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>> Annual Report 2016

Annual Report of Toyota Kreditbank GmbH Group, Cologne, for Financial Year 2016, 1 April 2015 – 31 March 2016

02 – 03

Contents

05 Foreword12 Notestotheconsolidatedfinancialstatementsof ToyotaKreditbankGmbHforthe2015/2016financialyear 14 1.Generalinformation

14 2. Group reporting entity

14 3. Consolidation principles

14 4.Accountingpolicies,foreigncurrencytranslation

17 5. Explanatory Notes to the balance sheet

25 6.ExplanatoryNotestotheincomestatement

26 7.Otherdisclosures

32 ConsolidatedCashFlowStatementforToyotaKreditbankGroup

33 ConsolidatedStatementofChangesinEquityofToyotaKreditbankGmbH

34 Segmentinformation

38 ToyotaKreditbankGmbH GroupManagementReportforthe2015/2016financialyear 40 A. GeneralInformationontheToyotaKreditbankGroup

42 B. ReportonEconomicPosition

55 C. Eventsaftertheendofthereportingperiod

55 D. OpportunitiesandRisksReport

73 E. Outlook

76 CountrybyCountryReporting

77 Auditors’Report

Dear Madam, dear Sir, In this fiscal year, we can once again proudly announce that Toyota has not only been able to maintain its position as the largest automobile manufacturer in the world with record profits of more than EUR 18.5 billion, but even succeeded in further increasing its profits by 6.4% – not least due to the excellent, innovative technology of our vehicles. For the ToyotaKreditbank Group, its global line-up is bearing fruit. More over, our European branches and subsidiaries are becoming increa-singly important and have played a major role in promoting our joint success.

Technically always one step ahead

As the current discussion regarding alternative drive types shows, Toyota is and remains the market leader for environ-mentally friendly vehicles. We do not only offer hybrid vehic-les in all vehicle classes: for Lexus, a hybrid drive is available for the entire range of models. The current version of the Prius already represents thefourth generation of this groundbreak-ing technology. Sales of over 10 million vehicles worldwide demonstrate the success of this innovative drive technology. But we go even further: in addition to introducing the new Mirai, Toyota has also launched the first hydrogen-driven limousine worldwide and supports the effort to bring environ-mentally friendly models into the market.

Among other features, the new platform strategy, TNGA (Toyota New Global Architecture), facilitates a lower center of gravity for the vehicle which in turn optimizes its handling and its driving stability. At the same time, it provides the basis for a comfortable and ergonomic interior along with an opti-mized position of the driver. Also, the new platform strategy opens up new possibilities for designers to realize an attractive design with lower lines and a more athletic profile.

Convincing by market-oriented products

With our enhanced management, our team at the Toyota Kreditbank Group is ready to respond to the new requirements of the modern dynamic market place. In this context, custo-mers' buying behavior, which has increasingly come to be domi nated by online sources, plays a particularly important role. Today, potential customers gather most of the informa-tion they need from the internet. In the used-car market in particular, new portals, platforms and automobile exchanges are constantly being developed. They attempt to create the impression that they ensure more neutrality than "the dealer around the corner", while in fact they frequently pursue other kinds of economic interests. We will need to address these trends with innovative products in the future.

In the field of new vehicles, we successfully supported our dealers by offering attractive financing products in all markets when launching the new models, RAV4 Hybrid and Prius.

To meet the growing need for reliable planning concerning mobility and follow-up costs in particular, we offer package deals such as "Service Leasing" or "Neu bleibt Neu", a new product which involves hedging the residual value of vehicles. In the other markets of this field of business, another major focus is also on "Trade Cycle Management" products. In Spain, the product we offer in this context is "Pay per Drive“ for used cars, and in France, we have "La Combinaison" as an option.

Yet another current trend in the automotive market consists of quite a few customers no longer wanting to own a car and demanding flexible mobility options. We will continue to closely monitor this change in behavior, which mainly occurs in metropolitan areas.

Annual Report of Toyota Kreditbank GmbH Group

Foreword Consolidated financial statements Report Auditors’ Report

04 – 05

Banking and retail working hand in hand

Our intelligent, customer-oriented products and the team spirit between our bank and retailers were received very positively by our trade partners who expressed their appreciation with excellent feedback: We are proud to announce that Toyota Kreditbank has recently been ranked as the "best automotive bank“ by the AUTOHAUS BankenMonitor for the sixth time in a row. We would like to take this opportunity to thank our trade partners for their remarkable loyalty to the "Toyota" and "Lexus" brands as well as for the particularly close and productive co-operation they contributed to. It is only together that we have been able to succeed.

The new financial year will be characterised by the reorien-tation of the dealer network in Germany, which, in order to improve profitability for distributors, has been operating as a single-tier network since June. Furthermore, the launch of the new products, HiLux and ProAce, is an important mile-stone for business customers in particular. In addition, the completely new model, C-HR, a stylish crossover hybrid, will set new standards.

Together, we will continue to expand the used-car business in all markets. In doing so, we will contribute to customer retention while at the same time strengthening the after sales business and also winning over potential new customers. A particular focus will also be placed on strengthening the after sales busi-ness by means of combined financing and service products.

We and our partners are ready for the new financial year and are looking forward to achieving increased momentum and successfully continuing to master the challenges related to the low-interest-rate policies of the European Central Bank and the implementation of the diverse European regulatory requirements.

Christian RubenManaging Director

Axel NordiekerManaging Director

Junichi YamadaChief Representative

Ivo LjubicaManaging Director

George JuganarManaging Director George Juganar, Axel Nordieker, Christian Ruben, Ivo Ljubica, Junichi Yamada



06 – 07



Consolidated balance sheet of Toyota Kreditbank GmbH, Cologne

Assets31/03/2016

EUR31/03/2015

EUR

1 Liquid fundsa Cash 8,770.98 45,460.21b Deposits with central banks, 144,533,429.71 33,880,930.81

thereof with German Federal BankEUR 134,360,398.72 (31/03/2015: TEUR 16,887)

144,542,200.69 33,926,391.02

2 Receivables due from banksa on demand 153,567,763.07 179,589,756.88b other receivables 36,525,842.23 133,091,130.41

190,093,605.30 312,680,887.29

3 Customer receivables 6,018,125,546.68 6,030,460,887.04thereof secured by mortgages: EUR 0.00 (31/03/2015: TEUR 0)Municipal loans EUR 0.00 (31/03/2015: TEUR 0)

4 Bonds and other interest bearing securitiesBonds and securities by public issuers 96,259,887.19 75,919,682.80

5 Investments - thereof 0.00 19,020.06in banks: EUR 0.00 (31/03/2015: TEUR 19)in financial services companies: EUR 0.00 (31/03/2015: TEUR 0)

6 Leasing assets 1,009,673,449.38 897,255,356.55

7 Intangible fixed assetsPurchased concessions, industrial and similar rights and assets, and licenses in such rights and assets 6,661,542.28 6,617,605.57

8 Tangible fixed assets 12,753,170.90 14,586,123.64

9 Other assets 79,166,800.68 57,875,886.52

10 Prepaid expenses and deferred charges 12,809,450.46 11,334,557.36

11 Assets arising from the overfunding of pension obligations 222,903.00 489,919.15

Total of assets 7,570,308,556.56 7,441,166,317.00

Equity and liabilities31/03/2016

EUR31/03/2015

EUR

1 Liabilities to banksa due on demand 28,997,342.46 76,365,074.88b with fixed term or notice periods 2,789,036,407.87 2,638,366,907.99

2,818,033,750.33 2,714,731,982.87

2 Liabilities to customers – other liabilitiesa due on demand 63,423,504.22 62,514,150.63b with fixed term or notice periods 2,359,286,060.33 2,378,226,694.58

2,422,709,564.55 2,440,740,845.21

3 Notes payable securitised liabilities 635,421,806.69 548,141,482.50

4 Other liabilities 233,967,521.48 222,780,057.00

5 Deferred income 502,310,020.63 520,284,365.50

6 Accruals and provisionsa Provision for pensions and similar obligations 16,085,750.59 14,584,846.35b Tax accruals 26,681,311.63 22,970,249.75c Other accruals 65,935,064.96 59,482,475.99

108,702,127.18 97,037,572.09

7 Subordinated liabilities 34,876,212.71 85,415,154.63

8 Equity a Contributed capital

Share capital 30,000,000.00 30,000,000.00Minus not required pending deposits 0.00 0.00

b Capital surplus 345,843,161.35 345,843,161.35c Revenue reserves 470,597,182.37 435,232,319.29d Group net income for the year 59,011,306.09 63,361,800.76e Currency translation differences -91,164,096.82 -62,402,424.20

814,287,552.99 812,034,857.20

Total of equity and liabilities 7,570,308,556.56 7,441,166,317.00

Contingent liabilities

Liability for Guarantee 3,358,323.94 0.00

2. Other obligations

Irrevocable credit commitments 386,104,747.06 341,633,583.19

08 – 09



Consolidated income statement of Toyota Kreditbank GmbH, Cologne,for the period 1 April to 31 March

01/04/2015 to 31/03/2016

EUR

01/04/2014to 31/03/2015

EUR

1 Interest income from a lending and money market transactions 322,815,383.39 351,075,928.90

thereof negative interest on receivables EUR 128,819.61b fixed income securities and government ledger bonds 1,102,981.00 1,394,035.94

323,918,364.39 352,469,964.84

2 Interest expense 101,505,260.23 126,294,427.97thereof negative interest on liabilities EUR 606,139.92 222,413,104.16 226,175,536.87

3 Investment income 979.94 100.00

4 Commission income 56,362,367.35 54,237,565.40

5 Commission expense 80,252,143.98 73,541,557.16-23,889,776.63 - 19,303,991.76

6 Other operating income 292,393,573.53 283,512,342.29

7 General administrative expensesa Personnel costsaa Wages and salaries 43,605,256.18 41,975,286.19ab Social security expenses 11,251,439.46 10,411,053.95

of which pension costs: EUR 1,691,218.35 (31/03/2015: TEUR 1,299)

b Other administrative expenses 63,447,612.84 62,884,515.48118,304,308.48 115,270,855.62

8 Depreciation and amortisation of intangible and tangible fixed assets, includingleasing assets 219,440,076.63 210,946,910.91

9 Other operating expenses 27,271,297.11 18,608,994.40

10 Bad debts written off and allowances onreceivables and securities, together withincreases to accruals in respect of lending business 22,167,325.30 36,953,168.57

11 Profit from ordinary business activities 103,734,873.48 108,604,057.90

12 Extraordinary expenses 0.00 19,960,002.80

13 Income taxes 43,754,944.71 24,221,408.55

14 Other taxes, to the extent not included in item (9) above 968,622.68 1,060,845.79

15 Group net income for the year 59,011,306.09 63,361,800.76

10 – 11

14 1. General information14 2. Group reporting entity14 3. Consolidation principles14 4. Accounting policies, foreign currency translation17 5. Explanatory Notes to the balance sheet 5.1 Cash reserve 5.2 Duefrombanks 5.3 Customerreceivables 5.4 Bondsandotherfixedinterestbearingsecurities 5.5 Investments 5.6 Leasingassets 5.7 Intangible assets 5.8 Tangiblefixedassets 5.9 Fixedassetsmovementschedule 5.10 Otherassets 5.11 Assetsdenominatedinaforeigncurrency 5.12 Prepaidexpensesanddeferredcharges 5.13 Liabilitiestobanks 5.14 Liabilitiestocustomers 5.15 Securitised liabilities 5.16 Otherliabilities 5.17 Deferredincome 5.18 Accruals and provisions 5.19 Subordinated liabilities 5.20 Foreign currency liabilities25 6. Explanatory Notes to the income statement 6.1 Otheroperatingincome 6.2 Depreciationandamortisationofintangibleassets,tangiblefixedassetsandleasingassets 6.3 Otheroperatingexpenses 6.4 Extraordinaryexpenses 6.5 Incometaxes26 7. Other disclosures 7.1 ExecutiveManagement(Geschäftsleitung) 7.2 Receivablesfromboardmembers(Geschäftsleitung) 7.3 Numberofemployees 7.4 Derivative transactions 7.5 Valuation units 7.6 Disclosuresreportedbelowthebalancesheet(liabilities) 7.7 Otherfinancialobligations 7.8 Auditors’fees 7.9 Relatedpartytransactions 7.10 Nameandplaceofbusinessoftheparentcompany,informationabouttheconsolidatedfinancialstatements32 Consolidated Cash Flow Statement for Toyota Kreditbank Group for the period 1 April 2015 to 31 March 201633 Consolidated Statement of Changes in Equity of Toyota Kreditbank GmbH as at 31 March 201634 Segment information

NotestotheconsolidatedfinancialstatementsofToyotaKreditbankGmbHforthe2015/2016financialyear



12 – 13



The pension provision for employees in Germany is calculated for HGB purposes at 31 March 2016 using the projected-unit-credit method based on a discount rate of 4.25% p.a., and as-sumed future salary and pension increases of 3.0% p.a. and 2.0% p.a. respectively. The 2005 mortality tables issued by Prof. Dr. Klaus Heubeck are used as the basis of calculation. In the financial year under review, items were discounted for the first time using the average market interest rate for the past 10 years. The difference in the carrying amount of the provi-sion based on using the average market interest rate for the past ten financial years and that for the past seven financial years is TEUR 1,645. Toyota Kreditbank GmbH has set up Contractual Trust Arrange-ments whereby assets designated to fulfil pension obligations have been separated from other assets and transferred to trustees. Assets which cannot be accessed by other creditors and have been designated as being held exclusively to settle pension obligations, are offset at the balance sheet date against the relevant obligations relating to fund performance based commitments in accordance with § 246 (2) sentence 2 HGB. The surplus of assets over obligations is presented within the line item "Other assets". Pension obligations resulting from the bank's previous arrangements and from guaranteed pen-sions are presented within the line item "Provisions and similar obligations". In these cases, there are no separate plan assets.

The provision for pre-retirement part-time working arran-gements was measured at 31 March 2016 in the HGB balance sheet using the projected-unit-credit method and a discount rate of 2.56%.

The financial statements of group subsidiaries denominated in a foreign currency are converted into Euro at 31 March 2016 in accordance with § 308a HGB. The translation difference arising is reported within the group entity as the currency translation difference on equity.

Foreign currency assets and liabilities are translated in accordance with § 256a HGB (in conjunction with § 340h HGB). The requirements of § 256a HGB are not applied if valuation units are created pursuant to § 254 HGB as hedges of foreign cur-rency items.

During the financial year under review, Toyota Kreditbank carried receivables as well as payables with negative interest rates. Negative interest on receivables is disclosed separately within the line item “Interest income” and negative interest on payables is disclosed separately within the line item “Interest expenses”. In both cases, the figures involved are not signifi-cant for the purposes of assessing the Toyota Kreditbank Group’s earnings performance for the year.

The loss provisioning expense is reported in the income statement net of recoveries.

assessment. General allowances are recognised on a contract-by-contract basis, taking into account the likelihood of de-fault and the expected loss. For the purposes of determining the probability of default and the expected loss, the Group takes into account, as a minimum, the parameters which it also uses to measure equity coverage of default risks using an internal rating-based approach (IRBA).

Bonds and other fixed-interest-bearing securities are clas-sified as current assets and measured in accordance with the strict lowest value principle pursuant to § 340e (1) sentence 2 HGB in conjunction with § 253 (4) HGB.

Leasing assets relate primarily to leased-out vehicles. Leasing assets are stated at acquisition cost less accumulated sched-uled depreciation and impairment losses. The provision for potential residual value risks has been offset against leased assets on the assets side of the balance sheet.

As a general rule, leasing assets are depreciated straight line down to their agreed residual value over the term of the lease. Leasing assets of the Norwegian and Swedish branches are depreciated on a straight line basis over the assets’ useful lives. Depending on their terms, the leasing contracts are treated either as operating leases or as finance leases and the under-lying assets are accordingly shown either as leasing assets or as customer receivables.

Software at cost of purchase less scheduled straight line amortisation over three to five years is shown under intangible assets.

