Resona Holdings, Inc. · TSE:8308
Resona — FY2014 Earnings Presentation
65 slides from Resona's earnings presentation, May 19, 2015
Slide 1: Business Results for FY2014 and Future Management Direction
Business Results for FY2014 and Future Management Direction May 19, 2015
Slide 2: Contents
Contents Outline of Business Results for FY2014 and Updates on Major Businesses Efforts to Build Solid Foundation for Sustainable Growth Full Repayment of Public Funds and Outline of New Capital Policy Reference Material Total loans outstanding (Term-end balance): JPY27.5 tn*1 1. In some pages of th
Slide 3: Table of Contents
Table of Contents Outline of Business Results for FY2014 Full Repayment of Public Funds and and Updates on Major Businesses Outline of New Capital Policy P4 Summary of FY2014 Results and FY2015 Forecasts P33 Full Repayment of the Public Funds P5 Major Business Trends P34 New Capital Management Polic
Slide 4: Outline of Business Results for FY2014 and Updates on Major Businesses
Outline of Business Results for FY2014 and Updates on Major Businesses Efforts to Build Solid Foundation for Sustainable Growth Full Repayment of Public Funds and Outline of New Capital Policy Reference Material 3
Slide 5: Summary of FY2014 Results and FY2015 Forecasts
Summary of FY2014 Results and FY2015 Forecasts EPS *1 Posted Y211.4 bn of consolidated net income Point 1 Exceeded a Y200 bn mark consecutively for four years (Yen) Point 2 Top-line income turned to increase after 7 years of decline (Forecast) CET1 ratio (phase-in/phase-out rule basis): 8.16%
Slide 6: Major Business Trends
Major Business Trends Loan balance (total of group banks) has increased for (Ytn) Term-end three consecutive fiscal years (+2.8% in FY2014） loan 25 Corporate loan (total of group banks) has grown by balance 4.5% in FY2014 (+6.1% increase for RB alone) Loan Business (Ytn) New residential Origin
Slide 7: Consolidated Net Income for FY2014 Compared with FY2013
Consolidated Net Income for FY2014 Compared with FY2013 Posted Y211.4 bn of consolidated net income ( Down Y9.1 bn YoY, Up Y21.4 bn vs. Forecast) Without a DTA writedown relating to a reduction in corporate income tax rate, (Billions of Yen) net income for FY 2014 would have been higher than the p
Slide 8: PL Summary / Consolidated and Non-Consolidated Difference
PL Summary / Consolidated and Non-Consolidated Difference Consolidated / Non-consolidated difference FY2014 PL summary (in approximate figures) Consolidated and non-consolidated difference in terms of net income was reduced by Y8.7 bn primarily due to the following one-time factors (Ybn） DTA adj
Slide 9: Gross Operating Profit for FY2014 Compared with FY2013
Gross Operating Profit for FY2014 Compared with FY2013 (Total of Group Banks) Top-line income turned to increase after seven years of decline Net gains (Billions of Yen) on bonds Other items (net) (including futures) +5.3 Other fee income +12.3 FY2014 Net interest income Investment items (net) from
Slide 10: Outline of Results by Business Segments (1)
Outline of Results by Business Segments (1) Actual net operating profit increased by Y20.8bn supported by Market Divisions Actual net operating profit of “Customer Divisions” decreased by Y2.8bn YoY Actual net operating profit of “Markets and Other” increased substantially, supported by favorabl
