Aeon Financial Service Co., Ltd. · TSE:8570
Aeon Financial Service — Q2 FY2024 Earnings Presentation
48 slides from Aeon Financial Service's earnings presentation, Oct 8, 2024
Slide 1: FY2024 2Q IR Presentation Material
This is an abridged translation of the original Japanese document and is provided for informational purposes only. If there are any discrepancies between this and the original, the original Japanese document prevails. FY2024 2Q IR Presentation Material October 8, 2024 Stock Listing: Tokyo Stock Exch
Slide 2: Financial summary
Financial summary Consolidated results show increased revenue and profit The business portfolio has been reviewed, and management resources have been concentrated in areas with high growth potential Business performance is continuing to improve Consolidated operating income was ￥27.1 bn (YoY 134%),
Slide 3: The Highlights of the Consolidated Results
The Highlights of the Consolidated Results FY202４ Rate of Consolidated YoY Forecast progress Domestic YoY Global YoY Operating Revenue ¥255.7 bn １０８ ％ ¥148.4 bn １０３ ％ ¥108.4 bn １１５ ％ ¥520.0 bn ４９ ％ Operating Profit ¥２７.１ bn １３４ ％ ¥９.４ bn ５９２％ ¥１７.５ bn ９５ ％ ¥55.0 bn ４９ ％ Ordinary profit ¥２７.１ bn １２７
Slide 4: The Highlights of the Consolidated Results 2Q Accounting Period (3 months)
The Highlights of the Consolidated Results 2Q Accounting Period (3 months) Consolidated YoY Domestic YoY Global YoY Operating Revenue ¥127.８ bn １０６ ％ ¥７３.１ bn １０１ ％ ¥５５.３ bn １１３ ％ Operating Profit ¥１１.８ bn １０７ ％ ¥３.１ bn ４１４％ ¥８.８ bn ８５ ％ Ordinary profit ¥１１.１ bn ９５ ％ － ー － ー Profit attributable to o
Slide 5: [Domestic] Breakdown of Operating Profit
[Domestic] Breakdown of Operating Profit • Steady growth in credit card revenue and the recording of financial income covered the decrease in gains on the securitization of receivables • The implementation of measures that emphasize cost efficiency has curbed sales promotion expenses, and the increa
Slide 6: [Domestic] Building a foundation for stock income
Asset Profitability [Domestic] Building a foundation for stock income Improvement • The ratio of high-yielding loans to the balance of domestic operating receivables has improved, and asset profitability has increased • Compared to the same period last year, the accumulation has accelerated Ratio of
Slide 7: [Domestic] Credit cards, E-money
Productivity [Domestic] Credit cards, E-money (Revenue growth) • The shopping transaction volume increased 106% YoY, thanks to the penetration of benefits within the AEON Group and the promotion of AEON Pay usage • The amount of cash advances exceeded the previous year due to continued measures to p
Slide 8: [Domestic] Expanding Group Synergy
Productivity [Domestic] Expanding Group Synergy (Revenue growth) • The benefits for Gold members at AEON MALL which started in April, are becoming more widely known and the volume of transactions on Customer Thanks Day is increasing • We will work to increase the attractiveness of group use and furt
Slide 9: [Domestic] AEON Pay
Productivity [Domestic] AEON Pay (Revenue growth) • The number of AEON Pay members and the number of places where it can be used are both increasing steadily Progress is being made in developing the environment as a payment infrastructure • The amount of money spent per person is increasing due to m
Slide 10: [Domestic] Status of acquisition of high-yield loans
Asset Profitability [Domestic] Status of acquisition of high-yield loans Improvement • Due to improvements in the UI/UX of the app, both revolving and installment loans and cash advances have been steadily increasing Balance of high-yielding loans Breakdown of increase/decrease (including securitiza
Slide 11: Efforts to expand the balance of high-yielding loans
Asset Profitability [Domestic] Efforts to expand the balance of high-yielding loans Improvement • In addition to continuous UI/UX improvements, we will strengthen our approach to members with high usage prediction scores using AI Strengthening targeting through the use of AI AI Scoring based on pred
