Fukuoka Financial Group, Inc. · TSE:8354
Fukuoka Financial — Investor Presentation (October 2015)
52 slides from Fukuoka Financial's investor presentation, Oct 19, 2015
Slide 1: FFG Growth Strategies
－ To be your Bank of choice － Fukuoka Financial Group FFG Growth Strategies October 2015
Slide 2: Contents
－ To be your Bank of choice － Contents Part Ⅰ FFG Growth Strategies Part Ⅱ About Fukuoka Financial Group Page Page 4. An Overview of FFG 17. Corporate Data 5. History of FFG 18. Stock Data 6. Improving Profit Structure 19. Market Share of Subsidiary Banks 7. Changes in Business Results 8. Potential
Slide 3: Contents
－ To be your Bank of choice － Contents Part Ⅲ Financial Data Part Ⅳ Our Mother Market “ Kyushu ” Page Page 21. Financial results for FY2014 43. Feature of Kyushu Economy 22. Projections for FY2015 44. Financial Map of Kyushu 23. Transition of Core business profit 45. Inbound effect on Kyushu 24. Loa
Slide 4: Part I: FFG Growth Strategies
－ To be your Bank of choice － Part I FFG Growth Strategies Fukuoka Fukuoka Saga Oita Nagasaki Kyushu Kumamoto Sasebo(Nagasaki) Miyazaki Kumamoto Kagoshima
Slide 5: An Overview of FFG
－ To be your Bank of choice － An Overview of FFG f FFG is a total financial group that includes 3 regional banks based in Kyushu and a securities company. f Established the “Multiple Brands/Single Platform” management style best suited to the integration of Japanese regional banks. Company Outline
Slide 6: History of FFG
－ To be your Bank of choice － History of FFG f Achievement of steady growth, including business expansion, while gradually progressing through phases over an eight-year period since management integration. Preparation for growth Switch to Switch to growth trends stable earnings structure Phase Run-u
Slide 7: Improving Profit Structure
－ To be your Bank of choice － Improving Profit Structure f Improve profit structure by increasing management efficiency through the construction of a single platform Changes in Personnel Organization 68.0% OHR Planning & Planning & 62.5% management management 58.9% 57.8% Total staff 57.3% services S
Slide 8: Changes in Business Results
－ To be your Bank of choice － Changes in Business Results f Consolidated net income showed a consecutive increase in profit for four terms and stood at a record high for three consecutive terms under a harsh business environment with ultra-low interest rates, as a result of improvements in profit st
Slide 9: Potential of our local Kyushu
－ To be your Bank of choice － Potential of our local “Kyushu” f New sources of growth are emerging in Kyushu, and there is ample opportunity for the island to develop markets overseas, mainly in other parts of Asia. f FFG’s development is tied to the economic development of Kyushu. Global GDP Rankin
Slide 10: FFG's Growth Potential
－ To be your Bank of choice － FFG’s Growth Potential f Although FFG holds the top market share in Kyushu, there is still significant room for development. Kyushu’s Financial Market Saving unions Japan Post Bank FFG FFG 16% 20% 24% 22% Mega banks 8% Deposits Loans Saving unions Local banks 21% 35% Lo
Slide 11: Fourth Mid-Term Management Plan
－ To be your Bank of choice － Fourth Mid-Term Management Plan f In the Fourth Mid-Term Management Plan (ABC Plan II), FFG looks to achieve a “significant expansion of its business base” through “structural reforms” originating with its customers, with the aim of becoming a total financial group with
Slide 12: Key Policies in ABC Plan II
－ To be your Bank of choice － Key Policies in ABC Plan II f Develop and expand business strategies targeting all levels of corporations and individuals f Support business strategies through business and administrative reform, strengthening IT infrastructure, and human resources development Expand an
