Aeon Financial Service Co., Ltd. · TSE:8570
Aeon Financial Service — FY2016 Earnings Presentation
39 slides from Aeon Financial Service's earnings presentation, May 12, 2017
Slide 1: AEON Financial Service Co., Ltd.
AEON Financial Service Co., Ltd. 1
Slide 2: Summary of consolidated results
Summary of consolidated results 1Q 2Q 3Q 4Q FY2016 （Unit：Billions of yen) Difference Results YoY Results YoY Results YoY Results YoY Results YoY from forecast Ordinary income 90.4 +6％ 90.5 +3％ 93.5 103％ 100.6 +6％ 375.1 +4％ -4.9 Ordinary expense 76.7 +6％ 76.8 +3％ 78.6 105％ 81.3 +5％ 313.5 +4％ -3.5 Ord
Slide 3: Consolidated Results of business scale
Consolidated Results of business scale FY2015 2016 1H FY2016 Change from Results YoY Results start of FY Results YoY Number of cardholders 37.22million +1.55 38.16million +0.94 38.94million +1.72 Number of cardholders 25.88million +1.24 26.44million +0.56 26.92million +1.04 ➊ in domestic Number of a
Slide 4: Consolidated Results by Area
Consolidated Results by Area FY2016 Topics ※（）:YoY （Unit：Billions of yen） ・Affiliated merchant fee ：¥67.3bn（+¥5.3bn） Results YoY Change ・Cash advance revenue：¥63.2bn(+4¥.8bn） Ordinary income 375.1 +4％ +15.5 →Active card：1.23mn（Change from start of FY +50K） Balance/person ：¥315,000（ Change from start
Slide 5: Results by Segments
Results by Segments FY2016 Topics ※（）:YoY (Unit :Billions of yen) Results YoY Change ・Card shopping transaction volume ：Increased after promoting double the point campaign Ordinary income 175.8 +9％ +14.5 →1Q+8％、2Q+9％、3Q+12％、4Q+11% Credit ・Installment sales volume：¥234.6bn（+17％） business Ordinary pro
Slide 6: Consolidated balance sheet
Consolidated balance sheet Consolidated Results Results Change from Topics ※（）:Change from start of FY (Unit : Billions of yen) start of FY ・Balance in domestic：¥505.0bn（+¥85.5bn） Cash and deposits 534.6 +89.7 →Needs usage of housing loan and cash advance ・ Balance in domestic ：¥1,617.7bn（+¥182.0bn）
Slide 7: Improve profitability of asset ～Capital efficiency by securitization～
Improve profitability of asset ～Capital efficiency by securitization～ ■Reduction of capital requirement…Risk asset compress for securitization and acquisition of credit-rating ■Increase of capital turnover…Securitize long-term duration loans then shift to short-term loans ■improve yields…Securitize
Slide 8: Improve profitability of asset - Increase turnover ratio and yield
Improve profitability of asset -Increase turnover ratio and yield- ■ Long-term duration and low yield housing loans are securitized to be invested in installment sales finance with short-term duration and higher yield ■ Hold a position as a originator to maintain relation with customer Ex : scheme o
Slide 9: Our task to challenge
Our task to challenge ■Promote sharing of information and utilize Artificial Intelligence(AI) for addressing customer’s various needs by construct a structure Needs in support Needs in poor support Preparation for Asset Expenditure Saving Borrowing Investment the future Management Discount/ Preferen
Slide 10: Future Direction
Future Direction AEON Financial Service Co., Ltd. 10
Slide 11: Our Vision “Asia’s No.1 Retail Financial Service Company”
Our Vision “Asia’s No.1 Retail Financial Service Company” MISSION ： Enriches daily lives of customers through providing financial service PROCESS ： Contributing to our customers’ all life stages and life styles Using data based marketing to our Asian subsidiaries Providing our group’s synergy for st
Slide 12: Our Vision ～Domestic Business～
Our Vision ～Domestic Business～ ■Taking in all financial needs from our group using Aeon group’s platform ■Analyzing data, which is accumulated by expanding our group’s transaction volume, and using it to develop external affiliated merchants and providing services to our customers, which will eventu
Slide 13: Our Vision ～Overseas Business～
Our Vision ～Overseas Business～ ■ Accelerate shifting from loans to goods and sale, refining screening and , Promote use of system in collection ■ By improving productivity, we expanded the share of overseas business to approximately 50% of consolidated ordinary profit Bad debt allowance and personne
Slide 14: Domestic realization → Re-growth in overseas business
