Aeon Financial Service Co., Ltd. · TSE:8570
Aeon Financial Service — FY2017 Earnings Presentation
36 slides from Aeon Financial Service's earnings presentation, Jun 15, 2018
Slide 1: AEON Financial Service Co., Ltd.
AEON Financial Service Co., Ltd. 1
Slide 2: Consolidated results and business outline
Consolidated results and business outline: Record high results and increase in ordinary income & ordinary profit for six consecutive terms （Unit: Billions of yen) 1Q 2Q 3Q 4Q FY2017 Results YoY Results YoY Results YoY Results YoY Results YoY Ordinary income 94.0 +4% 100.4 +11% 102.1 +9% 111.2 +11% 4
Slide 3: Consolidated results of business scale
Consolidated results of business scale FY2016 4Q FY2017 1H FY2017 Change from Change from Results YoY Results start of FY Results start of FY 38.94 mil +1.72 mil 39.84 mil +0.90 mil 40.64 mil +1.70 mil ➊ No. of cardholders No. of domestic 26.92 mil +1.04 mil 27.39 mil +0.47 mil 27.75 mil +0.83 mil c
Slide 4: Results by segment
Results by segment Domestic total Global total (Unit： China Mekong Malay Adjustments Total Billions of yen） ※1 Retail Solutions ※1 Area Area Area Ordinary income 279.1 177.3 171.0 123.7 19.4 63.9 40.3 -64.1 407.9 YoY +7％ +8％ +6％ +11％ +3％ +13％ +14％ +5％ +9％ Change +19.2 +13.2 +9.8 +12.6 +0.5 +7.1 +4.9
Slide 5: Domestic/Global area results by graph
Domestic/Global area results by graph ■During the period, securitization of receivables arising from inter-company transactions between domestic Securitization’s effect on subsidiaries (APF&AHLS→ABK) was recorded on the BS. For the purpose of compressing level of risk assets, consolidated results: t
Slide 6: Consolidated balance sheet
Consolidated balance sheet Consolidated results Change from Topics ※（）:Change from start of FY （Unit：Billions of yen） FY2017 start of FY ・Domestic balance: ¥616.7bn (+¥111.6bn) Cash and deposits 650.4 +115.8 →increase in funds due to securitization of receivables Loan and bills discounted 2,271.6 +4
Slide 7: Improve profitability of asset ~capital efficiency by securitization~
Improve profitability of asset ~capital efficiency by securitization~ ■Improvement of yield and duration gap as well as compression of risk asset through funding by securitization continues in view of increasing transactions volume and thus finance receivables (Unit: billions FY2016 FY2017 of yen) H
Slide 8: Implementation of IFRS9: Change in calculation method for allowance for doubtful accounts
Implementation of IFRS9: Change in calculation method for allowance for doubtful accounts ■ IFRS9 to be implemented in key overseas subsidiaries with respect to finance receivables in the consolidated earnings results ■ Shift from ‘incurred loss’ model to ‘expected credit loss’ (ECL) impairment mode
Slide 9: Progress and schedule of system/IT investments
Progress and schedule of system/IT investments FY2015 FY2016 FY2017 FY2017 FY2018 KPI for system/IT Investments Results Results Plan Results Plan (Revised) Consolidated ordinary income (YoY) +9％ +4％ +4％ Outperform +9％ +10％→+8％ → Consolidated ordinary income ¥359.6bn ¥375.1bn ¥390.0bn ¥407.9bn ¥440.0
Slide 10: Future Direction – Construction of AFS ecosystem
Future Direction － Construction of AFS ecosystem － AEON Financial Service Co., Ltd. 10
Slide 11: Our Vision: Asia's No. 1 Retail Financial Service Company
Our Vision “Asia’s No. 1 Retail Financial Service Company ■ Aim: To build the most recognized ecosystem in Asia and promote rapid expansion of customer base by 2025 ■ Increasing transactions volume, provision of low-cost & low-risk products through data analysis AFS Ecosystem Other ecosystems Needs-
Slide 12: Domestic: Reformation of business model
Domestic: Reformation of business model ■ Strengthening asset management services: Provision of convenient products/services which are of good value % of Customer’s needs households Net savings※2 Present Solution in Japan※1 Age: 20～40 yrs ・Insufficient products/ Preparation for the 24％ 20-40 yrs: -¥
