Credit Saison Co., Ltd. · TSE:8253
Credit Saison — FY2007 Earnings Presentation
55 slides from Credit Saison's earnings presentation, Jun 23, 2008
Slide 1: Management Report FY2007
Management Report FY2007 June 23, 2008 Credit Saison Co., Ltd.
Slide 2: Agenda
AGENDA ◆ FY2007 Highlights 1 ◆ FY2007 Financial Report 6 ◆ Management Strategy 27 ◆ Reference Materials 41 The figures contained in this document, which describes the Company’s business outlook and other information, is based forecasts made in accordance with the information currently available to u
Slide 3: FY2007 Highlights (April–September)
FY2007 Highlights ◆ Credit Saison ◎ Affiliates April–September ◎ April: Shizugin Saison Card Co., Ltd. commenced business and issued the ALL-S card. ◆ May: Restructuring of sales network and review of branch offices. ◎ May: Daiwa House Financial Co., Ltd. issued the Heart One Card, a Daiwa SAISON ca
Slide 4: FY2007 Highlights (October–March)
◆ Credit Saison ◎ Affiliates October–March ◎ October: Qubitous Co., Ltd. was established as a wholly-owned subsidiary of UC Card Co., Ltd. The company became a Credit Saison subsidiary in April 2008 (Credit Saison 51%, Mizuho Bank 49%). ◆ October: Combined the 《 SAISON 》 and UC points—UC points beca
Slide 5: Focus on FY2007 (1) Restructuring of Sales Network
Focus on FY2007 (1) Restructuring of Sales Network Shift to “Quantity + Quality” in Keeping with Emphasis on Efficiency ① Focus on highly profitable cards, emphasis on operating efficiency ・FY2007: Closed 2 branch offices, 12 satellite offices and 29 card counters. ・FY2008: 22 card counters to be cl
Slide 6: Focus on FY2007 (2) Eikyu Fumetsu.com
Focus on FY2007 (2) Eikyu Fumetsu.com Radically improved services through Web utilization — SAISON Permanent Points can now be multiplied by up to 19 times at any time — ・No. of affiliated stores: 260 (of which 30 are mobile shops) FY2008 targets ・Usage rate: No. of users: 200,000 a month Sales: ¥36
Slide 7: Results and Evaluation of Saison Asset Management Co., Ltd.
Focus on FY2007 (3) Results and Evaluation of Saison Asset Management Co., Ltd. ◇ Launch of sales: March 15, 2007 * In January 2008, the Saison Vanguard Global Balance ◇ Registered accounts: 27,000 Fund won the top prize in the Nihon Keizai Shimbun’s ◇ Total net assets: more than ¥16.0 billion “Nikk
Slide 8: FY2007 Financial Report
FY2007 Financial Report 1．Operating Results 2．Credit Risk Trends 3．Financial Indices 4．Main Indicators (Non-consolidated) CORPORATE STRATEGY ２００８ CREDIT SAISON CO., LTD.
