77 Bank, Ltd. · TSE:8341
77 Bank — The 77 Bank — 1H FY2022 Earnings Presentation
44 slides from 77 Bank's earnings presentation, Dec 6, 2022
Slide 1: Results for the First Half of Fiscal Year Ending March 31, 2023
Leading company creating a path to the future Results for the First Half of Fiscal Year Ending March 31, 2023 IR Presentation Materials were prepared for the Bank’s presentation of its results for the first half of fiscal year ending March 31, 2023 held on December 6, 2022. December 6, 2022
Slide 2: Contents
Contents 1. First Half Financial Summary ... 2 2. Projected Performance ... 11 3. Business Strategy ... 14 4. Sustainability ... 37 The 77 Bank, Ltd. | First Half of Fiscal Year Ending March 31, 2023 1
Slide 3: First Half Financial Summary
01 First Half Financial Summary The 77 Bank, Ltd. | First Half of Fiscal Year Ending March 31, 2023 2
Slide 4: First Half Financial Summary (Summary of profits and losses)
1. First Half Financial Summary (Summary of profits and losses) (Unit: JPY bn, %) Summary of profits and losses FY2021 FY2022 YoY change < Core operating income > (Non-consolidated) 1H 1H Increase/decrease Rate of change % Gross operating income 38.5 42.6 4.1 10.6 In addition to an increase in inter
Slide 5: First Half Financial Summary (Interest income)
1. First Half Financial Summary (Interest income) (Unit: JPY bn) Interest income increased JPY 1.3 billion year-on-year as a FY2021 FY2022 result of an increase in interest on loans and bills discounted 1H 1H YoY change thanks to an increase in yen-denominated loans and bills Interest income 37.7 39
Slide 6: First Half Financial Summary (Loans and bills discounted/Deposits)
1. First Half Financial Summary (Loans and bills discounted/Deposits) (Unit: JPY bn, %) FY2021 FY2022 YoY change Increase/decrease Rate of change % Loans and bills discounted increased 1H 1H Loans and bills discounted 5.4% year-on-year due to factors such 5,071.6 5,346.6 275.0 5.4 as an increase in
Slide 7: First Half Financial Summary (Securities)
1. First Half Financial Summary (Securities) Balance of marketable securities Despite an increase in the trading amount, particularly (Unit: JPY bn) (on an amortized cost base) (6.4) for floating rate bonds denominated in foreign currencies, the balance of marketable securities 3,013.4 3,007.0 decre
Slide 8: First Half Financial Summary (Securities)
1. First Half Financial Summary (Securities) Gains (losses) from evaluation of securities National gov. bonds Local gov. bonds Corporate bonds Although evaluation gains on domestic bonds, Investment trusts, etc. Foreign bonds Stock Total investment trusts, etc., worsened amid factors (Unit: JPY bn)
Slide 9: First Half Financial Summary (Fees and commissions)
1. First Half Financial Summary (Fees and commissions) (Unit: JPY mn) FY2021 FY2022 1H 1H YoY change Despite an increase in sales commissions of Fees and commissions A 9,930 9,241 (89) assets in custody as a result of an increase Fees and commissions from payments 4,536 4,100 (436) in insurance sale
Slide 10: First Half Financial Summary (Expenses)
1. First Half Financial Summary (Expenses) (Unit: JPY bn) FY2021 FY2022 1H 1H YoY change Expenses decreased JPY 1.3 billion year-on-year, Expenses 24.8 23.5 (1.3) largely thanks to a decrease in deposit insurance Personnel expenses 13.1 12.8 (0.3) premiums and a lower number of employees, due partly
Slide 11: First Half Financial Summary (Credit-related expenses/reserve for loan losses)
(Credit-related expenses/reserve for loan losses/ 1. First Half Financial Summary credits disclosed under the Financial Reconstruction Law) Credit-related expenses (Unit: JPY bn) 56.9 The Bank reversed some general reserve for loan losses partly owing to a decline in provision rates, but made provis
Slide 12: Projected Performance
02 Projected Performance The 77 Bank, Ltd. | First Half of Fiscal Year Ending March 31, 2023 11
Slide 13: Projected Performance (Summary of profits and losses)
2. Projected Performance (Summary of profits and losses) (Unit: JPY bn) Summary of profits and losses FY2022 YoY change FY2023 FY2021 (Non-consolidated) (Forecast) Increase/decrease (Simulation) Gross operating income 75.8 78.3 2.5 81.2 [ Core operating income ] [ 84.6 ] [ 84.3 ] [ (0.3) ] [ 82.8 ]
Slide 14: Projected Performance (Summary of profits and losses)
2. Projected Performance (Summary of profits and losses) (Unit: JPY bn) FY2022 FY2023 FY2021 (Forecast) YoY change (Simulation) Interest income 72.3 78.0 5.7 83.2 Investment income 72.9 78.7 5.8 83.7 [Interest on loans and bills discounted] [ 42.3 ] [ 45.7 ] [ 3.4 ] [ 47.8 ] (Reference) Level of yie
Slide 15: Business Strategy
