Kyoto Financial Group,inc. · TSE:5844
Kyoto Financial Group,inc — H1 FY2023 Earnings Presentation
46 slides from Kyoto Financial Group,inc's earnings presentation, Dec 26, 2023
Slide 1: FY2023 Interim Financial Results Briefing Session
FY2023 Interim Financial Results Briefing Session December, 2023
Slide 2: Index
Index Ⅰ. Business performance overview 13. Actions to Achieve Management Conscious of Cost of ･･･24 Capital and Stock Price (1) 1. Financial Summary of 1H FY2023 ･･･ 3 14. Actions to Achieve Management Conscious of Cost of ･･･25 2. Interim Financial Results Summary of FY2023 (consolidated) ･･･ 4 Cap
Slide 3: Ⅰ. Business performance overview
Ⅰ. Business performance overview 2
Slide 4: 1. Financial Summary of 1H FY2023
1. Financial Summary of 1H FY2023 FY2023 FY2025 Targeted FY2022 1H FY2023 (Plan) （Targets） Levels Net income attributable to owners of the parent JPY27.2bn JPY19.2bn JPY30.0bn JPY30.0bn JPY50.0bn (consolidated net income) ROE (shareholder’s equity basis) 5.63％ 6.1％ 6% 8％ ― ROE (net asset basis) 2.62
Slide 5: 2. Interim Financial Results Summary of FY2023 (consolidated)
2. Interim Financial Results Summary of FY2023 (consolidated) Consolidated interim net income is hitting a record highs for two consecutive years. （JPY bn） Profit-increasing factors 1H 1H FY2022 FY2023 【Increase】 YoY ・Gross operating profit ・Gain(loss) on stocks Consolidated gross operating profit 4
Slide 6: 3. Interim Financial Results Summary of FY2023 (non-consolidated)
3. Interim Financial Results Summary of FY2023 (non- consolidated) Bank of Kyoto (Non-consolidated) （JPY bn） 1H 2H FY2022 FY2023 YoY Interest on current account deposits at the Gross operating profit 46.7 49.0 2.3 Bank of Japan and gains and losses on Net interest income 42.1 41.0 -1.1 redemption of
Slide 7: 4. Interest Income and Rate earned on Loans and Bills (non-consolidated)
4. Interest Income and Rate earned on Loans and Bills (non- consolidated) Net Interest Income Domestic loans and Bills interest rates +0.6 -0.2 -0.8 (JPY bn) （%） 0.963 0.932 0.930 0.917 42.1 0.908 -0.2 0.897 -0.5 0.888 New loan interest rate （for SMEs） 41.0 New loan interest rate （Total） 0.730 0.729
Slide 8: 5. Net fees and commissions (Bank, Non-consolidated)
5. Net fees and commissions (Bank, Non-consolidated) Net fees and commissions (JPY bn) 6.87 5.60 5.96 4.67 4.15 3.57 1H 2018 1H 2019 1H 2020 1H 2021 1H 2022 1H 2023 Details of fees and commissions (JPY bn) 10.10 (The Bank of Kyoto + Kyogin Securities) 9.40 9.41 Corporate 8.54 1.88 solutions 8.22 1.5
Slide 9: 6. Credit Costs and Disclosed assets
6. Credit Costs and Disclosed assets (JPY bn) 1H FY2023 Break down of credit costs (consolidated) FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 （Plan） Net provision for allowance for specific loan losses 2.0 1.4 6.3 2.9 2.1 0.2 2.3 Disposal amount due to occurrence of new non-performing loans 3.0 2.8 7.