Slide 12: [Domestic] Housing Loan
Productivity [Domestic] Housing Loan (Revenue growth) • By promoting the benefits of the “AEON Select Club” loyalty program, which offers benefits other than interest rates, transaction volume up 122% YoY • Interest rates were revised in May and October, and we expect to see an increase in earnings
Slide 13: [Domestic] Bank Deposit
[Domestic] Bank Deposit ・Due to campaigns such as Term deposit campaigns, up 107% YoY, an increase of ¥310.1 bn from the beginning of the term •Promoting the use of accounts as living accounts, such as for automatic debit card payments and salary transfers, to acquire deposits AEON Bank Deposit bala
Slide 14: [Domestic] Cost Control
Productivity [Domestic] Cost Control (Cost control) • The ratio of bad debt-related expenses to the balance of operating receivables remains low • The efficiency of acquisition continues to improve due to a review of the operation of over-the-counter and internet recruitment Quarterly Trends in Bad
Slide 15: [Global] Performance Highlights by Segment
[Global] Performance Highlights by Segment • Interim operating revenue was the highest ever in all three areas. Excluding the costs associated with the opening of the digital bank, profits increased. • In the accounting period (3 months), the Mekong Area turned to increased profit Interim period Glo
Slide 16: [Global] Environment by area
[Global] Environment by area • Malaysia is recovering ahead of other countries, with strong consumer spending • On the other hand, Hong Kong continues to see a decline in domestic demand and a high number of personal bankruptcy applications. Thailand's GDP growth rate is also stagnant Malay Area（Mal
Slide 17: [Global] China Area Performance Highlights
[Global] China Area Performance Highlights • The company's response to changes in the environment, such as capturing the demand of Hong Kong residents visiting mainland China to spend money, has been successful, and profits have reached a new record high • Although bad debt-related expenses increase
Slide 18: [Global] Mekong Area Performance Highlights
[Global] Mekong Area Performance Highlights • Expansion of the member base and increase in transaction volume centered on credit card shopping • Operating revenue increased, but operating income was almost the same as the previous year due to increases in personnel expenses and bad debt-related expe
Slide 19: [Global] Malay Area Performance Highlights
[Global] Malay Area Performance Highlights • The volume and balance of installment sales and personal loans have increased due to strengthened sales promotions with the AEON Group and merchant stores • Bad debt-related expenses increased YoY due to a reversal in the same period of the previous year,
Slide 20: [Global] Balance of Receivables and NPL of Listed Subsidiaries
[Global] Balance of Receivables and NPL of Listed Subsidiaries • ACSA：Bad debt-related expenses increased due to a revision of the allowance rate. The yen-denominated balance of receivables decreased due to exchange rate fluctuations (but increased in Hong Kong dollars) • ATS ：Both bad debt-related
Slide 21: Earnings and Dividend Forecasts
Earnings and Dividend Forecasts AEON Financial Service Co., Ltd. 21
Slide 22: FY2024 earnings forecast, dividend forecast
FY2024 earnings forecast, dividend forecast （Unit ： JPY） Consolidated YoY Domestic YoY Global YoY Operating ５20.0 bn １０7 ％ 3１0.0 bn １０５ ％ 2１0.0 bn １０８ ％ Revenue Operating 55.0 bn 110 ％ 1５.0 bn １２９ ％ ４1.０ bn １０7 ％ Profit Ordinary Payout 55.0 bn 107 ％ Dividend per － ー share － ー Profit ratio Interim： ２
Slide 23: Priority Measures
Priority Measures AEON Financial Service Co., Ltd. 23
Slide 24: Review our business portfolio
