government welfare program.
(b) Component of Pension Cost
Disposition | March 31, 2003 (In millions of yen) | March 31, 2002 (In millions of yen) | March 31, 2003 (In millions of dollars) | |||||||||
Service Cost | ¥ | 945 | ¥ | 1,120 | $ | 8 | ||||||
Interest Cost | 510 | 501 | 4 | |||||||||
Expected Return on Plan Assets | (68 | ) | (185 | ) | (1 | ) | ||||||
Amortization of Prior Service Cost | (300 | ) | — | (2 | ) | |||||||
Amortization of Net Actuarial Gains/Losses | 2,172 | 505 | 18 | |||||||||
Amortization of Net Obligation at Transition | — | — | — | |||||||||
Other Costs | — | — | — | |||||||||
Net Pension Cost | ¥ | 3,258 | ¥ | 1,941 | $ | 27 | ||||||
(c) Principal Assumptions Used
| March 31, 2003 | March 31, 2002 | |||||
Discount Rate | 2.0 | % | 2.5 | % | ||
Expected Rate of Return on Plan Assets | 1.5 | % | 4.0 | % | ||
Method of Attributing the Projected Benefits to Periods of Services | Straight-line basis | Straight-line basis | ||||
Amortization Period of Prior Service Costs | Prior service cost is | — | ||||
| charged to net income | ||||||
| of the year | ||||||
Amortization Period of Actuarial Gains/Losses | Gains/losses are | Gains/losses are | ||||
| charged to net income | charged to net income | |||||
| of the year | of the year | |||||
Amortization Period of Net Obligation at Transition | — | — |
14. Acceptances and Guarantees
Acceptances and Guarantees as of March 31, 2003 and 2002 are as follows:
March 31, 2003 yen) | March 31, 2002 yen) | March 31, 2003 dollars) | |||||||
Acceptances | ¥ | — | ¥ | — | $ | — | |||
Guarantees | 629,082 | 574,763 | 5,234 | ||||||
| ¥ | 629,082 | ¥ | 574,763 | $ | 5,234 | ||||
15. Assets Pledged as Collateral
There were no assets pledged as collateral as of March 31, 2003 and 2002.
16. ODA-loan related losses
The Government of Japan has provided debt relief under TDB (the Trade and Development Board) scheme in the form of grant aid for eligible ODA loan recipients in exchange for repayments of ODA loans based on the resolution of TDB of the UNCTAD in 1978. Therefore, JBIC’s ODA Loans to eligible TDB countries had been substantially secured by matching grant aid for debt relief provided by the Government of Japan in the amount equivalent to repayment amount of principal and interest owed by such eligible TDB countries.
On the other hand, public creditors agreed to support the countries, which were regarded as Heavily Indebted Poor Countries (“HIPCs”) by the World Bank and the IMF and also were identified as the “HIPCs Initiative” and “Enhanced HIPCs Initiative”, which was qualified and agreed to reduce a part of the debt of HIPCs after the establishment of economic reform programs by the international financial institutions (IMF, World Bank, etc.) in Lyon Summit in June, 1996 and in Cologne Summit in June, 1999 respectively. After the debtor countries agreed to the economic reform programs, the Paris Club creditors agreed to the application of the (Enhanced) HIPCs Initiative. JBIC’s ODA Loans to the HIPCs Initiative countries are substantially secured by matching grant aid for debt relief provided by the Government of Japan to the HIPCs, because, as to debt reduction of ODA Loans to HIPCs, Japanese government announced, in “Statements by Chief Cabinet Secretary on Japan’s proposal for the Debt Initiative for the Heavily Indebted Poor Countries” dated April 28,1999, expansion of bilateral grant aid for debt relief to the HIPCs.
However, the above-mentioned grant aid for debt relief under TDB and HIPCs scheme was replaced by a waiver of loans provided by JBIC in accordance with the “Changes in Debt Relief Method” announced by the Government of Japan on December 10, 2002. JBIC thus has written off all amounts of corresponding ODA loans to eligible TDB countries except for scheduled repayments within the fiscal year 2002 which is covered by TDB scheme and all amounts of corresponding ODA loans to the Enhanced HIPCs Initiative countries. JBIC has also provided 100% allowance for corresponding ODA loans to the HIPCs Initiative countries which are not determined to be applied by the Enhanced HIPCs Initiative. Those losses are reflected in the extraordinary losses (“ODA-loan related losses”)
17. Accumulated dificit
A part of net earnings on the International Financial Account is paid to the National Treasury pursuant to Article 44 of the JBIC Law. The payment to the National Treasury is accounted for the appropriation of net earnings.
Another part of the net earnings on the International Financial Account is appropriated for reserve of the International Financial Account.
JBIC accounts for “Transfer from Reserve of the Overseas Economic Cooperation Account” for the fiscal year ended March 31, 2003.
18. Leased Transactions
Leased transactions in the fiscal year ended March 31, 2003 are as follows:
| (a) | Finance lease transactions, excluding leases where the ownership of the property is deemed to be transferred to the lessee. |
Not applicable
| (b) | Operating lease transactions: |
| • | Future Lease Payment Obligations |
| Within 1 year | More than 1 year | Total | |||||||
(In millions of yen) | ¥ | 9 | ¥ | 2 | ¥ | 11 | |||
(In millions of dollars) | $ | 0 | $ | 0 | $ | 0 | |||
Leased transactions in the fiscal year ended March 31, 2002 are as follows:
| (a) | Finance lease transactions, excluding leases where the ownership of the property is deemed to be transferred to the lessee. |
Not applicable
| (b) | Operating lease transactions: |
| • | Future Lease Payment Obligations |
| Within 1 year | More than 1 year | Total | |||||||
(In millions of yen) | ¥ | 23 | ¥ | 9 | ¥ | 33 | |||
19. Derivative Transactions
Notes to derivative transactions in the fiscal year ended March 31, 2003 are as follows:
(a) Policy for Derivative Transactions
JBIC engages in derivatives transactions solely for the purpose of hedging foreign exchange rate risks and interest rate risks that are incurred in respect of its lending and funding operations.
(b) Transactions
Derivatives transactions include interest rate and currency swaps and forward exchange contracts.
(c) Risks Involved in Derivatives Transactions
Derivatives transactions involve the following risks.
(i) Credit Risk
Potential loss from the failure of a counterparty to perform its obligations in accordance with terms and conditions under a contract governing transactions due to bankruptcy or deteriorating business.
(ii) Market Risk
Potential loss from changes in the market value of financial products due to fluctuations in interest rates or exchange rates.
(d) Policies of Risk Management for Derivatives Transactions
(i) Credit Risk
JBIC consistently monitors the market value of its derivatives transactions with each counterparty and the amount of its credit exposure and creditworthiness of each counterparty in order to ascertain the appropriateness of entering into or maintaining a transaction with each counterparty.
(ii) Market Risk
JBIC uses derivatives transactions solely for the purpose of hedging. Therefore, the market risk on derivatives transactions and that on hedged (lending or funding) transactions basically offsets.
Credit Risk Amounts of Derivatives, etc. | (In 100 millions of yen) | (In 100 millions of dollars) | ||||||||||||
March 31, 2003 | Contract Amount/Notional Amount | Credit Risk | Contract Amount/Notional Amount | Credit Risk | ||||||||||
Interest Rate Swaps | ¥ | 17,001 | ¥ | 1,093 | $ | 141 | $ | 9 | ||||||
Currency Swaps | 45,528 | 5,456 | 379 | 45 | ||||||||||
Forward Exchange Contracts | 14 | 0 | 0 | 0 | ||||||||||
Other Derivatives | — | — | — | — | ||||||||||
Credit Risk Reductions through Netting | — | (2,526 | ) | — | (21 | ) | ||||||||
Total | ¥ | 62,543 | ¥ | 4,023 | $ | 520 | $ | 33 | ||||||
| (Note) | Credit Risk amounts are calculated under Uniform International Standards in accordance with the Banking Law of Japan and the related regulations. |
(e) Interest Rate-related Transactions
There is no interest rate-related derivative transaction whose valuated gain/(loss) by market value is accounted for in the Statement of Operations.
Hedge accounting is applied to all of the interest rate-related derivative transactions.
(f) Currency-related Transactions
There is no currency-related derivative transaction whose valuated gain/(loss) by market value is accounted for in the Statement of Operations.
Certain currency swaps have been accounted for by using the accrual method of accounting based on “Treatment of Accounting and Auditing Concerning Accounting for Foreign Currency Transactions in the Banking Industry”, which is widely used by Japanese commercial banks. The Contractual Amount etc. of such currency swaps accounted for on an accrual method is as follows:
March 31, 2003 (In millions of yen) | |||||||||
Type | Contractual Amount | Market Value | Unrealized Gain/(Loss) | ||||||
Currency Swaps | ¥ | 4,536,027 | ¥ | 118,779 | ¥ | — | |||
March 31, 2003 (In millions of dollars) | |||||||||
Type | Contractual Amount | Market Value | Unrealized Gain/(Loss) | ||||||
Currency Swaps | $ | 37,737 | $ | 988 | $ | — | |||
(g) Equity-related Transactions
Not applicable
(h) Bond-related Transactions
Not applicable
(i) Commodity-related Transactions
Not applicable
(j) Credit Derivatives Transactions
Not applicable
Notes to derivative transactions in the fiscal year ended March 31, 2002 are as follows:
(a) Policy for Derivative Transactions
JBIC engages in derivatives transactions solely for the purpose of hedging foreign exchange rate risks and interest rate risks that are incurred in respect of its lending and funding operations.
(b) Transactions
Derivatives transactions include interest rate and currency swaps and forward exchange contracts.
(c) Risks Involved in Derivatives Transactions
Derivatives transactions involve the following risks.
(i) Credit Risk
Potential loss from the failure of a counterparty to perform its obligations in accordance with terms and conditions under a contract governing transactions due to bankruptcy or deteriorating business.
(ii) Market Risk
Potential loss from changes in the market value of financial products due to fluctuations in interest rates or exchange rates.
(d) Policies of Risk Management for Derivatives Transactions
(i) Credit Risk
JBIC consistently monitors the market value of its derivatives transactions with each counterparty and the amount of its credit exposure and creditworthiness of each counterparty in order to ascertain the appropriateness of entering into or maintaining a transactions with each counterparty.
(ii) Market Risk
JBIC uses derivatives transactions solely for the purpose of hedging. Therefore, the market risk on derivatives transactions and that on hedged (lending or funding) transactions basically offsets.
Credit Risk Amounts of Derivatives, etc. | (In 100 millions of yen) | ||||||
March 31, 2002 | Contract Amount/Notional Amount | Credit Risk | |||||
Interest Rate Swaps | ¥ | 17,629 | ¥ | 899 | |||
Currency Swaps | 50,909 | 4,329 | |||||
Forward Exchange Contracts | 10 | 0 | |||||
Other Derivatives | — | — | |||||
Credit Risk Reductions through Netting | — | (3,028 | ) | ||||
Total | ¥ | 68,549 | ¥ | 2,200 | |||
| (Note) | Credit Risk amounts are calculated under Uniform International Standards in accordance with the Banking Law of Japan and the related regulations. |
(e) Interest Rate-related Transactions
There is no interest rate-related derivative transaction whose valuated gain/(loss) by market value is accounted for in the Statement of Operations.
Hedge accounting is applied to all of the interest rate-related derivative transactions.
(f) Deferred Hedge Profits
JBIC recorded fair value of hedging instruments at the fiscal year ended March 31, 2001 as deferred hedge profits under Miscellaneous liabilities. From the fiscal year ended March 31, 2002, it records the net amount of fair value of hedging instruments at March 31, 2002 and realized profits and losses arising on hedging instruments as deferred hedge profits under Miscellaneous liabilities.
As a result of this, deferred hedge profits decreased by 14,240 million yen, and net income increased by the same amount.
(g) Currency-related Transactions
There is no currency-related derivative transaction whose valuated gain/(loss) by market value is accounted for in the Statement of Operations.
Certain currency swaps have been accounted for by using the accrual method of accounting based on the “Tenporary Treatment of Accounting and Auditing Concerning Accounting for Foreign Currency Transactions in the Banking Industry”, which is widely used by Japanese commercial banks. The Contractual Amount etc. of such currency swaps accounted for on an accrual method is as follows:
March 31, 2002 (In millions of yen) | ||||||||||
Type | Contractual Amount | Market Value | Unrealized Gain/(Loss) | |||||||
Currency Swaps | ¥ | 5,071,727 | ¥ | (377,490 | ) | ¥ | — | |||
(h) Equity-related Transactions
Not applicable
(i) Bond-related Transactions
Not applicable
(j) Commodity-related Transactions
Not applicable
(k) Credit Derivatives Transactions
Not applicable
20. Market Value of Securities
Notes to market value of securities as of March 31, 2003 are as follows:
The followings includes “Securities” and negotiable due from banks in “Cash and due from banks”
(a) Trading Securities
Not applicable
(b) Held-to-maturities Debt Securities
Not applicable
(c) Available-for-sale Securities with market value
Not applicable
(d) Held-to-maturities Debt Securities sold
Not applicable
(e) Available-for-sale Securities sold
Not applicable
(f) Held-to-maturity Debt Securities and Available-for-sale Securities whose market value is not readily determinable are as follows:
March 31,2003 (In millions of yen) | March 31, 2003 (In millions of dollars) | |||||
Held-to-maturity Debt Securities | ¥ | — | $ | — | ||
Unlisted Foreign Securities | — | — | ||||
Available-for-sale Securities | 122,912 | 1,023 | ||||
Unlisted Japanese Equities other than Over-the-counter | 119,084 | 991 | ||||
Unlisted Foreign Equities | 3,184 | 27 | ||||
Unlisted Japanese Local Government Bonds | — | — | ||||
Unlisted Japanese Corporate Bonds | — | — | ||||
Unlisted Foreign bonds | — | — | ||||
Other Japanese securities | — | — | ||||
Other unlisted foreign securities | 642 | 5 | ||||
Total | ¥ | 122,912 | $ | 1,023 | ||
(g) Change of Classification of Securities
Not applicable
(h) Redemption Schedule of Available-for-sale Securities with Maturity
Not applicable
(i) Money Held in Trust
Not applicable
(j) Net Unrealized Gain (Loss) on Available-for-sale Securities
Not applicable
Notes to market value of securities as of March 31, 2002 are as follows:
The followings includes “Securities” and negotiable due from banks in “Cash and Due from Banks”
(a) Trading Securities
Not applicable
(b) Held-to-maturities Debt Securities
Not applicable
(c) Available-for-sale Securities with market value
Not applicable
(d) Held-to-maturities Debt Securities sold
Not applicable
(e) Available-for-sale Securities sold
Not applicable
(f) Held-to-maturity Debt Securities and Available-for-sale Securities whose market value is not readily determinable are as follows:
March 31,2002 (In millions of yen) | |||
Held-to-maturity Debt Securities | ¥ | — | |
Unlisted Foreign Securities | — | ||
Available-for-sale Securities | 124,273 | ||
Unlisted Japanese Equities other than Over-the-counter | 119,134 | ||
Unlisted Foreign Equities | 4,443 | ||
Unlisted Japanese Local Government Bonds | — | ||
Unlisted Japanese Corporate Bonds | — | ||
Unlisted Foreign bonds | — | ||
Other Japanese securities | — | ||
Other unlisted foreign securities | 695 | ||
Total | ¥ | 124,273 | |
(g) Change of Classification of Securities
Not applicable
(h) Redemption Schedule of Available-for-sale Securities with Maturity
Not applicable
(i) Money Held in Trust
Not applicable
(j) Net Unrealized Gain (Loss) on Available-for-sale Securities
Not applicable
| ChuoAoyama Audit Corporation | PRICEWATERHOUSECOOPERS | |
| Kasumigaseki Bldg. 32nd Floor | ||
3-2-5, Kasumigaseki, Chiyoda-ku, | ||
| Tokyo 100-6088, Japan | ||
Report of Independent Auditors
To the Governor of
Japan Bank for International Cooperation
We have audited the accompanying non-consolidated International Financial Account balance sheets of Japan Bank for International Cooperation as of March 31, 2003 and 2002, and the related non-consolidated International Financial Account statements of operations, equity, and cash flows for the years then ended, all expressed in Japanese Yen. These non-consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these non-consolidated financial statements based in our audits.
