Credit Saison Co., Ltd. · TSE:8253
Credit Saison — H1 FY2008 Earnings Presentation
45 slides from Credit Saison's earnings presentation, Nov 10, 2008
Slide 1: Management Report FY2008 (April-September)
Management Report FY2008（April-September） November 10, 2008 Credit Saison Co., Ltd. 1
Slide 2: Agenda
AGENDA ◆ Interim FY2008 Highlights 1 ◆ Financial Overview of First Half 2 of FY2008 21 ◆ Management Strategy 28 ◆ Reference Materials The figures contained in this document, which describes the Company’s business outlook and other information, is based forecasts made in accordance with the informati
Slide 3: Highlights during the Period
Highlights during the Period ◇ Qubitous Co., Ltd. becomes Credit Saison subsidiary (April 1) Processing operations consolidated and combined, joint management with Mizuho Bank, Ltd. ◇ Merger with LAWSON CS Card, Inc. (September 1) LAWSON CS Card, Inc. becomes wholly-owned subsidiary in April, merged
Slide 4: Financial Overview of First Half of FY2008
Financial Overview of First Half of FY2008 ◆ Operating Results ◆ Credit Risks （delinquency, credit costs and interest return requests） ◆ Financial Indices ◆ Main Indices (Non-consolidated) CORPORATE STRATEGY ２００８ CREDIT SAISON CO., LTD.
Slide 5: Non-consolidated Operating Results
Operating Results (¥ billion) FY2007 FY2008 FY2008 YoY (%) YoY (%) YoY (%) 1H 1H （Estimate） Operating revenues 177.3 107.1 171.2 96.5 342.0 99.0 Consolidated Ordinary income 32.9 76.4 28.7 87.1 52.0 89.5 Net income 12.2 － 15.6 127.7 25.5 95.3 Earnings per share（¥） 6.802 － 8.672 127.5 14.155 95.1 Ope
Slide 6: Results by Business Segment
Results by Business Segment （¥ billion） Operating revenues Operating income (loss) Rate of FY2007 FY2008 Rate of FY2007 FY2008 change 1H 1H change (%) 1H 1H (%) Credit Service 130.3 128.0 △1.7 17.9 16.9 △5.6 Finance 22.0 22.7 3.3 4.8 7.0 45.4 Real Estate-related 20.7 15.8 △23.7 13.7 7.4 △ 45.7 Enter
Slide 7: Contribution to Consolidated Results
Contribution to Consolidated Results Ordinary Ordinary income: income: Difference Difference between between Consolidated Non-consolidated Difference consolidated consolidated and non-consolidated figures and non -consolidated figures Ordinary ¥28.7 billion ¥22.2billion ¥6.4 billion income Contribut
Slide 8: Operating Revenues (Consolidated/Non-consolidated)
Operating Revenues （Consolidated/Non-consolidated） About seven billion yen decreases in operating revenues because of lowering interest rate of cash advances. (¥ billion) 【Consolidated】 (¥ billion) 【Non-consolidated】 400 400 First half Second half Revised 342.0 First half Second half Revised 333.6 3
Slide 9: Ordinary Income (Consolidated/Non-Consolidated)
Ordinary Income （Consolidated/Non-Consolidated） The real estate business decreased the profit below the previous year in consolidated bases. Ordinary income increase by the cost reduction effect including credit cost in non-consolidated bases. (¥ billion) 【Consolidated】 (¥ billion) 【Non-Consolidated
Slide 10: Net Income (Consolidated/Non-consolidated)
Net Income （Consolidated/Non-consolidated） Secured profit increase above plans in both consolidated and non-consolidated bases. (¥ billion) 【Consolidated】 (¥ billion) 【Non-consolidated】 50 50 First half Second half Revised 42.2 First half Second half Revised 40 40 31.8 30 21.5 30 26.7 25.5 25.8 27.1
Slide 11: Credit Risk Trends ①
Credit Risk Trends① Delinquency rate lowered due to processing claims of the intervention of lawyers and other parties. *Delinquency rate: Percentage of total receivables over 90 days past due date. ■Delinquency of over 90 days 【Consolidated】 【Non-consolidated】 5.0% 5.0% 4.5% 4.5% 4.18% Cash advance
Slide 12: Credit Risk Trends ②
