Message from the President

In tune with the changing needs of society and our customers, the DBJ Group helps realize a sustainable society by promoting sustainability management while balancing economic and social value.

In tune with the changing needs of society and
our customers, the DBJ Group helps realize
a sustainable society by promoting sustainability
management while balancing economic and
social value.

Our Response to the COVID-19 Crisis

COVID-19, having become a pandemic since its outbreak in December 2019, has had an enormous impact on economic activity in Japan, constricting the travel of people inside Japan and around the world. In response to the unprecedented crisis, the DBJ Group is leveraging the experience it has gained responding to other crises, such as the global financial crisis and the Great East Japan Earthquake. DBJ set up a consulting service desk in January 2020. Then in March 2020, the Japanese government declared the COVID-19 pandemic a crisis. As a designated financial institution, the DBJ Group concentrated all of its energy on rapidly and appropriately implementing Crisis Response Operations.

As of March 31, 2021, we have already extended 345 Crisis Response Operations worth ¥2,231.8 billion and, through the Regional Emergency Response Program, provided a total of ¥103.9 billion in financing to 64 cases. At the request of the government, we set up a special team in March 2021 to strengthen time-limited and concentrated support for businesses severely impacted by the ongoing pandemic, such as those in the hospitality sector. Through these and other measures, we are focusing on rapidly and properly implementing Crisis Response Operations while collaborating and coordinating with private financial institutions to address the needs of customers adversely affected by COVID-19.

In Special Investment Operations, we created the Growth Fund for Coronavirus Revival in May 2020 with the aim of backing our customers’ initiatives to develop new businesses and collaborate across different industries in order to recover and grow from the impact of COVID-19.

The Role of the DBJ Group and Our Achievements to Date

Since the days of its predecessors, Japan Development Bank and Hokkaido-Tohoku Development Finance Public Corporation, the DBJ Group has worked to promote Japan’s sustainable development. We have achieved this by responding flexibly to the issues of the day, through the periods of postwar reconstruction, high and stable growth, and the bubble economy and its collapse. In more recent years, we have addressed the declining birth rate and aging population, and become a leader in the areas of globalization and growing environmental and disaster awareness. The past decade alone has seen dramatic change in the wake of the global financial crisis and such major events as the Great East Japan Earthquake. Against this backdrop, the DBJ Group has developed new initiatives to address social expectations with an eye on the future, and the Group itself has undergone major changes. We have achieved this by responding flexibly to the issues of the day—for example, through the periods of postwar reconstruction, high and stable growth, and the bubble economy and its collapse. In more recent years, we have addressed the declining birth rate and aging population and become a leader in the areas of globalization and growing environmental and disaster awareness.

Specifically, the DBJ Group has firmly established a unique, integrated investment- and loan-based business model through the development of Crisis Response Operations to cope with extraordinary events such as earthquakes and global financial crises, and through measures to enhance the supply of risk capital for subsequent growth.

As we deal with the unprecedented, long-term impact of COVID-19, the future is sure to present further changes and challenges. While monitoring initiatives across all industries on the path to carbon neutrality by 2050, a global movement, and in keeping with our unwavering mission, we will take a flexible approach to issues faced by regions and our customers as a whole, staying true to our core values and being mindful of our action guidelines.

Our Mission: Design the future with financial expertise
Our Action Guidelines:
• Responsibility to future generations
• The customer’s perspective
• Outstanding service
• Commitment and cooperation
 Our Values: Initiative and Integrity

Vision 2030 and Priority Areas

In 2015, with the aim of shaping our business vision around a longer-term outlook, we gave fresh thought to the role of DBJ in the years leading up to 2030. In the course of our debate, we identified a number of changes in the external environment with a significant impact on our stakeholders: Japan’s declining population and its climate and energy issues in the context of the global effort to build a sustainable society; intensifying global competition; and innovations in digital technologies such as AI and fintech. Based on the roles we have undertaken and the value we have realized over this time, we determined the best areas in which to use our strengths over the longer term in the interests of a sustainable society. Vision 2030 was the result. Drawn up in 2017, this long-term vision sets infrastructure, industry, and regional economies as the three priority areas (materialities) for the DBJ Group’s initiatives. Our contributions in these areas will be consistent with the Group’s course so far, and we believe they will be in line with what society and stakeholders expect from us in the future.

