Rakuten Bank, Ltd. · TSE:5838
Rakuten Bank — Q1 2024 Earnings Presentation
68 slides from Rakuten Bank's earnings presentation, Aug 7, 2024
Slide 1: FY2024 First Quarter IR Presentation
FY2024 First Quarter IR Presentation Rakuten Bank, Ltd. https://www.rakuten-bank.co.jp/ *For detailed numerical data, please refer to the data book: https://www.rakuten-bank.co.jp/corp/investors/documents/doc/databook-20240807.xlsx
Slide 2: Contents
Contents 1 Rakuten Bank’s Corporate Profile 2 About Our Medium- to Long-Term Vision and Growth Strategy 3 Overview of Results for First Quarter of FY2024 4 Appendix 2
Slide 3: Rakuten Bank's Corporate Profile
1 Rakuten Bank’s Corporate Profile 3
Slide 4: Corporate Profile
Corporate Profile Name Rakuten Bank, Ltd. In its aim to be the “safe, secure, and most convenient bank,” Rakuten Bank leverages the Rakuten Group’s strengths to develop a host of Established January 14, 2000 distinctive services. Capital JPY32,616mm* Employees 1,056* (consolidated) NBF Shinagawa Tow
Slide 5: Our Philosophy
Our Philosophy Rakuten Bank is aware of our public role and social responsibilities as a bank, and we strive to establish sound efficient business operations based on high self-discipline, to maintain society's unwavering trust and establish value. In addition, as a member of the Rakuten Group, we s
Slide 6: Rakuten Bank's History
Rakuten Bank’s History April 21, 2023 Sep. 2008 Listed on the Entered a capital and business Prime Market of alliance with Rakuten, Inc.*1 the Tokyo Stock October 2010 January 2021 Exchange Became a wholly owned Became the first May 2010 subsidiary of Rakuten, Inc.*1 digital bank*2 in Feb. 2024 Chan
Slide 7: Scale of Operations
Scale of Operations Promoted account acquisition by leveraging the Rakuten Group’s customer base (account acquisition through the BaaS business also contributed to results) Total deposit balance grew steadily in line with the rise in the number of bank accounts. Number of Bank Accounts Total Dep
Slide 8: Three Business Pillars
Three Business Pillars Services for Individual Customers Services for Corporate Customers and Sole Proprietors Deposits/ Personal asset loans Transactions can be completed online anytime, anywhere management Transfers/ Enter- Loans Other remittances tainment Transfer Deposits services Comprehensive
Slide 9: About Our Medium- to Long-Term Vision and Growth Strategy
２ About Our Medium- to Long-Term Vision and Growth Strategy 9
Slide 10: Medium- to Long-term Vision
Medium- to Long-term Vision*1 With an eye to the arrival of the zero-cash era, in April 2022 a medium- to long-term vision was formulated, indexed to FY2020, in the aim of becoming a leading FinTech company. Consolidated Consolidated Number of accounts (non-consolidated) ordinary income ordinary p
Slide 11: Two Pillars of Earnings (Non-Interest Income/Interest Income)
Two Pillars of Earnings (Non-Interest Income/Interest Income) Growth in Non-Interest Income Growth in Interest Income ・Achieve further growth by acquiring main accounts*1 ・Produce of Group's proprietary assets to have a and through cross-selling balanced and diversified loan portfolio ・Balanced expa
Slide 12: Robust Synergies with Unique Rakuten Ecosystem
Robust Synergies with Unique Rakuten Ecosystem Unique Ecosystem Trusted and Well-known Brand Customer Acquisition 70+ services*1 100mm+ membership*1*2 No.1 web brand in Japan*3 Cross-selling Most Popular*4 Deep & Rich Data Point Program × Technology (in Japan) Origination of Unique 100mm+ membership
Slide 13: Efficient Customer Acquisition through the Rakuten Ecosystem