Slide 10: 7. Financial results forecast for FY2023
7. Financial results forecast for FY2023 Consolidated net income is expected to increase for three consecutive year, revised upward from the initial forecast Consolidated (JPY bn) FY2023 FY2022 （plan） Of budget YoY Consolidated ordinary profit 38.1 42.3 2.9 4.2 Consolidated net income 27.2 30.0 2.0
Slide 11: 8. Shareholder Return and Equity
8. Shareholder Return and Equity Shareholder return ROE(consolidated) 97 (%) (%) Total payout ratio 6.1 5.63 Shareholder’s equity basis 29.2 (JPY bn) 57 4.38 49 Total amount of 3.68 13.0 shares to be 27 15.5 repurchased 2.62 2.9 10.0 Net asset basis 5.0 1.83 Total 1.68 2.5 16.2 dividends 4.5 10.5 7.
Slide 12: Ⅱ. Management strategy
Ⅱ. Management strategy 11
Slide 13: 1. 1st Medium-Term Management Plan
1. 1st Medium-Term Management Plan ―1st Medium-Term Management Plan‖ （From October 2023 to March 2026） Comprehensive solutions provider that drives community growth and What we aim for creates the future together. Positioning of the Medium- A period in which we take a strong first step toward creati
Slide 14: 2. Group-Wide Strategy
2. Group-Wide Strategy Group companies mutually cooperate to improve the Group’s overall strength through further expansion and deepening of existing business domains and expansion of new business domains Kyoto Soken Consulting (name changed in October 2023) (Operations to commence Launch of compreh
Slide 15: 3. Expansion of Business Domains (Kyoto Soken Consulting)
3. Expansion of Business Domains (Kyoto Soken Consulting) Birth of a consulting firm with think tank functions Three pillars Development of comprehensive consulting business ■ Business ■ IT, DX Membership Research introduction ■ Human resource management Business Business ■ SDGs New ■ Management ■ R
Slide 16: 4. Expansion of Business Domains (Kyoto Capital Partners)
4. Expansion of Business Domains (Kyoto Capital Partners) History of strengthening the capital function 2000 - 2015 2016 - 2020 2021 - present Investment in venture funds, absorption Establishment of the Group’s own Establishment of the Group’s own of know-how venture fund business succession fund ■
Slide 17: 5. Consulting Strategy
5. Consulting Strategy Promote becoming a more valuable business, starting with problem-solving sales Accompany customers to understand Provide comprehensive group-wide solutions and resolve issues and needs Extraction of ● Management strategy, ● Investments and loans issues management improvement ●
Slide 18: 6. Comprehensive Corporate Consulting
6. Comprehensive Corporate Consulting Fully utilize each function of the Kyoto Financial Group to implement comprehensive solutions to customers’ diversified management issues Understanding of issues and needs, and group-wide consideration of solutions ■ Utilize Action Plan Sheets ■ Utilize problem-
Slide 19: 7. Corporate Sector Initiatives
7. Corporate Sector Initiatives Consultative sales practices are steadily showing results. Number of business Income from comprehensive Number of business credit corporate services recipients matching contracts signed (Number) 40,000 (JPY bn) 確固たる経営基盤 (Cases) 1H 2H 1H 2H Excluding trade and 38,281 e
Slide 20: 8. Comprehensive Individual Customer Consulting
8. Comprehensive Individual Customer Consulting Realizing the best interests of our customers —Sales activities that prioritize increasing customers’ assets through consulting— The Bank of Kyoto Group companies Wealthy ■ Deepening of portfolio proposals [Kyogin Securities] customers, Customer develo
Slide 21: 9. Individual Customer Field Initiatives
9. Individual Customer Field Initiatives Customer-oriented practices Solutions Balance of assets under (JPY bn) Group custody 1,000 740.7 763.7 Provision of comprehensive solution To JPY1 tn Basic policy on customer-oriented services through collaboration between business operations the Bank, Securi
Slide 22: 10. DX Strategy
10. DX Strategy Reform towards data-driven management Deepening of existing businesses Exploring new businesses 【 将来展望 】 The Group will work as one to accurately respond to the increasingly sophisticated and diverse needs of customers through the accumulation, analysis, and utilization of data held