Slide 13: Reforming Earning Structure
－ To be your Bank of choice － Reforming Earning Structure f Build up earnings of 13 billion yen in three years through reforming earning structure f Cover impact of declining yields on loans through loan volume and reforming earning structure (¥ bil.) Core business profits (3 banks’ total) Increased
Slide 14: Bottoming Out of Net Interest Income
－ To be your Bank of choice － Bottoming Out of Net Interest Income f In FY 2015, FFG will achieve a reverse increase in net interest income in the full term for the first time since FFG was established, which will lead to further growth in the next mid-term management plan. Net Interest Income (3 ba
Slide 15: ROE & Shareholder Returns
－ To be your Bank of choice － ROE & Shareholder Returns f FFG aims to improve capital efficiency in the mid- and long-term by achieving reform in earnings structure and expanding our business base. f Shareholder returns shall be conducted based on the balance between securing capital adequacy and en
Slide 16: Projections for FY2015
－ To be your Bank of choice － Projections for FY2015 f FFG plans to achieve a core net business profit of 74 billion yen and a net income of 37 billion yen in FY 2015. f The first quarter was off to a good start with a progression rate of 46% for net income. Actual Planned Actual (¥ bil.) 《Changes i
Slide 17: Part II: About Fukuoka Financial Group
－ To be your Bank of choice － Part Ⅱ About Fukuoka Financial Group
Slide 18: Corporate Data
－ To be your Bank of choice － Corporate Data Corporate Governance As of August 1, 2015 【Senior Management】 General Meeting of Masaaki Tani Takashige Shibato Shareholders Audit & Supervisory FFG Chairman FFG President Board 3 (2 external members) Bank of Fukuoka Bank of Fukuoka Board of Directors 1
Slide 19: Stock Data
－ To be your Bank of choice － Stock Data as of March 31, 2015 Share Information Major Shareholders （thousands of shares） Type1 Major Shareholders Shares held Ratio* Common stock preferred stock Japan Trustee Services Bank,Ltd.（Trust account) 57,319 6.52% Number of 1,800,000,000 18,878,000 The Ma
Slide 20: Market Share of Subsidiary Banks
－ To be your Bank of choice － Market Share of Subsidiary Banks Fukuoka Prefecture Kumamoto Prefecture Nagasaki Prefecture 35% 50% 40% Bank of Fukuoka Higo bank 18 bank Shinwa 31.7% 45% 30% 35% bank 40% 33.6% 30% Share of loans 25% 35% Nishi-nippon City Bank 25% 30% Savings Unions 20% Mega & Major 25
Slide 21: Part III: Financial Data
－ To be your Bank of choice － Part Ⅲ Financial Data
Slide 22: Financial results for FY2014
－ To be your Bank of choice － Financial results for FY2014 Point1 Net interest income nearly Profit & Loss (3 banks’ total) (¥ bil.) reached bottom, except for 3 banks non- Bank of Fukuoka Kumamoto Bank Shinwa Bank specific factors consolidated total (non-consolidated) (non-consolidated) (non-consol
Slide 23: Projections for FY2015
－ To be your Bank of choice － Projections for FY2015 Profit & Loss (3 banks’ total) (¥ bil.) Profit & Loss (By bank) 3 banks non- (¥ bil.) Bank of Fukuoka Kumamoto Bank Shinwa Bank consolidated total (non-consolidated) (non-consolidated) (non-consolidated) Core business profit Bank of Fukuoka Net in
Slide 24: Transition of Core business profit
－ To be your Bank of choice － Transition of Core business profit Core Business profit -0.8 Core Business profit -0.1 （¥ bil.） Net interest income -3.3 Net interest income ＋0.2 ＋5.7 -9.6 ＋6.1 -5.8 76.9 factor zDomestic loans volume factor zDomestic loans rates factor zDomestic loans volume factor zDo