Efficient Customer Acquisition through the Rakuten Ecosystem 100mm+ Rakuten membership*1 Money Bridge JPY 6.0tn SPU*3 (Point rewards ・ domestic e-commerce GMS*2 (Point rewards) favorable interest rate) 11.3ｍｍ accounts*6 41.6mm MAU*4*5 73.2% of new customers come via Rakuten Group channel*8 Low CAC:
Slide 14: Full-fledged Digital Banking Services
Full-fledged Digital Banking Services Deposits / Asset Management Loans Personal loan Deposits (JPY, foreign currency) Housing loan FX margin trading Education loan Personal financial management Reverse mortgage loan (“Money Support”) Investment property loans Real estate collatera
Slide 15: Our Main Accounts' Growth Momentum…
Non-Interest Interest Income Income Our Main Accounts’*1 Growth Momentum… Key Drivers of Main Account*1 Conversion Convert into Convenience main account*1 Full-fledged services Customer-centric first-class UI/UX Economic Benefit Open Rakuten Rakuten Bank Ecosystem account Rakuten Point rewards
Slide 16: Increases Our Per Account Earnings
Non-Interest Interest Income Income Increases Our Per Account Earnings Average Revenue per Account Average Deposit Balance per Account (Q1 FY2024) (As of Jun.30, 2024) c. 4x c. 6x Non-main accounts Main accounts *1 Non-main accounts Main accounts *1 16 *1: Accounts that are used for direct debit or
Slide 17: Compelling Rakuten Card Securitization Scheme
Non-Interest Interest Income Income Compelling Rakuten Card Securitization Scheme One-stop securitization service Increasing Credit card shopping GTV*3 receivables (Trust) *2 Securitized Senior E-commerce Shopping portion Assets GMS*1 GTV*3 Shopping Funding through Subordinated Portion acceleration
Slide 18: Creating Investment Opportunities through Securitization Business Using Rakuten Trust
Non-Interest Interest Creating Investment Opportunities on Our Own through the Income Income Securitization Business that Utilizes Rakuten Trust Example of a scheme (simplified) Monetary claims Arranger • Rakuten Card trust beneficiary rights • Other credit card receivables • Accounts receivable, et
Slide 19: Data Technology to Enlarge Our Interest Income
Non-Interest Interest Income Income Data Technology to Enlarge Our Interest Income Improve accuracy Advanced Credit Scoring – Expand credit access EC – Drive loan growth Contents Travel – Reduce credit cost Sports Commu- FinTech nity Mobile Optimized Marketing – Accelerate customer acquisition – Enh
Slide 20: Promising Data Monetization Opportunities
Promising Data Monetization Opportunities Our unique advantages enable us to expand the advertising business and improve the marketing efficiency of our banking services Rich Data Targeting Reach Sales of advertising solutions to external 15.8mm accounts*1 (KYC completion) Precise target segme
Slide 21: Providing a New Customer Experience through BaaS
Providing a New Customer Experience through BaaS*1 Open API*2 15.57 mm passengers per day*3 Transportation 5.78 mm cardholders*4 （Launched May 9,2024） The Ogaki Kyoritsu Bank Entertainment Retail THE NISHI-NIPPON CITY BANK Real Estate/ Housing Other Regional Banks Life Insurance (“Rakuten Bank Dai-i
Slide 22: Overview of Results for First Quarter of FY2024
3 Overview of Results for First Quarter of FY2024 22
Slide 23: Q1 FY2024 Financial Results
Q1 FY2024 Financial Results Key Financial and Other Data Ordinary Income Ordinary Profit Non-interest Income*1 ROE *2 (Q1 FY2024, consolidated) (Q1 FY2024, consolidated) Ratio (Q1 FY2024, annualized basis, (Q1 FY2024, consolidated) consolidated) JPY 40.8 bn JPY 15.2 bn 35.5 % 16.4 % +25.0% YoY +34.2
Slide 24: Consolidated Statements of Income