Credit Risk Trends ② Credit cost including interest repayment cost decreased and expect 5 billion yen decrease of full year ■ Credit cost trends （ ）First Half (¥ billion) 【Consolidated】 (¥ billion) 【Non-consolidated】 80 80 Wr it e - o ff/ in c r e ase o f allo wan c e R e vise d Wr it e - o ff/ in c
Slide 13: Trends in Losses on Interest Repayment
Trends in Losses on Interest Repayment The number of new interest repayment claims is decreasing year on year due to the intervention of lawyers and others. Allowances are also decreasing. ■ Trend in new interest repayment claims ■ Allowance of interest repayment loss (Number of new claims) 5,500 in
Slide 14: Financial Indices
Financial Indices ■Shareholders’ Equity Ratio Rating & Return on Equity R&I A+ S&P A‾ Fitch A （ ）First Half 【Consolidated】 【Non-consolidated】 30% 30.0% 23.1% 25% 25.0% 19.9% 19.4% 20% 17.5% 20.0% 16.2% 17.8% 17.5% 17.5% 15.8% 15.9% 15% 15.0% 11.4% 12.8% 10% 9.2% 8.5% 7.0% 10.0% 6.9% (6.0%) (6.6%) (4
Slide 15: Funding Structure
Funding Structure ■ Interest-bearing debt trends (¥ billion) 【Consolidated】 (¥ billion) 【Non-consolidated】 1,947.7 2,000 1,854.0 2,000 1,656.2 1,608.3 1,554.6 1,480.3 1,500 1,500 1,350.1 1,190.4 1,239.0 1,146.9 1,189.0 927.5 1,054.0 948.6 929.5 1,000 1,004.9 1,000 825.1 752.0 786.0 266.7 568.6 250.1
Slide 16: Funding Structure
Funding Structure ■Long-term ratio and fixed ratio Balance of corporate bonds and long-term debt: ¥908.9 billion. Average due date is approx. 5 years. 【Consolidated】 【Non-consolidated】 80% 80% Long-term Fixed ratio Long-term ratio 72% 73% 70% 74% 70% 70% 72% 72% 62% 69% 61% 61% 68% 64% 60% 60% 63% 5
Slide 17: FY2008 Revised Forecast of Full-year Results
FY2008 Revised Forecast of Full-year Results (¥billion) Previous Current Change from Change forecast revised start-of-term Major reasons for change (B – A) (Sept. 25) (A) forecast (B) forecast ・ Operating revenue decline Operating revenues 347 342 △5 △21 caused by downturn in sales in real estate bu
Slide 18: Main Indices (Non-consolidated)
Main Indices (Non-consolidated) CORPORATE STRATEGY ２００８ CREDIT SAISON CO., LTD.
Slide 19: Main Indices (Non-consolidated)
Main Indices (Non-consolidated) ( ) Change from end of FY2007 FY2007 Fiscal FY2008 Fiscal FY2008 YoY (%) YoY (%) (Estimate) YoY (%) New applications (millions) 1.75 71.4 1.35 77.1 2.60 76.9 New card issued (millions) 1.43 66.8 1.23 86.0 2.15 75.7 Total cardholders 107.3 25.63 106.1 27.51 （+150 27.60
Slide 20: New Card Applications & New Cards Issued
① New Card Applications & ② New Cards Issued Emphasis on new applications for cards for high-frequency users. (Million) 【New applications】 (Million) 【 New cards issued 】 5 5 First half Second half Revised First half Second half Revised 4.28 4 4 1.83 3.38 3.60 3.22 2.84 3 2.60 3 2.41 0.10 2.71 1.46 1
Slide 21: Total cardholders & Active Cardholders
③ Total cardholders & ④ Active Cardholders Expand total cardholders and active cardholders by consolidating Lawson CS Card Inc. (Million) Active cardholders Total cardholders 30 27.51 27.60 26.01 24.91 80 revised 25 22.79 n li lio mil） .5 m 1.43 l li on 1 + LC S m i 20 l. .5 9 16.90 （ inc +1 13.67 1
Slide 22: Transaction Volume
⑤Transaction Volume Shopping and cash advances decreased below the plan due to decrease of transaction volume per customer （ ）First half (¥ billion) Card shopping Cash advances 6,000 4,787.0 5,000 4,595.1 786.0 4,305.4 836.6 91% (388.4) 4,000 (427.9) YoY 871.5 3,146.7 3,000 2,596.2 618.9 518.1 2,000
Slide 23: Credit Loans Outstanding
⑥ Credit Loans Outstanding Shopping (revolving): Projected 14% increase Cash advances: 3% increase accumulating on good credit (¥ billion) Cash advances ABS (cash advances) Shopping (revolving) ABS (shopping) 1,000 825.3 855.3 901.7 910.0 900 771.1 10.0 S流動化 285.1 300.0 800 40.0 2,636 Y Y Yo ｼｮｯﾋﾟﾝｸ
