Fukuoka Financial Group, Inc. · TSE:8354
Fukuoka Financial — Investor Presentation (May 2018)
55 slides from Fukuoka Financial's investor presentation, May 2018
Slide 1: Investor Meeting – FFG Outline / Growth Strategies
Investor Meeting － FFG Outline / Growth Strategies － M a y 2 0 1 8 0
Slide 2: Contents
Contents Part Ⅰ Opening Presentation Part Ⅲ Corporate Data Company Overview & Group Management Structure 3 Corporate Data 30 Group Network 4 Stock Data 31 History of FFG(11 years since establishment) 5 Market Share 32～33 Growth Strategy 6 Management Integration with the Eighteenth Bank 7 Structural
Slide 3: Part I Opening Presentation
Part Ⅰ Opening Presentation 2
Slide 4: Company Overview & Group Management Structure
Company Overview & Group Management Structure FFG is a total financial group featuring diverse financial functions and services, comprised of 3 banks based in Kyushu, plus a securities subsidiary, insurance subsidiary, consulting subsidiary, etc. Established the “Single Platform/Multiple Brands” man
Slide 5: Group Network
Group Network FFG is a broad area–based regional financial group, with an extensive network covering all of Kyushu, centering on Fukuoka, Kumamoto and Nagasaki prefectures, PLUS all the major cities in Japan, including Tokyo, Osaka and Nagoya With international offices in the main cities of East Asi
Slide 6: History of FFG (11 years since establishment)
History of FFG (11 years since establishment) Expanded business base while FFG has progressed through the Run-up Phase, the Acceleration Phase, and the Significant Growth Phase, since FFG establishment Achieved steady growth, up 3.9 trillion yen in loans, up 3.7 trillion yen in deposits, over the 11
Slide 7: Growth Strategy
Growth Strategy Promote far-sighted efforts for strengthening systems, such as structural reform and acceleration of innovation Enhance competitive edge and realize sustainable growth that is impervious to environmental changes, by shifting management resources (time, space, people, etc.) to areas o
Slide 8: Management Integration with the Eighteenth Bank
Management Integration with the Eighteenth Bank Management integration with the Eighteenth Bank is one of the key strategic options in plotting FFG growth strategy Although the review by the Japan Fair Trade Commission is ongoing, as a regional financial group with roots in the local community, in a
Slide 9: Structural Reform
Structural Reform Phase 1: Build up personnel in growth areas and cut back long working hours, by scaling down and increasing efficiency of operations at branches and headquarters Phase 2: Work to dramatically improve productivity in Stock reforms (improving infrastructure), also to improve customer
Slide 10: Acceleration of Innovation: Digital Strategy
Acceleration of Innovation: Digital Strategy Create new businesses and services in order to response to the entry of different sectors into banking and to changing customer needs and behavior Further increase sophistication of FFG services, by promoting acquisition of cutting-edge technologies and k
Slide 11: Acceleration of Innovation: iBank Business
Acceleration of Innovation: iBank Business Create 3 platforms in the iBank business: Financial Services, Ecosystem & Marketing Wallet+ is the core smartphone application product. 70% of users are younger generation. Monthly usage rate is also high. In March 2018, launched first open API collaboratio
Slide 12: Acceleration of Innovation: Wallet+ Business Functions
Acceleration of Innovation: Wallet+ Business Functions Wallet+ smartphone app is a financial services platform that seamlessly links the everyday consumption behavior and needs (family, hobbies, aspirations, etc.) of users with FFG’s financial services (saving, investment, loans) App functions will
Slide 13: Strengthen business solution
