77 Bank, Ltd. · TSE:8341
77 Bank — The 77 Bank — FY2021 Earnings Presentation
50 slides from 77 Bank's earnings presentation, Jun 7, 2022
Slide 1: Results for the Fiscal Year Ended March 31, 2022 IR Presentation
Leading company creating a path to the future Results for the Fiscal Year Ended March 31, 2022 IR Presentation Materials were prepared for the Bank’s presentation of its results for the fiscal year ended March 31, 2022 held on June 7, 2022. June 7, 2022
Slide 2: Table of Contents
Table of Contents 1. Financial Summary ... 2 2. Projected Performance ... 11 3. Business Strategy ... 14 4. Sustainability ... 42 The 77 Bank, Ltd.| Fiscal Year Ended March 31, 2022 1
Slide 3: Financial Summary
01 Financial Summary The 77 Bank, Ltd.| Fiscal Year Ended March 31, 2022 2
Slide 4: Financial Summary (Summary of profits and losses)
1. Financial Summary (Summary of profits and losses) (Unit: JPY bn, %) Summary of profits and losses YoY change FY2020 FY2021 (Non-consolidated) Increase/decrease Rate of change % < Core operating income > Gross operating income 67.8 75.8 8.0 11.8 [ Core operating income ] [ 80.6 ] [ 84.6 ] [ 4.0 ]
Slide 5: Financial Summary (Interest income)
1. Financial Summary (Interest income) Interest income increased JPY 1.8 billion year-on-year due to an increase in interest on loans and bills discounted and a decrease in fund procurement costs, among other factors. (Unit: JPY bn) <Change factors in interest income> (Unit: JPY bn) FY2020 FY2021 Fa
Slide 6: Financial Summary (Loans and bills discounted/Deposits)
1. Financial Summary (Loans and bills discounted/Deposits) Loans and bills discounted increased 3.4% year-on-year due to factors such as an increase in corporate loans largely due to efforts to aggressively provide funding based on the appropriate targeting of customers and an increase in retail loa
Slide 7: Financial Summary (Securities)
1. Financial Summary (Securities) Securities increased by JPY 40 billion year-on-year due to the Bank increasing its trading amount, particularly that in local government bonds and investment trusts. (Unit: JPY bn) Balance of marketable securities (on an amortized cost base) Composition ratio by typ
Slide 8: Financial Summary (Securities)
1. Financial Summary (Securities) Gains (losses) from the evaluation of securities decreased JPY 24.2 billion year-on-year largely due to evaluation losses on corporate bonds following the rise in interest rates. Gains (losses) from evaluation of securities Total gains (losses) from securities (Unit
Slide 9: Financial Summary (Fees and commissions)
1. Financial Summary (Fees and commissions) Fees and commissions increased JPY 2.0 billion year-on-year due partly to an increase in fees and commissions from corporate clients from the likes of syndicate loans and business matching as a result of stronger measures geared towards consulting-based sa
Slide 10: Financial Summary (Expenses)
1. Financial Summary (Expenses) Expenses decreased JPY 0.9 billion year-on-year due to a decrease in personnel expenses largely attributable to a lower number of employees as well as a decrease in logistics and other expenses. (Unit: JPY bn) (Unit: JPY bn) FY2020 FY2021 Key change factors in expense
Slide 11: Financial Summary (Credit-related expenses/reserve for loan losses)
(Credit-related expenses/reserve for loan losses/ 1. Financial Summary credits disclosed under the Financial Reconstruction Law) Based on concerns that credit risk would worsen due to the likes of economic stagnation caused by the prolonging of the novel coronavirus (COVID-19), the Bank introduced g
Slide 12: Projected Performance
02 Projected Performance The 77 Bank, Ltd.| Fiscal Year Ended March 31, 2022 11
Slide 13: Projected Performance (Summary of profits and losses)
2. Projected Performance (Summary of profits and losses) (Unit: JPY bn) Summary of profits and losses FY2022 YoY change FY2023 FY2021 (Non-consolidated) (Forecast) Increase/decrease (Simulation) Gross operating income 75.8 77.4 1.6 80.2 [ Core operating income ] [ 84.6 ] [ 82.1 ] [ (2.5) ] [ 82.1 ]