Tangible fixed assets are stated at cost less scheduled depre-ciation. Assets are all depreciated on a straight line basis over their expected useful lives. The impairment loss previously recorded on buildings in accordance with § 7 (5) no. 1 EStG was retained in accordance with Art. 67 (4) sentence 1 EGHGB.

Liabilities are stated at their expected settlement amount, including accrued interest.

Deferred income comprises interest and fees arising primarily from the instalment credit business. It is released to income under the so-called "Rule-of-78 method". This item is also used to show special leasing payments from the leasing business. By way of analogy with the leasing instalments, these are re-leased on a straight-line basis over the term of the contract.

Provisions and accruals are recognised for all identified risks and for liabilities of uncertain timing and amount. Other pro-visions and accruals with a remaining term of more than one year are discounted to their present value using the average market interest rate for the past seven years (corresponding to their remaining term) in accordance with § 253 (2) sen-tence 1 HGB.

3. Consolidation principlesThe consolidated financial statements have been prepared uni-formly using the accounting policies of Toyota Kreditbank GmbH described below. Where necessary, the financial statements of the included companies have been adjusted to bring them into line with the classification regulations used by the parent company.

The cost of investment in the consolidated subsidiaries, Toyota Leasing GmbH, Toyota Bank Polska Spolka Akcýjna, Toyota Leasing Polska Sp. z o.o. and AO Toyota Bank has been con-solidated pursuant to Art. 66 (3) sentence 4 EGHGB using the German book value method in accordance with § 301 (1) sentence 2 no. 1 HGB (old version).

Since the carrying amount of the investments in affiliated companies corresponded in all cases to relevant equity, no differences arose on consolidation.

The equity capital of the three Dutch foundations is presented in the consolidated financial statements within other liabilities due to the restricted liability function of these entities (and not as minority interests).

Intragroup receivables, payables, prepaid and deferred items as well as income and expenses between consolidated entities are eliminated. Inter-company profits and losses, which would have had to be eliminated in accordance with section 304 (1) HGB, did not occur in the year under review.

4. Accounting policies, foreign currency translationCustomer receivables resulting from instalment credit and lease financing business are stated including interest and charges for the remaining term. Other customer receivables and receivables due from banks as well as other assets are stated at their nominal amounts.

Specific allowances are recognised to cover foreseeable risks resulting from customer receivables. The general bad debt allowance taking into account the the general credit risk rela-ting to all lines of business. Where deemed prudent and appro-priate, general allowances are also recognised over and above the amounts allowed for tax purposes.

In the case of receivables from customers, specific allowances are recognised for contracts allocated to a default risk cate-gory or for which there has been a delay in payment in excess of a defined period. The level of the specific allowance is deter-mined on the basis of expected cash flows from each contract, taking into account the cash flows achieved in the past and collateral held. Specific allowances are recognised on dealer financing receivables on the basis of a case-by-case

1. General informationThe consolidated financial statements for the period ended 31 March 2016 of Toyota Kreditbank GmbH have been prepared in accordance with the regulations of the Handelsgesetzbuch (German Commercial Code) and the requirements of the German Accounting Regulation for Banks and Financial Institu-tions (RechKredV), taking account of the specific requirements of the Limited Liability Company Law (GmbHG). The structure corresponds to the formats required for banks as specified in section 2 et seq. RechKredV.

2. Group reporting entityBesides the parent company, Toyota Kreditbank GmbH, the consolidated financial statements for the year ended 31 March 2016 include the following German and foreign subsidiaries:

― Toyota Leasing GmbH, Cologne ― Toyota Bank Polska Spolka Akcýjna, Warsaw, Poland ― Toyota Leasing Polska Sp. z o.o., Warsaw, Poland ― AO Toyota Bank, Moscow, Russia ― Koromo S.A., Luxembourg

Toyota Kreditbank GmbH holds 100% of the shares of Toyota Leasing GmbH and Toyota Bank Polska Spolka Akcýjna.

Toyota Bank Polska Spolka Akcýjna holds 100% of the shares of Toyota Leasing Polska Sp. z o.o.

Toyota Kreditbank GmbH directly holds 99.9% of the shares of AO Toyota Bank, with the remainder held by Toyota Leasing GmbH. Koromo S.A., Luxembourg, is a special purpose purchasing entity. The shares of the special purpose entity are held by three Dutch foundations, each of which have an investment of TEUR 33 in the company’s equity. Toyota Kreditbank GmbH executed an ABS transaction with Koromo S.A., Luxembourg, during the financial year 2014/2015 and securitised some of its portfolio of instalment credit receivables.

All of the bonds issued by the special purpose purchasing entity to refinance these transactions have been acquired by Toyota Kreditbank GmbH. As a result of the sale of receivables to the special purpose entity and the parallel acquisition of bonds by the bank, the innate credit risk attached to the re ceiv ables rests with Toyota Kreditbank GmbH. The receivable balances continue to be credit receivables for the bank in substance and are therefore retained on the balance sheet on the line “Customer receivables”.

For this reason, Koromo S.A. is included as a subsidiary in the consolidated financial statements of Toyota Kreditbank GmbH in accordance with § 290 (2) no. 4 HGB.

All subsidiaries are fully consolidated.

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5. Explanatory notes to the balance sheet

5.1 Cash reserveIn addition to the balance with the Deutsche Bundesbank, cash balances with central banks related to the National Bank of Poland amounting to TEUR 5,577 (31 March 2015: TEUR 12,356) and to the Central Bank of Russia amounting to TEUR 4,596 (31 March 2015: TEUR 4,638).

Cash on hand amounting to TEUR 9 (31 March 2015: TEUR 45) and balances with central banks amounting to TEUR 144,533 (31 March 2015: TEUR 33,881) correspond to cash funds re-ported in the consolidated cash flow statement.

The cash reserve includes foreign currency amounts of TEUR 10,173 (31 March 2015: TEUR 16,994).

5.2 Receivables from banksReceivables from banks have the following remaining terms:

Remaining term of 31/03/2016 31/03/2015

up to three months TEUR 27,521 104,077more than three months and up to one year TEUR 9,005 20,006more than one year and up to five years TEUR 0 9,008

Receivables from banks include foreign currency amounts totalling TEUR 34,676 (31 March 2015: TEUR 114,567).

5.3 Receivables from customersThe caption comprises instalment credits from the financing business, lease receivables, dealer financing credits and resi dual-value receivables payable on a daily basis. The receivables are reported net of specific and general allowances.

The figure stated for receivables from customers includes an amount of TEUR 17,701 (31 March 2015: TEUR 21,619) for receivables due from affiliated companies.

Analysed by remaining terms, receivables from customers are broken down as follows:

Remaining term of 31/03/2016 31/03/2015

up to three months TEUR 1,026,067 1,080,339more than three months and up to one year TEUR 1,094,827 982,300more than one year and up to five years TEUR 3,447,939 3,413,923more than five years TEUR 449,292 553,899

Customer receivables include foreign currency amounts of TEUR 2,016,455 (31 March 2015: TEUR 2,243,254).

Deferred taxes are calculated on timing differences between the HGB carrying amounts and the tax bases of assets, liabil-ities and deferred items which are expected to reverse in subsequent years.

Deferred tax liabilities at 31 March 2016 result mainly from diffe rences relating to the classification of leasing contracts, the useful lives applied to leasing assets and the deprecia-tion/amortisation periods applied. Deferred tax assets arise at 31 March 2016 mainly for Germany, the branch in France and the subsidiary in Poland. The timing differences at 31 March 2016 relate mostly to the different carrying amounts of leasing assets, provisions and write-downs.

Deferred taxes are measured on the basis of a combined income tax rate which covers corporation tax, municipal trade tax and the solidarity surcharge. Deferred taxes relating to the foreign branches of Toyota Kreditbank GmbH and to the foreign sub-sidiaries are measured using the tax rates applicable in the re-levant tax jurisdiction.

Deferred tax liabilities were set off against deferred tax assets at an overall group level. A surplus of deferred tax assets over deferred tax liabilities is not recognised on the basis of the accounting option available in § 274 (1) sentence 2 HGB.

The market values of derivative financial instruments have been determined using IT-based valuation methods (discounted cash flow method). Fair values are determined by the parent company, Toyota Financial Services Corporation. Derivative financial instruments are not recognised since they are always used as hedging instruments in valuation units. Only the ac-crued interest is shown in the balance sheet.

In compliance with IDW RS BFA 3, any net obligation relating to transactions with interest-related financial instruments allocated to the banking book are calculated using an income statement-based approach. Under this method, an overall assessment is made of all interest bearing assets and liabilities (including derivatives), taking into account all risk-related and administrative costs expected to be incurred until the trans actions have been processed in full. The calculation took into account specific refinancing opportunities available in each relevant accounting period. There was no net obligation at 31 March 2016 and accordingly it was not necessary to recognise a provision at that date.

Interest rate swaps are used to manage the general interest rate risk in the banking book. Interest rate risks are monitored at a banking book level and risks quantified using a value-at- risk (VaR) model. The VaR model is used to demonstrate that the interest rate derivatives have a risk reducing impact.

16 – 17



5.8 Tangible fixed assetsThe figures shown under buildings comprise the purchase values less scheduled depreciation of the business premises of Toyota Kreditbank GmbH, as well as a production facility which is used by an affiliated company. Buildings used for Toyota Kreditbank GmbH’s own business have a carrying amount of TEUR 1,026 (31 March 2015: TEUR 1,342). The corresponding land is leased on a long term basis from Toyota Deutschland GmbH.

5.4 Bonds and other fixed interest bearing securities

Issuer Term beginsNominal amount

(Million) Interest rate (%) Maturity

Narodowy Bank Polski (Polish National Bank) 25/03/2016 PLN 230.0 (EUR 54.0) 0.152 01/04/2016

Polish Republic 18/04/2014 PLN 60.0 (EUR 14.1)

6-months WIBOR 25/01/2017





These state bonds are eligible for a stock exchange listing and are actually listed.

5.5 InvestmentsLiquiditäts-Konsortialbank GmbH i. L., Frankfurt am Main was wound up during the financial year under review and Toyota Kreditbank GmbH’s shareholding (0.01%) repaid.

5.6 Leasing assetsMovements in leasing assets are shown in the following table by parent company and subsidiary:

in TEUR

2015/16Toyota Kreditbank

GmbH

2015/16Toyota Leasing

GmbH

2015/16Total

2015/16Total

Acquisition cost Opening balance 672,387 576,818 1,249,205 1,309,440Translation difference 578 0 578 - 10,298Additions 379,342 171,997 551,339 446,231Disposals 194,834 230,543 425,377 496,168Closing balance 857,473 518,272 1,375,745 1,249,205DepreciationOpening balance 172,463 179,487 351,950 400,399

Translation difference 166 0 166 - 2,994Additions 118,843 93,759 212,602 205,995Disposals 85,618 113,029 198,647 251,450Closing balance 205,854 160,217 366,071 351,950Carrying amounts 651,619 358,055 1,009,674 897,255

An impairment loss of TEUR 12,837 (31 March 2015: TEUR 12,983) has been recognised on leasing assets to cover identified default risks caused by potential residual value fluctuations.

5.7 Intangible assetsIntangible assets consist mainly of IT software.

18 – 19



5.9 Fixed assets movement scheduleMovements in financial assets, leasing assets intangible and tangible fixed assets are shown in the following table:

Amounts in TEUR Cost Depreciation, amortisation and write-downs Carrying amounts

01/04/2015 Currency translation

Additions Disposals 31/03/2016 01/04/2015 Currency translation

Additions Disposals 31/03/2016 31/03/2016 31/03/2015

Participations 19 0 0 19 0 0 0 0 0 0 0 19

Financial Assets 19 0 0 19 0 0 0 0 0 0 0 19

Leasing assets 1,249,205 578 551,339 425,377 1,375,745 351,949 167 212,602 198,646 366,072 1,009,673 897,256

Intangible fixed assets 39,941 -1,161 3,429 14 42,195 33,323 -747 2,969 12 35,533 6,662 6,618

Buildings 32,633 0 0 0 32,633 29,202 0 820 0 30,022 2,611 3,431

Operational and business equipment

29,701 -1,443 7,452 7,359 28,351 18,546 -1,148 3,049 2,238 18,209 10,142 11,155

Tangible fixed assets 62,334 -1,443 7,452 7,359 60,984 47,748 -1,148 3,869 2,238 48,231 12,753 14,586

Total 1,351,499 -2,026 562,220 432,769 1,478,924 433,020 -1,728 219,440 200,896 449,836 1,029,088 918,479

5.10 Other assetsThis line item comprises mainly taxes receivable amounting to TEUR 47,412 (31 March 2015: TEUR 41,844), receivables from affiliated companies amounting to TEUR 19,314 (31 March 2015: TEUR 3,570) and trade accounts receivable amounting to TEUR 882 (31 March 2015: TEUR 3,269). Other assets include foreign currency amounts of TEUR 18,072 (31 March 2015: TEUR 13,779).

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5.18 Accruals and provisionsMarketable securities designated to cover specified pension obligations and separated from other assets by Toyota Kredit-bank GmbH in conjunction with a Contractual Trust Agreement are offset against the corresponding obligations. Designated plan assets with a fair value of TEUR 5,108 (31 March 2015: TEUR 5,046) compare with obligations amounting to TEUR 4,886 (31 March 2015: TEUR 4,338). Contributions set aside for investments in designated plan assets amounting to TEUR 134 (31 March 2015: TEUR 128) – which are not due until January of the following year – are reported at the end of the reporting period in the line item "Provisions for pensions and similar obligations". The amount by which pension plan assets exceed obligations is presented in the balance sheet line “Surplus of plan assets over liabilities”. The designated plan assets had an acquisition cost of TEUR 5,343 (31 March 2015: TEUR 4,552). Other provisions consist primarily of provisions for dealer bonuses amounting to TEUR 15,548 (31 March 2015: TEUR 12,820), personnel related expenses amounting to TEUR 11,423 (31 March 2015: TEUR 9,803), maintenance expenses amounting to TEUR 10,672 (31 March 2015: TEUR 8,396) and outstanding supplier invoices amounting to TEUR 6,260 (31 March 2015: TEUR 6,931).

5.11 Foreign currency assetsAssets denominated in foreign currencies totalled TEUR 2,401,175 (31 March 2015: TEUR 2,667,656).

5.12 Prepaid expenses and deferred chargesThis line item includes prepaid general administrative expenses amounting to TEUR 6,314 (31 March 2015: TEUR 6,128), pre-paid expenses for service work to be performed in conjunction with full-service lease business amounting to TEUR 6,464 (31 March 2015: TEUR 5,000) and guarantee fees of TEUR 31 (31 March 2015: TEUR 206) paid to raise cash funds. Expenses for service work to be performed relates primarily to the Spanish branch of Toyota Kreditbank GmbH and the Polish subsidiary company. This expenditure is spread over the term of the rele-vant leases.

5.13 Liabilities to banksThe following shows an analysis, by remaining terms, of bank liabilities having fixed terms or notice periods:

31/03/2016 31/03/2015

up to three months TEUR 302,711 352,440more than three months and up to one year TEUR 566,885 647,338more than one year and up to five years TEUR 1,910,068 1,622,852more than five years TEUR 9,372 15,737

Included in liabilities to banks are foreign currency amounts equivalent to TEUR 325,078 (31 March 2015: TEUR 675,788).

5.14 Liabilities to customersLiabilities to customers with fixed terms or notice periods are analysed, by remaining terms, as follows:

31/03/2016 31/03/2015

up to three months TEUR 371,638 388,167more than three months and up to one year TEUR 599,787 684,072more than one year and up to five years TEUR 1,385,763 1,300,861more than five years TEUR 2,097 5,126

The liabilities relate mainly to payables to affiliated companies amounting to TEUR 2,359,286 (31 March 2015: TEUR 2,378,227). Liabilities to customers include foreign currency liabi-li ties equivalent to TEUR 1,576,609 (31 March 2015: TEUR 1,664,334).