Slide 13: Global: Expansion of customer ID base through prepaid/smartphone payment services
Global: Expansion of customer ID base through prepaid/smartphone payment services ■Expansion of IDs in regions where AEON Group stores are present (e.g. Malaysia) Airline Gasoline Expansion of customer base by increasing alliances with various AEON sectors Malaysia Merging customer data within t
Slide 14: Main initiatives in FY2018
Main initiatives in FY2018 ■ Promotion towards complete digital shift ■ Catering a full range of products/services to meet the needs of our customers ■ Speeding up the growth of our global business AEON Financial Service Co., Ltd. 14
Slide 15: Addition of smartphone application functions
Addition of smartphone application functions ■Promote further recruitment of new cardholders through adding new functions (channels) to smartphone apps Addition of payment functions, e-receipts, timely distribution of AEON Wallet coupons etc Timely services Cardless transactions Distribution of e- P
Slide 16: Improve internal system through utilization of data (Domestic)
Improve internal system through utilization of data (Domestic) ■ Aim: To provide one-to-one asset management services best-suited to our customers through the utilization of information platform ■ Responding to the needs of our customers through effective use of our various channels ■ Building of a
Slide 17: Initiatives for improving labor productivity (Domestic)
Initiatives for improving labor productivity (Domestic) FY2018 Main areas of investments Main initiatives (Total amount: ¥35.0bn) Mobile app: Addition of asset management and payment function Keywords: Convenient Good value Satisfied Digital Shift Expansion of fee business and development of new 【To
Slide 18: Enhancing the current business (Global)
Enhancing the current business (Global) ■ Encourage more usage of our credit cards through issuing premium cards and promotions for co-branded cards ■ Promote cross-selling through adding new functions in the current mobile apps and stronger marketing efforts Issuance of new New: Start issuance in H
Slide 19: Expansion of new income source while creating social impact (Global)
Expansion of new income source while creating social impact (Global): Long-term growth through solving social issues FY2017 FY2018 Creating employment Services closely attuned to opportunities to boost customers’ lifestyles income of locals Introducing e-money payment app ・Reduce cost of holding cas
Slide 20: Forecast of Results for FY2018
Forecast of Results for FY2018 ■ Evolution of AFS ecosystem with the construction of a strong customer base and business foundation ■ Revamp business model in view of improving receivables portfolio and profit structure FY2018 Forecast YoY Ordinary income ¥440.0bn +7.0％ Ordinary profit ¥72.5bn +10.3
Slide 21: Aeon Credit Service Malaysia BHD Financial Performance and Key Policy
Aeon Credit Service Malaysia BHD Financial Performance and Key Policy AEON Financial Service Co., Ltd. 21
Slide 22: Financial Performance, FYE2018
Financial Performance, FYE2018 1HY 2HY Total （RM Million、%） <Sales Growth> Actual vsLY Actual vsLY Actual vsLY ‧ Credit Card : New card issue by 40,000 ‧ Motor bike :Shift to higher price segment, growth by 19% Credit card 585.7 109 660.6 116 1,246.3 113 ＜Sales decline＞ ‧ Super Bike :69% against las
Slide 23: FYE2018 KPI
FYE2018 KPI ■NPL – Improvement of asset quality by tightening credit criteria contributed minimum level of NPL growth ■NCC – 111% against receivables, 110% against receivables as of LY, 103% against profit from credit loss as of LY ■Reduction of impairment loss of Motor bike easy payment and Car eas
Slide 24: FYE2018 Key Policy – Expansion of Settlement Business
FYE2018 Key Policy – Expansion of Settlement Business 【Credit Card business】 ■Credit card members to 260,000 cards by expansion of recruitment channel ■Expansion of privilege merchant, number of acquiring device increased to 2050 units (202% vs LY) (RM’ Million) Card Holders、Transaction Volume (‘000