We conducted our audits in accordance with auditing standards, procedures and practices generally accepted and applied in Japan. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the non-consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the non-consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall non-consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the non-consolidated financial statements referred to above present fairly, in all material respects, the non-consolidated financial position of International Financial Account of Japan Bank for International Cooperation as of March 31, 2003 and 2002, and the non-consolidated results of its operations and its cash flows for the years then ended in conformity with accounting principles and practices generally accepted in Japan (see Note 1).
The amounts expressed in U.S. dollars, which are provided solely for the convenience of the reader, have been translated on the basis set forth in Note 1 to the accompanying non-consolidated financial statements.
/s/ ChuoAoyama Audit Corporation |
ChuoAoyama Audit Corporation |
Tokyo, Japan |
June 25, 2003 |
BALANCE SHEETS
JAPAN BANK FOR INTERNATIONAL COOPERATION
International Financial Account
| In millions of yen | In millions of yen | In millions of dollars | ||||||||||
| March 31, 2003 | March 31, 2002 | March 31, 2003 | ||||||||||
| Assets | ||||||||||||
Cash and due from banks | ¥ | 228,527 | ¥ | 403,110 | $ | 1,901 | ||||||
Securities | — | 1,599 | — | |||||||||
Loans | 9,738,760 | 11,003,074 | 81,021 | |||||||||
Miscellaneous assets | 224,946 | 230,545 | 1,871 | |||||||||
Premises and equipment | 20,784 | 21,576 | 173 | |||||||||
Deferred charges on bonds and notes | 2,249 | 2,573 | 19 | |||||||||
Customer’s liabilities for acceptances and guarantees | 629,082 | 574,763 | 5,234 | |||||||||
Allowance for possible loan losses | (127,151 | ) | (191,142 | ) | (1,058 | ) | ||||||
Allowance for possible investment losses | — | (1,119 | ) | — | ||||||||
Total assets | ¥ | 10,717,200 | ¥ | 12,044,980 | $ | 89,161 | ||||||
| In millions of yen | In millions of yen | In millions of dollars | ||||||||||
| March 31, 2003 | March 31, 2002 | March 31, 2003 | ||||||||||
Liabilities and equity | ||||||||||||
Liabilities | ||||||||||||
Bonds and notes | ¥ | 1,564,084 | ¥ | 1,562,696 | $ | 13,012 | ||||||
Borrowings | 6,606,964 | 7,574,648 | 54,966 | |||||||||
Miscellaneous liabilities | 300,891 | 762,200 | 2,503 | |||||||||
Allowance for employee bonuses | 467 | 369 | 4 | |||||||||
Allowance for employee retirement benefits | 11,215 | 9,934 | 93 | |||||||||
Acceptances and guarantees | 629,082 | 574,763 | 5,234 | |||||||||
Total liabilities | ¥ | 9,112,705 | ¥ | 10,484,613 | $ | 75,813 | ||||||
Equity | ||||||||||||
Capital of the International Financial Account | ¥ | 985,500 | ¥ | 985,500 | $ | 8,199 | ||||||
Reserve of the International Financial Account | 608,336 | 564,230 | 5,061 | |||||||||
Retained earnings at the end of the current year | 10,658 | 10,636 | 88 | |||||||||
Total equity | ¥ | 1,604,494 | ¥ | 1,560,367 | $ | 13,348 | ||||||
Total liabilities and equity | ¥ | 10,717,200 | ¥ | 12,044,980 | $ | 89,161 | ||||||
See accompanying “Notes to Financial Statements” which are an integral part of these statements.
STATEMENTS OF OPERATIONS
JAPAN BANK FOR INTERNATIONAL COOPERATION
International Financial Account
| In millions of yen | In millions of yen | In millions of dollars | |||||||
| Fiscal 2002 | Fiscal 2001 | Fiscal 2002 | |||||||
Income | |||||||||
Interest income | ¥ | 318,185 | ¥ | 435,177 | $ | 2,647 | |||
Interest on loans | 285,453 | 425,866 | 2,375 | ||||||
Interest income on reverse repurchase agreement | — | 3 | — | ||||||
Interest on due from banks | 3,636 | 9,307 | 30 | ||||||
Interest on swaps (net) | 29,095 | — | 242 | ||||||
Fees and Commissions | 5,327 | 5,681 | 44 | ||||||
Other operating income | — | 1,308 | — | ||||||
Foreign exchange gains | — | 1,308 | — | ||||||
Other ordinary income | 129 | 99 | 1 | ||||||
Reversal of allowance for possible loan losses | 57,410 | 4,614 | 478 | ||||||
Recovery of Written-off Claims | 159 | — | 1 | ||||||
Profits on sales of premises and equipment | 2 | 3 | 0 | ||||||
Total income | ¥ | 381,215 | ¥ | 446,885 | $ | 3,171 | |||
Expenses | |||||||||
Interest expenses | ¥ | 232,381 | ¥ | 305,301 | $ | 1,933 | |||
Interest on bonds and notes | 71,141 | 81,279 | 592 | ||||||
Interest on borrowings | 161,240 | 185,804 | 1,341 | ||||||
Interest on swaps (net) | — | 38,217 | — | ||||||
Fees and Commissions | 3,099 | 2,506 | 26 | ||||||
Other operating expenses | 755 | 866 | 6 | ||||||
Foreign exchange losses | 2 | — | 0 | ||||||
Amortization of bonds and notes issuance costs | 567 | 574 | 5 | ||||||
Others | 185 | 291 | 1 | ||||||
General and administrative expenses | 17,169 | 16,378 | 143 | ||||||
Other ordinary expenses | 351 | 568 | 3 | ||||||
Provision for allowance for possible investment losses | — | 78 | — | ||||||
Write-off of loans | — | 489 | — | ||||||
Write-off equities, securities, etc. | 351 | — | 3 | ||||||
Losses on disposal of premises and equipment | 36 | 39 | 0 | ||||||
ODA-loan related losses | 39,188 | — | 326 | ||||||
Total expense | ¥ | 292,982 | ¥ | 325,659 | $ | 2,437 | |||
Net income | ¥ | 88,232 | ¥ | 121,225 | $ | 734 | |||
See accompanying “Notes to Financial Statements” which are an integral part of these statements.
STATEMENTS OF CASH FLOWS
JAPAN BANK FOR INTERNATIONAL COOPERATION
International Financial Account
| In millions of yen | In millions of yen | In millions of dollars | ||||||||||
| Fiscal 2002 | Fiscal 2001 | Fiscal 2002 | ||||||||||
Cash flows from operating activities | ||||||||||||
Net income | ¥ | 88,232 | ¥ | 121,225 | $ | 734 | ||||||
Depreciation and amortization | 1,127 | 1,232 | 9 | |||||||||
Increase (decrease) in allowance for possible loan losses | (63,991 | ) | (5,855 | ) | (532 | ) | ||||||
Increase (decrease) in allowance for possible investment losses | (1,119 | ) | 78 | (9 | ) | |||||||
Increase (decrease) in allowance for employee bonuses | 98 | 369 | 1 | |||||||||
Increase (decrease) in allowance for employee retirement benefits | 1,280 | 305 | 11 | |||||||||
Interest income | (318,185 | ) | (435,177 | ) | (2,647 | ) | ||||||
Interest expenses | 232,381 | 305,301 | 1,933 | |||||||||
Net loss (gain) on securities | 1,471 | — | 12 | |||||||||
Foreign exchange loss (gain) | (12,226 | ) | (10,466 | ) | (102 | ) | ||||||
Net loss (gain) on sales of premises and equipment | 34 | 35 | 0 | |||||||||
Net decrease (increase) in loans | 796,319 | 321,382 | 6,625 | |||||||||
Net increase (decrease) in bonds and notes | 51,465 | 71,522 | 428 | |||||||||
Net increase (decrease) in borrowings | (967,684 | ) | (456,952 | ) | (8,051 | ) | ||||||
Net decrease (increase) in due from banks (excluding cash equivalents) | 200,850 | (76,372 | ) | 1,671 | ||||||||
Net decrease (increase) in reverse repurchase agreement | — | 105,418 | — | |||||||||
Interest received | 323,273 | 460,681 | 2,690 | |||||||||
Interest paid | (256,309 | ) | (353,806 | ) | (2,132 | ) | ||||||
Others, net | 7,726 | (13,630 | ) | 64 | ||||||||
Net cash provided by in operating activities | ¥ | 84,743 | ¥ | 35,290 | $ | 705 | ||||||
Cash flows from investing activities | ||||||||||||
Expenditures on premises and equipment | ¥ | (390 | ) | ¥ | (816 | ) | $ | (3 | ) | |||
Proceeds from sales of premises and equipment | 22 | 22 | 0 | |||||||||
Net cash used in investing activities | ¥ | (368 | ) | ¥ | (793 | ) | $ | (3 | ) | |||
Cash flows from financing activities | ||||||||||||
Payment to National Treasury | ¥ | (30,400 | ) | ¥ | (46,314 | ) | $ | (253 | ) | |||
Net cash used in financing activities | ¥ | (30,400 | ) | ¥ | (46,314 | ) | $ | (253 | ) | |||
Effect of exchange rate changes on cash and cash equivalents | ¥ | (0 | ) | ¥ | (0 | ) | $ | (0 | ) | |||
Net increase (decrease) in cash and cash equivalents | ¥ | 53,975 | ¥ | (11,817 | ) | $ | 449 | |||||
Cash and cash equivalents at the beginning of the fiscal year | ¥ | 4,821 | ¥ | 16,639 | $ | 40 | ||||||
Cash and cash equivalents at the end of the fiscal year | ¥ | 58,796 | ¥ | 4,821 | $ | 489 | ||||||
See accompanying “Notes to Financial Statements” which are an integral part of these statements.
STATEMENT OF EQUITY
JAPAN BANK FOR INTERNATIONAL COOPERATION
| In millions of yen | |||||||||||||||||||||
| Capital of the International Financial Account | Capital of the Overseas Economic Cooperation Account | Reserve of the International Financial Account | Reserve of the Overseas Economic Cooperation Account | Accumulated deficit at the end of the current year | Total Equity | ||||||||||||||||
Balance at March 31, 2002 | ¥ | 985,500 | ¥ | 6,285,244 | ¥ | 564,230 | ¥ | 182,296 | ¥ | (179,183 | ) | ¥ | 7,838,088 | ||||||||
Transfer from net earnings accounted under the JBIC law to reserves | 44,105 | 98,422 | (142,528 | ) | — | ||||||||||||||||
Payment to National Treasury | (44,105 | ) | (44,105 | ) | |||||||||||||||||
Issuance of capital from Government | 219,100 | 219,100 | |||||||||||||||||||
Net income | (495,051 | ) | (495,051 | ) | |||||||||||||||||
Balance at March 31, 2003 | ¥ | 985,500 | ¥ | 6,504,344 | ¥ | 608,336 | ¥ | 280,719 | ¥ | (860,868 | ) | ¥ | 7,518,031 | ||||||||
Appropriations: | |||||||||||||||||||||
Transfer from net earnings to reserve of the International Financial Account | 30,246 | (30,246 | ) | — | |||||||||||||||||
Transfer from reserve of the Overseas Economic Cooperation Account | (260,051 | ) | 260,051 | — | |||||||||||||||||
Payment to National Treasury | (30,246 | ) | (30,246 | ) | |||||||||||||||||
Total | ¥ | 30,246 | (260,051 | ) | ¥ | 199,559 | ¥ | (30,246 | ) | ||||||||||||
Unappropriated Accumulated deficit | ¥ | (661,309 | ) | ||||||||||||||||||
See accompanying “Notes to Financial Statements” which are an integral part of these statements.
STATEMENT OF EQUITY
JAPAN BANK FOR INTERNATIONAL COOPERATION
| In millions of dollars | |||||||||||||||||||||
| Capital of the International Financial Account | Capital of the Overseas Economic Cooperation Account | Reserve of the International Financial Account | Reserve of the Overseas Economic Cooperation Account | Accumulated deficit at the end of the current year | Total Equity | ||||||||||||||||
Balance at March 31, 2002 | $ | 8,199 | $ | 52,290 | $ | 4,694 | $ | 1,516 | $ | (1,491 | ) | $ | 65,208 | ||||||||
Transfer from net earnings accounted under the JBIC law to reserves | 367 | 819 | (1,186 | ) | — | ||||||||||||||||
| Payment to National Treasury | (367 | ) | (367 | ) | |||||||||||||||||
Issuance of capital from Government | 1,823 | 1,823 | |||||||||||||||||||
| Net income | (4,118 | ) | (4,118 | ) | |||||||||||||||||
| Balance at March 31, 2003 | $ | 8,199 | $ | 54,113 | $ | 5,061 | $ | 2,335 | $ | (7,162 | ) | $ | 62,546 | ||||||||
| Appropriations: | |||||||||||||||||||||
Transfer from net earnings to reserve of the International Financial Account | 252 | (252 | ) | — | |||||||||||||||||
Transfer from reserve of the Overseas Economic Cooperation Account | (2,164 | ) | 2,164 | — | |||||||||||||||||
Payment to National Treasury | (252 | ) | (252 | ) | |||||||||||||||||
Total | $ | 252 | (2,164 | ) | $ | 1,660 | $ | (252 | ) | ||||||||||||
Unappropriated Accumulated deficit | $ | (5,502 | ) | ||||||||||||||||||
See accompanying “Notes to Financial Statements” which are an integral part of these statements.