Slide 25: Loans
－ To be your Bank of choice － Loans Loans（by bank） Loans （by customer segment） （¥ bil.） （¥ bil.） Mar. 31, 2015 : 10.2 trillion 10,214.0 （ ）annual rate 10,214.0 （ ）annual rate 9,732.6 （4.9%） 9,732.6 （4.9%） （4.7%） （4.7%） 9,296.8 251.1 9,296.8 1,464.1 3 banks’ total 8,897.9 （4.5%） 217.8 3 banks’ total
Slide 26: Loans (By Bank)
－ To be your Bank of choice － Loans (By Bank) Bank of Fukuoka Kumamoto Bank Shinwa Bank * Excluding loans to FFG * Excluding subordinated beneficial interests * Excluding subordinated beneficial interests 1,370.7 1,370.7 1,391.1 1,391.1 7,096.9 7,096.9 1,026.6 1,026.6 6,759.5 974.4 1,276.0 1,276.0 A
Slide 27: Loan Portfolio (Classified by Industry)
－ To be your Bank of choice － Loan Portfolio (Classified by Industry) (¥ bil.) Mar. 31, 2015 Change from Mar. 31, 2014 Total Fukuoka(BOF) Kumamoto(KMB) Shinwa(SWB) Total BOF KMB SWB Domestic Loans 10,310.2 100.0% 7,763.3 100.0% 1,082.8 100.0% 1,464.1 100.0% 625.4 518.1 53.0 54.3 Classification by in
Slide 28: Deposits & CDs
－ To be your Bank of choice － Deposits & CDs Deposits & CDs (by bank) Deposits & CDs (by customer segment) （¥ bil.） （¥ bil.） （ ）annual rate （ ）annual rate 12,810.0 12,810.0 12,448.6 12,448.6 （2.9%） 11,984.3 （2.9%） 11,984.3 （3.9%） （3.9%） 3 banks’ total 11,271.1 （6.3%） 98.9 3 banks’ total 11,271.1 （6.
Slide 29: Deposits & CDs (By Bank)
－ To be your Bank of choice － Deposits & CDs (By Bank) Bank of Fukuoka Kumamoto Bank Shinwa Bank 8,764.9 2,249.5 8,004.2 8,456.6 8,764.9 8,456.6 1,320.0 1,320.0 2,171.2 2,171.2 2,249.5 Average deposit balance 7,724.3 8,004.2 7,724.3 492.0 1,244.1 1,244.1 2,012.1 2,012.1 7,583.8 7,583.8 539.8 1,149.5
Slide 30: Interest Rates (Domestic loan)
－ To be your Bank of choice － Interest Rates (Domestic loan) 3 banks’ total （％） 2.48 Retail 2.39 2.30 2.22 2.13 2.04 1.97 1.88 1.90 Loan Overall 1.80 1.83 1.79 1.75 Corporate 1.69 1.79 1.63 1.72 1.59 1.65 1.52 1.59 1.46 1.41 1.53 1.36 Public 1.45 1.40 1.31 1.32 1.28 1.25 1.24 1.20 1.20 1.22 1.14 1.1
Slide 31: Interest Rates (By Bank)
－ To be your Bank of choice － Interest Rates (By Bank) Bank of Fukuoka Kumamoto Bank Shinwa Bank 2.64 2.48 2.46 Interest rates on loans Retail 2.39 2.23 2.28 2.21 2.06 2.11 1.91 2.35 1.98 1.97 1.97 Overall 1.80 2.35 2.18 1.82 1.85 1.75 1.72 1.79 1.64 2.122.02 1.53 1.92 1.61 Corporate 1.42 1.95 1.87
Slide 32: Breakdown of Loans and Deposits & CDs by Interest Rate
－ To be your Bank of choice － Breakdown of Loans and Deposits & CDs by Interest Rate Domestic Loans (As of Mar. 31, 2015) Domestic Deposits (As of Mar. 31, 2015) 3 banks’ Bank of Kumamoto Shinwa 3 banks’ Bank of Kumamoto Shinwa total Fukuoka Bank Bank total Fukuoka Bank Bank Based on short- 8.3% 7.6
Slide 33: Securities
－ To be your Bank of choice － Securities Securities portfolio Bond duration & Outlier Ratio (¥ bil.) (years) *FFG consolidated 148.5 131.1 Domestic Bonds 4.67 4.52 Unrealized 102.6 3.98 4.07 3.95 gain(loss) 77.2 3,114.8 （+454.9） FFG （YoY Change） 2,831.2 3.07 3.15 271.7 3.00 2.89 2.88 （+19.7） 2,659.9
Slide 34: Non-interest Income
－ To be your Bank of choice － Non-interest Income Non-Interest Income (3 Banks & Fukuoka Securities Total) FY13 ⇒ FY14 Factor of Increasing and Decreasing（YoY Chg. +¥2.0bil.） ※Excluding profit(loss) on bond （¥bil.） Investment Trusts +0.9 Loan Guarantee Fee (0.6) （¥bil.） Insurance +2.2 Mortgage Insur
Slide 35: Asset Management Products
－ To be your Bank of choice － Asset Management Products Sales of asset management products Asset of Investment trust in custody (¥ bil.) 700 (¥ bil.) 600 570.6 528.7 516.0 600 478.1 40.9 495.3 60.6 500 29.5 48.0 FFG 401.4 24.6 467.1 395.7 500 total 37.8 15.0 437.3 FFG 46.6 404.1 29.5 100.0 25.6 103.
