Resona Holdings, Inc. · TSE:8308
Resona — FY2016 Earnings Presentation
68 slides from Resona's earnings presentation, May 19, 2017
Slide 1: Business Results for FY2016 and Medium-term Management Plan
Business Results for FY2016 and Medium-term Management Plan May 19, 2017
Slide 2: Table of Contents
Table of Contents Outline of Business Results for FY2016 Medium-term Management Plan and Updates on Major Businesses p3 Outline of Financial Results for FY2016 p19 Overview of the Mid-term Management Plan p4 Breakdown of Financial Results for FY2016 p20 Income and Cost Structure Reforms p5 Factors f
Slide 3: Outline of Business Results for FY2016 and Updates on Major Businesses
Outline of Business Results for FY2016 and Updates on Major Businesses Medium-term Management Plan Direction of Capital Management Reference Material 2
Slide 4: Outline of Financial Results for FY2016
Outline of Financial Results for FY2016 FY2016 FY2017 Resona HD consolodated v s. Target Net income attributable to owners of the parent : (JPY bn) YoY change Nov . Target JPY161.4 bn % 2016 Down 22.3 bn, or -12.1%, YoY, or (8.6) bn below the target Net income attributable to owners of the paren
Slide 5: Breakdown of Financial Results for FY2016
Breakdown of Financial Results for FY2016 Resona Holdings Total of group banks Difference (Consolidated) (Non-consolidated) (JPY bn) Saitama Kinki Resona YoY YoY Resona Osaka YoY Bank (A) change (B) change Bank Bank (A)-(B) change Gross operating profit (1) 563.1 (56.4) 517.7 (54.2) 352.2 122.1 43.3
Slide 6: Factors for the Changes in Periodic Profits (YoY Comparison)
RHD Factors for the Changes in Periodic Profits (YoY Comparison) Consolidated (JPY bn) Actual net operating profit (56.8) Gross operating profit (56.4) Net interest income (23.4) NII from Other Income domestic items, taxes and Other Fees and net loans and other NII commission Credit- (13.7) deposits
Slide 7: Trend of Loans and Deposits
Total of Trend of Loans and Deposits Group Banks Average loan / deposit balances, Trend of average loan balance (Domestic account) rates and spread (JPY tn) Avg. loan balance YoY (right scale) *1 FY2016 FY2017 Avg. loan to SMEs +4.0％ +3.9％ Avg. bal : Trillion Yen +1.84% +2.56% Income/Cost : Billi
Slide 8: Term-end Balance of Loans and Deposits
Total of Term-end Balance of Loans and Deposits Group Banks Term-end loan balance Term-end deposit balance JPY tn, JPY tn, % represents % represents YoY change YoY change Corporate (Large companies and other) *1 Other Corporate (SMEs) Corporate deposits Corporate (Apartment loans) Individual depo
Slide 9: Trend of Residential Housing Loans
Total of Trend of Residential Housing Loans Group Banks Composition of newly originated residential New loan origination housing loans by interest rate type (JPY tn) Share of fixed rate residential housing loans Share of variable rate residential housing loans Flat 35 3% 1% 2% 4% 7% 8% 12% Residenti
Slide 10: Trend of Fee Income
RHD Trend of Fee Income Consolidated Consolidated fee income ratio at 28.5% for FY2016 JPY bn, % represents YoY change Consolidated fee income ratio*1 30.0% 28.5% 30.0% 26.7% 27.2% 26.0% Consolidated fee income 190.0 171.0 25.0% 169.2 168.7 160.6 (+6.4% ) 158.7 (-4.7% ) 15.5 16.2 Insurance, 11.0 Inv
Slide 11: Asset Formation Support Business
Total of Asset Formation Support Business Group Banks Balance of asset formation support products sold to individuals (JPY tn) Asset formation support product 16.1% 16.0% 16.2% Number of individual customers 6 15.4% ratio*1 14.3% having investment trust, fund FX15% deposits and 4.71 wrap and insur
Slide 12: Major Fee Businesses
Total of Major Fee Businesses Group Banks Trust-related business (JPY bn) (Reference) Number of new asset succession-related contracts Income from trust solutions offered for asset and business succession Income from Pension/Securities trust Will trust Asset succession Trust for transfer of +Estate