STATEMENT OF EQUITY
JAPAN BANK FOR INTERNATIONAL COOPERATION
| In millions of yen | ||||||||||||||||||||||||
| Capital of the International Financial Account | Capital of the Overseas Economic Cooperation Account | Reserve of the International Financial Account | Special Reserve of the International Financial Account | Reserve of the Overseas Economic Cooperation Account | Accumulated deficit at the end of the current year | Total Equity | ||||||||||||||||||
Balance at March 31, 2001 | ¥ | 985,500 | ¥ | 6,000,744 | ¥ | 523,287 | ¥ | 5,423 | ¥ | 125,602 | ¥ | (302,367 | ) | ¥ | 7,338,190 | |||||||||
| Transfer from net earnings accounted under the JBIC law to reserves | 40,943 | 11 | 56,694 | (97,648 | ) | — | ||||||||||||||||||
| Payment to National Treasury | (5,435 | ) | (40,944 | ) | (46,379 | ) | ||||||||||||||||||
| Issuance of capital from Government | 284,500 | 284,500 | ||||||||||||||||||||||
Net income | 261,776 | 261,776 | ||||||||||||||||||||||
Balance at March 31, 2002 | ¥ | 985,500 | ¥ | 6,285,244 | ¥ | 564,230 | — | ¥ | 182,296 | ¥ | (179,183 | ) | ¥ | 7,838,088 | ||||||||||
Appropriations: | ||||||||||||||||||||||||
| Transfer from net earnings to reserve of the International Financial Account | 44,105 | (44,105 | ) | — | ||||||||||||||||||||
| Transfer from net earnings accounted under the JBIC law to reserve of the Overseas Economic Cooperation Account | 98,422 | (98,422 | ) | — | ||||||||||||||||||||
| Payment to National Treasury | (44,105 | ) | (44,105 | ) | ||||||||||||||||||||
| Total | ¥ | 44,105 | ¥ | 98,422 | ¥ | (186,633 | ) | ¥ | (44,105 | ) | ||||||||||||||
| Unappropriated Accumulated deficit | ¥ | (365,817 | ) | |||||||||||||||||||||
See accompanying “Notes to Financial Statements” which are an integral part of these statements.
NOTES TO FINANCIAL STATEMENTS
JAPAN BANK FOR INTERNATIONAL COOPERATION
International Financial Account
1. Basis of Presentation
The accompanying financial statements have been prepared from the accounts maintained by Japan Bank for International Cooperation (“JBIC”) in accordance with the provisions set forth in conformity with accounting principles and practices generally accepted in Japan, which are different in certain respects as to application and disclosure requirements from International Financial Reporting Standards.
The financial statements are not intended to present the financial position and results of operations in accordance with accounting principles and practices generally accepted in countries and jurisdictions other than Japan.
The Bank’s accounts are separated into International Financial Account and Overseas Economic Cooperation Account under Article 41 of the Japan Bank for International Cooperation Law (“JBIC Law”) whereby the accounting shall be separated in accordance with the categories of international financial operations and overseas economic cooperation operations and be recorded by establishing the respective account for each. In separating accounts, transactions directly related to either of the operations are attributed to the account for these operations and overhead expenses and others are allocated to both of the accounts by using a certain allocation rate.
Consolidated financial statements are not prepared because JBIC has no subsidiaries.
The amounts indicated in millions of yen are rounded down by omitting the figures less than one million. Totals may not add up exactly because of such omission.
Amounts in U.S. dollars are presented solely for the convenience of readers outside Japan. The rate of ¥120.20=$1.00, the exchange rate as of March 31, 2003, has been used in translation. The presentation of such amounts is not intended to imply that Japanese yen have been or could be readily converted, realized or settled into U.S. dollars at that rate or any other rate.
2. Significant Accounting Policies
(a) Cash and cash equivalents
“Cash and cash equivalents” as stated in the statements of cash flows consists of cash in hand and due from Bank of Japan included in “Cash and due from banks” in the balance sheets.
(b) Securities
All securities are classified as “Available-for-sale Securities” which have no market value and are carried at cost based on a moving average cost valuation.
(c) Valuation method for derivative financial instruments
All derivative financial instruments are carried at fair value.
(d) Hedge accounting
(i) Hedge accounting
JBIC applies the deferral method of hedge accounting.
(ii) Hedging instruments and hedged items
Hedging instrument: interest rate swaps
Hedged items: loans, bonds and notes
(iii) Hedging policy
To hedge interest rate risks, JBIC utilizes hedging instruments within the range of the hedged assets and liabilities.
(iv) Evaluation of hedge effectiveness
JBIC judges the effectiveness of the hedge by measuring and comparing the fluctuations of fair value or cumulative fluctuations of cash flows of hedging instruments and corresponding hedged items from the inception of the hedges to the judging point.
(e) Depreciation basis for fixed assets
(i) Premises and equipment
Premises and equipment are depreciated on the declining balance basis except for the buildings (excluding furniture and equipment) acquired on or after April 1, 1998, which are depreciated on the straight-line basis. The principal estimated useful lives are as follows:
Buildings: 38 years to 50 years
Equipment: 2 years to 20 years
(ii) Software
Software used by JBIC is amortized on the straight-line basis over its useful life (5 years).
(f) Method of amortization for deferred charges
“Discounts on Bonds and Notes” are amortized over terms of redemption, and “Bonds and Notes Issuance Costs” are amortized over 3 years, on the straight-line basis in accordance with the Commercial Code of Japan.
(g) Foreign currency translation and revaluation method
JBIC maintains its accounting records in Japanese yen. Assets and liabilities denominated in foreign currencies are translated into Japanese yen at the market exchange rate prevailing at the fiscal year end.
JBIC had adopted the “Temporary Treatment of Accounting and Auditing Concerning Accounting for Foreign Currency Transactions in the Banking Industry” (JICPA Industry Audit Committee Report No.20). Since the current fiscal year, however, JBIC have adopted the “Treatment of Accounting and Auditing Concerning Accounting for Foreign Currency Transactions in the Banking Industry” (JICPA Industry Audit Committee Report No.25). Foreign currency differences arising from futures currency transactions are recognized on the balance sheets on a net basis.
In accordance with the transitional applications described in JICPA Industry Audit Committee Report No.25, regarding foreign exchange swaps relating to lending and funding transactions, nominal amounts of money lent and nominal amounts of money funded are translated into yen using the exchange rates in effect at the fiscal year end and stated in the balance sheets on a net basis. Premiums or discounts reflecting interest rate differences between the two currencies are charged to or credited to the Statement of Operations on an accrual basis over the period from the spot transaction’s settlement date to the forward transaction’s settlement date, and stated as accrued income under Miscellaneous assets or accrued expenses under Miscellaneous liabilities on the balance sheets.
Such foreign exchange swaps relating to lending and funding transactions are swap transactions that are entered into for the purpose of loans which are sourced from funding in different currencies, where (1) the nominal amounts of funding or loans which are equal to the amounts of foreign exchange purchased or sold as spot transactions and (2) the amounts of future payment or proceed from loans or funding respectively, with the contractual interest payment or receipt denominated in foreign currency, are equal to the amounts of foreign exchange forward transaction sold or purchased.
With regard to flat currency swap transactions (including currency swap transactions for which the spot-forward is flat for each interest payment period) that are entered into for the purpose of loans which are sourced from funding in different currencies, where (1) the nominal amounts payable/receivable at the maturity date are equal to the nominal amounts receivable/payable at the contract date and where (2) the swap rate applied to the principal portion and the interest portion are rational, in accordance with the transitional applications described in JICPA Industry Audit Committee Report No.25, nominal amounts of money lent and nominal amounts of money funded are translated into yen using the exchange rates in effect at the fiscal year end and stated in the balance sheets on a net basis. An amount equivalent to the interest swapped are charged to or credited to the statements of operations on an accrual basis over the subject period, and stated as accrued income under Miscellaneous assets or accrued expenses under Miscellaneous liabilities on the balance sheets.
(h) Allowance for possible loan losses
JBIC provided “Allowance for possible loan losses” as follows:
The allowance for claims on debtors who are legally bankrupt (“Bankrupt Borrowers”) or substantially bankrupt (“Substantially Bankrupt Borrowers”) is provided based on the outstanding balance after the write-offs described in Note 5 (h) and the deductions of the amount expected to be collected through the disposal of collateral and execution of guarantees.
The allowance for claims on debtors who are not legally bankrupt but are likely to become bankrupt (“Potentially Bankrupt Borrowers”) is provided based on an assessment of the overall solvency of the debtors after deducting the amount expected to be collected through the disposal of collateral or the execution of guarantees.
The allowance for claims on debtors other than the above (Bankrupt Borrowers, Substantially Bankrupt Borrowers and Potentially Bankrupt Borrowers) is provided primarily based on the default rate, which is calculated based on the actual defaults during a certain period in the past.
The allowance for possible losses on specific overseas loans is provided based on the expected loss amount considering the political and economic situations of these countries.
All claims are assessed initially by the operational departments and secondly by risk evaluation departments based on internal rules for self-assessment of asset quality. The internal audit department, which is independent from the operational departments, reviews these self-assessments, and the allowance is provided based on the results of the assessment.
(i) Allowance for possible investment losses
“Allowance for possible investment losses” is provided based on the estimated losses on non-marketable debt securities.
(j) Allowance for employee bonuses
“Allowance for employee bonuses” is set aside to pay employee bonuses with respect to the portion of estimated bonus payments to employees that correspond to the current period. Allowance for bonuses to executive directors included in as of March 31, 2002, are not included in as of March 31, 2003.
(k) Allowance for employee retirement benefits
Allowance for employee retirement benefits represents the future payment for pension and retirement to employees, and is recorded as the amount accrued at the fiscal year end, based on the projected benefit obligations, and the estimated pension plan asset amount at the fiscal year end. The method of accounting for prior service cost and net actuarial gains/losses is as follows:
Prior service cost is charged to net income of the year.
Net Actuarial Gains/Losses are charged to net income of the year.
“Allowance for employee retirement benefits” includes allowance for retirement benefits to executive directors.
(l) Consumption tax
Consumption tax including local consumption tax is excluded from the transaction amounts.
3. Cash and cash equivalents
The reconciliation between the balance of cash and cash equivalents at the end of each fiscal year and the amount of cash and due from banks reported in the balance sheets as of March 31, 2003 and 2002 are as follows:
March 31, 2003 (In millions of yen) | March 31, 2002 (In millions of yen) | March 31, 2003 (In millions of dollars) | ||||||||||
Cash and Due from Banks | ¥ | 228,527 | ¥ | 403,110 | $ | 1,901 | ||||||
Due from Banks(*) | (169,731 | ) | (398,288 | ) | (1,412 | ) | ||||||
Cash and Cash quivalents | ¥ | 58,796 | ¥ | 4,821 | $ | 489 | ||||||
| (*) | Excluding Due from Bank of Japan |
4. Securities
Securities as of March 31, 2003 and 2002 are as follows:
March 31, 2003 (In millions of yen) | March 31, 2002 (In millions of yen) | March 31, 2003 (In millions of dollars) | |||||||
Equity | ¥ | — | ¥ | 1,599 | $ | — | |||
| ¥ | — | ¥ | 1,599 | $ | — | ||||
5. Loans
All of Loans are loans on deeds. The amounts reported in the balance sheets as of March 31, 2003 and 2002 are as follows:
International Financial Account | March 31, 2003 (In millions of yen) | March 31, 2002 (In millions of yen) | March 31, 2003 (In millions of dollars) | ||||||
Bankrupt Loans | ¥ | 665 | ¥ | 2,641 | $ | 5 | |||
Non-accrual Loans | 147,029 | 310,446 | 1,223 | ||||||
Past Due Loans (3 Months or More) | 92,620 | 39,044 | 771 | ||||||
Restructured Loans | 372,451 | 172,754 | 3,099 | ||||||
| ¥ | 612,767 | ¥ | 524,887 | $ | 5,098 | ||||
| (a) | “Bankrupt Loans”, which are placed non-accrual status, are loans to borrowers who have begun bankruptcy, composition, reorganization, winding-up or special liquidation proceedings under the Bankruptcy Law, the Corporate Reorganization Law, the Civil Rehabilitation Law, the Commercial Code or other similar laws of Japan, or who have had their transactions with the promissory note clearinghouse suspended, or loans to borrowers who have begun similar proceedings under any foreign law. Those loans are categorized as loans to “Bankrupt Borrowers” under self-assessment of asset quality. |
| (b) | “Non-accrual Loans” are loans which are placed non-accrual status and are other than “Bankrupt Loans.” Those loans are categorized as loans to “Substantially Bankrupt Borrowers” or “Potentially Bankrupt Borrowers” under self-assessment of asset quality. |
| (c) | “Past due Loans (3 months or more)” are loans whose principal and/or interest is past due three months or more counted from the date following the scheduled payment date, and are other than “Bankrupt Loans” and “Non-accrual Loans.” Those loans are also categorized as loans to “Watch Borrowers” under self-assessment of asset quality. |
| (d) | “Restructured Loans” are loans whose contracts were amended in favor of obligors (e.g. reduction of or exemption from stated interest, deferral of interest payments, extension of maturity dates, renunciation of claims) in order to assist or facilitate restructuring processes of the obligors in financial difficulties, and are other than “Bankrupt Loans”, “Non-accrual Loans”, and “Past due Loans (3 months or more)”. Those loans are also categorized as loans to “Watch Borrowers” under self-assessment of asset quality. |
| (e) | The amounts of Loans indicated above are the gross amounts prior to reduction of allowance for possible loan losses. |
| (f) | In the event that a debtor country which becomes temporarily difficult to pay and requests debt rescheduling with respect to external public debt (whose creditors are nations, Trade Insurance Institutions and Export Credit Institutions, etc.) because of the unfavorable balance of international payment, meetings of creditor countries (the “Paris Club”) would be held to discuss debt relief measures (rescheduling). When creditor countries agree on debt relief measures, debt-rescheduling agreements between the creditors and a debtor are agreed, and temporary liquidity assistance is made according to the agreements. Since the debtor carries out Economic Restructuring Program which was agreed with the International Monetary Fund (“IMF”) and continues to make repayments of the debt, those loans are excluded, in principle, from the above amounts. The principal amount of loans for which JBIC has agreed to provide debt relief pursuant to the Paris Club agreements is as follows: |
March 31, 2003 (In millions of yen) | March 31, 2002 (In millions of yen) | March 31, 2003 (In millions of dollars) | |||||||
International Financial Account | ¥ | 363,922 | ¥ | 430,269 | $ | 3,028 | |||
The Government of Japan has provided debt relief under TDB (the Trade and Development Board) scheme in the form of grant aid for eligible ODA loan recipients in exchange for repayments of ODA loans based on the resolution of TDB of the UNCTAD in 1978. Therefore, JBIC’s ODA Loans to eligible TDB countries had been substantially secured by matching grant aid for debt relief provided by the Government of Japan in the amount equivalent to repayment amount of principal and interest owed by such eligible TDB countries.
