Resona Holdings, Inc. · TSE:8308
Resona — 1H FY2018 Earnings Presentation
64 slides from Resona's earnings presentation, Nov 20, 2018
Slide 1: Business Results for 1H of FY2018 and Future Management Direction
Business Results for 1H of FY2018 and Future Management Direction November 20, 2018
Slide 2: Abbreviations and definitions of the figures presented
Abbreviations and definitions of the figures presented in this material are as follows: In order to facilitate understandings of how management integration of KMFG impacted the periodic profitability of Resona Holdings, “YoY” and “Adjusted YoY” comparisons are presented in this material. Definitio
Slide 3: Opening Remarks
Opening Remarks 1. The income and cost structure reforms have progressed Net income attributable to owners of the parent was in line with the target Gross operating profit turned to increase since the increase in fee income exceeded the decline in income from domestic loans and deposits Averag
Slide 4: Table of Contents
Table of Contents Outline of Business Results for 1H of FY2018 Progress of HD’s MMP and Efforts to Business and Updates on Major Businesses Challenges for Sustainable Growth P5 Outline of Financial Results for the 1H of FY2018 P21 Final Year’s KPIs of MMP Based on the 5 Banks Group Structure P6 Brea
Slide 5: Outline of Business Results for 1H of FY2018 and Updates on Major Businesses
Outline of Business Results for 1H of FY2018 and Updates on Major Businesses Progress of HD’s MMP and Efforts to Business Challenges for Sustainable Growth Direction of Capital Management Reference Material 4
Slide 6: Outline of Financial Results for the 1H of FY2018
Outline of Financial Results for the 1H of FY2018 [ Reference ] Posted JPY122.1 bn of net income attributable to Resona HD consolodated 1H of YoY change Adjusted YoY change (JPY bn) FY2018 owners of the parent % % KMFG contributed JPY4.6 bn (excluding one-off gain related to Net income attributabl
Slide 7: Breakdown of Financial Results
Breakdown of Financial Results Resona Holdings 5 banks total Total of Difference (Consolidated) (Non-consolidated) Saitama (JPY bn) Resona 3 group Resona [reference] [reference] Bank banks under YoY Bank (A) Adjusted YoY (B) Adjusted YoY KMFG (A)-(B) Gross operating profit (1) 336.8 +58.0 +3.8 309.8
Slide 8: Factors for the Changes in Periodic Profits (Adjusted YoY Comparison)
HD Factors for the Changes in Periodic Profits (Adjusted YoY Comparison) Consolidated (JPY bn) Actual net operating profit +4.6 Other YoY Gross operating profit +3.8 Net gains One-off +24.0 items on stocks gain (including regarding (15.7) （+24.4%） Equity in Operating income equity Credit- KMFG deriv
Slide 9: Trend of Loans and Deposits (Domestic Account)
Total of Trend of Loans and Deposits (Domestic Account) Group Banks Average loan / deposit balance, rates and spread Trend of average loan balance, loan rate change 5 banks [ Average loan balance (JPY tn)] % represents YoY change Avg. bal : Trillion Yen 1H FY2018 Corporate Income/Cost : Billion Ye
Slide 10: Term-end Balance of Loans and Deposits
Total of Term-end Balance of Loans and Deposits Group Banks Term-end loan balance Term-end deposit balance JPY tn, % represents YoY change Other Corporate 50.39 Corporate (Large companies and other) +3.6% Corporate (SMEs) Personal 48.64 3.11 Corporate (Apartment loans) +15.0% 35.92 2.70 Personal（C
Slide 11: Housing Loan Business
Total of Housing Loan Business Group Banks Composition of newly originated residential New loan origination housing loans by interest rate type (JPY tn) Share of fixed rate residential housing loans Share of variable rate residential housing loans Apartment loan Flat 35 3% 1% 2% 4% 7% 8% 11% 5% 17%
Slide 12: Fee Income
HD Fee Income Consolidated Consolidated fee income ratio*1 at 29.6% for the 1H of FY2018 (of which, RB+SR 32.6%*2) Insurance (+32%, adjusted YoY basis) and fund wrap (x 1.6 times, adjusted YoY basis) steadily increased (JPY bn) [ FY results and revised plans] 120.0 120.0 30.3% 30% Fee income rat
Slide 13: Major Fee Businesses(1) (Asset Formation Support Business)
HD Major Fee Businesses(1) (Asset Formation Support Business) Consolidated Balance of asset formation support products sold to individuals (JPY tn) 14.3% 14.6% Asset formation Balance of fund wrap*2: 13.7% 14.0% 1 % 5 1 % 5 support product ’18/9 JPY296.5 bn ratio*1 (JPY331.2 bn including corporati