IT / System investment : Area ・ Amount · Schedule System （IT） Area Over Field seas Replace New investment 30% 40% 60% ¥100 Billion Dom estic 70% Objective ‘ Effect 2017 2018 2019 Re-growth in overseas business ・Improve Data integration, business support related ・ ¥10bn Domestic realization → Improve
Slide 15: Improve Ordinary Income Ordinary Profit Rate
Improve Ordinary Income Ordinary Profit Rate ■Consolidated ordinary revenue for FY2018 plans to grow by more than 10% compared to FY2017 ■In addition to improve profitability of asset, expanding fee revenue by promoting cross-selling ■Improve bad debt allowance and labor share of income and increase
Slide 16: Key Initiatives for FY 2017
Key Initiatives for FY 2017 ■ Improving Convenience and Productivity ■ Improve profitability of asset ■ Re-growth in overseas business AEON Financial Service Co., Ltd. 16
Slide 17: Digitalization
Key Initiatives for FY2017 Improving Convenience and Productivity • AEON Wallet: Going card-less （Application, Payment, Point management） • Going paperless: Digital signage, electronic (web) statements, Digitalization branch operations • Marketing: Strengthening sales promotion, Sales consulting wit
Slide 18: Key Initiatives for FY2017 Improving Convenience and Productivity
Key Initiatives for FY2017 Improving Convenience and Productivity Focus on • Enhance business in the Jyonan Area using AEON Himonya Branch as a model • Card member recruitment efforts through the use of tablets installed in booths Greater Tokyo set up in small-scale shops within the AEON Group ; Exp
Slide 19: Evolution of Business Model: New structure vs current structure
Key Initiatives for FY2017 Improving Convenience and Productivity • Integration of domestic head office business functions through the evolution of business structure Evolution of • Collaboration with other companies while making use of our sales Business Model channels (E.g. Insurance business) • R
Slide 20: Expansion to overseas: Improvisation of Asset Profitability
Key Initiatives for FY2017 Improvisation of Asset Profitability ■Review receivables portfolio （Domestic: Shift to high-return receivables, Overseas: Shift to highly safe receivables） ■Control bad debt allowance through the review of screening standards based on each country’s market situation and cu
Slide 21: Re-growth in overseas business: AEON Credit Service (Asia)
Key Initiatives for FY2017 Re-growth in overseas business ■AEON CREDIT SERVICE (ASIA) ＜Hong Kong＞ ・Increase number of new sign-ups through the introduction of co-branded cards targeting youth ・Promotion of instant card issuance in AEON Store Branch; Co-promotion with AEON Group ・Facilitation of outb
Slide 22: Re-growth in overseas business: AEON Thanasinsap (Thailand)
Key Initiatives for FY2017 Re-growth in overseas business ■AEON THANASINSAP (THAILAND) □Thailand:・Issuance of co-branded credit cards through collaboration with Big C ・Reduction of allowance for doubtful accounts amount via the introduction of a shared credit management system and the refinement of
Slide 23: Re-growth in overseas business: AEON Credit Service (Malaysia)
Key Initiatives for FY2017 Re-growth in overseas business ■AEON CREDIT SERVICE (MALAYSIA) □Malaysia ・Issuance of prepaid cards partnered with international brands ・ Entrustment of points business to AEON Malaysia ・Insurance brokerage business, Trustee insurance business, Insurance targeting tenants
Slide 24: Forecast of Results for FY2017
Forecast of Results for FY2017 ■ Domestic：Continual growth in card shopping transaction volume ■ Overseas：Reduction of bad debt allowance and labor cost Forecast of Results Results YoY Ordinary income ¥390.0 billion +4.0％ Ordinary profit ¥65.0 billion +5.5％ Net income attributable to owners of the p
Slide 25: AEON Credit Service (M) BHD FYE2017 Overview
AEON Credit Service (M) BHD FYE2017 (as at February 2017) Overview AEON Financial Service Co., Ltd. 25
Slide 26: FYE2017 Performance Highlights
FYE2017 Performance Highlights ■Sales expanded by Credit Card , MEP and Personal Finance ■Impairment loss provision vs. operating income recorded 25%, improved 2% vs. LY (Unit: RM Mil) FYE2016 FYE2017 vs. LY Credit Card 947.7 1,106.9 117 General Easy Payment 367.3 354.4 96 Motorcycle Easy Payment 50
Slide 27: FYE2017 Summary of Statement of Financial Position