03 Business Strategy The 77 Bank, Ltd. | First Half of Fiscal Year Ending March 31, 2023 14
Slide 16: Business Strategy (Vision 2030)
3. Business Strategy (Vision 2030) The 77 Bank, Ltd. | First Half of Fiscal Year Ending March 31, 2023 15
Slide 17: Business Strategy (Vision 2030)
3. Business Strategy (Vision 2030) The 77 Bank, Ltd. | First Half of Fiscal Year Ending March 31, 2023 16
Slide 18: Business Strategy (Digital transformation)
3. Business Strategy (Digital transformation) Digital transformation (Key factors) While placing the utmost priority on “peace of mind and safety,” the 77 Bank Group will capitalize on the digital transformation, which accelerated as a result of COVID-19, and take actions including responding to the
Slide 19: Business Strategy (New businesses and sectors)
3. Business Strategy (New businesses and sectors) New businesses and sectors (Key factors) The 77 Bank Group aims to enter new business domains in order to solve the issues of customers and the local communities, and become a leading company that operates a diverse range of businesses with the banki
Slide 20: Business Strategy (Human resources)
3. Business Strategy (Human resources) Human resources (Key factors) The 77 bank Group will utilize the aptitude of each individual and develop “human resources that serve a purpose for customers and local communities” and “human resources that contribute to corporate reform,” which will serve as an
Slide 21: Business Strategy (Financial foundation)
3. Business Strategy (Financial foundation) Strengthen financial foundation (key factors) FY2021 FY2022 FY2022 FY2030 results 1H target Vision Net income JPY 22.2 bn JPY 13.0 bn JPY 22.5 bn JPY 28.0 bn (consolidated) (JPY 4.6 bn) (JPY 2.6 bn) (JPY 3.0 bn) (JPY 8.0 bn) (Credit-related expenses) Capit
Slide 22: KPI (Let's Try!) Vision 2030 status of progress
3. Business Strategy (Vision 2030 status of progress) FY2021 FY2022 FY2022 FY2030 KPI（Let’s Try!） Results 1H Target Vision Proportion of companies in Miyagi Prefecture for whom we are their main 56% 56% 57% 62% bank Number of corporate lending clients 1.07x 1.14x 1.13x 1.5x outside Miyagi Prefecture
Slide 23: Business Strategy (Basic strategies)
3. Business Strategy (Basic strategies) The 77 Bank, Ltd. | First Half of Fiscal Year Ending March 31, 2023 22
Slide 24: Business Strategy (Corporate sales)
3. Business Strategy (Corporate sales) Top customer Double Corporate Regional growth Provision of finance & consulting satisfaction strategy productivity strategy strategy culture reform strategy Implementation of consulting sales Measures to strengthen consulting capabilities Number of proposals by
Slide 25: Business Strategy (Corporate sales)
3. Business Strategy (Corporate sales) Top customer Double Corporate Strengthen the promotion of sales the Tohoku satisfaction productivity Regional growth culture reform strategy region, etc. strategy strategy strategy Opening of Aomori Branch (opened September 5, 2022) Measures aimed at strengthen
Slide 26: Business Strategy (Corporate sales)
3. Business Strategy (Corporate sales) Top customer Double Corporate Regional growth satisfaction productivity culture reform Strengthening of structured finance measures strategy strategy strategy strategy Structured finance (Yen-denominated, average balances) Project finance (Unit: JPY bn) ➢ Accum
Slide 27: Business Strategy (Retail sales)
3. Business Strategy (Retail sales) Promotion of asset-holding based on customers’ Top customer satisfaction Double productivity Regional growth Corporate culture reform strategy life plans strategy strategy strategy Strengthening of retail sales Sales commissions of assets in custody ➢ Strengthen s
Slide 28: Business Strategy (Retail sales)
3. Business Strategy (Retail sales) Top customer Double Corporate Regional growth Strengthening promotion of retail loans satisfaction strategy productivity strategy strategy culture reform strategy Strengthening promotion of housing loans (Unit: JPY bn, houses) 118.0 120.9 Amount of 111.5 housing l
Slide 29: Business Strategy (Non-face-to-face channels)
3. Business Strategy (Non-face-to-face channels) Top customer Double Corporate Regional growth Guiding to non-face-to-face channels satisfaction strategy productivity strategy strategy culture reform strategy Promotion and enhancement of non-face-to-face channels First regional bank in Tohoku! ➢ Int
Slide 30: Business Strategy (Paperwork-free and branch strategy)
3. Business Strategy (Paperwork-free and branch strategy) Top customer Double Corporate Regional growth satisfaction productivity culture reform Reduction/simplification of administrative processes strategy strategy strategy strategy Improvements to administrative processes KPI（Let’s Try!) ➢ Introdu