Slide 11: Outline of Results by Business Segments (2)
Outline of Results by Business Segments (2) Personal Banking Segment Corporate Banking Segment Actual net operating profit increased by Y0.8bn Actual net operating profit decreased by Y3.6bn Investment product sale and real estate brokerage Net interest income from loans and deposits decreas
Slide 12: Trend of Loan and Deposit
Trend of Loan and Deposit (Total of Group Banks) Average loan balance and YoY change Average loan balance and spread (Domestic Acct.) 27 FY2014 FY2015 (Trillion Yen) Y oY Y oY Average loan balance (Act) (Plan) +2.08% change change YoY (right scale) +2% Average loan balance (1) 26.52 +1.63% (Bankin
Slide 13: Term-end Balance of Loans and Deposits
Term-end Balance of Loans and Deposits (Total of Group Banks) Total loan balance has grown by 2.8% (Corporate loans +3.3% / Personal loans +2.0%) Term-end deposit balance Term-end loan balance Corporate (Other)*1 Other Corporate (SMEs) Corporate deposits Corporate (Apartment Loans) Individual d
Slide 14: Trend of Residential Housing Loans
Trend of Residential Housing Loans (Total of Group Banks) Composition of newly originated residential New loan origination housing loans by interest rate type Approx. 90% of the newly originated loans are variable rate type Flat 35 Residential housing loan Share of fixed rate residential housing l
Slide 15: Trend of Fee Income
Trend of Fee Income Fee income increased stably, fee income ratio increased to 26.7％ The difference between “consolidated” and “total of 3 banks” is mostly attributable to loan guarantee premiums directly paid to the group’s loan guarantee subsidiaries. 200.0 200.0 30.0% Consolidated fee income ra
Slide 16: Major Fee Businesses
Major Fee Businesses (Total of Group Banks) Trust Related Fees Sale of Investment Trust and Insurance (Pension/securities, asset and business succession) Insurance products Investment trust Income from trust solution offered for asset and business succession Amount of investment trust and insurance
Slide 17: Credit Costs and NPL
Credit Costs and NPL Trend of credit costs Comparison: Gross and net NPL ratio (Note) Positive figures represent reversal gains Gross NPL ratio Net NPL ratio *3 (Y bn) FY2012 FY2013 FY2014 FY 2015 Act Plan 2.09% Net credit cost 1.86% (Total of group banks (A)) (1) 21.4 27.1 24.3 (18.0) 1.51% General
Slide 18: Securities Portfolio
Securities Portfolio Securities Portfolio (Consolidated) Stocks Mar. 2014 Mar. 2015 (Ybn) Unrealized Breakeven Nikkei average: Approx. 5,500 yen gain Available-for-sale securities *1 (1) 6,201.1 3,830.6 573.6 Reduced relationship-purpose stock holdings Stocks (2) 331.9 330.9 539.9 by approx. Y1
Slide 19: Capital Adequacy Ratio (Consolidated, Japanese Domestic Std.)
Capital Adequacy Ratio (Consolidated, Japanese Domestic Std.) Capital adequacy ratio Factors for the change in FY2014 Adopted the Basel 3 from Mar. 31, 2014 Comparison of total capital as of Mar. 31 2015 and 2014 DIC Pref. Y(234.9) bn For the methodology to calculate the credit risk Planne
Slide 20: Capital Adequacy Ratio (Consolidated, International Std.)