FYE2017 Summary of Statement of Financial Position (Unit: RM Mil) 29 Feb 2016 28 Feb 2017 vs. LY Credit Card 538.7 586.7 47.9 General Easy Payment 464.6 424.9 (39.7) Motorcycle Easy Payment 899.1 984.9 85.9 Superbike Easy Payment 767.1 897.5 130.3 Automobile Financing 1,579.6 1,957.2 377.6 Personal
Slide 28: Key activities of FYE2017① – Value Chain Transformation
Key activities of FYE2017① – Value Chain Transformation Improved Branch staff productivity and operating cost by Branch Transformation ■ Expand Cashless Operation Branch in nationwide, 62 out of 64 branches successfully converted. ■ Branches are equipped with tablets for applications and other servi
Slide 29: e-Biz Portal (Web Application)
Key activity of FYE2017① – Value Chain Transformation e-Biz Portal (Web Application) ■ Merchant web application (Easy Payment Scheme) & Customer web application (PF and CC) ■ Productivity increased by 80%, turn-around-time reduced by 27%, and cost saving by 20% (per 1 application) Web Application Mo
Slide 30: Key activity of FYE2017 ② – Optimize income for Existing Stock business
Key activity of FYE2017 ② – Optimize income for Existing Stock business ■ Improved collection operation and reviewed assessment by customer attribution & profile. ■ Revenue for AF improved compared to last year although sales was lower due to the changes in assessment – assess by merchant grouping w
Slide 31: FYE 2018 Key Activity
FYE 2018 Key Activity AEON Financial Service Co., Ltd. 31
Slide 32: Expand Settlement Business/Fee Business and AEON Group Synergy
Expand Settlement Business/Fee Business and AEON Group Synergy ■ Absorb group retail cash transaction by New VISA prepaid Card ■ Established Digital Marketing to integrate Group customer database and group marketing ■ Expand group synergy, drive customers to ACS Finance products and services Drive C
Slide 33: Value Chain Transformation
Value Chain Transformation ■ Continue branch transformation, tablet utilization, proceed cashless operations, digital advertisement and multi-tasking training ■ Launch instant credit card to improve customer experience – improve convenience ■ Complete digitalization for application process to improv
Slide 34: 3 Years Investment Planning
3 Years Investment Planning ■ To accelerate Digital theft , Established IT R&D department ■ Increase investment for Settlement business expansion ■ Investment for improve Productivity and working efficiency for Branch and Operation Centre 2017 2018 2019 E-money(Aeon Member Plus) Overseas On-us Settl
Slide 35: (Reference) FY 2016 Results (Hong Kong, Thailand, Malaysia)
(Reference) FY 2016 Results (Hong Kong, Thailand, Malaysia) FY2015 FY2016 Results YoY Results YoY Revenue 1,258,854 -3% 1,228,100 -2% AEON CREDIT Operating income 1,174,260 -3% 1,145,752 -2% SERVICE Profit before tax 307,355 -11% 367,234 +20% (ASIA) Profit for the period (HK$’000) attributable to :
Slide 36: (Reference) FY 2016 Results (Hong Kong, Thailand, Malaysia)
(Reference) FY 2016 Results (Hong Kong, Thailand, Malaysia) ■ Consolidated Results of AEON Credit Service (Asia) Co., Ltd. (Unit : Billions of yen) FY 2015 FY 2016 Exchange rates: HKD 1 ・2015: ¥15.54 Results Results YoY ・2016： ¥14.09 Ordinary income 20.5 18.4 -10% Ordinary profit 4.7 5.1 +8% Fiscal
Slide 37: (Reference) Allowance for Doubtful Accounts and Loss on Refund of Interest
(Reference) Allowance for Doubtful Accounts and Allowance for Loss on Refund of Interest Received by Segment ■ Allowance for Doubtful Accounts (by Segment) (Unit : Billions of yen) Credit Banking Overseas Fee Total Allowance for doubtful accounts, beginning of period 27.5 3.2 15.0 4.2 49.4 Provision
Slide 38: (Reference) FY 2017 Business Plan (Domestic)
(Reference) FY 2017Business Plan (Domestic) FY 2016 FY 2017 Results YoY Plan YoY Number of cardholders 26.92 million +1.04 million 28.00 million +1.08 million Results YoY Plan YoY Card shopping transaction volume ¥4,515.7 billion +10.0% ¥5,000.0 billion +10.7% Change from start Change from start Res
Slide 39: AEON Financial Service Co., Ltd.
Statements contained in this report with respect to the Company’s management strategies, business policies and results forecasts are forward- looking statements about the future performance of the Company, which are based on the assumptions and beliefs in light of the information currently available
AEON Financial Service — FY2016 Earnings Presentation on 6ix