Rakuten Bank, Ltd. · TSE:5838
Rakuten Bank — Q1 FY2023 Earnings Presentation
59 slides from Rakuten Bank's earnings presentation, September 2023
Slide 1: IR Presentation
IR Presentation September 2023 Rakuten Bank, Ltd. https://www.rakuten-bank.co.jp/english/
Slide 2: Contents
Contents 1 Rakuten Bank’s Corporate Profile 2 About Our Medium- to Long-Term Vision and Growth Strategy 3 Overview of Results for First Quarter of FY2023 4 Appendix 2
Slide 3: Rakuten Bank's Corporate Profile
１ Rakuten Bank’s Corporate Profile 3
Slide 4: Corporate Profile
Corporate Profile In its aim to be the “safe, secure, and most Name Rakuten Bank, Ltd. convenient bank,” Rakuten Bank leverages the Rakuten Group’s strengths to develop a host of Established January 14, 2000 distinctive services. Capital JPY32,616mm*1 Employees 1,001*2 (consolidated) NBF Shinagawa T
Slide 5: Our Philosophy
Our Philosophy 1. Mission: Contribute to society by creating value through innovation and entrepreneurship ▪ Empowering people to realize their hopes and dreams, embracing new thinking, Rakuten Bank changes the world through innovation 2. Vision: Global Innovation Company ▪ We drive disruptive innov
Slide 6: Rakuten Bank's History
Rakuten Bank’s History September 2008 Entered a capital and business alliance with Rakuten, Inc.*1 October 2010 January 2021 April 21, 2023 Became a wholly owned Became Japan’s first Listed on the Prime subsidiary of Rakuten, Inc.*1 digital bank*2 to Market of the surpass 10mm Tokyo Stock accounts E
Slide 7: Scale of Operations
Scale of Operations Number of Bank Accounts Total Deposit Balance (As of June 30, 2023, non-consolidated) (As of June 30, 2023, non-consolidated) 14.04mm Japan’s No. 1 digital bank (As of Mar 31, 2023)*1 JPY 9.4tn Japan‘s No. 1 digital bank (As of Mar 31, 2023) *1 +10.7% YoY 14.04 +16.6% YoY 9.4 (mm
Slide 8: Three Business Pillars
Three Business Pillars Services for Individual Customers Services for Corporate Customers and Sole Proprietors Deposits/ Personal asset loans Transactions can be completed online anytime, anywhere management Transfers/ Enter- Loans Other remittances tainment Transfer Deposits services Comprehensive
Slide 9: About Our Medium- to Long-Term Vision and Growth Strategy
2 About Our Medium- to Long-Term Vision and Growth Strategy 9
Slide 10: Medium- to Long-term Vision
*1 Medium- to Long-term Vision ◼ With an eye to the arrival of the zero-cash era, in April 2022 we formulated a medium- to long-term vision, indexed to FY3/21, in the aim of becoming a leading fintech company. Consolidated Consolidated Number of accounts (non-consolidated) ordinary income ordinary p
Slide 11: Two Pillars of Earnings (Non-Interest Income/Interest Income)
Two Pillars of Earnings (Non-Interest Income/Interest Income) Growth in Non-Interest Income Growth in Interest Income ・Achieve further growth by acquiring main accounts*1 ・Produce of Group's proprietary assets to have a and through cross-selling balanced and diversified loan portfolio ・Balanced expa
Slide 12: Interest and Non-Interest Income (Non-Consolidated)
Interest and Non-Interest Income (Non-Consolidated) Interest and Adjusted Non-Interest Income*1 (JPYbn, non-consolidated) 117.6 % of total 104.7 99.1 49.4 42.0％ 39.2 44.4 YoY +11.2% 28.5 31.7 % of total 67.6 57.5％ % of total 59.3 59.6 12.8 40.5％ +4.8% 12.2 43.0％ 59.1％ 16.1 56.6％ 18.7 +16.2% FY3/21 F
Slide 13: Robust Synergies with Unique Rakuten Ecosystem
Robust Synergies with Unique Rakuten Ecosystem Unique Ecosystem Trusted and Well-known Brand Customer Acquisition 70+ services*1 100mm+ membership*1*2 No.1 web brand in Japan*3 Cross-selling Most Popular*4 Deep & Rich Data Point Program × Technology (in Japan) Origination of Unique 100mm+ membership
Slide 14: Full-fledged Digital Banking Services...