Slide 9: Operating Results
Operating Results (¥ billion) FY2008 FY2006 YoY (%) FY2007 YoY (%) YoY (%) (Estimate) Operating 333.6 121.5 345.5 103.6 363.0 105.0 revenues Ordinary 80.1 112.7 58.1 72.5 62.0 106.7 Consolidated income Net income 14.8 35.1 26.7 180.5 27.0 100.9 Earnings per 82.79 34.9 148.78 179.7 150.00 100.8 share
Slide 10: Results by Business Segment
Results by Business Segment (¥ billion) Operating revenues Operating income (loss) FY2006 FY2007 YoY (%) FY2006 FY2007 YoY (%) Credit Service 255.7 254.7 △0.4% 50.5 30.5 △39.5% Finance 37.3 44.3 18.8% 11.9 11.2 △6.0% Real Estate-related 27.8 37.9 36.4% 15.3 22.7 47.9% Entertainment 16.9 14.3 △14.9%
Slide 11: Contribution to Consolidated Results
Contribution to Consolidated Results Ordinary Ordinary income: income: Difference Difference between between Non-consolidated Consolidated Difference consolidated consolidated and and non-consolidated figures non-consolidated figures Ordinary ¥36.5 billion ¥58.1 billion ¥21.5 billion income Contribu
Slide 12: Operating Revenues (Consolidated/Non-consolidated)
Operating Revenues (Consolidated/Non-consolidated) Operating revenues of the finance business and the real estate-related business were sharply higher despite lower interest rates on cash advances. (¥ billion) Consolidated (¥ billion) Non-consolidated 400 400 363.0 333.6 345.5 350 350 300 l io n 300
Slide 13: Ordinary Income/Net Income (Consolidated/Non-consolidated)
Ordinary Income/Net Income (Consolidated/Non-consolidated) Ordinary income and net income are expected to increase in FY2008, despite the influence of lower interest rates on cash advances. Consolidated (¥ billion) Non-consolidated (¥ billion) 90 90 Ordinary income Net income Ordinary income 80.1 Ne
Slide 14: Credit Risk Trends ①
Credit Risk Trends ① Delinquency rate is at a high level due to an increase in credit handling by lawyers and other parties. ■ Delinquency of 90 days or more *Delinquency rate: Percentage of total receivables 90 days or more past due date. Consolidated Non-consolidated 5.0% 5.0% 4.5% 4.5% Cash advan
Slide 15: Credit Risk Trends ②
Credit Risk Trends ② The write-off rate is increasing due to an increase in interest repayment claims. ■ Write-off trends *Write-off rate: Percentage of total receivables written off during the term. Consolidated Non-consolidated 6.0% 6.0% 5.64% 5.5% 5.5% 4.66% Cash advances write-off rate 5.0% 5.0%
Slide 16: Credit Risk Trends ③
Credit Risk Trends ③ Credit costs increased to meet the increase in interest repayment claims. ■ Credit cost trends (¥ billion) Consolidated (¥ billion) Non-consolidated 80 80 74.3 70.0 70 70 63.7 60.4 59.0 60 60 51.5 50 46.7 50 43.8 41.2 36.3 37.3 39.9 40 40 30 30 20 20 10 10 0 0 ’03 '04 '05 '06 '0
Slide 17: 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 5,500 in October
Slide 18: Financial Indices
Financial Indices Rating ■ Shareholders’ equity ratio trends R&I A+ S&P A‾ Fitch A (¥ billion) Consolidated (¥ billion) Non-consolidated 700 25% 700 25% 23.1% 600 19.9% 600 22.7% 19.1% 19.4% 20% 20% 17.5% 17.8% 17.5% 500 16.2% 15.8% 500 373.1 386.2 15% 15% 400 360.7 400 361.5 341.4 349.7 301.3 298.5
Slide 19: Equity Efficiency
Equity Efficiency ■ROA/ROE trends Earning power was decreased due to a sudden reduction in the interest rate on cash advances. However, Credit Saison aims to renew earnings growth through diversification and business restructuring. ROA* (ordinary income basis) ROE Medium-term target: 3 to 3.5% Mediu
Slide 20: Fund Structure
Fund Structure ■Interest-bearing debt trends Consolidated (¥ billion) Non-consolidated 2,000 (¥ billion) 2,000 1,854.0 1,800 1,800 1554.6 1,600 1,608.3 1,600 1,480.3 1350.1 1,400 1,400 1,189.0 1239.0 1,200 1,146.9 1,200 1,054.0 929.5 1,000 1,011.5 948.6 1,004.9 1,000 825.1 828.6 786.0 800 752.0 800
Slide 21: Fund Structure
Fund Structure Balance of corporate bonds and long-term debt: ¥906.2 ■Long-term ratio & fixed ratio billion. Average due date is approximately five years. Consolidated Non-consolidated 80% 80% Long-term ratio 72% Fixed ratio 74% 75% Long-term ratio 70% 72% 70% 70% 62% 69% 69% 61% 61% 68% 60% 56% 60%
Slide 22: Dividends
Dividends Dividends FY2006 FY2007 FY2008 (Estimate) Dividend per share ¥28 ¥28 ¥30 Total cash ¥5.0 billion ¥5.0 billion ¥5.4 billion dividend Payout ratio 33.8％ 18.8％ 20.0％ (consolidated) CORPORATE STRATEGY ２００８ CREDIT SAISON CO., LTD. 19
Slide 23: Credit Saison Main Indicators (Non-consolidated)
Credit Saison Main Indicators (Non-consolidated) CORPORATE STRATEGY ２００８ CREDIT SAISON CO., LTD.