To fulfill our mission, we will work as financial professionals to enhance the added value provided to regional communities and our customers in industry and infrastructure, steadily implementing each initiative while respecting the views of stakeholders. We will take the lead in business and market creation by leveraging our ability to properly evaluate and address a broad range of risks. At the same time, as we respond to the COVID-19 crisis, take steps toward carbon neutrality and look forward to 2030, we will fulfill our unique role in the economy and society by taking action during times of crisis and otherwise responding to social demand.

Sustainability Management at the DBJ Group

The DBJ Group practices sustainability management as a means of creating value with a focus on three priority areas. By sustainability management, we mean working to create economic and social value by providing the solutions needed to create new industries and value through innovation, by responding during times of crisis, and by making other contributions toward the building of a sustainable society, all while being guided by the needs of our customers and society as a whole.

To this end, we must accurately understand the current issues affecting industries and our customers, in addition to longer-term trends and issues in society and the impact they may have on our customers and specific sectors. Leveraging our knowledge to produce future visions through research and analysis, and sharing these visions with customers and regional communities while offering financial solutions such as risk capital to deal with related issues, the DBJ Group will take the lead in creating industries and initiatives that can serve as pillars of Japan’s economy and society in the years to come. At the same time, Crisis Response Operations will play an important role, undertaken with flexibility and precision as required by events such as major disasters and instability in financial markets.

As we move ahead with these services, we are also honing our strengths in relationship capital (as exemplified by robust networks in industry, government, and academia), sound financial capital, and human capital sharing a common set of core values. We believe in the importance of constantly improving our sustainability management processes through dialogue with external stakeholders, centering on the Advisory Board and the Special Investment Operations Monitoring Board of DBJ.

Fiscal 2020 Results

In its results for fiscal 2020, DBJ generated net income of ¥45.2 billion, a decline of 10% from the previous fiscal year, due to owing to an increase in valuation allowance in light of the COVID-19 pandemic. We will continue to focus Crisis Response Operations on issues related to the pandemic, while also helping our customers rebuild their finances and take measures to recover and grow from the pandemic.

Fifth Medium-Term Management Plan

The DBJ Group has drawn up and implemented four medium-term management plans since it became a joint-stock company. While enhancing operations for supplying risk capital, DBJ is working to expand financial services that integrate investments and loans for customers in industrial fields and three infrastructure fields: energy, transportation, and urban development. In tandem with this effort, we are increasing the sophistication of our risk management capabilities.

With dramatic changes underway around the world amid increasing uncertainty due to the pandemic, DBJ drew up its Fifth Medium-Term Management Plan while backcasting from its long-term vision, Vision 2030. The Bank is also taking heed of four major social issues that are having a significant impact on economies and communities worldwide: the advancement of digitalization, the decline of working-age populations, internationalization, and sustainability. The idea of capitalism is being tested more than ever before by this pandemic. As social issues become inseparable from the business challenges faced by our customers, we must work to solve issues from the customer’s perspective. With this in mind, we unveiled our Fifth Medium-Term Management Plan for fiscal 2021 onward.

There are three key aspects to note in the Fifth Medium-Term Management Plan.

The first is that the most important tenet of the plan centers on the DBJ Group’s corporate philosophy: the balancing of economic and social value.

As the second aspect, due to the pandemic the Group recognizes the need to accelerate its initiatives for digitalization and sustainability given the global movement to become carbon neutral by 2050, a crucial milestone on the path to realizing a sustainability society. To advance these programs, we must collaborate more with our customers and private-sector financial institutions, as collaboration across sectors has become even more important than before. With “connections” as a rallying cry, the DBJ Group will serve as a nodal point and catalyst across industries, customers, and generations.

The third aspect to note is the GRIT Strategy, concrete initiatives created by the Group to enable it to fulfill the abovementioned role. With the realization of a sustainable society as our ultimate goal, we will collaborate with customers and all other stakeholders on Green, Resilience & Recovery, Innovation, and Transition & Transformation initiatives.

