Rakuten Bank, Ltd. · TSE:5838
Rakuten Bank — Q3 FY2023 Earnings Presentation
62 slides from Rakuten Bank's earnings presentation, February 2024
Slide 1: IR Presentation
IR Presentation February 2024 Rakuten Bank, Ltd. https: //www.rakuten-bank.co.jp/ *For detailed numerical data, please refer to the data book: https://www.rakuten-bank.co.jp/corp/investors/documents/doc/databook-20240213.xlsx
Slide 2: Contents
Contents 1 Rakuten Bank’s Corporate Profile 2 About Our Medium- to Long-Term Vision and Growth Strategy 3 Overview of Results for The Third Quarter of FY2023 4 Appendix 2
Slide 3: Rakuten Bank's Corporate Profile
１ Rakuten Bank’s Corporate Profile 3
Slide 4: Corporate Profile
Corporate Profile Name Rakuten Bank, Ltd. In its aim to be the “safe, secure, and most convenient bank,” Rakuten Bank leverages the Rakuten Group’s strengths to develop a host of Established January 14, 2000 distinctive services. Capital JPY32,616mm*1 Employees 1,071*2 (consolidated) NBF Shinagawa T
Slide 5: Our Philosophy
Our Philosophy Rakuten Bank is aware of our public role and social responsibilities as a bank, and we strive to establish sound efficient business operations based on high self-discipline, to maintain society's unwavering trust and establish value. In addition, as a member of the Rakuten Group, we s
Slide 6: Rakuten Bank's History
Rakuten Bank’s History Sep. 2008 Entered a capital and business alliance with Rakuten, Inc.*1 October 2010 January 2021 April 21, 2023 Became a wholly owned Became the first Listed on the May 2010 subsidiary of Rakuten, Inc.*1 digital bank*2 in Prime Market of Change of Japan to surpass the Tokyo St
Slide 7: Scale of Operations
Scale of Operations The Rakuten Group’s customer base is our leverage to promote account acquisition (such as increasing new accounts via Rakuten Securities in anticipation of the January 2024 start of the new NISA system) The total deposit balance surpassed JPY10tn at the end of December, drive
Slide 8: Three Business Pillars
Three Business Pillars Services for Individual Customers Services for Corporate Customers and Sole Proprietors Deposits/ Personal asset loans Transactions can be completed online anytime, anywhere management Transfers/ Enter- Loans Other remittances tainment Transfer Deposits services Comprehensive
Slide 9: About Our Medium- to Long-Term Vision and Growth Strategy
2 About Our Medium- to Long-Term Vision and Growth Strategy 9
Slide 10: Medium- to Long-term Vision
Medium- to Long-term Vision*1 With an eye to the arrival of the zero-cash era, in April 2022 a medium- to long-term vision was formulated, indexed to FY3/21, in the aim of becoming a leading fintech company. Consolidated Consolidated Number of accounts (non-consolidated) ordinary income ordinary p
Slide 11: Two Pillars of Earnings (Non-Interest Income/Interest Income)
Two Pillars of Earnings (Non-Interest Income/Interest Income) Growth in Non-Interest Income Growth in Interest Income ・Achieve further growth by acquiring main accounts*1 ・Produce of Group's proprietary assets to have a and through cross-selling balanced and diversified loan portfolio 38.7% of ・Bala
Slide 12: Robust Synergies with Unique Rakuten Ecosystem
Robust Synergies with Unique Rakuten Ecosystem Unique Ecosystem Trusted and Well-known Brand Customer Acquisition 70+ services*1 100mm+ membership*1*2 Leading web brand in Japan*3 Cross-selling Most Popular*4 Deep & Rich Data Point Program × Technology (in Japan) Origination of Unique 100mm+ members
Slide 13: Efficient Customer Acquisition through the Rakuten Ecosystem
Efficient Customer Acquisition through the Rakuten Ecosystem 100mm+ Rakuten membership*1 Money Bridge SPU*4 (Point rewards ・ JPY 6.0 tn (Point rewards) favorable interest rate) 10.0ｍｍ domestic accounts*6 e-commerce GMS*2*3 73.5% of new customers come via Rakuten Group channel*8 Note: This is the hig
Slide 14: Full-fledged Digital Banking Services
Full-fledged Digital Banking Services... Deposits / Asset Management Loans Personal loan Deposits (JPY, foreign currency) Housing loan FX margin trading Education loan Personal financial management Reverse mortgage loan (“Money Support”) Investment property loans Real estate collat
Slide 15: Our Main Accounts' Growth Momentum