Slide 14: Major Fee Businesses(2) (Trust, Corporate Solution, Real Estate Business)
Total of Major Fee Businesses(2) (Trust, Corporate Solution, Real Estate Business) Group Banks Trust-related business (JPY bn) Income from trust solution offered for asset and business succession Income from Pension/Securities trust Asset and business succession 11.1 11.7 11.5 Number of new asset
Slide 15: Credit Costs and NPL
HD Consolidated Credit Costs and NPL Total of Group Banks NPL balance and ratio Credit costs (Total of Group Banks) 3 banks 5 banks (Financial Reconstruction Act criteria)) FY 2017 FY 2017 FY 2018 (JPY bn) (reference) 2%2% 1H 1H Revised Unrecoverable or valueless claims Act. Act. Act. plan 1,000 Ris
Slide 16: Securities Portfolio
Total of Securities Portfolio Group Banks Securities portfolio*1 Status of policy-oriented stocks held 3 banks 5 banks Breakeven Nikkei average: Approx. 6,500 yen 2018/3 2018/3 2018/9 Balance of listed stocks disposed in 1H of FY2018 (JPY bn) (reference) Unrealized (acquisition cost basis): JPY3
Slide 17: Capital Adequacy Ratio
RHD Capital Adequacy Ratio Consolidated CAR (Domestic std.) and CET1 ratio* (International std.) as of September 30, 2018 were 10.17% and 8.97%, respectively, maintaining sound capital adequacy level * Excluding unrealized gain on available for sale securities Domestic standard (Reference) Interna
Slide 18: Earnings Targets for FY2018 (Released in November 2018)
HD Consolidated Earnings Targets for FY2018 (Released in November 2018) Total of Group Banks HD consolidated Common DPS Change 1H Full-year YoY （JPY bn） Act. target from change original Change from DPS Net income attributable to previous year owners of the parent (1) 122.1 200.0 - (36.2) Common stoc
Slide 19: (Reference) Outline of Financial Results of Each Segment
HD (Reference) Outline of Financial Results of Each Segment Consolidated Actual net operating profit increased by JPY3.2 bn, adjusted YoY Adjusted FY2018 (JPY bn) (JPY bn) YoY Markets 1H Corporate Change and Banking Other Gross operating profit (1) 237.6 +11.9 Personal Customer +5.4 (4.9) KMFG Ope
Slide 20: (Reference) Outline of Financial Results of Customer Divisions
HD Consolidated (Reference) Outline of Financial Results of Customer Divisions (exclude KMFG) Personal banking segment Corporate banking segment Actual net operating profit : Up JPY4.3 bn, YoY Actual net operating profit : Up JPY5.4 bn, YoY Other (JPY bn) (JPY bn) Pension items, Operating and ne
Slide 21: Progress of HD's MMP and Efforts to Business Challenges for Sustainable Growth
Outline of Business Results for 1H of FY2018 and Updates on Major Businesses Progress of HD’s MMP and Efforts to Business Challenges for Sustainable Growth Direction of Capital Management Reference Material 20
Slide 22: Final Year's KPIs of MMP Based on the 5 Banks Group Structure
Final Year’s KPIs of MMP Based on the 5 Banks Group Structure Before KMFG Integration reflected KPIs KMFG Integration FY2017 HD’s MMP reflected*1 (First Year Act.) (FY2019) (FY2019) Net income attributable to JPY236.2 bn JPY170.0 bn Excluding one time JPY165.0 bn owners of the parent gains JPY 150.5
Slide 23: Envisage Stable Net Income
Envisage Stable Net Income Achieve steady income growth through implementation of the income-cost structure reforms and enlargement of KMFG’s income contribution 3 banks 5 banks Further (JPY bn) growth 236.2 One-off gain 200.0 85.6 One-off gain 122.1 170.0 Exclude One-off gain 160.0 temporary RB+SR：
Slide 24: Omni-Channel Strategy (1) ~Digital~
Omni-Channel Strategy (1) ~Digital~ Daily, diverse transactions with wide-ranging customers over their lifetimes ⇒ develop a recurring fee business Resona Group App (Feb. 2018~) “Bank in Your Pocket” Outstanding design Marketing engine 2018 Prize Winning and user-friendliness Personalized prop
Slide 25: Omni-Channel Strategy (2) ~Face-to-face~
Omni-Channel Strategy (2) ~Face-to-face~ Seamless linkage between different channels / branch operation with fewer staffs ⇒ Enhance customer convenience and low-cost operations External environment Medium-term direction Working-age population declining Digitalization for branch operational with
Slide 26: Omni-Regional Strategy
Omni-Regional Strategy Broader alliances with regional financial institutions with or without capital ties ⇒ Provide new value to wider range of customers Benefits for Expanded Strengthened Resona Group customer base functions Mutually “Win-Win” relationships Benefits for customers Benefits for part