Slide 24: Main Indicators (Non-consolidated)
Main Indicators (Non-consolidated) FY2006 FY2007 FY2008 YoY (%) YoY (%) (Estimate) YoY (%) New applications (millions) 4.28 132.9 3.38 79.0 2.5 74.0 New card issued (millions) 3.6 132.8 2.84 78.9 2.1 73.9 Total cardholders 109.3 104.4 103.0 (millions) 24.91 （+2,120 thousand） 26.01 （+1,100 thousand)
Slide 25: 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 New cards issued 4.28 4 3.60 3.38 3.22 △0 2.84 3 2.71 .9 79% milli △0 2.50 2.41 Yo on .88 2.11 Y 74% mill 2.09 i 2.10 1.86 Yo o n 2 Y △0 .76 mil lion △0 .7 1 7 4 %
Slide 26: Total Cardholders & Active Cardholders
③ Total cardholders & ④ Active Cardholders Increasing total cardholders and active cardholders through efficient marketing. (Million) Active cardholders Total cardholders 30 26.01 26.80 24.91 25 22.79 ion ll 20 n 9 mi oY 16.90 illio .7 +0 3％ Y 1 m oY 15.87 . +1 4% Y 10 14.00 15 10 12.49 13.22 11.68
Slide 27: Transaction Volume
⑤ Transaction Volume Shopping: >10% and growth recovery in cash advances (¥ billion) Card shopping Cash advances 6,000 4,976.0 5,000 4,595.1 843.0 4,305.4 836.6 Y 96% Yo 4,000 871.5 YoY 1% 10 3,146.7 3,000 2,596.2 618.9 Yo Y 2,408.6 Yo Y 0% 11 496.4 518.1 0% 11 4,133.0 2,000 3,758.5 3,433.8 2,527.8
Slide 28: Credit Loans Outstanding
⑥ Credit Loans Outstanding Shopping (revolving): Projected 14% increase Cash advances: 3% increase accumulating on good credit Cash advances ABS (cash advances) (¥ billion) Shopping (revolving) ABS (shopping) 1,000 910.0 900 825.3 855.3 40.0 ABS (shopping) 10.0 800 771.1 263.6 260.0 Shopping Y 40.0
Slide 29: (Reference ①) Share of Cards
(Reference ①) Share of Cards Fee-charging premium cards have higher transaction. Postal cards were converted to SAISON NEXT cards with hardly any effect on transaction volume. 【Share of total cardholders】 【Share of shopping transaction volume】 (Total: 26,010,000) (Total: ¥3,708.7 billion) MMC MMC 8.
Slide 30: Management Strategy
Management Strategy FY2008 Management Policy Medium-term Target: Creation of a Non-bank Financial Institution with a Powerful Market Presence CORPORATE STRATEGY ２００８ CREDIT SAISON CO., LTD.
Slide 31: 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. Steps to Achieving the Medium-term Targets IV. FY2007 Priority Policies V. Reference Materials CORPORATE STRATEGY ２００８ CREDIT SAISON CO.