Full-fledged Digital Banking Services... Deposits / Asset Management Loans ◼ Personal loan ◼ Deposits (JPY, foreign currency) ◼ Housing loan ◼ FX margin trading ◼ Education loan ◼ Personal financial management ◼ Reverse mortgage loan (“Money Support”) ◼ Investment property loans ◼ Real estate collat
Slide 15: Our Main Accounts' Growth Momentum…
Non-Interest Interest Our Main Accounts’*1 Growth Momentum… Income Income Key Drivers of Main Account*1 Conversion Convert into main account*1 Convenience ✓ Full-fledged services ✓ Customer-centric first-class UI/UX Economic Benefit Open Rakuten Rakuten Bank Ecosystem account ✓ Rakuten Point rewards
Slide 16: Our Main Accounts' Growth Momentum…
Non-Interest Interest Our Main Accounts’*1 Growth Momentum… Income Income 5 35.0% 31.1% 5 35.0% 4.5 29.3% 30.3% 31.4% 4.5 30.0% 30.0% 4 24.6% 4 3.5 25.0% 3.5 25.0% 20.2% 3 3 20.0% 20.0% 16.6% 2.5 2.5 14.5% 15.0% 15.0% 2 2 1.5 1.5 10.0% 10.0% 1 1 5.0% 5.0% 0.5 0.5 0 0 0.0% 0.0% 18-Mar 19-Mar 20-Mar 2
Slide 17: …Increases Our Per Account Earnings
Non-Interest Interest …Increases Our Per Account Earnings Income Income Average Revenue per Account Average Deposit Balance per Account (Q1 FY3/2024) (As of May 30, 2023) c. 3x c. 6x Non-main accounts Main accounts *1 Non-main accounts Main accounts *1 17 *1: Accounts that are used for direct debit
Slide 18: Structural Tailwind from Potential Interest Rate Increases
Non-Interest Interest Structural Tailwind from Potential Interest Rate Increases*1 Income Income Balance Sheet Breakdown of Interest Rate Type (As of June 30, 2023, non-consolidated) (As of June 30, 2023, non-consolidated) Assets Deposits Loans and Bills Discounted Loans + Monetary Claims Bought Fix
Slide 19: Compelling Rakuten Card Securitization Scheme
Non-Interest Interest Compelling Rakuten Card Securitization Scheme Income Income One-stop securitization service Increasing Credit card shopping GTV*3 receivables (Trust) *2 Securitized Senior E-commerce Shopping portion Assets GMS*1 GTV*3 Shopping Funding through Subordinated Portion acceleration
Slide 20: Our Unique and Rakuten Group Originated Investments
Non-Interest Interest Our Unique and Rakuten Group Originated Investments Income Income Trust Beneficiary Rights of Personal Loans Rakuten Card • Bank card loans • Small loans with AI credit screening To leverage Rakuten Card’s shopping GTV To utilize rich data of 100mm+ Rakuten Group growth fueled
Slide 21: Data Technology to Enlarge Our Interest Income
Non-Interest Interest Data Technology to Enlarge Our Interest Income Income Income Improve accuracy Advanced Credit Scoring EC – Expand credit access – Drive loan growth Contents Travel – Reduce credit cost Sports Commu- FinTech nity Mobile Optimized Marketing – Accelerate customer acquisition – Enh
Slide 22: Promising Data Monetization Opportunities
Promising Data Monetization Opportunities Our unique advantages enable us to increase ad revenue and promote cross-use of our services Rich Data Targeting Reach ✓ 14.0mm accounts*1 (KYC completion) ✓ Precise target segmentation For advertisers ✓ Banking transaction data – AI technology ✓ Data-driven
Slide 23: Providing a New Customer Experience through BaaS
Providing a New Customer Experience through BaaS *1 14 mm passengers per day*3 Open API*2 Transportation 5.5 mm cardholders*4 (announced in Dec 2022) The Ogaki Kyoritsu Bank Automobile Retail THE NISHI-NIPPON CITY BANK Residence Other Regional Banks Life Insurance (“Rakuten Bank Dai-ichi Life Insura
Slide 24: Overview of Results for First Quarter of FY2023
3 Overview of Results for First Quarter of FY2023 24
Slide 25: Ordinary Profit Growth in Q1 in Line with Company Plan
Ordinary Profit Growth in Q1 in Line with Company Plan Key Financial and Other Data Ordinary Income Ordinary Profit Non-interest Income*1 Ratio ROE *2 (Q1/FY2023 consolidated, JPY bn) (Q1/FY2023 consolidated, JPY bn) (Q1/FY2023, consolidated) (Q1/FY2023, annualized basis, consolidated) 32.6 11.3 40.