5.15 Securitised liabilitiesIn total, commercial paper equivalent to TEUR 595,864 (31 March 2015: TEUR 548,142) had been issued by Toyota Kreditbank GmbH at the balance sheet date. All of these secu ri tised liabilities fall due for payment during the fiscal year ending 31 March 2017. AO Toyota Bank, Moscow, Russia, issued a bond for the first time in the financial year under review amounting to TEUR 39,558 (31 March 2015: TEUR 0). Securitised liabilities include foreign currency amounts equi-valent to TEUR 303,359 (31 March 2015: TEUR 387,151) and include liabilities denominated in British Pounds equivalent to TEUR 263,801 (31 March 2015: TEUR 275,659), in Russian Roubles equivalent to TEUR 39,558 (31 March 2015: TEUR 0) and in US dollars equivalent to TEUR 0 (31 March 2015: TEUR 111,492).

5.16 Other liabilitiesThis item comprises mainly payables to affiliated companies amounting to TEUR 186,877 (31 March 2015: TEUR 187,146), including liabilities relating to the factoring business of the Italian branch, payables to contracted dealerships amounting to TEUR 9,597 (31 March 2015: TEUR 9,175), trade accounts payable amounting to TEUR 9,004 (31 March 2015: TEUR 6,054) and tax payables amounting to TEUR 8,513 (31 March 2015: TEUR 5,447). This line item also includes unrealised exchange gains of TEUR 4,288 (31 March 2015: TEUR 3,973), resulting from the currency translation of allocated branch capital and loans of Toyota Kreditbank GmbH. In total, other liabilities include foreign currency liabilities amounting to TEUR 32,184 (31 March 2015: TEUR 24,482). Other liabilities at 31 March 2016 include payables to the shareholder, Toyota Financial Services Corporation, amoun-ting to TEUR 242 (31 March 2015: TEUR 311).

5.17 Deferred incomeThe balance is made up primarily of interest and fees in con-nection with the instalment credit business and attributable to future periods, as well as upfront payments arising in con-nection with lease contracts. Deferred income also includes discounts of TEUR 3 (31 March 2015: TEUR 24).

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5.19 Subordinated liabilitiesThis item comprises three deposits from Toyota Motor Finance (Netherlands) B.V., Amsterdam, Netherlands.

Term begins MillionInterest rate

(%)Interest rate

(applicable until)Renewed interest rate

to be based on Maturity

12/03/2007 PLN 69.5(EUR 16.3)

2.1700 14/06/2016 3-months WIBOR 16/03/2021

11/03/2011 RUB 550.0(EUR 7.2)

8.1585 12/03/2018

01/08/2012 RUB 850.0(EUR 11.1)

8.6574 01/08/2019

Interest expense on subordinated liabilities for the financial year amounted to TEUR 2,310 (2014/2015: TEUR 3,633).

In the event of the bank’s insolvency, compromise settle-ments or similar proceedings to prevent the bank’s insolvency, the liabilities are subordinated behind the unsubordinated claims of all other creditors. There is no option to convert the subordinated liabilities before their maturity date.

Accrued interest at the end of the reporting period amounted to TEUR 205 (31 March 2015: TEUR 376).

5.20 Foreign currency liabilitiesLiabilities denominated in foreign currencies totalled TEUR 2,490,537 (31 March 2015: TEUR 3,044,346).

6. Explanatory notes to the income statement

6.1 Other operating incomeThis item consists mainly of leasing revenues of TEUR 278,739 (2014/2015: TEUR 272,056). Rent and other services charged to Toyota Group companies totalled TEUR 5,056 (2014/2015: TEUR 4,887). This item includes a figure of TEUR 1,609 (2014/2015: TEUR 2,479) attributable to other periods.

6.2 Depreciation and amortisation of intangible assets, tangible fixed assets and leasing assetsDepreciation of leasing assets relating to the branches of Toyota Kreditbank GmbH in France, Sweden, Spain and Norway, and to Toyota Leasing GmbH amounted to TEUR 212,602 (2014/2015: TEUR 204,426).

6.3 Other operating expensesThis item consists mainly of expenses relating to the leasing business amounting to TEUR 9,389 (2014/2015: TEUR 6,568) as well as losses on the disposal of items of operational and office equipment amounting to TEUR 743 (2014/2015: TEUR 1,115). Other operating expenses include an expense of TEUR 1,166 (2014/2015: TEUR 2,070) relating to interest adjust-ments arising from discounting long term provisions. Prior year expenses resulting from the ongoing tax field audit in Germany amounted to TEUR 1,095 (2014/2015: TEUR 2).

Also included are exchange rate losses totalling EUR 7,820 (2014/2015: TEUR 3,788), with the increase compared to the previous year being attributable to the measurement of allo-cated branch capital.

6.4 Extraordinary expensesNo extraordinary expenses were incurred during the financial year under review. In the previous year, an extraordinary expense of TEUR 19,960 was recognised in connection with the reimbursement of administrative fees to customers.

6.5 Income taxesThis item comprises current German and foreign income taxes.

FY 2015/16 FY 2014/15

Expected tax expense/ income (-)at an income tax rate of 32.45% in Germany 38,533 28,421

Tax rate differences on foreign earnings 1,499 -3,330Non-deductible expenses 2,041 -1,123Other 1,682 253Reported tax expense/ income (-) 43,755 24,221

The effective tax rate was 42.6% (2014/2015: 27.7%).

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7. Other disclosures

7.1 Executive Management (Geschäftsleitung) The following persons acted as directors during the year under review:

— Christian Ruben, Diplom-Kaufmann — Ivo Ljubica, Diplom-Ökonom — Axel Nordieker, Diplom-Kaufmann

(from 1 September 2015) — George Juganar, Diplom-Ökonom

(from 1 September 2015)

Mr. Ruben and Mr. Ljubica are directors (Geschäftsführer) of both Toyota Kreditbank GmbH and Toyota Leasing GmbH.

Remuneration paid to board members during the financial year under review totalled TEUR 1,070.

Pension provisions in respect of former members of manage-ment amounted to TEUR 3,892. Pension payments in the financial year under review amounted to TEUR 283.

7.2 Receivables from board members (Geschäftsleitung)Receivables from board members at 31 March 2016 totalled TEUR 0.

7.3 Number of employeesThe average number of persons employed during the year under review was 710 (2014/2015: 705), comprising 248 (2014/2015: 250) in Germany, 80 (2014/2015: 81) in France, 47 (2014/2015: 47) in Spain, 28 (2014/2015: 28) in Norway, 29 (2014/2015: 27) in Sweden, 11 (2014/2015: 12) in Italy, 106 (2014/2015: 107) in Poland and 161 (2014/2015: 153) in Russia.

7.4 Derivative transactionsDerivative instruments have been entered into to hedge interest and currency risks. These are interest swaps, interest/currency swaps and currency futures which are used exclusively for hedging purposes.

Interest rate swaps are used to manage the interest rate risks in the banking book.

The Total Return Swap entered into in 2008 to hedge the cur-rency and country risk in Russia expired during the financial year under report. The resulting currency loss arising on repayment was largely covered by provisions recognised in previous years for negative fair values, with the consequence that the result for the year was not negatively impacted.

Derivative financial instruments comprised the following:

in TEUR

Nominal amounts

31/03/2015

Nominal amounts

31/03/2016

Fair values positive

31/03/2015

Fair values positive

31/03/2016

Fair values negative

31/03/2015

Fair values negative

31/03/2016

Interest rate risks ― interest swaps

87,850 37,245 0 13 3,834 1,611

Interest rate/currency risks ― interest rate/currency swaps

252,748 51,163 40,856 5,669 0 0

Currency risks ― forward currency contracts

387,621 264,225 34,167 0 655 13,128

Total return swap 10,150 0 0 0 5,034 0Derivative instruments - total 738,369 352,633 75,023 5,682 9,523 14,739

The above figures are "dirty prices" which represent the sum of "clean price" and accrued interest.

7.5 Valuation unitsAs a general rule, the interest rate/currency swaps and forward currency contracts are matched by a liabilities-side hedged item with a corresponding opposite risk profile (micro-hedge).

The interest rate swaps are not matched by any comparable liabilities-side underlying items. These swaps are used for portfolio hedging purposes (macro-hedge). The risk mitigating effect is documented by means of various monthly calculations.

The rules for the offsetting measurement of hedged and hedg-ing items in conjunction with interest rate/currency swaps and forward currency contracts were applied using the so-called "Through Posting Method" (Durchbuchungsmethode). Fair value gains and losses arising on hedged and hedging items (including cash flows) will offset each other over the terms of those items due to the fact that amounts, maturities, interest rates, currency, interest rate revision and repayment dates are identical.

26 – 27



The carrying amounts of underlying transactions included in valuation units pursuant to § 254 HGB and hedged volumes at the balance sheet date were as follows:

Amounts in TEURUnderlying

transactions Hedged amount Maximum term

Interest rate/currency risks 60,564 60,564 2018Currency risks 308,427 308,427 2017Total amount 368,991 368,991

7.6 Disclosures reported below the balance sheet (liabilities)Irrevocable credit commitments mainly relate to loans to dealers and commitments relating to retail business and are subject to the normal credit monitoring processes that apply to all credit exposures. An increased credit loss risk has not been identified. Claims could arise at any time.

7.7 Other financial obligationsObligations arising from lease, rental, leasing and maintenance agreements at the end of the reporting periods are as follows:

Due by 31 March 2017 TEUR 5,920Due between 1 April 2017 and 31 March 2021 TEUR 6,004Due after 31 March 2021 TEUR 1,585Total TEUR 13,509

of which due to affiliated companies TEUR 3,362

Commitments to lessees of Toyota Leasing GmbH for ordered vehicles amounted to TEUR 23,547 (31 March 2015: TEUR 21,864).

7.8 Auditors’ feesKPMG AG Wirtschaftsprüfungsgesellschaft is the external auditor of the Toyota Kreditbank GmbH Group. Fees charged by KPMG AG Wirtschaftsprüfungsgesellschaft and by non-German entities of the KPMG network for the financial year were as follows:

FY 2015/16 FY 2014/15Year end audits TEUR 719 744Other attestation services TEUR 7 0Tax advisory services TEUR 423 216Other services TEUR 59 197Total TEUR 1,208 1,157

7.9 Related party transactionsRelated parties are defined as persons or entities that can be influenced by the reporting entity or who can exercise influence over the Group. Persons or entities that are already included as consolidated companies in the consolidated financial state-ments of Toyota Kreditbank GmbH are not disclosed below.

Toyota Financial Services Corporation, Nagoya, Japan, is the sole shareholder of Toyota Kreditbank GmbH. Business rela-tions between the companies are conducted on an arms' length basis. Toyota Financial Services Corporation also guarantees the Group’s European commercial paper programme.

Toyota Motor Finance (Netherlands) B.V. provides Toyota Kreditbank GmbH with refinancing funds subject to normal market conditions, and is also a subordinate lender. Toyota Motor Finance (Netherlands) B.V. also continues to guarantee the joint capital market programme of Toyota Bank Polska S.A. and Toyota Leasing Polska Sp. z o.o. Liabilities at the end of the reporting period amounted to TEUR 2,394,162 (31 March 2015: TEUR 2,463,642), expenses during the year under review totalled TEUR 46,707 (2014/2015: TEUR 62,168).

All transactions with these companies and with related parties are conducted on an arms' length basis. In order to support sales promotion activities, Toyota Kredit-bank GmbH receives financial subsidies from the importer companies of Toyota Motor Corporation, Toyota City/Japan.

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7.10 Name and place of business of the parent company, information about the consolidated financial statementsImmediate parent company:

Toyota Financial Services CorporationNagoya Lucent Tower 15F, 6-1, Ushijima-cho, Nishi-ku, Nagoya 451-6015, Japan

Ultimate parent company:

Toyota Motor Corporation1, Toyota-cho, Toyota City, Aichi Prefecture 441-8571, Japan

Toyota Kreditbank GmbH prepares its own sub-group financial statements, published in Germany in the electronic version of the Federal Gazette. Toyota Kreditbank GmbH is part of the sub-group of Toyota Financial Services Corporation, Nagoya, Japan. The financial statements of the sub-group are included in the consolidated financial statements of Toyota Motor Corporation, Toyota City, Japan. These consolidated financial statements are disclosed in Nagoya and Toyota City, Japan. Cologne, 28 July 2016

Toyota Kreditbank GmbH

Christian Ruben Ivo Ljubica Axel Nordieker George Juganar

30 – 31



Consolidated cash flow statement of Toyota Kreditbank Group2015/16

TEUR

47 Cash flow from financing activities -73,60548 Cash relevant change in cash funds 160,15249 Changes in cash funds due to exchange rate and valuation factors -49,53650 Changes in cash funds due to changes in group reporting entity 0

51 Cash funds at beginning of period 33,92652 Cash funds at end of period 144,542

Consolidated Statement of Changes in Equity of Toyota Kreditbank GmbH as at 31 March 2016Breakdown of consolidated equity:

TEUR Share capitalCapital surplus

Revenue reserves

Earnings brought forward

Group net income for

the yearTranslation differences Equity

As of 31 March 2014 30,000 345,843 386,970 0 79,983 -26,691 816,105Addition from net income 2014

0 0 0 0 63,362 0 63,362

Profit retained previous year

0 0 47,453 0 -47,453 0 0

Dividends paid 0 0 0 0 -32,530 0 -32,530Proceeds from capital injections

0 0 0 0 0 0 0

Translation differences 0 0 809 0 0 -35,711 -34,902

As of 31 March 2015 30,000 345,843 435,232 0 63,362 -62,402 812,035Addition from net income 2015

0 0 0 0 59,011 0 59,011

Profit retainedprevious year

0 0 35,362 0 -35,362 0 0

Dividends paid 0 0 0 0 -28,000 0 -28,000Proceeds from capital injections

0 0 0 0 0 0 0

Translation differences 0 0 0 0 0 - 28,762 - 28,762Other differences 0 0 0 0 0 0 0

As of 31 March 2016 30,000 345,843 470,594 0 59,011 -91,164 814,284

The Board of Directors of Toyota Kreditbank GmbH will propose to the shareholders’ meeting to add this years profit to the next business year.

Consolidated Cash Flow Statement for Toyota Kreditbank Group for the period 1 April 2015 to 31 March 2016The cash flow statement shows the changes in cash funds for the group of Toyota Kreditbank GmbH. The cash flow statement consists of the cash flows from operating, investing and financing activities. The sum of these cash flows is in line with the changes in cash funds. The cash flow statement for the group of Toyota Kreditbank GmbH has been drawn up in accordance with German Accounting Standard No. 21 of the German Financial Reporting Standards Board.

Consolidated cash flow statement of Toyota Kreditbank Group2015/16

TEUR

1 Net income (loss) for the year 59,0112 + / - Depreciation, amortisation, write-downs/allowances and reversals of such

in respect of receivables and fixed assets241,607

3 + / - Increase/decrease in provisions 11,9324 + / - Other non-cash income/expenses 05 - / + Gains/losses arising on disposal of fixed assets -2986 + Cash received from disposals of leasing assets 227,2627 - Cash paid for investments in leasing assets -551,3398 - / + Other adjustments (net) -6,0059 - / + Increase/decrease in receivables from banks 122,58710 - / + Increase/decrease in receivables from customers 12,33511 - / + Increase/decrease in securities (not classified as fixed assets) -20,34012 - / + Increase/decrease in other assets relating to operating activities -22,76613 + / - Increase/decrease in liabilities to banks 103,30214 + / - Increase/decrease in liabilities to customers -18,03115 + / - Increase/decrease in securitised liabilities 87,28016 + / - Increase/decrease in other liabilities relating to operating activities -6,78717 - / + Interest expense/income -222,41418 - / + Extraordinary expense/income 019 + / - Income tax expense/income -41,17820 + Interest and dividends received 323,91921 - Interest paid -101,50522 + Cash received relating to extraordinary items 023 - Cash paid relating to extraordinary items 024 - / + Income tax paid 41,17825 Cash flow from operating activities 239,75026 + Cash received from disposals of non-current financial investments 027 - Cash paid for investments in non-current financial assets 028 + Cash received from disposals of tangible fixed assets 4,88729 - Cash paid for investments in tangible fixed assets -7,45230 + Cash received from disposals of intangible assets 131 - Cash paid for investments in intangible assets -3,42932 + Cash received in conjunction with disposals from group reporting entity 033 - Cash paid in conjunction with additions to group reporting entity 034 +/- Change in cash funds from other investing activities (net) 035 + Cash received relating to extraordinary items 036 - Cash paid relating to extraordinary items 037 Cash flow from investing activities -5,99338 + Cash received from equity provided by shareholders of parent company 039 + Cash received from equity provided by other shareholders 040 - Cash paid to shareholders of parent company in conjunction with equity reductions 041 - Cash paid to other shareholders in conjunction with equity reductions 042 + Cash received relating to extraordinary items 043 - Cash paid relating to extraordinary items 044 - Dividends paid to shareholders of parent company -28,00045 - Dividends paid to other shareholders 046 + / - Change in funds relating to other capital items (net) -45,605

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Segment information for the Toyota Kreditbank GmbH Group for the period 1 April to 31 March (1/2)

The Toyota Kreditbank Group operates in Germany and, via its branches, in France, Sweden, Norway, Spain and Italy. The Group also has subsidiaries in Poland and Russia. In the year under review, the Group was engaged in the instalment credit and the leasing business as well as in the financing of dealers’ car inventories, and provided loans for car dealers’ real estate and working capital.

