Kyoto Financial Group,inc. · TSE:5844
Kyoto Financial Group,inc — 1H FY2024 Earnings Presentation
50 slides from Kyoto Financial Group,inc's earnings presentation, December 2024
Slide 1: December, 2024
December, 2024 5844, TSE Prime
Slide 2: Index
Index Ⅰ. Business performance overview Market Operations 26 Financial Results Summary of 1H FY2024 3 Shareholder Returns 27 Financial Results Summary of 1H FY2024 Capital Allocation 28 4 (Kyoto Bank, non-consolidated) Reducing Securities Held for Strategic Equity 29 Interest Income and Rate earned o
Slide 3: I. Business performance overview
I. Business performance overview
Slide 4: Financial Results Summary of 1H FY2024
Financial Results Summary of 1H FY2024 Kyoto FG consolidated (JPY bn) Kyoto FG （※） consolidated net income * 1H FY2023 1H FY2024 YoY Kyoto FG's consolidated Gross operating profit 51.5 56.8 5.3 net income hit record highs for the fourth Ordinary profit 26.8 29.6 2.8 straight year, driven by an Net i
Slide 5: Financial Results Summary of 1H FY2024 (Kyoto Bank, non-consolidated)
Financial Results Summary of 1H FY2024 (Kyoto Bank, non-consolidated) 1H FY2023 1H FY2024 (JPY bn) YoY Gross operating profit 49.0 53.4 4.4 Net interest income 41.0 44.1 3.1 Increase in interest on loans, etc. Net fees and commissions 6.8 7.4 0.6 hitting a record highs for four consecutive years Oth
Slide 6: Interest Income and Rate earned on Loans and Bills
Interest Income and Rate earned on Loans and Bills (Kyoto Bank, non-consolidated) Factors of Net Interest Income Loans and bills discounted (term-average) (JPY bn, %) (JPY bn) 9.2 YoY Domestic Foreign Change Currency rate Loans and Domestic Funding Other 4.5 (Domestic 3.1 2.4 Bills securities gap de
Slide 7: Non-interest Income (Consolidated)
Non-interest Income (Consolidated) Non-interest income (Fees and commissions + Other operating income) (*1) 12.49 (JPY bn) 10.58 9.85 8.59 6.26 9.09 Kyoto Bank 7.91 7.43 6.04 3.93 Group companies 2.33 2.55 2.66 2.41 3.39 (excluding Kyoto Bank) 1H 1H 1H 1H 1H 2020 2021 2022 2023 2024 Details of non-i
Slide 8: Credit Costs and Disclosed Assets
Credit Costs and Disclosed Assets (Kyoto Bank, Non-consolidated) Break down of credit costs FY2024 FY2020 FY2021 FY2022 FY2023 (JPY bn) 1H FY2024 (Plan) Net provision for allowance for specific loan losses 6.3 2.9 2.1 0.9 0.3 1.6 Disposal amount due to occurrence of new non- performing loans 7.4 4.1
Slide 9: Financial Results Forecast for FY2024
Financial Results Forecast for FY2024 ☞ Consolidated net income is expected to increase for the fourth consecutive fiscal year and reach a record high, due to upward revision from the initial forecast. Kyoto FG consolidated FY2024 FY2023 (Plan) Of budget YoY (JPY bn) Ordinary profit 43.5 49.5 3.3 6.
