Hokuhoku Financial Group, Inc. · TSE:8377
Hokuhoku Financial — H1 FY2007 Earnings Presentation
49 slides from Hokuhoku Financial's earnings presentation, November 2007
Slide 1: Investor Meeting – Interim Results for FY 2007
Hokuhoku Financial Group,Inc. Investor Meeting ～Interim Results for FY 2007～ (ended September 30, 2007)
Slide 2: Table of Contents
Table of Contents Hokuhoku Financial Group,Inc. 【Summary of Interim Results for FY 2007】 【Strengthening Balance Sheet】 ・ Summary of Interim Results Ⅰ-① (P/L:consolidated) 2 ・ Non-Performing Loans 17 ・ Summary of Interim Results Ⅰ-② (P/L:each bank) 3 ・ Credit Costs 18 ・ Summary of Interim Results Ⅱ-①
Slide 3: Summary of Interim Results for FY 2007
Hokuhoku Financial Group,Inc. Summary of Interim Results for FY 2007 1
Slide 4: Summary of Interim Results Ⅰ-① (P/L: Consolidated)
Summary of Interim Results Ⅰ-① Hokuhoku Financial Group,Inc. ＜P/L : Consolidated and Total of Two Banks＞ ¾ Recorded the highest Interim Net Income ever FY07 1H FY06 1H (¥ Bn) Total of two banks change + Hokugin Corp. (¥ Bn) FY07 1H FY06 1H Net Interest Income(Domestic) 67.6 (0.8) 68.5 Loans & Discou
Slide 5: Summary of Interim Results Ⅰ-② (P/L: Each Bank)
Summary of Interim ResultsⅠ-② Hokuhoku Financial Group,Inc. <P/L : Non-Consolidated, each bank> (total of two banks + Hokugin Corp.) (¥ Bn) Hokuriku Bank Core Gross Business Profits Hokkaido Bank + Hokugin Corp. FY07 1H FY06 1H FY07 1H FY06 1H (¥ Bn) 100 88.1 90.4 90.4 change change 6.9 6.0 Others 4
Slide 6: Summary of Interim Results Ⅱ-① (B/S: Consolidated)
Summary of Interim Results Ⅱ-① Hokuhoku Financial Group,Inc. <B/S : Consolidated and Total of two Banks> ¾Loans (Total of two banks and Hokugin Corporate) ･･･ + ¥195.0 Billion (compared to the balance as of ’06/9) ¾Securities (Total of two banks ) ･･･ ‐ ¥ 29.2 Billion (compared to the balance as of
Slide 7: Summary of Interim Results Ⅱ-② (B/S: Each Bank)
Summary of Interim Results Ⅱ-② Hokuhoku Financial Group,Inc. <B/S : Non-Consolidated, each bank> (total of two banks + Hokugin Corp.) Loans ( )=Total balance of loans including securitized portion (¥ Bn) Hokuriku Bank Hokkaido Bank (6,689.8) (6,804.5) (6,987.3) (¥ Bn) 07/9 06/9 07/9 06/9 8,000 6,570
Slide 8: Earnings Forecasts for FY 2007
Earnings Forecasts for FY 2007 Hokuhoku Financial Group,Inc. (¥ Bn) Hokuhoku FG (consolidated) (¥ Bn) （Forecast for FY 2007） Full Year Change from Annual Dividend Forecast Interim FY 2006 ⇒ 2.5 yen per share of common stock Results (+0.5 yen compared to FY 2006) Ordinary Income 125.7 247.0 4.8 Ordin
Slide 9: Enhancing Operating Performance
Hokuhoku Financial Group,Inc. Enhancing Operating Performance 7
Slide 10: Asset-based Business Ⅰ
Asset-based Business Ⅰ Hokuhoku Financial Group,Inc. ＜Balance of Loans, Loans to SMEs & Individuals＞ Loans (term-end balance) Loans to SMEs & Individuals (term-end balance) (total of two banks + Hokugin Corp.) (total of two banks + Hokugin Corp.) (¥ Bn) (¥ Bn) % to total Loans 8,000 8,000 （6,938.1）
Slide 11: Asset-based Business Ⅱ
Asset-based Business Ⅱ Hokuhoku Financial Group,Inc. ＜Balance of Housing & Consumer Loans, Card Loans＞ (total of two banks) Housing & Consumer Loans (term-end balance) Housing Loans (term-end balance) Residential Housing Loans (Sales Amount) % to total Loans Refinanced Loans (¥ Bn) (25.95%)(26.63%)
Slide 12: Asset-based Business Ⅲ: Interest Margins
Asset-based Business Ⅲ Hokuhoku Financial Group,Inc. ＜Interest Margins＞ Interest Margin between Loans and Deposits (Domestic Operations) (total of two banks) (%) 2.50 2.02 2.04 Loan Rate 1.94 1.96 2.00 0.76 Net Interest Margin 0.88 0.81 1.50 0.83 1.00 1.03 Operating Expense Ratio 1.08 1.07 1.03 0.50
Slide 13: Asset-based Business Ⅳ: Effect of Interest Rate Rise