Slide 31: Business Strategy (Productivity enhancement)
3. Business Strategy (Productivity enhancement) Top customer Double Corporate Regional growth Measures aimed at enhancing productivity satisfaction productivity strategy culture reform strategy strategy strategy Rebalancing of management resources Optimize branch Personnel members created KPI（Let’s
Slide 32: Business Strategy (Support for growth of regional businesses)
3. Business Strategy (Support for growth of regional businesses) Top customer Double Corporate Regional growth satisfaction productivity culture reform Support for growth of inspirational local companies strategy strategy strategy strategy Enhancement of support programs for founders and startups Su
Slide 33: Business Strategy (Regional vitalization)
3. Business Strategy (Regional vitalization) Top customer Double Corporate Regional growth satisfaction productivity culture reform Collaboration with local governments strategy strategy strategy strategy Measures related to the Miyagi wide-area PPP platform (MAPP) (established Jan. 2020) ➢ Aim to c
Slide 34: Business Strategy (Corporate culture reform)
3. Business Strategy (Corporate culture reform) Top customer Double Corporate Regional growth satisfaction productivity culture reform Fostering of ambitious spirit strategy strategy strategy strategy Enhancement of internal communication Penetration of ambitious spirit ➢ Vitalization of communicati
Slide 35: Business Strategy (Marketable securities trading)
3. Business Strategy (Marketable securities trading) Portfolio management suited to changes in the investment environment 2H FY2022 Trading policy Trading posture ➢ Increase income from interest and dividends based on changes in the Treasury Div. (32 members) (Front department) investment environmen
Slide 36: Policy of Return of Profits to Shareholders
3. Business Strategy (Return of profits to shareholders) Measures targeting shareholder returns Formulation of policy of return of profits to shareholders From the standpoint of establishing a solid financial foundation through elevating customer satisfaction and improving productivity based on the
Slide 37: Business Strategy (Financial foundation and cross-shareholdings)
3. Business Strategy (Financial foundation and cross-shareholdings) Financial foundation Capital adequacy ratio (consolidated) and risk assets Trends in ROE (Unit: JPY bn) (Unit: JPY bn) 10.38% 10.31% 10.39% 4.33% Capital adequacy 10.27% 10.22% ratio (consolidated) 3.89% ROE 3.60% 3.42% [Domestic st
Slide 38: Sustainability
04 Sustainability The 77 Bank, Ltd. | First Half of Fiscal Year Ending March 31, 2023 37
Slide 39: Sustainability (Measures up to this point)
4. Sustainability (Measures up to this point) Sustainability measures up to this point Established the “Sustainability Promotion and Management Policy” Formulated the “Dementia Barrier-Free Declaration” Established the “Sustainability Committee” Formulated the “77 Bank Group SDG Declaration” Newly e
Slide 40: Sustainability (Revitalization of regional economy)
4. Sustainability (Revitalization of regional economy) Spread of sustainability Support for sustainability at clients ➢ e-dash business partnership (support for decarbonization by clients) KPI ➢ Partnership related to products and services in the sustainability sector with banks Total cumulative sus
Slide 41: Sustainability (Responding to global warming and climate change)
4. Sustainability (Responding to global warming and climate change) Response to environmental issues Reduction of environmental burden ➢ Reduction of electric and other power consumption through branches within branches KPI ➢ Installation of solar power generation systems at newly established branch
Slide 42: Sustainability (Support for individual employee activities)
4. Sustainability (Support for individual employee activities) Measures to create an organization that enables employees to engage in a diverse range of activities Support for balancing work and childrearing Promotion of the active participation of women Rate of taking paternity leave (Unit: People)
Slide 43: Sustainability (Advancement of governance)
4. Sustainability (Advancement of governance) Measures aimed at enhancing and strengthening governance Composition of the Board of Directors Directors Outside Female Directors Directors Outside Directors Total number of Ratio of outside Ratio of female Directors Directors Directors Directors 6 4 16
Slide 44: The 77 Bank, Ltd. | First Half of Fiscal Year Ending March 31, 2023
The 77 Bank, Ltd. | First Half of Fiscal Year Ending March 31, 2023 43