Consolidated Statements of Income Interest income rose substantially, owing to the steady accumulation of investment assets and the Bank of Japan’s lifting of the negative interest rate policy. As a result, ordinary income and gross operating profit grew at an accelerated pace (ordinary profit was
Slide 25: Summary of Consolidated Financial Results
Summary of Consolidated Financial Results YoY growth rates in ordinary income, ordinary profit, and net income were up significantly, driven by the increase in interest income. Ordinary Income Ordinary Profit*1 Net Income*1*2 Forecasts for the FY2024 (JPY bn, consolidated) (JPY bn, consolidated) (
Slide 26: Interest and Non-Interest Income (Non-Consolidated)
Interest and Non-Interest Income (Non-Consolidated) Previously, the ratio of interest income to non-interest income trended at around 6:4. Since the Bank of Japan lifted the negative interest rate policy, however, interest income has been growing at a faster rate than non-interest income. Interest
Slide 27: Interest Income (Non-Consolidated)
Non-Interest Interest Income Income Interest Income (Non-Consolidated) Interest on loans, interest on monetary claims bought, and others (interest on due from banks, interest and dividend on securities, etc.) all increased substantially thanks to the steady accumulation of investment assets and th
Slide 28: Breakdown of Loans and Monetary Claims Bought
Breakdown of Loans and Monetary Claims Bought Non-Interest Income Interest Income Loans and monetary claims bought increased in a well-balanced manner, except for some investment assets with special factors. YoY vs23/6（12M） QoQ vs24/3（3M） （JPY bn, non-consolidated） Mar.31, 2023 Mar.31, 2024 Jun.30
Slide 29: Expand Investment Assets/Net Interest Income
Non-Interest Interest Medium- to Long-term Vision Income Income Expand Investment Assets/Net Interest Income Expansion of middle-risk assets drove growth in net interest income. Total for Categories That Include Middle-Risk Assets (JPY bn, non-consolidated) Monetary claims bought: others ABL (Asse
Slide 30: Balance Sheet Summary
Non-Interest Interest Balance Sheet Summary Income Income Of investment assets, 78% are based on floating rates, and floating rates are mostly based on TIBOR, so benefit from a structural tailwind*1 is expected when interest rates rise. (Jun. 30, 2024, non-consolidated) Loans + monetary claims bou
Slide 31: Status of Marketable Securities Investment
Status of Marketable Securities Investment*1 Non-Interest Interest Income Income In light of future interest rate trends, we are gradually expanding loans to the Ministry of Finance and purchases of marketable securities for the purpose of generating investment income. (Jun. 30, 2024, non-consolid
Slide 32: Non-Interest Income (Non-Consolidated)
Non-Interest Income (Non-Consolidated) Non-Interest Interest Income Income The growth rate of fees and commissions income increased as the growth rates of direct debit fees and debit card commissions recovered. FY2023 FY2024 Breakdown of Non-Interest Income*1 (JPY bn, non-consolidated) Q1 Q1 Chang
Slide 33: Our Main Accounts' Growth Momentum
Non-Interest Interest Income Income Our Main Accounts’*1 Growth Momentum Our number of main accounts, which tend to have higher deposit balances and be more profitable, is increasing faster than the number of total accounts Number of Total accounts and main accounts*1 （mm、rounded down less than di
Slide 34: Topic: Word-of-Mouth Referrals by Customers with an Account
Non-Interest Interest Topic: Word-of-Mouth Referrals by Customers with an Account Income Income By implementing referral initiatives to drive Rakuten Bank account openings, which leverage our 16 million customer base, we made progress in eliminating concerns about online bank transactions and rais