Capital Adequacy Ratio (Consolidated, International Std.) Capital adequacy ratio Factors for the change in FY2014 Common equity Tier 1 ratio (excluding unrealized Comparison of CET1 ratio as of Mar. 31, 2015 and 2014 gain on available-for-sale securities): 7.07% DIC Pref. Y(234.9) bn （Ybn） P
Slide 21: Earnings Forecasts for FY2015
Earnings Forecasts for FY2015 Resona Holdings (Consolidated) Dividend Forecast 1st Half Full year YoY Change （Ybn） Forecast for forecasts forecasts change from MMP per share dividend Consolidated (1) 131.0 254.0 (79.3) - ordinary profit Common stock (12) 17 yen Net (interim) income attributable to s
Slide 22: Forecasted Consolidated Net Income for FY2015 Compared with FY2014
Forecasted Consolidated Net Income* 1for FY2015 Compared with FY2014 (Act) Forecasting Y175 bn of consolidated net income* 1 for FY2015 ((36.4) bn YoY, +Y15.0 bn vs. MMP) (Billions of yen) Including equity derivatives (10.0) +0.5 +0.3 Equity derivatives +24.5 Absence of one-time gain from (34.5)
Slide 23: Efforts to Build Solid Foundation for Sustainable Growth
Outline of Business Results for FY2014 and Updates on Major Businesses Efforts to Build Solid Foundation for Sustainable Growth Full Repayment of Public Funds and Outline of New Capital Policy Reference Material 22
Slide 24: Corporate Banking Dept. (1): Increase Sound Loan Assets (1)
Corporate Banking Dept. (1) : Increase Sound Loan Assets (1) Capture demand for loans from corporate sector amid improving business environment More than 60% of Resona Group’s corporate [Corporate loans] (Term end balance) customers having intentions to increase Capex*1 (excluding loans to premier
Slide 25: Corporate Banking Dept. (2): Increase Sound Loan Assets (2)
Corporate Banking Dept. (2) : Increase Sound Loan Assets (2) Loans to Premier customers are on the rise driven by rising needs for asset and business succession solutions Advent of i Mostly long-term and high quality loans aged society Growing markets Relatively high loan yield and high coverage
Slide 26: Corporate Banking Dept. (3): Expand Customer Base and Profit Opportunities
Corporate Banking Dept. (3) : Expand Customer Base and Profit Opportunities Expanding business opportunities arising from 24/365 services Capture diverse profit opportunities Expand business by offering settlement solutions Group consolidated management Commenced 24 hour RTGS*1 service in Apr. 2
Slide 27: Consumer Banking Dept. (1): Housing Loan Business
Consumer Banking Dept. (1) : Housing Loan Business Sustain high origination level while maintaining and improving profitability Business environment Negative impact of sales tax increase subsiding Differentiation with high value-added product Improving employment / wage increase, HL- related t
Slide 28: Consumer Banking Dept. (2): Consumer Loan Business
Consumer Banking Dept. (2) : Consumer Loan Business Aim at achieving the mid-term plan target earlier (JPY bn) Ideal direction of Anytime, anywhere, consumer loan Convenience convenient and easy business Provide customers Swiftness Quick when in need with timely supports to design an active life pla
Slide 29: Consumer Banking Dept. (3): Promoting Omni-channel Strategy
Consumer Banking Dept. (3) : Promoting Omuni-channel Strategy 3 reforms to know, make an approach to, and contact with customers better Marketing Targeted clients Customers inaccessible so far with limited profit opportunities Reform Departure Full transactions with potential customers outside o
Slide 30: Cross-selling Culture
Cross-selling Culture 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 Increase life-time profits by upgrading Products Per customer segments and by increasing the depth
Slide 31: Unchanged Commitment to Low-cost Operation after Completing Repayment