Strengthen business solution Strengthen solution functions such as our headquarters front, affiliated companies, etc., and actively work on developing human resources capable of suggesting the best solution Providing a full lineup of optimal solutions, not limited to loan transactions, from needs th
Slide 14: Strengthen Sale of Asset Management Products
Strengthen Sale of Asset Management Products Provide optimal products and services according to customer’s stage of life, through integrated Group management of banking, securities and insurance Fukuoka Securities changed name to FFG Securities (May 1, 2018). Expanded market to Kumamoto and Nagasaki
Slide 15: Consumer Loans
Consumer Loans Provide timely products and services in line with customer needs, by working to strengthen non-face-to-face channels Balance/earnings from both loans on deeds and card loans are steadily increasing, continuing to maintain a high annual rate Main measures and lineup of products Project
Slide 16: Securities
Securities Net unrealized gain on securities continues to be at a high level due to strong stock market condition. Domestic bonds duration at the end of March 2018 shortened to 2.27 years. Outlier ratio also stays at a low level. Securities Balance / Unrealized gain Bond duration / Outlier ratio (3
Slide 17: Financial results for FY2017
Financial results for FY2017 Profit & Loss (3 banks total) (¥ bil.) Point1 Net interest income +2.8 billion yen (YoY) 3 banks non- Kumamoto Bank Bank of Fukuoka Shinwa Bank consolidated total (non-consolidated) (non-consolidated) (non-consolidated) Yields declined due to negative interest rates, etc
Slide 18: Projections for FY2018
Projections for FY2018 Profit & Loss (3 banks total) Profit & Loss (By bank) (¥ bil.) (¥ bil.) 3 banks non- Bank of Fukuoka Core business profit Bank of Fukuoka Kumamoto Bank Shinwa Bank consolidated total Net income (non-consolidated) (non-consolidated) (non-consolidated) 61.4 58.9 61.3 63.1 P:FY18
Slide 19: ROE & Shareholder Returns
ROE & Shareholder Returns FFG aims to improve capital efficiency in the mid- and long-term by achieving reform in earnings structure and expanding our business base. Shareholder returns shall be conducted based on the balance between securing capital adequacy and enhancing capital efficiency for gro
Slide 20: Part II Financial Data
cFF@ Fukuoka Financial Group Part I Financial Data
Slide 21: Transition of Top Line
Transition of Top Line In FY 2017, core business profit was 74.4 billion yen, an increase of 3.1 billion yen year-on-year, owing to factors such as buildup of loans, growth in investment trusts and insurance, and corporate-related fees. The projection for FY2018 is 76.0 billion yen, an increase of 1
Slide 22: Transition of Bottom Line
Transition of Bottom Line In FY2017, consolidated net income increased 8.9 billion yen year-on-year (excluding one-time goodwill amortization) to 49.4 billion yen as a result of increase of core business profit and removal of goodwill amortization. The projection for FY 2018 is 52.0 billion yen, an
Slide 23: Net Interest Income
Net Interest Income Regarding net interest income, we plan to make up for lowering yield on loans and decrease in income from securities and international division with reversing interest income on domestic loans and reducing funding cost. Decrease of domestic deposit loan gross margin is expected t
Slide 24: Loans
Loans Loan growth is expected to be maintained at an annual rate of around 3% and to achieve the final year target of the mid-term management plan (average balance: 11.5 trillion yen). We plan to achieve the higher loan growth rates than previous year for “Small and medium-sized enterprises” and “Re
Slide 25: Deposits & CDs
Deposits & CDs Deposits & CDs of all 3 banks keep steadily increasing and are expected to maintain an increasing trend centering on Retail and Corporate in FY 2018. Deposits & CDs（Domestic + International） Deposits & CDs by Customer Segment （¥ bil.） （¥ bil.） （ annual rate） （annual rate ） 14,235.9 13