Slide 27: Good Start for Kansai Mirai Financial Group
Good Start for Kansai Mirai Financial Group PMI*1 for earlier realization of integration synergies progressing according to plan Strengths of 3 Banks Under KMFG Strengths of Resona Group Presence in Osaka, Hyogo, Shiga Nationwide network and customer base High Consulting ability that contribut
Slide 28: Omni-Advisors Strategy
Omni-Advisors Strategy Raise consultants who can think and act in the best interests of their customers ⇒ Attain “Customers’ happiness” Expand sales Improve ability Think in the best interests of their customers contacts and time to offer solution Work-style reforms Digitalization Rule requiri
Slide 29: Progress of Key Business and FY2019 Target under the 5 Banks Group Structure
Progress of Key Business and FY2019 Target under the 5 Banks Group Structure Asset formation support business Settlement business Succession business Balance of asset formation Income from asset Settlement-Related Income Succession-related income support products sold to individuals formation suppor
Slide 30: Asset Formation Support Business
Asset Formation Support Business External environment, customer needs Initiatives for shift from savings to asset formation Increasing asset management, private pension needs Expand customers having investment products Era of 100-year-olds Provide investment products matched to medium/long-term
Slide 31: Settlement Business(1) ~Initiatives to Cashless Payments~
Settlement Business(1) ~Initiatives to Cashless Payments~ Expanding cashless market*1 Expanding debit card business 【Japan’s cashless market 】 2025 For individual customers: Gov’t target Integrate debit card with cash card Standard with new accounts (for free, instantly issued) 2016 JPY120 tn*2 •
Slide 32: Settlement Business(2) ~Outline of Resona Cashless Platform~
Settlement Business(2) ~Outline of Resona Cashless Platform~ Resona will contribute to reduction in social costs and help corporate customers enhance productivity by promoting “cashless payments” Provide services from Nov. 2018 (2) Providing incentives outweighing others Increase in sales Reduce
Slide 33: Succession Business
Succession Business External environment, customer needs Provide succession solutions with firm grasp of customer needs Smooth asset/business succession becoming social issue Increasing asset/business succession needs Household financial assets: 70’s～ Number of business succession consultations:
Slide 34: SME Business
SME Business External environment, customer needs Initiatives based on firm grasp of customer needs SME management issues and expectations Support for sales increase, business scale expansion for financial institutions Top management issues for companies*1 Capex-related loans*3 1st Increase sale
Slide 35: International Business
International Business Change of shareholders in Bank Resona Perdania Covering the Asia and US via overseas bases and business cooperation with and partner banks the Bank of Yokohama and Daido Life Insurance Full banking services from Bank Resona Perdania Shareholder change (FY2018 *1, plan) (In
Slide 36: Individual Loan Business
Individual Loan Business Residential housing loan Loans to “Premium” customers (incl. apartment loans) Resona’s franchise: accumulation of households To further raise portfolio soundness Rate of Household Increase*1 (2015-2020) 4% Focus on loan screening Saitama Kanagawa Tokyo Qualification as
Slide 37: Improve Customers' Convenience and Resona's Productivity Through Digitalization
Improve Customers’ Convenience and Resona’s Productivity Through Digitalization Business Clerical style in which all work employees engage volume*1 FY2004 Halve FY2015 Halve FY2021 with customers Operational reform Digitalization Halve clerical work Halve clerical work again to deliver “Paperless”,
Slide 38: Cost Structure Reforms
Cost Structure Reforms Reduce overall costs while absorbing IT investment and one-off integration costs Established a low cost management through Enhance productivity in anticipation of operational reforms reduced population in labor force (JPY bn) [Staff(Round number)] 34,600 5 banks 32,800 Ren
Slide 39: Resona Sustainability Challenge 2030