Unchanged Commitment to Low-cost Operation after Completing Repayment Trend of adjusted net personnel expenses Adjusted net personnel expense Incentive salary (JPY bn) (Excluding incentive salary) Absorbing unavoidable increase relating to social insurance, adjusted net personnel 150 3.0 20.6 22.3
Slide 32: Advanced Corporate Governance
Advanced Corporate Governance The First Japanese Bank with three committees ( Nomination, Audit and Remuneration) Separation of management oversight Companies with and operation functions three committees Advanced corporate governance ：59 companies ⇒ 59 companies among 3,787 listed companies are
Slide 33: Full Repayment of Public Funds and Outline of New Capital Policy
Outline of Business Results for FY2014 and Updates on Major Businesses Efforts to Build Solid Foundation for Sustainable Growth Full Repayment of Public Funds and Outline of New Capital Policy Reference Material 32
Slide 34: Full Repayment of the Public Funds
Full Repayment of the Public Funds Public funds which supported Resona’s turnaround and growth are now to be fully repaid Fully repaying the outstanding RCC Pref. by executing the following 1) and 2) Peak amount 1) Distribute a regular special preferred dividends totaling Y32.0 bn Y3,128.0bn 2) Repu
Slide 35: New Capital Management Policy (1): Capital Adequacy Ratio Target
New Capital Management Policy (1): Capital Adequacy Ratio Target Post public funds CAR target Effort for qualitative and quantitative capital buildup Secure sufficient capital adequacy under the De Facto “Capital Exchange” Japanese Domestic Std. Sale of treasury shares and repurchase of Aim
Slide 36: New Capital Management Policy (2): Shareholder Return Policy
New Capital Management Policy(2) : Shareholder Return Policy Shareholder return policy Increase common DPS by 2 yen (or 13%) from term-end dividend for FY2014 [Rational for the 2 yen DPS increase] (Annual common DPS to be increased to 17 yen) FY2014 FY2015 Maintain a stable dividend policy while
Slide 37: Reference Material
Outline of Business Results for FY2014 and Updates on Major Businesses Efforts to Build Solid Foundation for Sustainable Growth Full Repayment of Public Funds and Outline of New Capital Policy Reference Material 36
Slide 38: Outline of Financial Results for FY2014
Outline of Financial Results for FY2014 Tot al of Resona Holdings Difference 3 group bank s Saitama Kinki (Consolidated) (Ybn) ( Non- c ons olidated) Resona Resona Osaka YoY YoY YoY Bank YoY YoY YoY （A ） (A)-(B) （B ） Bank Bank change change change change change change Gros s operat ing prof it (1) 6
Slide 39: Sound Balance Sheet
Sound Balance Sheet Sound assets backed by very stable deposit funding Resona’s consolidated balance sheet (as of March 31, 2015) Total assets Y46.5 tn Loans and bills Sound loan portfolio discounted Stable funding structure Y 27.4 tn Consists mostly of Strong deposit base housing loans and sm
Slide 40: Stable Earnings Trend and High Profitability
Stable Earnings Trend and High Profitability Resona has consistently generated stable profits supported by our sound balance sheet Historical Consolidated ROA*1 0.7% Resona HD Mizuho FG SMFG MUFG 0.6% 0.5% 0.4% 0.3% 0.2% 0.1% 0.0% FY2010 FY2011 FY2012 FY2013 FY2014 Resona Group Y160.0 bn Y253.6 bn
Slide 41: Business Results by Major Group Business Segments
Business Results by Major Group Business Segments “RAROC” and “RVA”*1 as management indicators to measure profitability to allocated capital Management Accounting by Major Group Business Lines (FY2014) (Billions of Yen, %) Profitability Soundness Net operating profit after a deduction of credit co
Slide 42: Consolidated Subsidiaries and Affiliated Companies
Consolidated Subsidiaries and Affiliated Companies Consolidated domestic subsidiaries (excluding subsidiary banks) (Billions of Yen） Capital contribution Net income Name Line of business ratio FY2014 YoY change FY2013 Credit guarantee Resona Ｇroup Resona Guarantee Co., Ltd. (1) 13.5 (5.6) 19.1 (Main
