77 Bank, Ltd. · TSE:8341
77 Bank — The 77 Bank — FY2023 Earnings Presentation
62 slides from 77 Bank's earnings presentation, Jun 4, 2024
Slide 1: Results for the Fiscal Year Ended March 31, 2024 IR Presentation
Note: This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail. Results for the Fiscal Year Ended March 31, 2024 IR Presentation Materials were prep
Slide 2: Table of Contents
Table of Contents 1. Financial Summary ・・・ 2 2. Projected Performance ・・・ 12 3. The 77 Bank Group’s Value Enhancement ・・・ 17 4. Business Strategy ・・・ 27 The 77 Bank, Ltd. | Fiscal Year Ended March 31, 2024 1
Slide 3: Financial Summary
01 Financial Summary The 77 Bank, Ltd. | Fiscal Year Ended March 31, 2024 2
Slide 4: Summary of Profits and Losses
Summary of Profits and Losses Non-consolidated Consolidated The 77 Bank, Ltd. | Fiscal Year Ended March 31, 2024 3
Slide 5: Net Interest Income
Net Interest Income Interest on loans and bills discounted increased due to improvement in yields in addition to a growth in loans and bills discounted outstanding Interest and dividends on securities also increased, mainly interest on foreign currency-denominated bonds Average balances and yields o
Slide 6: Deposits
Deposits Retail deposits and corporate deposits increased in Miyagi Prefecture Deposits (average balances) Deposits by region (average balances) (including (including certificates of deposits) (Unit: JPY bn) certificates of deposits) (Unit: JPY bn) 8,908.5 8,624.8 8,842.8 8,908.5 8,842.8 8,216.1 8,6
Slide 7: Loans and bills discounted
Loans and bills discounted Capture steadily needs for loans and bills discounted in Miyagi Prefecture and Tohoku region, etc. Yields of loans and bills discounted improved due to higher interest rates in the market Loans and bills discounted Corporate loans (average balances) (average balances) (Uni
Slide 8: Securities (1)
Securities (1) Implemented switching of yen-denominated bonds with a view to improving the portfolio Total yield on securities increased due to an increase in interest and dividends on investment securities Balance of investment securities (on an amortized cost basis) (Unit: JPY bn) Total gains (los
Slide 9: Securities (2)
Securities (2) Losses from evaluation of yen-denominated securities increased as a result of higher interest rates, however, gains from evaluation of stocks and investment trusts increased due to higher stock prices Executed sales of yen-denominated bonds with the aim of controlling interest rate ri
Slide 10: Fees and commissions
Fees and commissions Fees and commissions from corporate clients increased due to growth in credit-related fees and commissions and those for business matchings Fees and commissions (Unit: JPY bn) Fees and commissions from corporate clients (Unit: JPY bn) 3.8 2.9 2.7 1.7 2.0 1.2 Credit-related 1.4 f
Slide 11: Expenses
Expenses Personnel expenses increased, affected by personnel system reform and others Core OHR continued to improve due to an increase in core gross operating profit Expenses (Unit: JPY bn) Core OHR (Unit: JPY bn) Core OHR 71.35% 62.27% 58.22% 56.55% 52.18% Core gross operating profit 93.9 80.6 84.6
Slide 12: Credit-related expenses
Credit-related expenses Credit-related expenses increased as a result of precautionary allowance for certain project finance claims Credit-related expenses (Unit: JPY bn) Credit-related expenses (Unit: JPY bn) YoY change FY2022 FY2023 Amount 56.9 Credit-related expenses 1.2 3.7 2.5 7.3 7.6 Provision
Slide 13: Projected Performance
02 Projected Performance The 77 Bank, Ltd. | Fiscal Year Ended March 31, 2024 12
Slide 14: Summary of Profits and Losses
Summary of Profits and Losses Non-consolidated Consolidated The 77 Bank, Ltd. | Fiscal Year Ended March 31, 2024 13
Slide 15: Net Interest Income
Net Interest Income Average balances and yields of loans and bills Net Interest Income (Unit: JPY bn, %) discounted (Unit: JPY bn) YoY change Yields of loans and FY2024 FY2025 bills discounted FY2023 Forecast Amount % Simulation (Overall) 0.96% 0.91% 0.94% Yields of loans and Net interest Income 93.
