Aeon Financial Service Co., Ltd. · TSE:8570
Aeon Financial Service — FY2023 Earnings Presentation
45 slides from Aeon Financial Service's earnings presentation, Apr 9, 2024
Slide 1: FY2023 IR Presentation Material
This is an abridged translation of the original Japanese document and is provided for informational purposes only. If there are any discrepancies between this and the original, the original Japanese document prevails FY2023 IR Presentation Material April 9, 2024 Stock Listing: Tokyo Stock Exchange,
Slide 2: Contents
Contents １ FY2023 Summary of Results ２ Establishment of Management Indicators ３ Initiatives to enhance corporate value ４ FY2024 Priority Measures ５ FY2024 Earnings and Dividend Forecasts Appendix AEON Financial Service Co., Ltd. 2
Slide 3: The Highlights of the Consolidated Results
The Highlights of the Consolidated Results • Achieved the planned figures for operating revenue due to steady growth in both the Domestic and the Global transaction volume and balance of receivables. • Increase in bad debt-related expenses in the Global business and Productivity issues in the Domest
Slide 4: Domestic Breakdown of Operating Profit: Main factors
[Domestic] Breakdown of Operating Profit ・Credit Card revenues increased due to a steady increase in receivables balance and higher merchant fees. ・Bad debt-related expenses increased due to the rising balance, but sales promotion expenses were controlled through a review of measures. Installment （U
Slide 5: Domestic Cardholders and AEON Pay Status
[Domestic] Cardholders and AEON Pay Status • Reviewing enrollment policies to improve acquisition efficiency. Shifted to a cost-effective structure despite lower acquisition numbers than the previous year. • Meanwhile, AEON Pay membership grew steadily. The number of locations where AEON Pay can be
Slide 6: Domestic Credit Card Purchase, Cash Advance Transaction Volume and Balance of Receivables
[Domestic] Credit Card Purchase, Cash Advance Transaction Volume and Balance of Receivables • Card shopping transaction volume increased 8% YoY due to AEON Pay promotion, etc. • Steady increase in trade receivables balance for both revolving and installment loans and cash advances due to improved co
Slide 7: Domestic Revolving, installment finance, cash advances and bad debt-related expenses
[Domestic] Revolving・installment finance, cash advances and bad debt-related expenses • Loan loss expense ratio to outstanding loans is stable at a low level. • Increase the number of users by promoting usage, and increase the balance while maintaining the quality of credits by refining credit. Revo
Slide 8: Domestic Housing Loan and Asset Management Business
[Domestic] Housing Loan and Asset Management Business • Transaction volume increased 114% YoY due to the appeal of AEON SELECT CLUB benefits. • Asset management business benefited from the launch of the new NISA as well as improved convenience through the transfer to Monex, Inc. Housing loan transac
Slide 9: Global Business by Segment 4Q Performance Highlights
Global Business by Segment ４Q Performance Highlights • Cumulative operating revenue is the highest ever in all three areas. • China Area continued to increase revenues and profits, achieving record profits. （Unit ： Bn JPY） FY2023 China area YoY Mekong area YoY Malay area YoY Operating revenue 30.6 b
Slide 10: Global FY2023 Operating Profit Breakdown
[Global] FY2023 Operating Profit Breakdown • The main reason for the YoY decline was an increase in bad debt-related expenses in each area. • In Malaysia, preparations for the opening of the Digital Bank in 2024 are progressing well. China Mekong Malay （Unit ： Bn JPY） area area area Revenue +1.0 ▲3.
