Aeon Financial Service Co., Ltd. · TSE:8570
Aeon Financial Service — Q1 FY2024 Earnings Presentation
41 slides from Aeon Financial Service's earnings presentation, Jul 11, 2024
Slide 1: FY2024 1Q IR Presentation Material
This is an abridged translation of the original Japanese document and is provided for informational purposes only. If there are any discrepancies between this and the original, the original Japanese document prevails. FY2024 1Q IR Presentation Material July 1１, 2024 Stock Listing: Tokyo Stock Exchan
Slide 2: Financial summary
Financial summary Results are improving as the effects of "selection and concentration“ to enhance corporate value are being realized Improved profitability and productivity of assets ⚫ Asset Profitability ※ ➢High-yield trade receivables steadily expanded and contributed to earnings Domestic: ¥811.7
Slide 3: The Highlights of the Consolidated Results
The Highlights of the Consolidated Results FY202４ Rate of Consolidated YoY Forecast progress Domestic※ YoY Global YoY Operating Revenue ¥127.９ bn １10 ％ ¥７５.３ bn １０５ ％ ¥５３.１ bn １１７ ％ ¥520.0 bn ２５ ％ Operating Profit ¥１５.２ bn １６６ ％ ¥６.３ bn ７５３％ ¥８.７ bn 10７ ％ ¥55.0 bn ２８ ％ Ordinary profit ¥１５.９ bn １６７ ％
Slide 4: Main factors: Domestic Breakdown of Operating Profit
[Domestic] Breakdown of Operating Profit • Increased due to continued growth in card revenues and financial income, despite the negative impact of the sale of a subsidiary • Continued to control sales promotion expenses with emphasis on cost-effectiveness despite an increase in bad debt-related expe
Slide 5: [Domestic] Credit card, e-money
Productivity [Domestic] Credit card, e-money (Revenue growth) • Credit card shopping transaction volume increased 105% YoY due to the launch of Gold Card exclusive benefits and promotion of AEON Pay usage • Cash advance transaction volume increased by 102% YoY due to improved convenience of the appl
Slide 6: [Domestic] Expansion of Group synergies
Productivity [Domestic] Expansion of Group synergies (Revenue growth) • Launched Gold Member benefits at AEON MALL Increased incentives to visit AEON MALL, leading to an increase in both the number of customers and the amount of payment • Continue to enhance group benefits to maximize group synergy
Slide 7: [Domestic] AEON Pay
Productivity ［Domestic］ AEON Pay (Revenue growth) • AEON Pay has more than 10 million members, and the number of locations where AEON Pay can be used is steadily increasing. • Advanced use of AEON Pay in everyday situations, and the inclusion of small-value payments has contributed to an increase in
Slide 8: [Domestic] Operating receivables
Asset Profitability ［Domestic］ Operating receivables Improvement • 110% YoY growth is expected to continue and recover to pre-Pandemic levels in 2H Operating receivables Breakdown （Unit ： Bn JPY） Revolving 1,000 credit・ Cash advances・ Difference リボ・分割残高 キャッシング･無担保ローン残高 Ｉｎｓｔａｌｌｍｅｎｔ Unsecured loans Yo
Slide 9: [Domestic] Improved UX through app improvements
Asset Profitability [Domestic] Improved UX through app improvements Improvement • Improved functionality and visibility of the "AEON Wallet" contributed to an increase in the number of revolving transactions and an increase in revolving balances Operating Receivables Growth Rate Change of applicatio
Slide 10: [Domestic] Control of bad debt-related expenses
Productivity ［Domestic］ Control of bad debt-related expenses (Cost control) • Ratio of bad debt-related expenses to operating receivables remains low Quarterly Bad Debt Expense Ratio Improved productivity in debt collection *Ratio of bad debt-related expenses to the total balance of revolving, insta
Slide 11: [Domestic/Increased productivity] Improved acquisition efficiency
[Domestic/Increased productivity] Productivity (Cost control) Improved acquisition efficiency • Improved acquisition efficiency by reviewing in-store-branch and online operations Acquisition cost per member Increased productivity Reduction Review of utilization channels In addition to acquisition ef
Slide 12: [Domestic] Bank deposits
[Domestic] Bank deposits • Deposits up 103% YoY (+¥24.6bn from the beginning of the FY) due to time deposit campaigns, etc. • Expansion of My Stage, a preferential system based on transaction status lead to further acquisition of deposits AEON Bank Deposit Balance Revised interest rates for Yen Savi
Slide 13: [Domestic] Housing Loan
Productivity [Domestic] Housing Loan (Revenue growth) • Mortgage loan transaction volume increased 126% YoY due to the continued strengthening of the "AEON SELECT CLUB" advertising campaign • The over-the-counter interest rate for existing variable-rate mortgages was raised by 0.10% from May 1, ２０２４
