Aeon Financial Service Co., Ltd. · TSE:8570
Aeon Financial Service — Q1 FY2023 Earnings Presentation
35 slides from Aeon Financial Service's earnings presentation, Jul 11, 2023
Slide 1: FY2023 First 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 First Quarter IR Presentation Materials July 11, 2023 Stock Listing: Tokyo S
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: Financial Results Highlights
Financial Results Highlights (１) Increased transaction volume Domestic： Revenues increased due to expansion of business, mainly credit cards. Global ： Operating revenue in all three areas reached a record high, with double-digit sales growth in global business (２) Increase in the balance of trade re
Slide 5: The Highlights of the Consolidated Results
The Highlights of the Consolidated Results • Both in the domestic and global business, operating revenue in increased year on year • Operating profit decreased because of up bad debt expenses in both area FY2023 Consolidated YoY Forecast Progress Domestic YoY Global YoY Operating Revenue ¥116.6 bn １
Slide 6: [Domestic] Breakdown of operating profit year-on-year
[Domestic] Breakdown of operating profit year-on-year • Although business expanded mainly on credit cards, profit decreased due to the replacement of securities in the banking business, sales promotion to acquire customers, and an increase in bad debt-related expenses due to the expansion of the out
Slide 7: [Domestic] Shopping transaction and revolving credit balance
[Domestic] Shopping transaction and revolving credit balance • Number of users is steadily expanding even though more people are cutting down on their spending • Revolving credit balance growth rate shows above the industry average （Unit ： Bn JPY） 300 Shopping Transaction Volume 2,400 Transaction vo
Slide 8: [Domestic] Cash advance transaction volume and receivables balance
[Domestic] Cash advance transaction volume and receivables balance • By approaching new and inactive cardholders, the number of users has increased by double digits, and the balance has also turned positive compared to the same period of the previous year （Unit ： Bn JPY） 120 Transaction volume (LHS)
Slide 9: [Domestic] Revolving Credit and Cash Advances, and Bad Debt Related Expenses
［Domestic］ Revolving Credit and Cash Advances, and Bad Debt Related Expenses • The bad debt related expenseｓ rate for receivable balance is staying below 1% • With the increase users for revolving credit and cash advances, the receivable balance has also increased 150% Number of Revolving Credit Use
Slide 10: [Domestic] Housing loan transaction and receivables balance
[Domestic] Housing loan transaction and receivables balance • Pre-application has increased due to a revision of benefits for mortgage borrowers （Unit ： Bn JPY） Housing loan transaction volume 250 4,000 ➣ １Q Result： 138.8bn （YoY 90%） Transaction volume (LHS) ➣ With the changes in the interest rate R
Slide 11: Highlights by segments of Global Business
Highlights by segments of Global Business • While operating revenue has increased in all three areas, the Mekong and Malay areas have decreased in operating profits due to the increase in bad debt related expenses • In the China Area, operating profit has achieved a record-high in 1Q due to the succ
Slide 12: [Global] Breakdown of operating profit year-on-year
[Global] Breakdown of operating profit year-on-year • The main factor behind the decrease in OP YoY is the higher bad debt related expenses in the Mekong and Malay areas Revenue Expenses Unit ： Bn JPY China Mekong Malay Area Area Area +0.6 ▲2.5 ▲2.8 Unit ： Bn JPY １2.8bn Revenue Expenses Revenue ＋2.1
Slide 13: [Global] External environment for bad debt expenses
[Global] External environment for bad debt expenses Soaring prices of commodities and energy is squeezed household budgets • In Thailand, the consumer price index has risen for 23 consecutive months (as of July 2023), but the minimum wage has remained unchanged since October 2022 • In Malaysia, cons
Slide 14: [Global] Operating Receivables and NPL of ACS Asia (HK)
[Global] Operating Receivables and NPL of ACS Asia （HK） • The receivables continue to expand • Although the bad debt related expenses has increased, the NPL ratio and the ratio to the balance outstanding receivables are stable Factors influenced （bn） Bad Debt Related Expenses 12.0% Total loans and b
Slide 15: [Global] Operating Receivables and NPL of AEON Thana Sinsap (Thai)
[Global] Operating Receivables and NPL of AEON Thana Sinsap （Thai） • Due to the government's reduction in debtor protection measures, economic stagnation, and rising prices, the NPL ratio is showing an upward trend • Due to stricter screening, the increase in receivables has slowed down Factors infl
Slide 16: [Global] Operating Receivables and NPL of ACS Malaysia
[Global] Operating Receivables and NPL of ACS Malaysia • Bad debt related expenses in the previous 1Q improved significantly due to special factors • In the current period, bad debt related expenses to receivables are showing an increasing trend, controlled within a certain range （bn） Factors influe
Slide 17: 2 Priority Measures
2 Priority Measures AEON Financial Service Co., Ltd. 17
Slide 18: [Domestic] Expanding the number of IDs (AEON Pay)
