Aeon Financial Service Co., Ltd. · TSE:8570
Aeon Financial Service — Q2 FY2024 Earnings Presentation
41 slides from Aeon Financial Service's earnings presentation, Oct 8, 2024
Slide 1: IR Presentation on FY2024 2Q Financial Results: Script and Q&A
IR Presentation on FY2024 2Q Financial Results: Script and Q&A Time and Date: 5:00‒6:00 p.m., Tuesday, October 8, 2024 Presenters: Kenji Fujita, President and CEO Tomoyuki Mitsufuji, Director, Managing Executive Officer and General Manager of the Finance and Accounting Division
Slide 2: Summary of financial results
・Let me start with a summary of the financial results. In the first half of the fiscal year ending February 28, 2025, both revenue and profit increased year on year on a consolidated basis. We have been making efforts to optimize the use of management resources by reviewing our business portfolio wi
Slide 3: Summary of financial results (continued)
balance in the global business segment increased by 11% year on year to 972.3 billion yen. Both domestic and global business segments presented double-digit growth. ・Progress is being made in reviewing our business portfolio, and efforts are being made to concentrate management resources on growth a
Slide 4: Consolidated financial results for the first half
This slide highlights the key figures in the consolidated financial results for the first half. ○ Operating revenue was 255.7 billion yen, up 8% year on year. ○ Operating profit was 27.1 billion yen, up 34% year on year. ○ Ordinary profit was 27.1 billion yen, up 27% year on year. ○ Profit attributable
Slide 5: Consolidated results for the three months ended August 31, 2024
Here are consolidated financial results for the three months ended August 31, 2024. ○ Operating revenue was 127.8 billion yen, up 6% year on year. ○ Operating profit was 11.8 billion yen, up 7% year on year. ○ Ordinary profit was 11.1 billion yen, down 5% year on year. ○ Profit attributable to owners o
Slide 6: Domestic segment operating profit breakdown
・This slide shows a breakdown of year-on-year changes in the operating profit of the domestic business segment. ・The yellow bars represent operating revenue. Due to the business transfer of AEON Product Finance in March, revenue fell 7.9 billion yen. However, credit card revenue increased due to inc
Slide 7: Domestic business: operating receivables
・Now, I will explain the status of our domestic business segment. ・The icon in the upper right corner indicates which indicator or initiative the topic corresponds to, among our approaches to improving ROE, which we explained at the beginning of the fiscal year. ・First, let me explain the status of
Slide 8: Payment and cash advance transaction volume
・First, the graph on the left shows our payment transaction volume. The total transaction volume of e-money, WAON, and credit card shopping stood at 4,726.5 billion yen. ・The transaction volume of e-money, WAON, was down 6% year on year due to a reaction to the increased use in the last year to take
Slide 9: Gold Card Customer Thank You Day benefits
・As for shopping transaction volume, as part of our new efforts to increase group synergy, we started to offer “Customer Thank You Day” benefits in AEON Mall specialty stores to Gold Card members in April. ・On Thank You Days at the AEON mall, transaction volume with Gold Cards jumped by 10% year on
Slide 10: AEON Pay members and加盟 locations
・Let me explain AEON Pay, our smartphone payment tool. ・The number of members as of August 31, 2024 was 10.85 million, an increase of approximately 20% compared to the figure as of August 31, 2023. The number of locations accepting AEON Pay also increased by more than 1 million from the figure as of
Slide 11: Balance of high-yielding loans
・ This slide shows the changes in the balance of high-yielding loans, including those securitized. ・The balance of high-yielding loans as of August 31, 2024 stood at 816.0 billion yen, up 10% compared to the figure as of August 31, 2023, remaining on a double-digit growth trend. Compared to the figu
Slide 12: AI-driven promotions for loans
・Promotional efforts utilizing AI have also been effective in growing the balance of high- yielding loans. ・We utilized multifaceted data, including customer profiles, purchase information, and status of balance holdings, to score predicted future usage. This has enabled us to strengthen our approac
Slide 13: Housing loan transaction volume
・Next, let me explain the status of the transaction volume of our housing loans. ・The transaction volume grew significantly by 22% year on year to 320.2 billion yen. ・In March 2023, we expanded the benefits of the AEON Select Club, which offers AEON Bank housing loan customers discounts at AEON stor
Slide 14: Deposits at AEON Bank
・This slide explains deposits made to AEON Bank. ・As interest rates rise, our ability to raise funds through bank deposits is a significant competitive advantage. ・The deposit balance rose 7% year on year. It increased 310.1 billion yen compared to the figure as of March 1, 2024. ・Amid competition a
Slide 15: Cost control: bad debt and member acquisition
・Next, let me talk about our efforts to control costs. ・As shown on the left, the ratio of bad debt-related expenses to the total balance of receivables remained low. It is attributable to our efficient and low-stress efforts, such as outbound calls to customers to update their registered informatio
Slide 16: Global business segment
・Now, I will explain our global business segment. ・Operating revenues for the six months ended August 31, 2024 were historical highs in all three areas. ・Operating profit also increased, excluding the impact of the increase in costs associated with the opening of the digital bank in Malaysia at the
Slide 17: External environment in key countries
・Before discussing the financial results of our three overseas areas, let me explain the external environment in the key country in each area. ・Presented on the left are quarterly changes in real GDP growth rates. ・In Malaysia, real GDP growth is accelerating, driven by an increase in consumer spend
Slide 18: China area results
・First, I will explain the China area. ・Operating revenue reached a record high of 17.2 billion yen as measures we took to address changes in the environment proved successful, such as supporting UnionPayʼs QR payment in response to the increase in “northbound consumption.” ・However, the number of p
Slide 19: Mekong area results
・In the Mekong area, amid prolonged weakness in the economic environment, increasing the balance of receivables is imperative. However, both card and personal loan memberships have grown, and transaction volumes have increased. As a result, operating revenue grew 6% year on year to 47.6 billion yen.