Non-Interest Interest Income Income Our Main Accounts’*1 Growth Momentum… Key Drivers of Main Account*1 Conversion Convert into main account*1 Convenience Full-fledged services Customer-centric first-class UI/UX Economic Benefit Open Rakuten Rakuten Bank Ecosystem account Rakuten Point rewards
Slide 16: Increases Our Per Account Earnings
Non-Interest Interest Income Income Increases Our Per Account Earnings Average Revenue per Account Average Deposit Balance per Account (FY2023 Q3) (As of Dec.31, 2023) c. 3x c. 6x Non-main accounts Main accounts *1 Non-main accounts Main accounts *1 *1: Accounts that are used for direct debit or dir
Slide 17: Compelling Rakuten Card Securitization Scheme
Non-Interest Interest Income Income Compelling Rakuten Card Securitization Scheme One-stop securitization service Increasing Credit card shopping GTV*3 receivables (Trust) *2 Securitized Senior E-commerce Shopping portion Assets GMS*1 GTV*3 Shopping Funding through Subordinated Portion acceleration
Slide 18: Our Unique and Rakuten Group Originated Investments
Non-Interest Interest Income Income Our Unique and Rakuten Group Originated Investments Trust Beneficiary Rights of Personal Loans Rakuten Card • Bank card loans • Small loans with AI credit screening To leverage Rakuten Card’s shopping GTV To utilize rich data of 100mm+ Rakuten Group growth fueled
Slide 19: Data Technology to Enlarge Our Interest Income
Non-Interest Interest Income Income Data Technology to Enlarge Our Interest Income Improve accuracy Advanced Credit Scoring – Expand credit access EC – Drive loan growth Contents Travel – Reduce credit cost Sports Commu- FinTech nity Mobile Optimized Marketing – Accelerate customer acquisition – Enh
Slide 20: Promising Data Monetization Opportunities
Promising Data Monetization Opportunities Our unique advantages enable us to increase ad revenue and promote cross-use of our services Rich Data Targeting Reach 14.7mm accounts*1 (KYC completion) Precise target segmentation For advertisers Banking transaction data – AI technology Data-driven
Slide 21: Providing a New Customer Experience through BaaS
Providing a New Customer Experience through BaaS*1 14 mm passengers per day*3 Open API*2 Transportation 5.5 mm cardholders*4 (announced in Dec. 2022) The Ogaki Kyoritsu Bank Automobile Retail THE NISHI-NIPPON CITY BANK Residence Other Regional Banks Life Insurance (“Rakuten Bank Dai-ichi Life Insura
Slide 22: Overview of Results for the Third Quarter of FY2023
3 Overview of Results for the Third Quarter of FY2023 22
Slide 23: The Financial Results in Q1-Q3
The Financial Results in Q1-Q3 Key Financial and Other Data Ordinary Income Ordinary Profit Non-interest Income*1 ROE *2 (FY2023 Q1-Q3, consolidated) (FY2023 Q1-Q3, consolidated) Ratio (FY2023 Q1-Q3 , annualized basis, (FY2023 Q1-Q3, consolidated) consolidated) 101.0 JPY bn 35.2 JPY bn 38.8 % 13.9 %
Slide 24: Consolidated Statements of Income
Consolidated Statements of Income FY2022 FY2023 Interest income rose substantially, owing to the (JPY bn, consolidated) Q1-Q3 Q1-Q3 Change YoY accumulation of investment assets. As a result, ordinary income and gross operating profit both grew Ordinary income 89.1 101.0 +11.9 +13.3% by double digi
Slide 25: Breakdown of Changes in Consolidated Ordinary Profit
Breakdown of Changes in Consolidated Ordinary Profit Profit rose, due to a major increase in adjusted net interest income Ordinary Profit Waterfall (JPY bn, consolidated) +6.6 0.2 (2.1) (0.1) 8.7 35.2 28.5 FY2022 Adjusted net interest Adjusted net non- General and Other Ordinary FY2023 Q1-Q3 incom
Slide 26: Our Growth Trajectory and Targets – Topline and Profit
Our Growth Trajectory and Targets – Topline and Profit The growth in investment assets pushed up interest income, which resulted double-digit growth in Ordinary income, Ordinary profit and Net Income Ordinary Income Ordinary Profit Net Income*1 Forecasts for the FY2023 (JPY bn, consolidated) (JPY
Slide 27: Revisions to the Consolidated Forecast for FY2023
Revisions to the Consolidated Forecast for FY2023 Based on our performance through Q3, the consolidated forecast is revised as follows (JPY bn, consolidated) Original forecast Revised forecast FY2022 FY2023 FY2023 Change YoY YoY (Results) (Original forecast) (Revised forecast) (% change) Ordinary
