Credit Saison Co., Ltd. · TSE:8253

Credit Saison — H1 FY2019 Earnings Presentation

43 slides from Credit Saison's earnings presentation, Nov 15, 2019

1. Slide 1: Financial Results of First Half of FY2019

   Financial Results of First Half of FY2019 2019.11.15 Copyright © CREDIT SAISON Co.,Ltd All Rights Reserved. 1 CREDIT SAISON CO.,LTD.

2. Slide 2: Agenda

   AGENDA 1. Financial Results of FY2019 1H / Financial Policy & Capital Policy Director, Shingo Baba Head of Corporate Risk Management Dept. and Corporate Treasury & Accounting Dept., in charge of Corporate Planning Dept., Asset Management Dept. and Leasing & Rental Business Dept. 2. Mid-term Manageme

3. Slide 3: FY2019 First Half Financial Report - Financial Results (IFRS)

   Financial Policy & Mid-term Management Plan Financial Report ESG related Capital Policy Progress & Future Initiatives FY2019 First Half Financial Report ~ Financial Results(IFRS) (billion yen) 【Net revenue】 200 • Payment business, finance business and real estate-related business drove the overall b

4. Slide 4: Main Profit & Loss in Business Income

   Financial Policy & Mid-term Management Plan Financial Report ESG related Capital Policy Progress & Future Initiatives FY2019 First Half Financial Report ~ Main Profit & Loss in Business Income <FY2019 1H> Main profit & loss in business income Breakdown of built up earnings +5.4 billion ￥31.2 billion

5. Slide 5: Results by Business Segment (IFRS)

   Financial Policy & Mid-term Management Plan Financial Report ESG related Capital Policy Progress & Future Initiatives Results by Business Segment(IFRS) (billion yen) 180 <Net revenue> 159.2 【Payment business】 151.2 +5% • Increased sales and profits due to increased shopping transaction volume 150 an

6. Slide 6: Main Indices (Non-consolidated)

   Financial Policy & Mid-term Management Plan Financial Report ESG related Capital Policy Progress & Future Initiatives Main Indices (Non-consolidated) New cards issued Total cardholders Active cardholders Usage rate 0.92 million 26.62 million 14.89 million 55.9% (-13% YoY) (-0.17 million from (-0 mil

7. Slide 7: Credit Risk: Delinquency rate

   Financial Policy & Mid-term Management Plan Financial Report ESG related Capital Policy Progress & Future Initiatives Credit Risk Delinquency rate is maintained at a relatively low level [Consolidated] Delinquency over 90 days 【Consolidated】 FY2019 1H ’07 ’17 Bad debts cost 6.0% Reduction of cash ad

8. Slide 8: Interest Repayment Claims

   Financial Policy & Mid-term Management Plan Financial Report ESG related Capital Policy Progress & Future Initiatives Interest Repayment Claims ■New interest repayment claims shows upward trend from last year Continue to monitor future trends and ■Price per claim plan for additional provisions if ne

9. Slide 9: Revised Business Results Forecast

   Financial Policy & Mid-term Management Plan Financial Report ESG related Capital Policy Progress & Future Initiatives Revised Business Results Forecast This forecast is made based on previous forecast, taking into account that the net revenue was lower than expected due to the recent business situat

10. Slide 10: Financial Policy (Structure of Interest-bearing Debt)

    Financial Policy & Mid-term Management Plan Financial Report ESG related Capital Policy Progress & Future Initiatives Financial Policy (Structure of Interest-bearing Debt) Regarding structure of interest-bearing debt: [Credit Rating] • Over 60% of the interest-bearing debt is composed of long-term f

11. Slide 11: Regarding Management Indicators

    Financial Policy & Mid-term Management Plan Financial Report ESG related Capital Policy Progress & Future Initiatives Regarding Management Indicators In recent years, asset efficiency (ROA) has declined due to the expansion of the finance business that contributed profits and the decrease in yields

12. Slide 12: Capital Policy (Shareholder Returns & Management Indicators)

    Financial Policy & Mid-term Management Plan Financial Report ESG related Capital Policy Progress & Future Initiatives Capital Policy(Shareholder Returns & Management Indicators) Maintaining and improving financial soundness as a priority, aiming to improve asset efficiency by realizing sustainable g

13. Slide 13: Capital Policy (Risk Capital Management)

    Financial Policy & Mid-term Management Plan Financial Report ESG related Capital Policy Progress & Future Initiatives Capital policy (Risk capital management) • ALM management is introduced to measure risk and allocate risk capital for each business. • Profit & loss fluctuation risks are measured by

14. Slide 14: Medium-Term Management Vision: Neo Finance Company in Asia

    Financial Policy & Mid-term Management Plan Financial Report ESG related Capital Policy Progress & Future Initiatives Medium-Term Management Vision: “Neo Finance Company in Asia” Mission Statement A Finance Company Advancing with Customers for 50 Years: ~ Providing Peace of Mind and Discovering Pote