Amounts are allocated to segments on the basis of the location of the registered office of the relevant branches and Group entities. Due to the close connection of the business activities with TKG head office, the special purpose entity Koromo S.A., Luxembourg, is allocated to the segment "Germany". All amounts relating to the balance sheet and income statements are presented in TEUR.

All figures are in TEUR, unless otherwise stated

Germany France Spain Norway Sweden Italy

2015/16 2014/15 2015/16 2014/15 2015/16 2014/15 2015/16 2014/15 2015/16 2014/15 2015/16 2014/15

Interest income 81,971 90,671 32,374 33,137 41,684 36,487 25,789 27,850 11,544 12,390 3,864 3,989comprising: ― Income from retail financing 69,654 75,302 27,917 28,281 40,228 34,945 25,224 27,145 10,936 11,546 0 0― Income from dealer financing 12,266 14,858 4,415 4,789 855 878 545 680 608 842 3,664 3,555Interest expense 16,006 23,168 5,715 7,060 6,565 7,024 9,940 12,212 1,263 4,464 507 848Net interest result 65,965 67,503 26,659 26,077 35,119 29,463 15,849 15,638 10,281 7,926 3,357 3,141Risk provisioning expense -1,899 -13,982 -7,366 -3,940 -1,417 -6,242 -2,120 -723 -465 -255 -1,730 -1,596Net commission result -6,932 -2,677 -116 555 -14,657 -12,939 2,224 1,781 -3,620 -2,693 2,129 2,119Profit/loss leasing business 22,731 28,955 25,190 22,118 1,301 1,902 728 879 7,117 7,399 0 0Other operating income/expenses, net -3,935 -2,862 -494 -410 -2,665 264 -1,087 -760 -535 -522 -365 -342Administrative expenses -51,330 -46,398 -16,173 -15,312 -9,140 -8,982 -5,940 -5,848 -5,674 -5,685 -2,881 -2,928Profit/loss from ordinary activities 24,600 30,539 27,700 29,088 8,541 3,466 9,654 10,967 7,104 6,170 510 394Extraordinary Expenses 0 -19,960 0 0 0 0 0 0 0 0 0 0Taxes -16,135 -1,303 -10,461 -8,305 -6,878 -5,897 0 0 -73 -8 -416 -598Net income for the year 8,465 9,276 17,239 20,783 1,663 -2,431 9,654 10,967 7,031 6,162 94 -204Ratio of expenses/income before taxes 66.0% 51.0% 31.6% 31.7% 47.9% 48.1% 33.5% 33.3% 42.8% 46.9% 56.2% 59.5%

All figures are in TEUR, unless otherwise statedGermany France Spain Norway Sweden Italy

03/2016 03/2015 03/2016 03/2015 03/2016 03/2015 03/2016 03/2015 03/2016 03/2015 03/2016 03/2015

Liquid funds 134,368 16,931 0 0 1 1 0 0 0 0 0 0Receivables from banks 108,198 110,843 15,083 9,020 3 3 2,322 32,709 3,079 3,730 76,759 78,248Customer receivables 1,940,506 1,966,547 811,062 733,239 936,577 798,626 609,723 652,902 330,328 285,324 313,526 288,795Leasing assets 358,055 397,331 415,275 295,334 25,493 16,948 6,829 10,985 204,022 176,657 0 0Liabilities due to banks 2,060,761 1,907,966 315,286 183,652 212,845 200,448 0 26,045 2 3 0 0Liabilities due to customers 427 504 484,612 514,516 360,962 261,288 524,504 572,551 471,073 402,923 100 100Notes payable 595,863 548,141 0 0 0 0 0 0 0 0 0 0Subordinated liabilities 0 40,063 0 0 0 0 0 0 0 0 0 0Equity/allotted capital 405,613 388,092 138,744 133,760 53,409 55,841 83,809 86,490 44,865 43,267 -123 82

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Segment information for the Toyota Kreditbank GmbH Group for the period 1 April to 31 March (2/2)

All figures are in TEUR, unless otherwise stated

Poland Russia Consolidation Group

2015/16 2014/15 2015/16 2014/15 2015/16 2014/15 2015/16 2014/15

Interest income 22,738 22,016 104,098 126,267 -144 -336 323,918 352,470comprising: ― Income from retail financing 6,593 6,782 78,426 103,926 0 0 258,977 287,927― Income from dealer financing 2,345 3,256 20,041 15,181 0 0 44,738 44,038Interest expense 8,562 8,693 53,093 63,142 -145 -318 101,505 126,294Net interest result 14,176 13,323 51,005 63,125 1 -18 222,413 226,176Risk provisioning expense -241 -828 -6,930 -9,388 0 0 -22,167 -36,953Net commission result -865 -367 -2,057 -5,085 4 0 -23,890 -19,304Profit/loss leasing business -492 -355 0 0 0 0 56,575 60,897Other operating income/expenses, net -124 -553 -1,331 -1,282 -357 -474 -10,891 -6,940Administrative expenses -10,007 -9,947 -17,519 -20,622 359 452 -118,304 -115,271Profit/loss from ordinary activities 2,447 1,273 23,168 26,748 7 -40 103,736 108,605Extraordinary Expenses 0 0 0 0 0 0 0 -19,960Taxes -5,609 -3,266 -5,153 -5,906 0 0 -44,724 -25,282Net income for the year -3,162 -1,993 18,015 20,842 7 -40 59,012 63,363Ratio of expenses/income before taxes 78.8% 82.6% 36.8% 36.3% 48.4% 44.2%

All figures are in TEUR, unless otherwise statedPoland Russia Consolidation Group

03/2016 03/2015 03/2016 03/2015 03/2016 03/2015 03/2016 03/2015

Liquid funds 5,577 12,356 4,596 4,638 0 0 144,542 33,926Receivables from banks 266 169 29,009 77,959 -44,626 0 190,094 312,681Customer receivables 397,941 332,007 678,463 973,021 0 0 6,018,126 6,030,461Leasing assets 0 0 0 0 0 0 1,009,673 897,255Liabilities due to banks 44,705 49,006 184,435 347,613 0 0 2,818,034 2,714,732Liabilities due to customers 348,593 312,325 232,439 376,535 0 0 2,422,710 2,440,741Notes payable 0 0 39,558 0 0 0 635,422 548,141Subordinated liabilities 16,341 17,028 18,535 28,324 0 0 34,876 85,415Equity/allotted capital 16,676 17,379 71,293 87,124 0 0 814,288 812,035

36 – 37

ToyotaKreditbankGmbH GroupManagementReportforthe2015/2016financialyear

40 A. General Information on the Toyota Kreditbank Group42 B. Report on Economic Position 1.Generaleconomicconditionsandsectorenvironment 2.Courseofbusiness 3.Analysisofnetassets,financialpositionandresultsofoperations a. Earnings b.Netassetsandfinancialposition 4.Keyperformanceindicators55 C. Events after the end of the reporting period55 D. Opportunities and Risks Report 1.Riskmanagement a.Riskmanagementorganisation b.Riskmanagementprocess c.Riskstrategy d.Relevantriskcategories e.Risk-bearingcapacityconcept 2.Riskcategories a. Credit risk b. Market price risk c.Liquidityrisk d.Operationalrisk e. Business risk 3. Summarised description of risk situation73 E. Outlook 1.Futuremacro-economicsituation 2.ReviewofoperationsoftheToyotaKreditbankGroup 76 Country by Country Reporting77 Auditors’ Report



38 – 39

40 – 41



Toyota Kreditbank GmbH is a classic "captive bank", whose principal activity is the financing of Toyota and Lexus brand vehicles manufactured by the Toyota Group. In the case of new cars, financing is provided primarily for Toyota and Lexus brand vehicles. In the case of used cars, other brands are also financed. The Toyota Kreditbank Group provides financing to Toyota and Lexus dealerships for new, showroom and used cars. It also provides investment loans for the purchase or moder-nisation of company real estate and working capital loans.

The range of services on offer is only comparable to that of a "universal" bank to a limited extent, since the business model is aimed almost entirely at financing the relevant brands. For this reason, performance is dependent to a large extent on the volume of cars sold within the operating territory. The financing products offered by the Toyota Kreditbank Group for Toyota and Lexus vehicles have to compete with those offered by other banks and German savings banks (Sparkassen).

The range of financing products on offer in Germany comprises traditional loan contract, final instalment financing arrange-ments and the sale of leasing products. This range of financing products is supplemented by so-called "package" products offered in conjunction with Toyota Insurance Service and Aioi Nissay Dowa Life Insurance of Europe AG, Ismaning, and with Toyota Motor Europe SA/NV Brussels, Belgium. In addition to a reasonable and fixed financing amount, these all-inclusive products include access to Toyota service facilities, a follow-on and mobility guarantee and credit insurance. The customer can also opt to add car insurance (with rebate protection) to the package.

As well as servicing the German market, financial products are also provided in other European countries where the Toyota Kreditbank Group has branches or subsidiaries. The Toyota Kreditbank Group has branches in France, Spain, Norway, Sweden and Italy, as well as subsidiaries in Poland and Russia.

In terms of consumer credit business with private and business customers, the branches and subsidiaries – with the exception of the branch in Italy – offer financing products comparable to those offered in Germany. The product range also covers the sale of leasing products and the arranging of insurance policies. In addition, Toyota and Lexus dealers can apply for investment and working capital loans and are able to finance new, show-room and used cars via the Group. The branch in Italy only pro-vides financing to dealerships.

The key performance indicators used by the Toyota Kreditbank Group are based on regulatory requirements on the one hand and the interests of the shareholder on the other.

A. General Information on the Toyota Kreditbank Group The Toyota Kreditbank Group, represented by its manufacturing related financing companies, provides financial services aimed at supporting car sales. A wide range of financing products is available to private and commercial customers on the one hand and to Toyota and Lexus dealers on the other.

Toyota Financial Services Corporation, based in Japan, is the parent company of the sub-group and owns all of the shares of the entities within the Toyota Kreditbank Group. The ultimate parent company is the Japanese car manufacturer, Toyota Motor Corporation, which, in turn, owns 100% of the shares of Toyota Financial Services Corporation. The companies concerned also work very closely from a marketing perspective.

Toyota Motor Corporation (TMC)

Toyota Financial Services United Kingdom Toyota Kreditbank Group

Toyota Financial Services Corporation (TFSC)

Americas Asia PacificEurope Africa

The Toyota Financial Services Group is represented in 35 coun-tries, covering three main regions, namely America, Europe/Africa and Asia Pacific. The Europe/Africa region consists of the two sub-groups, Toyota Financial Services United Kingdom and the Toyota Kreditbank Group.

Toyota Kreditbank GmbH is the parent company of the Toyota Kreditbank Group and has its registered office in Cologne.

Toyota Kreditbank GmbH

Toyota Leasing GmbH Toyota Bank Polska

Toyota Leasing Polska

AO Toyota Bank Russia

> 99%

< 1%

Management system

Market Penetration Ratio of new registrations to financed vehicles

Financial

Cost-income ratio Ratio expense/income before tax

Average accounts/ Average associates Ratio of contracts to full-time employees

Regulatory requirements Risk appetite Aggregate amount of risk limits (for risk-bearing capacity

purposes) divided by the risk coverage amount

100%

42 – 43



B. Report on Economic Position

1. General economic conditions and sector environment

The global economyGlobal economic growth slowed down during the calendar year 2015. According to figures issued by the International Monetary Fund (IMF), economic output expanded by 3.1% in 2015, compared with 3.4% one year earlier. Although the world's emerging economies again outpaced industrial coun-tries, growth rates were not as high as in previous years.

Emerging economies, which had been the principal driver of global growth in recent years, grew by 4.0% in the calendar year 2015, compared with 4.6% one year earlier. In this con-text, it is also worth mentioning the slight slow-down of growth in the Chinese economy, which slipped from 7.4% in the calen-dar year 2014 to 6.9% in 2015. After contracting by 0.1% in the calendar year 2014, the Japanese economy grew by 0.5% in 2015, mainly reflecting the government's efforts to stimulate the economy.

The economies of the world's industrial countries grew margi-nally faster than one year earlier, with the growth rate edging up overall from 1.8 to 1.9%.

Operating territoryThe Euro area recorded another year of solid growth in 2015, with gross national product (GNP) up by 1.6%, compared to 0.9% in the previous year.

Economic indicators in Europe

Countries

GNP1 Change compared

to previous year % 2015

GNP1 Change compared


CPI2 Change compared


CPI2 Change compared to

previous year % 2014

European Union 2.0 1.4 0.0 0.5Euro area 1.6 0.9 0.0 0.4Germany 1.5 1.6 0.1 0.8France 1.1 0.4 0.1 0.6Spain 3.2 1.4 -0.5 -0.2Norway 1.6 2.2 2.2 2.0Sweden 4.1 2.1 0.7 -0.2Italy 0.8 -0.4 0.1 0.2Poland 3.6 3.3 -0.9 0.0Russia -3.7 0.6 15.5 7.8

Source: IMF 1 Real gross national product based on 2005 prices 2 Consumer Price Index covering all products

Germany continued its run of stable growth, driven not only by exports, but also by rising domestic demand, in particular in the form of consumer spending. The situation in Germany was also boosted by the strong job market and various temporary factors, including low energy prices. The job market has recovered well from the previous crisis, with unemployment now at its lowest level since reunification.

After three years of weak economic performance, France mana-ged to achieve a growth rate of 1.1% in 2015, helped in part by a number of favourable factors, including the low price of oil and measures aimed at improving competitiveness. Italy continued to lag behind the remainder of the region and still needs to con-front a number of structural weaknesses.In stark contrast, the Spanish economy benefited from struc-tural reforms and performed well in 2015, reflected in increased domestic demand, a sharp drop in unemployment and greater consumer confidence. The situation was also helped by the drop in oil prices.

The European Union recorded a moderate recovery. Although unemployment figures fell, they nevertheless remain high, in particular among the region’s youth. The recovery was helped by a number of temporary pro-cyclical factors, including low oil prices, a relatively weak Euro and accommodating moneta-ry policies. The positive development also reflects the initial benefits of reforms implemented in recent years.

A number of factors caused the Russian economy to slip into recession in 2015. Oil prices fell sharply at the end of 2014 and the beginning of 2015, exacerbating the problem of Russia’s heavy dependence on oil, gas and related products. Due to this concentration, the real economy suffered from the sharp fall in prices on the world market. Ongoing geopolitical risks and the resulting sanctions imposed by the USA and the EU also contributed to Russia’s economic crisis.

44 – 45



Currency developmentsThe exchange rate of the US Dollar to the Euro fluctuated over the twelve month period between 1.05 and 1.15. Based on its year end rate of 1.1385, the Euro was nearly 6% up compared to the beginning of the year. The Japanese Yen was practically unchanged against the Euro in terms of year end rates, whereas the Russian Rouble continued to lose value against the Euro.