Slide 26: Consolidated Statements of Income
Consolidated Statements of Income FY2022 FY2023 ◼ Interest income expanded in line with the Medium- to (JPY bn, consolidated) Q1 Q1 Change YoY Long-term Vision, driving double-digit growth in Ordinary income ordinary income and gross operating profit. Ordinary 29.0 32.6 +3.5 +12.2% profit increased
Slide 27: Business Expansion Driving Further Profit Growth
Business Expansion Driving Further Profit Growth ◼ Profit rose, due to a major increase in adjusted net interest income ◼ Other ordinary income/expenses include IPO-related expenses (+JPY0.14bn YoY) Ordinary Profit Waterfall (JPY bn, consolidated) +2.1 0.3 (0.2) (0.4) 2.4 11.3 9.2 Q1 Adjusted net in
Slide 28: Our Growth Trajectory and Targets – Topline and Profit
Our Growth Trajectory and Targets – Topline and Profit Ordinary Income Ordinary Profit Net Income *1 Forecasts for the FY2023 (JPY bn, consolidated) (JPY bn, consolidated) (JPY bn, consolidated) (JPY bn, consolidated) + 12.2% Progress FY2022 FY2023 YoY rate(Q1) Ordinary Income 120.4 134.8 +11.9% 24.
Slide 29: Credit Costs (Non-Consolidated)
Credit Costs (Non-Consolidated) ◼ Credit costs rose due to an increase in non-guaranteed card loans and overall expansion of investment assets, but the credit cost ratio remained low Credit Costs*1 (JPY mm, non-consolidated) 159 (148) (156) (458) (369) (657) (0.01%) (1,297) 0.00% 0.03% 0.02% 0.03% 0
Slide 30: Adjusted Net Interest Income and Net Non-Interest Income
Adjusted Net Interest Income and Net Non-Interest Income (Non-Consolidated) ◼ Owing to a substantial increase in net interest income, adjusted gross operating profit rose 14.3% YoY. Adjusted Gross Operating Profit *1 YoY (JPY bn, non-consolidated) 21.5 +14.3% 18.8 15.9 8.2 +3.5% 7.9 6.7 13.3 +22.1%
Slide 31: Interest Income (Non-Consolidated)
Interest Income (Non-Consolidated) ◼ Interest income rose 16.2% YoY, owing to an increase in investment assets Interest Income 18.7 (JPY bn, Non-Consolidated) + 16.2% 0.8 Others + 9.7% 16.1 14.7 0.5 4.9 0.1 Interest on Monetary 4.0 Claims Bought 3.4 Interest on Loans 12.9 11.1 11.5 Q1/FY2021 Q1/FY20
Slide 32: Non-Interest Income (Non-Consolidated)
Non-Interest Income (Non-Consolidated) ◼ A solid rise in total settlements led to a 11.9% YoY increase in exchange/settlement commissions FY2022 FY2023 Breakdown of Non-Interest Income*1 (JPY bn, non-consolidated) Q1 Q1 Change YoY (Q1/FY2023, non-consolidated) Non-interest income*1 12.2 12.8 + 0.6 +
Slide 33: Balance Sheets (Non-Consolidated)
Balance Sheets (Non-Consolidated) ◼ Deposits and investment assets (loans + monetary claims bought) both grew steadily (deposits: +16.6% year on year; investment assets: +22.1% year on year) 貸借対照表 Balance Sheet Loans and Monetary Claims Bought (Non-consolidated, end-June 2023) 5.84tn 5.93tn 4.58tn 4
Slide 34: Breakdown of Loans and Monetary Claims Bought
Breakdown of Loans and Monetary Claims Bought ◼ We saw a balanced increase in diversified loans and monetary claims bought. Change from (JPY bn, non-consolidated) March 31, 2021 March 31, 2022 March 31, 2023 June 30, 2023 March 31, 2023 Loans 1,895.6 2,942.5 3,769.0 3,834.8 +65.7 ★★ Card loans 330.3
Slide 35: Expand Investment Assets/Net Interest Income
Medium- to Long-term Vision Expand Investment Assets/Net Interest Income Expansion of middle-risk assets drove growth in net interest income Total for Categories That Include Middle-Risk Assets Monetary claims bought: others (JPY bn, non-consolidated) ABL (Asset-Based Lending) Investment property lo
Slide 36: Sufficient Capital Adequacy with Disciplined Management
Sufficient Capital Adequacy with Disciplined Management ◼ The capital adequacy ratio increased, owing to the application of STC securitization exposures, and we secured a capital base sufficient for further business expansion through a public offering Since September 30, 2022 Increases in April and
Slide 37: General and Administrative Expenses (Non-Consolidated)
General and Administrative Expenses (Non-Consolidated) ◼ An expanded scale of business boosted management efficiency, and our G&A Expense Ratio reached 42.7% (improving 5.0pp YoY) General and Administrative Expenses and G&A Expense Ratio* (Non-Consolidated) (JPY bn, amounts truncated after the digit
Slide 38: Roadmap to Achieve Higher ROE