Slide 28: Interest and Non-Interest Income (Non-Consolidated)
Interest and Non-Interest Income (Non-Consolidated) Interest income to non-interest income ratio is progressing at approximately 6:4, with revenue growing in a balanced manner, as planned Interest and Adjusted Non-Interest Income*1 (JPY bn, non-consolidated) YoY 49.4 38.0 +2.9% 44.4 4.2 3.9 ： 39.2
Slide 29: Interest Income (Non-Consolidated)
Non-Interest Interest Income Income Interest Income (Non-Consolidated) Interest income grew +19.8% YoY, owing to the steady expansion of investment assets This figure outpaces growth rate of +12.6% in Q1-Q3 FY2022 (Interest on both loans and monetary claims bought grew steadily) Interest Income (J
Slide 30: Breakdown of Loans and Monetary Claims Bought
Non-Interest Interest Income Income Breakdown of Loans and Monetary Claims Bought Diversified portfolio of loans and monetary claims bought increased in a well-balanced manner Change from Change from (JPY bn, non-consolidated) Mar. 31, 2022 Mar. 31, 2023 Dec. 31, 2022 Dec. 31, 2023 Dec. 31, 2022 M
Slide 31: Expand Investment Assets/Net Interest Income
Non-Interest Interest Medium- to Long-term Vision Income Income Expand Investment Assets/Net Interest Income Expansion of middle-risk assets drove growth in net interest income Total for Categories That Include Middle-Risk Assets Monetary claims bought: others (JPY bn, non-consolidated) ABL (Asset
Slide 32: Balance Sheet Summary
Non-Interest Interest Balance Sheet Summary Income Income Of investment assets, 78% are based on floating rates, and floating rates are mostly based on TIBOR, so benefit from a structural tailwind*1 is expected when interest rates rise (December 31, 2023, non-consolidated) Loans + monetary claims
Slide 33: Start of Marketable Securities Investment
Start of Marketable Securities Investment Non-Interest Interest Income Income In addition to holding marketable securities for purposes of collateral done to date, it was also decided to purchase marketable securities for purpose of investment Purchase of marketable securities for purposes of in
Slide 34: Non-Interest Income (Non-Consolidated)
Non-Interest Interest Non-Interest Income (Non-Consolidated) Income Income A solid rise in total settlements led to an 10.7% YoY increase in exchange/settlement commissions FY2022 FY2023 Breakdown of Non-Interest Income*1 (FY2023 Q1-Q3, non-consolidated) (JPY bn, non-consolidated) Q1-Q3 Q1-Q3 Chan
Slide 35: Leveraging the New NISA Tailwind to Expand Our Customer Base
Non-Interest Interest Income Income Topic: Leveraging the New NISA Tailwind to Expand Our Customer Base (Leveraging the Rakuten Ecosystem) The start of the new NISA in Jan. 2024 created greater demand for securities trading accounts. Accordingly, the pace of bank accounts opened via Rakuten Securi
Slide 36: Our Main Accounts' Growth Momentum
Non-Interest Interest Income Income Our Main Accounts’*1 Growth Momentum… Our number of main accounts, which tend to have higher deposit balances and be more profitable, is increasing faster than the number of total accounts 31.1% 30.9% 31.4% 29.3% 24.6% 20.0% 16.6% 14.5% FY2018 FY2019 FY2020 FY20
Slide 37: Sufficient Capital Adequacy with Disciplined Management
Sufficient Capital Adequacy with Disciplined Management The capital adequacy ratio increased, owing to the application of STC securitization exposures A public offering secured us sufficient capital base for further business, and a sound level shall be maintained while actively accumulating inve
Slide 38: General and Administrative Expenses (Non-Consolidated)
General and Administrative Expenses (Non-Consolidated) An expanded scale of business boosted management efficiency, and our G&A Expense Ratio reached 42.9% (improving 2.7pts YoY) General and Administrative Expenses and G&A Expense Ratio* (Non-Consolidated) (JPY bn, amounts truncated after the digi
Slide 39: Credit Costs (Non-Consolidated)
Credit Costs (Non-Consolidated) Credit costs rose due to an increase in non-guaranteed card loans and overall expansion of investment assets, while the credit cost ratio remained at a low level Credit Costs *1 (JPY mm, non-consolidated) 159 (148) (458) (657) (868) (1,297) (1,359) (0.01%) 0.00% 0.0
Slide 40: Roadmap to Achieve Higher ROE