Review our business portfolio Repost: Announcement of FY20233Q financial results • Review our business portfolio through “selection and concentration“ in view of changes of business environment • Allocate resources to the domestic payments which is our core business and overseas which is a growth bu
Slide 25: Review our business portfolio
Review our business portfolio • Optimize management resources and investment through “selection and concentration” to strengthen development in growth areas Optimizing management resources Strengthening development in growth areas and investment Progress in reviewing the New business, business Ⅰ bus
Slide 26: Progress in reviewing the business portfolio
Progress in reviewing the business portfolio • Continue to review the portfolio in light of the competitiveness and future growth potential of each area and business • Following the transfer of Domestic・Installment finance, the decision was made to reorganize the finance business in Myanmar and the
Slide 27: Business development in new business and new areas
Business development in new business and new areas • Strengthening the organization to expand the digital banking business in Malaysia and the finance business in Vietnam • progress is being made in developing an organization that will facilitate collaboration between existing and newly acquired bus
Slide 28: [Malaysia] Digital Bank
［Malaysia] Digital Bank • Further growth through the expansion of new businesses and areas of development through the use of digital technology Improve brand recognition by holding events at AEON Group AEON Bank（Malaysia） stores and using SNS and external advertising Events at Group Stores Strengthe
Slide 29: Improving productivity by consolidating bases and functions
Improving productivity by consolidating bases and functions • Consolidate contact centers and stores • Provide one-stop financial services to improve customer satisfaction and productivity ＜Consolidating financial services such as settlements, banking, and insurance＞ ＜Distributed across multiple poi
Slide 30: Smartphone app: AEON Wallet
Smartphone app: AEON Wallet • Renewed as a comprehensive financial application last year • Built to provide a seamless connection to credit card, bank, and insurance services at any time Highly regarded in design awards around the world iF Design Award Germany A' Design Award Italy International Des
Slide 31: [Domestic] Maximizing Group Synergy
[Domestic] Maximizing Group Synergy • Expand the customer base by providing a “financial infrastructure” that connects customers and business partners of the AEON Group • Improve attractiveness by providing new benefits at each group company Expanding the customer Strengthening everyday base in the
Slide 32: Sustainability Initiatives
Sustainability Initiatives AEON Financial Service Co., Ltd. 32
Slide 33: Human Rights
Listed the key issues in our materiality • Setting key materiality indicators to achieve the “vision for 2030” • We will work to deepen each initiative linked to our business activities Contributing to peace through the creation of a sustainable society We are committed to seeking to enrich the Huma
Slide 34: Materiality1 Pursuing happiness through innovative financial services
Materiality1 Pursuing happiness through innovative financial services Contributing to the development Enriching the lives of customers, Initiatives of local communities through Initiatives business partners, and employees financial services through financial education ・Promoting financial inclusion
Slide 35: Materiality2 Exerting diversity and the potential of our people
Materiality2 Exerting diversity and the potential of our people Initiatives Respecting the diversity of employees and create a flexible and rewarding work environment Key Key Indicators Enhancing employee training Indicators Improving employee engagement （2030） （2030） Held a meeting to promote the s
Slide 36: [Our Purpose]
［Our Purpose］ AEON Financial Service Co., Ltd. 36
Slide 37: Appendix
Appendix AEON Financial Service Co., Ltd. 37
Slide 38: Changes in the interest rate environment