Slide 35: Sufficient Capital Adequacy with Disciplined Management
Sufficient Capital Adequacy with Disciplined Management Following our capital increase through public offerings in April and May 2023, we actively accumulated investment assets. Meanwhile, our capital adequacy ratio remained at a sound level. Capital Adequacy Ratio*1 (JPY bn, consolidated) Since
Slide 36: General and Administrative Expenses (Non-Consolidated)
General and Administrative Expenses (Non-Consolidated) An expanded scale of business boosted management efficiency, and our G&A Expense Ratio reached 37.9% improving 4.8pts from FY2023Q1. General and Administrative Expenses and G&A Expense Ratio* (Non-Consolidated) *G&A Expense ratio: General and
Slide 37: Credit Costs (Non-Consolidated)
Credit Costs (Non-Consolidated) Credit cost ratio remained at a low level, while credit costs rose due to an increase in card loans. Credit costs*1 *2 （JPY mm, non-consolidated） Credit costs Reversal of credit costs Credit cost ratio 159 (148) (369) (657) (703) (1,297) (2,102) (0.01%) 0.00% 0.03%
Slide 38: Roadmap to Achieve Higher ROE
Roadmap to Achieve Higher ROE Aiming for Further Business Expansion with Unique Rakuten Ecosystem ROE*1 further increases Non-Interest Income Growth • Further growth through main account*2 acquisition and cross-selling 16.4% Enhance Risk/Return Profile • Produce of Group‘s proprietary assets to
Slide 39: Our Dividend Policy
Our Dividend Policy Our Thoughts on Capital and View on the Capital Adequacy Ratio Prioritize further growth over dividends for the near term To achieve the targets in our Medium- to Long-Term Vision, the accumulation of (%) risk assets is intended to control within – Intend to keep capital adequacy
Slide 40: FinTech Reorganization - Announcement of Changes as of July 29, 2024
FinTech Reorganization - Announcement of Changes as of July 29, 2024 Rakuten Bank, Ltd. and Rakuten Group, Inc. entered into an MoU to initiate discussion on integration of the entire FinTech business*1 into one group to further expand our FinTech Ecosystem with innovative services and deeper data
Slide 41: Appendix
4 Appendix 41
Slide 42: Strong Commitment by Experienced Management
Strong Commitment by Experienced Management*1 Mika Matsumoto Kenji Takeuchi Tatsuya Misawa Takuya Mizuno Tamaki Kasuya Masato Tarukado Kosho Ito Executive Manager: General Manager: Executive Manager: Executive Manager: Executive Manager: General Manager: General Manager: • Customer Support • Data In
Slide 43: Disciplined Corporate Governance
Disciplined Corporate Governance*1 3 Outside Directors out of 5 Directors Banking Regulations Hiroshi Mikitani Hiroyuki Nagai Chairman President & CEO Group Arm’s- Synergies Length Eiji Ebinuma Michio Kayano Masatsugu Nagato Outside director Outside director Outside director 3 Outside Auditors out o
Slide 44: Our "SDGs" Initiatives
Our “SDGs” Initiatives Contributing to a healthy and economically prosperous society through “SDGs” “SDGs” × Gender “SDGs” × Education • Percentage of women in managerial • Construction of elementary school in positions*1: People Cambodia (2006) and Philippines (2008) - Reached our initial target of
Slide 45: Digital Bank Share
Japan – Dawn of Banking Digitalization Japan Cashless Payment Ratio*2 Japan Post Bank 80% 4 20% (aiming to be the global highest level) % Promoted by Japanese Government Digital Bank ~40% 39% Share*1 Mizuho Bank 29% MUFG Bank (deposit balance) 16% 22% … … … SMBC 2020 2023 2025 Long- 17% term Actual
Slide 46: Rakuten Bank's Ability to Lead Digitalization