Slide 14: [Global] Performance Highlights by Segment
[Global] Performance Highlights by Segment • Revenue and profit increased in Global business, driven by the Malay Area, despite an increase in bad debt-related expenses Global business China Area Mekong Area Malay Area YoY YoY YoY YoY Operating revenue ５３.１ bn １１７ ％ 8.６ bn １２８ ％ 2３.１ bn １０７ ％ ２１.４ b
Slide 15: [Global] China Area Performance Highlights
[Global] China Area Performance Highlights • Revenues reached a record high due to an increase in the balance of receivables due to an increase in the use of cash advances and personal loan applications • Continued increase in bad debts due to increase in the number of personal bankruptcies Strength
Slide 16: [Global] Mekong Area Performance Highlights
[Global] Mekong Area Performance Highlights • Increased transaction volume for both cash advances and personal loans due to promotions targeting dormant members • Bad debt related expenses remained high due to prolonged economic slowdown Breakdown of operating profit Operating revenue difference fro
Slide 17: [Global] Malay Area Performance Highlights
[Global] Malay Area Performance Highlights • In addition to installment finance of individual products, the balance of personal loans increased due to improved convenience such as digital completion and shortened screening time • Stable bad debt related expenses due to more precise credit screening
Slide 18: [Global] Balance of Receivables and NPL of Listed Subsidiaries
[Global] Balance of Receivables and NPL of Listed Subsidiaries • Malaysia: NPL ratio stable despite acceleration of credit balance accumulation • Hong Kong and Thailand to optimize bottom line by finding balance between strengthening top line and credit management ■ ACSA（Hong Kong） ■ AEONTS（Thailand
Slide 19: [Global] Upgrading credit and collection systems
Productivity [Global] Upgrading credit and collection systems • Improve credit and collection accuracy by utilizing AI technology and introducing new scoring models • Strengthen the AFS Group as a whole by sharing and horizontally deploying technology and know-how in each country Malaysia Sales Appl
Slide 20: [Global] Opening of Digital Bank (Malaysia)
[Global] Opening of Digital Bank (Malaysia) • Opening Malaysia's First Digital Bank Using Islamic Financial Method on May 26 • Expanding as a center of digital services in the AEON Living Area AEON Group companies Supplier AEON Living Business Area partner expansion Member store Bank deposit Debit c
Slide 21: [Global] Expanding digital touchpoints
Productivity [Global] Expanding digital touchpoints. (Revenue growth) • Expansion of digital financial services centred on smartphones in various countries to improve convenience and expand new customer segments. ■ China area (ACSA) ■ Mekong area (AEONTS) ■ Malay area (Indonesia) Expansion of paymen
Slide 22: Priority Measures
Priority Measures AEON Financial Service Co., Ltd. 22
Slide 23: [Global/Malaysia] Raising awareness of AEON BANK(M)
［Global/Malaysia] Raising awareness of AEON BANK(M) • Strengthen awareness throughout Malaysia by utilising AEON Group companies and external media (real and digital). • Customer organisation to build an ionic living area starting from the digital bank. Strengthening awareness using real and digital
Slide 24: Touch Point Conversion
Touch Point Conversion Repost: Announcement of FY2023 financial results • Shift to a touchpoint starting from a digital wallet (smartphone app), which is a familiar point of contact, and build an environment where each financial service can be used seamlessly from the app Up to now : Individual touc
Slide 25: [Domestic] Transformation of touchpoints
［Domestic］ Transformation of touchpoints <Seamless customer experience> • Reorganize into a one-stop financial services environment by eliminating the fragmentation of services Card Bank Insurance FY23～ AEON Wallet renewed Apps as a comprehensive financial application FY２４～ Credit card Bank Insuranc
Slide 26: [Domestic] Conversion of touchpoints: AEON Wallet
［Domestic］ Conversion of touchpoints ＜Total financial application AEON Wallet> • Awarded international design awards for advanced design, including screen selection according to use • Improved UI and UX have improved cross-selling results for loans, etc. Awarded international design awards No. of ap
Slide 27: [Domestic] Strengthening regional collaboration
