Resona Holdings, Inc. · TSE:8308
Resona — FY2015 Earnings Presentation
63 slides from Resona's earnings presentation, May 18, 2016
Slide 1: Business Results for FY2015 and Future Management Direction
Business Results for FY2015 and Future Management Direction May 18, 2016
Slide 2: Contents
Contents Outline of Business Results for FY2015 and Updates on Major Businesses Efforts to Build Solid Foundation for Sustainable Growth Direction of Capital Management Reference Material Total loans outstanding (Term-end balance): JPY27.7 tn*1 1. In some pages of this material, names of Resona Grou
Slide 3: Table of Contents
Table of Contents Outline of Business Results for FY2015 Direction of Capital Management and Updates on Major Businesses P4 Outline of Financial Results for FY2015 P34 Direction of Capital Management P5 Factors for the Changes in Periodic Profits P6 PL Summary / Consolidated and Non-Consolidated Dif
Slide 4: Outline of Business Results for FY2015 and Updates on Major Businesses
Outline of Business Results for FY2015 and Updates on Major Businesses Efforts to Build Solid Foundation for Sustainable Growth Full Repayment of Public Funds and Direction of Capital Management Reference Material 3
Slide 5: Outline of Financial Results for FY2015
Outline of Financial Results for FY2015 FY2015 FY2016 v s. Posted Y183.8 bn as net income attributable to owners of the parent (RHD (Y bn) YoY change consolidated), down Y27.6 bn, or -13.0%, YoY, but exceeded the forecast by Forecast Target % (Nov . 2015) Y8.8 bn, or +5.0% Resona HD (Consolidated)
Slide 6: Factors for the Changes in Periodic Profits (YoY Comparison)
Factors for the Changes in Periodic Profits (YoY Comparison) Consolidated net income attributable to Actual net operating profit owners of the parent (RHD Consolidated) (Total of Group Banks) (Y bn) (Y bn) Net gains on bonds (including futures)+11.1 Net interest income Actual net FY2014 19.9 (21
Slide 7: PL Summary / Consolidated and Non-Consolidated Difference
PL Summary / Consolidated and Non-Consolidated Difference Consolidated / Non-consolidated difference PL Summary for FY2015 (in approximate figures) (Y bn） (Y bn） Resona Holdings (2) Gross operating profit FY2015 FY2015 YoY YoY change (Consolidated) change HL guarantee subsidiaries 26.2 (1.3) Gross o
Slide 8: Outline of Results by Business Segments for FY2015 (1)
Outline of Results by Business Segments for FY2015 (1) Actual net operating profit decreased by Y24.9bn, primarily due to slowdown of market division YoY (Y bn) FY2015 (Y bn) Change Personal Banking Corporate (1) Gross operating profit 518.0 (23.1) Markets Banking Customer (9.2) and Other Divisions
Slide 9: Outline of Results by Business Segments for FY2015 (2)
Outline of Results by Business Segments for FY2015 (2) Personal Banking Segment Corporate Banking Segment Actual net operating profit decreased by Y9.2bn Actual net operating profit decreased by Y4.2bn Decrease in net interest income from loans and deposits Decrease in net interest income fr
Slide 10: 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 JPY49.1 tn (as of Mar. 31, 2016) (+ JPY2.3 tn. from Dec. 31, 2015) Loans 27.6 tn Deposits and NCDs (+0.3tn) 39.5 tn (+0.4 tn) No change to Short-term Prime Fixed-rate loans*1 5.