Slide 14: Projected Performance (Summary of profits and losses)
2. Projected Performance (Summary of profits and losses) (Unit: JPY bn) FY2022 FY2023 (Reference) FY2021 Level of yields, interest rates, etc. used as the basis for FY2022 forecast and (Forecast) YoY change (Simulation) FY2023 simulations Interest income 72.2 (0.1) (Unit: %) 72.3 74.1 FY2022 FY2023
Slide 15: Business Strategy
03 Business Strategy The 77 Bank, Ltd.| Fiscal Year Ended March 31, 2022 14
Slide 16: Business Strategy (Vision 2030)
3. Business Strategy (Vision 2030) The 77 Bank, Ltd.| Fiscal Year Ended March 31, 2022 15
Slide 17: Business Strategy (Vision 2030)
3. Business Strategy (Vision 2030) The 77 Bank, Ltd.| Fiscal Year Ended March 31, 2022 16
Slide 18: Vision 2030 status of progress
3. Business Strategy (Vision 2030 status of progress) 1. Strengthening of financial foundation (key factors) FY2022 FY2030 FY2020 FY2021 Forecast Our Target Form Net income (consolidated) JPY 16.5 bn JPY 22.2 bn JPY 22.0 bn JPY 28.0 bn Capital adequacy ratio (consolidated) 10.39% 10.27% Over 10% Ove
Slide 19: Provision of Finance & Consulting (Top customer satisfaction strategy)
3. Business Strategy (Top customer satisfaction strategy) Ⅰ Top customer satisfaction strategy ➢ Provision of services that only regional financial institutions can offer through consulting and digital technology ➢ Utilizing overseas network, information network in regions and other strengths ➢ Surp
Slide 20: Strengthening relations with customers through finance & consulting
3. Business Strategy (Corporate Sales) Strengthening relations with customers through “finance” & “consulting” ■ Implementation of consulting ▪ Implementation of high-quality business feasibility evaluations ▪ Stronger handling of COVID-19-related lending Number of contracts for problem-solving meas
Slide 21: Implementation of consulting sales awards
3. Business Strategy (Corporate Sales) ▪ Implementation of consulting sales awards “Consulting sales awards” have been held since FY2019 in order to evaluate medium- to long-term measures geared towards consulting sales by sales offices for the purpose of reinforcing consulting sales ability, Sample
Slide 22: Reinforcement of sales framework (Corporate Sales)
3. Business Strategy (Corporate Sales) Implementing proposals that leverage total capability and expanding business fields ■ Reinforcement of sales framework Balance/share of loans in Miyagi Pref. ▪ Strengthening of structured finance measures Balance of loans at the Bank (at term-end) Share of loan
Slide 23: Business Strategy (Corporate Sales)
3. Business Strategy (Corporate Sales) Corporate loans in Miyagi Pref. Structured finance (Yen-denominated, average balances) (average balances, yen-denominated) (Unit: JPY bn) +5.2% (Unit: JPY bn) +23.2% 2,000 (+92.5bn) 300 (+38.7bn) 1,866.0 1,773.5 205.0 200 166.3 1,500 1,960.0 1,717.3 100 230.0 1
Slide 24: Suggestion-based sales tailored to customers' life plans (Retail sales)
3. Business Strategy (Retail sales) Implementing suggestion-based sales tailored to customers’ life plans through collaboration between sales offices, HQ and 77 Securities ■ Strengthening of retail Balance of assets in custody Further strengthening of cooperation between the Bank 77 Securities (ex
Slide 25: Stronger promotion of housing and unsecured loans
3. Business Strategy (Retail sales) Ascertaining customer needs with precision and promoting housing and unsecured loans ■ Stronger promotion of housing and unsecured loans ▪ Capturing of customer needs Number of new housing starts in Miyagi Pref. and amount of Retail loans (average balances) housin
Slide 26: The 77 Bank Group (Group companies)
3. Business Strategy (Group companies) Uniting across the Group to provide the very best solutions to address the issues faced by customers and regions ■ Establishment of subsidiary that operates ■ The 77 Bank Group Key factor human resource-related businesses New businesses Main services offered: S