For Becoming the “Retail No.1” Financial Services Group ~Resona Sustainability Challenge 2030~ Striving to solve social issues through financial services, our main business Social Strengths of Resona Group Create changes Omni Omni Customers’ Retail No.1 and Regional Omni Advisors Value issues Channe
Slide 40: Direction of Capital Management
Outline of Business Results for 1H of FY2018 and Updates on Major Businesses Progress of HD’s MMP and Efforts to Business Challenges for Sustainable Growth Direction of Capital Management Reference Material 39
Slide 41: Direction of Capital Management
Direction of Capital Management Continue allocation policy of equal weight to 1) investment for future growth, 2) higher capital adequacy, and 3) enlargement of shareholder return Class 5 PS repurchased and cancelled in FY2017, realizing shareholders’ equity comprised solely of common shares CAR T
Slide 42: Reference Material
Outline of Business Results for 1H of FY2018 and Updates on Major Businesses Progress of HD’s MMP and Efforts to Business Challenges for Sustainable Growth Direction of Capital Management Reference Material 41
Slide 43: Resona Group's Brand Identity
Resona Group’s Brand Identity The Resona Group's corporate name is derived from the Latin word (resonus) meaning "resonate" or "resound" in English We attach great importance to customers' voice. By adopting the corporate name Resona, we want to express our desire to build stronger ties with communi
Slide 44: Corporate Governance System
Corporate Governance System The first Japanese banking group which adopted a committee-based corporate governance structure in 2003 for management transparency and objectivity Outside directors Tadamitsu Matsui Mitsudo Urano Yoko Sanuki Chairperson, Nominating Committee Chairperson, Compensation Cha
Slide 45: Initiatives for Corporate Governance Evolution
Initiatives for Corporate Governance Evolution Self-evaluation of the board Performance share unit plan (PSU) Improve effectiveness of Board of Directors meetings by Introduced in July 2017 revising operations, etc. through annual board evaluations HD stock will be granted based on consolidate
Slide 46: Overview of the KMFG's Mid-term Management Plan
Overview of the KMFG’s Mid-term Management Plan New retail financial services model advancing together with the future of Kansai region Goal Banking group considered “absolutely essential” by customers Position of the first Build strong corporation among 3 banks through the management integration
Slide 47: Resona's Challenges Attracting Attentions from Outside
Resona’s Challenges Attracting Attentions from Outside Resona’s challenges towards “Retail No.1” are highly evaluated by various institutions Won both R&I Fund Award 2018 Resona Group App and 16th MERCER MPA Award 2017 30th Nikkei Good Design Award 2018 (Japan) 2018 New Office Awards ( two consecuti
Slide 48: Initiatives for a Better Society
Initiatives for a Better Society Community “Re: Heart Club” (Employee volunteer group) joined various community activities [“Re: Heart Club” members ] Supported regional revitalization through the Resona Group Regional Revitalization Council 7,329 7,094 6,198 Privately-placed bonds with donati
Slide 49: Sound Balance Sheet
RHD Sound Balance Sheet Consolidated As of March 31, 2018 As of September 30, 2018 Fixed-rate Deposits Loans loans*1 and JPY JPY7.6 tn Fixed-rate NCDs Loans Deposits 35.7 tn JPY loans*1 JPY and Ordinary JPY6.6 tn 51.6 tn 28.7 tn NCDs Short-term deposits*1 JPY prime rate-base Short-term JPY30.5 tn Or
Slide 50: Measures to Build Multifaceted Business Relationships with Customers
Measures to Build Multifaceted Business Relationships Total of Two Banks with Customers (RB, SR) Visible progress has been made through the increase in the number of “Resona Loyal Customers” Number of Customers Top-line Avg. # of Customer segments based on (thousands) Income Products Increase life-t
Slide 51: Business Results by Major Group Business Segments
Business Results by Major Group Business Segments Management accounting by major group business lines (1H of FY2018) (JPY bn, %) Profitability Soundness Net operating profit after a deduction of credit cost Net profit after a Risk-adjusted Cost to Resona Group deduction return income Actual net oper
Slide 52: Consolidated Subsidiaries and Affiliated Companies
Consolidated Subsidiaries and Affiliated Companies Major consolidated domestic subsidiaries (excluding group banks) (JPY bn） Net YoY Name Line of business Capital contribution ratio Fiscal year income change Credit guarantee Japan's highest class of residential housing 1H FY'18 Resona Guarantee Co.,