Slide 23: 11. Human Resources Strategy (Human Capital Management)
11. Human Resources Strategy (Human Capital Management) A virtuous cycle of “human capital management practice” → “improvement of human resources and corporate value” → “investment in human capital” Strengthening Kyoto Financial Group’s human capital Number of employees with specialist certification
Slide 24: 12. Basic Policy on Capital Management
12. Basic Policy on Capital Management Implement aggressive investment in growth while enhancing shareholder returns and ensuring soundness Investment in growth Challenge to aggressively invest in the expansion of business Inorganic domains, alliances, etc. Aggressive risk-taking and strengthening o
Slide 25: 13. Actions to Achieve Management Conscious of Cost of Capital and Stock Price (1)
13. Actions to Achieve Management Conscious of Cost of Capital and Stock Price (1) Efforts to improve ROE Improve ROE with the significant accumulation of risk assets that leverage the solid financial strength and inorganic investments as drivers Reference page RORA improvement ■ Significant accumul
Slide 26: 14. Actions to Achieve Management Conscious of Cost of Capital and Stock Price (2)
14. Actions to Achieve Management Conscious of Cost of Capital and Stock Price (2) Initiatives to reduce cost of equity Reference page Practicing sustainability- ➢ Initiatives for sustainability issues P.33 oriented management (Sustainable finance, carbon neutrality and other initiatives) Reducing p
Slide 27: 15. Asset Strategy
15. Asset Strategy Basic concept Trust from the local community Improvement of corporate Accumulation of assets in line value with the Medium-Term (Social value and economic Management Plan Improvement of profitability value) (increase in ROE) Continuation of activities to increase trading position
Slide 28: 16. Capital Allocation
16. Capital Allocation Controlled capital ratio in the 11% range 17 Capital Allocation Image Credit Risk Asset Image Other 16 Structured Finance Fund Market division Mortgage Accumulation of 15 credit risk assets of JPY500.0 bn + extra Apartment Leasing Active credit risk 14 Capital ratio asset inve
Slide 29: 17. Structured Finance (SF)
17. Structured Finance (SF) Accumulation of high-quality assets that will serve as future sources of income SF income amount SF (loan) balance SF (investment) balance (JPY bn) (JPY bn) (JPY mn) Aggressive risk-taking Aiming to exceed Medium- by leveraging our 4,500 450 Aiming to exceed Medium- 1,300
Slide 30: 18. Market Operations
18. Market Operations While paying attention to interest rate risk, increase the balance of securities and secure stable periodic income. Domestic bonds: Continue to increase the balance mainly in government bonds and municipal bonds, while shortening the investment period. Foreign bonds: While
Slide 31: 19. Reducing Securities Held for Strategic Equity
19. Reducing Securities Held for Strategic Equity Policy on Reducing Securities Held for Reduce securities held for strategic equity Strategic Equity (Announced in May 2022) ･･･ by 16.0billion yen around 3 years Changes in balance of strategic investment stocks Number of Stocks Classified as Securit
Slide 32: 20. Shareholder returns
20. Shareholder returns Shareholder return policy ~ a total payout ratio of 50% or more ~ While considering the balance between investment for growth and ensuring sound management, we will continue to enhance shareholder returns and implement returns flexibly. Total return amount and Total payout ra
Slide 33: 21. Stakeholder Communication
21. Stakeholder Communication Stock Split Shareholder Benefit Program Shareholder survey results After Reas on f or s toc k owners hip Before After 4% 3% 2% Before Holding shares for Holding shares for 7% 22% Total number 3 consecutive terms 1 period of authorized 200,000,000 800,000,000 or more 7%
Slide 34: 22. Practicing Sustainability Management
22. Practicing Sustainability Management （All results are as of September 30, 2023） Social value Sustainability Linked Loan (Kyoto Version)* ・Responses in accordance with TCFD recommendations Sustainability ■Since the start of handling in January 2023, ・Initiatives to realize Management 38 cases hav