Slide 10: II. Management strategy
II. Management , Strategy
Slide 11: Kyoto Financial Group Celebrates Its First Anniversary
Kyoto Financial Group Celebrates Its First Anniversary 10
Slide 12: Events during the First Year since the Transition to a Holding Company Structure
Events during the First Year since the Transition to a Holding Company Structure ➣ One of the objectives of the transition to a holding company structure, “Expansion of solution functions and new business domains,” has made steady progress. October 2023 Established “Kyoto Financial Group, Inc.” Kyot
Slide 13: Setting New Strategic Targets
Setting New Strategic Targets ➣ Increasing the growth trajectory: Increase earnings by transitioning to a holding company structure and taking on the challenge of further growth in response to the arrival of a world with interest rates ROE (net asset basis) Net income attributable to owners of the p
Slide 14: Targets for the Medium-Term Management Plan (1)
Targets for the Medium-Term Management Plan (1) ➣ Set new strategic targets and begin formulating the 2nd Medium-Term Management Plan April 2023 April 2026 Set new strategic targets First half of 2030s Start of the 1st Start of the 2nd targeting March 2029 ROE 8% or more Medium-Term Nov. 2024 Medium
Slide 15: Targets for the Medium-Term Management Plan (2)
Targets for the Medium-Term Management Plan (2) ➣ Set significantly more challenging targets as strategic targets of 2nd Medium-Term Management Plan ➣ Aim for ROE (net asset basis) of 8% or more for first half of 2030s 2nd Medium- Term FY2022 FY2023 FY2024 Management First half of (Result) (Result)
Slide 16: Growth Strategy
Growth Strategy ➣ Focusing on three key initiatives to achieve ROE (net assets basis) of 5% March 2029 ROE 5% (Net income JPY60.0bn) First half of 2030s ROE 8% or more (1) Discover and nurture next- (2) Strengthen the deposit and loan- (3) Accelerate resolution of regional generation growth companie
Slide 17: Accelerating Growth by Expanding Business Domains
Accelerating Growth by Expanding Business Domains ➣ Expand comprehensive solutions function based on the combination of finance and consulting Image of business domain expansion Accelerate M&As and capital and business alliances, with a focus on areas supporting SMEs and the IT/DX domain ●Advanced f
Slide 18: ROE
ROE ➣ Improve ROE by leveraging financial strength to build up risk-weighted assets and expand business areas 12% Aim for a level of ROE targets for ROE that exceeds First half of 2030s the cost of capital 10% reference: ROE (shareholder’s equity basis) 8% or more 8% 7.46% Assumed Range 6.39% of Cos
Slide 19: Efforts to Improve Corporate Value
Efforts to Improve Corporate Value ➣ While striving to increase ROE through sustainable growth, we also want to reduce the cost of shareholders' equity, which should lead to an increase in PBR. ■ Significant accumulation of ➢ Strategy development by risk assets launching strategic P.20 RORA Strength
Slide 20: Group-wide Strategy
Group-wide Strategy ➣ We are making steady progress toward becoming a corporate group in which the challenge to change corporate culture is a chain of challenges Regional Future Co-Creation Project Project initiated to serve regional businesses Results are quickly emerging as we work closely with cu
Slide 21: Progress of the Asset Strategy
Progress of the Asset Strategy ➣ Plan to increase asset balance to JPY 1.2 trillion or mote and credit risk assets to 500 billion yen or more over the three years from FY2023 to FY2025 ➣ At the midpoint (September 2024), the asset balance has exceeded par-play level, and credit risk assets have alre
Slide 22: Asset Strategy (Structured Finance)
Asset Strategy (Structured Finance) ➣ Structured finance (SF) is on track to meet targets in terms of both balance and revenue through aggressive efforts ➣ Properly review loan and investment portfolio, with appropriate consideration and soundness in mind SF (loan) component ratio SF (loan) balance
Slide 23: Asset Strategy (Apartment Loans, Personal Loans)
Asset Strategy (Apartment Loans, Personal Loans) ➣ Leverage the introduction of Kyogin Apartment Loan - Next to significantly grow condominium loans ➣ Mortgages loans have continued to perform strongly, and the introduction of fully online consumer loan services has enabled branches to focus more on
Slide 24: Results of Corporate Consulting