Slide 36: Overhead Expenses
－ To be your Bank of choice － Overhead Expenses By Category / OHR (3 banks’ total) FY14 Factor of Increasing and Decreasing (YoY Chg.) （¥ bil.） Personnel General Tax 140 （¥ bil.） Expenses Expenses ＋0.1 (1.8) ＋0.8 Core OHR 60.2% 58.8% ＋1.0 (1.8) 56.8% 57.4% 57.4% 57.3% 60% 3 banks’ total ＋0.4 （YoY Ch
Slide 37: Credit Cost & NPL
－ To be your Bank of choice － Credit Cost & NPL Credit Cost (3 banks’ total) Non-Performing Loans & Ratio (3 banks’ total) (¥ bil.) (¥ bil.) As of March 31, 32 3 banks (Credit Cost Strengthened reserve for obligors with risk 24.2 level ranked as needing attention or higher Ratio 2.64% 2.96% 2.81% 2.
Slide 38: Status of reserves & coverage: Bank of Fukuoka
－ To be your Bank of choice － Status of reserves & coverage：Bank of Fukuoka Under Watch Obligors zCovered ratio for claims disclosed pursuant to the Financial Reconstruction Act : 75.7% March 31, 2015 ( ) : March 31, 2014 (¥ bil.) Reserved ratio for Reserved ratio for Covered Collateral Uncovered cl
Slide 39: Status of reserves & coverage: Kumamoto Bank
－ To be your Bank of choice － Status of reserves & coverage：Kumamoto Bank Under Watch Obligors zCovered ratio for claims disclosed pursuant to the Financial Reconstruction Act : 78.6% March 31, 2015 ( ) : March 31, 2014 (¥ bil.) Reserved ratio for Reserved ratio for Covered Collateral Uncovered Clai
Slide 40: Status of reserves & coverage: Shinwa Bank
－ To be your Bank of choice － Status of reserves & coverage：Shinwa Bank Under Watch Obligors zCovered ratio for claims disclosed pursuant to the Financial Reconstruction Act : 81.3% March 31, 2015 ( ) : March 31, 2014 (¥ bil.) Reserved ratio for Reserved ratio for Covered Collateral Uncovered claims
Slide 41: Capital Adequacy Ratio
－ To be your Bank of choice － Capital Adequacy Ratio Capital adequacy ratio (FFG consolidated) Breakdown of the capital (¥ bil.) (FFG consolidated) Basel II Basel III Mar.31, (¥ bil. %) Items 2015 800 Fundamental items 757.5 Capital stock (Common stock) 586.9 700 Capital adequacy 12.26 Reserves 11.8
Slide 42: Consolidated Balance Sheets
－ To be your Bank of choice － Consolidated Balance Sheets （￥bil.） Mar.31,2014 Mar.31,2015 Comparison Mar.31,2014 Mar.31,2015 Comparison Loans and bills discounted 9,596 10,213 ＋618 Deposits and NCD 12,238 12,682 ＋444 Domestic floating Domestic short-term loan 1,581 1,648 ＋66 deposits 6,856 7,279 ＋42
Slide 43: Part IV: Our Mother Market Kyushu
－ To be your Bank of choice － Part Ⅳ Our Mother Market “Kyushu”
Slide 44: Feature of Kyushu Economy
－ To be your Bank of choice － Feature of Kyushu Economy Well-Balanced Industry Well-Balanced Industry Grouping Grouping Overview Overview of of Each Each prefecture prefecture in in Kyushu Kyushu North Prefecture GPP* Share (¥ trillion) Center of “ Car Island ” f Number of Passenger Cars produced in