Slide 32: Changes in the Business Environment and Their Impact on the Company
I. Changes in the Business Environment and Their Impact on the Company (1) Slowdown caused by stricter laws and regulations, including the revision of the Money Lending Business Control and Regulation Law ・ A series of laws and regulations, including the Money Lending Business Control and Regulation
Slide 33: Management Vision Based on Analysis of the Business Environment
II. Management Vision Based on Analysis of the Business Environment Achieving innovation in the face of the regulation-driven slump (1) Establishment of the No. 1 credit card group ・ Returning to the fundamentals of the card business, we are working to boost card profits through business alliances a
Slide 34: Steps to Achieving the Medium-term Targets
III. Steps to Achieving the Medium-term Targets The structural business reform undertaken since FY2007 is moving steadily ahead toward the goals set out in the medium-term business plan, with focus on cost reduction and profit-maximizing policies. FY2007 FY2008 ordinary ordinary income income ¥36.5
Slide 35: FY2008 Priority Policies
IV. FY2008 Priority Policies 1. Expand the profitability of the card business Utilizing business alliances and area marketing techniques 2. Commence operation of Qubitous, specialized processing company 3. Ensure continued growth of card joint ventures 4. Aggressively develop the finance business 5.
Slide 36: Expanding the Profitability of the Card Business
1. Expanding the Profitability of the Card Business Utilizing business alliances and area marketing techniques ① Policies to expand shopping (revolving) balance ・ Highlight the benefits of a shopping (revolving) balance by approaching large business partners (Millennium Gr., Takashimaya, Parco, Yama
Slide 37: Additional functions / Internet use for cash advances / loans with affinity cards
Additional functions / Internet use for cash advances / loans with affinity cards ① Additional functions for MMC Card and Yamada LABI Card (3 million cardholders in total) ・ Add single payment cash advance function (planned for 2nd half) ⇒ Increase of ¥12 billion ② Increase online cash advances (imp
Slide 38: Commencing Operations of Qubitous, Specialized Processing Company
2. Commencing Operations of Qubitous, Specialized Processing Company Start-up of Japan’s biggest processing company, paving the way to industry cost-leadership ① Qubitous become our consolidated subsidiary from April with 51% equity (Mizuho Bank: 49％) * Examples of other clients: ・ 3,000 employees (
Slide 39: Ensuring Continued Growth of Card Joint Ventures
3. Ensuring Continued Growth of Card Joint Ventures Eight joint ventures and companies invested in by Credit Saison. Each company follows a growth strategy based on its own characteristics. Takashimaya Idemitsu Credit Risona Card LAWSON CS Card Credit Wholly owned Investment: 50％ Investment: 22.4％ C
Slide 40: FY2007 Results of Capital Alliances with Card Companies
FY2007 Results of Capital Alliances with Card Companies (¥ billion) No. of cards Total Transaction Operating Operating issued cardholders volume revenues income Credit Saison 3.38 million 26.01 million 45,951 2,777 365 (non-consolidated) LAWSON CS Card 30.0％ (established Feb. 2002) 200 thousand 1.73
Slide 41: Aggressive Development of Finance Business
4. Aggressive Development of Finance Business Ensuring stable profitability of non-card businesses ① Development of credit guarantee business ・ Expansion of new partners ( more new partners than FY2007 to be a total of 200 partners). ・ Strengthen relationship with existing partners (co-operate with
Slide 42: (Reference) Changes in Profit Profile
(Reference) Changes in Profit Profile Change in profit profile Increase in share of cash advances: from 41% to 34% FY2006 Shopping Cash advances / loans 9% 41% Credit guaranteesOther fee Changes to ・leases businesses lending laws ・loans, etc. ・insurance, etc. FY2008 Shopping Cash advances / loans 12
Slide 43: Implementing Measures to Ensure Sound Loans
5. Implementing Measures to Ensure Sound Loans Reducing bad debt costs through thorough risk management Initial credit: Stricter management criteria Thorough elimination of multiple debt customers and illegal applications ・ Use information about the no. of TeraNet cases and balance information ⇒ imp
Slide 44: Taking on New Business Challenges
6. Taking on New Business Challenges Entry into overseas markets is necessary to expand the card business ① Credit card retail finance business activities overseas ・ Trial issuances of cards in Shanghai, China and research on Asian market area have already been completed. ・ Search for business allia
Slide 45: Strengthening Credit Saison Group Management
7. Strengthening Credit Saison Group Management Credit Saison Group: Business management and synergy benefits ① Consolidated subsidiaries ・Atrium Co., Ltd.: Using a recession-proof business model, this company seizes opportunities to acquire high-quality properties during real estate slumps. The par
Slide 46: Implementation of a Flexible HR Strategy
8．Implementation of a Flexible HR Strategy Flexible HR recruitment, creating a friendlier working environment ① “Diversity Management" Personnel training / HR recruitment conducted without age/gender considerations ・ Recruitment of women (including 1 director, 11 managers, and 38 section chiefs). ⇒
Slide 47: (Reference) Promotion of female workers above manager
(Reference) Promotion of female workers above manager ■ Ratio of males to females in general ■ Ratio of males to females in section manager or equivalent positions manager or equivalent positions ★ Average percentage of females in Japanese companies (based ★ Average percentage of females in Japanese