Slide 53: Stocks Held by Industry (September 30, 2018)
10% 15% 20% 0% 5% Fishery, agriculture and forestry Mining Construction (Balance sheet amount) Food product Textile product Pulp and paper Chemical product Pharmaceutical product Oil and petrochemical product Rubber products Glass and pottery Iron and steel Non-metal products Metal products Machiner
Slide 54: Swap Positions by Remaining Periods
RHD Swap Positions by Remaining Periods Consolidated Notional amounts of interest rate swaps (deferred hedge accounting applicable) by remaining period (JPY bn) Sep. 30, 2018 Mar. 31, 2018 Within 1 to 5 Over Within 1 to 5 Over Total Total 1 year years 5 years 1 year years 5 years Receive fixed rat
Slide 55: Composition of Loan Portfolio and Deposits (September 30, 2018)
Composition of Loan Portfolio and Deposits Total of (September 30, 2018) Five Banks Loans*1 Deposits*3 Fixed Rate Liquid Fixed Rate 4% deposits 18% 24% Personal Banking Corporate Corporation Bussiness Banking Liquid (JPY15.1 tn) Prime Unit Bussiness deposits Rate (JPY13.1 tn) Unit*1 32% 45% Time dep
Slide 56: Maturity Ladder of Loan and Deposit (Domestic Operation)
Total of Two Banks Maturity Ladder of Loan and Deposit (Domestic Operation) (RB, SR) Loans and bills discounted Deposits [End of March 2018] [End of March 2018] Within 6M 6 to 12M 1 to 3Y Over 3Y Total Within 6M 6 to 12M 1 to 3Y Over 3Y Total Fixed rate (1) 1.1% 1.0% 6.2% 15.5% 23.9% Liquid deposits
Slide 57: Migrations of Borrowers (1H of FY2018)
RB Migrations of Borrowers (1H of FY2018) Exposure amount basis (Migrations of borrowers for 1H of FY2018 *1 ) End of September 2018 Upward Downward Other Special Effectively Migration Migration Normal Doubtful Bankrupt Other Collection, Assignments, Watch Attention Bankrupt Repayments Sale Normal
Slide 58: List of Subordinated Bonds (September 30, 2018)
RB List of Subordinated Bonds (September 30, 2018) RB Amount Issue date Maturity Dividend rate outstanding JPY50.0 bn July 17, 2009 June 20, 2019 2.766% JPY50.0 bn March 4, 2010 March 4, 2020 2.084% JPY40.0 bn September 28, 2010 September 28, 2020 1.606% JPY25.0 bn June 1, 2011 June 1, 2021 1.878% J
Slide 59: Responses to the Ongoing International Discussion over Further Tightening of Financial Regulation
Responses to the Ongoing International Discussion over Further Tightening of Financial Regulation (No serious impact on Resona) Major items of financial regulation being discussed internationally For many items, international rules will be finalized hereafter and local authorities will start worki
Slide 60: Outline of Eligible Capital under the Japanese Domestic Std.
Outline of Eligible Capital under the Japanese Domestic Std. Subordinated debts, preferred securities and non-convertible preferred shares Subordinated debts and preferred securities issued under the Basel 2 can be fully included in Core Capital as of the end of March 2014. These grandfathering
Slide 61: Long Term Business Results
Long Term Business Results 3 banks 5 banks (JPY bn) FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 1H FY2018 Gross operating profit 739.5 678.3 667.0 655.2 637.1 608.5 632.4 619.5 563.1 552.5 336.8 Net interest income 547.0 499.4 484.0 463.9 443.0 430.0 425.9 401.3 377.9 368.3
Slide 62: Credit Rating Information (Long Term)
Credit Rating Information (Long Term) Moody’s S&P R&I JCR Resona Holdings - - A - AA- Resona Bank A2 A A+ (Upgrade from A+ in ’18/9) AA- Saitama Resona Bank A2 - A+ (Upgrade from A+ in ’18/9) A+ Kansai Urban Banking - - - (Upgrade from A Corporation in ’18/9) Kinki Osaka Bank A2 - - - A+ Minato Bank
Slide 63: Composition of Resona HD's Common Shareholders
Composition of Resona HD’s Common Shareholders 2.26% 5.03% 3.96% 3.93% 4.89% 8.96% 6.45% Other 6.08% 6.09% 5.80% 5.88% 20.01% 20.01% 20.01% 5.76% Corporations 6.35% 13.51% 13.44% 15.68% 15.48% 12.46% Individuals, etc. 41.95% DIC 5.83% 4.34% 4.58% 16.51% 50.11% 6.84% 6.50% 7.39% 34.17% 34.00% 22.23%
Slide 64: Proactively Communicating with Our Shareholders and Investors
Proactively Communicating with Our Shareholders and Investors Resona Group HP Integrated Report of Resona Group https://www.resona-gr.co.jp/holdings/english/index.html Integrated Report explains in a simple manner to all View IR presentation material from here stakeholders the Resona Group’s streng