Results of Corporate Consulting ➣ Corporate consulting sales have become established, and income from comprehensive corporate services reached a half-year record high in the 1H of FY2024 ➣ Kyoto Soken Consulting has also seen a steady increase in contracts since launching its consulting business las
Slide 25: Deposits
Deposits ➣ By leveraging our branch network for face-to-face sales proposals and expanding products and services that capture diverse needs, we aim to be the main bank for more customers and enhance the quantity of highly stable deposits Increase in personal deposits Personal deposits (term-average)
Slide 26: Assets under Custody
Assets under Custody ➣ Provide all customers with consulting services through “Banking, Securities, and Trust” to achieve the best profit for customers Balance of assets under Group Provision of comprehensive solution services custody JPY 1 Target (JPY bn) trillion Proposal for long- term, accumulat
Slide 27: Market Operations
Market Operations ➣ Building a portfolio with an awareness of “the world with interest rates.” In domestic bonds, we purchased JGBs and other securities with shorter maturities as a precautionary measure ahead of the anticipated interest rate hikes by the Bank of Japan. In foreign bonds, we inve
Slide 28: Shareholder Returns
Shareholder Returns ➣ Dividend for FY2024 is planned to be 60 yen per share, an increase of 5 yen per share. ➣ In FY2024, we will repurchase 10 billion yen of treasury stock and continue to provide a high level of shareholder returns, with a total return ratio of 78%. Point! Changes in Dividends per
Slide 29: Capital Allocation
Capital Allocation ➣ Reduce the Equity-to-asset ratio to the 11% range as a level that can withstand unexpected crises in the future by actively investing in risk assets that will lead to future growth and providing appropriate shareholder returns. Capital Allocation Image Risk Asset Image Cumulativ
Slide 30: Reducing Securities Held for Strategic Equity
Reducing Securities Held for Strategic Equity ➣ To clarify our stance on reducing policy shareholdings, we have set a new target of reducing strategic equity holdings by 100 billion yen or more based on market value. Policy on Reducing Holdings of Securities Held for Strategic Equity ＜Growth Driver
Slide 31: Venture and Business Succession Business
Venture and Business Succession Business ➣ Over JPY 100 billion in next-generation growth investments, using funds generated by reducing strategic equity holdings ➣ This year, both venture funds and business succession funds have established funds of JPY 10 billion, which far exceeds their previous
Slide 32: Dialogue with Shareholders and Investors
Dialogue with Shareholders and Investors ➣ Continue to actively engage in dialogue with shareholders and investors ➣ The shareholder survey results indicate an increase in acquisitions due to future potential and growth prospects compared to the previous fiscal year Trends in the number of individua
Slide 33: Initiatives to Achieve a Sustainable Society
Initiatives to Achieve a Sustainable Society ➣ We will continue to promote sustainability in the region Efforts to reduce CO2 emissions Sustainable finance initiatives [Image of recycling] Kyogin Sustainability Linked Loan Sustainability Linked Loan Recycling of used uniforms (Kyoto Version) ・ Parti
Slide 34: Human Capital Strategy (Human Capital Management)
Human Capital Strategy (Human Capital Management) ➣ Expanding the engagement survey to all employees throughout the Group to put in practice engagement management throughout the Group ➣ Encourage a hand-raising culture to support and motivate all employees in their career development Engagement mana
Slide 35: DX Strategy
DX Strategy ➣ Roll out Service Innovation Core to Group companies to pursue data-driven management ➣ Increase number of users of Kyogin Business Portal Site, a gateway tool for corporate customers, and Kyogin App, a gateway tool for individual customers Progress in data driven management Development
Slide 36: III. Reference material
Ⅲ. Reference material
Slide 37: History of Kyoto Bank (Outline: Establishment to Heisei Eras)
History of Kyoto Bank (Outline: Establishment to Heisei Eras) 昭和 1941 Established Tanwa Bank (％) Market Share with in Kyoto Prefecture Post-war recovery Commissioned to provide main Emergence of venture companies and 1950 depository service for Kyoto subsequent rapid growth Prefecture Loans Establis