Slide 35: Ⅲ. Reference material
Ⅲ. Reference material 34
Slide 36: Reference material 1. Our History
Reference material 1. Our History (Outline: Establishment to Heisei Eras) Expansion of branch network In Kyoto City, financial difficulties for small and Kyoto Osaka Shiga Nara Hyogo Aichi Tokyo total medium-sized enterprises March were a problem. 105 9 0 0 0 0 1 115 2000 March 111 31 14 7 8 2 1 174
Slide 37: Reference material 2. Deposits and negotiable certificates of deposit
Reference material 2. Deposits and negotiable certificates of deposit (Bank, Non-consolidated) Deposits and negotiable certificates of deposit(term-average) Share in Kyoto Prefecture Results of 1H FY2023 (YoY change) Results of 1H FY2023 (YoY change) (As of September 30, 2023) Corporations +JPY195.1
Slide 38: Reference material 3. Loans and bills discounted
Reference material 3. Loans and bills discounted (Bank, Non-consolidated) Loans and bills discounted(Term-average) Share in Kyoto Prefecture (As of September 30, 2023) Results of 1H FY2023 (YoY change) Results of 1H FY2023 (YoY change) Corporations〒JPY165.8bn, Individuals〒JPY11.0bn, Kyoto〒JPY39.3bn,
Slide 39: Reference material 4. Impact of rising yen interest rates
Reference material 4. Impact of rising yen interest rates (Bank, Non-consolidated) Yen currency balance sheet Impact of rising interest rates on profits 【End of September 2023】 (JPY tn) Annual revenue impact amount : About +JPY2.0bn Rising interest rates will have a positive impact on bank profits,
Slide 40: Reference material 5. Expenses and OHR
Reference material 5. Expenses and OHR Expenses and OHR (Consolidated) Expenses and OHR (Bank, non-consolidated) 67.63 68.93 64.95 66.06 (%) (%) 56.28 57.13 57.07 57.91 55.01 55.20 OHR OHR 29.8 (JPY bn) 28.7 （JPY bn） 28.6 28.3 28.2 28.3 27.5 27.3 27.0 27.1 15.6 Personnel 15.4 15.3 15.2 15.3 expense
Slide 41: Reference material 6. Comprehensive Risk management
Reference material 6. Comprehensive Risk management Interest rate risk in the banking book [Status of Comprehensive Risk Amount] （As of the end of September 2023） ●The capital allocation amount for the first half of fiscal 2023 was 285.0 billion yen, Delta EVE and the integrated risk amount as of th
Slide 42: Reference material 7. Outline of the Holding Company
Reference material 7 . Outline of the Holding Company <About the logo> Dry landscape gardens (karesansui) are a familiar sight in Kyoto. The design was inspired by the ripple pattern represented in the sand pattern of a karesansui. The three ripples forming the logo represent ―our customers,‖ ―the l
Slide 43: Reference material 8. Management Principle
Reference material 8. Management Principle Kyoto Financial group’s management principle and management policy is inherited from the Bank of Kyoto’s principle and policy, and the Group’s action guidelines for the realization of the principle and policy will be newly established on the occasion of the
Slide 44: Reference material 9. Holding company structure (Governance Structure)
Reference material 9. Holding company structure (Governance Structure) The Holding Company will be a ―company with an audit and supervisory committee‖ to enable highly effective supervision of management and prompt decision-making as we aim to expand into new business areas and achieve independent b
Slide 45: Reference material 10. Group Companies
Reference material 10. Group Companies Main Business Kyoto Financial Group, Inc. Business management of group companies The Bank of Kyoto, Ltd. Banking Kyoto Guaranty Service Co., Ltd. （100% owned by The Bank of Kyoto） Credit guarantee Sky Ocean Asset Management Co., Ltd. (The Bank of Kyoto’s Equity
Slide 46: Inquiries
This material has been translated from the Japanese-language original for reference purposes only. In the event of any conflict or discrepancy between this document and the Japanese-language original, the Japanese-language original shall prevail in all respects. And This material contains descriptio
Kyoto Financial Group — H1 FY2023 Earnings Presentation on 6ix