Slide 26: Non-interest Income
Non-interest Income We plan to offset the increase in loan guarantee fees and group credit life insurance premiums due to the buildup of consumer loan and mortgage with sales of asset management products and corporate-related fees. In FY 2018, sales of asset management products is expected to exceed
Slide 27: Overhead Expenses
Overhead Expenses While strategic cost increased as a result of promoting business efficiency, personnel expenses decreased in FY 2017. Therefore, overhead expense was almost the same level as the previous year. In FY 2018, we pursue further efficiency and plan to decrease overhead expenses by 0.5 b
Slide 28: Credit Cost & NPL
Credit Cost & NPL In FY 2017, we posted 3 billion yen reversal of reserve due to upgraded debtors’ credit ratings and debt collection of large loans. Non-performing Loans & Ratio are decreasing due to our efforts to support customers for business improvement and revitalization. Credit Cost (3 banks
Slide 29: Capital Adequacy Ratio
Capital Adequacy Ratio Quality and level of capital have been steadily improving by retained earnings. Capital adequacy ratio based on Basel III domestic standard at the end of March 2018 was 9.41% (8.62% on a fully adopted basis). We will continue to operate paying attention to the balance between
Slide 30: Part III Corporate Data
cFF@ Fukuoka Financial Group Part I Corporate Data
Slide 31: Corporate Data
Corporate Data Corporate Governance As of April 2, 2018 【Senior Management】 General Meeting of Masaaki Tani Takashige Shareholders Audit & Supervisory FFG Chairman Shibato Group Compensation & Board 3 Photo Nominating Advisory (2 external members) Bank of Fukuoka FFG President Committee Board of Dir
Slide 32: Stock Data
Stock Data as of March 31, 2018 Share Information Major Shareholders （thousands of shares, %） Major Shareholders Shares Held Ratio* 普通株式 The Master Trust Bank of Japan, Ltd.(Trust account) 64,092 7.45 Number of Japan Trustee Services Bank, Ltd.（Trust account) 60,285 7.01 authorized shares 1,800,000,
Slide 33: Market Share (1)
Market Share (1) Number of Number of Fukuoka Population business Loans Deposits Population business Loans Deposits pref. establishments Kitakyushu Bank establishments pref. Oita 5,060,000 19.7 33.3 The Bank of 1.2 trillion yen 233,000 1,170,000 58,000 3.3 7.3 Fukuoka people Establishments trillion y
Slide 34: Market Share (2)
Market Share (2) Fukuoka Prefecture Kumamoto Prefecture Nagasaki Prefecture 35% 50% 40% Bank of Fukuoka Higo bank 18 bank 32.8% 45% 35% 30% Shinwa 40% 30% Bank 33.2% Share of loans 25% 35% Nishi-nippon City Bank (※) 25% 20% 30% Savings Unions Mega & Major Savings Unions Kumamoto Bank 22.4%20% 25% 15
Slide 35: Part IV Figures
cFF@ Fukuoka Financial Group Part IV Figures
Slide 36: Loans (By Bank)
Loans (By Bank) Bank of Fukuoka Kumamoto Bank Shinwa Bank * Excluding loans to FFG, Government *※劣後受益権除く Excluding subordinated beneficial interests * Excluding subordinated beneficial interests ※劣後受益権除く 8,193.7 1,161.4 7,898.4 1,117.4 1,439.4 1,463.0 1,480.2 7,576.8 1,078.7 1,391.1 Average loan bal
Slide 37: Deposits & CDs (By Bank)
Deposits & CDs (By Bank) Bank of Fukuoka Kumamoto Bank Shinwa Bank Average deposit balance 9,973.3 1,465.1 2,249.5 2,297.9 2,324.2 9,440.3 1,429.7 2,171.2 2,245.1 by customer segment 9,175.9 1,329.4 8,456.6 8,764.9 682.1 1,320.0 55.9 44.7 278.9 498.7 566.7 1,244.1 317.1 285.7 293.1 492.0 104.7 66.3
Slide 38: Interest Rates (Domestic Loan)
Interest Rates (Domestic Loan) 3 banks total * Excluding loans to FFG, Government （％） 1.97 Retail 1.90 1.83 1.80 1.78 1.79 1.78 1.78 1.78 1.77 Loan 1.52 Overall 1.46 1.41 1.37 Corporate 1.31 1.29 1.40 1.23 1.21 1.32 1.28 1.18 1.16 1.22 Public 1.16 1.11 1.12 1.07 1.06 1.02 1.01 0.97 0.99 0.96 0.92 0.