Roadmap to Achieve Higher ROE Further Business Expansion with Unique Rakuten Ecosystem Non-Interest Income Growth ROE*1 Aiming for further increases ✓ • Further growth through main account*2 acquisition and cross-selling 13.9％ 13.8% ✓ Enhance Risk/Return Profile • Produce of Group‘s proprietary asse
Slide 39: Our Dividend Policy
Our Dividend Policy Prioritize further growth over dividends for the near term – Intend to keep capital adequacy to achieve our mid-to-long term targets – Make room for further expansion to pursue higher returns Assess our capital management including paying dividends in light of our strategy in the
Slide 40: Appendix
EB Appendix 40
Slide 41: Rakuten International Commercial Bank in Taiwan
Rakuten International Commercial Bank in Taiwan Company Overview Group Structure Company RAKUTEN INTERNATIONAL COMMERCIAL BANK CO., LTD. Name (Joint Venture) Establishment May 18, 2020 Rakuten Card Co., Ltd. IBF Financial Holdings Co., Ltd. 50% 1% 49% Operation Since January 19, 2021 Electronic bank
Slide 42: Strong Commitment by Experienced Management
Strong Commitment by Experienced Management*1 President Hiroyuki Hiroshi Founder, Chairman Chairman and CEO & CEO Nagai Mikitani of Rakuten Group EVP*2 Senior Executive Officers Akihito Yuichiro Takuya Koichi Kazuhiro Naoki Hajime Nohara Takasugi Kato Yada Iga Mizuguchi Hayakawa Executive Manager: E
Slide 43: Disciplined Corporate Governance
Disciplined Corporate Governance*1 3 Outside Directors out of 5 Directors Banking Regulations Hiroshi Mikitani Hiroyuki Nagai Chairman President & CEO Group Arm’s- Synergies Length Eiji Ebinuma Michio Kayano Masatsugu Nagato Outside director Outside director Outside director 3 Outside Auditors out o
Slide 44: Our SDGs Initiatives
Our “SDGs” Initiatives Contributing to a healthy and economically prosperous society through “SDGs” “SDGs” × Gender “SDGs” × Education • Percentage of women in managerial • Construction of elementary school in positions*1: People Cambodia (2006) and Philippines (2008) - Reached our initial target of
Slide 45: Digital Bank Share
Japan – Dawn of Banking Digitalization Japan Cashless Payment Ratio*2 Japan Post Bank 16% 2 80% (aiming to be the global highest level) % Promoted by Japanese Government MUFG Bank 15% Digital Bank ~40% Share*1 24% 36% (deposit balance) … … SMBC 12% 2018 2022 2025 Long-term Mizuho Bank (Actual) (Actu
Slide 46: Banking in a Cashless Era
Banking in a Cashless Era The industry’s widest range of instruments for cashless payment Debit Cards Prepaid Cards Direct Payment Using R-Pay App Rakuten Bank Card Service Linkage with Rakuten Card via Account Transfers (Rakuten Card Combined with Cash Card) ✓ Interest on ordinary deposits double t
Slide 47: Our Unique Service Offering through One App…
Our Unique Service Offering through One App… Full-fledged Digital Banking Services Rakuten Ecosystem Deposits / Asset Management Loans Transfer Payment Entertainment Single integrated app comprehensively covering individuals’ everyday life 47
Slide 48: Rakuten Card (originator) Securitization Scheme
Scheme for the Liquidation of Rakuten Card’s Credit Card Receivables Non-Interest Interest (Trust Beneficiary Rights) Income Income Rakuten Card Co., Ltd. is one of Japan’s largest credit card companies, with more than 28 million cards issued.* In general, when the holder of a credit card uses their
Slide 49: Number of Accounts, Deposit Balance (Non-Consolidated)
Number of Accounts, Deposit Balance (Non-Consolidated) Number of Accounts (Non-Consolidated) Deposit Balance (Non-Consolidated) (Millions of accounts, amounts truncated after the digit shown) (JPY bn, amounts truncated after the digit shown) 10,000 9,488.0 16.00 9,129.8 90.8 94.1 9,000 604.4 118.6 1
Slide 50: Quarterly Consolidated Financial Summary
Quarterly Consolidated Financial Summary FY2022 FY2023 YoY (JPY bn, consolidated) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Ordinary income 29.0 29.3 30.7 31.3 32.6 +12.2% Interest income 16.3 16.9 17.6 18.0 19.2 +17.6% Non-interest income 12.5 12.3 13.0 12.8 13.2 +5.3% Fees and commissions income 10.5 10
Slide 51: Financial Summary – Consolidated Balance Sheets
Financial Summary – Consolidated Balance Sheets (JPY bn, consolidated) As of Mar 31, 2021 As of Mar 31, 2022 As of Mar 31, 2023 As of Jun 30, 2022 As of Jun 30, 2023 Total assets 6,486.8 9,490.6 11,589.5 10,084.0 12,011.1 (incl.) Cash and due from banks 2,682.9 3,649.1 4,050.2 3,779.8 4,318.2 (incl.
