Okinawa Financial Group, Inc. · TSE:7350
Okinawa Financial — FY2024 1H Earnings Presentation
48 slides from Okinawa Financial's earnings presentation, 2024
Slide 1: Results Briefing Materials FY2024 1H
Results Briefing Materials FY2024 1H
Slide 2: Contents
Contents 1 Business Environment 4 Initiatives to Increase Corporate Value 1. Geographical Advantage 4 1. Increasing ROE 29 2. Nominal Gross Prefectural Production 5 2. Scenario for Increasing ROE 30 3. Population and Number of Households 6 3. Controlling Risk-Weighted Assets 31 4. Number of Visitors
Slide 3: Business Environment
Business Environment _. a HeBDIAFY IY WIVT
Slide 4: Geographical Advantage
Business Environment 1 Geographical Advantage Okinawa Prefecture is within a four-hour flight from major cities in Singapore, Thailand, China, Taiwan, South Korea, and other Asian countries. It is located at the center of the vast East Asian market, which has a population of approximately 2.2 billio
Slide 5: Nominal Gross Prefectural Production
Business Environment 2 Nominal Gross Prefectural Production “New Okinawa 21st Century Vision Basic Plan,” the master plan announced by Okinawa Prefecture, forecasts a nominal gross prefectural production reaching approx. ¥5,700 billion in FY2031, on account of a value-added tourism industry leveragi
Slide 6: Population and Number of Households
Business Environment 3 Population and Number of Households Although the population began to decline in 2023, the National Institute of Population and Social Security Research forecasts that, until 2050, Okinawa Prefecture will have the second lowest rate of population decline in Japan behind Tokyo,
Slide 7: Number of Visitors and Tourism Revenues
Business Environment 4 Number of Visitors and Tourism Revenues Being the only subtropical area in Japan, Okinawa Prefecture enjoys a mild climate all year. It has abundant tourism resources, including the beautiful sea and historical buildings where visitors can feel the Ryukyu culture. In a regiona
Slide 8: Development Project
Business Environment 5 Development Project Okinawa Prefectural Economic Organizations Conference, Okinawa Future Creation Council, Naha City, Urasoe City, Ginowan City, Okinawa Konwakai, and Naha Airport Expansion and Development Promotion Association have announced that they have established the GW
Slide 9: Outline of Business Results for FY2024 1H
2 Outline of Business Results for FY2024 1H
Slide 10: Performance Highlights for FY2024 1H
Outline of Business Results for FY2024 1H 1 Performance Highlights for FY2024 1H Net income attributable to owners of the parent +20.9% YoY (1H revenues and earnings both increased for the first time in two fiscal years) OFG (Consolidated) (¥ million) FY2023 1H FY2024 1H FY2024 Progress FY2026 YoY c
Slide 11: Reasons for Change in Ordinary Income and Trends in Earnings
Outline of Business Results for FY2024 1H 2 Reasons for Change in Ordinary Income and Trends in Earnings Business performance points ▶ Ordinary profit increased by ¥964 million year on year, due to an increase in ordinary income and a year- on-year decrease of ¥280 million in ordinary expenses. The
Slide 12: Deposits
Outline of Business Results for FY2024 1H 3 Deposits The term-end balance rose by ¥49.7 billion year on year to ¥2,716.4 billion, driven mainly by increases in deposits by individuals and deposits by public funds. Deposits share rose by 0.33 percentage points. Term-end balance of deposits (¥ billion
Slide 13: Loans (i)
Outline of Business Results for FY2024 1H 4 Loans (i) Business loans increased due to proactively responding to financial demand associated with the recovery of economic activities. Consumer loans also increased due to speedy examination of loans and other initiatives for prompt response, as well as
Slide 14: Loans (ii)
Outline of Business Results for FY2024 1H 5 Loans (ii) Interest on loans and discounts increased by ¥419 million year on year due to an increase in the balance of loans and bills discounted, despite a decrease in yield on loans and bills discounted. Provided loans to a wide range of industries, with
Slide 15: Business Profit and Yield on Customer Services
Outline of Business Results for FY2024 1H 6 Business Profit and Yield on Customer Services Business profit on consumer services increased due to an increase in the average balance of loans and bills discounted, as well as an increase in net fees and commissions as a result of sales promotion and oth
Slide 16: Securities (i)
Outline of Business Results for FY2024 1H 7 Securities (i) The term-end balance increased by ¥114.6 billion year on year as a result of efforts to manage funds efficiently and secure stable income while giving consideration to interest rate risks and current maturity. Yield improved by 0.04 percenta
Slide 17: Securities (ii)
Outline of Business Results for FY2024 1H 8 Securities (ii) While gain (loss) on valuation of domestic bonds worsened due to a rise in domestic interest rates, gain (loss) on valuation of available-for-sale securities improved year on year due to the improvement of gain (loss) on valuation of compon
Slide 18: Fee Business: (i) Partnerships with Local Enterprises
Outline of Business Results for FY2024 1H 9 Fee Business: (i) Partnerships with Local Enterprises The Group actively engages in medium- to long-term initiatives in various fields to increase the value of local communities. In particular, income from business matching, consulting services, etc. has b
Slide 19: Fee Business: (ii) Assets in Custody
Outline of Business Results for FY2024 1H 10 Fee Business: (ii) Assets in Custody Assets in custody as a whole increased by ¥24.0 billion year on year, as a result of offering products and services tailored to each stage in life of customers to meet their asset formation needs. Balance of assets in
Slide 20: Fee Business: (iii) Cashless Services
Outline of Business Results for FY2024 1H 11 Fee Business: (iii) Cashless Services Cashless services have performed strongly as shown below, as a result of continuous efforts to improve the convenience of such services to meet the diverse needs of customers. No. of JCB card and JCB debit members No.