Slide 43: Capital Adequacy Ratio (Subsidiary Banks)
Capital Adequacy Ratio (Subsidiary Banks) Resona Bank Saitama Resona Bank Kinki Osaka Bank (Consolidated) (Non-consolidated) (Consolidated) Japanese Domestic Standard (Billions of Yen) Mar.31, Mar.31, Mar.31, Mar.31, Mar.31, Mar.31, 2014 2015 2014 2015 2014 2015 Basel 3 Basel 3 Basel 3 Basel 3 Basel
Slide 44: Trend of Investment Product Sale Business
Trend of Investment Product Sale Business (Total of Group Banks) Investment Trust*1 Insurance*1 （Y bn） （Y bn） 400 392.3 113.2 369.3 340.4 351.8 100 97.2 89.7 297.3 83.3 82.6 300 275.0 283.2 78.3 245.6 249.6 71.2 73.7 70.6 72.0 243.5 58.8 61.2 200 188.4 50 146.4 100 0 0 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
Slide 45: Achievements in Cross-selling Efforts Measured with KPIs
Achievements in Cross-selling Efforts Measured with KPIs (YTD) Primary Index RLCs = Clients to whom the group have achieved cross-selling to some extent (Number of customers in thousands) Mar. 31, 2014 Mar. 31, 2015 Change AUM or condominium loan (1) Premier 53 55 ＋2.3 exceeding JPY50 mill
Slide 46: Supports for SMEs Doing Business in Asia
Supports for SMEs Doing Business in Asia Footholds in Asia to Extend Supports to SMEs Local Services Offered through Alliances Overseas Entered a business alliance with Myanma Apex Bank in representative offices Nov. 2014 5 offices Alliance network comprising 13 partner banks covering Shanghai
Slide 47: Efficient Cost Structure: Personnel and Non-Personnel Expense
Efficient Cost Structure: Personnel and Non-Personnel Expense (Total of Group Banks) Unavoidable increase in operating expenses including social insurance premium will be offset by continued efforts to reduce non-personnel expenses Strictly controlled personnel expenses including the cost associ
Slide 48: Sophistication in ALM Interest Rate Risk Management
Sophistication in ALM Interest Rate Risk Management: (Introduction of Internal Model to Measure Core Liquidity Deposits) Reassess the value of liquidity deposits Methods to measure core liquidity deposits Internal model to measure core liquidity deposits Before implementation of internal model ⇒ Gra
Slide 49: Securities Portfolio (Total of Group Banks)
Securities Portfolio (Total of Group Banks) Maturity ladder of securities held (securities with contractual maturities, nominal amount basis) (Y bn) End of Mar. 2015 End of Mar. 2014 Five to Five to One year One to Three to Seven to Over One year One to Three to Seven to Over seven Total seven Total
Slide 50: Stocks Held by Industry
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 51: Maturity Ladder of Loan and Deposit
Maturity Ladder of Loan and Deposit (Total of Group Banks, Domestic Operation) Loans and Bills Discounted Deposits [End of March 2014] [End of March 2014] 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) 2.0% 1.4% 4.3% 7.6% 15.3% Liquid deposits (1) 40
Slide 52: Swap Positions by Remaining Periods
Swap Positions by Remaining Periods (RHD Consolidated) Notional amounts of interest rate swaps (deferred hedge accounting applicable) by remaining period (Billions of Yen) Mar. 31, 2015 Mar. 31, 2014 Within 1 to 5 Over Within 1 to 5 Over Total Total 1 year years 5 years 1 year years 5 years Receiv
Slide 53: Composition of Loan Portfolio by Base Rates
Composition of Loan Portfolio by Base Rates (Total of Group Banks) Loans to corporations*1 Fixed Fixed Fixed Prime Prime Prime Rate Rate, Rate, Rate, Rate, Rate, 23% 23% 24% 26% 28% 28% [March 31, [September 30, [March 31, 2014] 2014] 2015] Market Rate*2 Market Rate*2, Market Rate*2, 48% 49% 50% Loa
Slide 54: Composition of Deposits by Types
Composition of Deposits by Types (Total of Group Banks) Corporate Deposits Time Time Time deposits deposits deposits 25% 23% 23% [March 31, [September 30, [March 31, 2014] 2014] 2015] Liquid deposits Liquid deposits Liquid deposits 71% 72% 72% Individual Deposits Time Time Time deposits deposits dep