On the other hand, public creditors agreed to support the countries, which were regarded as Heavily Indebted Poor Countries (“HIPCs”) by the World Bank and the IMF and also were identified as the “HIPCs Initiative” and “Enhanced HIPCs Initiative”, which was qualified and agreed to reduce a part of the debt of HIPCs after the establishment of economic reform programs by the international financial institutions (IMF, World Bank, etc.) in Lyon Summit in June, 1996 and in Cologne Summit in June, 1999 respectively. After the debtor countries agreed to the economic reform programs, the Paris Club creditors agreed to the application of the (Enhanced) HIPCs Initiative. JBIC’s ODA Loans to the HIPCs Initiative countries are substantially secured by matching grant aid for debt relief provided by the Government of Japan to the HIPCs, because, as to debt reduction of ODA Loans to HIPCs, Japanese government announced, in “Statements by Chief Cabinet Secretary on Japan’s proposal for the Debt Initiative for the Heavily Indebted Poor Countries” dated April 28,1999, expansion of bilateral grant aid for debt relief to the HIPCs.
However, the above-mentioned grant aid for debt relief under TDB and HIPCs scheme was replaced by a waiver of loans provided by JBIC in accordance with the “Changes in Debt Relief Method” announced by the Government of Japan on December 10, 2002. JBIC thus has written off all amounts of corresponding ODA loans to eligible TDB countries except for scheduled repayments within the fiscal year 2002 which is covered by TDB scheme and all amounts of corresponding ODA loans to the Enhanced HIPCs Initiative countries. JBIC has also provided 100% allowance for corresponding ODA loans to the HIPCs Initiative countries which are not determined to be applied by the Enhanced HIPCs Initiative.
| (g) | As JBIC’s debtors need mostly long-term loans, JBIC generally enters into commitment line contracts with these debtors. JBIC is committed to lend necessary funds up to the predetermined amount, which shall be within the borrowers’ financing needs for the projects and up to the agreed maximum to lend, upon borrowers’ request, provided that the request meets terms and conditions for disbursement prescribed in the Loan Agreement. The total balance of unused commitment lines as of March 31, 2003 and 2002 are ¥1,685,551 million ($14,023 million) and ¥2,072,688 million respectively. |
| (h) | With respect to the claims with collateral or guarantees on debtors who are legally or substantially bankrupt (“Bankrupt Borrowers and Substantially Bankrupt Borrowers”), the remaining booked amount of the claims after deduction of the amount which is deemed collectible through the disposal of collateral or the execution of guarantees was written-off against the respective claims. The amount of the accumulated write-offs as of March 31, 2003 and 2002 are ¥7,765 million ($65 million) and ¥4,540million respectively. |
6. Miscellaneous assets
Miscellaneous assets as of March 31, 2003 are as follows:
(a) Accrued income | “Accrued income” includes ¥137,824 million ($1,147 million) of accrued interest on loans and ¥15,011 million ($125 million) of accrued interest on swaps and others. | |
(b) Other assets | “Other assets” includes ¥607 million ($5 million) of other accounts receivable.
A part of the net earnings on the General Account of the International Financial Account is paid to the National Treasury, pursuant to Article 44 of the JBIC Law.
Preliminary payment to the National Treasury, made on a best estimation basis for the year ended March 31, 2003 amounted to ¥10,971 million ($91 million) and accounted for under Miscellaneous assets on the balance sheets (See Note 16). | |
Miscellaneous assets as of March 31, 2002 are as follows:
(a) Accrued income | “Accrued income” includes ¥145,765 million of accrued interest on loans and ¥12,105 million of accrued interest on swaps and others. | |
(b) Other assets | “Other assets” includes ¥32 million of suspense payments and others.
A part of the net earnings on the General Account of the International Financial Account is paid to the National Treasury, pursuant to Article 44 of the JBIC Law.
Preliminary payment to the National Treasury, made on a best estimation basis for the year ended March 31, 2002 amounted to ¥24,677 million and accounted for under Miscellaneous assets on the balance sheets (See Note 16). | |
7. Premises and equipment
Premises and equipment as of March 31, 2003 and 2002 are as follows:
March 31, 2003 (In millions of yen) | March 31, 2002 (In millions of yen) | March 31, 2003 (In millions of dollars) | |||||||
Tangible Fixed Assets | |||||||||
Land | ¥ | 9,618 | ¥ | 9,557 | $ | 80 | |||
Buildings | 19,202 | 19,155 | 160 | ||||||
Equipment | 3,992 | 4,052 | 33 | ||||||
Construction in Progress | 146 | 141 | 1 | ||||||
Total | ¥ | 32,961 | ¥ | 32,906 | $ | 274 | |||
Less - Accumulated Depreciation | 12,773 | 12,018 | 106 | ||||||
Net Book Value | ¥ | 20,187 | ¥ | 20,887 | $ | 168 | |||
Intangible Fixed Assets | |||||||||
Software | ¥ | 670 | ¥ | 632 | $ | 6 | |||
Guarantee deposit | 163 | 164 | 1 | ||||||
Others | 66 | 66 | 0 | ||||||
Total | ¥ | 901 | ¥ | 863 | $ | 7 | |||
Less - Accumulated Depreciation | 293 | 161 | 2 | ||||||
Net Book Value | ¥ | 607 | ¥ | 701 | $ | 5 | |||
8. Deferred charges on bonds and notes
Deferred charges on bonds and notes as of March 31, 2003 and 2002 are as follows:
March 31, 2003 (In millions of yen) | March 31, 2002 (In millions of yen) | March 31, 2003 (In millions of dollars) | |||||||
Deferred discount on bonds and notes | ¥ | 1,284 | ¥ | 1,850 | $ | 11 | |||
Deferred bonds and notes issuance costs | 965 | 722 | 8 | ||||||
| ¥ | 2,249 | ¥ | 2,573 | $ | 19 | ||||
9. Allowance for possible loan losses
Allowance for possible loan losses as of March 31, 2003 and 2002 are as follows:
March 31, 2003 (In millions of yen) | March 31, 2002 (In millions of yen) | March 31, 2003 (In millions of dollars) | |||||||
General Allowance for Possible Loan Losses | ¥ | 63,426 | ¥ | 74,140 | $ | 528 | |||
Specific Allowance for Possible Loan Losses | 60,212 | 108,523 | 501 | ||||||
Allowance for Possible Losses on Specific Overseas Loans | 3,512 | 8,478 | 29 | ||||||
| ¥ | 127,151 | ¥ | 191,142 | $ | 1,058 | ||||
10. Bonds and notes
Bonds and notes as of March 31, 2003 and 2002 are as follows:
Description of | Issue date | Currency and Amounts March 31, 2003 (In millions) | Interest Rate(%) | Maturity date | March 31, 2003 (In millions of yen) | March 31, 2002 (In millions of yen) | March31,2003 (In millions of dollars) | ||||||||||
Export-Import Bank of Japan Bonds guaranteed by Japan 27-30, 32, 33, 35-37, 39, 40, 42, 44-46 | May 1993- June 1999 | JPY 165,000 USD 2,600 EUR 2,235 GBP 400 | 2.875~ 8.250, LIBOR -0.0625 | July 2003 - June 2008 | ¥ | 843,484 | ¥ | 1,062,946 | $ | 7,017 | |||||||
Japan Bank for International Cooperation Bonds guaranteed by Japan 1-4 | November 1999- March 2003 | JPY 60,000 USD 3,000 | 0.350~ 7.125, LIBOR +0.0625 | June 2005 - November 2009 | 420,600 | 399,750 | 3,499 | ||||||||||
FILP Agency Bonds 1-6 (*) | October 2001 - September 2002 | JPY 300,000 | 0.350~ 1.520 | September 2006- September 2012 | 300,000 | 100,000 | 2,496 | ||||||||||
| ¥ | 1,564,084 | ¥ | 1,562,696 | $ | 13,012 | ||||||||||||
| (*) | Non-government guaranteed bonds issued in domestic market. |
Bonds and notes with redemption of 5 years or less are shown in the following table.
Fiscal 2003 | ¥ | 329,943 | million | $ | 2,745 | million | ||
2004 | 145,945 | 1,214 | ||||||
2005 | 276,360 | 2,299 | ||||||
2006 | 295,980 | 2,462 | ||||||
2007 | 206,069 | 1,714 |
11. Borrowings
Borrowings as of March 31, 2003 and 2002 are as follows:
Average rate | Due date of repayment | March 31, 2003 | March 31, 2002 | March 31, 2003 | |||||||||
| (In millions of yen) | (In millions of yen) | (In millions of dollars) | |||||||||||
Long-term borrowings | |||||||||||||
Borrowings from the Government Fund for Fiscal Investment and Loan Program | 2.05 | May 2003 – March 2012 | ¥ | 6,426,646 | ¥ | 7,346,148 | $ | 53,466 | |||||
Borrowing from the Government Post Office Life Insurance Special Account | 2.54 | 180,318 | 228,500 | 1,500 | |||||||||
| ¥ | 6,606,964 | ¥ | 7,574,648 | $ | 54,966 | ||||||||
Long-term borrowings with maturities within 5 years outstanding as of March 31, 2003 are as follows:
Fiscal 2003 | ¥ | 868,446 million | $ | 7,225 million | ||
2004 | 767,842 | 6,388 | ||||
2005 | 740,807 | 6,163 | ||||
2006 | 774,172 | 6,441 | ||||
2007 | 1,115,484 | 9,280 |
12. Miscellaneous liabilities
Miscellaneous liabilities as of March 31, 2003 are as follows:
| (a) Accrued expenses | “Accrued expenses” includes ¥34,941million ($291million) of accrued interest on borrowings and ¥26,298 million ($219million) of accrued interest on bonds and notes and others. | |
| (b) Other liabilities | “Other liabilities” includes ¥178,104 million ($1,482million) of deferred foreign exchange and ¥3,648 million ($30million) of suspense receipts and others.
“Deferred hedged gains” is net realized or unrealized gains from hedging instruments. The gross amounts of deferred hedge gains and losses before netting are ¥273,907 million ($2,279 million) and ¥258,536 million ($2,151 million) as of March 31, 2003, respectively. | |
Miscellaneous liabilities as of March 31, 2002 are as follows:
| (a) Accrued expenses | “Accrued expenses” includes ¥47,241 million of accrued interest on borrowings and ¥34,829 million of accrued interest on bonds and notes and others. | |
| (b) Deferred Income | “Deferred income” includes ¥3,289 million of unearned interest on bonds and notes and others. | |
| (c) Other liabilities | “Other liabilities” includes ¥636,295 million of deferred foreign exchange and ¥1,598 million of suspense receipts and others.
“Deferred hedged gains” is net realized or unrealized gains from hedging instruments. The gross amounts of deferred hedge gains and losses before netting are ¥377,303 million and ¥346,221 million as of March 31, 2002, respectively. | |
13. Employee Retirement Benefits
JBIC has defined benefit pension plans which consist of welfare pension fund plan and lump-sum severance indemnity plan.
(a) The Funded Status of the Pension Plans
Disposition | March 31, 2003 (In millions of yen) | March 31, 2002 (In millions of yen) | March 31, 2003 (In millions of dollars) | |||||||||||
Projected Benefit Obligation | (A) | ¥ | (13,847 | ) | ¥ | (12,765 | ) | $ | (115 | ) | ||||
Fair Value of Plan Assets | (B) | 2,631 | 2,830 | 22 | ||||||||||
Unfunded Pension Obligation | (C)=(A)+(B) | (11,215 | ) | (9,934 | ) | (93 | ) | |||||||
Unrecognized Net Obligation at Transition | (D) | — | — | — | ||||||||||
Unrecognized Net Actuarial Gains/Losses | (E) | — | — | — | ||||||||||
Unrecognized Prior Service Cost | (F) | — | — | — | ||||||||||
Net Amount Recognized on the Balance Sheet | (G)=(C)+(D)+(E)+(F) | (11,215 | ) | (9,934 | ) | (93 | ) | |||||||
Prepaid Pension Cost | (H) | — | — | — | ||||||||||
Allowance for Employee Retirement Benefits | (G)-(H) | ¥ | (11,215 | ) | ¥ | (9,934 | ) | $ | (93 | ) | ||||
(Note) The above Projected Benefit Obligations include a portion in which the pension fund acts for the government welfare program.
(b) Component of Pension Cost
Disposition | March 31, 2003 (In millions of yen) | March 31, 2002 (In millions of yen) | March 31, 2003 (In millions of dollars) | |||||||||
Service Cost | ¥ | 586 | ¥ | 694 | $ | 5 | ||||||
Interest Cost | 316 | 310 | 3 | |||||||||
Expected Return on Plan Assets | (42 | ) | (114 | ) | (0 | ) | ||||||
Amortization of Prior Service Cost | (186 | ) | — | (2 | ) | |||||||
Amortization of Net Actuarial Gains/Losses | 1,346 | 313 | 11 | |||||||||
Amortization of Net Obligation at Transition | — | — | — | |||||||||
Other Costs | — | — | — | |||||||||
Net Pension Cost | ¥ | 2,020 | ¥ | 1,203 | $ | 17 | ||||||
(c) Principal Assumptions Used
| March 31, 2003 | March 31, 2002 | |||||
Discount Rate | 2.0 | % | 2.5 | % | ||
Expected Rate of Return on Plan Assets | 1.5 | % | 4.0 | % | ||
Method of Attributing the Projected Benefits to Periods of Services | Straight-line basis | Straight-line basis | ||||
Amortization Period of Prior Service Costs | Prior service cost income of the | | — | |||
Amortization Period of Actuarial Gains/Losses | Gains/losses are charged to net income of the |
| Gains/losses are charged to net income of the |
| ||
Amortization Period of Net Obligation at Transition | — | — | ||||
14.Acceptances and Guarantees
Acceptances and Guarantees as of March 31, 2003 and 2002 are as follows:
March 31, 2003 (In millions of yen) | March 31, 2002 (In millions of yen) | March 31, 2003 (In millions of dollars) | |||||||
Acceptances | ¥ | — | ¥ | — | $ | — | |||
Guarantees | 629,082 | 574,763 | 5,234 | ||||||
| ¥ | 629,082 | ¥ | 574,763 | $ | 5,234 | ||||
15. Assets Pledged as Collateral
There were no assets pledged as collateral as of March 31, 2003 and 2002.