Changes in the interest rate environment • Domestic: Demonstrate the strength of funding, which is centered on bank deposits Global: Assume an improvement in interest margins due to a decrease in borrowing rates Domestic Global Interest Rate Outlook for continued interest Outlook for lower interest
Slide 39: Approach to ROE Improvement
Approach to ROE Improvement Repost: Announcement of FY2023 financial results ROE Return on Operating Existing Improve Assets Number of (%) Receivables high-yield bond ment valid IDs + × Operating Revenue / Outstanding Receivables New Products Utilization × +α rate × Fee Amount Productivity used for
Slide 40: Consolidated Balance Sheet
Consolidated Balance Sheet （Unit ： Bn JPY） FY 202４ FY 202４ 2Q Results YTD 2Q Results YTD Cash and deposits 611.0 ▲ ５４.５ Deposits ４.８６５.９ +327.6 Accounts Operating Loans 9４４.２ +２５.３ payable-trade 3９７.１ +128.6 Loans and bills Interest-bearing discounted for 2,6８４.０ +3４４.８ debt 1,244.8 ▲ ６８.２ banking b
Slide 41: Results by Segment
Results by Segment （Unit ： Bn JPY） Domestic Global Consol. China Mekong Malay Retail Solutions Total ※1 Total ※1 Area Area Area Total ※１ Operating 148.4 95.8 92.2 108.4 17.2 47.6 43.5 255.7 Revenue YoY 103％ 1１2％ 99％ 115％ 121％ 106％ 125％ 108％ Operating 9.4 ５.３ 4.1 17.5 3.9 6.8 6.7 27.1 Profit YoY ５92％
Slide 42: Results by Area
Results by Area Transaction Operating (Unit ： Bn JPY） YoY receivables YTD volume (Before securitization) Credit card 3,894.0 106% １,８60.0 +143.6 credit card shopping 3,705.4 106% 1,438.5 +134.4 Domestic （of which, revolving and installment) - - 341.4 ＋30.6 cash advance 188.5 1０1% 4２1.5 +9.2 Housing
Slide 43: Cumulative Results of Overseas Listed Companies (Local Currency)
Cumulative Results of Overseas Listed Companies (Local Currency) FY 2023 FY 2024 2Q Results 2Q Results YoY AEON Revenue 783,109 860,321 １１0% CREDIT SERVICE Profit before tax 230,865 203,211 ８8% (ASIA) HK$’000 Profit for the period 191,426 170,361 ８9% AEON Revenue 11,135,562 11,221,442 １０１% THANA SIN
Slide 44: Cumulative Results of Overseas Listed Companies (Yen conversion)
Cumulative Results of Overseas Listed Companies （Yen conversion） FY 202３ FY 202４ (Unit ： Bn JPY） Exchange rates 2Q Results 2Q Results YoY Revenue 13.9 １６.８ 121% AEON （JPY / HKD） CREDIT Profit before tax 4.1 ３.９ 97% ・ FY202３Q２ ： ¥1７.７９ SERVICE ・ FY202４Q２ ： ¥19.6３ (ASIA) Profit for the period 3.4 3.3
Slide 45: Transaction Volumes and Operating Receivables of Global Business
Transaction Volumes and Operating Receivables of Global Business China Area Mekong Area Malay Area Global Business (Hong Kong) (Thailand) (Unit ： Bn JPY） YoY YoY YoY YoY (Change) (Change) (Change) (Change) Transaction volume 128.5 123% 186.7 127% 36.5 126% 351.8 1２6% Credit card Operating Receivable
Slide 46: Allowance for Doubtful Accounts and Provision for Loss on Interest Repayment by Segments
Allowance for Doubtful Accounts and Provision for Loss on Interest Repayment by Segments [Allowance for Doubtful Accounts ] （Unit ： Bn JPY） Domestic Global Consol. China Mekong Malay Retail Solutions Total Total Area Area Area Total Opening balance of allowance for doubtful ５５.６ 3.０ 53.０ ６４.３ ４.７ ３５
Slide 47: The Highlights of the Consolidated Results – FY2023 2Q Fiscal Quarter
The Highlights of the Consolidated Results – FY2023 2Q Fiscal Quarter Repost: Announcement of FY20232Q financial results [Domestic] : ¥400mn in business integration costs recorded as an extraordinary loss [Global] : Operating profit in the Malay area increased by 145% YoY, and the business turned to
Slide 48: Forward-looking statements
Statements contained in this report with respect to the Company’s management strategies, business policies and results forecasts are forward- looking statements about the future performance of the Company, which are based on the assumptions and beliefs in light of the information currently available
AEON Financial Service — Q2 FY2024 Earnings Presentation on 6ix