Resona Holdings, Inc. · TSE:8308
Resona — FY2013 Earnings Presentation
60 slides from Resona's earnings presentation, May 20, 2014
Slide 1: Business Results for FY2013 and Future Management Direction
Business Results for FY2013 and Future Management Direction May 20, 2014
Slide 2: Contents
Contents Outline of Business Results for FY2013 and Updates on Major Businesses Efforts to Build Solid Foundation for Sustainable Growth Progress in Public Funds Full Repayment Plan and Direction of Future Capital Policies Reference Material 1. In some pages of this material, names of Resona Group c
Slide 3: Table of Contents
Table of Contents Outline of Business Results for FY2013 and Progress of "Public Funds Full Repayment Plan“ Updates on Major Businesses and Direction of Future Capital Policies P4 Financial Highlights for FY2013 P30 Repayment Efforts Entering the “Final Stage” to Complete Full Repayment P5 Factors A
Slide 4: Outline of Business Results for FY2013 and Updates on Major Businesses
Outline of Business Results for FY2013 and Updates on Major Businesses Efforts to Build Solid Foundation for Sustainable Growth Progress in Public Funds Full Repayment Plan and Direction of Future Capital Policies Reference Material 3
Slide 5: Financial Highlights for FY2013
Financial Highlights for FY2013 1. Posted JPY220.6bn of consolidated net income 4. Public Funds Full Repayment Plan progressed Consolidated net income decreased by Y54.4bn Repaid in total Y515.6bn of public funds and the (19.8%) YoY amount still outstanding is reduced to Y356.0bn on an injected
Slide 6: Factors Accounting for the Change in Consolidated Net Income
Factors Accounting for the Change in Consolidated Net Income Consolidated net income declined by Y54.4bn YoY (Y35.6bn increase YoY with an adjustment of one-time tax-related gain (Y90.1bn) posted in the previous year) Consolidated net income exceeded Y200bn for three consecutive fiscal years Inc
Slide 7: Outline of Financial Results for FY2013
Outline of Financial Results for FY2013 (Billions of Yen) Resona Holdings Total of 3 group Factors accounting for the difference (Consolidated) (A)-(B) (Approx. figures) Difference banks Resona Saitama Kinki RC: Resona Card, （A） YoY change （A）－（B） （B） YoY change Resona Osaka GS: Guarantee subsidiari
Slide 8: Factors Accounting for the Change in Gross Operating Profit
Factors Accounting for the Change in Gross Operating Profit (Total of Group Banks) Gross operating profit decreased by Y26.3bn YoY Increase in fee income almost made up for the decline in net interest income (Billions of Yen) Pension and FY2012 Financial securities trust +2.6 Loans Other products
Slide 9: Outline of Results by Business Segments (1)
Outline of Results by Business Segments (1) Actual net operating profit decreased by Y18.3bn YoY due to slowdown in Market division Actual net operating profit of “Customer Divisions” increased by Y0.6bn YoY Actual net operating profit of “Markets and Other (Net)” decreased by Y19.0bn YoY due to
Slide 10: Outline of Results by Business Segments (2)
Outline of Results by Business Segments (2) Personal Banking Segment Corporate Banking Segment Actual net operating profit increased by Y1.4bn Actual net operating profit decreased by Y0.7bn Increase in fee income fully made up for the decrease in Increase in fee income and reduction in oper
Slide 11: Trend of Loan and Deposit (Total of Group Banks)
Trend of Loan and Deposit (Total of Group Banks) Average loan balance and spread Loan and deposit rates and spread (Domestic Acct.) FY2013 FY2014 Loan yield (left scale) (Trillion Yen) Y oY Y oY (Act) (Plan) Loan-to-deposit spread (left scale) change change 2.5% 1.2% Deposit cost (right scale) Aver
Slide 12: Trend of Housing Loans (Total of Group Banks)
Trend of Housing Loans (Total of Group Banks) Composition of newly originated housing loans Housing loan origination by interest rate type Apartment loan Over 80% of the newly originated loans are variable rate type （Y tn） Flat 35 Residential housing loan 1.63 1.55 1.47 1.5 1.34 1.30 0.32 0.33 0.3
Slide 13: Trend of Fee Businesses
Trend of Fee Businesses Fees and commission income plus trust fees earned in FY2013 : Y115.9bn (1) Investment Products (2) Pension and Securities Trusts 115.9 (Total of Group Banks) (Total of Group Banks) Insurance products Investment trust Amount of investment trust and insurance products sold (ri