Roadmap to Achieve Higher ROE Further Business Expansion with Unique Rakuten Ecosystem Non-Interest Income Growth ROE*1 • Further growth through main account*2 acquisition and cross-selling 13.9% 13.8% Enhance Risk/Return Profile • Produce of Group‘s proprietary assets to have a balanced and div
Slide 41: Our Dividend Policy
Our Dividend Policy Our Thoughts on Capital and View on the Capital Adequacy Ratio Prioritize further growth over dividends for the near term To achieve the targets in our Medium- to Long-Term Vision, the accumulation of risk assets is intended to control within – Intend to keep capital adequacy to
Slide 42: Appendix
4 Appendix 42
Slide 43: Strong Commitment by Experienced Management
Strong Commitment by Experienced Management*1 *1: As of Dec.31, 2023 *2: Executive Vice President. 43
Slide 44: Disciplined Corporate Governance
Disciplined Corporate Governance*1 3 Outside Directors out of 5 Directors Banking Regulations Hiroshi Mikitani Hiroyuki Nagai Chairman President & CEO Group Arm’s- Synergies Length Eiji Ebinuma Michio Kayano Masatsugu Nagato Outside director Outside director Outside director 3 Outside Auditors out o
Slide 45: Our "SDGs" Initiatives
Our “SDGs” Initiatives Contributing to a healthy and economically prosperous society through “SDGs” “SDGs” × Gender “SDGs” × Education • Percentage of women in managerial • Construction of elementary school in positions*1: People Cambodia (2006) and Philippines (2008) - Reached our initial target of
Slide 46: Digital Bank Share
Japan – Dawn of Banking Digitalization Japan Cashless Payment Ratio*2 Japan Post Bank 80% 2 16% (aiming to be the global highest level) % Promoted by Japanese Government MUFG Bank 15% Digital Bank ~40% Share*1 36% 24% (deposit balance) … … SMBC 12% 2018 2022 2025 Long-term Mizuho Bank (Actual) (Actu
Slide 47: Banking in a Cashless Era
Banking in a Cashless Era The industry’s widest range of instruments for cashless payment Debit Cards Prepaid Cards Direct Payment for code payment Rakuten Bank Card Service Linkage with Rakuten Card via Direct Debit (Rakuten Card Combined with Cash Card) Interest on ordinary deposits double the u
Slide 48: Our Unique Service Offering through One App
Our Unique Service Offering through One App… Full-fledged Digital Banking Services Rakuten Ecosystem Deposits / Asset Management Loans Transfer Payment Entertainment Single integrated app comprehensively covering individuals’ everyday life 48
Slide 49: Rakuten International Commercial Bank in Taiwan
Rakuten International Commercial Bank in Taiwan Company Overview Group Structure Company RAKUTEN INTERNATIONAL COMMERCIAL BANK CO., LTD. Name (Joint Venture) Establishment May 18, 2020 Rakuten Card Co., Ltd. IBF Financial Holdings Co., Ltd. 50% 1% 49% Operation Since January 19, 2021 Electronic bank
Slide 50: Scheme for the Liquidation of Rakuten Card's Credit Card Receivables
Scheme for the Liquidation of Rakuten Card’s Credit Card ReceivablesNon-Interest Income Interest Income (Trust Beneficiary Rights) Rakuten Card Co., Ltd. is one of Japan’s largest credit card companies, with more than 30 million cards issued.* In general, when the holder of a credit card uses their
Slide 51: Number of Accounts, Deposit Balance (Non-Consolidated)
Number of Accounts, Deposit Balance (Non-Consolidated) Number of Accounts (Non-Consolidated) Deposit Balance (Non-Consolidated) (Millions of accounts, amounts truncated after the digit shown) (JPY bn, amounts truncated after the digit shown) 16.00 10,319.7 14.75 94.0 10,000 13.73 711.0 133.3 14.00 1
Slide 52: Improved Spreads on the Card Loans (Personal Loans)
Non-Interest Interest Income Income Improved Spreads on the Card Loans (Personal Loans) Effective yields on Card loans (Personal Loans) comprise two layers. Non-guaranteed balance: yield - ratio of allowance for loan losses = (1) effective yield on non-guaranteed personal loans Balance with extern
Slide 53: Quarterly Consolidated Financial Summary
Quarterly Consolidated Financial Summary FY2022 FY2023 YoY (JPY bn, consolidated) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Ordinary income 29.0 29.3 30.7 31.3 32.6 33.2 35.1 +12.2% +13.5% +14.3% Interest income 16.3 16.9 17.6 18.0 19.2 20.3 21.8 +17.6% +20.5% +23.9% Non-interest income 12.5 12.3 13.0 12.