Asset-based Business Ⅳ Hokuhoku Financial Group,Inc. ＜Effect of Interest Rate Rise＞ In FY06, BOJ hiked policy rate twice (’06/7 +0.25%, ’07/2 +0.25%). Deposit rate rose ahead of loan rate. Due to the competition with other banks, loan rate rise delayed. Interest rate of Yen denominated Loans and Dep
Slide 14: Asset-based Business Ⅴ
Asset-based Business Ⅴ Hokuhoku Financial Group,Inc. ＜Result and Forecast of Net Interest Income＞ FY07 1st half : Net interest income decreased due to the rising deposit rate preceding loan rate. FY07 Forecast : Net interest income is expected to decrease continuously due to the rate factor, offsett
Slide 15: Fee-Based Business Ⅰ
Fee-Based Business Ⅰ Hokuhoku Financial Group,Inc. (total of two banks) (total of two banks) (Hokuriku Bank) Balance of Investment Products Balance of Investment Products Net Fees & Commissions (for individuals) (for individuals) (¥ Bn) (term-end balance) (¥ Bn) (¥ Bn) 14.98% 15.96% Percentage of In
Slide 16: Fee-Based Business Ⅱ
Fee-Based Business Ⅱ Hokuhoku Financial Group,Inc. Investment Trusts (total of two banks) Insurance (total of two banks) (¥ Bn) (¥ Bn) (¥ Bn) (¥ Bn) Sales Amount Fees Sales Amount Fees 400 10 200 5 9.1 (Life Insurance) 330.8 4.2 8 4 3.8 300 150 248.6 6.2 5.8 6 6.1 3 236.1 189.9 2.4 3.0 200 176.9 100
Slide 17: Management Efficiency
Management Efficiency Hokuhoku Financial Group,Inc. G&A Expenses and OHR Number of Employees OHR(%) Percentage of temporary staffs (¥ Bn) (Number) Average of regional banks(‘07/3, 60%) 47.36% 47.85% 48.21% 120 50.95% 8,000 46.81% 50% 48.99% 48.67% 49.69% 45.01% 48.39% 50% 100 89.2 88.6 88.0 40% 40%
Slide 18: Strengthening Balance Sheet
Hokuhoku Financial Group,Inc. Strengthening Balance Sheet 16
Slide 19: Non-Performing Loans (NPLs)
Non-Performing Loans (“NPLs”) Hokuhoku Financial Group,Inc. Total of Two Banks (+ Hokugin Corporate) Hokuriku Bank (+Hokugin Corporate) (¥ Bn) Target (09/3) : Reduce NPL* Ratio to less than 4% ⇒ Possible to achieve by 08/03 (¥ Bn) 7.46% 8% 6.83% 600 7% 500 6.03% 400 6% 326.5 4.65% 4.26% 5.76% 6% 300
Slide 20: Credit Costs
Credit Costs Hokuhoku Financial Group,Inc. Total of Two Banks (+ Hokugin Corporate) Hokuriku Bank (+Hokugin Corporate) (¥ Bn) (Bp) (¥ Bn) 100 90 60 55.2 56.5 140 51.9 Credit Costs Ratio (Bp) 42.6 73 120 40 34.7 27.6 27.7 100 92.2 93.8 22.0 85.8 51 20 12.7 8.8 80 50 59.4 38 38 0 60 '05/3 '06/3 '07/3
Slide 21: Investment Securities (Consolidated and Total of two banks)
Investment Securities (Consolidated and Total of two banks) Hokuhoku Financial Group,Inc. (¥ Bn) HokuhokuFG: Consolidated Total of two banks Net unrealized gains (losses) 45.4 37.1 36.7 28.0 40 28.8 40 19.4 23.0 2,000 13.6 2,000 20 1,802.7 20 1,749.0 1,703.8 1,649.8 0 59.9 1,698.3 0 60.0 1,644.9 Tot
Slide 22: Investment Securities (each bank)
Investment Securities (each bank) Hokuhoku Financial Group,Inc. (¥ Bn) Hokuriku Bank (+Hokugin Corporate) Hokkaido Bank Net unrealized gains (losses) 28.2 29.7 30 18.4 30 14.3 15.7 10.3 8.4 8.6 10 10 1,000 1,000 892.7 910.0 -10 850.6 858.2 -10 853.2 840.0 45.6 Total 815.6 14.3 97.4 10.8 9.3 790.8 40
Slide 23: Bond Portfolio (yen denominated bonds)
Bond Portfolio (yen denominated bonds) Hokuhoku Financial Group,Inc. Total of two banks Each Bank (term-end balance) (term-end balance) 800 (¥ Bn) 1,350 (¥ Bn) 750 06/3 Hokkaido Bank size of a circle = Value at Risk 07/3 07/9 06/3 700 07/9 650 05/3 600 07/9 Hokuriku 06/3 07/3 07/3 Bank 550 05/3 500
Slide 24: Capital Ratios
Capital Ratios Hokuhoku Financial Group,Inc. Hokuhoku FG (consolidated) Hokuriku Bank (¥ Bn) (¥ Bn) 800 500 9.16% 9.41% 12% 10.44% 8.42% 8.86% 9.97% 6.39% 6.55% 8% Capital Adequacy Ratio 9.00% 400 5.38% 5.96% 8.33% 7.74% 284.2 294.4 301.5 4% 7.28% 300 275.4 6.47% Tier1 Capital Ratio 5.95% 0% 600 200