Slide 38: Outline of Kinki Region
Outline of Kinki Region ➣ Although ranked 13th in terms of economic scale, the Kinki region (Kyoto, Osaka, Hyogo, Shiga, and Nara prefectures), which has a network of stores, has a large economy. ➣ Demand for commercial land in Kyoto and Osaka prefectures is high, and land prices are above the natio
Slide 39: Attraction of Kyoto Prefecture
Attraction of Kyoto Prefecture ➣ Kyoto’s unique and attractive industrial structure is also related to our Group’s business and will lead to business opportunities Kyoto has many technologically advanced high-tech industries. Industry-university High-tech cooperation Industry: Many manufacturing com
Slide 40: Initiatives to Contribute to Local Communities
Initiatives to Contribute to Local Communities ➣ Continued efforts to embody the Management Principle of "Serving the Prosperity of the Community” Promotion of local culture and sports Financial and economic education initiatives [Volunteer float pullers at the Gion Festival, working in a yukata] Es
Slide 41: GHG Emissions
GHG Emissions ➣ Started calculating emissions based on GHG Protocol and started Scope 3 calculation. Group GHG Emissions Category 15 Calculation Results by Industry Data quality score Emissions Carbon intensity Calculation Details Calculation results Percentage Industry (t-CO2) (t-CO2/JPY mn) (DS) w
Slide 42: Deposits and negotiable certificates of deposit
Deposits and negotiable certificates of deposit (Kyoto Bank, Non-consolidated) Deposits and negotiable certificates of deposit (term-average) Results of 1H FY2024 (YoY change) Results of FY2024 (YoY change) Corporations +JPY17.1bn, Kyoto+JPY131.8bn, Osaka･Hyogo+JPY29.9bn, Individuals+JPY101.2bn, Shi
Slide 43: Loans and bills discounted
Loans and bills discounted (Kyoto Bank, Non-consolidated) Loans and bills discounted(Term-average) Results of 1H FY2024 (YoY change) Results of 1H FY2024 (YoY change) Corporations＋JPY542.5bn, Individuals＋JPY31.5bn, Kyoto＋JPY213.4bn, Osaka・Hyogo＋JPY161.1bn, Local governments, Financial institutions +
Slide 44: Impact of rising JPY interest rate
Impact of rising JPY interest rate (Kyoto Bank, Non-consolidated) ➣ Depending on the situation of rising interest rates, we expect an increase in net interest income to have an effect of JPY 11.0-23.0 billion Impact of rising interest rates on profits JPY currency balance sheet Increase in net inter
Slide 45: Expenses and OHR
Expenses and OHR Expenses and OHR (Consolidated) Expenses and OHR (Kyoto Bank, non-consolidated) 64.95 66.06 57.13 57.07 57.91 56.28 55.01 55.20 53.68 OHR 53.50 OHR (％) (％) (JPY bn) (JPY bn) 30.5 28.6 28.3 28.2 28.3 28.5 27.5 27.3 27.0 27.1 Personnel 15.1 15.4 expense 15.3 15.2 15.3 Non- 10.9 person
Slide 46: Comprehensive Risk management
Comprehensive Risk management Status of Comprehensive Risk Amount (As of the end of September 2024) Interest rate risk in the banking book (As of the end of September 2024) As part of the Risk Appetite Framework, the company confirms that Delta EVE risk-taking (amount of integrated risk) is at an ac
Slide 47: BPS
BPS Changes in BPS Annualized 4,500 (Compounded) 4,135yen 8.78％ 4,000 3,905yen 3,500 Annualized (Compounded) 8.16％ 3,000 2,500 2,000 1,783yen 1,500 1,000 2014/3期 2015/3期 2016/3期 2017/3期 2018/3期 2019/3期 2020/3期 2021/3期 2022/3期 2023/3期 2024/3期 ■ BPS ■Cumulative dividend BPS (Book Value per Share) = Ne
Slide 48: Group Companies
Group Companies Main Business Kyoto Financial Group, Inc. Business management of group companies The Bank of Kyoto, Ltd. Banking Kyoto Guaranty Service Co., Ltd. Credit guarantee Sky Ocean Asset Management Co., Ltd. Investment management (The Bank of Kyoto’s Equity Method Associate) Real estate mana
Slide 49: Governance Structure
Governance Structure ➣The Holding Company will be a “company with an audit and supervisory committee” to enable highly effective supervision of management and prompt decision-making as we aim to expand into new business areas and achieve independent business operations for each group company, thereb
Slide 50: Inquiries
This material has been translated from the Japanese-language original for reference purposes only. In the event of any conflict or discrepancy between this document and the Japanese-language original, the Japanese-language original shall prevail in all respects. And This material contains descriptio
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