Slide 11: Outstanding Receivables and NPL Ratio in Global business
Outstanding Receivables and NPL Ratio in Global business • Although profits fell short of expectations due to an increase in doubtful expenses, trade receivables steadily accumulated. • Thailand aims to recover balance while balancing credit costs. ACSA（Hong Kong） AEONTS（Thailand） ACSM（Malaysia） （Un
Slide 12: Establishment of Management Indicators
Establishment of 2 Management Indicators AEON Financial Service Co., Ltd. 12
Slide 13: Recognition of current status and establishment of management indicators
Recognition of current status and establishment of management indicators • ROE and PBR have declined since the pandemic, slowing recovery. • Aim to achieve and maintain ROE of 10% or more above cost of capital, with ROE and PBR as management indicators. Aiming Level (Times) 1.40倍 1.3 PBR ROE Over 12
Slide 14: Approach to ROE Improvement
Approach to ROE Improvement ROE Return on Operating Existing Improve Assets (%) Receivables high-yield bond ment Operating Revenue / Number of Outstanding Receivables + valid IDs New Products × × +α Utilization rate × Productivity Fee Amount (%) Revenue used for each Net Income / product Operating R
Slide 15: Domestic Improvement of Asset Profitability
Improvement of Asset Profitability＜Expansion of Stock Profit＞ • Build a stable revenue base by increasing the balance of receivables and the ratio of high-yielding receivables. FY202３ 1,000bn Operating FY 202３ ・Revolving, ７１０ bn (20％ of total) receivable ７１０bn 1,000bn Domestic ・Installment, outstand
Slide 16: Global Productivity Improvement
[Global] Productivity Improvement ＜Improvement of credit and collection accuracy＞ • Expand transaction volume and curb bad debt-related expenses by improving credit and collections. Strengthening credit and collections Strengthening forward-looking measures through AI and digital applications a thro
Slide 17: Basic Capital Management Policy
Basic Capital Management Policy • Balance between improving profitability and financial security, while investing in growth areas and productivity improvement and providing stable and sustainable shareholder returns. Financial Maintain an appropriate risk buffer for risk-taking Leverage while target
Slide 18: Initiatives to enhance corporate value
Initiatives to ３ enhance corporate value AEON Financial Service Co., Ltd. 18
Slide 19: A community-based global company that makes finance closer
Ideal state The Goal for 2030 A community-based global company that "makes finance more closer” AEON Financial Service Co., Ltd. 19
Slide 20: Positioning of the mid-term management plan Second Foundation
Positioning of the mid-term management plan "Second Foundation: Value Chain Innovation and Network Creation Our purpose is to bring “finance” closer to everyone. By committing to each and every person, we brighten up everyday lives with peace of mind and smiles. ～FY2020 FY２０２１～202５ FY2026～ Expansion
Slide 21: Review our business portfolio
Review our business portfolio • Continue the review of “concentration in core competence" based on changes in the business environment to maximize corporate value • Consolidate financial functions dispersed throughout the group and transform into an efficient organizational structure Integration of
Slide 22: Expansion of AEON Living Zone
Expansion of AEON Living Zone • To be an infrastructure that connects communities, member stores, and business partners by providing financial services that are rooted in the community in each country where we operate. • Build an AEON lifestyle zone that creates a borderless customer experience thro
Slide 23: Touch Point Conversion
Touch Point Conversion • Shift to a touchpoint starting from a digital wallet (smartphone app), which is a familiar point of contact, and build an environment where each financial service can be used seamlessly from the app. Up to now : Individual touch points at Future： Seamless service provision f
Slide 24: Domestic AEON Wallet App
[Domestic] AEON Wallet App • AEON Wallet App, which was redesigned in September 2０２３, won an international design award. AEON Financial Service Co., Ltd. 24
Slide 25: FY2024 Priority Measures
４ FY2024 Priority Measures AEON Financial Service Co., Ltd. 25
Slide 26: Domestic Creating an AEON Living Zone through payment business
[Domestic] Creating an AEON Living Zone through payment business • Through the transformation of touch points, expand the AEON Living Zone by creating an environment where customers can use convenient functions and services anywhere. Target for FY20２４ transformation of Expansion of the size of touch
Slide 27: Domestic Re-organization of real touchpoints
[Domestic] Re-organization of real touchpoints • Reorganize each office as a real touch point from the customer's viewpoint. • Increase customer satisfaction by improving the level of service at a single location. Real touch point Approx. 450stores Credit card, payment, mobile, etc. AEON Bank Approx
Slide 28: Domestic Strengthen profitability
[Domestic] Strengthen profitability • Expand earnings base by increasing card shopping transaction volume and trade receivables balance. • Focus on Expanding Deposits at AEON Bank. Strengthening competitive advantage in a rising interest rate environment. FY2024 Domestic Economic Outlook and Environ
Slide 29: Global Economic Trends and Initiatives by Area
[Global] Economic Trends and Initiatives by Area • Economic trends in Hong Kong and Thailand require close monitoring, while stable growth continues in Malaysia. • Improve quality and efficiency of collections while expanding receivables through more sophisticated credit management. Hong Kong Thaila
Slide 30: Global AEON Living Zone (Malaysia)
[Global] AEON Living Zone (Malaysia) • Plans to open the first digital bank business in Malaysia in 1Q24 using Islamic financial methods. • Started with individual deposits and gradually expanded products and services. Corporate services also developed and expanded to include business partners, etc.