Rakuten Bank’s Ability to Lead Digitalization A corporate mindset of specializing in digital and cashless (1) Impact on earnings improvement No possession of legacy assets (branches/own ATMs) Utilization of state-of-the-art technology Service creation with an in-depth understanding of custom
Slide 47: Banking in a Cashless Era
Banking in a Cashless Era The industry’s widest range of instruments for cashless payment Debit Cards Prepaid Cards Direct Payment for code payment Rakuten Bank Card Service Linkage with Rakuten Card via Direct Debit (Rakuten Card Combined with Cash Card) Interest on ordinary deposits double the u
Slide 48: Our Unique Service Offering through One App…
Our Unique Service Offering through One App… Full-fledged Digital Banking Services Rakuten Ecosystem Deposits / Asset Management Loans Transfer Payment Entertainment Single integrated app comprehensively covering individuals’ everyday life 48
Slide 49: Providing JRE BANK service jointly with JR East Group
Providing JRE BANK service jointly with JR East Group Realize a new financial service experience by providing benefits that take advantage of the assets and business areas of the JR East Group through the BaaS initiative ー Launched on May 9, 2024 Connections between Customers and JR East Group 40％
Slide 50: Rakuten International Commercial Bank in Taiwan
Rakuten International Commercial Bank in Taiwan Company Overview Group Structure Company RAKUTEN INTERNATIONAL COMMERCIAL BANK CO., LTD. Name (Joint Venture) Establishment May 18, 2020 Rakuten Card Co., Ltd. IBF Financial Holdings Co., Ltd. 50% 1% 49% Operation Since January 19, 2021 Electronic bank
Slide 51: Rakuten Card (originator)
Scheme for the Liquidation of Rakuten Card’s Credit Card Non-Interest Income Interest Income Receivables (Trust Beneficiary Rights) Rakuten Card Co., Ltd. is one of Japan’s largest credit card companies, with more than 30 million cards issued.* In general, when the holder of a credit card uses their
Slide 52: Number of Accounts, Deposit Balance (Non-Consolidated)
Number of Accounts, Deposit Balance (Non-Consolidated) Number of Accounts (Non-Consolidated) Deposit Balance (Non-Consolidated) (Millions of accounts, amounts truncated after the digit shown) (JPY bn, amounts truncated after the digit shown) 15.87 12,000 16.00 15.23 10,943.9 10,540.2 93.8 Total 13.7
Slide 53: Improved Spreads on the Card Loans (Personal Loans)
Non-Interest Interest Income Income Improved Spreads on the Card Loans (Personal Loans) Effective yields on Card loans (Personal Loans) comprise two layers. Non-guaranteed balance: yield - ratio of allowance for loan losses = (1) effective yield on non-guaranteed personal loans Balance with extern
Slide 54: Quarterly Consolidated Financial Summary
Quarterly Consolidated Financial Summary FY2023 FY2024 YoY (JPY bn, consolidated) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Ordinary income 32.6 33.2 35.1 36.8 40.8 +25.0% Interest income 19.2 20.3 21.8 23.0 26.1 +35.8% Non-interest income 13.2 12.8 13.1 13.2 14.4 +9.1% Fees and commissions income 10.8 10
Slide 55: Financial Summary – Consolidated Balance Sheets
Financial Summary – Consolidated Balance Sheets (JPY bn, consolidated) Mar. 31, 2022 Mar. 31, 2023 Mar. 31, 2024 Jun.30, 2023 Jun.30, 2024 Total assets 9,490.6 11,589.5 13,480.4 12,011.1 14,030.7 (incl.) Cash and due from banks 3,649.1 4,050.2 4,791.0 4,318.2 5,117.4 (incl.) Monetary claims bought 1
Slide 56: Quarterly Non-consolidated Financial Summary
Quarterly Non-consolidated Financial Summary FY2023 FY2024 YoY (JPY bn, consolidated) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Ordinary income 31.7 32.3 34.1 35.8 39.5 +24.3% Interest income 18.7 19.8 21.2 22.3 25.3 +34.7% Non-interest income 12.8 12.4 12.7 12.8 14.0 +8.9% Fees and commissions income 10.