Slide 14: Credit Costs and NPL
Credit Costs and NPL Trend of credit costs NPL balance and NPL ratio (Total of Group Banks) (Note) Positive figures represent reversal gains (Ybn) FY2010 FY2011 FY2012 FY2013 Net credit cost (1) (36.8) (4.4) 21.4 27.1 (Total of group banks (A) General reserve (2) 5.7 49.4 29.4 28.4 Specific reserve
Slide 15: Securities Portfolio
Securities Portfolio Securities portfolio with reduced downside risks Trend of Securities Portfolio (HD consolidated) Stocks Mar.2003 Mar.2007 Mar.2013 Mar..2014 (Ybn) Unrealized Breakeven Nikkei average: Approx. 6,500 yen gains Available-for-sale securities*1 (1) 6,005.1 6,396.5 7,697.0 6,201
Slide 16: Status of Accumulated Other Comprehensive Income (A-OCI)
Status of Accumulated Other Comprehensive Income (A-OCI) RHD Consolidated Balance Sheet (Ybn) Mar. 2013 Mar. 2014 (A) Net unrealized gain on available-for-sale securities Net assets (1) 2,189.3 1,956.4 Net unrealized gains on available-for-sale securities are Capital stock (2) 340.4 50.4 Y333.2 bn
Slide 17: Capital Adequacy Ratio (Consolidated, Domestic Standard)
Capital Adequacy Ratio (Consolidated, Domestic Standard) Capital adequacy ratio Factors for the YoY change Adopted the Basel 3 from Mar. 31, 2014 Comparison of total qualifying capital as of Mar.31, 2014 and 2013 （Ybn） For the methodology to calculate the credit risk weighted assets, RHD/RB/SR
Slide 18: Capital Adequacy Ratio (Consolidated, International Standard)
Capital Adequacy Ratio (Consolidated, International Standard) Capital adequacy ratio Risk weighted assets Banks adopting the IRB approach to calculate credit For the methodology to calculate the credit risk- risk weighted assets are required to satisfy: weighted assets, RHD/RB/SR started adoptin
Slide 19: Earnings Forecasts for FY2014
Earnings Forecasts for FY2014 (Billions of Yen) Resona Holdings (Consolidated) Resona Holdings (Non-consolidated) Forecast for term-end Interim Full y ear Change f rom per share dividend* Interim Full y ear Change f rom f orecasts f orecasts prev ious y ear f orecasts f orecasts prev ious y ear Comm
Slide 20: Forecasted Consolidated Net Income for FY2014 Compared with FY2013
Forecasted Consolidated Net Income for FY2014 Compared with FY2013 (Act) Forecasting Y150 bn of consolidated net income for FY2014 (Y70.6 bn decrease YoY) (Billions of yen) +1.8 (2.4) FY2013 22.3 (52.6) FY2014 10.0 YoY 220.6 (70.6) Actual (12.3) (5.4) +9.1 (8.8) Net credit cost (credit cost ra
Slide 21: Efforts to Build Solid Foundation for Sustainable Growth
Outline of Business Results for FY2013 and Updates on Major Businesses Efforts to Build Solid Foundation for Sustainable Growth Progress in Public Funds Full Repayment Plan and Direction of Future Capital Policies Reference Material 20
Slide 22: Increase Business Loans (1) Business Environment
Increase Business Loans (1) Business Environment Pickup in loan demand from SMEs Pickup in loan demand from improving business confidence and more active corporate activities Improvement in Inflation business confidence <Average balance of corporate and apartment loans> Growth strategy/public spendi
Slide 23: Increase Business Loans (2) Promotion Measure
Increase Business Loans (2) Promotion Measure Stimulating latent demand for fund Stimulating latent demand for fund with asset and business succession solutions by extending supports for growth and business turnaround Example of solutions Example of solutions Effectively Supporting Management consul
Slide 24: Increase Loans to Individuals (1) Housing Loans
Increase Loans to Individuals (1) Housing Loans Housing loan demand likely to be strong in FY2014 Promotion measures to be taken in FY2014 Inflationary environment Growing number of LPs open on holidays Number of LPs Collaboration between LPs and Expanded tax incentives given to home buyers Of whi
Slide 25: Increase Loans to Individuals (2) Consumer Loans
Increase Loans to Individuals (2) Consumer Loans Start actively promoting consumer loans as one of strategically important businesses Vast untapped client base to promote consumer loans Actively promote the following strategic products with high profitability <Consumer loan balance (Total of Group B
Slide 26: Cross-selling Culture