Slide 48: The Card Market: Current Situation
V. Reference Materials The Card Market: Current Situation CORPORATE STRATEGY ２００８ CREDIT SAISON CO., LTD.
Slide 49: Share and Growth by Area
(１) Share and Growth by Area ■ Trend of transaction volume share by area FY2006 transaction volume share by area Othe rs ％ 1.7% 70 60 Asia Pasific 50 N./S. America 14.8% 40 Europe Asia / Pacific 30 Others Sou th Ame rica 20 Europe 54.7% 2 8.9% 10 0 2000 2001 2002 2003 2004 2005 2006 2000 2001 2002 2
Slide 50: Changes in U.S. Market Shares
(２) Changes in U.S. Market Shares Although JP Morgan Chase and Citigroup lost market shares, the three upper-ranking companies continue to hold the majority shares. ■ Loan balance shares by issuer ■Ranking by no. of cards issued USAA Savings (10,000 cards) 2.0% Rank Name of issuer No. issued 1 Bank
Slide 51: Changes in U.S. Settlement Methods and Forecast
(３) Changes in U.S. Settlement Methods and Forecast ■ Trend in shares of major settlement methods Trend development 2001–2011 within household consumption ％ 50 100% Electronic 5 settlement 16 現金 Cash 小切手 Checks 40 クレジットカード Credit cards デビットカード Debit cards 31 75% Card その他 Others settlement 30 54 50%
Slide 52: Differentiation of Functions within Card Business and the Listing of VISA
(４) Differentiation of Functions within Card Business and the Listing of VISA ■ Transaction volume shares of U.S. ■ Stock prices of listed brand companies acquirers in 2007 and aggregate market values Other Aggregate Stock price 18% market value ($) ($100 million) VISA 67.04 519.6 Global 4% MasterCa
Slide 53: Global Market Share by Brand
(５) Global Market Share by Brand ■ Transaction volume share trends by Global transaction volume shares for ％ international brand 2006 70 JC B DINERS 1.2% 0.4% 60 AM EX 10.7% VISA 50 MASTER AMEX 40 JCB DINERS 30 M AST ER 27.3% VISA 20 60.3% 10 0 2000 2001 2002 2003 2004 2005 2006 2000 2001 2002 2003
Slide 54: Change of domestic market share (shopping transaction volume)
(6) Change of domestic market share (shopping transaction volume) Credit Saison G FY2000 JCB G FY2006 14.6 Mitsubishi UFJ NICOS G 10.1 CreditSaison 20.7 6.5 Mitsui Sumitomo G JCB Credit Saison Co . int ima cy 6.6 9.9 9.9 wit h U C C o. intimacy JV 0.6 with JC B Card Co. 3.5 4.1 Oth ers Mitsui Sumito
Slide 55: Changes to the Domestic Credit Market
(7) Changes to the Domestic Credit Market Mizuho Credit Saison Risona Mitsui-Sumitomo FG HD FG Mitsui Sumitomo Card Postal Bank Risona Orico Card Central Lawson CS Idemitsu Takashimaya OMC Card Quoq Finance Card Credit Credit Aeon Credit Yamada Shizugin Daiwa House YM Financial SAISON card Financial