Slide 20: Malaysia area results
・In Malaysia, financing through installment payment plans for individual products grew. Financing for motorcycles continued to grow, along with financing for used cars. In addition, digitalization of procedures and shortening of screening time increased the convenience of personal loans. As a result
Slide 21: Receivables and NPL ratios of overseas listed companies
・I will explain quarterly changes in the balances of receivables and the ratio of non performing loans (NPLs) at three companies listed in overseas stock markets. ・At ACS Asia, both the NPL ratio and bad debt-related expenses have risen. The rise in the NPL ratio is attributable to an increase in re
Slide 22: Financial results forecasts and dividends
・I will explain our financial results and dividend forecasts.
Slide 23: Financial results forecast
・There is no change to the financial results forecast we announced in April. ・In the domestic business segment, we have successfully accumulated receivables in revolving credit and cash advances, which offer high levels of profitability. We expect that the growth of the balance of receivables and th
Slide 24: Priority measures from second half
・I am Mr. Kenji Fujita, the President and CEO of the Company. ・Now, I will explain the priority measures we will be working on from the six months ending February 28, 2025 onward.
Slide 25: Business portfolio review
・We have reposted a slide that we showed and explained to you this January. We are currently reviewing our business portfolio to further raise our corporate value. ・In a rapidly changing business environment, it is time for us to rise to the challenge of transformation with a sense of urgency. In th
Slide 26: Four efforts for growth
・To roll out our business in growth areas more robustly and with greater speed, we believe that selection and concentration will be essential, including divestitures of, exits from, and consolidations of some businesses for higher efficiency. ・Now, I will explain four of our efforts, which are prese
Slide 27: Progress in reviewing the business portfolio
・First, let me explain making progress in reviewing the business portfolio. ・In the previous fiscal year, we executed various strategies in the domestic business segment, including integrating with AEON CREDIT SERVICE, which was our subsidiary, making FeliCa Pocket Marketing a consolidated subsidiar
Slide 28: Resource shift and Vietnam acquisition
・While we reorganize our businesses in Myanmar and the Philippines, we will appropriately shift our management resources, including human resources, to areas with high future growth potential to strengthen business development in new businesses and areas. ・ As for the acquisition of a finance busine
Slide 29: Digital bank in Malaysia
・In Malaysia, we opened a digital bank this May, which had been in preparation for some time. ・The digital bank will provide services not only to retail customers but also to corporate clients, including companies in the AEON Group, merchants, and suppliers, and take on a role in connecting customer
Slide 30: Consolidating bases and functions
・Next, let me explain improving productivity by consolidating bases and functions. ・We will further diversify our businesses as a provider of comprehensive financial services, including payment, banking, and insurance, and aim to offer convenient and valuable financial services in various aspects of
Slide 31: AEON Wallet app
・Smartphone apps are the most accessible and convenient touchpoints with customers. Last year, we renewed AEON Wallet as a comprehensive financial app. ・After the AEON Wallet renewal, which changed the displays and paths for various services, including credit card, banking, and insurance, the number
Slide 32: Maximizing group synergy
・Let me explain maximizing group synergy aimed at further capitalizing on our competitive advantage and strengthening our growth foundation. ・We serve as an infrastructure that connects the AEON Group, customers, and merchants through financial services. The expansion of new AEON Group companies and
Slide 33: Sustainability efforts
・Lastly, let me explain our sustainability efforts.
Slide 34: Vision for 2030 and materiality
・We have decided that our vision for 2030 is to become a global company that is deeply rooted in local communities and brings finance closer to everyone. We aim to support our customersʼ everyday lives through our financial services. ・To achieve this vision, we have newly established key materiality
Slide 35: Innovative financial services and financial inclusion
・In pursuing happiness through innovative financial services, which is the first materiality, we are striving to enrich the lives and happiness of our customers by working to build a safe and secure infrastructure that allows everyone to access financial services for our customers in countries in wh
Slide 36: Diversity and potential of people
・In the effort of exerting diversity and the potential of our people, we aim to create an environment in which everyone can fully demonstrate their individual abilities and feel a sense of fulfillment at work by respecting the personality and diversity of employees. ・To this end, we are working to p
Slide 37: Closing remarks
・We have explained financial results for the six months ended August 31, 2024. ・In reviewing our business portfolio, we are concentrating resources and investments on strengthening our payment infrastructure, which is the core area, and developing new businesses overseas, which is the growth area, a
Slide 38: Q&As: Daiwa Securities
[Q&As] ■ Daiwa Securities / Analyst Watanabe (1) The progress of profit in the second quarter appears to be slowing down. Could you tell me the factors that put upward pressure and downward pressure on profit relative to the projection made at the beginning of the fiscal year? (Tomoyuki Mitsufuji, D
Slide 39: Q&As (continued)
itself has decreased. As we had estimated a smaller gain on securitization this fiscal year compared to the previous fiscal year, the decline itself had been expected. (2) Your competitors have announced increases in their revolving credit fees. Could you share your intentions in this matter? Even i
Slide 40: Q&As: JP Morgan Securities
■ JP Morgan Securities / Analyst Sato (1) You aim for a credit card shopping transaction volume of 8 trillion yen this fiscal year. How do you assess your current situation? How do you view the decline in the number of active members in the domestic business segment compared to the previous quarter?
Slide 41: Q&As (continued)
see improvement in margins on an annual basis. I think that a contributing factor is the consistently high bad debt-related expenses. I would like to ask about that. (Tomoyuki Mitsufuji, Director, Managing Executive Officer and General Manager of the Finance and Accounting Division) Increasing profi
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