Slide 16: Securities
Securities Balance of investment securities (on an amortized cost basis) (Unit: JPY bn) Total gains (losses) from securities (Unit: JPY bn, %) YoY change FY2024 FY2025 FY2023 2,990.1 3,036.9 Forecast Amount (Rate) Simulation 2,918.0 Interest and dividends on 42.8 44.5 1.7 41.7 investment securities
Slide 17: Expenses
Expenses Expenses (Unit: JPY bn) Core OHR (Unit: JPY bn) FY2024 YoY change FY2025 Core OHR FY2023 Forecast amount Simulation 52.18% 49.05% 47.87% Expenses 49.0 48.6 (0.4) 48.7 Core gross operating profit Personnel expenses 26.0 24.9 (1.1) 24.4 99.1 101.8 93.9 Expenses Non-personnel expenses 19.7 20.
Slide 18: The 77 Bank Group's Value Enhancement
03 The 77 Bank Group’s Value Enhancement The 77 Bank, Ltd. | Fiscal Year Ended March 31, 2024 17
Slide 19: Our Target Form in "Vision 2030"
Our Target Form in “Vision 2030” An increase in top line and others resulted in a renewed record high for net income and a rise in ROE to above 5% Progress in financial targets FY2021 FY2022 FY2023 FY2024 FY2030 Results Results Results Forecast Vision JPY 45.0 bn Profit JPY 33.0 bn ● JPY 29.8 bn (co
Slide 20: Enhanced Returns on Capital (1)
Enhanced Returns on Capital (1) Striving to improve PBR by increasing capital efficiency through strengthening of returns and improvement in profitability Approach to improving PBR Initiatives “Vision 2030” financial targets, etc. Improve Strengthen profitability ROE RORA (slides 21 and 22) (Consoli
Slide 21: Enhanced Returns on Capital (2)
Enhanced Returns on Capital (2) Implement management conscious of capital efficiency, while striving to boost profitability and properly control capital adequacy ROE (consolidated) Profit (consolidated) (Unit: JPY bn) 8.00% 7% or more 45.0 33.0 Capital cost level 29.8 (6%–7%) 25.1 6.00% 22.2 5.38% 5
Slide 22: Strengthen Profitability/Control Costs
Strengthen Profitability/Control Costs Striving to strengthen profitability through measures set forth in “Vision 2030” Profit (consolidated) increase concept Double productivity Paperwork-free policies strategy and increased efficiency JPY (3.5) bn Reduced expenses JPY DX investment 9.0 bn Credit-r
Slide 23: Response to Risk Assets
Response to Risk Assets Striving to improve profitability on risk assets by increasing loans and bills discounted with consciousness about RORA Top line RORA and OHR levels 2.5% Corporate loans Raise top line through an expansion in income and improvement in yields Retail loans Improve profitabi
Slide 24: Optimally Distribute Capital (1)
Optimally Distribute Capital (1) Implementing appropriate redistribution of profit to stakeholders while being conscious of sustainable growth Approach to capital allocation Redistribution of profit Enhancement of shareholder Preservation of Soundness returns Maintenance of capital adequacy Enhancem
Slide 25: Optimally Distribute Capital (2)
Optimally Distribute Capital (2) Implementing proper control to maintain capital adequacy ratio Maintenance of capital adequacy ratio (consolidated) Profit +0.70 Profit ✔ Background to the setting of capital adequacy ratio target Capital adequacy ratio must be sufficient Capital Capital for supporti
Slide 26: Optimally Distribute Capital (3)
Optimally Distribute Capital (3) Promoting ongoing reduction to reduce the ratio to consolidated net assets to below 10% before the end of the fiscal year Reducing Cross-Shareholdings (Unit: clients, JPY bn) Ratio to consolidated 17.4% net assets (market value basis) 14.0% 13.2% 11.3% 10.4% Number o
Slide 27: Enhancement of shareholder returns
Enhancement of shareholder returns Continuing to consider responsive acquisition of treasury shares while striving to elevate dividend ratio Policy of Return of Profits to Shareholders (reviewed in November 2023) While taking factors such as its public character as a bank business and the preservati
Slide 28: Business Strategy
04 Business Strategy The 77 Bank, Ltd. | Fiscal Year Ended March 31, 2024 27
Slide 29: "Vision 2030"
“Vision 2030” The 77 Bank, Ltd. | Fiscal Year Ended March 31, 2024 28
Slide 30: "Vision 2030" – Our Target Form –
“Vision 2030” – Our Target Form – ® The 77 Bank, Ltd. | Fiscal Year Ended March 31, 2024 29
Slide 31: "Vision 2030" – The Bank Group Direction –
“Vision 2030” – The 77 Bank Group Direction – The 77 Bank, Ltd. | Fiscal Year Ended March 31, 2024 30
Slide 32: "Vision 2030" – Basic Strategies to Achieve "Our Target Form" –
“Vision 2030” – Basic Strategies to Achieve “Our Target Form” – ® The 77 Bank, Ltd. | Fiscal Year Ended March 31, 2024 31
Slide 33: Penetration of "Vision 2030"
Penetration of “Vision 2030” Shared key measures for FY2024 at the meeting for the branch general managers 〈Looking back the three years〉 〈Future outlook〉 ✓ Enhanced consulting sales capability ✓ Shift to inflationary economy ✓ Considerable improvement in productivity ✓ New phase of rising interest
Slide 34: Looking Back "Vision 2030"
