Aeon Financial Service Co., Ltd. · TSE:8570
Aeon Financial Service — Q2 FY2023 Earnings Presentation
38 slides from Aeon Financial Service's earnings presentation, Oct 10, 2023
Slide 1: FY2023 Second Quarter IR Presentation Materials
This is an abridged translation of the original Japanese document and is provided for informational purposes only. If there are any discrepancies between this and the original, the original Japanese document prevails FY2023 Second Quarter IR Presentation Materials October 10, 2023 Stock Listing: Tok
Slide 2: Contents
Contents １ Financial Results Highlights ２ Priority Measures 3 Earnings and Dividend Forecasts Appendix AEON Financial Service Co., Ltd. 2
Slide 3: 1 Financial Results Highlights
1 Financial Results Highlights AEON Financial Service Co., Ltd. 3
Slide 4: Summary of Financial Results
Summary of Financial Results (１) First Half Performance ▻ Although revenues increased due to an increase in transaction volume, consolidated operating profit was ¥20.2 bn (YoY 64%) due to an increase in expenses (2) Stock stacking ▻ Outstanding operating receivables steadily increased in Domestic an
Slide 5: The Highlights of the Consolidated Results
The Highlights of the Consolidated Results [Domestic] : Operating profit decreased due to an increase in bad debt related expenses due to an increase in the balance of loans and sales promotion expenses to expand the customer base [Global] : Although bad debt related expenses increased, top line sal
Slide 6: The Highlights of the Consolidated Results -2Q Fiscal Quarter
The Highlights of the Consolidated Results -2Q Fiscal Quarter [Domestic] : ¥400mn in business integration costs recorded as an extraordinary loss [Global] : Operating profit in the Malay area increased by 145% YoY, and the business turned to higher profits Consolidated YoY Domestic YoY Global YoY Op
Slide 7: [Domestic] Breakdown of Operating Profit
[Domestic] Breakdown of Operating Profit • Increased sales due to expansion of shopping and cash advance use due to revitalization of consumption • Profit decreased due to an increase in bad debt related expenses associated with an increase in outstanding balances and sales promotion expenses to exp
Slide 8: [Domestic] Shopping Transactions and Receivables
[Domestic] Shopping Transactions and Receivables • Transaction volume was driven by travel and leisure as daily consumption recovered • Revolving balances continue to grow at double-digit rates year-on-year due to the expansion of users （Unit ： Bn JPY） Shopping Transaction Volume 3,200 Installment p
Slide 9: [Domestic] Cash advance transaction volume and receivables balance
[Domestic] Cash advance transaction volume and receivables balance • Approach to new and dormant members continues to drive double-digit yoy growth in transaction volume • The balance also turned positive YoY from FY23 1Q and has been on an upward trend （Unit ： Bn JPY） Cash Advances Transaction Volu
Slide 10: [Domestic] Revolving Credit and Cash Advances, and Bad Debt Related Expenses
［Domestic］ Revolving Credit and Cash Advances, and Bad Debt Related Expenses • The ratio of bad debt-related expenses to outstanding receivables remains low at less than 1% • The number of users of both revolving and cash advances continued to increase, and the outstanding amount of receivables expa
Slide 11: [Domestic] Housing loan transaction and receivables balance
[Domestic] Housing loan transaction and receivables balance • Competitive interest rates and expanded AEON Select Club benefits led to a 30% year- on-year increase in pre-registrations • Transaction volume is currently recovering, and balances are steadily accumulating. Number of pre-application （Re
Slide 12: [Domestic] Status of ID expansion
[Domestic] Status of ID expansion • Although the acquisition of new members was sluggish, the number of active members increased due to the success of improving initial operation and promoting the use of gold cards （Unit ： Mil JPY） 70.0% 20 Number of active card holder*1(RHS) Number of new members a
Slide 13: Global Business by Segment 1H Performance Highlights
Global Business by Segment 1H Performance Highlights • Operating revenue increased in all three and sales and profits continued to increase in China area • In the 2Q accounting period, profits also increased in the Malay area, and the Global business also turned to higher revenues and profits 1H Chi
Slide 14: [Global] 1H Operating Profit Breakdown