Slide 21: Expenses, OHR, and Core OHR (Consolidated)
Outline of Business Results for FY2024 1H 12 Expenses, OHR, and Core OHR (Consolidated) OHR and core OHR improved by 8.39 and 6.04 percentage points, respectively, year on year, as a result of increases in both gross business profit and core gross business profit mainly due to an increase in busines
Slide 22: Bad Debt, Allowance and Credit Cost (Consolidated)
Outline of Business Results for FY2024 1H Mandatory Disclosure of Bad Debt under the Financial Reconstruction Law, 13 Allowance for Possible Loan Losses, and Credit Cost (Consolidated) We provide allowances and implement amortization appropriately to maintain the soundness of loans, in preparation f
Slide 23: Bad Debt, Allowance and Credit Cost (Non-consolidated)
Outline of Business Results for FY2024 1H Mandatory Disclosure of Bad Debt under the Financial Reconstruction Law, 14 Allowance for Possible Loan Losses, and Credit Cost (Non-consolidated) Non-consolidated non-performing loan ratio for The Bank of Okinawa decreased by 0.09 percentage points year on
Slide 24: Capital Ratio
Outline of Business Results for FY2024 1H 15 Capital Ratio Risk-weighted assets increased due to proactive response to financial demand. Consolidated capital ratio declined in the 1H of the previous fiscal year due to the purchase of treasury stock and other factors, but soundness has been maintaine
Slide 25: Initiatives under the 2nd Medium-Term Business Plan
3 Initiatives under the 2nd Medium-Term Business Plan (April 2024 – March 2027)
Slide 26: Name and Strategies of the 2nd Medium-Term Business Plan
Initiatives under the 2nd Medium-Term Business Plan (April 2024 – March 2027) 1 Name and Strategies of the 2nd Medium-Term Business Plan Under the 2nd Medium-Term Business Plan, we will roll out various measures to “co-create growth” based on three strategies. We will implement medium- and long-term
Slide 27: Towards the Co-Creation of Growth
Initiatives under the 2nd Medium-Term Business Plan (April 2024 – March 2027) 2 Towards the “Co-Creation of Growth” By taking on the challenge to achieve ambitious moonshot targets* through its three strategies under the 2nd Medium-Term Business Plan, the Okinawa Financial Group will realize its aim
Slide 28: Initiatives to Increase Corporate Value
4 Initiatives to Increase Corporate Value
Slide 29: Increasing ROE
Initiatives to Increase Corporate Value 1 Increasing ROE As of March 31, 2024, the Group’s price-to-book ratio (PBR) stood at 0.36. Assuming that cost of shareholders’ equity is around 8%*, the Group will work to increase its consolidated ROE to that level. The 2nd Medium-Term Business Plan aims for
Slide 30: Scenario for Increasing ROE
Initiatives to Increase Corporate Value 2 Scenario for Increasing ROE Given that ROE is composed of return on risk-weighted assets (RORA) and financial leverage ratio, the Group seeks to improve RORA by increasing top-line revenue (ordinary income) and net income and maintain the financial leverage
Slide 31: Controlling Risk-Weighted Assets
Initiatives to Increase Corporate Value 3 Controlling Risk-Weighted Assets We aim to increase RORA and maintain the financial leverage ratio at the target level by controlling risk-weighted assets and working on increasing loan volume and improving yield. To achieve a net income RORA of 0.67%, which
Slide 32: Paying Out Progressive Dividends
Initiatives to Increase Corporate Value 4 Paying Out Progressive Dividends Our basic policy for shareholder returns is to secure stable income necessary in driving the growth of local communities and an appropriate level of capital toward achieving “growing together with the community,” as well as t
Slide 33: Build a Base for Growth
5 Build a Base for Growth 2nd Medium-Term Business Plan (April 2024 – March 2027) Co-creating Growth – Growing Okinawa together – Strategy I Strategy II Strategy III Increase the value of Human capital Build a base for local communities management growth
Slide 34: Interest on Loans and Discounts
Build a Base for Growth 1 Interest on Loans and Discounts To increase The Bank of Okinawa’s income from interest on loans and discounts by more than ¥5.0 billion, we intend to increase the average balance of total loans to the ¥2 trillion range. For business loans, we plan to streamline teller opera
Slide 35: Non-interest Income and Group Companies