Slide 25: Deferred Tax Assets
Deferred Tax Assets Hokuhoku Financial Group,Inc. zDeferred Tax Assets: ¥67.2Billion (-¥4.8 Bn compared to March 2007) zTarget (by March 2008): Reduce the Deferred Tax Asset Ratio to 20% or below (¥ Bn) 300 70% 60% 250 Deferred Tax Assets 50% Consolidated Deferred Tax Asset Ratio 39.60% 200 40% Cons
Slide 26: Business Strategy
Hokuhoku Financial Group,Inc. Business Strategy 24
Slide 27: Capital Policy
Capital Policy Hokuhoku Financial Group,Inc. March 2005 → Issued Subordinated Bonds: ¥20.0 Bn Amount of Outstanding Public Funds : ￥85.0 Bn Sep. 2005 → Issued Subordinated Bonds: ¥20.0 Bn First-issue class 1 First-issue class 4 Sep. 2005 preferred stock preferred stock Number of shares 80 million sh
Slide 28: Management Plan
Management Plan Hokuhoku Financial Group,Inc. ’07/03 (Note) Financial Target (Total of two banks) ’09/03 Plan Results *1 ROA (Core Net Business Profits Base) = Core Net Business Profits / average balance of assets throughout the fiscal period Net Income JPY 39.3 Bn Above JPY 40 Bn *2 OHR (Core Gross
Slide 29: Business Matching
Business Matching Hokuhoku Financial Group,Inc. Business Matching = Matching the needs and demands of our customers in different types of business and regions. The number of Business Matching The result of Business Matching Fees and commissions New loans (number) 2006FY 2007FY Approximately JPY 0.1
Slide 30: Network Expansion Ⅰ
Network Expansion Ⅰ Hokuhoku Financial Group,Inc. Regional Financial Marketing Workshop (’07/10) Shared Utilization of Banking System Staff Hokkaido Bank Stafffrom fromregional regionalbanks banksisisdispatched dispatchedtotoHamagin HamaginResearch ResearchInstitute. Institute. Workshop Member Bank
Slide 31: Network Expansion Ⅱ
Network Expansion Ⅱ Hokuhoku Financial Group,Inc. We support the overseas business for our clients Holding of Business seminar and conference Intermediating information exchange between clients Offer timely local information Alliance with each area A Top-level Southeast, Asian Network among Regional
Slide 32: Inquiries – Hokuhoku Financial Group Planning Group
Inquiries related to this presentation should be addressed to Hokuhoku Financial Group, Inc. Planning Group TEL(81)76-423-7331 FAX(81)76-423-9545 E-MAIL:honsha2@hokuhoku-fg.co.jp http://www.hokuhoku-fg.co.jp/ This document may not be reproduced or distributed to any third party without prior approva
Slide 33: Investor Meeting Appendix
Hokuhoku Financial Group,Inc. Investor Meeting Appendix ～Interim Results for FY 2007～ (ended September 30, 2007)
Slide 34: Table of Contents
Table of Contents Hokuhoku Financial Group,Inc. About Japanese Regional Banks ･ Financial Institutions in Japan 2 ･ Outline of Regional Banks 3 About Hokuhoku Financial Group ･ History of Hokuhoku Financial Group 5 ･ Our Domestic Service Network (Branches and sub-branches) 6 ･ Our Overseas Service N
Slide 35: About Japanese Regional Banks
Hokuhoku Financial Group,Inc. About Japanese Regional Banks 1
Slide 36: Financial Institutions in Japan
Financial Institutions in Japan Hokuhoku Financial Group,Inc. Source: Home page of Regional Banks Association of Japan 1 Central Bank - Bank of Japan Hokuhoku Financial Group, Inc. 2 Private Financial Institutions (Hokuriku Bank, Hokkaido Bank) City banks Banks Regional banks Member banks of the Sec
Slide 37: Outline of Regional Banks
Outline of Regional Banks Hokuhoku Financial Group,Inc. Current Situation of Regional Banks Main Financial Institutions in the Regions As of March 31, 2007, there are 64 regional The regional banks have the branch banks. Headquarters for regional banks are network mainly in the prefectures where loc
