Aeon Financial Service Co., Ltd. · TSE:8570
Aeon Financial Service — Q3 FY2022 Earnings Presentation
28 slides from Aeon Financial Service's earnings presentation, February 2023
Slide 1: Results for the Third Quarter of FY2022: Script and the QAs
Results for the Third Quarter of FY2022: Script and the QAs Tomoyuki Mitsufuji, Director and Senior Executive Officer in charge of Group Corporate Management, AEON Financial Service Co., Ltd.
Slide 2: Briefing topics
・Today, Tomoyuki Mitsufuji in charge of Group Corporate Management will brief you on the following: First, the financial highlights of the second quarter; second, the overview of our domestic businesses; third, the overview of our global businesses; fourth, our future directions; fifth, our earnings
Slide 3: Consolidated results for the third quarter (cumulative)
・ I would like to start by discussing the consolidated results for the third quarter. - Operating revenue was 331.1 billion yen, down 5% year on year. - Please note that the year-on-year change is up 3% when the effect of applying the Accounting Standard for Revenue Recognition is excluded. - Operat
Slide 4: Consolidated results for the three months of Q3
・ This slide shows the consolidated results for the three months over the third quarter. - Operating revenue was 109.5 billion yen, down 1% year on year. Please note that the year-on-year change is up 7% when the effect of applying the Accounting Standard for Revenue Recognition is excluded. - Opera
Slide 5: Overview of domestic businesses
・ This slide shows the overview of our domestic businesses. Cumulative operating profit for the third quarter dropped by 7.9 billion from the previous year. ・ The credit card business earned 2.7 billion yen more than the previous year in total from shopping transactions owing to the recovered transa
Slide 6: Domestic topics: redesigned AEON credit cards
・ I will discuss the topics concerning the domestic businesses. ・ In last November, we launched redesigned AEON credit cards. The fronts of these new cards are simple in design in hopes of attracting new members of all generations and gaining lasting favor with all customers. With the launch, we als
Slide 7: Cash advance transactions
・ This slide is about cash advance transactions. ・ Cashless payments, including those with AEON credit cards, have rapidly grown over the last few years, which has led to changes in customers needs for cash. Cash advance transactions and balances of receivables across the credit card industry have n
Slide 8: Japan credit card transaction volumes and receivables
・ These graphs show Japan s credit card transaction volumes and outstanding receivables over these given periods. The left graph shows the volumes of shopping transactions and the balances of revolving credit receivables, and the right graph shows the volumes of cash advance transactions and the bal
Slide 9: Asset management business efforts
・ This slide is about the asset management business s efforts. ・ Most of AEON Bank s customers are members of AEON credit cards, and many have only limited or no investment experiences. Sales teams at branches offer consulting services to these customers to increase the sales of our asset management
Slide 10: Global businesses: Hong Kong
・ Now I will discuss the overview of our global businesses. ・ In Hong Kong, local travel restrictions have been gradually lifted, and we have launched initiatives that aim to restore consumers confidence. ・ The right graph shows operating revenue and profit before income taxes from local year-end cl
Slide 11: Global businesses: Thailand
・ In Thailand, sales promotions in collaboration with major e-commerce websites and other partners have boosted shopping receivables and revenues. ・ As for bad debt-related expenses, when allowance for doubtful accounts was calculated for the second quarter, the economic indicator used for forecasts
Slide 12: Global businesses: Malaysia
・ Finally, in Malaysia, volumes of transactions and balances of receivables have grown owing to measures such as incentives given to stores with excellent performance in installments for individual products such as motorcycles. ・ On the other hand, with the rising prices and the termination of gover
Slide 13: Receivables and NPL ratios by area
・ With these circumstances in mind, I will explain, as always, changes in outstanding receivables and nonperforming loan (NPL) ratios in each area. ・ From left to right, these charts show figures in the China, Mekong, and Malay Areas, respectively. As explained earlier, all areas show accelerated gr
Slide 14: Future directions
・ I will discuss our future directions.