Slide 31: Human Capital
Human Capital • Actively invest in human resources who share Our Purpose and achieve customer satisfaction. • Fostering next-generation human resources by providing employees with more learning opportunities and acquiring new knowledge such as DX. Spreading Ｏｕｒ Purpose Promotion of reskilling To bri
Slide 32: AFS Academy
AFS Academy Organize seminers for employee Electronic Library AEON Financial Service Co., Ltd. 32
Slide 33: Earnings and Dividend Forecasts
5 Earnings and Dividend Forecasts AEON Financial Service Co., Ltd. 33
Slide 34: FY2024 earnings forecast, dividend forecast
FY2024 earnings forecast, dividend forecast • Strengthen the earnings base by increasing transaction volume and the balance of trade receivables, and work to improve productivity. • Plans to Open Malaysia Digital Bank. Focus on building a new business model. Consolidated YoY Domestic YoY Global YoY
Slide 35: Our Purpose
［Our Purpose］ AEON Financial Service Co., Ltd. 35
Slide 36: Appendix
Appendix AEON Financial Service Co., Ltd. 36
Slide 37: The Highlights of the Consolidated Results - 4Q
The Highlights of the Consolidated Results -4Q Fiscal Quarter （Unit ： Bn JPY） Consolidated YoY Domestic YoY Global YoY Operating Revenue 1２９.８ bn １０8 ％ ８０.１ bn １０４ ％ ５０.２ bn １1４ ％ Operating Profit ２３.９ bn １３９ ％ １２.２ bn １８３ ％ １１.７ bn １１２ ％ Ordinary Profit ２４.０ bn １４２ ％ － ー － ー Profit attributable to
Slide 38: Consolidated Balance Sheet
Consolidated Balance Sheet （Unit ： FY 2023 （Unit ： FY 2023（単位：bn） billions of yen Results YTD billions of yen Results YTD Cash and deposits 665.5 ▲ 177.0 Deposits 4538.3 +140.4 Accounts Operating Loans 918.8 +73.5 payable-trade 268.5 +12.8 Loans and bills Interest-bearing discounted for 2339.2 +178.
Slide 39: Results by Segment
Results by Segment （Unit ： Domestic Global Consol. billions of yen） China Mekong Malay Total ※1 Retail Solutions Total ※1 Area Area Area Total ※2 Operating 293.9 172.9 190.7 193.5 30.6 89.9 72.9 485.6 Revenue YoY ※3 103％ 103％ 108％ 114％ 136％ 105％ 120％ 107％ Operating 11.6 4.6 8.3 38.2 8.7 15.8 13.5 50
Slide 40: Results by Area
Results by Area Transaction Operating (Unit ： billions of yen) YoY receivables YTD volume (Before securitization) Credit card 7452.2 109% 1716.4 +123.6 Shopping 7081.4 108% 1304.0 +106.6 Domestic Cash advances 370.8 110% 412.3 +17.0 Installment finance 198.2 103% 730.3 +7.2 Housing loan 5５８.６ 1１４% 3
Slide 41: 4Q Cumulative Results of Overseas Listed Companies (Local Currency)
４Q Cumulative Results of 3 Overseas Listed Companies (Local Currency) FY 2022 FY 2023 Results Results YoY AEON Revenue 1,231,631 1,６２３,321 132% CREDIT SERVICE Profit before tax 449,294 472,528 105% (ASIA) HK$’000 Profit for the period 373,611 392,270 105% AEON Revenue 22,331,665 21,965,263 98% THANA
Slide 42: 4Q Cumulative Results of Overseas Listed Companies (Yen conversion)
４Q Cumulative Results of 3 Overseas Listed Companies （Yen conversion） FY 2022 FY 2023 Exchange rates Results Results YoY Operating ２０.９bn 2９.6bn 14１% AEON Income （JPY / HKD） CREDIT Operating 7.6bn ８.6bn 11３% ・ FY2022 ： 1７.０4yen SERVICE Profit ・ FY202３ ： 18.29yen (ASIA) Net Income 6.3bn ７.1bn 1１３% Op
Slide 43: Transaction Volume and Operating Receivables of Global Business
Transaction Volume and Operating Receivables of Global Business China Area Mekong Area Malay Area Global Business （Unit : billions of yen) (Hong Kong) (Thailand) YoY YoY YoY YoY (Change) (Change) (Change) (Change) Transaction volume 221.5 120% 296.1 112% 61.3 116% 579.0 115% Credit card Operating Re
Slide 44: Allowance for Doubtful Accounts and Provision for Loss on Interest Repayment by Segments
Allowance for Doubtful Accounts and Provision for Loss on Interest Repayment by Segments [Allowance for Doubtful Accounts ] Domestic Global Consol. （Unit ： billions of yen） China Mekong Malay Total Retail Solutions Total Area Area Area Total Allowance for doubtful accounts balance at 57.1 3.8 53.7 6
Slide 45: Forward-looking statements
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 — FY2023 Earnings Presentation on 6ix