Slide 38: About Hokuhoku Financial Group
Hokuhoku Financial Group,Inc. About Hokuhoku Financial Group 4
Slide 39: History of Hokuhoku Financial Group
History of Hokuhoku Financial Group Hokuhoku Financial Group,Inc. (Hokuriku Bank and Hokkaido Bank) Trade between Hokuriku and Hokkaido region 1875 1900 1925 1950 1975 2000 flourished in the 19th century Hokuriku Bank Immigrants Established from Hokuriku 1877 Hokuhoku region Financial 1899 Establish
Slide 40: Our Domestic Service Network
Our Domestic Service Network Hokuhoku Financial Group,Inc. (Branches and sub-branches) Hokuriku Region Hokkaido Region 152 166 147 122 64 91 59 E D Hokuhoku A B C Hokuhoku Metropolis Tokyo, Osaka, Nagoya etc 15 Our Service Network Competitors 6 4 3 =Competitive Advantage =Bank A, B, C, D, E 1 agains
Slide 41: Our Overseas Service Network
Our Overseas Service Network Hokuhoku Financial Group,Inc. We Strengthen A Top-level Southeast, Asian Network among Regional Banks Overseas Business Support For Our Corporate Clients Hokkaido Bank Shenyang Office Sea of Japan ･Membership Club for Business Beijing Office of Sapporo Clients expanding
Slide 42: Market Share in Our Home Market (Loans)
Market Share in Our Home Market Hokuhoku Financial Group,Inc. (Loans, ‘07/03) Hokuriku Area Hokkaido Area Shinkin Banks HFG 27% Shinkin Banks HFG 25% 21% 26% Other Banks O the r Banks Main 12% Main Competitor 21％ 31% Competitor 37% S.B 44% S.B HFG 18% S.B HFG 15% HFG ※Figures of the Main O.B O.B Com
Slide 43: Market Share in Our Home Market (Deposits)
Market Share in Our Home Market Hokuhoku Financial Group,Inc. (Deposits, ‘07/03) Hokuriku Area Hokkaido Area Shinkin Banks HFG 27% HFG 22% Shinkin Banks 24% 32% Main 30% O the r Banks Competitor 19% Other Banks Main 12% Competitor 34% S.B 49% S.B HFG 15% S.B HFG 14% HFG ※Figures of the Main O.B Comp
Slide 44: Lending Portfolio in the Region by Industry
Lending Portfolio in the Region by Industry Hokuhoku Financial Group,Inc. (2007/09) Hokuriku Bank Hokkaido Bank Others Manufacturing Others 7.2% Construction 0.6% Manufacturing 0.5% 15.7% 4.9% Communications & Individual Transportation 31.0% Individual 3.4% Construction 7.3% 37.0% Wholesale & Retail
Slide 45: Regional Economy Trends
Hokuhoku Financial Group,Inc. Regional Economy Trends 11
Slide 46: Characteristics of Our Main Business Area
Characteristics of Our Main Business Area Hokuhoku Financial Group,Inc. Population and Square Measure Data from Ministry of Public Management, Home Affairs, Posts and Telecommunications Same as Osaka, Toyama Ishikawa Fukui Total Hokkaido Total Kanagawa! Prefecture a Prefecture b Prefecture c a+b+c P
Slide 47: Economic Conditions
Economic Conditions Hokuhoku Financial Group,Inc. Monthly MonthlyEconomic EconomicReport Report Monthly MonthlyEconomic EconomicReport Report (By the Cabinet Office) (By the Cabinet Office) (By Bank of Japan) (By Bank of Japan) All AllJapan Japan Hokuriku HokurikuArea Area Hokkaido HokkaidoArea Area
Slide 48: Big Projects in Hokuriku and Hokkaido Area
Big Projects in Hokuhoku Financial Group,Inc. Hokuriku and Hokkaido Area Hokkaido Hokkaido ◎Construction of the Hokkaido Bullet Train Constructing a 360 KM line from Shin-Aomori Station to Sapporo Station. Expected to be completed in FY 2015 （Shin-Aomori Station to Shin-Hakodate Station） Hokkaido 5.
Slide 49: Inquiries – Hokuhoku Financial Group Planning Group
Inquiries related to this presentation should be addressed to Hokuhoku Financial Group, Inc. Planning Group TEL(81)76-423-7331 FAX(81)76-423-9545 E-MAIL:honsha2@hokuhoku-fg.co.jp http://www.hokuhoku-fg.co.jp/ This document may not be reproduced or distributed to any third party without prior approva
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