Slide 55: Migrations of Borrowers (RB, 1H of FY2014)
Migrations of Borrowers (RB, 1H of FY2014) Exposure amount basis *1 End of September 2014 Upward Downward Other Special Effectively Migration Migration Normal Doubtful Bankrupt Other Collection, Assignments, Watch Attention Bankrupt Repayments Sale Normal 98.7% 0.7% 0.0% 0.0% 0.0% 0.0% 0.5% 0.5% 0
Slide 56: Migrations of Borrowers (RB, 2H of FY2014)
Migrations of Borrowers (RB, 2H of FY2014) Exposure amount basis *1 End of March 2015 Upward Downward Other Special Effectively Migration Migration Normal Doubtful Bankrupt Other Collection, Assignments, Watch Attention Bankrupt Repayments Sale Normal 98.6% 0.5% 0.0% 0.0% 0.0% 0.0% 0.7% 0.7% 0.0%
Slide 57: Trend of Long-term Senior Debt Rating of Resona Bank
Trend of Long-term Senior Debt Rating of Resona Bank S&P 2003 2004 2005 2006 2007 2011 2015 Moody's R&I 2/28 9/22 1/20 1/20 12/17 6/8 4/10 3/30 9/18 8/24 JCR 5/19 2/3 1/24 6/9 5/5 2/18 9/9 1/31 9/29 A1 A+ 2/4 R&I JCR S&P A2 A Moody's A3 A- Baa1 BBB+ Baa2 BBB S&P Moody's R&I Baa3 BBB- JCR Ba1 BB+ 56
Slide 58: List of Preferred Share Issued by RHD
List of Preferred Share Issued by RHD [As of March 31, 2015] Public Funds Private Funds Class C Class F Class 4 Class 5 Class 6 Preferred Shares Preferred Shares Preferred Shares Preferred Shares Preferred Shares Distinction between public and private funds (1) Public Fund Public Fund Private Fund P
Slide 59: List of Preferred Securities and Subordinated Bonds
List of Preferred Securities and Subordinated Bonds (As of March 31, 2015) Preferred Securities Issuer Amount outstanding Issue date Maturity First call date*1 Dividend rate*2 Resona Preferred Global USD 1,150 mn 25 July 2005 Perpetual 30 July 2015 7.191% Securities（Cayman）Limited (JPY138.3 bn) Subo
Slide 60: Change in Composition of Resona HD's Total Equity
Change in Composition of Resona HD’s Total Equity (From Mar. 31, 2010 to Mar. 31, 2015) BPS (ND) is rapidly expanding => BPS(ND) 690.66 yen Resona Capital Public Funds Full （Y bn） Restructuring Plan Repayment Plan 3,000 Net Income In June 2014 160.0 Special preferred dividend for RCC pref. shares
Slide 61: Outline of Domestic Capital Regulation
Outline of Domestic Capital Regulation Subordinated debts, preferred securities and non-convertible preferred shares Existing subordinated debts and preferred securities can be fully included in Core Capital as of the end of March 2014. These grandfathering items will be subject to a 10-year pha
Slide 62: Long Term Business Results
Long Term Business Results (Ybn) FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 Gross operating profit 901.8 775.0 763.1 768.6 805.2 769.3 739.5 678.3 667.0 655.2 637.1 608.5 632.4 Net interest income 599.1 561.2 542.3 549.8 563.7 555.3 547.0 499.4 484.0 4
Slide 63: Composition of Resona HD's Common Shareholders
Composition of Resona HD’s Common Shareholders 100% 2.26% 7.47% 5.03% Other 8.96% 13.44% 6.08% Corporations 20.01% 20.01% 20.01% 6.12% 6.35% 3.83% 13.76% 15.68% Individuals, etc. 6.67% 41.95% DIC 5.83% 4.34% 4.58% 16.51% 50.11% 6.84% 6.50% 7.39% 67% 17.70% 20.80% 22.23% 19.72% 27.92% Financial 21.56
Slide 64: MMP Earnings Plan and Status of Progress
MMP Earnings Plan and Status of Progress (Ybn） Total of Group Banks FY2014 FY2015 FY2016 FY2017 (Non-consolidated) Mid-term Mid-term Mid-term Mid-term Actual Difference Forecast Difference Plan Plan Plan Plan Gross operating profit 557.0 580.5 +23.5 564.0 581.0 +17.0 570.0 600.0 Net intrest income 4
Slide 65: Forward-looking statements
The forward-looking statements contained in this presentation may be subject to material change due to the following factors. These factors may include changes in the level of stock price in Japan, any development and change related to the government’s policies, laws, business practices and their in