Slide 24: (Reference ①) Share of Cards
(Reference ①) Share of Cards Fee-charging premium cards have higher transaction unit costs. UC-alliance cards (MMC, LABI, etc.) performed well, while SAISON NEXT cards were down slightly. [Share of total cardholders] [Share of shopping transaction volume] (Total: 26,080,000) (Total: ¥1,911.2 billion
Slide 25: Management Strategy
Management Strategy ～ Management policy from 2nd Half of FY2008 ～ CORPORATE STRATEGY ２００８ CREDIT SAISON CO., LTD.
Slide 26: Management Strategy
Management Strategy I. Changes in the Business Environment and Their Impact on the Company II. Management Vision Based on Analysis of the Business Environment III. Concerning the Medium-term Targets IV. Priority Policies from FY2008 2H ＊Reference Materials CORPORATE STRATEGY ２００８ CREDIT SAISON CO.,
Slide 27: Changes in the Business Environment and Impact on Company and Industry
I. Changes in the Business Environment and Impact on Company and Industry (1) Economic slowdowns in Japan and overseas ・ Violent fluctuations in share prices, exchange rates and product prices in extremely short cycles owing to global financial slowdown. ・ Japanese economy in recession as it deals w
Slide 28: Management Indicators Based on Conditions in the Business Environment
II. Management Indicators Based on Conditions in the Business Environment Achieving innovation in the face of financial uncertainties and a regulation-driven slump (1) Credit card business restructuring ・ Strengthen client partnerships to further develop strategies to expand credit card shopping (re
Slide 29: Medium-term Business Plan
III. Medium-term Business Plan In light of an external environment undergoing drastic changes, revised laws and regulations and the current real estate business situation, the medium- term management plan established in FY2007 is in need of revision. Non-consolidated FY2008 est. non- FY2009 ordinary
Slide 30: FY2008 Priority Policies
IV. FY2008 Priority Policies 1. Measures to Expand Card Business Profits 2. Strategies for Growing Card Joint Ventures 3. Commence operation of Qubitous, specialized processing company 4. Development of Finance Business 5. Take on new business challenges 6. Financial Strategy: Basic Policy on Procur
Slide 31: Measures to Expand Card Business Profits (1)
1. Measures to Expand Card Business Profits (1) Measures to expand profits through shopping (revolving) ① Policies to expand shopping (revolving) balance ・ Expand revolving-credit sales in shops by partnering with clients (card partners, large affiliated stores, etc.). * Millennium Group, Takashimay
Slide 32: Measures to Expand Card Business Profits (2)
1. Measures to Expand Card Business Profits (2) Measures to expand usage of cards with high operating ratios and unit prices (for new affluent cardholders) ③ Convert high-balance users on ordinary cards to gold cards ・ Encourage 1,000,000 cardholders to switch to premium membership. ④ Consider issui
Slide 33: Measures to Expand Card Business Profits (3)
1. Measures to Expand Card Business Profits (3) Stepping up sales to the corporate market ⑧ Expand UC corporate card business ・ Expand B-to-B (distribution card) business. FY2010 targets B-to- to-B sales volume: ¥70 billion ・ Promote net memberships for individuals within Corp. individual cashing/lo
Slide 34: Measures to Expand Card Business Profits (Cash advances/Loans)
1. Measures to Expand Card Business Profits (Cash advances/Loans) Adding functionality for cardholder convenience ① New function for MMC Card and Yamada LABI Card (total 3 million cards) ・ New function added for one-time cash advance payment (starting Jan. 2009). ⇒ Increase transaction Increase volu
Slide 35: Strategies for Growing Card Joint Ventures