Exchange rates

Currency 31/03/2016 31/03/2015

Euro 1,0000 1,0000US Dollar 1,1385 1,0759British Pound 0,7916 0,7273Japanese Yen 127,9000 128,9500Norwegian Krone 9,4145 8,7035Swedish Krone 9,2253 9,2901Russian Rouble 76,3051 62,4400Polish Zloty 4,2576 4,0854

Source: Bloomberg

The Russian Rouble exchange range fluctuated during the twelve month period within a range of 53.41 and 91.76 Roubles to the Euro. The exchange rate fell from its high for the financial year to stand at 76.31 at 31 March 2016. Lower oil prices, com-bined with international economic sanctions, have exposed Russia's underlying structural weaknesses and caused investors to be more reticent in dealing with Russia. All of these negative factors contributed to the Rouble’s ongoing weakness.

Review of the automobile marketGlobal sales of passenger vehicles continued their upward trend in the calendar year 2015, growing according to data published by Bloomberg by 0.6% to 92.5 million units (inclu-ding commercial vehicles).

The Chinese and North American markets in particular made good contributions towards the overall moderate growth rate. While the North American market expanded at an above- average rate of 6.2%, the growth rate of the Chinese market slowed to just under 5%.

The European automobile market grew by nearly 3% in the calendar year 2015. The German automobile market performed somewhat better than Europe as a whole in 2015, growing at a rate of 5.6%. The economic downturn in Russia resulted in further market contraction, causing sales to drop by a good 35% in 2015.

46 – 47



With worldwide sales of 10.15 million vehicles in the calen-dar year 2015, Toyota remained the world's largest auto-mobile manufacturer, thus repeating its 2014 achievement of selling more than ten million Toyota brand vehicles in a single calendar year.

New car registrations Toyota Europe

CY 2015 CY 2014 CY 2013 CY 2012

Europe 873,844 888,015 847,540 837,969The bank’s operating territory 483,932 514,692 486,901 411,087

The number of new registrations of Toyota vehicles in Europe was slightly down on the previous year. Sales within the Toyota Kreditbank Group’s operating territory fell overall by 6.0% to 483,932 units compared to the previous year. The decrease was mainly due to lower sales on the Russian market, whereas the remainder of the operating territory saw a slight increase in registration figures.

Toyota and Lexus models in Europe

Sales volume CY 2015




All models 873,844 888,015 847,540 837,969Thereof:― Yaris 201,271 181,105 184,795 201,923― Auris 142,369 142,105 131,928 83,012

Yaris and Auris remain Toyota's most popular models in Europe. The range was enhanced by the introduction of the Mirai, the world’s first mass market hydrogen fuel cell vehicle. With the Prius plug-in already on the market, the new model underlines Toyota’s environmental and technological credentials. Hybrid vehicles continue to sell well, including the new RAV 4 launched during the year under review. The total number of hybrid vehicles sold worldwide during the past calendar year rose to 1,204,656 units. As a proportion of all Toyota and Lexus vehicles sold in 2015, sales of hybrid vehicles accounted for approximately 11.9% worldwide, 23.9% in Europe and 23.2% in Germany.

2. Course of businessEconomic conditions and developments within the automobile sector remained positive. The Toyota Kreditbank Group was able to stabilise its total business volume in the financial year 2015/2016 at roughly the previous year’s level, whereas the retail business saw a slight shift from instalment credit to the leasing business.

Key performance figures

Disclosures in EUR millions31/03/2016

TEUR31/03/2015

TEURVariance

TEURVariance

%

Credit disbursed to customers(before allowances) 6.217.206 6.230.221 - 13.015 - 0,2

Thereof: — retail customers 4.638.139 4.728.019 - 89.880 - 1,9— contract dealerships 1.579.067 1.502.202 76.865 5,1Leasing assets 1.009.673 897.255 112.418 12,5

Retail businessToyota Kreditbank Group's lending business is shaped primarily by loans to retail customers. The bank's performance in this sector is dependent to a large extent on the number of new registrations in the territory in which it operates.

New car registrationsToyota Kreditbank Group Europe New vehicle penetration*

FY 2015/16 FY 2014/15 FY 2015/16 FY 2014/15

Germany 69,633 70,688 45.3% 45.3%France 81,327 75,919 35.1% 30.7%Spain 59,010 48,809 36.8% 41.1%Norway 18,985 19,555 38.6% 42.4%Sweden 23,803 22,554 41.5% 35.5%Italy n.a. n.a. n.a. n.a.Poland 41,525 34,655 30.0% 30.4%Russia 116,432 169,444 16.8% 17.3%Total 410,715 441,624 31.9% 29.7%

* New vehicle penetration in both years: only Toyota and Lexus vehicles

During the financial year under review, new registrations in the operating territory were 7.0% lower. Despite the decrease in the volume of new Toyota vehicles sold, the number of new contracts signed (including lease contracts) was maintained roughly at the previous year's level. The penetration rate throughout the operating territory therefore rose on average from 29.7% to 31.9%, clearly reflecting the success of the Toyota Kreditbank Group’s attractive and competitively priced product range.

48 – 49



Number of new contracts*

FY 2015/16 FY 2014/15Variance

%

New vehicles 82,611 90,301 -8.5Used vehicles 44,022 46,241 -4.8Total financing contracts 126,633 136,542 -7.3New vehicles 48,415 41,275 17.3Used vehicles 1,970 1,689 16.6Total leasing contracts 50,385 42,964 17.3Total New car registrations 410,715 441,624 -7.0New vehicle penetration financing 20,1 % 20,4 % -1.5New vehicle penetration leasing 11.8 % 9.3 % 26.9Total New vehicle penetration 31.9 % 29.7 % 7.4

* Both years only Toyota and Lexus vehicles

Number of new contracts by country*

Financing Leasing

FY 2015/16 FY 2014/15Change

% FY 2015/16 FY 2014/15Change

%

Germany 50,255 51,763 -2.9 8,499 10,218 -16,8France 11,298 13,067 -13.5 21,108 14,204 48,6Spain 21,482 20,009 7.4 1,328 1,228 8,1Norway 6,271 6,402 - 2.0 4,574 5,342 -14,4Sweden 11,422 9,732 17.4 5,272 4,194 25,7Italy n. a. n. a. n. a. n. a. n. a. n. a.Poland 4,861 4,328 12.3 9,604 7,778 23,5Russia 21,044 31,241 -32.6 0 0 0,0Total 126,633 136,542 -7.3 50,385 42,964 17,3* Both years only Toyota and Lexus vehicles

The Toyota Kreditbank Group only operates in the field of finance leasing via Toyota Kreditbank GmbH’s branches in France, Sweden, Norway and Spain as well as the subsidiary in Poland. In Germany, the leasing business is handled by the subsidiary, Toyota Leasing GmbH.

With the exception of Russia, new business developed posi ti-vely in general. The ongoing economic crisis in Russia resulted in 10,197 fewer new contracts being signed in this market, whereas the remainder of the operating territory saw an over all increase compared to the previous financial year. This positive development mainly reflected increased demand outside Germany. The state sponsored “Plan PIVE” for effi-cient vehicles was extended again in Spain, this time through to 31 July 2016. In France, the successful introduction of the Trade Cycle Management (TCM) programme “La combinaison” resulted overall in a greater volume of signed contracts. One consequence, however, was a shift between financing and leasing. The Toyota Kreditbank Group continues to offer financing arrangements in Sweden and Norway at extremely favourable annual interest rates.

Dealership financing businessThe Toyota Kreditbank Group provides loans to contract dealer-ships to finance showroom cars, working capital and invest-ments. In the field of inventory financing, the Toyota Kreditbank Group is an important financing partner for dealerships with operations focused on Germany, France, Spain, Italy and Russia.

Dealership financing

31/03/2016 TEUR

31/03/2015 TEUR

Variance TEUR

Variance %

Working capital/investment loans 222,513 236,997 -14,484 -6.1thereof: ― Germany 81,449 95,025 -13,576 -14.3― Foreign 141,064 141,972 - 908 -0.6

Showroom vehicle financing 1,351,800 1,257,877 93,923 7.5thereof: ― Germany 342,830 335,781 7,049 2.1― Foreign 1,008,970 922,096 86,874 9.4

Total Dealership financing 1,574,313 1,494,874 79,439 5.3

Inventory financing volumes in Germany grew year-on-year by 2.1% overall despite the decrease in sales figures. The positive trend outside Germany continued with a growth rate of 9.4%. Overall, the total volume of dealership financing is at a high level. The volume of working capital credits continued to decrease in Germany, whilst nearly stable outside Germany.

Overall, the Toyota Kreditbank Group strengthened its position as an important financing partner for dealerships.

50 – 51



3. Analysis of net assets, financial position and results of operations

a. EarningsGroup net income for the year fell slightly from EUR 63.4 million to EUR 59.0 million, mainly reflecting downward pressure on margins in the face of intense competition and higher com-mission expense. The forecast profit from ordinary activities “at a similar level or slightly lower than profit reported for the previous financial year” was nevertheless achieved.

Earnings benefitted from the fact that market interest rates remained at a level that can be described as “globally satis-factory”. Overall, the Toyota Kreditbank Group reports satis-factory earnings for the financial year 2015/2016.

Earnings

31/03/2016 TEUR

31/03/2015 TEUR

Variance TEUR

Variance %

Net interest result 222,413 226,176 -3,763 -1.7Result from investments 1 0 1 0.0 Commission result -23,890 -19,304 -4,586 23.8Other operating income/expense (net) 265,123 264,903 220 0.1 Administrative expense 118,305 115,271 3,034 2.6 Amortisation and depreciation 219,440 210,947 8,493 4.0 Risk provisioning expense 22,167 36,953 -14,786 -40.0 Profit before tax 103,735 108,604 -4,869 -4.5 Extraordinary expense 0 19,960 -19,960 -100.0Tax expense 44,724 25,282 19,442 76.9Net income for the year 59,011 63,362 -4,351 -6.9

Net interest resultNet interest result comprises:

31/03/2016 TEUR

31/03/2015 TEUR

Variance TEUR

Variance %

Interest and similar income 323.919 352.470 - 28.551 - 8.1thereof: ― Retail business 272.493 299.574 - 27.081 - 9.0 ― Dealership financing business 43.707 42.602 1.105 2.6 ― Other 7.719 10.294 - 2.575 - 25.0Interest expenses 101.506 126.294 - 24.788 - 19.6thereof: ― Banks and other expenses 54.398 64.106 - 9.708 - 15.1 ― Affiliates 47.108 62.188 - 15.080 - 24.2Net interest result 222.413 226.176 - 3.763 - 1.7

The net interest result decreased by EUR 3.8 million to EUR 222.4 million. This slight decrease was attributable mainly to the downward pressure on margins caused by market competition. At the same time, low interest rates enabled the Toyota Kreditbank Group to put favourable refinancing arrangements in place with banks.

Net commission incomeNet commission expense in the financial year under review totalled EUR 23.9 million (2014/2015: EUR 19.3 million). Commission income rose slightly to EUR 56.4 million (2014/2015: EUR 54.2 million). Commission expense amounted to EUR 80.3 million (2014/2015: EUR 73.5 million). The increase in commission expense was mainly attributable to higher disbursements to contract dealerships outside Germany (in particular Spain) as a result of the higher volume of instalment credit and leasing business.

General administrative expensesThe following table shows the breakdown of general administrative expenses.

FY 2015/16 TEUR

FY 2014/15 TEUR

Variance TEUR

Variance %

Personnel expense 54,857 52,386 2,471 4,7Other expenses 63,448 62,885 563 0,9 Total 118,305 115,271 3,034 2,6

General administrative expenses totalled EUR 118.3 million. The increase in personnel expenses was primarily due to the general trend in salary levels. Other administrative expenses were also up, in particular reflecting increased marketing activity and higher compulsory contributions (bank levy). Other operating income and expenseThe net positive amount of other operating income and ex-pense was EUR 265.1 million (2014/2015: EUR 264.9 million). The slight improvement reflected increased leasing business, offset in part by higher expenses for allocations to accruals for legal risks.

Amortisation and depreciationAmortisation and depreciation on intangible assets, property plant and equipment, and leasing assets increased slightly to EUR 219.4 million (2014/2015: EUR 210.9 million), mainly reflecting the expanded volume of leasing assets in France.

Risk provisioning expenseThe net expense for write-offs and allowances on receivables and specified marketable securities, together with additions to accruals and provisions relating to lending business amounted to EUR 22.2 million (2014/2015: EUR 37.0 million).

Tax expenseThe expense for income taxes for the financial year went up by EUR 19.4 million to EUR 44.7 million, with most of the increase relating to Germany. The effective tax rate was 42.6%, com-pared to 27.7% one year earlier.

Please refer to the note on segment information for a regional breakdown of the Group's net income for the year.

52 – 53



b. Net assets and financial positionThe balance sheet total (total assets/total equity and liabilities) of the Toyota Kreditbank Group edged up over the course of the financial year 2015/2016 by EUR 129.1 million to EUR 7,570.3 million. Balance sheet volumes decreased slightly for customer credit business and increased for leasing business.

Customer receivables remained the most significant item on the assets side of the balance sheet, accounting for 79.5% of total assets at the end of the reporting period. Leasing assets accounted for 13.3% of total assets.

Receivables from customers (before allowances) went down slightly from EUR 6,230.2 million to EUR 6,217.2 million, mainly due to lower registrations in Germany and Russia. The de-crease in receivables in Russia also reflected the loss of value of the Rouble. Nevertheless, the volume of receivables out-side Germany increased over the twelve month reporting period from EUR 4,185.5 million to EUR 4,204.6 million.

Leasing assets continued to develop positively overall, increas-ing during the financial year 2015/2016 by EUR 112.4 million thanks to growth outside Germany. Increases in France, Spain and Sweden more than offset the decreases recorded in Germany and Norway.

On the equity and liabilities side, the principal items are liabilities to customers and liabilities to banks.

Liabilities

31/03/2016 TEUR

31/03/2015 TEUR

Variance TEUR

Variance %

— to banks 2,818,034 2,714,732 103,302 3.8— to customers 2,422,710 2,440,741 -18,031 -0.7— securitised liabilities 635,422 548,141 87,281 15.9Total 5,876,166 5,703,614 172,552 3.0

Compared to the end of the previous financial year, liabilities to banks were EUR 103.3 million higher at EUR 2,818.0 million, with the increase related primarily to Germany. The excellent re-financing conditions available to Toyota Kreditbank GmbH in Germany were also used in part to finance demand for lending outside Germany. Within the line item "Liabilities to customers", increases at foreign branches more than offset the decrease recorded in Germany. Toyota Kreditbank GmbH and Toyota Leasing GmbH continued to participate in a groupwide commer-cial paper issue programme, placing securitised liabilities on the market. In addition, the Russian subsidiary successfully issued a bond with a volume of EUR 39.6 million.

Toyota Kreditbank Group's equity for accounting purposes totalled EUR 814.3 million at the end of the reporting period (31 March 2015: EUR 812.0 million).

All entities included in the consolidated financial statements were solvent at all times during the year under review thanks to their balanced and well planned access to liquid funds. Appro-priate amounts of cash were deposited by Toyota Kreditbank GmbH with the Deutsche Bundesbank in order to comply with applicable minimum reserve requirements and the Liquidity Coverage Ratio (LCR). In order to comply with LCR requirements at a Group level, the Toyota Kreditbank Group also has access to the relevant portions of the Polish bonds held by the Polish subsidiary.

The Toyota Kreditbank Group refinances its operations primarily via short term borrowings from Toyota Motor Finance, which is based in the Netherlands. Toyota Kreditbank GmbH’s asset-backed securities programme enables instruments issued by the European Central Bank (ECB) to be used for refinancing purposes. This source of funding continues to be used primarily as a secure means of obtaining liquidity. The unused facility with the ECB at the end of the reporting period amounted to EUR 785.4 million.

With regard to the presentation of the sources of finance and derivative financial instruments, please refer to the notes to the financial statements.

Given the current economic environment and interest rate structure, management is satisfied with the business situation and performance of the Toyota Kreditbank Group. The financial condition of the Toyota Kreditbank Group as a whole remained stable at the date of issue of this report.

54 – 55



4. Key performance indicatorsThe key financial performance indicators used by the Toyota Kreditbank Group are based on groupwide requirements stipulated by the parent company, Toyota Financial Services in Japan, whereas specific performance indicators are, to a certain extent, set and managed on a decentralised basis for each country.