Slide 45: Financial Map of Kyushu
－ To be your Bank of choice － Financial Map of Kyushu (Regional Bank & Regional Bank Ⅱ) Number of Number of Fukuoka Population business deposits Oita Population business deposits establishments establishments pref. 5,060,000 225,000 31.8 The Bank of Kitakyushu Bank pref. 1,190,000 56,000 7.1 people
Slide 46: Inbound effect on Kyushu
－ To be your Bank of choice － Inbound effect on Kyushu The number of Foreign travelers entering Kyushu The number of foreign cruise port call to Kyushu （thousand） （times） 2,000 300 1,800 250 Other 1,600 Kagoshima 1,400 Nagasaki 200 1,200 Hakata 1,000 150 800 100 600 400 50 200 0 0 03 04 05 06 07 08
Slide 47: Industrial Production Trends
－ To be your Bank of choice － Industrial Production Trends Industrial production index （2010＝100） Integrated Circuits 120 (%) （million pieces） 1,000 40 900 Quantity 30 800 YoY Chg. 【 700 20 110 600 10 Japan Kyushu 500 400 0 300 -10 】 100 200 -20 100 0 -30 13/1 13/4 13/7 13/10 14/1 14/4 14/7 14/10 15
Slide 48: Land Price Trends
－ To be your Bank of choice － Land Price Trends Volatility of standard land prices in major cities in Fukuoka Pref. Volatility of standard land prices Residential land Commercial land <Published Land Prices for 2015> 2014 2015 2014 2015 (Unit: %) Fukuoka City 1.8 2.2 2.9 3.8 Residential land Commerc
Slide 49: Corporate Bankruptcies
－ To be your Bank of choice － Corporate Bankruptcies (¥bil.) (Number) Left Axis ：The total debts / Bar graph 20 50 Right Axis：The number of bankruptcies / Line graph 40 (¥bil.) (Number) 15 Fukuoka 1000 1100 30 1050 10 20 800 1000 5 950 10 Japan 600 900 0 0 850 13/1 13/7 14/1 14/7 15/1 15/7 400 800 (
Slide 50: Loans
－ To be your Bank of choice － Loans Rate of increase of Bank Loans （YoY Change, Monthly) 8.0 5.2 5.2 (%) 6.0 6.0 4.0 5.2 5.2 Fukuoka 2.0 0.0 (2.0) 3.4 4.0 3.4 (4.0) 08/1 09/1 10/1 11/1 12/1 13/1 14/1 15/1 Japan 8.0 2.0 6.0 4.2 4.2 Kumamoto 4.0 2.0 0.0 0.0 (2.0) (4.0) 08/1 09/1 10/1 11/1 12/1 13/1 14
Slide 51: Deposits
－ To be your Bank of choice － Deposits Rate of increase of Bank Deposits （YoY Change, Monthly) 6.0 (%) 5.0 5.0 3.7 4.0 Fukuoka 3.0 2.0 1.0 0.0 4.0 3.9 (1.0) Japan (2.0) 08/1 09/1 10/1 11/1 12/1 13/1 14/1 15/1 3.3 6.0 3.0 5.0 Kumamoto 4.0 1.9 3.0 2.0 2.0 1.0 0.0 (1.0) (2.0) 08/1 09/1 10/1 11/1 12/1 1
Slide 52: Forward-looking statements disclaimer
－ To be your Bank of choice － This document contains forward-looking statements, regarding FFG’s projected financials, operational figures, and other matters that are not historical facts. Those statements are based on management’s expectations, assumptions, estimates, projections and beliefs in lig
Fukuoka Financial Group — Investor Presentation (October 2015) on 6ix