16. ODA-loan related losses
The Government of Japan has provided debt relief under TDB (the Trade and Development Board) scheme in the form of grant aid for eligible ODA loan recipients in exchange for repayments of ODA loans based on the resolution of TDB of the UNCTAD in 1978. Therefore, JBIC’s ODA Loans to eligible TDB countries had been substantially secured by matching grant aid for debt relief provided by the Government of Japan in the amount equivalent to repayment amount of principal and interest owed by such eligible TDB countries.
On the other hand, public creditors agreed to support the countries, which were regarded as Heavily Indebted Poor Countries (“HIPCs”) by the World Bank and the IMF and also were identified as the “HIPCs Initiative” and “Enhanced HIPCs Initiative”, which was qualified and agreed to reduce a part of the debt of HIPCs after the establishment of economic reform programs by the international financial institutions (IMF, World Bank, etc.) in Lyon Summit in June, 1996 and in Cologne Summit in June, 1999 respectively. After the debtor countries agreed to the economic reform programs, the Paris Club creditors agreed to the application of the (Enhanced) HIPCs Initiative. JBIC’s ODA Loans to the HIPCs Initiative countries are substantially secured by matching grant aid for debt relief provided by the Government of Japan to the HIPCs, because, as to debt reduction of ODA Loans to HIPCs, Japanese government announced, in “Statements by Chief Cabinet Secretary on Japan’s proposal for the Debt Initiative for the Heavily Indebted Poor Countries” dated April 28,1999, expansion of bilateral grant aid for debt relief to the HIPCs.
However, the above-mentioned grant aid for debt relief under TDB and HIPCs scheme was replaced by a waiver of loans provided by JBIC in accordance with the “Changes in Debt Relief Method” announced by the Government of Japan on December 10, 2002. JBIC thus has written off all amounts of corresponding ODA loans to eligible TDB countries except for scheduled repayments within the fiscal year 2002 which is covered by TDB scheme and all amounts of corresponding ODA loans to the Enhanced HIPCs Initiative countries. JBIC has also provided 100% allowance for corresponding ODA loans to the HIPCs Initiative countries which are not determined to be applied by the Enhanced HIPCs Initiative. Those losses are reflected in the extraordinary losses (“ODA-loan related losses”).
17. Retained Earnings
A part of net earnings on the International Financial Account is paid to the National Treasury pursuant to Article 44 of the JBIC Law. The payment to the National Treasury is accounted for the appropriation of net earnings.
Another part of the net earnings on the International Financial Account is appropriated for reserve of the International Financial Account, pursuant to Article 44 of the JBIC Law, the related law and the related cabinet order.
18. Leased Transactions
Leased transactions in the fiscal year ended March 31, 2003 are as follows:
(a) Finance lease transactions, excluding leases where the ownership of the property is deemed to be transferred to the lessee.
Not applicable
(b) Operating lease transactions:
| • | Future Lease Payment Obligations |
| Within 1 year | More than 1 year | Total | |||||||
(In millions of yen) | ¥ | 5 | ¥ | 1 | ¥ | 7 | |||
(In millions of dollars) | $ | 0 | $ | 0 | $ | 0 | |||
Leased transactions in the fiscal year ended March 31, 2002 are as follows:
(a) Finance lease transactions, excluding leases where the ownership of the property is deemed to be transferred to the lessee.
Not applicable
(b) Operating lease transactions:
| • | Future Lease Payment Obligations |
| Within 1 year | More than 1 year | Total | |||||||
(In millions of yen) | ¥ | 14 | ¥ | 6 | ¥ | 20 | |||
19. Derivative Transactions
Notes to derivative transactions in the fiscal year ended March 31, 2003 are as follows:
(a) Policy for Derivative Transactions
JBIC engages in derivatives transactions solely for the purpose of hedging foreign exchange rate risks and interest rate risks that are incurred in respect of its lending and funding operations.
(b) Transactions
Derivatives transactions include interest rate and currency swaps and forward exchange contracts.
(c) Risks Involved in Derivatives Transactions
Derivatives transactions involve the following risks.
(i) Credit Risk
Potential loss from the failure of a counterparty to perform its obligations in accordance with terms and conditions under a contract governing transactions due to bankruptcy or deteriorating business.
(ii) Market Risk
Potential loss from changes in the market value of financial products due to fluctuations in interest rates or exchange rates.
(d) Policies of Risk Management for Derivatives Transactions
(i) Credit Risk
JBIC consistently monitors the market value of its derivatives transactions with each counterparty and the amount of its credit exposure and creditworthiness of each counterparty in order to ascertain the appropriateness of entering into or maintaining a transaction with each counterparty.
(ii) Market Risk
JBIC uses derivatives transactions solely for the purpose of hedging. Therefore, the market risk on derivatives transactions and that on hedged (lending or funding) transactions basically offsets.
Credit Risk Amounts of Derivatives, etc. | (In 100 millions of yen) | (In 100 millions of dollars) | ||||||||||||
March 31, 2003 | Contract Amount/Notional Amount | Credit Risk | Contract Amount/Notional Amount | Credit Risk | ||||||||||
Interest Rate Swaps | ¥ | 17,001 | ¥ | 1,093 | $ | 141 | $ | 9 | ||||||
Currency Swaps | 45,528 | 5,456 | 379 | 45 | ||||||||||
Forward Exchange Contracts | 14 | 0 | 0 | 0 | ||||||||||
Other Derivatives | — | — | — | — | ||||||||||
Credit Risk Reductions through Netting | — | (2,526 | ) | — | (21 | ) | ||||||||
Total | ¥ | 62,543 | ¥ | 4,023 | $ | 520 | $ | 33 | ||||||
| (Note) | Credit Risk amounts are calculated under Uniform International Standards in accordance with the Banking Law of Japan and the related regulations. |
(e) Interest Rate-related Transactions
There is no interest rate-related derivative transaction whose valuated gain/(loss) by market value is accounted for in the Statement of Operations.
Hedge accounting is applied to all of the interest rate-related derivative transactions.
(f) Currency-related Transactions
There is no currency-related derivative transaction whose valuated gain/(loss) by market value is accounted for in the Statement of Operations.
Certain currency swaps have been accounted for by using the accrual method of accounting based on “Treatment of Accounting and Auditing Concerning Accounting for Foreign Currency Transactions in the Banking Industry”, which is widely used by Japanese commercial banks. The Contractual Amount etc. of such currency swaps accounted for on an accrual method is as follows:
March 31, 2003 | |||||||||||
(In millions of yen) | |||||||||||
Type | Contractual Amount | Market Value | Unrealized Gain/ (Loss) | ||||||||
Currency Swaps | ¥ | 4,536,027 | ¥ | 118,779 | ¥ | — �� | |||||
March 31, 2003 | |||||||||||
(In millions of dollars) | |||||||||||
Type | Contractual Amount | Market Value | Unrealized Gain/ (Loss) | ||||||||
Currency Swaps | $ | 37,737 | $ | 988 | $ | — | |||||
(g) Equity-related Transactions
Not applicable
(h) Bond-related Transactions
Not applicable
(i) Commodity-related Transactions
Not applicable
(j) Credit Derivatives Transactions
Not applicable
Notes to derivative transactions in the fiscal year ended March 31, 2002 are as follows:
(a) Policy for Derivative Transactions
JBIC engages in derivatives transactions solely for the purpose of hedging foreign exchange rate risks and interest rate risks that are incurred in respect of its lending and funding operations.
(b) Transactions
Derivatives transactions include interest rate and currency swaps and forward exchange contracts.
(c) Risks Involved in Derivatives Transactions
Derivatives transactions involve the following risks.
(i) Credit Risk
Potential loss from the failure of a counterparty to perform its obligations in accordance with terms and conditions under a contract governing transactions due to bankruptcy or deteriorating business.
(ii) Market Risk
Potential loss from changes in the market value of financial products due to fluctuations in interest rates or exchange rates.
(d) Policies of Risk Management for Derivatives Transactions
(i) Credit Risk
JBIC consistently monitors the market value of its derivatives transactions with each counterparty and the amount of its credit exposure and creditworthiness of each counterparty in order to ascertain the appropriateness of entering into or maintaining a transactions with each counterparty.
(ii) Market Risk
JBIC uses derivatives transactions solely for the purpose of hedging. Therefore, the market risk on derivatives transactions and that on hedged (lending or funding) transactions basically offsets.
Credit Risk Amounts of Derivatives, etc. | (In 100 millions of yen) | ||||||
March 31, 2002 | Contract Amount/Notional Amount | Credit Risk | |||||
Interest Rate Swaps | ¥ | 17,629 | ¥ | 899 | |||
Currency Swaps | 50,909 | 4,329 | |||||
Forward Exchange Contracts | 10 | 0 | |||||
Other Derivatives | — | — | |||||
Credit Risk Reductions through Netting | — | (3,028 | ) | ||||
Total | ¥ | 68,549 | ¥ | 2,200 | |||
| (Note) | Credit Risk amounts are calculated under Uniform International Standards in accordance with the Banking Law of Japan and the related regulations. |
(e) Interest Rate-related Transactions
There is no interest rate-related derivative transaction whose valuated gain/(loss) by market value is accounted for in the Statement of Operations.
Hedge accounting is applied to all of the interest rate-related derivative transactions.
(f) Deferred Hedge Profits
JBIC recorded fair value of hedging instruments at the fiscal year ended March 31, 2001 as deferred hedge profits under Miscellaneous liabilities. From the fiscal year ended March 31, 2002, it records the net amount of fair value of hedging instruments at March 31, 2002 and realized profits and losses arising on hedging instruments as deferred hedge profits under Miscellaneous liabilities.
As a result of this, deferred hedge profits decreased by 14,240 million yen, and net income increased by the same amount.
(g) Currency-related Transactions
There is no currency-related derivative transactions whose valuated gain/(loss) by market value is accounted for in the Statement of Operations.
Certain currency swaps have been accounted for by using the accrual method of accounting based on the “Temporary Treatment of Accounting and Auditing Concerning Accounting for Foreign Currency Transaction in the Banking Industry”, which is widely used by Japanese commercial banks. The Contractual Amount etc. of such currency swaps accounted for on an accrual method is as follows:
March 31, 2002 (In millions of yen) | ||||||||||
Type | Contractual Amount | Market Value | Unrealized Gain/(Loss) | |||||||
Currency Swaps | ¥ | 5,071,727 | ¥ | (377,490 | ) | ¥ | — | |||
(h) Equity-related Transactions
Not applicable
(i) Bond-related Transactions
Not applicable
(j) Commodity-related Transactions
Not applicable
(l) Credit Derivatives Transactions
Not applicable
20. Market Value of Securities
Notes to market value of securities as of March 31, 2003 are as follows:
The followings includes “Securities” and negotiable due from banks in “Cash and due from banks”
(a) Trading Securities
Not applicable
(b) Held-to-maturities Debt Securities
Not applicable
(c) Available-for-sale Securities with market value
Not applicable
(d) Held-to-maturities Debt Securities sold
Not applicable
(e) Available-for-sale Securities sold
Not applicable
(f) Held-to-maturity Debt Securities and Available-for-sale Securities whose market value is not readily determinable
Not applicable
(g) Change of Classification of Securities
Not applicable
(h) Redemption Schedule of Available-for-sale Securities with Maturity
Not applicable
(i) Money Held in Trust
Not applicable
(j) Net Unrealized Gain (Loss) on Available-for-sale Securities
Not applicable
Notes to market value of securities as of March 31, 2002 are as follows:
The followings includes “Securities” and negotiable due from banks in “Cash and due from banks”
(a) Trading Securities
Not applicable
(b) Held-to-maturities Debt Securities
Not applicable
(c) Available-for-sale Securities with market value
Not applicable
(d) Held-to-maturities Debt Securities sold
Not applicable
(e) Available-for-sale Securities sold
Not applicable
(f) Held-to-maturity Debt Securities and Available-for-sale Securities whose market value is not readily determinable are as follows:
March 31,2002 (In millions of yen) | |||
| ¥ | |||
Held-to-maturity Debt Securities | — | ||
Unlisted Foreign Securities | — | ||
Available-for-sale Securities | 1,599 | ||
Unlisted Japanese Equities other than Over-the-counter | — | ||
Unlisted Foreign Equities | 1,599 | ||
Unlisted Japanese Local Government Bonds | — | ||
Unlisted Japanese Corporate Bonds | — | ||
Unlisted Foreign bonds | — | ||
Other Japanese securities | — | ||
Other unlisted foreign securities | — | ||
Total | ¥ | 1,599 | |
(g) Change of Classification of Securities
Not applicable
(h) Redemption Schedule of Available-for-sale Securities with Maturity
Not applicable
(i) Money Held in Trust
Not applicable
(j) Net Unrealized Gain (Loss) on Available-for-sale Securities
Not applicable
| ChuoAoyama Audit Corporation | PRICEWATERHOUSECOOPERS | |
| Kasumigaseki Bldg. 32nd Floor | ||
3-2-5, Kasumigaseki, Chiyoda-ku, | ||
| Tokyo 100-6088, Japan | ||
Report of Independent Auditors
To the Governor of
Japan Bank for International Cooperation
We have audited the accompanying non-consolidated Overseas Economic Cooperation Account balance sheets of Japan Bank for International Cooperation as of March 31, 2003 and 2002, and the related non-consolidated Overseas Economic Cooperation Account statements of operations, equity, and cash flows for the years then ended, all expressed in Japanese Yen. These non-consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these non-consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards, procedures and practices generally accepted and applied in Japan. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the non-consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the non-consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall non-consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the non-consolidated financial statements referred to above present fairly, in all material respects, the non-consolidated financial position of Overseas Economic Cooperation Account of Japan Bank for International Cooperation as of March 31, 2003 and 2002, and the non-consolidated results of its operations and its cash flows for the years then ended in conformity with accounting principles and practices generally accepted in Japan (see Note 1).