Slide 52: Quarterly Non-consolidated Financial Summary
Quarterly Non-consolidated Financial Summary FY2022 FY2023 YoY (JPY bn, non-consolidated) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Ordinary income 28.5 28.6 29.9 30.4 31.7 +11.2% Interest income 16.1 16.5 17.2 17.6 18.7 +16.2% Non-interest income 12.2 11.9 12.6 12.4 12.8 +4.8% Fees and commissions income
Slide 53: Financial Summary – Non-consolidated Balance Sheets
Financial Summary – Non-consolidated Balance Sheets (JPY bn, non-consolidated) As of Mar 31, 2021 As of Mar 31, 2022 As of Mar 31, 2023 As of Jun 30, 2022 As of Jun 30, 2023 Total assets 6,684.6 9,647.7 11,694.2 10,182.8 12,098.2 (incl.) Cash and due from banks 2,681.3 3,645.1 4,039.7 3,772.8 4,308.
Slide 54: Accountholder Demographics
Accountholder Demographics (As of June 30, 2023) By Age Under 20s By Region Hokkaido Kyushu, Okinawa 3% 4% Tohoku 10% Chugoku, 6% 60s and 20s Shikoku over 13% 7% 13% 50s 21% Kansai 30s Kanto, 18% 24% Koshinetsu 42% Tokai 40s 11% 26% Hokuriku 2% Others Student By Occupation 4% By Gender 6% Housewife
Slide 55: Organizational Chart of Rakuten Group
Organizational Chart of Rakuten Group *1 Rakuten Group, Inc. (TSE: 4755) Internet Services business 100% Payment 95% FinTech 100% FinTech 100% Mobile 100% business business business business Rakuten Bank, Rakuten Rakuten Card Rakuten Securities Rakuten Mobile, Ltd. 5% Payment, Inc. Co., Ltd. Holding
Slide 56: Rakuten Card: Driving the Rakuten FinTech Ecosystem
Rakuten Card: Driving the Rakuten FinTech Ecosystem with a Huge Customer Base Cards Issued Shopping GTV GTV Share*1 March 2023 28.63 mm LTM 19.1 tn yen Q1/FY2023*2 Target 23.3 % Q1/23*2 Q1/23*2 Q1/23*2 4.9 tn December 2012 5.8% 2008 2022 2008 2022 2012 2022 *1 Calculated based on “Ministry of Econom
Slide 57: Customer Loyalty through Money Bridge
Achieving Customer Loyalty through “Money Bridge” How Money Bridge Works Huge Presence and Rapid Growth of Money Bridge (non-consolidated) Transaction JPY 4.9tn (YoY +16.6%) Automatic deposit 4.1mm accounts (YoY +15.8%) 52%*3 of Rakuten Bank’s Automatic total deposit balance withdrawal Favorable int
Slide 58: Rakuten Payment – Developing Leading Services in Japan
Rakuten Payment – Developing Leading Services in Japan Centered on Payment and Marketing Rakuten Payment Revenue*3 Service Lineup (JPY bn) Smartphone payment service (QR code/barcode/touch payment/Suica, etc.) Common point service CY18-22 IC type electronic money CAGR + 22.6% 51 Online electronic mo
Slide 59: The opinions and forecasts stated in this document reflect the Bank's judgment at the
The opinions and forecasts stated in this document reflect the Bank's judgment at the time these materials were prepared. The Bank does not guarantee the accuracy of the information contained herein. Please note that actual performance and results may differ significantly due to various factors.