Slide 13: Credit Costs and NPL
RHD Consolidated Credit Costs and NPL Total of Group Banks Trend of NPL balance and ratio Trend of credit costs (Total of Group Banks) FY2014 FY 2015 FY 2016 FY 2017 (Financial Reconstruction Act criteria) (JPY bn) Plan Unrecoverable or valueless claims Net credit cost (RHD consolidated) (1) 22.3 (2
Slide 14: Securities Portfolio
Total of Securities Portfolio Group Banks Securities Portfolio Status of policy-oriented stocks held Breakeven Nikkei average: Approx. 6,200 yen (JPY bn) 2015/3 2016/3 2017/3 Unrealized Decrease in listed stocks in FY2016 (acquisition cost): gain/(loss) JPY3.1 bn, Available-for-sale securities *1
Slide 15: Capital Adequacy Ratio
RHD Capital Adequacy Ratio Consolidated CAR (Domestic std.) and CET1 ratio* (International std.) as of Mar. 31, 2017 were 11.69% and 8.59%, respectively, maintaining sound capital adequacy level * Excluding unrealized gain on available for sale securities Domestic standard (Reference) Internationa
Slide 16: Earnings Target and Dividend Forecast for FY2017
RHD Consolidated Earnings Target and Dividend Forecast for FY2017 Total of Group Banks RHD consolidated Common DPS 1st Half Full-year YoY YoY （JPY bn） DPS target target change change Net (interim) income Common stock attributable to owners (1) 73.0 150.0 (11.4) (3) 20.0 yen +1.0 yen (annual) of the
Slide 17: Outline of Financial Results of each Segment (1)
Total of Group Banks Outline of Financial Results of each Segment (1) and loan guarantee subsidiaries Actual net operating profit decreased by JPY44.4 bn YoY due to slowdown of customer divisions YoY (JPY bn) (JPY bn) FY2016 Change Personal Gross operating profit (1) 465.7 (52.3) Banking Customer (3
Slide 18: Outline of Financial Results of each Segment (2)
Total of Group Banks Outline of Financial Results of each Segment (2) and loan guarantee subsidiaries Consumer Banking Corporate Banking Actual net operating profit : down JPY30.8 bn YoY Actual net operating profit : down JPY20.5 bn YoY Segment interest spreads decreased due to decline of Se
Slide 19: Medium-term Management Plan
Outline of Business Results for FY2016 and Updates on Major Businesses Medium-term Management Plan Direction of Capital Management Reference Material 18
Slide 20: Overview of the Mid-term Management Plan
Overview of the Mid-term Management Plan Vision “Retail No.1” “Financial Services Group” that is most supported by regional customers as it walks with them into the future Construction of “Next-generation Retail Financial Services Model” Accomplishment of Medium- to Long-term Income Structure Reform
Slide 21: Income and Cost Structure Reforms
Income and Cost Structure Reforms Develop tolerance to prolonged ultra-low interest rate Higher profitability via perfection of new business model and environment via income and cost structure reforms better operating environment (JPY bn) Income structure Cost structure Further growth reforms reform
Slide 22: KPIs
KPIs 1. Diversify income source and increase fee income by establishing a new business model 2. Improve efficiency through further cost structure reform 3. Seek optimal balance between 1) profitability improvement and 2) higher capital adequacy to enhance Resona’s corporate value sustainably 4. Plan
Slide 23: Basic Strategies: (1) Evolution of Omni-Channel
Basic Strategies: (1) Evolution of “Omni-Channel” Expansion of the Customer Contacts Expansion of the Customer Base Digital Face-to-Face (Non-face-to-face) Customers Resona has not had effective contracts with Holiday sales bases Entirely web/smartphone-based +30 services Customers needs Integratio
Slide 24: Basic Strategies: (2) Development of 26,000 Omni-advisors