[Global]1H Operating Profit Breakdown • The main reason for the decline in the previous FY was an increase in bad debt related expenses in the Mekong and Malay area China Mekong Malay （Unit ： Bn JPY） Area Area Area Revenue +0.8 ▲2.7 ▲1.5 Expense 2１.8 Revenue Expenses ＋2.9 Revenue ＋3.8 Expenses Reven
Slide 15: [Global] Operating Receivables and NPL of ACS Asia (HK)
[Global] Operating Receivables and NPL of ACS Asia （HK） • Outstanding receivables increased steadily to YoY 139% • Take preventive measures against sudden bankruptcy risk and expect bad debt related expense to peak out in the 2H of the FY （Unit ：Bn JPY） External environment Total loans and bills dis
Slide 16: [Global] Operating Receivables and NPL of AEON Thana Sinsap
[Global] Operating Receivables and NPL of AEON Thana Sinsap • NPL ratio continues to rise, but revision of provision rate calculation method controls bad debt related expenses External environment （Unit ：Bn JPY） ➣ CPI rises for 24 consecutive months (as of Aug. 2023) Total loans and bills discounted
Slide 17: [Global] Operating Receivables and NPL of ACS Malaysia
[Global] Operating Receivables and NPL of ACS Malaysia • In the 1Q of the previous FY, bad debt related expenses improved significantly due to special factors • Outstanding receivables mainly personal loans steadily expanded, but NPL ratio remained stable （Unit ：Bn JPY） External environment 12.0% 40
Slide 18: 2 Priority Measures
2 Priority Measures AEON Financial Service Co., Ltd. 18
Slide 19: Maximize the value provided to customers
Environment Surrounding the Company and the Direction of Initiatives • Re-organize Domestic business and reform overseas business models in order to maximize the value provided to customers Maximize the value provide to customers AEON Financial Service Co., Ltd. 19
Slide 20: [Domestic] Expansion of Touchpoints (AEON Wallet)
[Domestic] Expansion of Touchpoints (AEON Wallet) • Expanding the functions of the AEON Wallet app according to the customer's lifestyle • Expand new customer base and promote cross-selling by accumulating data through apps Consultation Appointment Expansion of small-amount, Card Financial Expansion
Slide 21: [Domestic] Expansion of the Economic Zone
[Domestic] Expansion of the Economic Zone (Strengthening of Regional Cooperation) • Consolidated FeliCa Pocket Marketing, which provides Community Currency and apps • Expanding community-based services to local governments Hometown tax payment local Customer governments Community Community Currency
Slide 22: [Global] Control of bad debt related expenses
[Global] Control of bad debt related expenses • Enhance sophistication at each transaction stage to strengthen control of bad debt expenses Utilization of AI Talkbots ➣ Thorough identity verification through e-KYC(Thailand, Malaysia) Improving collection Application efficiency with AI ➣ Introduction
Slide 23: [Global/Hong Kong] Expansion of payment opportunities
[Global/Hong Kong] Expansion of payment opportunities • Expand mobile payment capabilities to improve customer experience 4Q～ Issuance of Virtual Card 3Q Introduction of NFC payment 2Q Introduction of UnionPay QR Code AEON Financial Service Co., Ltd. 23
Slide 24: [Global/Thailand] Expansion of payment opportunities
[Global/Thailand] Expansion of payment opportunities • Incorporate the code payment function into the company's app to acquire new customers and expand transaction volume Scheduled to be introduced Introduced after the 3Q Prompt Pay Payment Apps Scan to pay in Thailand In Thailand, where the cashles
Slide 25: [Global/Malaysia] Expansion of revenues
[Global/Malaysia]Expansion of revenues • Completely online application flow improves the convenience of personal loans Pass the screening Original flow Loan Visit the store Visit the store application and verify ID and sign Passed the Fully ✔ Introduced screening online Scheduled to be introduced af
Slide 26: [Global/Malaysia] New Business Models
[Global/Malaysia] New Business Models • AEON Digital Bank caters for our own ecosystem ACTIVATING THE AEON LIVING ZONE We look to provide our own customers all their financial needs ※Image is for illustration purposes AEON Financial Service Co., Ltd. 26
Slide 27: 3 Earnings and Dividend Forecasts
３ Earnings and Dividend Forecasts AEON Financial Service Co., Ltd. 27
Slide 28: FY2023 earnings forecast, dividend forecast
FY2023 earnings forecast, dividend forecast • There is no change in earnings and dividend forecasts Consolidated YoY Domestic YoY Global YoY Operating ¥480.0 bn １０6 ％ ¥290.0 bn １０3 ％ ¥190.0 bn １12 ％ Revenue Operating ¥61.0 bn 104 ％ ¥19.0 bn 11１ ％ ¥43.０ bn 101 ％ Profit Ordinary Dividend per share Pay
Slide 29: AEON Financial Service Co., Ltd.