Slide 11: Trend of Loans and Deposits (Total of Group Banks)
Trend of Loans and Deposits (Total of Group Banks) Average loan and deposit balances Average loan and deposit balances and spread and YoY change (Domestic account) Avg. bal : Trillion Yen FY2015 FY2016 Y oY Y oY Avg. deposit balance including NCDs Income/Cost : Billion Yen (Act) (Plan) change change
Slide 12: Term-end Balance of Loans and Deposits (Total of Group Banks)
Term-end Balance of Loans and Deposits (Total of Group Banks) Term-end loan balance Term-end deposit balance (Y tn) (Y tn) Corporate (Other) *1 Other Corporate (SMEs) Corporate deposits Corporate (Apartment loans) Individual deposits Personal（Residential housing loans + Consumer loans) 38.27 (+4.1%)
Slide 13: Trend of Residential Housing Loans (Total of Group Banks)
Trend of Residential Housing Loans (Total of Group Banks) Composition of newly originated residential New loan origination housing loans by interest rate type Plans to originate Y1.13 tn for FY2016 Approx. 90% of the newly originated loans are variable rate type (Y tn) Flat 35 Share of fixed rat
Slide 14: Trend of Fee Income
Trend of Fee Income Consolidated fee income ratio at 27.2% Y bn, % represents YoY change 200.0 200.0 29.0% 30.0% Consolidated 26.7% 27.2% fee income ratio*1 26.0% 175.0 180.0 180.0 168.7 (+3%) 23.6% 169.2 (-0.2%) 25.0% 158.7 Housing loan 160.0 160.0 guarantee fee 150.6 etc. 135.0 20.0% 140.0 140.0 1
Slide 15: Asset Formation Support Business (Total of Group Banks)
Asset Formation Support Business (Total of Group Banks) Balance of investment products sold to individuals (Y tn) Investment trusts Insurance Public bonds Foreign currency deposits and Investment product ratio*1 Money trusts with peformance-based dividends 20% 6 16.1% 16.0% 16.2% 15.3% 15.4% Numbe
Slide 16: Major Fee Businesses (Total of Group Banks)
Major Fee Businesses (Total of Group Banks) Trust-related business (Y bn) (Reference) Number of new asset succession-related contracts Income from trust solutions offered for asset and business succession Will trust Asset succession Trust for transfer of +Estate division own company stocks Income fr
Slide 17: Credit Costs and NPL
Credit Costs and NPL Trend of NPL balance and ratio Trend of credit costs (Total of Group Banks) (Financial Reconstruction Act criteria) (Y bn) FY2013 FY2014 FY 2015 FY 2016 Unrecoverable or valueless claims Act Plan Risk claims Net credit cost 2.32% (Total of group banks (A)) (1) 27.1 24.3 (23.4) (
Slide 18: Securities Portfolio (Total of Group Banks)
Securities Portfolio (Total of Group Banks) Securities Portfolio Status of policy-oriented stocks held (Y bn) 2014/3 2015/3 2016/3 Unrealized Breakeven Nikkei average: Approx. 6,500 yen gain/(loss) Listed stocks sold in FY2015 (acquisition cost): Y8.7 bn, Available-for-sale securities *1 (1) 6,1
Slide 19: Capital Adequacy Ratio (RHD Consolidated)
Capital Adequacy Ratio (RHD Consolidated) CAR (Domestic std.) and CET1 ratio* (International std.) as of Mar. 31 2016 were 13.53% and 8.13%, respectively, maintaining sound capital adequacy level * Excluding unrealized gain on available for sale securities Domestic standard (reference) Internation
Slide 20: Earnings Target and Dividend Forecast for FY2016
Earnings Target and Dividend Forecast for FY2016 Resona Group engages in financial service business such as commercial banking, trust banking, credit card and other financial businesses. There are a number of uncertainties relating to the economic environment including the potential impact of the
Slide 21: Targeted Consolidated Net Income for FY2016 Compared with FY2015
Targeted Consolidated Net Income for FY2016 Compared with FY2015 (Billions of yen) Credit- Gross related Net gains on Difference Operating stocks expense between profit (including +2.4 “RHD consolidated” Other, net Income (15.0) equity and FY2015 (9.9) tax derivatives) “Total of group Operating (2.1
Slide 22: Efforts to Build Solid Foundation for Sustainable Growth
Outline of Business Results for FY2015 and Updates on Major Businesses Efforts to Build Solid Foundation for Sustainable Growth Direction of Capital Management Reference Material 21
Slide 23: Resona’s Management Strategy
Resona’s Management Strategy Become “No.1 Retail Bank” Cultivating strategic business areas even further Challenge to Create New Profit Opportunities Build good-quality Omni-channel strategy Shared Open Platforms loan assets Expected increase in net business Strengthen fee income profits: + JPY29 bn
Slide 24: Cultivating Strategic Business Areas Even Further: Corporate Banking Dept. (1)
Cultivating Strategic Business Areas Even Further: Corporate Banking Dept. (1) Corporate customer base comprising of 0.43 million SMEs Build up long-term loan assets by offering good solutions Relatively high loan yield and coverage ratio Capex-related loans*1,2 Loans to healthcare industry*2, 3 Loa