Basic Strategies: (2) Development of 26,000 “Omni-advisors” All Resona Staff Providing Solutions Consultants who can understand true latent × Expand sales × Improve ability to need of customers contacts x time offer solutions “Customers' happiness is our pleasure” Improve productivity through digi
Slide 25: Basic Strategies: (3) Establishment of Omni-regional Platform
Basic Strategies: (3) Establishment of “Omni-regional” Platform Full-scale Introduction of “Smart Store” (Internet Branch): Providing new value to more customers Nationwide sales area Expand Smart Account function -> Platform for daily life Entirely app-based services -> Families ・・・・・・・ [Domi
Slide 26: Business Strategies: Asset Formation Support Business
Business Strategies: Asset Formation Support Business Substantially Expand Asset Formation Support Business Actualize medium/long-term asset formation needs Ultra-Low Interest Rates Legal and Tax Backup Promoting understanding of investment tax breaks key (iDeCo NISA) Ultra-Aging Society to expa
Slide 27: Business Strategies: Settlement Business
Business Strategies: Settlement Business Challenge to advanced and convenient settlement services by making best use of new technologies Structural Change toward Cashless Settlement; Expansion of Debit Card Market [YoY Change in Settlement Volume (2016)] Resona Debit Card: +33.7% ＞ eMoney *1: +10.8%
Slide 28: Business Strategies: Succession Business
Business Strategies: Succession Business Realize a No. 1 Brand in Succession Solution Brand [Succession Trends & Projection *1] [Succession Tax Scope (People)*2] Succession market expanding; 1.67m twofold increase in taxable persons people 103,000 1.31m due to inheritance tax system revision peopl
Slide 29: Business Strategies: SME Business
Business Strategies: SME Business Provide Optimal Solutions at Optimal Timing for Each Growth Stage Provide functions/expertise of commercial bank utilizing trust Strengthen marketing capabilities and capabilities (Current) Borrower-centered: 80,000 improve productivity simultaneously -> All cor
Slide 30: Business Strategies: International Business
Business Strategies: International Business Supports to SMEs to Develop Overseas Business Mainly in Asia Services offered by corporation among domestic branches, JV bank, overseas representative offices and overseas partner banks Overseas alliance network has expanded to 17 partner banks coverin
Slide 31: Business Strategies: Individual Loan Business
Business Strategies: Individual Loan Business Be a No.1 Individual Loan Provider by Accommodating Sound Funding Needs Protracted low interest rates Diversification of lifestyles ICT evolution/diffusion More advanced promotion Development of new markets Penetration of screening and Maintain/inc
Slide 32: Strengthen Marketing Capabilities and Improve Productivity through Digitalization
Strengthen Marketing Capabilities and Improve Productivity through Digitalization Build next-generation retail financial services model adapted to changes in business environment Expectation of simple, convenient, high added-value transaction style Necessity of improving staff productivity ahead
Slide 33: Basic Agreement Concerning a Business Integration (Policies and Structure)
Basic Agreement Concerning a Business Integration between The Minato Bank, Ltd., Kansai Urban Banking Corporation and The Kinki Osaka Bank, Ltd. Basic Policies of the Integrated Group To create a new retail financial services model that is in step with the future of the Kansai region and beyond th
Slide 34: Basic Agreement Concerning a Business Integration (Summary of Integrated Group)
Basic Agreement Concerning a Business Integration between The Minato Bank, Ltd., Kansai Urban Banking Corporation and The Kinki Osaka Bank, Ltd. Summary of the Integrated Group The Integrated Group will be one of the leading regional financial groups in Japan with a competitive and full-scale bran
Slide 35: Composition of Resona Holdings' Board of Directors