The amounts expressed in U.S. dollars, which are provided solely for the convenience of the reader, have been translated on the basis set forth in Note 1 to the accompanying non-consolidated financial statements.
/s/ ChuoAoyama Audit Corporation |
ChuoAoyama Audit Corporation |
Tokyo, Japan |
June 25, 2003 |
BALANCE SHEETS
JAPAN BANK FOR INTERNATIONAL COOPERATION
Overseas Economic Cooperation Account
| In millions of yen | In millions of yen | In millions of dollars | ||||||||||
| March 31, 2003 | March 31, 2002 | March 31, 2003 | ||||||||||
Assets | ||||||||||||
Cash and due from banks | ¥ | 59,756 | ¥ | 49,823 | $ | 497 | ||||||
Securities | 122,912 | 122,674 | 1,023 | |||||||||
Loans | 10,425,582 | 11,024,333 | 86,735 | |||||||||
Miscellaneous assets | 142,726 | 119,936 | 1,187 | |||||||||
Premises and equipment | 7,665 | 7,904 | 64 | |||||||||
Deferred charges on bonds and notes | 17 | 22 | 0 | |||||||||
Allowance for possible loan losses | (181,011 | ) | (296,684 | ) | (1,506 | ) | ||||||
Total assets | ¥ | 10,577,649 | ¥ | 11,028,009 | $ | 88,000 | ||||||
| In millions of yen | In millions of yen | In millions of dollars | ||||||||||
| March 31, 2003 | March 31, 2002 | March 31, 2003 | ||||||||||
Liabilities and equity | ||||||||||||
Liabilities | ||||||||||||
Bonds and notes | ¥ | 25,000 | ¥ | 25,000 | $ | 208 | ||||||
Borrowings | 4,611,717 | 4,699,830 | 38,367 | |||||||||
Miscellaneous liabilities | 20,234 | 19,142 | 168 | |||||||||
Allowance for employee bonuses | 286 | 226 | 3 | |||||||||
Allowance for employee retirement benefits | 6,874 | 6,089 | 57 | |||||||||
Total liabilities | ¥ | 4,664,112 | ¥ | 4,750,288 | $ | 38,803 | ||||||
Equity | ||||||||||||
Capital of the Overseas Economic Cooperation Account | ¥ | 6,504,344 | ¥ | 6,285,244 | $ | 54,113 | ||||||
Reserve of the Overseas Economic Cooperation Account | 280,719 | 182,296 | 2,335 | |||||||||
Accumulated deficit at the end of the current year | (871,526 | ) | (189,819 | ) | (7,251 | ) | ||||||
Total equity | ¥ | 5,913,536 | ¥ | 6,277,721 | $ | 49,197 | ||||||
Total liabilities and equity | ¥ | 10,577,649 | ¥ | 11,028,009 | $ | 88,000 | ||||||
See accompanying “Notes to Financial Statements” which are an integral part of these statements.
STATEMENTS OF OPERATIONS
JAPAN BANK FOR INTERNATIONAL COOPERATION
Overseas Economic Cooperation Account
| In millions of yen | In millions of yen | In millions of dollars | |||||||||
| Fiscal 2002 | Fiscal 2001 | Fiscal 2002 | |||||||||
Income | |||||||||||
Interest income | ¥ | 250,598 | ¥ | 273,183 | $ | 2,085 | |||||
Interest on loans | 247,935 | 270,407 | 2,063 | ||||||||
Interest and dividend income on securities | 2,659 | 2,761 | 22 | ||||||||
Interest on due from banks | 3 | 13 | 0 | ||||||||
Fees and Commissions | 606 | 688 | 5 | ||||||||
Other operating income | — | 91 | — | ||||||||
Foreign exchange gains | — | 91 | — | ||||||||
Other ordinary income | 71 | 281 | 0 | ||||||||
Reversal of allowance for possible loan losses | 130,405 | 34,316 | 1,085 | ||||||||
Recovery of Written-off Claims | 3,960 | — | 33 | ||||||||
Reversal of allowance for possible investment losses | — | 1,631 | — | ||||||||
Profits on sales of premises and equipment | 9 | 2 | 0 | ||||||||
Total income | ¥ | 385,652 | ¥ | 310,193 | $ | 3,208 | |||||
Expenses | |||||||||||
Interest expenses | ¥ | 140,122 | ¥ | 157,389 | $ | 1,166 | |||||
Interest on bonds and notes | 740 | 740 | 6 | ||||||||
Amortization of discounts on bonds and notes | 5 | 5 | 0 | ||||||||
Interest on borrowings | 139,377 | 156,644 | 1,160 | ||||||||
Fees and Commissions | 1,882 | 1,536 | 16 | ||||||||
Other operating expenses | 192 | 1 | 2 | ||||||||
Foreign exchange losses | 190 | — | 2 | ||||||||
Others | 1 | 1 | 0 | ||||||||
General and administrative expenses | 10,256 | 9,758 | 85 | ||||||||
Other ordinary expenses | 49 | 931 | 0 | ||||||||
Write-off of equities, securities, etc. | — | 759 | — | ||||||||
Others | 49 | 171 | 0 | ||||||||
Losses on disposal of premises and equipment | 6 | 26 | 0 | ||||||||
ODA-loan related losses | 816,428 | — | 6,792 | ||||||||
Total expense | ¥ | 968,936 | ¥ | 169,643 | $ | 8,061 | |||||
Net (loss) income | ¥ | (583,284 | ) | ¥ | 140,550 | $ | (4,853 | ) | |||
See accompanying “Notes to Financial Statements” which are an integral part of these statements.
STATEMENTS OF CASH FLOWS
JAPAN BANK FOR INTERNATIONAL COOPERATION
Overseas Economic Cooperation Account
| In millions of yen | In millions of yen | In millions of dollars | ||||||||||
| Fiscal 2002 | Fiscal 2001 | Fiscal 2002 | ||||||||||
Cash flows from operating activities | ||||||||||||
Net (loss) income | ¥ | (583,284 | ) | ¥ | 140,550 | $ | (4,853 | ) | ||||
Depreciation and amortization | 466 | 489 | 4 | |||||||||
Increase (decrease) in allowance for possible loan losses | (115,673 | ) | (34,316 | ) | (962 | ) | ||||||
Increase (decrease) in allowance for possible investment losses | — | (1,721 | ) | — | ||||||||
Increase (decrease) in allowance for employee bonuses | 60 | 226 | 0 | |||||||||
Increase (decrease) in allowance for employee retirement benefits | 785 | 187 | 7 | |||||||||
Interest income | (250,598 | ) | (273,183 | ) | (2,085 | ) | ||||||
Interest expenses | 140,122 | 157,389 | 1,166 | |||||||||
Net loss (gain) on securities | 49 | 800 | 0 | |||||||||
Foreign exchange loss (gain) | 177 | (105 | ) | 1 | ||||||||
Net loss (gain) on sales of premises and equipment | (2 | ) | 24 | (0 | ) | |||||||
Net decrease (increase) in loans | 598,750 | (306,921 | ) | 4,981 | ||||||||
Net increase (decrease) in borrowings | (88,113 | ) | (83,481 | ) | (733 | ) | ||||||
Net decrease (increase) in due from banks (excluding cash equivalents) | 46,311 | 18,041 | 385 | |||||||||
Interest received | 228,002 | 255,258 | 1,897 | |||||||||
Interest paid | (140,074 | ) | (157,267 | ) | (1,165 | ) | ||||||
Others, net | 688 | 45 | 6 | |||||||||
Net cash used in operating activities | ¥ | (162,333 | ) | ¥ | (283,985 | ) | $ | (1,351 | ) | |||
Cash flows from investing activities | ||||||||||||
Purchases of securities | ¥ | (474 | ) | ¥ | (1,240 | ) | $ | (4 | ) | |||
Sales of securities | 189 | 1,833 | 2 | |||||||||
Expenditures on premises and equipment | (239 | ) | (502 | ) | (2 | ) | ||||||
Proceeds from sales of premises and equipment | 15 | 19 | 0 | |||||||||
Net cash (used in) provided by investing activities | ¥ | (508 | ) | ¥ | 109 | $ | (4 | ) | ||||
Cash flows from financing activities | ||||||||||||
Proceeds from issuance of capital from Government | ¥ | 219,100 | ¥ | 284,500 | $ | 1,823 | ||||||
Net cash provided by financing activities | ¥ | 219,100 | ¥ | 284,500 | $ | 1,823 | ||||||
Effect of exchange rate changes on cash and cash equivalents | ¥ | (0 | ) | 0 | $ | 0 | ||||||
Net increase (decrease) in cash and cash equivalents | ¥ | 56,257 | ¥ | 624 | $ | 468 | ||||||
Cash and cash equivalents at the beginning of the fiscal year | ¥ | 2,615 | ¥ | 1,991 | $ | 22 | ||||||
Cash and cash equivalents at the end of the fiscal year | ¥ | 58,873 | ¥ | 2,615 | $ | 490 | ||||||
See accompanying “Notes to Financial Statements” which are an integral part of these statements.
STATEMENT OF EQUITY
JAPAN BANK FOR INTERNATIONAL COOPERATION
| In millions of yen | |||||||||||||||||||||
| Capital of the International Financial Account | Capital of the Overseas Economic Cooperation Account | Reserve of the International Financial Account | Reserve of the Overseas Economic Cooperation Account | Accumulated deficit at the end of the current year | Total Equity | ||||||||||||||||
Balance at March 31, 2002 | ¥ | 985,500 | ¥ | 6,285,244 | ¥ | 564,230 | ¥ | 182,296 | ¥ | (179,183 | ) | ¥ | 7,838,088 | ||||||||
Transfer from net earnings accounted under the JBIC law to reserves | 44,105 | 98,422 | (142,528 | ) | — | ||||||||||||||||
Payment to National Treasury | (44,105 | ) | (44,105 | ) | |||||||||||||||||
Issuance of capital from Government | 219,100 | 219,100 | |||||||||||||||||||
Net income | (495,051 | ) | (495,051 | ) | |||||||||||||||||
Balance at March 31, 2003 | ¥ | 985,500 | ¥ | 6,504,344 | ¥ | 608,336 | ¥ | 280,719 | ¥ | (860,868 | ) | ¥ | 7,518,031 | ||||||||
Appropriations: | |||||||||||||||||||||
Transfer from net earnings to reserve of the International Financial Account | 30,246 | (30,246 | ) | — | |||||||||||||||||
Transfer from reserve of the Overseas Economic Cooperation Account | (260,051 | ) | 260,051 | — | |||||||||||||||||
Payment to National Treasury | (30,246 | ) | (30,246 | ) | |||||||||||||||||
Total | ¥ | 30,246 | (260,051 | ) | ¥ | 199,559 | ¥ | (30,246 | ) | ||||||||||||
Unappropriated Accumulated deficit | ¥ | (661,309 | ) | ||||||||||||||||||
See accompanying “Notes to Financial Statements” which are an integral part of these statements.
STATEMENT OF EQUITY
JAPAN BANK FOR INTERNATIONAL COOPERATION
| In millions of dollars | |||||||||||||||||||||
| Capital of the International Financial Account | Capital of the Overseas Economic Cooperation Account | Reserve of the International Financial Account | Reserve of the Overseas Economic Cooperation Account | Accumulated deficit at the end of the current year | Total Equity | ||||||||||||||||
Balance at March 31, 2002 | $ | 8,199 | $ | 52,290 | $ | 4,694 | $ | 1,516 | $ | (1,491 | ) | $ | 65,208 | ||||||||
Transfer from net earnings accounted under the JBIC law to reserves | 367 | 819 | (1,186 | ) | — | ||||||||||||||||
Payment to National Treasury | (367 | ) | (367 | ) | |||||||||||||||||
Issuance of capital from Government | 1,823 | 1,823 | |||||||||||||||||||
Net income | (4,118 | ) | (4,118 | ) | |||||||||||||||||
Balance at March 31, 2003 | $ | 8,199 | $ | 54,113 | $ | 5,061 | $ | 2,335 | $ | (7,162 | ) | $ | 62,546 | ||||||||
Appropriations: | |||||||||||||||||||||
Transfer from net earnings to reserve of the International Financial Account | 252 | (252 | ) | — | |||||||||||||||||
Transfer from reserve of the Overseas Economic Cooperation Account | (2,164 | ) | 2,164 | — | |||||||||||||||||
Payment to National Treasury | (252 | ) | (252 | ) | |||||||||||||||||
Total | $ | 252 | (2,164 | ) | $ | 1,660 | $ | (252 | ) | ||||||||||||
Unappropriated Accumulated deficit | $ | (5,502 | ) | ||||||||||||||||||
See accompanying “Notes to Financial Statements” which are an integral part of these statements.
STATEMENT OF EQUITY
JAPAN BANK FOR INTERNATIONAL COOPERATION
| In millions of yen | ||||||||||||||||||||||||
| Capital of the International Financial Account | Capital of the Overseas Economic Cooperation Account | Reserve of the International Financial Account | Special Reserve of the International Financial Account | Reserve of the Overseas Economic Cooperation Account | Accumulated deficit at the end of the current year | Total Equity | ||||||||||||||||||
Balance at March 31, 2001 | ¥ | 985,500 | ¥ | 6,000,744 | ¥ | 523,287 | ¥ | 5,423 | ¥ | 125,602 | ¥ | (302,367 | ) | ¥ | 7,338,190 | |||||||||
Transfer from net earnings accounted under the JBIC law to reserves | 40,943 | 11 | 56,694 | (97,648 | ) | — | ||||||||||||||||||
Payment to National Treasury | (5,435 | ) | (40,944 | ) | (46,379 | ) | ||||||||||||||||||
Issuance of capital from Government | 284,500 | 284,500 | ||||||||||||||||||||||
Net income | 261,776 | 261,776 | ||||||||||||||||||||||
Balance at March 31, 2002 | ¥ | 985,500 | ¥ | 6,285,244 | ¥ | 564,230 | — | ¥ | 182,296 | ¥ | (179,183 | ) | ¥ | 7,838,088 | ||||||||||
Appropriations: | ||||||||||||||||||||||||
Transfer from net earnings to reserve of the International Financial Account | 44,105 | (44,105 | ) | — | ||||||||||||||||||||
Transfer from net earnings accounted under the JBIC law to reserve of the Overseas Economic Cooperation Account | 98,422 | (98,422 | ) | — | ||||||||||||||||||||
Payment to National Treasury | (44,105 | ) | (44,105 | ) | ||||||||||||||||||||
Total | ¥ | 44,105 | ¥ | 98,422 | ¥ | (186,633 | ) | ¥ | (44,105 | ) | ||||||||||||||
Unappropriated Accumulated deficit | ¥ | (365,817 | ) | |||||||||||||||||||||
See accompanying “Notes to Financial Statements” which are an integral part of these statements.