Slide 25: Cultivating Strategic Business Areas Even Further: Corporate Banking Dept. (2)
Cultivating Strategic Business Areas Even Further: Corporate Banking Dept. (2) Corporate customer base comprising of 0.43 million SMEs Offer diverse solutions Strengthen fee income Real estate brokerage Corporate Solution Cultivating real estate- Real estate business Settlement business related info
Slide 26: Cultivating Strategic Business Areas Even Further: Consumer Banking Dept. (1)
Cultivating Strategic Business Areas Even Further: Consumer Banking Dept. (1) Efforts to strengthen competitiveness in residential housing loan business Holiday operation HL business reform Offering unparalleled customer convenience All LPs completed adopting the new system Approx. 40% of the
Slide 27: Cultivating Strategic Business Areas Even Further: Consumer Banking Dept. (2)
Cultivating Strategic Business Areas Even Further: Consumer Banking Dept. (2) Efforts to strengthen competitiveness of consumer loan business Bal. of “strategic products” increased by 12.9%, YoY Build up the balance further with renewed approaches Strategic Products Other products (abolished) Quic
Slide 28: Cultivating Strategic Business Areas Even Further: Cross-selling Culture
Cultivating Strategic business Areas Even Further: Cross-selling Culture 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
Slide 29: Omni-channel Strategy: Envisaged Goal
Omni-channel Strategy: Envisaged Goal Envisaged goal to be attained in FY2019 Increase in net business profit +JPY29.0 bn From new customers From existing customers From clerical work reform Active retail Resona Loyal Tablet One for each +0.8 million branch staff customers + 2 million Customer
Slide 30: Omni-channel Strategy: Channel Reform
Omni-channel Strategy: Channel Reform “Anytime” and “Anywhere”: Greater convenience via integration of “web” and “real” interfaces Consultation-focused with no clerical work process Real Web Greater convenience Increase “7 Days Plazas” further Capturing customers who reside outside of Resona’s o
Slide 31: Omni-channel Strategy: Marketing and Sales Reforms
Omni-channel Strategy: Marketing and Sales Reforms Marketing reform Sales reform Capturing diverse business opportunities through consulting-based business promotion Automated personalized proposals of products and services best-suited to Becoming “New Financial Services Company” customers’ respecti
Slide 32: Asset Management Business
Asset Management Business Strengthening group’s AM business further with the establishment of Resona Asset Management (RAM) AM know-how developed Investment products Well-established FY2020 as a trust bank × distribution capability × customer base FY2015 FY2016（Plan） Net business profits Aug. 2015 E
Slide 33: Low-cost Operation and Strategic Mobilization of Resources
Low-cost Operation and Strategic Mobilization of Resources Intensively allocating expenses in strategic areas while curtailing total operating expenses Adjusted personnel and non-personnel expense Employee Composition (Total of Group Banks) (Total of Group Banks) （Y bn） 432.6 Operational reform (Tho
Slide 34: Direction of Capital Management
Outline of Business Results for FY2015 and Updates on Major Businesses Efforts to Build Solid Foundation for Sustainable Growth Direction of Capital Management Reference Material 33
Slide 35: Direction of Capital Management
Direction of Capital Management Capital actions taken in FY2015 Fully repaid the public funds in June 2015 Bought back Class 4 PS (JPY63 bn) in July 2015 Total amount injected: JPY 3,128 bn Called T1 hybrid securities (USD 1.15 bn) in July 2015 Direction of Capital Management Capital adequac
Slide 36: Reference Material
Outline of Business Results for FY2015 and Updates on Major Businesses Efforts to Build Solid Foundation for Sustainable Growth Direction of Capital Management Reference Material 35
Slide 37: Advanced Corporate Governance
Advanced Corporate Governance Separated “management oversight” and “execution of operation” The first Japanese bank which adopted the three committees-based corporate governance model in 2003. Won “Corporate Governance of the Year Award 2015” Majority of the board members are independent outsi
Slide 38: 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 Excellent Product of the Year ® 2015 and Service Award 2015 Nikkin Award 2015 Japan Association of “24 hours / 365 Corporate Direc
Slide 39: Omni-channel Strategy: Measures Implemented Thus Far
Omni-channel Strategy: Measures Implemented Thus Far Provide customers with overwhelming convenience Overcome constraints of “time” for Overcome constraints of “space” for banking transactions (Anytime) banking transactions (Anywhere) Expand the net channel Business hours extended to 17:00 (Oct.