Business Profit and Loss (Consolidated)

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(¥ billion) FY2019 FY2020 YoY change
Gross ordinary income 164.3 164.1 (0.1)
Loans 76.6 91.7 15.0
Investment 68.2 47.0 (21.2)
Fee and commission income 19.3 25.3 5.9
Operating expenses (57.1) (56.7) 0.4
Net ordinary income 107.1 107.3 0.2
Other extraordinary items 4.0 0.7 (3.3)
Gains on reversal of reserves, depreciation, etc., of written-off claims (28.1) (34.2) (6.1)
Loans 4.5 (24.9) (29.5)
Investment (32.7) (9.3) 23.3
Income before income taxes and minority interests 83.0 73.8 (9.2)
Total income taxes (31.5) (26.9) 4.5
Current net income 51.5 46.8 (4.7)
Net income attributable to non-controlling interests 1.0 1.5 0.5
Net income attributable to owners of the parent 50.4 45.2 (5.2)

Note: Business categories are those used in business management.

Special Investment Operations

The DBJ Group’s Special Investment Operations are conducted as mandated in revisions made in 2015 to the Development Bank of Japan Inc. Act. Utilizing our experience in supplying risk capital, through these operations we have extended ¥931.5 billion in investments and loans to a total of 132 projects as of March 31, 2021. A total of ¥5,714 billion in private-sector investments and loans have been triggered by DBJ’s investments and loans worth ¥893.2 billion. The DBJ Group will continue to supply growth capital in collaboration with private financial institutions. The Group also has an extensive track record in regional revitalization projects and is keen to engage in future initiatives with local financial institutions willing to help create distinctive regional communities.

In May 2020, DBJ established the Growth Fund for Coronavirus Revival to help customers recover and grow from the COVID-19 pandemic. In February 2021, DBJ created the Green Investment Fund to strongly support initiatives that help realize a greener society. In March of the same year, we also set up the DBJ Innovation and Life Sciences Fund for the purpose of supporting innovation and sharpening competitiveness in the life sciences industry. At meetings of the Special Investment Operations Monitoring Board, which convenes twice a year, the opinions of stakeholders are taken into consideration when conducting operations.

Development of Human Resources Focused on Best Practices in Sustainability Management

Sustainability management, a key to the DBJ Group’s value creation process, relies above all on personnel who share the core values of initiative and integrity and who display the four elements of our core corporate values in the pursuit of balancing economic and social value. Officers and employees of the DBJ Group have inherited the core corporate values of long-term perspective, impartiality, public mindedness, and reliability, which have evolved over the years in the course of our business. Bolstered by these corporate values, the Group has consistently risen to meet the challenges of the times. We always strive to enhance our skills in corporate and project assessment. Our know-how, capability, and developed networks reinforce the DBJ Group’s core asset of expertise in long-term screening and assessment based on a comprehensive view of regional and current issues.

The employees embodying the Group’s values should be able to pursue their activities creatively and in good health, and we are promoting workstyle reforms for this purpose. To bring more flexibility to working patterns, we have introduced telecommuting and a flex-time work system, and we aim to enhance our paid parental and caregiving leave programs.

As part of our response to COVID-19, we are encouraging employees to take a flexible approach to working at home or coming to work on staggered schedules, because the health and safety of our executives and employees are of paramount importance. We are also making every effort to update our systems so that Crisis Response Operations can be smoothly implemented.

Improving Collaboration with Stakeholders

The situation around the world and in Japan, including the impact of the pandemic, looks increasingly uncertain as major changes continue to occur. Over the next decade in particular, given the aging and declining population in Japan, we expect the advancement of digitalization to accelerate after the pandemic ends, resulting in sweeping changes in the economy and society as initiatives across industries for achieving carbon neutrality by 2050 gain momentum. We also expect to see the intensification of global competition, new collaborations and cooperation across sectors and companies in the business community, changes in business models, and the emergence of new ecosystems. Based on its Fifth Medium-Term Management Plan, the DBJ Group will continue to supply risk capital through integrated investments and loans with the intention of leading the way toward a sustainable society in the future, while taking on challenges for new initiatives together with its customers.

Furthermore, DBJ will continue with efforts to build a more sustainable society in line with this global movement. Recently, the public and private sectors have come together to engage

in more efforts to contribute to SDGs, a global agenda for 2030. On financial markets, interest in the flow of funds is growing from an ESG perspective. To date, the DBJ Group has, through its certification programs and other means, advanced initiatives toward a sustainable society by proactively evaluating intangible assets not shown on the financial statements based on dialogues with customers. Engaging in dialogue with stakeholders will remain a crucial endeavor as we continue to fulfill our mission as a front-runner in sustainability management. It is our sincere hope that this integrated report will lead to greater dialogue with all of our stakeholders.

Hajime Watanabe

President and CEO
August 2021