NOTES TO FINANCIAL STATEMENTS
JAPAN BANK FOR INTERNATIONAL COOPERATION
Overseas Economic Cooperation Account
1. Basis of Presentation
The accompanying financial statements have been prepared from the accounts maintained by Japan Bank for International Cooperation (“JBIC”) in accordance with the provisions set forth in conformity with accounting principles and practices generally accepted in Japan, which are different in certain respects as to application and disclosure requirements from International Financial Reporting Standards.
The financial statements are not intended to present the financial position and results of operations in accordance with accounting principles and practices generally accepted in countries and jurisdictions other than Japan.
The Bank’s accounts are separated into International Financial Account and Overseas Economic Cooperation Account under Article 41 of the Japan Bank for International Cooperation Law (“JBIC Law”) whereby the accounting shall be separated in accordance with the categories of international financial operations and overseas economic cooperation operations and be recorded by establishing the respective account for each. In separating accounts, transactions directly related to either of the operations are attributed to the account for these operations and overhead expenses and others are allocated to both of the accounts by using a certain allocation rate.
Consolidated financial statements are not prepared because JBIC has no subsidiaries.
The amounts indicated in millions of yen are rounded down by omitting the figures less than one million. Totals may not add up exactly because of such omission.
Amounts in U.S. dollars are presented solely for the convenience of readers outside Japan. The rate of ¥120.20=$1.00, the exchange rate as of March 31, 2003, has been used in translation. The presentation of such amounts is not intended to imply that Japanese yen have been or could be readily converted, realized or settled into U.S. dollars at that rate or any other rate.
2. Significant Accounting Policies
(a) Cash and cash equivalents
“Cash and cash equivalents” as stated in the statements of cash flows consists of cash in hand and due from Bank of Japan included in “Cash and due from banks” in the balance sheets.
(b) Securities
All securities are classified as “Available-for-sale Securities” which have no market value and are carried at cost based on a moving average cost valuation.
(c) Depreciation basis for fixed assets
(i) Premises and equipment
Premises and equipment are depreciated on the declining balance basis except for the buildings (excluding furniture and equipment) acquired on or after April 1, 1998, which are depreciated on the straight-line basis. The principal estimated useful lives are as follows:
Buildings: 38 years to 50 years
Equipment: 2 years to 20 years
(ii) Software
Software used by JBIC is amortized on the straight-line basis over its useful life (5 years).
(d) Method of amortization for deferred charges
“Discounts on Bonds and Notes” are amortized over terms of redemption.
(e) Foreign currency translation and revaluation method
JBIC maintains its accounting records in Japanese yen. Assets and liabilities denominated in foreign currencies are translated into Japanese yen at the market exchange rate prevailing at the fiscal year end.
JBIC had adopted the “Temporary Treatment of Accounting and Auditing Concerning Accounting for Foreign Currency Transactions in the Banking Industry” (JICPA Industry Audit Committee Report No.20). Since the current fiscal year, however, JBIC have adopted the “Treatment of Accounting and Auditing Concerning Accounting for Foreign Currency Transactions in the Banking Industry” (JICPA Industry Audit Committee Report No.25).
Foreign currency differences arising from futures currency transactions are recognized on the balance sheets on a net basis.
(f) Allowance for possible loan losses
JBIC provided “Allowance for possible loan losses” as follows:
The allowance for claims on debtors who are legally bankrupt (“Bankrupt Borrowers”) or substantially bankrupt (“Substantially Bankrupt Borrowers”) is provided based on the outstanding balance after the write-offs described in Note 5 (h) and the deductions of the amount expected to be collected through the disposal of collateral and execution of guarantees.
The allowance for claims on debtors who are not legally bankrupt but are likely to become bankrupt (“Potentially Bankrupt Borrowers”) is provided based on an assessment of the overall solvency of the debtors after deducting the amount expected to be collected through the disposal of collateral or the execution of guarantees.
The allowance for claims on debtors other than the above (Bankrupt Borrowers, Substantially Bankrupt Borrowers and Potentially Bankrupt Borrowers) is provided primarily based on the default rate, which is calculated based on the actual defaults during a certain period in the past.
The allowance for possible losses on specific overseas loans is provided based on the expected loss amount considering the political and economic situations of these countries.
All claims are assessed initially by the operational departments and secondly by risk evaluation departments based on internal rules for self-assessment of asset quality. The internal audit department, which is independent from the operational departments, reviews these self-assessments, and the allowance is provided based on the results of the assessment.
(g) Allowance for employee bonuses
“Allowance for employee bonuses” is set aside to pay employee bonuses with respect to the portion of estimated bonus payments to employees that correspond to the current period. Allowance for bounuses to executive directors included in as of March 31, 2002, are not included in as of March 31, 2003.
(h) Allowance for employee retirement benefits
Allowance for employee retirement benefits represents the future payment for pension and retirement to employees, and is recorded as the amount accrued at the fiscal year end, based on the projected benefit obligations, and the estimated pension plan asset amount at the fiscal year end. The method of accounting for prior service cost and net actuarial gains/losses is as follows:
Prior service cost is charged to net income of the year.
Net Actuarial Gains/Losses are charged to net income of the year.
“Allowance for employee retirement benefits” includes allowance for retirement benefits to executive directors.
(i) Consumption tax
Consumption tax including local consumption tax is excluded from the transaction amounts.
3. Cash and cash equivalents
The reconciliation between the balance of cash and cash equivalents at the end of each fiscal year and the amount of cash and due from banks reported in the balance sheets as of March 31, 2003 and 2002 are as follows:
| March 31, 2003 | March 31, 2002 | March 31, 2003 | ||||||||||
| (In millions of yen) | (In millions of yen) | (In millions of dollars) | ||||||||||
Cash and Due from Banks | ¥ | 59,756 | ¥ | 49,823 | $ | 497 | ||||||
Due from Banks (*) | (883 | ) | (47,207 | ) | (7 | ) | ||||||
Cash and Cash Equivalents | ¥ | 58,873 | ¥ | 2,615 | $ | 490 | ||||||
(*) Excluding Due from Bank of Japan
4. Securities
Securities as of March 31, 2003 and 2002 are as follows:
| ||||||||||||
| March 31, 2003 | March 31, 2002 | March 31, 2003 | ||||||||||
| (In millions of yen) | (In millions of yen) | (In millions of dollars) | ||||||||||
Equity | ¥ | 122,269 | ¥ | 121,979 | $ | 1,017 | ||||||
Other Securities | 642 | 695 | 5 | |||||||||
| ¥ | 122,912 | ¥ | 122,674 | $ | 1,022 | |||||||
5. Loans
All of Loans are loans on deeds. The amounts reported in the balance sheets as of March 31, 2003 and 2002 are as follows:
| ||||||||||||
| March 31, 2003 | March 31, 2002 | March 31, 2003 | ||||||||||
| (In millions of yen) | (In millions of yen) | (In millions of dollars) | ||||||||||
Bankrupt Loans | ¥ | — | ¥ | — | $ | — | ||||||
Non-accrual Loans | 90,596 | 381,146 | 754 | |||||||||
Past Due Loans (3 Months or More) | 51,186 | 81,880 | 426 | |||||||||
Restructured Loans | — | 900 | — | |||||||||
| ¥ | 141,783 | ¥ | 463,928 | $ | 1,180 | |||||||
| (a) | “Bankrupt Loans”, which are placed non-accrual status, are loans to borrowers who have begun bankruptcy, composition, reorganization, winding-up or special liquidation proceedings under the Bankruptcy Law, the Corporate Reorganization Law, the Civil Rehabilitation Law, the Commercial Code or other similar laws of Japan, or who have had their transactions with the promissory note clearinghouse suspended, or loans to borrowers who have begun similar proceedings under any foreign law. Those loans are categorized as loans to “Bankrupt Borrowers” under self-assessment of asset quality. |
| (b) | “Non-accrual Loans” are loans which are placed non-accrual status and are other than “Bankrupt Loans.” Those loans are categorized as loans to “Substantially Bankrupt Borrowers” or “Potentially Bankrupt Borrowers” under self-assessment of asset quality. |
| (c) | “Past Due Loans (3 Months or More)” are loans whose principal and/or interest is past due three months or more counted from the date following the scheduled payment date, and are other than “Bankrupt Loans” and “Non-accrual Loans.” Those loans are also categorized as loans to “Watch Borrowers” under self-assessment of asset quality. |
| (d) | “Restructured Loans” are loans whose contracts were amended in favor of obligors (e.g. reduction of or exemption from stated interest, deferral of interest payments, extension of maturity dates, renunciation of claims) in order to assist or facilitate restructuring processes of the obligors in financial difficulties, and are other than “Bankrupt Loans”, “Non-accrual Loans”, and “Past Due Loans (3 Months or More)”. Those loans are also categorized as loans to “Watch Borrowers” under self-assessment of asset quality. |
| (e) | The amounts of Loans indicated above are the gross amounts prior to reduction of allowance for possible loan losses. |
| (f) | In the event that a debtor country which becomes temporarily difficult to pay and requests debt rescheduling with respect to external public debt (whose creditors are nations, Trade Insurance Institutions and Export Credit Institutions, etc.) because of the unfavorable balance of international payment, meetings of creditor countries (the “Paris Club”) would be held to discuss debt relief measures (rescheduling). When creditor countries agree on debt relief measures, debt-rescheduling agreements between the creditors and a debtor are agreed, and temporary liquidity assistance is made according to the agreements. Since the debtor carries out Economic Restructuring Program which was agreed with the International Monetary Fund (“IMF”) and continues to make repayments of the debt, those loans are excluded, in principle, from the above amounts. The principal amount of loans for which JBIC has agreed to provide debt relief pursuant to the Paris Club agreements is as follows: |
| March 31, 2003 | March 31, 2002 | March 31, 2003 | |||||||
| (In millions of yen) | (In millions of yen) | (In millions of dollars) | |||||||
Overseas Economic Cooperation Account | ¥ | 1,203,975 | ¥ | 1,265,900 | $ | 10,016 | |||
The Government of Japan has provided debt relief under TDB (the Trade and Development Board) scheme in the form of grant aid for eligible ODA loan recipients in exchange for repayments of ODA loans based on the resolution of TDB of the UNCTAD in 1978. Therefore, JBIC’s ODA Loans to eligible TDB countries had been substantially secured by matching grant aid for debt relief provided by the Government of Japan in the amount equivalent to repayment amount of principal and interest owed by such eligible TDB countries.
On the other hand, public creditors agreed to support the countries, which were regarded as Heavily Indebted Poor Countries (“HIPCs”) by the World Bank and the IMF and also were identified as the “HIPCs Initiative” and “Enhanced HIPCs Initiative”, which was qualified and agreed to reduce a part of the debt of HIPCs after the establishment of economic reform programs by the international financial institutions (IMF, World Bank, etc.) in Lyon Summit in June, 1996 and in Cologne Summit in June, 1999 respectively. After the debtor countries agreed to the economic reform programs, the Paris Club creditors agreed to the application of the (Enhanced) HIPCs Initiative. JBIC’s ODA Loans to the HIPCs Initiative countries are substantially secured by matching grant aid for debt relief provided by the Government of Japan to the HIPCs, because, as to debt reduction of ODA Loans to HIPCs, Japanese government announced, in “Statements by Chief Cabinet Secretary on Japan’s proposal for the Debt Initiative for the Heavily Indebted Poor Countries” dated April 28,1999, expansion of bilateral grant aid for debt relief to the HIPCs.
However, the above-mentioned grant aid for debt relief under TDB and HIPCs scheme was replaced by a waiver of loans provided by JBIC in accordance with the “Changes in Debt Relief Method” announced by the Government of Japan on December 10, 2002. JBIC thus has written off all amounts of corresponding ODA loans to eligible TDB countries except for scheduled repayments within the fiscal year 2002 which is covered by TDB scheme and all amounts of corresponding ODA loans to the Enhanced HIPCs Initiative countries. JBIC has also provided 100% allowance for corresponding ODA loans to the HIPCs Initiative countries which are not determined to be applied by the Enhanced HIPCs Initiative.