Composition of Resona Holdings’ Board of Directors (After AGM in Jun. 2017) 6 outside directors 4 internal directors Tadamitsu Matsui Mitsudo Urano Kazuhiro Tetsuya Kan Chairperson, Chairperson, Higashi Representative Nominating Committee Compensation Executive Officer President and Member, Compensa
Slide 36: Superior Corporate Governance system ensures transparency and objectivity
Superior Corporate Governance system ensures transparency and objectivity The first Japanese banking group which adopted the committees-based corporate governance structure in 2003 Board of Directors Majority of the Board members, six out of ten, are independent outside directors with wide range of
Slide 37: Direction of Capital Management
Outline of Business Results for FY2016 and Updates on Major Businesses Medium-term Management Plan Direction of Capital Management Reference Material 36
Slide 38: Direction of Capital Management
Direction of Capital Management Seek optimal balance among 1) higher capital adequacy, 2) investment for future growth and 3) enlargement of shareholder return CAR target Shareholder return policy Secure sufficient capital adequacy under the Japanese Domestic Std. Common DPS planned for FY2017:
Slide 39: Reference Material
Outline of Business Results for FY2016 and Updates on Major Businesses Medium-term Management Plan Direction of Capital Management Reference Material 38
Slide 40: Overview of the Impacts from the BOJ's NIRP on Consolidated BS
Overview of the Impacts from the BOJ’s NIRP on Consolidated BS Impacts that surfaced already are manageable Total assets JPY48.4 tn (Mar. 31, 2017) （JPY(0.6) tn, YoY) Impacts of the NIRP FY2016 Loans Fixed-rate loans*1 Deposits (JPY bn) JPY28.1 tn JPY6.5 tn (23%) Act and (+0.5 tn) ③ NCDs ① Loans (9.
Slide 41: Resona's Challenges Attracting Attentions from Outside
Resona’s Challenges Attracting Attentions from Outside Resona’s challenges towards “Retail No.1” are highly evaluated by various institutions Corporate Governance Nikkei’s Survey on Banks’ 2015Nikkei Superior Products of the Year ® 2015 Retail Capability 2016 and Services Awards Japan Association of
Slide 42: For Further Sustainability Improvement
For Further Sustainability Improvement Corporate culture that cherishes the corporate credo of “Always together with society” In order to improve the Group’s sustainability, Resona Group will fulfill social responsibilities through its primary business, taking into account such societal demands as
Slide 43: Upgrade Segments
Measures to Build Multifaceted Business Relationships with Customers Visible progress has been made through the increase in the number of “Resona Loyal Customers” Number of Customers Top-line Avg. # of Customer segments based on (thousands) Income Products Increase life-time profits by upgrading the
Slide 44: Achievements in Cross-selling Efforts Measured with KPIs (YTD)
Achievements in Cross-selling Efforts Measured with KPIs (YTD) Primary Index RLCs = Clients to whom the group have achieved the depth of transaction to some extent (Number of customers in thousands) Mar. 31, 2016 Mar. 31, 2017 Change AUM or condominium loan (1) Premier 55 56 + 1.7 exceedin
Slide 45: Business Results by Major Group Business Segments
Business Results by Major Group Business Segments “RVA”*1 and “RAROC” as management indicators to measure profitability to allocated capital Management Accounting by Major Group Business Lines (FY2016) (JPY bn, %) Profitability Soundness Net operating profit after a deduction of credit cost Net pr
Slide 46: PL Summary and Factors for Consolidated and Total of Group Banks Difference
PL Summary and Factors for “Consolidated” and “Total of Group Banks” Difference PL Summary RHD Consolidated / Total of Group Banks Difference (RHD Consolidated / Total of Group Banks) Difference (Major consolidated subsidiaries) Total of group RHD HL guarantee Resona Resona P. T. Bank banks subsidia