Slide 27: Double productivity strategy
3. Business Strategy (Double productivity strategy) Ⅱ Double productivity strategy ➢ Power-saving through improvements to administrative processes and the enhancement of non-face-to- face transactions and promotion of their usage ➢ Optimization of sales channels based on customer needs “Rebalancing
Slide 28: Measures in digital technology reforms for banking business
3. Business Strategy (Digital technology strategy) Measures in digital technology reforms for banking business Non-face-to-face channel reforms Introduction of 77 Business Portal (Scheduled for Oct. 2022) Improvements to UI/UX for The 77 Bank app/retail e-banking Providing all kinds of financial ser
Slide 29: Promotion and enhancement of non-face-to-face channels
3. Business Strategy (Non-face-to-face channels) Enhancing non-face-to-face channels based on customer needs ■Promotion and enhancement of non-face-to-face channels ▪ Introduction of 77 Business Portal (Scheduled for Oct. 2022) ▪ Improvements to UI/UX of The 77 Bank app, etc. ⇒ Building of total pla
Slide 30: Paperwork-free and utilization of digital technology
3. Business Strategy (Paperwork-free and utilization of digital technology) Promoting paperwork-free through the reduction and consolidation of administrative processes and digital technology reforms ▪ Measures by Paperwork-Free Promotion Committee *Paperwork-Free Promotion Committee (since Mar. 202
Slide 31: Regional growth strategy
3. Business Strategy (Regional growth strategy) Ⅲ Regional growth strategy ➢ Establishment of partnerships aimed at realizing a future devised alongside local governments ➢ Strengthening and application of cooperation with external partner institutions, private enterprises with consulting functions,
Slide 32: Regional economy vitalization
3. Business Strategy (Regional economy vitalization) Taking full advantage of The 77 Bank Group’s networks to contribute to the forward development of local communities ■ Enhancement of support programs for founders Cases of growth support for founders ▪ Creation of <77> Startup Support Desk Unit: C
Slide 33: Creation of Miyagi wide-area PPP platform (MAPP)
3. Business Strategy (Regional vitalization) Strengthening cooperation with local governments, etc. through MAPP Creation of “Miyagi wide-area PPP platform (MAPP)” (Established Jan. 2020) As a measure based on the “Agreement on Comprehensive Cooperation Aimed at Regional Vitalization” and other agre
Slide 34: Environmental response
3. Business Strategy (Environmental response) Strengthening response to environmental issues with a view to realizing sustainable local communities ■ Measures aimed at CO2 reductions ■ Response to clients ▪ Reduction of electric and other power consumption ▪ Execution of financing for solar sharing
Slide 35: Corporate culture reform strategy
3. Business Strategy (Corporate culture reform strategy) Ⅳ Corporate culture reform strategy ➢ Fundamental revision of HR and organizational systems aimed at accommodating diverse values and boosting motivation ➢ Fostering of an environment that is tolerant of trial and error and recognizes challeng
Slide 36: Foster an ambitious spirit
3. Business Strategy (Foster an ambitious spirit) Fostering an ambitious spirit through vitalizing communication in the workplace, etc. ■ Enhancement of communication in the workplace ■ Penetration of ambitious spirit ▪Vitalization of communication by managers, etc. ▪Holding of contests within the B
Slide 37: Progress in diversity
3. Business Strategy (Progress in diversity) Promoting diversity & inclusion with a view to accommodating diverse values ■ Educate and spread awareness of diversity and inclusion ▪ Strengthening of measures aimed at career support ⇒ Holding the women’s career advancement program (Scene from holding
Slide 38: Human resource development