2. Strategies for Growing Card Joint Ventures Credit Saison is conducting growth strategies that take advantage of each partnership’s characteristics. (LAWSON CS Card merged with Credit Saison in Sept. 2008). Takashimaya Idemitsu Credit Resona Card LAWSON CS Credit Card Investment: 50% Investment: 2
Slide 36: 1st Half FY2008 Results of Card Companies with Capital Alliances
1st Half FY2008 Results of Card Companies with Capital Alliances (¥billion) No. of cards Total no. of Transaction Operating Operating issued cardholders volume revenues income Credit Saison (non-consolidated) 1,350,000 27,510,000 2,304.4 133.5 22.2 Idemitsu Credit 50.0% (invested Oct. 2003) 230,000
Slide 37: Processing Company Qubitous
3. Processing Company “Qubitous” From organizational preparation to stronger marketing ① Preparation of operating organization Kansai Ubiquitous Profile “Kansai Ubiquitous” starts up (Oct. 1) Location: Minami-Senba, Chuo-ku, Osaka ・ For greater efficiency, eight separate Floor area: 8,250 m2 (9 floo
Slide 38: Development of Finance Business
4. Development of Finance Business Expand credit guarantee and rental business, and shrink mortgage loan business ① Develop credit guarantee business ・ Expand new partnerships (targeting 200 partners, currently at 169 at Oct. 31). ・ Re-energize existing partnerships (contribute to building of good c
Slide 39: Developing New Businesses
5. Developing New Businesses Strategic investment businesses directly linked to revenue ① Strategic investment ・ Develop financing for enterprises that potentially synergize with FY2009 our card business. profit target ¥0.3 billion ・ Build a high-profit portfolio. Fee business using cardholder found
Slide 40: Financial Strategy: Basic Policy on Procurement
6. Financial Strategy: Basic Policy on Procurement Conduct procurement in keeping with asset structure, revenue structure and financial market environment ◆ Diversification of procurement means. ◆ Expansion of sources (financial institutions that we work with). Dealing with ◆ Investor creation (incl
Slide 41: Diversification of procurement means
Diversification of procurement means ■ Shift to a procurement structure that can deal with expansion of interest- bearing debt as the card business expands in the future ■ Diversify funding procurement sources to deal with changes in the market environment Trends in the balance and structure of inte
Slide 42: Group Management
7.Group Management Restructuring and reinforcing real estate business ① Atrium business portfolio review ・ Concentrate management resources on business areas suited to future real estate market conditions (e.g. servicer business). ・ Real estate collateral finance guarantee business to shrink in scal
Slide 43: Maintaining a Sound Asset Portfolio on Consolidated Basis
(Supplement) Maintaining a Sound Asset Portfolio on Consolidated Basis Smoothly build up small-scale, dispersed finance business assets Of Credit Saison’s ¥2,900 billion in Finance business assets consolidated assets, more than 70% are in not greatly affected by small-scale, dispersed form, such as
Slide 44: (Appendix 1) Changes in Japanese Market Share
(Appendix 1) Changes in Japanese Market Share (Shopping Transaction Volume) Credit Saison Mitsubishi Group UFJ NICOS [FY2000] [FY2007] 14.3 Group JCB Group 20.2 10.1 Credit Saison Sumitomo Credit UC close JCB partners 0.5 Mitsui FG Saison 6.5 6.6 9.9 9.7 Capital alliance JCB close partners partners
Slide 45: (Appendix 2) Changes in Japanese Card Market
(Appendix 2) Changes in Japanese Card Market Sumitomo Mizuho Credit Saison Resona Mitsui Financial Financial Group HD Group Sumitomo Mitsui Card Cedyna Resona Orico Central Card Takashimaya Yamada OMC Card Quoq Finance Idemitsu Credit Financial Credit JCB Aeon Shizugin Daiwa House YM Sanyo At-Loan P