Slide 54: Financial Summary – Consolidated Balance Sheets
Financial Summary – Consolidated Balance Sheets (JPY bn, consolidated) Mar. 31, 2021 Mar. 31, 2022 Mar. 31, 2023 Dec. 31, 2022 Dec. 31, 2023 Total assets 6,486.8 9,490.6 11,589.5 11,404.3 13,173.0 (incl.) Cash and due from banks 2,682.9 3,649.1 4,050.2 3,748.5 4,563.1 (incl.) Monetary claims bought
Slide 55: Quarterly Non-consolidated Financial Summary
Quarterly Non-consolidated Financial Summary FY2022 FY2023 YoY (JPY bn, non-consolidated) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Ordinary income 28.5 28.6 29.9 30.4 31.7 32.3 34.1 +11.2% +12.9% +13.8% Interest income 16.1 16.5 17.2 17.6 18.7 19.8 21.2 +16.2% +19.6% +23.4% Non-interest income 12.2 11.9
Slide 56: Financial Summary – Non-consolidated Balance Sheets
Financial Summary – Non-consolidated Balance Sheets (JPY bn, non-consolidated) Mar. 31, 2021 Mar. 31, 2022 Mar. 31, 2023 Dec. 31, 2022 Dec. 31, 2023 Total assets 6,684.6 9,647.7 11,694.2 11,502.7 13,245.1 (incl.) Cash and due from banks 2,681.3 3,645.1 4,039.7 3,741.0 4,553.9 (incl.) Monetary claims
Slide 57: Accountholder Demographics
Accountholder Demographics (Dec.31, 2023) By Age Under 20s By Region Kyushu, Hokkaido 4% Okinawa 4% Chugoku, 10% 60s and Tohoku 20s Shikoku over 5% 13% 8% 13% 50s 21% Kansai 30s 18% Kanto, 24% Koshinetsu 42% Tokai 11% 40s 25% Hokuriku 2% Student Others By Occupation 6% 4% By Gender Housewife 8% Comp
Slide 58: Organizational Chart of Rakuten Group
Organizational Chart of Rakuten Group*1 Rakuten Group, Inc. (TSE: 4755) Internet Services business 49.26% FinTech 100% FinTech 100% Mobile 100% business business business Rakuten Bank, Rakuten Card Rakuten Securities Rakuten Mobile, Co., Ltd. Inc. Ltd. 4.72% Holdings, Inc. 95.28% 100% 50% Payment 10
Slide 59: Rakuten Card: Driving the Rakuten FinTech Ecosystem
Rakuten Card: Driving the Rakuten FinTech Ecosystem with a Huge Customer Base Cards Issued Shopping GTV GTV Share*1 目標 Sep. 2023 29.54 ｍｍ LTM 20.6 tn yen Aug. 2023 23.4 % *2 Q3/23*2*2 Aug. 2023 5.3 tn Dec. 2012 *1 Calculated based on “Ministry of Economy, Trade and Industry, Specified Service Indust
Slide 60: Rakuten Securities: Achieving High Customer Loyalty through Money Bridge
Rakuten Securities: Achieving High Customer Loyalty through “Money Bridge” How Money Bridge Works Huge Presence and Rapid Growth of Money Bridge (non-consolidated) Transaction JPY 5.4tn (YoY +18.0%) Automatic deposit 4.5mm accounts (YoY +18.3%) 53.1%*3 of Rakuten Bank’s total deposit balance Automat
Slide 61: Rakuten Payment: Developing Leading Services in Japan
Rakuten Payment :Developing Leading Services in Japan Centered on Payment and Marketing Service Lineup Rakuten Payment Revenue*3 (JPY bn) Cashless payment service (QR code/barcode/touch payment/Suica/ Online payment,etc.) Common point service IC type electronic money CY18-22 CAGR Online electronic m
Slide 62: The opinions and forecasts stated in this document reflect the Bank's judgment at the
The opinions and forecasts stated in this document reflect the Bank's judgment at the time these materials were prepared. The Bank does not guarantee the accuracy of the information contained herein. Please note that actual performance and results may differ significantly due to various factors.