3. Business Strategy (Human resource development) Expanding scope of activity through human resource development, dispatch outside the Bank, etc. Key factor Human ■Development of human resources who serve a resources purpose for customers and local communities ▪ Enhancement of training framework for
Slide 39: Marketable securities trading: FY2022 Trading Policy
3. Business Strategy (Marketable securities trading) Strengthening trading posture with a view to continuously acquiring earnings ■ FY2022 Trading Policy Composition ratio by type (on an amortized cost base) (1) Promotion of rebalancing to income reinforcement based on changes in trading environment
Slide 40: Marketable securities trading: FY2030 portfolio concept
3. Business Strategy (Marketable securities trading) ■ FY2030 portfolio concept ♦ Securities portfolio: JPY 3 tn ♦ Total yield across all securities*: 1.00% ♦ Portfolio weightings of equities and REITs, as well as overseas assets: Approx. 2x vs. FY2020 *Income based yield calculated by aggregating i
Slide 41: Policy of Return of Profits to Shareholders
3. Business Strategy (Return of profits to shareholders) From the standpoint of establishing a solid financial foundation through elevating customer satisfaction and improving productivity based on the “Vision 2030” that it initiated in April 2021 while simultaneously realizing at an early stage “th
Slide 42: Strengthening of financial foundation
3. Business Strategy (Capital adequacy ratio and cross-shareholdings) Strengthening of financial foundation (disclosure of “Vision 2030”) Key factor Financial foundation Capital adequacy ratio (consolidated) Over 10% (Target for FY2030) Movements in capital adequacy ratio and ROE End-Mar. 2018 End-M
Slide 43: Sustainability
04 Sustainability The 77 Bank, Ltd.| Fiscal Year Ended March 31, 2022 42
Slide 44: Measures associated with sustainability
4. Sustainability (Measures up to this point) ■ Measures associated with sustainability “77 Bank Group SDG Declaration” Formulation of “Lending Policies for Specific Businesses” Agreement with “TCFD Establishment of “Diversity Promotion Policy” Recommendations” Establishment of “Sustainability Estab
Slide 45: Revitalization of regional economy
4. Sustainability (Revitalization of regional economy) 1. Actions aimed at revitalizing regional economy ■ SDGs support for clients ■ Collaborative agreements aimed at regional vitalization <Launch of SDGs-related products> <Collaborative agreement with Nippon Telephone and Telegraph East Corporatio
Slide 46: Responding to global warming and climate change
4. Sustainability (Responding to global warming and climate change) 2. Responding to global warming and climate change ■ State of response to TCFD Recommendations 1. Governance 3. Risk management Formulated a “Sustainability Promotion and Management Recognizing climate-related risks that are transit
Slide 47: Support for individual employee activities
4. Sustainability (Support for individual employee activities) 3. Actions aimed at encouraging and supporting the activities of employees -Ideal form- A highly productive organization whose members are physically and mentally fit and are capable of fully manifesting their potential as they go about
Slide 48: Advancement of governance
4. Sustainability (Advancement of governance) 4. Actions aimed at advancing corporate governance ■ Measures aimed at enhancing and strengthening ■ Actions aimed at revising Corporate Governance Code governance Selected the “Prime Market” for the Bank’s new market Timing Content under the Tokyo Stock
Slide 49: Measures aimed at achievement of SDGs
4. Sustainability (Measures aimed at achievement of SDGs) ■ Progress in KPI up to FY2030 Ⓥ is disclosed in “Vision 2030” FY2021 KPI for FY2030 Cases of growth support for founders ⓥ 1,490 cases 3,000 cases Projects established in new businesses or sectors (by FY2023) ⓥ 1 project 10 projects Supporti
Slide 50: The 77 Bank, Ltd.| Fiscal Year Ended March 31, 2022
The 77 Bank, Ltd.| Fiscal Year Ended March 31, 2022 49