[Domestic] Expanding the number of IDs (AEON Pay) • In the 1Q, acquired 470,000 cardholders (YoY 101%) • AEON Pay members expanded to 8.36 million, cross-selling to various services by expanding functions Expansion of AEON Pay membership ➢ From June 14, in addition to AEON Card payment, a charge pay
Slide 19: [Domestic] Expanding the number of IDs (cooperation with the AEON Group)
[Domestic] Expanding the number of IDs （cooperation with the AEON Group) • Depending on customer attributes and stores visited, promote effective use of channels and recruitment systems Promotion of affiliated cards with Welcia ➢ Starting with the Welcia Card, which launched its own benefits in June
Slide 20: [Domestic] Expanding the number of IDs (cooperation with the AEON Group)
[Domestic] Expanding the number of IDs （cooperation with the AEON Group) • Joint promotion of membership acquisition of AEON Group's new online supermarket "Green Beans", which began full-scale operation on July 10 in parts of Tokyo's 23 wards and Chiba City AEON Financial Service Co., Ltd. 20
Slide 21: [Domestic] Increasing the transaction volumes of credit card business
[Domestic] Increasing the transaction volumes of credit card business • Improve the initial operation rate by promoting virtual cards that can be issued instantly online, promote gold card membership, and strengthen measures to connect card enrollment to use Initiatives to improve initial usage Init
Slide 22: [Domestic] Increasing the transaction volumes of housing loans
[Domestic] Increasing the transaction volumes of housing loans • Appealing to customers the strengths of AEON Bank, which combines online convenience with the peace of mind of physical stores, and the unique benefits of the AEON Group Pre-application Application The convenience of the online & the r
Slide 23: [Global] Advancement of credit and collection methods
[Global] Advancement of credit and collection methods • Enhancing methods at each stage of transactions and strengthening control of bad debt costs Application Screening Debt collection Optimize credit decisions Establishment of a timely Measures for online for those who lack external and appropriat
Slide 24: [Global] Initiatives to increase revenues
[Global] Initiatives to increase revenues • "Going online" and "capturing inbound demand" will lead to new revenue opportunities ACSM 1Q Operating Revenue : ¥15.1bn Application completely online Recoveries of written (Malaysia) off receivables ９％ others 9％ ➢ For personal loans, we plan to make them
Slide 25: Purpose-formulation
Purpose-formulation • Formulate a common decision-making axis for the AFS Group to maximize the value provided to customers and enhance corporate value AEON Financial Service Co., Ltd. 25
Slide 26: 3 Earnings and Dividend Forecasts
３ Earnings and Dividend Forecasts AEON Financial Service Co., Ltd. 26
Slide 27: FY2023 earnings forecast, dividend forecast (unchanged)
FY2023 earnings forecast, dividend forecast (unchanged) • 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 p
Slide 28: Appendix
Appendix AEON Financial Service Co., Ltd. 28
Slide 29: Consolidated Balance Sheet
Consolidated Balance Sheet （Unit ： FY 2023 FY 2023 billions of yen） Results YTD Results YTD Cash and deposits 760.2 △ 8.2 Deposits 4,428.0 +3.0 Accounts Operating Loans 895.7 +5.0 payable-trade 294.1 +3.8 Loans and bills Interest-bearing debt discounted for banking 2,230.2 +6.9 1,260.1 +4.9 (excl. d
Slide 30: Results by Segment
Results by Segment （Unit ： Domestic Global Consol. billions of yen） Total ※1 Total ※1 China Mekong Malay Total ※2 Retail Solutions Area Area Area Operating 71.3 42.8 44.7 45.3 6.7 21.6 16.9 116.6 Revenue YoY 105％ 104％ 107％ 116％ 146％ 107％ 120％ 109％ Operating 1.3 0.07 1.7 8.1 2.1 2.7 3.2 9.1 Profit Yo
Slide 31: Results by Area
Results by Area Transaction Operating (Unit ： billions of yen) YoY receivables YTD volume (Before securitization) Credit card 1,857.7 110% 1,688.7 +95.9 Card shopping 1,757.2 109% 1,280.8 +83.3 Domestic Cash advances 100.4 117% 407.8 +12.5 Installment finance 51.3 102% 729.5 +6.4 Housing loan 138.8
Slide 32: 1Q Performance of Three Overseas Listed Companies (Local currency)
1Q Performance of Three Overseas Listed Companies （Local currency） FY 2022 FY 2023 Results Results YoY AEON Revenue 279,059 379,953 136% CREDIT SERVICE Profit before tax 98,234 117,458 119% (ASIA) HK$’000 Profit for the period 82,663 96,967 117% AEON Revenue 5,484,649 5,459,191 1００% THANA SINSAP Pro
Slide 33: 1Q Performance of Three Overseas Listed Companies (Yen conversion)
1Q Performance of Three Overseas Listed Companies （Yen conversion） FY 2022 FY 2023 (Unit ： billions of yen) Exchange rates Results Results YoY Operating ４.４ 6.5 149% AEON Income Exchange rates HKD 1 CREDIT Operating 1.5 2.0 131% ・ FY2022 1Q ： ¥15.80 SERVICE Profit ・ FY202３ 1Q ： ¥17.33 (ASIA) Net Inc
Slide 34: Transaction Volume and Operating Receivables of Global Business
Transaction Volume and Operating Receivables of Global Business China Area Mekong Area Malay Area Global Business （Unit : billions of yen) YoY YoY YoY YoY (Change) (Change) (Change) (Change) Transaction volume 50.1 150% 70.1 112% 14.3 113% 134.6 124% Credit card Operating Receivables 82.5 +26.6 172.
Slide 35: 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 Total Area Area Area Allowance for doubtful accounts balance at 57.1 3.8 53.7 6
AEON Financial Service — Q1 FY2023 Earnings Presentation on 6ix