Slide 39: Interest Rates (By Bank)
Interest Rates (By Bank) Bank of Fukuoka Kumamoto Bank Shinwa Bank * Excluding loans to FFG, Government * Excluding loans to Government * Excluding loans to Government 2.11 1.97 1.93 1.94 1.94 Interest rates on loans 1.91 Retail 1.87 1.80 1.78 1.77 1.77 1.72 1.69 1.61 1.66 1.64 1.82 1.48 1.80 1.74 1
Slide 40: Securities (By Bank)
Securities (By Bank) Bank of Fukuoka Kumamoto Bank Shinwa Bank ※Consolidated15年変国は、12/3末まで理論値採用 ※15年変国は、12/9末まで理論値採用 ※15年変国は、12/9末まで理論値採用 169.7 33.2 156.1 10.1 28.3 27.5 133.8 8.4 25.4 Unrealized 119.6 7.0 6.9 19.0 2,291.8 6.0 2,281.6 Securities Balance gain 80.6 2,258.9 771.3 289.6 281.4 748.2 751.
Slide 41: Non-Interest Income・Asset Management Products Sales (By Bank)
Non-Interest Income・Asset Management Products Sales (By Bank) Bank of Fukuoka Kumamoto Bank Shinwa Bank ※Excluding profit(loss) on bond and on marketable products ※Excluding profit(loss) on bond and on marketable products ※Excluding profit(loss) on bond and on marketable products 17.9 18.0 4.7 16.7
Slide 42: Overhead Expenses / Credit Cost (By Bank)
Overhead Expenses / Credit Cost (By Bank) Bank of Fukuoka Kumamoto Bank Shinwa Bank 52.2% 52.9% 51.8% 53.4% 52.4% 72.7% 71.4% 73.6% 72.6% 70.5% 71.4% 69.8% 69.7% 67.1% 66.7% Core OHR Expenses 65.4 65.8 66.1 67.7 67.6 14.3 21.1 20.4 13.6 13.8 13.9 13.9 20.1 19.9 20.0 Tax 4.3 4.9 5.4 6.1 6.4 0.6 1.0 1
Slide 43: Non-Performing Loans・Capital Adequacy Ratio (By Bank)
Non-Performing Loans・ Capital Adequacy Ratio (By Bank) Bank of Fukuoka Kumamoto Bank Shinwa Bank * After partial write-off * After partial write-off * After partial write-off 3.06% Non-Performing Loans & Ratio 2.32% 2.24% 2.97% 2.90% Ratio 2.02% 2.69% 2.70% 2.61% 2.65% 2.48% 1.77% 2.32% 1.61% 43.6 1
Slide 44: Part V Our Mother Market “Kyushu”
Part Ⅴ Our Mother Market “Kyushu” 43
Slide 45: Potential of Our Local “Kyushu” (1)
Potential of Our Local “Kyushu” (1) Potential for Economy in Kyushu Global GDP Ranking (2017) ($ bil.) Nigeria 495 GDP ¥ 43.9 trillion (9%) Poland 477 Same economic size Population: 13.12 million (10%) Belgium 455 as Iran Businesses: Approx. 600,000 (10%) KYUSHU Kyushu 399 Iran 399 20% increase in f
Slide 46: Potential of Our Local “Kyushu” (2)
Potential of Our Local “Kyushu” (2) Well-Balanced Industry Grouping Industries in Kyushu (thousand vehicles) Passenger Car North 1,450 1,400 (Share in Japan ％) 16% 15% 1,350 Center of “ Car Island ” 14% 1,300 Number of Passenger Cars produced in 1,250 13% Kyushu is 1,390 thousand vehicles in 2017. 1
Slide 47: Potential of Our Local “Kyushu” (3)
Potential of Our Local “Kyushu” (3) Number of Foreign Nationals Entering Kyushu Land Price in Fukuoka Metropolitan Area Fukuoka city's land price increase rate greatly exceeds the nationwide and three major The number of foreign people entering Japan through Kyushu has (thousand people) metropolitan