Cross-selling Culture Visible progress has been made through the increase in the number of “Resona Loyal Customers” Number of Customers Top-line Avg. # of Customer segments based on (thousands) Income Increase life-time profits by upgrading Products Per customer segments and by increasing the depth
Slide 27: Promotion of Cross-selling (1) Premier Customer Segments
Promotion of Cross-selling (1) “Premier” Customer Segments Resona Group’s customers in need of PB solutions are rapidly increasing Change in business Vast PB business “Retail x Trust” business model environment customer base Retail customer base Full-line trust Over 0.8 million potentially Advent of
Slide 28: Promotion of Cross-selling (2) Potential Customer Segments
Promotion of Cross-selling (2) “Potential” Customer Segments To raise per head profitability of “potential” segment customers being a primary objective Promoting cross-selling to existing customers is more cost-efficient than trying to capture new customers Top-line Potential I x 10 income • Sum o
Slide 29: Sustain Low-cost Operation to Further Enhance Competitiveness
Sustain Low-cost Operation to Further Enhance Competitiveness Trend of effective personnel and Mid to long-term measures to curtail effective non-personnel expenses operating expenses Effective personnel expenses remained flat, absorbing an Continue ceaseless efforts to reduce costs in the incre
Slide 30: Progress in Public Funds Full Repayment Plan and Direction of Future Capital Policies
Outline of Business Results for FY2013 and Updates on Major Businesses Efforts to Build Solid Foundation for Sustainable Growth Progress in Public Funds Full Repayment Plan and Direction of Future Capital Policies Reference Material 29
Slide 31: Repayment Efforts Entering the Final Stage to Complete Full Repayment
Repayment Efforts Entering the “Final Stage” to Complete Full Repayment The balance of public funds has reduced to almost one tenth of the peak amount Chronological repayment of public funds (based on injected amount) 3,500 (JPY bn) Sub Debt RCC Preferred DIC Preferred DIC Common Amount repaid 3,1
Slide 32: Outline of Public Funds Full Repayment Plan and Progress to Date
Outline of “Public Funds Full Repayment Plan” and Progress to Date Amount in “Final Stage” to Complete Full Repayment billions of yen Mar. 2013 (Injected 1st Year 2nd Year 3rd Year 4th Year 5th Year amount basis) Total 871.6 Mar. 2014 Mar. 2015 Mar. 2016 Mar. 2017 Mar. 2018 Repayment 32.0*1 RCC Repa
Slide 33: Mitigating and Eliminating Two Concerns relating to RHD's Common Shares
Mitigating and Eliminating “Two Concerns” relating to RHD’s Common Shares Mitigating “Dilution Concern” Repayment of convertible preferred stock will relating to RCC/DIC Preferred Stock decrease the number of dilutive shares RCC To be repaid in installments through special preferred dividends Year
Slide 34: Direction of Resona's Capital Management
Direction of Resona’s Capital Management Capital Adequacy Ratio Management Remain subject to the Japanese Domestic Standard However, in order to secure reliable capital strength, Resona Group operates its business with a high CAR, taking reference to the International Standard. Started calcula
Slide 35: Reference Material
Outline of Business Results for FY2013 and Updates on Major Businesses Efforts to Build Solid Foundation for Sustainable Growth Progress in Public Funds Full Repayment Plan and Direction of Future Capital Policies Reference Material 34
Slide 36: Long Term Business Results
Long Term Business Results (Ybn) FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 Gross operating profit 901.8 775.0 763.1 768.6 805.2 769.3 739.5 678.3 667.0 655.2 637.1 608.5 Net interest income 599.1 561.2 542.3 549.8 563.7 555.3 547.0 499.4 484.0 463.9 443.0 43
Slide 37: Sound Balance Sheet
Sound Balance Sheet Sound assets backed by very stable deposit funding Resona’s consolidated balance sheet (as of March 31, 2014) Total assets Y44.7 tn Sound loan portfolio Stable funding structure Loans and bills Consists mostly of discounted Strong deposit base housing loans and small-lot JP
Slide 38: Stable Earnings Trend and High Profitability
Stable Earnings Trend and High Profitability Resona has consistently generated stable profits supported by our sound balance sheet Resona’s 5-year average RORA and ROA are higher than the average for the 3 megabank groups and 10 largest regional bank groups Historical Consolidated ROA*1 RORA (5-