The following table sets out the key performance indicators of the Toyota Kreditbank Group:

Financial indicators

Cost/Income ratio Average number of accounts Penetration rate2

FY 2015/16 FY 2014/15 FY 2015/16 FY 2014/15 FY 2015/16 FY 2014/15

Germany 55.4% 1 52.1% 1 190,004 198,561 45.3% 45.3%France 31.6% 31.7% 88,142 80,521 35.1% 30.7%Spain 47.9% 48.1% 71,999 62,964 36.8% 41.1%Norway 33.5% 33.3% 34,658 33,075 38.6% 42.4%Sweden 42.8% 46.9% 44,472 41,716 41.5% 35.5%Italy 56.2% 59.5% n. a. n. a. n. a. n. a.Poland 78.9% 82.6% 94,306 75,200 30.0% 30.4%Russia 36.8% 36.3% 68,937 76,722 16.8% 17.3%1 Before consolidation 2 New vehicle penetration in both years only Toyota and Lexus vehicles

The average number of contracts in Germany continued to decrease, mainly reflecting the lower volume of new vehicles sold by the importer.

In addition to financial performance indicators, the Toyota Kreditbank Group also uses financial performance indicators to manage the business. The Toyota Way, which is founded on the Toyota organisation’s corporate philosophy, is actively put into practice. The two main pillars of the Toyota Way are "Continuous Improvement" and "Respect for Others". Recom-mendations made by staff with a view to achieving continuous improvement are documented in conjunction with so-called "Kaizen" procedures and are rewarded as part of a competition for employees.

Kaizen activities

FY 2015/16 FY 2014/15 Variance %

Germany 13 34 -61.8France 5 2 150.0Spain 10 14 -28.6Norway 12 13 -7.7Sweden 43 43 -0.0Italy 24 25 -4.0Poland 70 74 -5.4Russia 25 24 +4.2Total 202 229 -11.8

C. Events after the end of the reporting periodNo significant events have occurred after the end of the re-porting period which have a significant impact on the Toyota Kreditbank Group's net assets, financial and earnings position.

D. Opportunities and Risks ReportThe Toyota Kreditbank Group has applied a stable, strategic business model for years. Its success is attributable firstly to its conservative risk profile combined with effective risk management and secondly to its strategic business model of a "captive" financing company, offering financing for the vehicles of the Toyota Group within its operating territory.

Responsibility for the early recognition and control of business risks and opportunities lies with the Executive Management of the parent company.

The Toyota Kreditbank Group is exposed to various other risks which are usual for the sector in which it operates. At the same time, it is important for the Toyota Kreditbank Group to identify and exploit potential opportunities with a controlled manage-ment process with a view to safeguarding and developing its competitive position. An opportunity refers to the possibility of using events, current developments or actions to ensure or exceed planned targets.

Business performance is dependent to a large extent on the volume of group-brand car sales within the operating territory. The extent to which opportunities can be exploited is highly dependent on this situation.

Opportunities for further profitable growth are identified and included in the decision making process as part of the overall strategic process as well as the medium and long term business planning process. Business opportunities are not reported as part of the risk management system. Instead, they are recorded in conjunction with strategic and medium term forecasts and monitored during the year as part of the periodic reporting process.

A stronger economic upturn may boost group-brand sales, thus, in turn, generating additional growth for the Toyota Kreditbank Group. Assuming a constant penetration rate, any increase in new registrations results in an upward trend for new business.

Further opportunities arise for the Toyota Kreditbank Group through the creation of additional products for end-user custo-mers and by moving into growth segments in which customers' needs are focused on even more closely. This approach also helps to improve the penetration rate in the long term.

In relation to credit business risks, an opportunity may also present itself if actual losses incurred within the Toyota Kredit bank Group's core business turn out to be lower than previously calculated expected losses. Given the general eco-nomic conditions, the Toyota Kreditbank Group has applied a conservative approach to risk provisioning in recent years. If the economies in the countries which are relevant for the Toyota Kreditbank Group continue to stabilise, such that the creditworthiness of borrowers improves, there may be an opportunity to reverse previously recorded risk provisions.

56 – 57



1. Risk management

a. Risk management organisationDecisions are taken by the Toyota Kreditbank Group (and its foreign branches and affiliates) on the basis of an ongoing assessment of the balance between realisable returns and risks to be incurred within the framework of the risk-bearing capacity.

The Executive Management of the parent company is respon-sible for the organisation of risk management throughout the Toyota Kreditbank Group, including its foreign branches and affiliates. A risk management organisation has been set up which forms the basis for risk and cost oriented manage-ment of the Toyota Kreditbank Group as a whole (overall bank management).

Group Risk Controlling Committee– Reporting lines to Group Risk Controlling Function –

Executive Management

Risk Management

Credit Risk

OpRisk Management

Operational Risks

Compliance Function

Treasury

Liquidity Risk

Market Risk

Directors

Finance

Business Risk

Group RiskControlling Function

The Group Risk Controlling Committee and the Group Risk Controlling Function play key roles within the risk management organisation. Whereas the Group Risk Controlling Function is responsible for all operational aspects of risk controlling, the Group Risk Controlling Committee is responsible for moni toring and communicating the risk strategy set by Executive Manage- ment. The Group Risk Controlling Function assesses the Toyota Kreditbank Group's specific and overall risk situation, specifically taking into account the limits established in conjunction with the assessment of its risk-bearing capacity and gives recommen-dations to the Group Risk Controlling Committee. The aim is to identify risks at the earliest possible stage and to stipulate a set of suitable risk mitigation measures.

Risk reporting is addressed directly to Executive Management and to members of the Group Risk Controlling Committee. Risk trends and the current situation are reported on at the quarterly meetings of the Group Risk Controlling

Committee and, based on the results of those discussions, appropriate decisions taken. The Toyota Kreditbank Group has also set up independent anti-money laundering and data protection officer functions.

Consideration of stress tests is a key component of risk mana-gement to control the overall risk profile of the Toyota Kredit-bank Group. Stress tests, along with the maintenance of a risk inventory and the assessment of risk-bearing capacity, are further components of the risk management concept, helping the Toyota Kreditbank Group to manage its overall risk portfolio.

Business & Overall Risk Strategy

Risk-bearing capacity concept

Sub-strategies for significant risks

Risk inventory

Stress testing concept

Rules fixed in writing(including organisational structure, separation of duties, model concepts)

The task of risk control is carried out in decentralised manage-ment units. The actual monitoring of risks – identification, assessment and monitoring of risks and countermeasures, reporting and specification of methods – is also organised on a decentralised basis.

In order to allow a thorough assessment of the risk impact of new products (including the potential impact on the overall bank risk profile), all relevant organisational units are integrat-ed into the new product development process.

Internal Audit reviews and assesses all activities of the Toyota Kreditbank Group. Audits are planned and conducted using a risk-based approach. The assessment of the risk situation, the proper processing of transactions and the effectiveness of the internal control system are important audit criteria.

Reports on the audits conducted during the financial year, together with audit findings, were submitted to Executive Management.

58 – 59



b. Risk management processThe business strategy of the Toyota Kreditbank Group provides the framework for the risk strategy. One important aspect of this risk strategy is that risks will only be entered into after due consideration of the level of economic and regulatory capi-tal, while at the same time ensuring liquidity, and main taining a prudent risk profile. The risk management system is therefore a key component of managing business performance.

The objective of the risk management system is to assume customary banking risks within a defined framework, including strict compliance with risk-bearing capacity requirements. The core elements of the risk management system are the risk strategy, the management of risk-bearing capacity and the internal control system. The internal control system consists of a set of defined rules and an organisational structure, inclu-ding, in particular, the specific processes applied to manage and control risks.

Over the years, the risk management process has been refined, as a result of which the Toyota Kreditbank Group now has a full range of tried and tested tools at its disposal. In addition to organisational rules, such as competency guidelines and process/system documentation, methods have been continu-ously developed to identify, measure and manage risks.

c. Risk strategyThe risk strategy – in conjunction with the risk-bearing capacity concept – provides the overall framework for risk management. The risk profile and underlying approach to risk taking are determined after taking into account all risks identified in the various lines of business and in accordance with all relevant statutory and regulatory requirements.

The focus of the risk strategy is ensuring the long-term going-concern status and an appropriate balance between return and risk. Consciously choosing to take risks – having given due consideration to economic and regulatory capital levels – is a component of the risk strategy and is derived from the overall banking strategy.

The Toyota Kreditbank Group, as a financial services provider whose primary function is to support the sale of cars, provides financing for Toyota dealers and retail customers. The resulting overall banking risk is therefore significantly lower than that of banks offering a full range of banking services. Under the Toyota Kreditbank Group’s business model, concentration risks

are assumed knowingly within reasonable limits. Within the retail portfolio, concentration risks are only of secondary im-portance in view of the overall customer structure. In con-trast, concentration risks are higher in the business customer and dealership financing portfolio due to the relatively small number of customers.

In line with the overall risk strategy, specific sub-strategies are defined for each main risk category, which, together with the risk inventory, the risk-bearing capacity concept, the stress testing concept and the organisational rules, form the basis for the Toyota Kreditbank Group’s risk management system.

d. Relevant risk categoriesAs part of the process of drawing up the risk inventory, the next step – after identifying all risks – is to perform a quantitative and qualitative analysis of the various risk categories as the basis for determining materiality. The main risk categories result directly from banking operations and are of particular importance for the ongoing management of the Toyota Kredit-bank Group. The following risks have been identified as material risk categories in conjunction with the annual risk inventory:

Relevant Risk Categories

Credit Risk Market Risk Liquidity Risk

Operational Risk

Business Risk Other Risks

Default Interest Rate

Currency

Spread

Market Liquidity

Investment/ Share Price

Residual Value

Short-term Liquidity

Refinancing Costs

Operational Risk

Legal

Model

Return

Reputation

Strategic

Migration

Counterparty

Issuer

Collateral

Countries

Concentration

Significant Risks

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e. Risk-bearing capacity conceptThe Toyota Kreditbank Group has implemented a risk-bearing capacity concept for the regular assessment of the risk situation at a total bank level. The risk-bearing capacity specifies the extent to which the risks assumed can be covered by the defined risk coverage amounts. The concept was further refined during the financial year 2015/2016, including a requirement to manage limits in the local currency.

Determining risk-bearing capacity sets the framework for risk management and control within the Toyota Kreditbank Group. Measuring and ensuring the appropriateness of the capacity to bear risks is therefore a fundamental aspect of the manage-ment of the Toyota Kreditbank Group as a whole.

Under the current concept, both a balance sheet-based going- concern approach and a liquidation approach are considered to assess the risk-bearing capacity.

The going-concern approach assumes that operations will be continued, whereas the liquidation approach focuses more on the protection of creditors. Executive Management has concluded that the going-concern approach is relevant for managing the business, supplemented where appropriate by the liquidation approach.

The risk coverage potential totaling EUR 316.1 million com-prises subscribed capital, capital surplus, retained earnings and current year earnings. Under the going-concern approach, the part of the regulatory capital which is necessary to comply with the minimum capital requirements pursuant to the Capital Requirement Regulation (CRR) is not taken into account for risk coverage purposes. In addition, under the going-concern approach, a budgeted profit is also taken into consideration. In order to comply with MaRisk requirements and take into account only a prudently budgeted profit, the business risk is deducted from the risk coverage potential as a corrective factor.

Risk-bearing capacity

31/03/2016

Limit Mio. EUR

31/03/2016 AmountUtilized

Mio. EUR


%

31/03/2015

Limit Mio. EUR


Mio. EUR


%

Required capital in economic terms 284.5 187.1 65.8 328.1 216.5 66.0 — thereof for customer credit risk 155.6 112.4 72.2 156.0 112.7 72.2 — thereof for interest rate risk 46.3 19.2 41.5 50.0 29.0 58.0 — thereof for liquidity risk 13.0 5.9 45.4 24.0 4.2 17.5 — thereof for operational risks 20.0 9.9 49.5 25.0 12.0 48.0 — thereof cushion for market

fluctuations 49.6 39.7 80.0 73.1 58.5 80.0

Risk coverage potential utilisation % 90.0 59.2 90.0 59.4

Maximum risk appetite % 90.0 90.0

In both the going-concern and liquidation approaches, only part of the risk coverage potential counts towards the risk coverage amount. The respective risk coverage amount allocated, as well as the risk appetite, the overall limit and the allocation limit among the different risk categories are stipula-ted each year by Executive Management and are based on the business strategy and the associated willingness to assume risk.

Part of the available risk coverage potential was not allocated to offset potential losses from the material risk categories, thus taking into account the risks not limited in the risk-bearing capacity concept.

In order to ensure the Toyota Kreditbank Group's risk-bearing capacity, risks (quantified by appropriate instruments) and stipulated limits are compared for each risk category.

In addition, stress scenarios are also tested, based on scenario and sensitivity analyses which take into account institution-specific and general market factors for all material risk catego-ries, thus ensuring an overall consideration of the situation across all risk categories. The so-called "normal case" considered in the risk-bearing capacity assessment corresponds to the current relevant economic situation. The historical recession simulates – for all significant risk categories – the stress that would be caused by a severe economic slump (comparable with the Lehman crisis in 2008/2009).

Risk category correlation effects are not taken into account to measure the amount of limit utilised. Likewise, the Toyota Kreditbank Group does not consider any correlation effects between and/or within the various risk categories. In view of the nature and scale of business transactions, the Toyota Kreditbank Group assumes a correlation coefficient of one within the material risk categories. As a result, potential capital saving diversification effects are not taken into account, thus reflecting the enterprise's prudent approach to risk assessment.

The Toyota Kreditbank Group's ability to bear risk (i.e. its risk-bearing capacity) was ensured at all times during the financial year 2015/2016.

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2. Risk categoriesA risk is defined as the danger of incurring a loss or damage by an outcome that is less favourable than originally expected. The following risks were identified as material risks in con-junction with the annual risk inventory:

a. Credit riskCredit risk is defined as the risk of a possible loss arising from deterioration in the creditworthiness rating or payment default of a counterparty. Within credit risk, the following distinctions can be made depending on the underlying transaction:

Default risk is defined as the traditional credit business risk – i.e. the core business of the Toyota Kreditbank Group. Default risk refers here to the possible loss arising from deterioration in the creditworthiness rating or payment default of a borrower.

Issuer risk is defined as the default risk in the case of a securities transaction.

Trading counterparty risk is defined as risk of default by the contracting party in the case of a derivatives transaction.

Credit concentration risk is defined as the risk of the reali- sation of multiple default risks, issuer risks or trading counter-party risks resulting from concentration of the portfolio on a few individual contracting parties, groups of contracting parties or concentrations on individual market sectors.

The Toyota Kreditbank Group’s core business consists of dealer financing and vehicle financing for end-user customers in the Retail and Corporate lines of business. Default and credit concentration risk (dealer financing and corporate end-user customer exposures) are therefore the principal sources of credit risk. The principal focus of credit risk management is therefore placed on the assessment and control of these risks. Trading counterparty risks arise on account of the hedging of market risks. Since the securities portfolio is currently very small, issuer risk is not material at present.

Organisation of credit risk managementExecutive Management is responsible for effective, sound management of the bank's credit risks. Furthermore, Executive Management and the Group Risk Controlling Function have joint responsibility for introducing appropriate tools to measure credit risk.

Toyota Kreditbank GmbH's Risk Management Department is responsible for implementing and applying these measure-ment tools as well as for other operational credit risk control measures. Risk monitoring is the key component here. As an independent function within the risk management system, risk monitoring concentrates on the identification, analysis, measurement, control and monitoring of the default and credit concentration risks throughout the Toyota Kreditbank Group as a whole. The Treasury Department is responsible for monitoring issuer and trading counterparty risks.

Credit risk strategyThe Toyota Kreditbank Group considers credit risk to be a key component of its operations. As such, credit risks are entered into in full knowledge of the facts and are subject to proactive control, measurement and monitoring. This is particularly true in the case of default and credit concentration risks. Generally, the materiality of default risks is assessed in conjunction with the annual risk inventory.The credit risk strategy conforms to the guidelines set out in the business and general risk strategy, thus reflecting the prudent approach adopted by the Group.