Slide 47: Consolidated Subsidiaries and Affiliated Companies
Consolidated Subsidiaries and Affiliated Companies Consolidated domestic subsidiaries (excluding group banks) (JPY bn） Capital contribution Net income Name Line of business ratio FY2016 YoY change FY2015 Credit guarantee Resona Ｇroup Resona Guarantee Co., Ltd. (1) 14.8 (0.5) 15.3 (Mainly mortgage lo
Slide 48: Capital Adequacy Ratio (Group Banks)
Capital Adequacy Ratio (Group Banks) Resona Bank Saitama Resona Bank Kinki Osaka Bank (Consolidated) (Non-consolidated) (Consolidated) [A-IRB] [A-IRB] [F-IRB] Japanese Domestic Standard (JPY bn) Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, 2016 2017 2016 2017 2016 2017 Change Change Change
Slide 49: Sophistication in ALM Interest Rate Risk Management
Sophistication in ALM Interest Rate Risk Management: (Internal Model to Measure Core Liquidity Deposits) Reassess the value of liquidity deposits Methods to measure core liquidity deposits Internal model to measure core liquidity deposits Before implementation of internal model ⇒ Grasp more properly
Slide 50: Securities Portfolio
Total of Securities Portfolio Group Banks Maturity ladder of securities held (securities with contractual maturities, nominal amount basis) Mar. 31, 2017 Mar. 31, 2016 (JPY bn) One year or One to Three to Five to Seven to Over One year One to Three to Five to Seven to Over Total Total less three yea
Slide 51: Stocks Held by Industry (March 2017)
10% 15% 20% 0% 5% Fishery, agriculture and forestry Mining Construction (Balance sheet amount) Food product Textile product Pulp and paper Chemical product Pharmaceutical product Oil and petrochemical product Rubber products Glass and pottery Iron and steel Non-metal products Metal products Machiner
Slide 52: Swap Positions by Remaining Periods
RHD Swap Positions by Remaining Periods Consolidated Notional amounts of interest rate swaps (deferred hedge accounting applicable) by remaining period (JPY bn) Mar. 31, 2017 Mar. 31, 2016 Within 1 to 5 Over Within 1 to 5 Over Total Total 1 year years 5 years 1 year years 5 years Receive fixed rat
Slide 53: Maturity Ladder of Loan and Deposit (Domestic Operation)
Total of Maturity Ladder of Loan and Deposit (Domestic Operation) Group Banks Loans and Bills Discounted Deposits [End of March 2016] [End of March 2016] Within 6M 6 to 12M 1 to 3Y Over 3Y Total Within 6M 6 to 12M 1 to 3Y Over 3Y Total Fixed rate (1) 1.5% 1.3% 6.7% 11.7% 21.2% Liquid deposits (1) 42
Slide 54: Composition of Loan Portfolio and Deposits (March 31, 2017)
Composition of Loan Portfolio and Deposits Total of (March 31, 2017) Group Banks Loans*1 Deposits*4 Fixed Rate Liquid Fixed Rate 5% deposits 19% 25% Personal Banking Corporate Corporation Bussiness Banking Liquid (JPY12.6 tn) Prime Unit Bussiness deposits 33% Rate (JPY10.6 tn) Unit*2 46% Time deposi
Slide 55: Composition of Loan Portfolio by Base Rates
Total of Composition of Loan Portfolio by Base Rates Group Banks Corporate Banking Business Unit*1,2 Fixed Prime Prime Prime Fixed Fixed Rate Rate Rate Rate Rate Rate 28% 30% 28% 27% 29% 30% [March 31, [September 30, [March 31, 2016] 2016] 2017] Market Rate*3 Market Rate*3 Market Rate*3 42% 42% 43%
Slide 56: Composition of Deposits by Types
Total of Composition of Deposits by Types Group Banks Corporate Deposits Time Time Time deposits deposits deposits 23% 22% 21% [March 31, [September 30, [March 31, 2016] 2016] 2017] Liquid deposits Liquid deposits Liquid deposits 72% 74% 75% Individual Deposits Time Time Time deposits deposits depos
Slide 57: Migrations of Borrowers (1H of FY2016)
RB Migrations of Borrowers (1H of FY2016) Exposure amount basis *1 End of September 2016 Upward Downward Other Special Effectively Migration Migration Normal Doubtful Bankrupt Other Collection, Assignments, Watch Attention Bankrupt Repayments Sale Normal 98.4% 0.8% 0.1% 0.0% 0.0% 0.0% 0.7% 0.7% 0.