Looking Back “Vision 2030” Profitability improved due to a reduction in expenses, in addition to a growth in top line through the implementation of consulting sales. Performance (Unit: JPY bn) “Vision 2030” Leading company creating a path to the future Previous Medium-term Management Plan ‘For The C
Slide 35: Consulting Sales Initiatives
Consulting Sales Initiatives Top customer Double Regional growth Corporate culture satisfaction productivity strategy reform strategy strategy strategy Developing platform for the Headquarters and branches to work together to implement finance & consulting services Consulting sales system Number of
Slide 36: Spread of Consulting Sales
Spread of Consulting Sales Top customer Double Regional growth Corporate culture satisfaction productivity strategy reform strategy strategy strategy Acquired a variety of projects thanks to the spread of consulting sales Changes in various results Changes in credit-related fees and commissions (Uni
Slide 37: Expansion of Business Base
Expansion of Business Base Top customer Double Regional growth Corporate culture satisfaction productivity strategy reform strategy strategy strategy We have expanded the fields we actively operate in by utilizing our network of branches, our overseas network, local information network, and more Ser
Slide 38: Group Companies' "Vision 2030"
Group Companies’ “Vision 2030” Top customer Double Regional growth Corporate culture satisfaction productivity strategy reform strategy strategy strategy Aiming to establish Group business as the third pillar of income, each company has formulated new “Vision 2030” Outline of Group companies’ “Visio
Slide 39: Initiatives for New Businesses and Sectors (1)
Initiatives for New Businesses and Sectors (1) Top customer Double Regional growth Corporate culture satisfaction productivity strategy reform strategy strategy strategy Launched 10 projects in new business and sectors with a view to solving issues faced by local communities/clients List of projects
Slide 40: Initiatives for New Businesses and Sectors (2)
Initiatives for New Businesses and Sectors (2) Top customer Double Regional growth Corporate culture satisfaction productivity strategy reform strategy strategy strategy (i) 77 Partners (Established December 2021) (v) Tohoku Healthcare Support (Established April 2023) Established to exhibit further
Slide 41: Initiatives for New Businesses and Sectors (3)
Initiatives for New Businesses and Sectors (3) Top customer Double Regional growth Corporate culture satisfaction productivity strategy reform strategy strategy strategy (ix) Preparation for the launch of a local Group Business Strategy Committee subsidiary in Singapore (Established April 2024) (Sch
Slide 42: Support for Clients' Asset Formation
Support for Clients’ Asset Formation Top customer Double Regional growth Corporate culture satisfaction productivity strategy reform strategy strategy strategy Boost recurring revenue by supporting customer asset formation Customers’ Asset Formation Promotion Changes in various results Committee (Es
Slide 43: Measures for Increasing Productivity
Measures for Increasing Productivity Top customer Double Regional growth Corporate culture satisfaction productivity strategy reform strategy strategy strategy Striving for dramatic improvement in productivity with the aim to transform ourselves into a lean corporate group Measures aimed at enhancin
Slide 44: Branch Strategy
Branch Strategy Top customer Double Regional growth Corporate culture satisfaction productivity strategy reform strategy strategy strategy Transitioning to branches within branches in consideration of characteristics of markets and local circumstances including the number of customers visiting branc
Slide 45: Creation of Sales Personnel
Creation of Sales Personnel Top customer Double Regional growth Corporate culture satisfaction productivity strategy reform strategy strategy strategy While raising the ratio of sales sections, increasing consulting opportunities by utilizing personnel members and man-hours created Personnel members
Slide 46: Initiatives for Digital Technology
Initiatives for Digital Technology Top customer Double Regional growth Corporate culture satisfaction productivity strategy reform strategy strategy strategy Renewal of MEJAR system was completed. Continuing to promote digital technology reforms Digital technology reforms for the banking business No
Slide 47: Expansion of Non-Face-to-Face Channels
Expansion of Non-Face-to-Face Channels Top customer Double Regional growth Corporate culture satisfaction productivity strategy reform strategy strategy strategy Enhancing each function to expand use of non-face-to-face channels Number of active e-banking service accounts and cumulative Enhancing th
Slide 48: Initiatives for Regional Vitalization
Initiatives for Regional Vitalization Top customer Double Regional growth Corporate culture satisfaction productivity strategy reform strategy strategy strategy Defining four domains as key items of implementation for regional vitalization Regional vitalization mission The 77 Bank Regional Vitalizat