As a general rule, default risks are only entered into in accordance with the general risk strategy. Credit decisions and exposure amounts are always determined on the basis of creditworthiness. This involves an analysis of the borrower's ability to service debts currently and in the future.

The Toyota Kreditbank Group recognises appropriate levels of risk provision to take into account losses from credit business.

Elements of credit risk managementThe Toyota Kreditbank Group uses a range of instruments to manage credit risk, as described in detail below.

Instruments used to manage credit risk

Strategic components

- Allocation of risk coverage amount

Operationalcomponents

- Credit decision processes- limits- collateral and guarantees- intensive management- risk provisionning

Monitoring andcommunication

- Management reporting- Risk monitoring

Credit riskmeasurement

Internal procedures forassessing creditworthiness

- amount of receivable on default- probability of default- loss ratio- expected loss- unexpected loss- stress tests

Risk coverage amount (capital cushion)The parent company's Executive Management and Group Risk Controlling Function jointly assign the risk coverage amount available for credit risks. The risk coverage amount is determined at group and institution level as well as for each subsidiary and branch individually. The risk coverage amount is assigned as part of the general capital planning process in line with the general risk appetite.

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Credit risk measurementInternal creditworthiness assessment procedures and stress tests are applied to measure and assess credit risks. The Toyota Kreditbank Group has opted to use the Advanced Internal Ratings Based Approach (A-IRBA) for the purposes of measu-ring and assessing credit risks. An application to apply the A-IRBA approach was submitted as of 31 March 2008. In order to be able to use the A-IRBA approach on a permanent basis, the regulator requires at least 92% of the portfolio to be mea-sured through appropriately certified internal rating procedures. The remaining 8% may continue to be measured using the Credit Risk Standardised Approach (CRSA). In order to achieve this coverage rate, the Toyota Kreditbank Group has successively switched over the various sub-portfolios to the A-IRBA approach by developing rating procedures specific to each of them. These sub-portfolios are defined for each country as follows:

— Small-sized customers (end-user customers vehicle financing): end-user customers with an exposure of less than TEUR 250. In the small-sized customer segment, a further distinction is drawn between retail (private individuals and sole traders) and corporate customers.

— Major customers (end-user customers vehicle financing): end-user customers with an exposure or limit of more than TEUR 250.

— Dealerships: financing of dealerships.

Other lending transactions which do not relate to the Toyota Kreditbank Group's core business are combined across countries in the "Other lending transactions" sub-portfolio. Treasury transactions are also shown separately.

Measurement approach by country

Country Type of business Customer groupMeasurement

approachPermitted

since

GermanyEnd customers (vehicle financing)

Small-sized customers (retail) A-IRBA 04/2008

Major customers A-IRBA 04/2008

Dealership financing Dealerships A-IRBA 04/2008

FranceEnd-user customers (vehicle financing)


Small-sized customers (businesses) A-IRBA 10/2014

Major customers CRSA -


SwedenEnd-user customers (vehicle financing)




Dealership financing Dealerships CRSA 09/2009

NorwayEnd-user customers (vehicle financing)



Dealership financing Dealerships CRSA -

SpainEnd-user customers (vehicle financing)




Dealership financing Dealerships A-IRBA -

Italy Dealership financing Dealerships A-IRBA 07/2013

PolandEnd-user customers (vehicle financing)

Small-sized customers (retail and leasing) A-IRBA 04/2015

Small-sized customers (retail PK-Ekfm loan) A-IRBA 04/2015

Small-sized customers (retail business loan) CRSA -


End-user customers (others) Small-sized and major customers CRSA -


Russia

End-user customers (vehicle financing) Small-sized customers (retail) A-IRBA 12/2013

End-user customers (others) Major customers CRSA -


Over-archingOther lending transactions Various CRSA -

Treasury Bank CRSA -

Rating procedures are systematically developed throughout the Toyota Kreditbank Group. The procedures used are based mainly on statistical models. Rating procedures are calibrated individually for each sub-portfolio. Responsibility for the deve-lop ment, quality and monitoring of the use of rating proce-dures for risk management purposes lies with the Risk Moni-toring Department.

The values calculated using the various rating procedures are input to the relevant internal controlling system and made available to Group Risk Controlling Function in order to mea-sure the risk-bearing capacity. Risk premiums and credit risk costs are calculated in conjunction with the Controlling Depart-ment on the basis of past empirical values on the one hand and planned changes in the credit portfolio on the other.

66 – 67



The accuracy of the statistical models is checked monthly by back-testing against actual amounts realised. Anomalies identified during this process are then subjected to further detailed analysis. Furthermore, the models are validated each year in accordance with a pre-defined procedure. Where neces-sary, the rating procedures are recalibrated with the approval of Executive Management.

The main technical terms relevant for the A-IRBA-certified rating procedure are explained below.

The definition of loss is based on the Capital Requirement Regulation (CRR). This defines loss as "economic loss, includ-ing material discount effects, and direct and indirect costs associated with the recovery of outstanding balances for the transaction".

With respect to the Toyota Kreditbank Group's core business, the loss therefore corresponds to receivables outstanding after all recovery efforts. This includes discounting effects and costs arising in conjunction with recovery efforts.

Exposure at default (EAD) is defined as the expected amount of the credit exposure at the time of default.

A uniform definition of default, complying with the CRR, is applied at group level. According to this definition, an exposure is considered to be in default when either or both of the following events have occurred:

― The Toyota Kreditbank Group considers it to be very un- likely that the borrower will repay its debt without further action by the institution.

― The borrower has been in arrears for more than 90 days in succession with respect to a material proportion of its total debt.

An exposure which is not in default is referred to as an active exposure. The probability of default expresses the probability of at least one default by a borrower over a one year period. The probability of default of a borrower is determined in conjunction with the relevant internal rating procedure.

For this purpose, each exposure is first assigned to a credit-worthiness class, based on the rating procedure allowed for the relevant sub-portfolio. The creditworthiness classes are defined uniformly across the various sub-portfolios on the basis of a so-called "master scale" that is valid throughout the Group.

The master scale comprises eleven classes for active exposures and three classes for exposures at default. For exposures at default, the three classes reflect the various stages in the de-fault process. For the eleven creditworthiness classes for active exposures, the master scale indicates a minimum and a maxi-mum probability of default. As part of the process of calibrat-ing the models specific to the various sub-portfolios, the creditworthiness classes are each assigned a final default pro-bability, specific to each sub-portfolio. This is based on the maximum and minimum default probabilities specified by the master scale. The default probability of an exposure results from the application of this final default probability by refer-ence to the creditworthiness class and the sub-portfolio.

The loss given default (LGD) refers to the expected percentage of the exposure at default which will be lost in the event of default. As in the case of the default probability, the LGD of an exposure is determined using a statistical model. For the pur-poses of calibrating the statistical models used, particular consideration is given to proceeds realised historically.

The expected loss (EL) refers to the loss from credit risks which, at the relevant reporting date, is expected to be in-curred within one year. This is a statistical average value which is calculated considering the default probability, the LGD and the EAD.

The unexpected loss (UL) refers to potential losses which exceed the expected loss. “Potential” for these purposes means that, based on a going-concern approach, there is a 99% probability that actual losses incurred within one year will not exceed the UL. The UL, which is therefore a key internal control parameter, is calculated on the basis of the regu latory requirements applicable to A-IRBA procedures. More specifi-cally, the calculation is based on the default probabilities and loss given defaults determined using the applicable rating procedure. The issue of concentration risks is addressed by taking into account the granularity of the portfolio. Model-based default probabilities and loss given defaults are not available for portfolio components rated using the credit risk standardised approach (CRSA) and are therefore replaced by expert estimates.

Stress tests are carried out at least monthly. These serve on the one hand to check the capital adequacy calculated and on the other to identify events and market changes which could have an adverse impact on the Toyota Kreditbank Group, so that countermeasures can be taken at an early stage. Firstly, the sensitivity of the risk model with respect to various risk factors is measured on the basis of stress tests. Secondly, scenario analyses are carried out to examine the effects of economic stress events on the portfolio. For this purpose, both historical events and fictitious synthetic events are considered.

Operational componentsThe credit decision making process relies on both credit application procedures and rating models. In the case of retail business, this process is largely automated. In the case of dealer financing business, credit approvals have to be confirmed manually by credit committees. Local credit committees at the individual branches and subsidiaries of the Toyota Kredit-bank Group consist in each case of front and back office repre-sentatives. A European Credit Committee (ECC) is in place at group level.

Depending on the nominal amount of the credit application, the relevant credit committee is convened and makes its decision with respect to the credit application. In the event that the front office and back office representatives within a local credit committee reach a different decision, the credit application is transferred to the ECC and the decision is taken there.

Credit exposure limits have been introduced to limit default and credit concentration risks. The limits are determined on the basis of the customer's creditworthiness. Limits are in place both for both individual borrowers and groups of bor-rowers. Where appropriate, limits are also set for specific pro-ducts. For exposures to major customers, the amount of the limit used is monitored on a daily basis in accordance with the Banking Act (Kreditwesengesetz)

By way of analogy, limits are also defined and monitored for hedging and securities transactions at the level of individual counterparties and issuers.

A standardised process is in place within the section for dealerships and major customers to handle the measurement of guarantees and collateral. These serve to compensate for losses in the event of default by the counterparty. The Credit Manual defines the type of guarantees or collateral that can be accepted. The extent to which guarantees and collateral are acceptable varies from portfolio to portfolio on account of differing regulatory requirements. Within the retail business, it is the financed vehicles themselves that primarily serve as collateral. In the dealership segment, other collateral may also be accepted on a case-by-case basis.

An early warning system, based on the internal credit ratings, has been installed for dealership and major customer business. This system has the function of identifying borrowers with impending financial difficulties. A borrower identified to be in this position receives special attention in the form of intensive management so that measures are taken to reduce the risk and prevent default. Furthermore, a watch list is maintained showing borrowers directly under threat of default.

Provision for credit risk is recognised in the form of specific allowances and portfolio-based allowances. A specific allow-ance is required to be recognised if it is likely that the customer will be unable to fulfil all interest and repayment obligations in the future. In the case of contracts for which no specific allow-ances are recognised, allowances are calculated at portfolio level with the aid of the IRBA parameters.

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Monitoring and communicationRisk Monitoring draws up a monthly management report for distribution to Executive Management and the Group Risk Controlling Function. In addition to general information on the risk situation of the Toyota Kreditbank Group, this contains aggregated quantitative information derived from the A-IRBA procedure. These reports represent a key component of the risk and management control system.

The reliability of the information derived from the A-IRBA procedure is examined monthly by Risk Monitoring and, where necessary, communicated to the Group Risk Controlling Func-tion and Executive Management. The latter also monitors the credit risk of the individual sub-portfolios by means of detailed reports. The reports are communicated on a quarterly basis to the Group Risk Controlling Function and Executive Manage-ment.

The tables below present the Toyota Kreditbank Group’s credit portfolio, broken down according to various risk classes.

Unexpected Loss (UL)

31/03/2016 EUR million

31/03/2016 %


31/03/2015 %

Germany 34.22 30.5 37.93 33.6France 25.15 22.4 21.01 18.6Spain 16.81 15.0 19.44 17.2Norway 3.40 3.0 3.00 2.7Sweden 2.06 1.8 2.05 1.8Italy 10.21 9.1 10.49 9.3Poland 6.60 5.9 4.48 4.0Russia 13.93 12.4 14.33 12.7Total 112.38 100.0 112.73 100.0

Exposure At Default (EAD)


31/03/2016 %


31/03/2015 %

Low risk (creditworthiness classes 1-7) 6.453.54 84.7 6.362.83 85.4At watch (creditworthiness classes 8-9) 582.36 7.7 571.37 7.7At risk (creditworthiness classes 10-11) 447.18 5.9 356.14 4.8Default 132.38 1.7 156.79 2.1Total 7.615.46 100.0 7.447.13 100.0

b. Market price riskMarket price risks are defined as risks which may arise as a result of changes in rates of return, exchange rates and prices on the financial markets. This can give rise to a loss since these risks have an impact on the measurement of open interest rates, equity investment and currency exposures. The main risks for the Toyota Kreditbank Group are interest rate risk and exchange rate risk.

StrategyThe Toyota Kreditbank Group has set out a general framework for the management of assets and liabilities as part of its current group risk strategy. This framework takes the concrete form of internal group instructions and other guidelines/ manuals.

Derivative instruments are used as a general rule to hedge interest and currency risks. The derivative instruments used (interest swaps, interest/currency swaps and currency futures) are used exclusively for hedging purposes. In each case, the hedging instruments are matched by a liabilities-side hedged item with a corresponding opposite risk profile. Interest swaps entered into exclusively with a view to managing the general interest rate risk within the banking book, are accounted for as a rule on a portfolio basis.

The Toyota Kreditbank Group does not run a trading book and does not engage in any commercial transactions in the sense of aiming to make a short term profit by exploiting market price fluctuations. All trading transactions serve to create an efficient banking book structure from the point of view of risk and return.

Money market transactions and the issue of own instruments are executed primarily with a view to securing the Toyota Kredit-bank Group's liquidity. Surplus liquidity may be invested with selected credit institutions.

Foreign currency riskIt is not a strategic objective of the Toyota Kreditbank Group to take up foreign currency positions. For this reason, Treasury endeavours where possible to hedge foreign currency balances and/or future foreign currency cash flows arising from trading contracts by appropriate offsetting transactions. Foreign cur-rency risks arising from strategic investments (e.g. endowment capital) in the branches of Toyota Kreditbank GmbH are sub-ject to continuous monitoring.

Contrary to its strategy of not taking on foreign currency risks,Toyota Kreditbank GmbH took on a foreign currency exposure for the first time in the 2008/2009 financial year. Toyota Motor Finance based in Amsterdam, Netherlands provided a subor-dinated loan of RUB 350 million to AO Toyota Bank, Moscow, Russia. Since this entity is a subsidiary of the Group’s imme-diate parent company, Executive Management decided on

7 November 2008 to bear the resulting currency and credit risks in Germany. As part of the process of transferring these risks to the Toyota Kreditbank Group, a swap was entered into with Toyota Motor Finance. The swap expired on 9 November 2015.

Residual value risk Residual value risks arise from negative variances between the actual and imputed residual value of a leasing asset. Depending on local circumstances and past experience gained marketing used cars, updated internal and external information regarding changes in residual values is continually fed into residual value forecasts.

For the purposes of determining which party actually bears residual value risks, a distinction is made between direct and indirect residual value risks. Direct residual value risks are those that are borne directly by the Toyota Kreditbank Group. These residual values are monitored within the Toyota Kredit-bank Group. Appropriate risk provisions have been recorded to take into account the current situation in used car markets. An indirect residual value risk exists when the risk has been trans-ferred to a third party as a result of a residual value guarantee.

Under the Toyota Kreditbank Group’s current range of pro-ducts, the residual value risk is transferred either to the lessee (residual value lease agreement) or to the dealer (distance-driven-leases) with the consequence that a counterparty risk arises in the first instance with regards to the residual value guarantee. If the residual value guarantor defaults or the calcu-lated residual value cannot be realised, the leased asset (and hence the related residual value risk) is transferred to the Toyota Kreditbank Group.

70 – 71



Interest rate riskThe Toyota Kreditbank Group pursues a dual control approach to interest rate risk. Monitoring and control are based on a value-at-risk indicator and the square hedge ratio. Limits/ranges, within which the respective figures should fall, are set for the relevant indicator.

The square hedge ratio is determined by dividing the sum of all refinancing amounts across all maturity ranges by the sum of the assets to be refinanced across all maturity ranges (in each case up to the end of the currently valid fixed interest rate period).

The value-at-risk model is based on a historic simulation. The parameters used for the calculation are a confidence level of 99%, a holding period of 250 days and a mirrored interest rate history of 1,001 days.