Slide 58: Migrations of Borrowers (2H of FY2016)
RB Migrations of Borrowers (2H of FY2016) Exposure amount basis *1 End of March 2017 Upward Downward Other Special Effectively Migration Migration Normal Doubtful Bankrupt Other Collection, Assignments, Watch Attention Bankrupt Repayments Sale Normal 98.9% 0.6% 0.0% 0.0% 0.0% 0.0% 0.5% 0.5% 0.0% -
Slide 59: List of Preferred Shares and Subordinated Bonds
List of Preferred Shares and Subordinated Bonds (Apr. 30, 2017) Preferred Shares Class 5 Preferred Shares Original issue date (1) 8/28/2007 Current number of shares (2) 4,000,000 shares Issue price per share (3) JPY 25,000 Total issue amount remaining at present (4) JPY 100.0 Billion Original total
Slide 60: Responses to the Ongoing International Discussion over Further Tightening of Financial Regulation
Responses to the Ongoing International Discussion over Further Tightening of Financial Regulation Major items of financial regulation being discussed internationally For many items, international rules will be finalized hereafter and local authorities will start working on domestic rules. Major re
Slide 61: Outline of Eligible Capital under the Japanese Domestic Std.
Outline of Eligible Capital under the Japanese Domestic Std. Subordinated debts, preferred securities and non-convertible preferred shares*1 Subordinated debts and preferred securities issued under the Basel 2 can be fully included in Core Capital as of the end of March 2014. These grandfatherin
Slide 62: BOJ Current Account Balances
BOJ Current Account Balances Monthly average balance of BOJ current account (16 April -15 May) Total of institutions subject to the complementary City banks including deposit facility Resona Bank and Saitama Resona Bank JPY343.8 tn JPY129.9 tn The outstanding balance of current account at the Bank J
Slide 63: Long Term Business Results
Long Term Business Results (JPY bn) FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 Gross operating profit 901.8 775.0 763.1 768.6 805.2 769.3 739.5 678.3 667.0 655.2 637.1 608.5 632.4 619.5 563.1 Net interest income 599.1 561.2 542.3 549.8 56
Slide 64: Trend of Long-term Senior Debt Rating
RB Trend of Long-term Senior Debt Rating S&P Moody's R&I 2003 2004 2005 2006 2007 2011 2017 JCR A1 A+ R&I JCR S&P A2 A Moody' A3 A- Baa1 BBB+ Baa2 BBB Baa3 BBB- Ba1 BB+ 63
Slide 65: Composition of Resona HD's Common Shareholders
Composition of Resona HD’s Common Shareholders 2.26% 5.03% 3.96% 3.93% Other 8.96% 6.08% 6.09% 5.80% Corporations 20.01% 2 0 .01% 20.01% 6.35% 15.48% 13.51% Individuals, etc. 15.68% 41.95% DIC 5.83% 4.34% 4.58% 16.51% 50.11% 7.39% 6.84% 6.50% Financial 22.23% 19.72% 27.92% 31.29% 34.17% institutions
Slide 66: Our Website Information
Our Website Information http://www.resona-gr.co.jp/holdings/english/ Materials for investors are available from here Official You Tube (in Japanese language) http://www.youtube.com/user/ResonaGroup Official Facebook account Official Twitter account (in Japanese language) (in Japanese language ) ht
Slide 67: Proactively Communicating with Our Shareholders and Investors
Proactively Communicating with Our Shareholders and Investors Publication of Integrated Report 2016 of Resona Group http://www.resona-gr.co.jp/holdings/english/investors/financial/integrated/index.html Integrated Report explains in a simple manner to all stakeholders the Resona Group’s strengths and
Slide 68: Forward-looking statements
The forward-looking statements contained in this presentation may be subject to material change due to the following factors. These factors may include changes in the level of stock price in Japan, any development and change related to the government’s policies, laws, business practices and their in