Slide 39: Business Results by Major Group Business Segments
Business Results by Major Group Business Segments “RAROC” and “RVA”*1 as management indicators to measure profitability to allocated capital Management Accounting by Major Group Business Lines (FY2013) (Billions of Yen, %) Profitability Soundness Net operating profit after a deduction of credit co
Slide 40: Consolidated Subsidiaries and Affiliated Companies
Consolidated Subsidiaries and Affiliated Companies Consolidated domestic subsidiaries (excluding subsidiary banks) (Billions of Yen) Capital contribution Net income Name Line of business ratio FY2013 YoY change FY2012 Credit guarantee Resona Ｇroup Resona Guarantee Co., Ltd. (1) (Mainly housing loan)
Slide 41: Capital Adequacy Ratio (Subsidiary Banks)
Capital Adequacy Ratio (Subsidiary Banks) Resona Bank Saitama Resona Bank Kinki Osaka Bank (Consolidated) (Non-consolidated) (Consolidated) Japanese Domestic Standard (Billions of Yen) Mar.31,2013 Mar.31,2014 Mar.31,2013 Mar.31,2014 Mar.31,2013 Mar.31,2014 Basel 2 Basel 3 Basel 2 Basel 3 Basel 2 Bas
Slide 42: Trend of Investment Product Sale Business
Trend of Investment Product Sale Business (Total of Group Banks) Investment Trust*1 Insurance*1 （Y bn） （Y bn） 100 96.1 400 392.3 369.3 89.7 83.3 82.6 78.9 73.7 297.3 71.2 70.5 300 293.5 68.8 245.6 58.8 61.2 233.9 243.5 201.0 188.4 50 200 189.1 44.5 146.4 118.5 100 0 0 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3
Slide 43: KPIs for Cross-selling
KPIs for Cross-selling (Total of Group Banks, End of March 2014) Primary Index RLCs = Clients to whom the group have achieved cross-selling to some extent (Number of customers in thousands) Mar 31, 2013 Mar 31, 2014 Change AUM or condominium loan (1) Premier 51.1 52.7 ＋1.5 exceeding JPY50
Slide 44: Supports for SMEs Doing Business in Asia
Supports for SMEs Doing Business in Asia Footholds and Alliance Partners in Asia Local Services Offered through Alliances Large number of branches and local expertise Overseas Ability to provide local service without being regulated representative offices as a foreign bank Shanghai 4 offices M
Slide 45: Efficient Cost Structure: Personnel and Non-Personnel Expense
Efficient Cost Structure: Personnel and Non-Personnel Expense (Total of Group Banks) Unavoidable increase in operating expenses including social insurance premium will be offset by continued efforts to reduce non-personnel expenses Strictly controlled personnel expenses including the cost associ
Slide 46: Sophistication in ALM Interest Rate Risk Management
Sophistication in ALM Interest Rate Risk Management: (Introduction of Internal Model to Measure Core Liquidity Deposits) Reassess the value of liquidity deposits Methods to measure core liquidity deposits Internal model to measure core liquidity deposits Before implementation of internal model ⇒ Gra
Slide 47: Securities Portfolio (Total of Group Banks)
Securities Portfolio (Total of Group Banks) Maturity ladder for securities held (securities with contractual maturities, nominal amount basis) (Y bn) End of Mar. 2014 End of Mar. 2013 Five to Five to One year One to Three to Seven to Over One year One to Three to Seven to Over seven Total seven Tota
Slide 48: Stocks Held by Industry
10% 15% 20% 0% 5% Fishery, agriculture and forestry Mining Construction Food product Textile product Pulp and paper Chemical product Pharmaceutical product Oil and petrochemical product Rubber products Glass and pottery Iron and steel Non-metal products Metal products Machinery Electronics Transport
Slide 49: Maturity Ladder of Deposit and Loans
Maturity Ladder of Deposit and Loans (Total of Group Banks, Domestic Operation) Loans and Bills Discounted Deposits [End of March 2013] [End of March 2013] Within 6M 6 to 12M 1 to 3Y Over 3Y Total Within 6M 6 to 12M 1 to 3Y Over 3Y Total Fixed rate (1) 2.3% 1.5% 4.4% 7.6% 15.9% Liquid deposits (1) 3
Slide 50: Swap Positions by Remaining Periods
Swap Positions by Remaining Periods (RHD Consolidated) Notional amounts of interest rate swaps by remaining period (Billions of Yen) Mar. 31, 2013 Mar. 31, 2014 Within 1 to 5 Over Within 1 to 5 Over Total Total 1 year years 5 years 1 year years 5 years Receive fixed rate/ Pay floating rate (1) 55.