Square hedge ratio%

Value-at-Risk EUR million

Sensitivity of the banking book EUR million

Germany 86 - 3.1 - 8.7France 92 - 1.3 - 1.7Spain 88 - 3.2 - 5.8Norway 65 - 1.7 - 2.8Sweden 85 - 0.1 - 0.0Italy n. a. - 0.7 - 0.3Poland 80 - 1.4 - 0.7Russia 92 - 7.7 - 2.2

Management of market risksThe direction, timing and scope of future market price changes are, by their very nature, unknown. The Toyota Kreditbank Group manages market risks by limiting the impact of market price changes on earnings and the risk coverage amount. Limits are monitored systematically using sensitivity and present value analyses.

Monitoring and communicationThe parent company's Treasury department in Cologne draws up the relevant reports for the Toyota Kreditbank Group on a monthly and/or quarterly basis. The reporting system contains the necessary information to ensure that stipulated limits and requirements are monitored.

c. Liquidity riskThe liquidity risk is defined as the risk that it may not be pos-sible to meet present and future payment obligations on time or in full (short term liquidity) or that, in the event of a liquidi-ty crisis, funds are obtainable for refinancing only at higher market rates (refinancing costs). In line with its overall banking strategy, the Toyota Kreditbank Group's liquidity risk strategy is aimed at ensuring a stable, comfortable liquidity position, thus – in particular – preventing insolvency and limiting any losses arising from refinancing on the money and capital markets.

This risk is managed as a general rule with the aid of overnight and term deposits. In addition, the Toyota Kreditbank GmbH uses repo transactions with the European Central Bank, the issue of commercial paper and promissory notes (Schuld-scheindarlehen).

As part of the risk measurement process, the refinancing cost risk (higher liquidity cost) is determined by means of regular scenario analyses (LVaR). The value measured constitutes the additional refinancing costs for the coming twelve months in the event of an ad hoc increase in refinancing costs around a specified number of basis points. An indicator (DAF2) is calcu-lated for the short term liquidity risk, reflecting the number of days for which secure sources of liquidity (confirmed bank credit lines, the relevant portion of the Master Credit Facility, ECB repo transactions) are currently available in order to cover future payment obligations (including new business).

The short term liquidity risk is not taken into consideration in the calculation of risk-bearing capacity, since the liquidity risk relates to payments and not to earnings. By contrast, the refinancing cost risk is included in the risk-bearing capacity calculation.

The methodology for calculating LVaR was revised and impro-ved during the financial year 2015/2016.

d. Operational riskOperational risks are defined as the danger of incurring losses as a result of the inappropriateness or failure of internal pro-cedures, employees, the internal infrastructure or as a result of external factors.

Within the Toyota Kreditbank Group, the definition of opera-tional risks also covers model risks arising from inappropriate models and legal risks from contractual agreements or statutory requirements.

The principal objective in terms of the management of opera-tional risks is to identify potential causes for losses in good time and to avoid operational interruptions (e.g. through

serious damage to key equipment). For this reason, a compre-hensive and integrated approach is applied to identifying, analysing and assessing the full range of the Group’s opera-tional risks.

Responsibility for the management and control of operational risks lies with the centralised Risk Management Department. OpRisk managers at branches and subsidiaries have the job of ensuring close cooperation between head office and local departments and are responsible for assessing operational risks and implementing operational risk management pro-cesses locally.

The remit of the centralised Risk Management Department includes the specification of methods to be used to identify, quantify and control operational risks as well as appropriate reporting to the OpRisk Committee, which, in turn, reports to Executive Management and the Group Risk Controlling Function on the risk situation and measures taken.

As part of the annual scenario-based OpRisk inventory, opera -tional risks are allocated to four levels of risk using a risk matrix, depending on frequency and loss potential. In the case of risks in the top two levels, risk mitigation strategies must be devised and the resulting measures implemented in order to reduce the risks to an acceptable level.

Risk capital requirements for the purpose of measuring risk-bearing capacity are calculated with the aid of a Monte Carlo simulation after aggregating the results of individual scena-rios applied in conjunction with the OpRisk inventory. The OpRisk Committee notifies Executive Management and the Group Risk Controlling Function if the group-wide limits are exceeded.

This combination of procedures ensures that the sum of all risks is always covered by the amount allocated to cover this particular risk category in accordance with the risk-bearing capacity concept, thus safeguarding the Group's going con-cern status.

In order to protect against legal risks, the Toyota Kreditbank Group requires the use of standardised framework agreements. Legislation and court rulings that are relevant for the Group's business are monitored by the Compliance Function at entity level. Non-standard contractual provisions of Toyota Kredit-bank GmbH are examined by the Legal Department.

“Business Continuity Plan” and “Business Continuity Manage-ment” guidelines are in place for all locations in Germany and abroad, including communication plans, work instructions, system descriptions and rules of conduct. The effectiveness of the plan is tested regularly.

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e. Business riskBusiness risk is defined as the risk of unexpected decreases in earnings and negative variances from budget, which do not have their origin in other defined risk categories. Business risk can be caused by changes in customer behaviour or changes in economic conditions which do not have their origin in legislation. The Toyota Kreditbank Group plans income and expenses as part of its forecasting process. Forecasting, however, is always subject to a degree of uncertainty. For instance, fiercer competition or a poor reputation – either of the Toyota brand or of the Toyota Kreditbank Group – could have a negative impact on operating results.

In order to manage forecasting variances, the Toyota Kredit-bank Group has created a scenario model based on key fore-casting figures. This involves subjecting the key indicators “new vehicle retail sales”, “average dealership financing”, ”retail penetration”, “retail margin” and “dealership financing margin” to stress after gathering expert opinion and deter-mining the negative impact on forecast earnings. Under the going-concern approach, the forecast profit included in the risk coverage potential calculation is reduced by the business risk. Under the liquidation approach – in which forecast profit is not included in the risk coverage potential calculation – the business risk is deducted only if the scenario calculation gives rise to a forecast loss.

3. Summarised description of risk situationAt no stage during the financial year 2015/2016 did the total amount of risks entered into exceed the Toyota Kreditbank Group’s risk coverage potential, thus demonstrating its capa-city to bear risk throughout the year under review.

There are no indications of risks which could pose a threat to the going-concern status or which could have a material adverse impact on the net assets, financial position or results of operations for the current year.

The Toyota Kreditbank Group’s strategy of achieving a sus-tainable risk-conscious growth in business volumes is based on its intention to remain within the risk coverage potential. Based on current forecasts, risk-bearing capacity require-ments will be complied with in the financial year 2016/2017.

E. Outlook

As a financial services provider, the Toyota Kreditbank Group offers a range of financing and leasing products to Toyota dealerships and retail customers within a defined operating territory in order to support the sale of cars. The scope of opportunities available is significantly lower by comparison to that of banks offering a full range of banking services. The Toyota Kreditbank Group's performance is also highly depen-dent on sales of Toyota and Lexus brand vehicles within the operating territory. For this reason, positive developments in the market as a whole do not necessarily correlate with the performance of the Toyota Kreditbank Group.

1. Future macro-economic situationThe global economy is expected to grow in the calendar year 2016 at a similar level to 2015. The IMF forecasts global GDP growth of 3.2% for 2016, compared with 3.1% one year earlier.

Real GNP and consumer prices 2016-2018

GNP1 Change compared to previous year %

CPI2 Change compared to previous year %

Countries 2016 2017 2018 2016 2017 2018

Euro area 1.5 1.6 1.6 0.4 1.1 1.6Germany 1.5 1.6 1.6 0.5 1.4 1.7

1 Real gross national product based on 2005 prices2 Consumer Price Index covering all products

Source: IMF, Focus Economics

GNP increased in the Euro area by 1.6% in the calendar year 2015. The forecast for 2016 is an increase of 1.5%. Germany is likely to continue to make an important contribution to European growth with an expected growth rate of 1.6%. Low interest rates and a stable situation in the employment market will further strengthen consumer spending. In addi tion to a slight increase in consumer spending, the coming year should also see a rise in investment activities.

74 – 75



Under these circumstances and with a view to achieving its price stability targets, the ECB is likely to continue its expansive monetary and low-interest-rate policies in 2016 in order to underpin economic recovery in the Euro area. In March 2016, the ECB reduced its main refinancing rate to 0.00%. It also decided, as part of its bond buying programme, to increase the volume of monthly purchases to EUR 80 billion as of April 2016. Furthermore, Euro-denominated investment gradebonds of companies (except banks) based in the Euro zone were included in the list of assets eligible for regular purchases. The Toyota Kreditbank Group does not expect any significant rise in short term interest rates in the near future; if there is any change in the situation, it is only expected to entail small rises in medium and long term interest rates. The ECB's low-inte-rest-rate policy will result in higher credit disbursement by the banks and hence to a more competitive market environ-ment for the Toyota Kreditbank Group.

According to a study undertaken by the Automobile Industry Association (VDA), the global growth rate of 3.2% forecast by the IMF for the calendar year 2016 should also be reflectedin increased global demand for passenger vehicles. The VDA forecasts an average growth rate of 2.0% for passenger vehicle sales. This growth is expected to be driven primarily by China and the USA, whereas momentum from Western Europe is likely to be more moderate. Automobile sales may well develop differently in the various countries covered by the Toyota Kreditbank Group's operating territory. On the assumption that business conditions no not deteriorate, the German passenger vehicle market is likely to grow slightly in 2016. The markets in Italy and France should continue to recover, with growth rates at a low level. The market in Spain seems set to move sideways. Russia should be able to maintain volumes at the low level recorded in 2015.

New registrations of Toyota vehicles are again expected to rise slightly year-on-year in the various markets in the coming financial year. Similarly, registration figures for the German market are also expected to be higher than one year earlier.

2. Review of operations of the Toyota Kreditbank GroupThe following outlook is based on forecasts drawn up at the end of 2015 for the individual markets included in the Toyota Kreditbank Group's operating territory. The forecast period covers the current financial year 2016/2017. The forward-looking assertions contained therein are based partly on general expectations of future macroeconomic develop-ments, with a primary focus on the automobile sector.

We expect to achieve slightly higher levels of lending by focusing on retail customers and offering a comprehensive range of services to dealers. As in the previous year, plans are in hand to expand the Toyota Kreditbank Group's leasing portfolio in Germany and abroad by the addition of new pro-ducts tailored to commercial customers' requirements, in the hope that the leasing business in Germany also settles down at the previous year's level.

These trends will also be reflected in the Toyota Kreditbank Group’s key performance indicators. Accordingly, we forecast a slight increase in Average Accounts Outstanding for the financial year 2016/2017. Based on the expected rise in new registrations in France and Spain, and despite a further drop in Russia, we expect the penetration rate in 2016/2017 to remain at a similar level to the previous financial year.

The net interest result is expected to be at a similar level to the financial year 2015/2016.

The Toyota Kreditbank Group will continue to apply a policy of rigorous cost management in order to ensure that cost levels remain commensurate with business volumes. Due to invest-ments in strategic business segments as well as the need to comply with regulatory requirements, the Toyota Kreditbank Group forecasts a further slight increase in administrative expenses for the financial year 2016/2017. The risk provisioning expense for the lending business is likely decrease slightly year-on-year in 2016/2017. Appropriate levels of risk provision have been recognised to take into account macro-economic developments in the territory in which the Toyota Kreditbank Group operates.

In view of the political and economic situation, we expect the market in Russia to remain volatile, with the Toyota brand achieving a stable market share. In the medium term, we expect vehicle sales to return to a positive trajectory, thus generating a rising volume of vehicle financing. We predict rising oil prices, as a result of the pressure on the EUR/RUB exchange rate easing. In the medium term, we continue to forecast substan-tial growth.

Despite intense pressure on margins within a low-interest- rate environment, profit from ordinary activities for the finan-cial year 2016/2017 is expected to be at a similar level to the 2015/2016 financial year and hence still at a satisfactory level. Based on its coherent business concept, a good liquidity and refinancing structure, strong partnership with the dealer network and its efficient organisation, management considers that the Toyota Kreditbank Group is well positioned to rise to future challenges. Comprehensive mobility concepts, financing packages combined with service and insurance products, as well as new digital sales and marketing instruments are set to play a key role in the future strategic direction of the business.

Cologne, 28 July 2016

Toyota Kreditbank Group

Executive Management (Geschäftsleitung)



Auditors’ ReportWe have audited the consolidated financial statements prepared by Toyota Kreditbank GmbH, Cologne, comprising the balance sheet, income statement, notes to the consolidated financial statements, cashflow statement, statement of changes in equity and segment reporting together with the group management report for the business year from 1 April 2015 to 31 March 2016. The preparation of the consolidated financial statements and the group management report in accordance with German com-mercial law are the responsibility of the parent company’s mana gement. Our responsibility is to express an opinion on the consolidated financial statements and on the group manage-ment report based on our audit.

We conducted our audit of the consolidated financial statements in accordance with Article 317 HGB ("Handelsgesetzbuch": "German Commercial Code") and generally accepted German standards for the audit of financial statements promulgated by the Institut der Wirtschaftsprüfer (Institute of Public Auditors in Germany, IDW). Those standards require that we plan and perform the audit such that misstatements materially affecting the presentation of the net assets, financial position and results of operations in the consolidated financial statements in accordance with German principles of proper accounting and in the group management report are detected with reasonable assur-ance. Knowledge of the business activities and the economic and legal environment of the Group and expectations as to possible misstatements are taken into account in the determina-tion of audit procedures. The effectiveness of the accounting- related internal control system and the evidence supporting the disclosures in the consolidated financial statements and the group management report are examined primarily on a test basis within the framework of the audit.

The audit includes assessing the annual financial statements of those entities included in consolidation, the determination of entities to be included in consolidation, the accounting and con-solidation principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements and group management report. We believe that our audit provides a reasonable basis for our opinion.

Our audit has not led to any reservations.

In our opinion, based on the findings of our audit, the consolida-ted financial statements comply with the legal requirements and give a true and fair view of the net assets, financial positionand results of operations of the Group in accordance with these requirements. The group management report is consistent with the consolidated financial statements and as a whole provides a suitable view of the Group’s position and suitably presents the opportunities and risks of future development.

Düsseldorf, 10 August 2016

KPMG AGWirtschaftsprüfungsgesellschaft(Original German version signed by:) Kügler, Wirtschaftsprüfer (German Public Auditor)Hunstock, Wirtschaftsprüfer (German Public Auditor)

In the event of the publication or transmission of a version of the consolidated financial statements and/or the consolidated management report which diverges from the version on which we delivered our opinion, including translations into other languages, in so far as our audit opinion is quoted or our audit referred to, a fresh opinion must be obtained from us. In this respect, the reader is referred to Section 328 of the German Commercial Code.

turnoverEUR

average number of employees

profit/loss before tax

EUR

income taxes on profit/loss

EUR

government aid received

EUR

Germany 55,097,910.50 248 24,564,287.15 16,099,407.49 0.00France 26,049,311.19 80 27,079,395.10 9,839,725.29 0.00Spain 17,797,056.02 47 8,457,477.91 6,794,046.91 0.00Norway 16,986,518.91 28 9,655,253.07 0.00 0.00Sweden 6,126,272.15 29 7,104,584.02 72,578.85 0.00Italy 5,122,021.24 11 511,428.19 415,545.82 0.00Poland 13,187,129.39 106 2,222,834.75 5,385,359.27 0.00Russia 47,706,627.42 161 23,164,092.86 5,148,281.08 0.00

type of activity place of business country

Toyota Kreditbank GmbH bank Cologne GermanyToyota Leasing GmbH financial services Cologne GermanyToyota France Financement bank Vaucresson FranceToyota Kreditbank GmbH, Sucursal en Espana bank Madrid SpainToyota Kreditbank GmbH, Norsk Filial bank Drammen NorwayToyota Kreditbank GmbH Tyskland, Sverige Filial bank Sundbyberg SwedenToyota Kreditbank Germany, Filiale Italiana bank Rome ItalyToyota Bank Polska S.A. bank Warsaw PolandToyota Leasing Polska Sp. z o.o. financial services Warsaw PolandAO Toyota Bank Russia bank Moscow Russia

Country by Country Reporting as of March 31, 2016

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Toyota Kreditbank GmbH50415 Köln Deutschland

Tel. +49 (0) 2234 102 10Fax +49 (0) 2234 102 70www.toyota-bank.de

toyota-bank.de

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