Slide 15: Domestic efforts to boost number of IDs
・ The first topic is the domestic business efforts to boost the number of IDs. ・ We are currently working to increase users of AEON Pay, the service that was launched in September 2021, in addition to AEON Card members. ・ We have started with initiatives to increase service use within the AEON Group
Slide 16: Domestic business restructuring
・ The next topic is the domestic business restructuring announced in October. ・ During the first half of the fiscal year 2023, the management of AEON Financial Service and AEON Credit Service, our subsidiary, will be integrated so that we will transition to a business holding company that engages pr
Slide 17: Synergy between retail and financial businesses
・ Next, I am presenting our measures to create synergy between our retail and financial businesses. ・ We will expand the benefits offered by AEON Select Club that is available to customers who have taken out a housing loan from AEON Bank. ・ Currently, these customers receive a 5% discount on everyth
Slide 18: Global businesses: China Area
・ The next topic is our global businesses. ・ Let me start from the China Area. Visitors from Hong Kong have been rapidly rising recently, and AEON Card WAKUWAKU targeting foreign visitors to Japan has been enjoying a growing membership. The cashback benefits available for the use of the Card in Japa
Slide 19: Global businesses: Mekong Area
・ This slide is about the Mekong Area. ・ Other than in Thailand, our business is growing in Cambodia. With the country s economic recovery, the volumes of credit card and loan transactions have picked up again. The business there now seems capable of yielding a profit of one billion yen. We will con
Slide 20: Global businesses: Malay Area
・ This slide is about the Malay Area, the last one under this topic of the global businesses. ・ We are also working on expanding our business into Indonesia as an area that will be an extension of Malaysia. In October, we started offering new loans for the purchase of electric motorcycles. In antici
Slide 21: Earnings and dividend forecasts
・ Finally, I will present earnings and dividend forecasts. ・ These projections of earnings figures remain unchanged from those announced in April, as you see. So do the projections of dividends. The planned annual dividend is 50 yen, up 4 yen from the last year s ordinary dividend of 46 yen. ・ We de
Slide 22: Questions and Answers
Questions and Answers ■ Mr. Sakamaki, analyst at Nomura Securities (1) Q: Would you tell us how you view the present business environment in light of the next year s dividends? A: (Tomoyuki Mitsufuji, Director and Managing Executive Officer in charge of Group Corporate Management) As we see, risk fa
Slide 23: Questions and Answers (continued)
(2) Q: The medium-term management plan states that active spending will continue until the end of the fiscal year 2022 and be replaced by profit growth in the fiscal year 2023. The balance of receivables is somewhat behind in building up, especially in Japan. Do you expect the phase of active spendi
Slide 24: Questions and Answers (continued)
we will need to discuss risk limits as we adopt it. We do not think interest rates have stopped rising yet, so we will continue to move forward carefully and come back to the issue sometime in the summer. ■ Mr. Otsuka, analyst at J.P. Morgan (1) Q: The domestic businesses seem to be making progress
Slide 25: Questions and Answers (continued)
dramatically go down. Information systems that were written off were recorded as loss on retirement when the Bank s mission-critical system went through migration, yet this will not continue to take place in the fourth quarter or any time thereafter. (2) Q: Would you tell us why the balance of recei
Slide 26: Questions and Answers (continued)
beginning of the fiscal year will decrease. (3) Q: Would you tell us about your forecasts of costs for the insurance business? A: (Tomoyuki Mitsufuji, Director and Managing Executive Officer in charge of Group Corporate Management) There are always prior costs for information systems and personnel,
Slide 27: Questions and Answers (continued)
Japan? How many new Card members do you aim to win next year and thereafter? A: (Tomoyuki Mitsufuji, Director and Managing Executive Officer in charge of Group Corporate Management) We believe that the major factors were the greater convenience of loyalty points and the campaign and redesigned credi
Slide 28: Questions and Answers (continued)
competition is fierce. Yet we will rebuild our strong position by leveraging the foundation of the AEON brand. We will speed up our business management process and simplify our management style to adapt to this competitive environment.
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