AEON Financial Service Co., Ltd. 29
Slide 30: Appendix
Appendix AEON Financial Service Co., Ltd. 30
Slide 31: Consolidated Balance Sheet
Consolidated Balance Sheet （Unit ： FY 2023 FY 2023 billions of yen Results YTD Results YTD Cash and deposits 698.0 △ 144.5 Deposits 4,506.0 +108.1 Accounts Operating Loans 899.9 +54.6 payable-trade 286.8 +31.1 Loans and bills Interest-bearing discounted for 2,235.7 +74.9 debt 1,295.1 +84.5 banking b
Slide 32: Results by Segment
Results by Segment （Unit ： Domestic Global Consol. billions of yen） Total ※1 China Mekong Malay Retail Solutions Total ※1 Area Area Area Total ※2 Operating 144.２ 85.7 93.0 94.2 14.2 45.0 34.8 237.５ Revenue YoY 10２％ 100％ 109％ 117％ 136％ 109％ 121％ 107％ Operating 1.6 0.4 2.2 18.4 4.2 6.8 7.3 20.2 Profit
Slide 33: Results by Area
Results by Area Transaction Operating (Unit ： billions of yen) YoY receivables YTD volume (Before securitization) Credit card 3,678.2 1１0% 1,709.2 +116.4 Shopping 3,491.9 110% 1,306.5 +109.1 Domestic Cash advances 186.2 115% 402.6 +7.3 Installment finance 103.5 106% 733.8 +10.7 Housing loan 263.2 93
Slide 34: 2Q Cumulative Results of Overseas Listed Companies (Local Currency)
2Q Cumulative Results of 3 Overseas Listed Companies (Local Currency) FY 2022 FY 2023 Results Results YoY AEON Revenue 571,730 783,109 137% CREDIT SERVICE Profit before tax 211,111 230,865 118% (ASIA) HK$’000 Profit for the period 176,774 191,426 117% AEON Revenue 10,960,066 11,135,562 102% THANA SI
Slide 35: 2Q Cumulative Results of Overseas Listed Companies (Yen conversion)
2Q Cumulative Results of 3 Overseas Listed Companies （Yen conversion） FY 2022 FY 2023 Exchange rates Results Results YoY Operating 9.４bn 13.9bn 148% AEON Income （JPY / HKD） CREDIT Operating 3.4bn 4.1bn 118% ・ FY2022 ２Q ： ¥16.49 SERVICE Profit ・ FY202３ ２Q ： ¥17.79 (ASIA) Net Income 2.9bn 3.4bn 117% O
Slide 36: Transaction Volume and Operating Receivables of Global Business
Transaction Volume and Operating Receivables of Global Business China Area Mekong Area Malay Area Global Business (Hong Kong) (Thailand) （Unit : billions of yen) YoY YoY YoY YoY (Change) (Change) (Change) (Change) Transaction volume 104.1 133% 146.8 114% 29.0 114% 280.1 120% Credit card Operating Re
Slide 37: Allowance for Doubtful Accounts and Provision for Loss on Interest Repayment by Segments
Allowance for Doubtful Accounts and Provision for Loss on Interest Repayment by Segments [Allowance for Doubtful Accounts ] Domestic Global Consol. （Unit ： billions of yen） China Mekong Malay Total Retail Solutions Total Area Area Area Total Allowance for doubtful accounts balance at 57.1 3.8 53.7 6
Slide 38: Forward-looking statements
Statements contained in this report with respect to the Company’s management strategies, business policies and results forecasts are forward- looking statements about the future performance of the Company, which are based on the assumptions and beliefs in light of the information currently available
AEON Financial Service — Q2 FY2023 Earnings Presentation on 6ix