Slide 40: Outline of Financial Results for FY2015
Outline of Financial Results for FY2015 Tot al of Resona Holdings Difference group bank s Saitama Kinki (Consolidated) (Y bn) ( Non- c ons olidated) Resona Resona Osaka YoY YoY YoY Bank YoY YoY YoY （A） (A)-(B) （B） Bank Bank change change change change change change Gros s operat ing prof it (1) 619.
Slide 41: Business Results by Major Group Business Segments
Business Results by Major Group Business Segments “RAROC” and “RVA”*1 as management indicators to measure profitability to allocated capital Management Accounting by Major Group Business Lines (FY2015) (Y bn, %) Profitability Soundness Net operating profit after a deduction of credit cost Net prof
Slide 42: Consolidated Subsidiaries and Affiliated Companies
Consolidated Subsidiaries and Affiliated Companies Consolidated domestic subsidiaries (excluding subsidiary banks) (Y bn） Capital contribution Net income Name Line of business ratio FY2015 YoY change FY2014 Credit guarantee Resona Ｇroup Resona Guarantee Co., Ltd. (1) 15.3 +1.7 13.5 (Mainly mortgage
Slide 43: Stable Earnings Trend and High Profitability
Stable Earnings Trend and High Profitability Resona has consistently generated stable profits supported by our sound balance sheet Historical Consolidated ROA*1 Resona HD Mizuho FG SMFG MUFG 0.6% 0.4% 0.2% 0.0% Resona HD FY2011 FY2012 FY2013 FY2014 FY2015 Net Income Attributable Y253.6 bn Y275.1 b
Slide 44: Capital Adequacy Ratio (Subsidiary Banks)
Capital Adequacy Ratio (Subsidiary Banks) Resona Bank Saitama Resona Bank Kinki Osaka Bank (Consolidated) (Non-consolidated) (Consolidated) Japanese Domestic Standard [Basel 3 A-IRB] [Basel 3 A-IRB] [Basel 3 F-IRB] (Y bn) Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, 2015 2016 2015 2016 2015
Slide 45: Sophistication in ALM Interest Rate Risk Management
Sophistication in ALM Interest Rate Risk Management: (Introduction of 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 ⇒ Gra
Slide 46: Securities Portfolio (Total of Group Banks)
Securities Portfolio (Total of Group Banks) Maturity ladder of securities held (securities with contractual maturities, nominal amount basis) End of Mar. 2016 End of Mar. 2015 (Y bn) Five to Five to One year or One to Three to Seven to Over One year One to Three to Seven to Over seven Total seven To
Slide 47: Stocks Held by Industry (March 2016, RB)
15% 10% 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 Machinery El
Slide 48: Maturity Ladder of Loan and Deposit
Maturity Ladder of Loan and Deposit (Total of Group Banks, Domestic Operation) Loans and Bills Discounted Deposits [End of March 2015] [End of March 2015] 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% 1.2% 4.4% 7.4% 14.5% Liquid deposits (1) 41
Slide 49: Swap Positions by Remaining Periods (RHD Consolidated)
Swap Positions by Remaining Periods (RHD Consolidated) Notional amounts of interest rate swaps (deferred hedge accounting applicable) by remaining period (Y bn) Mar. 31, 2016 Mar. 31, 2015 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 50: Composition of Loan Portfolio and Deposits (March 31, 2016)
Composition of Loan Portfolio and Deposits (March 31, 2016) (Total of Group Banks) Loan*1 Deposits*1 Fixed Liquid Rate Fixed Rate 3% deposits 18% 23% Liquid Personal deposits Banking Corporate Corporation Bussiness Banking 46% (Y11.2 tn) Unit Bussiness 31% (Y10.4 tn) Time deposits Prime Unit*2 Marke
Slide 51: Composition of Loan Portfolio by Base Rates (Total of Group Banks)