Slide 48: Economic Trend
Economic Trend 30 The Bank of Japan’s Tankan Business Sentiment Index 20 10 Fukuoka region ※ Fukuoka 0 Projection 30 ▲ 10 ▲ 20 Kitakyushu ▲ 30 20 ▲ 40 ▲ 50 09/6 10/6 11/6 12/6 13/6 14/6 15/6 16/6 17/6 18/6 Japan ※Fukuoka region: Adding Saga prefecture to Fukuoka prefecture, 10 excluding Kitakyushu 3
Slide 49: Industrial Production Trends
Industrial Production Trends Industrial Production Index（2010＝100） 【Kyushu】 Main Industry Trends 120 （million pieces） Integrated Circuits （%） 1,000 50 Quantity YoY Chg. 40 800 30 110 600 20 Japan 10 400 0 100 ▲ 10 200 ▲ 20 0 ▲ 30 13/2 14/2 15/2 16/2 17/2 18/2 90 （thousand vehicles） Passenger Car （%）
Slide 50: Capital Investment · Housing Investment
Capital Investment · Housing Investment Capital Investment: Bank of Japan’s Tankan Housing Starts Survey (YoY Chg.) (thousand) （%） 40 1,200 Unit 20 YoY Chg. 1,000 10 30 Projection 800 0 Japan 600 ▲ 10 20 400 ▲ 20 200 Feb.18 ▲ 30 10 0 ▲ 40 08 09 10 11 12 13 14 15 16 17 18 (thousand) （%） 0 120 Unit 20
Slide 51: Land Price Trends
Land Price Trends Volatility of Standard Land Prices （Unit：％） ＜ Ministry of Land, Infrastructure and Transport: 2018 Outline of results of land prices survey ＞ Volatility of standard land prices in major cities in Fukuoka Pref. Residential land Commercial land ○ Japan：Average volatility of residenti
Slide 52: Corporate Bankruptcies
Corporate Bankruptcies Number of Bankruptcies and Total Liabilities (¥ bil.) (Number) Left Axis ：Total debts / Bar graph 20 50 (¥ bil.) Right Axis：Number of bankruptcies / Line graph （Number） 40 Fukuoka 15 1,600 1,100 30 Takata 1,400 10 Corporation 1,000 20 1,200 5 10 900 1,000 0 0 Japan 800 800 13/
Slide 53: Loans
Loans （％） 8 Rate of Increase of Bank Loans （YoY Change, Monthly) 6 Fukuoka （％） 4 6 3.0 2 0 ▲2 4 ▲4 Japan 08/2 10/2 12/2 14/2 16/2 18/2 3.1 8 2 2.3 6 5.5 Kumamoto 4 2 0 0 ▲2 ▲4 08/2 10/2 12/2 14/2 16/2 18/2 ▲2 8 Kyushu 6 4 Nagasaki ▲4 2 2.6 0 ▲2 ▲4 ▲6 ▲6 08/2 09/2 10/2 11/2 12/2 13/2 14/2 15/2 16/2 1
Slide 54: Deposits
Deposits （％） Rate of Increase of Bank Deposits （YoY Change, Monthly) 6 5 Fukuoka （％） 4 10 3 4.3 9 2 1 8 0 Japan 08/2 10/2 12/2 14/2 16/2 18/2 7 12 Kumamoto 10 6 8 6 5 4 4 4.2 2 1.6 0 ▲2 3 3.0 08/2 10/2 12/2 14/2 16/2 18/2 Kyushu 6 2 5 Nagasaki 4 1 3 2 2.6 1 0 0 ▲1 ▲1 ▲2 08/2 09/2 10/2 11/2 12/2 13/2
Slide 55: Contact for further inquiries
Contact for further inquiries: Fukuoka Financial Group, Corporate Planning Division, Public Relations Group TEL ： 092 － 723 － 2255 E-mail： ffg-ir@fukuoka-fg.com HP ： https://www.fukuoka-fg.com Thank you for your time today for our presentation. We need to remind you of the risks involved in forward-
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