Slide 51: Composition of Loan Portfolio by Base Rates
Composition of Loan Portfolio by Base Rates (Total of Group Banks) Loans to corporations*1 Fixed Fixed Fixed Prime Prime Prime Rate Rate Rate Rate Rate, Rate, 24% 23% 24% 30% 29% 28% [March 31, [September 30, [March 31, 2013] 2013] 2014] Market Rate*2 Market Rate*2 Market Rate*2 46% 47% 48% Loans to
Slide 52: Composition of Deposits by Types
Composition of Deposits by Types (Total of Group Banks) Corporate Deposits Time Time Time deposits deposits deposits 28% 25% 25% [March 31, [September 30, [March 31, 2013] 2013] 2014] Liquidity deposits Liquidity deposits Liquidity deposits 69% 70% 71% Individual Deposits Time Time Time deposits dep
Slide 53: Migrations of Borrowers (RB, 1H FY2013)
Migrations of Borrowers (RB, 1H FY2013) Exposure amount basis (Migration during 1H of FY2013)*1 End of September 2013 Upward Downward Other Special Effectively Migration Migration Normal Doubtful Bankrupt Other Collection, Assignments, Watch Attention Bankrupt Repayments Sale Normal 98.5% 0.8% 0.0
Slide 54: Migrations of Borrowers (RB, 2H FY2013)
Migrations of Borrowers (RB, 2H FY2013) Exposure amount basis (Migration during 2H of FY2013)*1 End of March 2014 Upward Downward Other Special Effectively Migration Migration Normal Doubtful Bankrupt Other Collection, Assignments, Watch Attention Bankrupt Repayments Sale Normal 98.5% 0.9% 0.0% 0.
Slide 55: Trend of Long-term Senior Debt Rating of Resona Bank
Trend of Long-term Senior Debt Rating of Resona Bank 2003 2004 2005 2006 2007 2011 2012 2013 2014 S&P R&I 2/28 9/22 1/20 12/17 6/8 4/10 3/30 9/18 8/24 1/20 Moody's JCR 5/19 2/3 1/24 6/9 5/5 2/18 9/9 1/31 9/29 2/4 A1 A+ R&I JCR S&P A2 A Moody's A3 A- Baa1 BBB+ Baa2 BBB S&P Moody's Baa3 BBB- R&I JCR B
Slide 56: List of Preferred Share Issued by RHD
List of Preferred Share Issued by RHD [As of May 1, 2014] Public Funds Private Funds Class C Class F Class 3 Class 4 Class 5 Class 6 Preferred Shares Preferred Shares Preferred Shares Preferred Shares Preferred Shares Preferred Shares Distinction between public and private funds (1) Public Fund Publ
Slide 57: Change in Composition of Resona HD's Total Equity
Change in Composition of Resona HD’s Total Equity (From Mar. 31, 2010 to Mar. 31, 2014) BPS (ND) is rapidly expanding => BPS(ND) 552 yen （Y bn） Resona Capital Public Funds Full Restructuring Plan Repayment Plan 3,000 Net Income 160.0 P.O. 2,500 547.7 2,271.8 Repayment Other 48.9 (1,307.6) Repayment
Slide 58: Distributable Profits and Dividend Policy
Distributable Profits and Dividend Policy Distribute in total Y46.9 bn as term-end dividends for FY2013 （Common dividends: Y32.8 bn Preferred dividends: Y46.0 bn*1) Resona Holdings (Distributable Profits as of End Mar. 2014: Y1,078.4 bn) Term-end Common Y1.1 bn Common Y18.6 bn Common Y2.4 bn dividen
Slide 59: Business Revitalization Plan
Business Revitalization Plan (Billions of Yen) FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 [Total of Group Banks] (Actual) (Actual) (Actual) (Plan) (Plan) (Actual) (Actual) (Actual) (Plan) (Plan) Gross operating profit 1 598.6 581.6 555.2 568.0 588.0 Total assets
Slide 60: The forward-looking statements contained in this presentation may be subject to material change due
The forward-looking statements contained in this presentation may be subject to material change due to the following factors. These factors may include changes in the level of stock price in Japan, any development and change related to the government’s policies, laws, business practices and their in