Build a Base for Growth 2 Non-interest Income and Group Companies For the growth of top-line revenue, we intend to increase The Bank of Okinawa’s non-interest income by around ¥2.1 billion from the FY2021 level. In the investment trust and insurance domain, we will make better proposals through data
Slide 36: Enhanced Non-face-to-face Channels
Build a Base for Growth 3 Enhanced Non-face-to-face Channels We seek to increase transactions by establishing transaction environments unbound by time or location, as well as to streamline and improve the efficiency of back-office operations by taking advantage of digital technologies. Retail bankin
Slide 37: Human Capital Management
6 Human Capital Management 2nd Medium-Term Business Plan (April 2024 – March 2027) Co-creating Growth – Growing Okinawa together – Strategy I Strategy II Strategy III Increase the value of Human capital Build a base for local communities management growth
Slide 38: Promotion of Female Participation
Human Capital Management 1 Promotion of Female Participation Given that we have achieved the target of increasing the proportion of female managers to 30% under the 1st Medium-Term Business Plan, we are enhancing initiatives under the 2nd Medium- Term Business Plan with the aim of achieving 40%. To
Slide 39: Strategy II. Human Capital Management
Human Capital Management 2 Strategy II. Human Capital Management (1) Initiatives to double the number of corporate sales Approx. 125 corporate sales Redeploy personnel to the sales section by streamlining representatives as part of management strategy representatives (March 2024) teller operations ▶
Slide 40: Increase the Value of Local Communities
7 Increase the Value of Local Communities 2nd Medium-Term Business Plan (April 2024 – March 2027) Co-creating Growth – Growing Okinawa together – Strategy I Strategy II Strategy III Increase the value of Human capital Build a base for local communities management growth
Slide 41: Strategy I. Increase the Value of Local Communities (i)
Increase the Value of Local Communities 1 Strategy I. Increase the Value of Local Communities (i) Since FY2021, we have signed comprehensive partnership agreements with 10 towns and villages in remote islands around the Okinawa mainland, and have dispatched employees, provided support for greater op
Slide 42: Strategy I. Increase the Value of Local Communities (ii)
Increase the Value of Local Communities 2 Strategy I. Increase the Value of Local Communities (ii) Financial and economic literacy education “Life and Money Class” The Group positions eliminating the problem of child poverty as a key issue (materiality). As a specific initiative, we organize “Life a
Slide 43: Reference Materials: Trends in Economy in Okinawa
8 <Reference Materials> Trends in Economy in Okinawa
Slide 44: Income and Consumption
<Reference Materials> Trends in Economy in Okinawa 1 Income and Consumption While consumption expenditure is trending upwards due to rising prices and other factors, real income is also increasing due to wage increase and other factors. YoY change in real income and consumption expenditure Real inco
Slide 45: Number of Housing Starts
<Reference Materials> Trends in Economy in Okinawa 2 Number of Housing Starts The number of housing starts in Okinawa Prefecture has been on a recovery trend since FY2021. Owner-occupied House for rent Condominiums and detached housing Company-owned Total 12,000 18,000 11,000 10,663 16,197 16,000 10
Slide 46: Active Opening Ratio and Unemployment Rate
<Reference Materials> Trends in Economy in Okinawa 3 Active Opening Ratio and Unemployment Rate The active opening ratio exceeded 1.0 for the second consecutive year, on the back of a recovery in tourism demand after the COVID-19 pandemic. The unemployment rate remained at a similar level to the pre
Slide 47: Business Confidence DI and Demand for Capital Investment
<Reference Materials> Trends in Economy in Okinawa 4 Business Confidence DI and Demand for Capital Investment and Other Investments Corporate business sentiment experienced an upturn as the COVID-19 pandemic was brought under control, and has remained positive since. Investment demand has also remai
Slide 48: Okinawa Financial Group, Inc.
Okinawa Financial Group, Inc. General Planning Division Inquiries TEL 098-864-1253 Email ofg-ir@okinawafg.co.jp HP https://www.okinawafg.co.jp/english/ Contact Yukiya Kinjo These materials have been prepared solely for the purpose of providing information. They do not constitute a solicitation of an
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