Slide 25: FY2017 – Key Policy – Portfolio Shift
FY2017 – Key Policy – Portfolio Shift 【MOPED / GEP】 ■MOPED shifting to small motor bikes higher price range and UCEP shifting to second hand cars of Japanese brand for higher income segment ■Car EP has implemented merchant management system and product portfolio to shift to better asset quality ■MOP
Slide 26: FY2018 Key Policy
FY2018 Key Policy AEON Financial Service Co., Ltd. 26
Slide 27: External Environment・Market Trend
External Environment・Market Trend ■Continued demographic shift to mid-to-high income group with sustained GDP growth of 5% level ■Overall growth rate of retail sector in year 2017 is 2%. Progress in shift from brick-and mortar stores to e-commerce. ■Motor Bike market and automobile market are expect
Slide 28: Challenges and corresponding policies
Challenges and corresponding policies ■Bulk of customers are in income segment of less than RM2000. Task: Acquire more customers from higher income segments ■To increase product lines to expand customer-base. To integrate customer database for effective usage ■Shift of EP business model to middle ri
Slide 29: Expansion of customer-base and asset portfolio
Expansion of customer-base and asset portfolio ■Introduction of E-Money and Aeon Wallet as common group platform ■Expansion of customer base by integration of group customer data and alliance with external parties ■Penetration into higher income and lower risk customer segment utilizing integrated g
Slide 30: Business Model Transformation、IT investment
Business Model Transformation、IT investment ■Transformation from B2B model with physical merchant presence as touch points to B2C model with mobile touch points ■To enable pre-approval utilizing mobile touch points ■Intensive investment in IT infra to modernize touchpoints for better customer experi
Slide 31: FY2018 - Key Policy - Sustainability
FY2018 - Key Policy - Sustainability ■Paperless operation by digitalization. ■Nationwide activities for conservation of natural environment ■Engagement in local communities through CSR activities including participation to Digital Johor Project ■Adherence to Malaysian Corporate Governance Code relea
Slide 32: (Reference) FY2017 Results (Hong Kong, Thailand, Malaysia)
(Reference) FY2017 Results (Hong Kong, Thailand, Malaysia) FY2016 FY2017 Results YoY Results YoY AEON Total Revenue (※2) 1,309,198 99％ 1,337,034 102％ CREDIT Profit before tax 367,234 120％ 447,265 122％ SERVICE (ASIA) Profit for the period attributable to : 298,796 120％ 371,148 124％ (HK$’000) Owners o
Slide 33: (Reference) FY2017 Results (Hong Kong, Thailand, Malaysia)
(Reference) FY2017 Results (Hong Kong, Thailand, Malaysia) ■ Consolidated Results of AEON Credit Service (Asia) Co., Ltd. FY2016 FY2017 Exchange rate: HKD1 ・FY2016: ¥14.09 Results Results YoY ・FY2017: ¥14.27 Ordinary income ¥18.4bn ¥19.0bn +3％ Fiscal period ・2016: Mar. 1～Feb. 28 Ordinary profit ¥5.1
Slide 34: (Reference) Allowance for Doubtful Accounts and Allowance for Loss on Refund of Interest Received by Segment
(Reference) Allowance for Doubtful Accounts and Allowance for Loss on Refund of Interest Received by Segment ■ Allowance for Doubtful Accounts (by Segment) ■ Allowance for Loss on Refund of Domestic Interest Received Retail Solutions Total FY2016 FY2017 Allowance for doubtful accounts, beginning of
Slide 35: (Reference) FY2018 Business Plan (Domestic)
(Reference) FY2018 Business Plan (Domestic) FY 2016 FY 2017 Change from Results start of FY Plan YoY Number of cardholders 27.75mil +0.83mil 28.50mil +1.05mil Results YoY Plan YoY Card shopping transaction volume 4,955.4bn +9.7％ 5,500.0bn +11.1％ Change from Results start of FY Plan YoY Balance of ca
Slide 36: 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 — FY2017 Earnings Presentation on 6ix