Composition of Loan Portfolio by Base Rates (Total of Group Banks) Corporate Banking Business Unit*1,2 Fixed Prime Fixed Prime Fixed Prime Rate Rate Rate Rate Rate Rate 28% 32% 28% 31% 28% 30% [March 31, [September 30, [March 31, 2015] 2015] 2016] Market Rate*3 Market Rate*3 Market Rate*3 40% 41% 42
Slide 52: Composition of Deposits by Types (Total of Group Banks)
Composition of Deposits by Types (Total of Group Banks) Corporate Deposits Time Time deposits deposits Time 23% 21% deposits 23% [March 31, [September 30, [March 31, 2015] 2015] 2016] Liquid deposits Liquid deposits Liquid deposits 72% 74% 72% Individual Deposits Time Time Time deposits depos deposi
Slide 53: Migrations of Borrowers (RB, 1H of FY2015)
Migrations of Borrowers (RB, 1H of FY2015) Exposure amount basis *1 End of September 2015 Upward Downward Special Effectively Migration Migration Normal Other Watch Doubtful Bankrupt Other Collection, Assignments, Attention Bankrupt Repayments Sale Normal 98.2% 0.9% 0.0% 0.2% 0.1% 0.0% 0.6% 0.6% 0
Slide 54: Migrations of Borrowers (RB, 2H of FY2015)
Migrations of Borrowers (RB, 2H of FY2015) Exposure amount basis *1 End of March 2016 Upward Downward Special Effectively Migration Migration Normal Other Watch Doubtful Bankrupt Other Collection, Assignments, Attention Bankrupt Repayments Sale Normal 98.8% 0.5% 0.0% 0.0% 0.0% 0.0% 0.6% 0.6% 0.0%
Slide 55: Supports for SMEs Doing Business in Asia
Supports for SMEs Doing Business in Asia Footholds in Asia to Extend Supports to SMEs Local Services Offered through Alliances Overseas Entered business alliances with Sacom Bank, Yes Bank, and Axis Bank in May 2016 representative offices Alliance network comprising 15 partner banks covering 5
Slide 56: 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 cross-selling to some extent (Number of customers in thousands) Mar. 31, 2015 Mar. 31, 2016 Change AUM or condominium loan (1) Premier 55 55 (0.3) exceeding JPY50 million (2)
Slide 57: List of Preferred Shares and Subordinated Bonds (Mar. 31, 2016)
List of Preferred Shares and Subordinated Bonds (Mar. 31, 2016) Preferred Shares Class 5 Preferred Shares Class 6 Preferred Shares Original issue date (1) 8/28/2007 12/8/2009 Current number of shares (2) 4,000,000 shares 3,000,000 shares Issue price per share (3) JPY 25,000 JPY 25,000 Total issue am
Slide 58: 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 59: Long Term Business Results
Long Term Business Results (Y bn) FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 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 Net interest income 599.1 561.2 542.3 549.8 563.7 555.3 547.0
Slide 60: MMP Earnings Plan and Status of Progress
MMP Earnings Plan and Status of Progress (Y bn) FY2015 FY2016 FY2017 Total of Group Banks (Non-consolidated) Mid-term Mid-term Mid-term Actual Difference Plan Plan Plan Gross operating profit 564.0 572.0 +8.0 570.0 600.0 Net intrest income 414.0 395.5 (18.5) 415.5 437.0 *1 Loan to deposit spread 1.3
Slide 61: Trend of Long-term Senior Debt Rating of Resona Bank
Trend of Long-term Senior Debt Rating of Resona Bank S&P Moody's R&I 2003 2004 2005 2006 2007 2011 2016 JCR A1 A+ R&I JCR S&P A2 A Moody's A3 A- Baa1 BBB+ Baa2 BBB S&P Moody's R&I Baa3 BBB- JCR Ba1 BB+ 60
Slide 62: Composition of Resona HD’s Common Shareholders
Composition of Resona HD’s Common Shareholders 2.26% 5.03% 2.38% Other 8.96% 6.08% 6.09% Corporations 20.01% 20.01% 20.01% 6.35% 15.68% 14.14% Individuals, etc. 41.95% DIC 5.83% 4.34% 4.58% 16.51% 50.11% 7.39% 6.84% 6.50% Financial 22.23% 19.72% 21.56% 27.92% 31.29% institutions 26.59% 2.18% 23.31%
Slide 63: change related to the government’s policies, laws, business practices and their interpretation,
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