Slide 49: Formation of the Miyagi Wide-area PPP Platform
Formation of the Miyagi Wide-area PPP Platform Top customer Double Regional growth Corporate culture satisfaction productivity strategy reform strategy strategy strategy Strengthening collaboration with local governments through the Miyagi Wide-area PPP Platform Miyagi Wide-area PPP Platform As a
Slide 50: Promotion of Urban Development Projects (1)
Promotion of Urban Development Projects (1) Top customer Double Regional growth Corporate culture satisfaction productivity strategy reform strategy strategy strategy Gathering information through the project team to respond to expansion by semiconductor companies Expansion by semiconductor-related
Slide 51: Promotion of Urban Development Projects (2)
Promotion of Urban Development Projects (2) Top customer Double Regional growth Corporate culture satisfaction productivity strategy reform strategy strategy strategy Cutting-edge research facility started operation Start of operation of NanoTerasu, the next-generation synchrotron radiation facility
Slide 52: Promotion of Urban Development Projects (3)
Promotion of Urban Development Projects (3) Top customer Double Regional growth Corporate culture satisfaction productivity strategy reform strategy strategy strategy Development is accelerating in Miyagi Prefecture, centered on Sendai Urban Restructuring Project Sendai Urban Restructuring Project R
Slide 53: Our Efforts for Human Capital Management
Our Efforts for Human Capital Management Top customer Double Regional growth Corporate culture satisfaction productivity strategy reform strategy strategy strategy Reviewing and executing human resource strategy, etc. aimed at achieving management strategy The 77 Bank Group’s human capital managemen
Slide 54: Corporate culture reform
Corporate culture reform Top customer Double Regional growth Corporate culture satisfaction productivity strategy reform strategy strategy strategy Forster an ambitious culture through corporate culture reform Implementation of personnel system reform (April 2023) Spread of corporate culture reform
Slide 55: Strengthening of Human Resource Development
Strengthening of Human Resource Development Top customer Double Regional growth Corporate culture satisfaction productivity strategy reform strategy strategy strategy Developing various specialized human resources through external dispatch and investment in human resource development, etc. Developme
Slide 56: Promotion of Diversity/Development of Work Environment
Promotion of Diversity/Development of Work Environment Top customer Double Regional growth Corporate culture satisfaction productivity strategy reform strategy strategy strategy Developing an employee-friendly system for each and every employee Support of activity by diverse human resources Proporti
Slide 57: Sustainability Initiatives (1)
Sustainability Initiatives (1) Strengthening initiatives for achieving carbon neutrality by FY2030 Changes in CO2 emissions (Unit: t-CO2) Introduction of a tool for calculating CO2 emissions Became the first financial institution in eastern Japan to introduce “C-Turtle® FE” that calculates greenho
Slide 58: Sustainability Initiatives (2)
Sustainability Initiatives (2) Expanding a support system for decarbonization of our trading partners Enhanced engagement with trading partners Solution menu “CO2 emissions visualization service” (launched in September 2022) “Support business for use of carbon credit” (launched in December 2023)
Slide 59: Governance
Governance Balance and diversity of knowledge, experience, and abilities across the Board of Directors Skills matrix Evaluation of effectiveness of the Board of Directors Management In-house Outside strategy/ Corporate Compliance/ Risk Sales/ Regional International/ Market DX Human resource Status
Slide 60: (Reference) Financial Targets under "Vision 2030"
(Reference) Financial Targets under “Vision 2030” (Reviewed on November 10, 2023) FY2021 FY2022 FY2023 FY2024 FY2030 FY2030 Results Results Results Forecast Vision Initial target Profit JPY 22.2 bn JPY 25.1 bn JPY 29.8 bn JPY 33.0 bn JPY 45.0 bn JPY 28.0 bn (consolidated) Capital Roughly 10% or adeq
Slide 61: (Reference) KPI (Let's Try!)
(Reference) KPI (Let’s Try!) (Reviewed on May 10, 2024) FY2021 FY2022 FY2023 FY2024 FY2030 Results Results Results Target Vision Proportion of companies in Miyagi Prefecture whose main bank is the 77 56% 56% 56% 57% 62% Bank Number of corporate lending clients outside Miyagi prefecture (Vs. FY2020)
Slide 62: Projections do not guarantee future performance
Please note that the projections described in this document do not guarantee future performance. Future performance projections may differ from actual results due to uncertainty caused by factors such as changes in the business environment. The 77 Bank, Ltd. | Fiscal Year Ended March 31, 2024 61