| (g) | As JBIC’s debtors need mostly long-term loans, JBIC generally enters into commitment line contracts with these debtors. JBIC is committed to lend necessary funds up to the predetermined amount, which shall be within the borrowers’ financing needs for the projects and up to the agreed maximum to lend, upon borrowers’ request, provided that the request meets terms and conditions for disbursement prescribed in the Loan Agreement. The total balance of unused commitment lines as of March 31, 2003 and 2002 are ¥4,221,727 million ($35,123 million) and ¥4,424,721 million respectively. |
| (h) | With respect to the claims with collateral or guarantees on debtors who are legally or substantially bankrupt (“Bankrupt Borrowers and Substantially Bankrupt Borrowers”), the remaining booked amount of the claims after deduction of the amount which is deemed collectible through the disposal of collateral or the execution of guarantees was written-off against the respective claims. The amount of the accumulated write-offs as of March 31, 2003 and 2002 are ¥105 million ($1 million) and ¥105 million respectively. |
6. Miscellaneous assets
Miscellaneous assets as of March 31, 2003 are as follows:
| (a) Accrued income | “Accrued income” includes ¥140,769 million($1,171 million) of accrued interest on loans and others. | |
| (b) Other assets | “Other assets” includes ¥148 million($1 million) of suspense payments and others. | |
Miscellaneous assets as of March 31, 2002 are as follows:
| (a) Accrued income | “Accrued income” includes ¥118,201 million of accrued interest on loans and others. | |
| (b) Other assets | “Other assets” includes ¥10 million of suspense payments and others. | |
7. Premises and equipment
Premises and equipment as of March 31, 2003 and 2002 are as follows:
March 31, 2003 (In millions of yen) | March 31, 2002 (In millions of yen) | March 31, 2003 (In millions of dollars) | |||||||
Tangible Fixed Assets | |||||||||
Land | ¥ | 3,054 | ¥ | 3,016 | $ | 25 | |||
Buildings | 7,032 | 6,933 | 59 | ||||||
Equipment | 1,241 | 1,275 | 10 | ||||||
Construction in Progress | 90 | 86 | 1 | ||||||
Total | ¥ | 11,418 | ¥ | 11,312 | $ | 95 | |||
Less - Accumulated Depreciation | 4,353 | 4,060 | 36 | ||||||
Net Book Value | ¥ | 7,065 | ¥ | 7,252 | $ | 59 | |||
Intangible Fixed Assets | $ | ||||||||
Software | ¥ | 411 | ¥ | 387 | $ | 3 | |||
Guarantee deposit | 334 | 331 | 3 | ||||||
Total | ¥ | 745 | ¥ | 718 | $ | 6 | |||
Less - Accumulated Depreciation | 145 | 66 | 1 | ||||||
Net Book Value | ¥ | 599 | ¥ | 652 | $ | 5 | |||
8. Deferred charges on bonds and notes
Deferred charges on bonds and notes as of March 31, 2003 and 2002 are as follows:
| March 31, 2003 | March 31, 2002 | March 31, 2003 | |||||||
| (In millions of yen) | (In millions of yen) | (In millions of dollars) | |||||||
Deferred discount on bonds and notes | ¥ | 17 | ¥ | 22 | $ | 0 | |||
| ¥ | 17 | ¥ | 22 | $ | 0 | ||||
9. Allowance for possible loan losses
Allowance for possible loan losses as of March 31, 2003 and 2002 are as follows:
| March 31, 2003 | March 31, 2002 | March 31, 2003 | |||||||
| (In millions of yen) | (In millions of yen) | (In millions of dollars) | |||||||
General Allowance for Possible Loan Losses | ¥ | 108,878 | ¥ | 238,865 | $ | 906 | |||
Specific Allowance for Possible Loan Losses | 72,133 | 57,819 | 600 | ||||||
Allowance for Possible Losses on Specific | — | — | — | ||||||
Overseas Loans | |||||||||
| ¥ | 181,011 | ¥ | 296,684 | $ | 1,506 | ||||
10. Bonds and notes
Bonds and notes as of March 31, 2003 and 2002 are as follows:
Description of Bonds and notes | Issue date | Currency and (In millions) | Interest Rate(%) | Maturity date | March 31, 2003 (In millions of yen) | March 31, 2002 (In millions of yen) | March 31, 2002 (In millions of dollars) | |||||||||||
| JPY | 25,000 | ¥ | 25,000 | ¥ | 25,000 | $ | 208 | |||||||||||
Overseas Economic Cooperation Fund Bonds guaranteed by Japan 8,9 | December 1995- November 1996 | 2.9~3.0 | December 2005- November 2006 | |||||||||||||||
| ¥ | 25,000 | ¥ | 25,000 | $ | 208 | |||||||||||||
Bonds and notes with redemption of 5 years or less are shown in the following table.
Fiscal 2003 | ¥ | — | million | $ | — | million | ||||
2004 | — | — | ||||||||
2005 | 15,000 | 125 | ||||||||
2006 | 10,000 | 83 | ||||||||
2007 | — | — |
11. Borrowings
Borrowings as of March 31, 2003 and 2002 are as follows:
| Average interest rate(%) | Due date of | March 31, 2003 ( In millions of yen) | March 31, 2002 ( In millions of yen) | March 31, 2003 (In millions of dollars) | |||||||||
Long-term borrowings | |||||||||||||
Borrowings from the Government Fund for | 2.76 | September 2003- December 2017 | ¥ | 4,507,637 | ¥ | 4,571,520 | $ | 37,501 | |||||
Borrowing from the Government Post Office Life Insurance Special Account | 2.42 | 104,080 | 128,310 | 866 | |||||||||
| ¥ | 4,611,717 | ¥ | 4,699,830 | $ | 38,367 | ||||||||
Long-term borrowings with maturities within 5 years outstanding as of March 31, 2003 are as follows:
Fiscal 2003 | ¥ | 540,310 million | $ | 4,495 million | ||
2004 | 534,348 | 4,445 | ||||
2005 | 524,038 | 4,360 | ||||
2006 | 492,387 | 4,096 | ||||
2007 | 433,953 | 3,610 |
12. Miscellaneous liabilities
Miscellaneous liabilities as of March 31, 2003 are as follows:
| (a) Accrued expenses | “Accrued expenses” includes ¥17,634million ($147 million) of accrued interest on borrowings and ¥22 million ($0 million) of accrued interest on bonds and notes and others. | |
| (b) Other liabilities | “Other liabilities” includes ¥2,299million ($19 million) of suspense receipts and others. | |
Miscellaneous liabilities as of March 31, 2002 are as follows:
| (a) Accrued expenses | “Accrued expenses” includes ¥17,591 million of accrued interest on borrowings and ¥22 million of accrued interest on bonds and notes and others. | |
| (b) Other liabilities | “Other liabilities” includes ¥1,341 million of suspense receipts and others. | |
13. Employee Retirement Benefits
JBIC has defined benefit pension plans which consist of welfare pension fund plan and lump-sum severance indemnity plan.
(a) The Funded Status of the Pension Plans
Disposition | March 31, 2003 (In millions of | March 31, 2002 (In millions of | March 31, 2003 (In millions of | |||||||||||
Projected Benefit Obligation | (A) | ¥ | (8,487 | ) | ¥ | (7,824 | ) | $ | (71 | ) | ||||
Fair Value of Plan Assets | (B) | 1,613 | 1,735 | 14 | ||||||||||
Unfunded Pension Obligation | (C)=(A)+(B) | (6,874 | ) | (6,089 | ) | (57 | ) | |||||||
Unrecognized Net Obligation at Transition | (D) | — | — | — | ||||||||||
Unrecognized Net Actuarial Gains/Losses | (E) | — | — | — | ||||||||||
Unrecognized Prior Service Cost | (F) | — | — | — | ||||||||||
Net Amount Recognized on the Balance Sheet | (G)=(C)+(D)+(E)+(F) | (6,874 | ) | (6,089 | ) | (57 | ) | |||||||
Prepaid Pension Cost | (H) | — | — | — | ||||||||||
Allowance for Employee Retirement Benefits | (G)-(H) | ¥ | (6,874 | ) | ¥ | (6,089 | ) | $ | (57 | ) | ||||
(Note) The above Projected Benefit Obligations include a portion in which the pension fund acts for the government welfare program.
(b) Component of Pension Cost
Disposition | March 31, 2003 (In millions of yen) | March 31, 2002 (In millions of yen) | March 31, 2003 (In millions of dollars) | |||||||||
Service Cost | ¥ | 359 | ¥ | 425 | $ | 3 | ||||||
Interest Cost | 193 | 190 | 1 | |||||||||
Expected Return on Plan Assets | (26 | ) | (70 | ) | (0 | ) | ||||||
Amortization of Prior Service Cost | (114 | ) | — | (1 | ) | |||||||
Amortization of Net Actuarial Gains/Losses | 825 | 192 | 7 | |||||||||
Amortization of Net Obligation at Transition | — | — | — | |||||||||
Other Costs | — | — | — | |||||||||
Net Pension Cost | ¥ | 1,238 | ¥ | 737 | $ | 10 | ||||||
(c) Principal Assumptions Used
| March 31, 2003 | March 31, 2002 | |||||
Discount Rate | 2.0 | % | 2.5 | % | ||
Expected Rate of Return on Plan Assets | 1.5 | % | 4.0 | % | ||
Method of Attributing the Projected Benefits to Periods of Services | Straight-line basis | Straight-line basis | ||||
Amortization Period of Prior Service Costs | Prior service cost is charged to net income of the year | | — | |||
Amortization Period of Actuarial Gains/Losses | Gains/losses are charged to net income of the year | | Gains/losses are charged to net income of the year | | ||
Amortization Period of Net Obligation at Transition | — | — |
14. Assets Pledged as Collateral
There were no assets pledged as collateral as of March 31, 2003 and 2002.
15. ODA-loan related losses
The Government of Japan has provided debt relief under TDB (the Trade and Development Board) scheme in the form of grant aid for eligible ODA loan recipients in exchange for repayments of ODA loans based on the resolution of TDB of the UNCTAD in 1978. Therefore, JBIC’s ODA Loans to eligible TDB countries had been substantially secured by matching grant aid for debt relief provided by the Government of Japan in the amount equivalent to repayment amount of principal and interest owed by such eligible TDB countries.
On the other hand, public creditors agreed to support the countries, which were regarded as Heavily Indebted Poor Countries (“HIPCs”) by the World Bank and the IMF and also were identified as the “HIPCs Initiative” and “Enhanced HIPCs Initiative”, which was qualified and agreed to reduce a part of the debt of HIPCs after the establishment of economic reform programs by the international financial institutions (IMF, World Bank, etc.) in Lyon Summit in June, 1996 and in Cologne Summit in June, 1999 respectively. After the debtor countries agreed to the economic reform programs, the Paris Club creditors agreed to the application of the (Enhanced) HIPCs Initiative. JBIC’s ODA Loans to the HIPCs Initiative countries are substantially secured by matching grant aid for debt relief provided by the Government of Japan to the HIPCs, because, as to debt reduction of ODA Loans to HIPCs, Japanese government announced, in “Statements by Chief Cabinet Secretary on Japan’s proposal for the Debt Initiative for the Heavily Indebted Poor Countries” dated April 28,1999, expansion of bilateral grant aid for debt relief to the HIPCs.
However, the above-mentioned grant aid for debt relief under TDB and HIPCs scheme was replaced by a waiver of loans provided by JBIC in accordance with the “Changes in Debt Relief Method” announced by the Government of Japan on December 10, 2002. JBIC thus has written off all amounts of corresponding ODA loans to eligible TDB countries except for scheduled repayments within the fiscal year 2002 which is covered by TDB scheme and all amounts of corresponding ODA loans to the Enhanced HIPCs Initiative countries. JBIC has also provided 100% allowance for corresponding ODA loans to the HIPCs Initiative countries which are not determined to be applied by the Enhanced HIPCs Initiative. Those losses are reflected in the extraordinary losses (“ODA-loan related losses”).
16.Accumulated deficit
JBIC accounts for “Transfer from Reserve of the Overseas Economic Cooperation Account” for the fiscal year ended March 31, 2003, pursuant to Article 44 of the JBIC Law, the related law and the related cabinet order.
Therefore, losses carried forward to the following fiscal year are simply the sum of “Accumulated deficit at the fiscal year ended March 31, 2003” and statutory appropriation of net earnings as stipulated by the related law of JBIC. Deficit, which represents shortage of net assets from capital of the Overseas Economic Cooperation Account as of March 31, 2003, was ¥590,807million($4,915 million).
17. Leased Transactions
Leased transactions in the fiscal year ended March 31, 2003 are as follows:
| (a) | Finance lease transactions, excluding leases where the ownership of the property is deemed to be transferred to the lessee. |
Not applicable
| (b) | Operating lease transactions: |
| • | Future Lease Payment Obligations |
| Within 1 year | More than 1 year | Total | |||||||
(In millions of yen) | ¥ | 3 | ¥ | 0 | ¥ | 4 | |||
(In millions of dollars) | $ | 0 | $ | 0 | $ | 0 | |||
Leased transactions in the fiscal year ended March 31, 2002 are as follows:
(a) Finance lease transactions, excluding leases where the ownership of the property is deemed to be transferred to the lessee.
Not applicable
(b) Operating lease transactions:
| • | Future Lease Payment Obligations |
| Within 1 year | More than 1 year | Total | |||||||
(In millions of yen) | ¥ | 8 | ¥ | 3 | ¥ | 12 | |||
18. Derivative Transactions
There were no derivative transactions in the fiscal year ended March 31, 2003 and 2002.
| 19. | Market Value of Securities |
Notes to market value of securities as of March 31, 2003 are as follows:
The followings includes “Securities” and negotiable due from banks in “Cash and due from banks”
(a) Trading Securities
Not applicable
(b) Held-to-maturities Debt Securities
Not applicable
(c) Available-for-sale Securities with market value
Not applicable
(d) Held-to-maturities Debt Securities sold
Not applicable
(e) Available-for-sale Securities sold
Not applicable
(f) Held-to-maturity Debt Securities and Available-for-sale Securities whose market value is not readily determinable are as follows
| March 31, 2003 | March 31, 2003 | |||||
| (In millions of yen) | (In millions of dollars) | |||||
Held-to-maturity Debt Securities | ¥ | — | $ | — | ||
Unlisted Foreign Securities | — | — | ||||
Available-for-sale Securities | 122,912 | 1,023 | ||||
Unlisted Japanese Equities other than Over-the-counter | 119,084 | 991 | ||||
Unlisted Foreign Equities | 3,184 | 27 | ||||
Unlisted Japanese Local Government Bonds | — | — | ||||
Unlisted Japanese Corporate Bonds | — | — | ||||
Unlisted Foreign bonds | — | — | ||||
Other Japanese securities | — | — | ||||
Other unlisted foreign securities | 642 | 5 | ||||
Total | ¥ | 122,912 | $ | 1023 | ||
(g) Change of Classification of Securities
Not applicable
(h) Redemption Schedule of Available-for-sale Securities with Maturity
Not applicable
(i) Money Held in Trust
Not applicable
(j) Net Unrealized Gain (Loss) on Available-for-sale Securities
Not applicable
Notes to market value of securities as of March 31, 2002 are as follows:
The followings includes “Securities” and negotiable due from banks in “Cash and Due from Banks”
(a) Trading Securities
Not applicable
(b) Held-to-maturities Debt Securities
Not applicable
(c) Available-for-sale Securities with market value
Not applicable
(d) Held-to-maturities Debt Securities sold
Not applicable
(e) Available-for-sale Securities sold
Not applicable
(f) Held-to-maturity Debt Securities and Available-for-sale Securities whose market value is not readily determinable are as follows
| March 31, 2002 | |||
| (In millions of yen) | |||
Held-to-maturity Debt Securities | ¥ | — | |
Unlisted Foreign Securities | — | ||
Available-for-sale Securities | 122,674 | ||
Unlisted Japanese Equities other than Over-the-counter | 119,134 | ||
Unlisted Foreign Equities | 2,844 | ||
Unlisted Japanese Local Government Bonds | — | ||
Unlisted Japanese Corporate Bonds | — | ||
Unlisted Foreign bonds | — | ||
Other Japanese securities | — | ||
Other unlisted foreign securities | 695 | ||
Total | ¥ | 122,674 | |
(g) Change of Classification of Securities
Not applicable
(h) Redemption Schedule of Available-for-sale Securities with Maturity
Not applicable
(i) Money Held in Trust
Not applicable
(j) Net Unrealized Gain (Loss) on Available-for-sale Securities
Not applicable