Slide 57: Financial Summary – Non-consolidated Balance Sheets
Financial Summary – Non-consolidated Balance Sheets (JPY bn, non-consolidated) Mar. 31, 2022 Mar. 31, 2023 Mar. 31, 2024 Jun.30, 2023 Jun.30, 2024 Total assets 9,647.7 11,694.2 13,527.6 12,098.2 14,045.9 (incl.) Cash and due from banks 3,645.1 4,039.7 4,782.3 4,308.2 5,107.4 (incl.) Monetary claims
Slide 58: Accountholder Demographics
Accountholder Demographics By Age By Region By Occupation Company executive Others Hokkaido 2% 4% Unemployed Under 20s 4% 3% 4% Tohoku Student Kyushu, 6% 6% Okinawa 60s and 20s 10% over 13% Chugoku, Housewife 14% Shikoku 7% 7% Company employee (general) 50s 45% 21% Kansai Part-time 17% Kanto, 12% 30
Slide 59: Progress of Medium- to Long-term Vision
Progress of Medium- to Long-term Vision Number of Bank Accounts Ordinary Income CAGR+10.0% （mm, non-consolidated） （JPY bn, consolidated） （Target: >+10%） CAGR +13.1% （Target: >+15%） 200.0 25.0 137.9 15.2 103.3 10.5 FY2020 FY2023 FY2026 FY2020 FY2023 FY2026 Target Target Total Deposit Balance Ordinary
Slide 60: The Consolidated Forecast for FY2024
The Consolidated Forecast for FY2024 (JPY bn, consolidated) (JPY bn, consolidated) FY2022 FY2023 FY2024 （Actual) (Actual) (Forecast) YoY Change YoY Change Change % Change % Ordinary Income 120.4 137.9 +17.5 +14.5% ⇒ 162.5 +24.5 +17.8% Ordinary Profit 38.7 48.3 +9.6 +24.8% 53.2 +4.8 +10.1% excluding
Slide 61: Implementation of Shareholder Benefit Program
Implementation of Shareholder Benefit Program（Announced February 22, 2024） Newly introduced a shareholder benefit program, based on which we also expect an increase in salary receiving accounts, one of the important factors toward achievement of our medium- to long-term vision. Purpose of Sharehol
Slide 62: Organizational Chart of Rakuten Group
Organizational Chart of Rakuten Group*1 Rakuten Group, Inc. (TSE: 4755) Internet Services business 49.26% FinTech 100% FinTech 100% Mobile 100% business business Rakuten Bank, business Rakuten Card Rakuten Rakuten Mobile, Ltd. 4.72% Co., Ltd. Securities Holdings, Inc. Inc. （TSE: 5838） 95.28% 100% 50
Slide 63: The history of the FinTech segment within the Rakuten Group
The history of the FinTech segment* within the Rakuten Group September 2004 April 2013 Rakuten fully acquires Rakuten Group rebrands Aozora Card Co., Ltd. AIRIO Life Insurance as (currently known as Rakuten Life Insurance Co., Rakuten Card Co., Ltd.). Ltd. (Life Insurance) June 2005 Rakuten commence
Slide 64: Measures to Avoid Conflicts of Interest in FinTech Reorganization
Measures to Avoid Conflicts of Interest and Ensure Fairness in Relation to FinTech Reorganization Rakuten Group, Inc. Rakuten Bank, Ltd Rakuten Group, Inc. Rakuten Bank, Ltd *1 Rakuten Bank’s Advisor Board of directors Financial Advisor： Advice, etc. • Daiwa Securities Co. Ltd. Negotiation From the
Slide 65: Rakuten Card: Driving the Rakuten FinTech Ecosystem
Rakuten Card: Driving the Rakuten FinTech Ecosystem with a Huge Customer Base Shopping GTV GTV Share*1 目標 Q1/24 5.6 tn yen Feb. 2024 23.6 % *１：Calculated by Rakuten Group, Inc. based on “Ministry of Economy, Trade and Industry, Specified Service Industry Statistics Survey, Credit Card （https://www.m
Slide 66: Rakuten Securities: High Customer Loyalty through Money Bridge
Rakuten Securities: Achieving High Customer Loyalty through “Money Bridge” How Money Bridge Works Huge Presence and Rapid Growth of Money Bridge (non-consolidated) Transaction 5.2mm accounts (YoY +25.9%) Automatic deposit “Money Bridge” deposit balance JPY 5.9tn (YoY +18.3%) makes up 53.9%*2 of Raku
Slide 67: Rakuten Payment: Developing Leading Services in Japan
Rakuten Payment :Developing Leading Services in Japan Centered on Payment and Marketing Service Lineup Rakuten Payment Revenue*3 (JPY bn) Cashless payment service (QR code/barcode/touch payment/Suica/ Online payment,etc.) Common point service IC type electronic money Number of locations where R- Pay
Slide 68: The opinions and forecasts stated in this document reflect the Bank's judgment at the
The opinions and forecasts stated in this document reflect the Bank's judgment at the time these materials were prepared. The Bank does not guarantee the accuracy of the information contained herein. Please note that actual performance and results may differ significantly due to various factors.