［Domestic］ Strengthening regional collaboration • FeliCa Pocket Marketing, which has extensive experience working with local governments, strengthens ties with local communities • Participation in "TSUNAGU CORPORATION," a regional trading company in Saitama City, aiming to revitalize the local econo
Slide 28: [Domestic] Reinforcement of System Infrastructure
［Domestic］ Reinforcement of System Infrastructure • Cloud computing is being implemented to build a solid and highly agile (shorter development time, lower cost) system infrastructure to support scale expansion. • The next credit card system will also be cloud computing. Reduce total cost by impleme
Slide 29: Earnings and Dividend Forecasts
Earnings and Dividend Forecasts AEON Financial Service Co., Ltd. 29
Slide 30: FY2024 earnings forecast, dividend forecast
FY2024 earnings forecast, dividend forecast （Unit ： JPY） Consolidated YoY Domestic YoY Global YoY Operating ５20.0 bn １０7 ％ 3１0.0 bn １０５ ％ 2１0.0 bn １０８ ％ Revenue Operating 55.0 bn 110 ％ 1５.0 bn １２９ ％ ４1.０ bn １０7 ％ Profit Ordinary Payout 55.0 bn 107 ％ Dividend per － ー share － ー Profit ratio Interim： ２
Slide 31: [Our Purpose]
［Our Purpose］ AEON Financial Service Co., Ltd. 31
Slide 32: Appendix
Appendix AEON Financial Service Co., Ltd. 32
Slide 33: Approach to ROE Improvement
Approach to ROE Improvement Repost: Announcement of FY2023 financial results ROE Return on Operating Existing Improve Assets Number of (%) Receivables high-yield bond ment valid IDs + × Operating Revenue / Outstanding Receivables New Products Utilization × +α rate × Fee Amount Productivity used for
Slide 34: Consolidated Balance Sheet
Consolidated Balance Sheet （Unit ： Bn JPY） FY 202４ FY 202４ 1Q Results YTD 1Q Results YTD Cash and deposits 420.2 ▲ 245.3 Deposits 4,5６８.０ +２９.７ Accounts Operating Loans 9６４.５ +４５.７ payable-trade 306.8 +３８.３ Loans and bills Interest-bearing discounted for 2,639.4 +300.2 debt 1,3０８.７ ▲４.３ banking busi
Slide 35: Results by Segment
Results by Segment （Unit ： Bn JPY） Domestic Global Consol. China Mekong Malay Retail Solutions Total ※1 Total ※1 Area Area Area Total ※１ Operating ７５.３ ４８.５ ４６.３ 53.1 8.6 23.1 21.4 127.9 Revenue YoY ※２ 10６％ 1１３％ 10３％ 117％ 128％ 107％ 127％ 110％ Operating ６.３ ５.３ ２.２ 8.7 1.9 2.5 4.2 15.2 Profit YoY ※２ ４
Slide 36: Results by Area
Results by Area Transaction Operating (Unit ： Bn JPY） YoY receivables YTD volume (Before securitization) Credit card 1,952.6 10５% １,８11.2 +９４.８ credit card shopping 1,849.8 10５% 1,384.1 +８０.０ Domestic (of which, revolving and installment) - - 330.3 ＋１９.６ cash advance 102.7 1０２% 4２７.１ +１４.８ Housing l
Slide 37: Cumulative Results of Overseas Listed Companies (Local Currency)
Cumulative Results of Overseas Listed Companies (Local Currency) FY 2023 FY 2024 1Q Results 1Q Results YoY AEON Revenue 379,953 426,547 １１２% CREDIT SERVICE Profit before tax 117,458 99,351 ８５% (ASIA) HK$’000 Profit for the period 96,967 83,255 ８６% AEON Revenue 5,459,191 5,507,210 １０１% THANA SINSAP P
Slide 38: Cumulative Results of Overseas Listed Companies (Yen conversion)
Cumulative Results of Overseas Listed Companies （Yen conversion） FY 202３ FY 202４ (Unit ： Bn JPY） Exchange rates 1Q Results １Q Results YoY Revenue 6.5 ８.３ 127% AEON （JPY / HKD） CREDIT Profit before tax 2.0 １.９ 96% ・ FY2023Q1 ： ¥1７.33 SERVICE ・ FY2024Q1 ： ¥19.67 (ASIA) Profit for the period 1.6 １.６ ９７
Slide 39: Transaction Volumes and Operating Receivables of Global Business
Transaction Volumes and Operating Receivables of Global Business China Area Mekong Area Malay Area Global Business (Hong Kong) (Thailand) (Unit ： Bn JPY） YoY YoY YoY YoY (Change) (Change) (Change) (Change) Transaction volume 64.4 129% 90.6 129% 17.3 121% 172.4 1２８% Credit card Operating Receivables
Slide 40: Allowance for Doubtful Accounts and Provision for Loss on Interest Repayment
Allowance for Doubtful Accounts and Provision for Loss on Interest Repayment by Segments [Allowance for Doubtful Accounts ] （Unit ： Bn JPY） Domestic Global Consol. China Mekong Malay Total Retail Solutions Total Area Area Area Total Opening balance of allowance for doubtful ５５.６ 3.０ 53.０ ６４.３ ４.７ ３５
Slide 41: Statements contained in this report with respect to the Company's management strategies
Statements contained in this report with respect to the Company’s management strategies, business policies and results forecasts are forward- looking statements about the future performance of the Company, which are based on the assumptions and beliefs in light of the information currently available
AEON Financial Service — Q1 FY2024 Earnings Presentation on 6ix