15. Slide 15: Cross-sectional approach based on customer needs and life cycle

    Financial Policy & Mid-term Management Plan Financial Report ESG related Capital Policy Progress & Future Initiatives Cross-sectional approach based on customer needs and life cycle By using credit cards with long service lives as touchpoints, we endeavored to maximize the LTV* through cross-selling

16. Slide 16: Challenges towards the New Credit Saison

    Financial Policy & Mid-term Management Plan Financial Report ESG related Capital Policy Progress & Future Initiatives Challenges towards the New Credit Saison ~ Further acceleration of “Revival of card business” and transformation to a “general non-bank” ’18 ’21 ’08 Business Income Business Income (

17. Slide 17: Growth Strategies and Structural Reform in the Payment Business

    Financial Policy & Mid-term Management Plan Financial Report ESG related Capital Policy Progress & Future Initiatives Ⅰ. Growth Strategies and Structural Reform in the Payment Business ~ Transitions and key points of shopping transaction volume Settlement Associated Core System in the process of dev

18. Slide 18: Expansion of Shopping Transaction Volumes (BtoC): Main Initiatives

    Financial Policy & Mid-term Management Plan Financial Report ESG related Capital Policy Progress & Future Initiatives Ⅰ. Growth Strategies and Structural Reform in the Payment Business ~ 1. Expansion of shopping transaction volumes <BtoC field> Settlement ＜Announced in May 2019＞Outline of main initi

19. Slide 19: Strengthening customer base through new partnership networks

    Financial Policy & Mid-term Management Plan Financial Report ESG related Capital Policy Progress & Future Initiatives Ⅰ. Growth Strategies and Structural Reform in the Payment Business ~ Loan Asset 1. Expansion of shopping transaction volumes <BtoC field> Settlement Management ①-1 Strengthening cust

20. Slide 20: Strengthening customer base through new partnership networks (2)

    Financial Policy & Mid-term Management Plan Financial Report ESG related Capital Policy Progress & Future Initiatives Ⅰ. Growth Strategies and Structural Reform in the Payment Business ~ Loan Asset 1. Expansion of shopping transaction volumes <BtoC field> Settlement Management ①-2 Strengthening cust

21. Slide 21: Revitalizing card use: Saison Classe and card benefits

    Financial Policy & Mid-term Management Plan Financial Report ESG related Capital Policy Progress & Future Initiatives Ⅰ. Growth Strategies and Structural Reform in the Payment Business ~ 1. Expansion of shopping transaction volumes <BtoC field> Settlement ② Revitalizing card use by shifting from “re

22. Slide 22: Regarding new initiatives

    Financial Policy & Mid-term Management Plan Financial Report ESG related Capital Policy Progress & Future Initiatives Ⅰ. Growth Strategies and Structural Reform in the Payment Business ~ 1. Expansion of shopping transaction volumes <BtoC field> Settlement Regarding new initiatives ■Participation in

23. Slide 23: Redefining Saison counters

    Financial Policy & Mid-term Management Plan Financial Report ESG related Capital Policy Progress & Future Initiatives Ⅰ. Growth Strategies and Structural Reform in the Payment Business ~ 1. Expansion of shopping transaction volumes <BtoC field> Settlement ⑤ Redefining Saison counters In addition to

24. Slide 24: Expansion of shopping transaction volumes (BtoB field)

    Financial Policy & Mid-term Management Plan Financial Report ESG related Capital Policy Progress & Future Initiatives Ⅰ. Growth Strategies and Structural Reform in the Payment Business ~ 2. Expansion of shopping transaction volumes <BtoB field> Settlement ＜Announced in May 2019＞ ＜Growth rate of tran

25. Slide 25: BtoB: Streamlining cashless settlement, corporate platform

    Financial Policy & Mid-term Management Plan Financial Report ESG related Capital Policy Progress & Future Initiatives Ⅰ. Growth Strategies and Structural Reform in the Payment Business ~ 2. Expansion of shopping transaction volumes <BtoB field> Settlement ① Streamlining of cashless methods in settle

26. Slide 26: Expansion of revolving / cash advance balance

    Financial Policy & Mid-term Management Plan Financial Report ESG related Capital Policy Progress & Future Initiatives Ⅰ. Growth Strategies and Structural Reform in the Payment Business ~ Revolving 3. Expansion of revolving / cash advance balance installment payment ＜Announced in May 2019＞Outline of

27. Slide 27: Initiatives in insurance business

    Financial Policy & Mid-term Management Plan Financial Report ESG related Capital Policy Progress & Future Initiatives Ⅰ. Growth Strategies and Structural Reform in the Payment Business ~ 4. Initiatives in insurance business Insurance Promote insurance business to approximately 27 million cardholders

28. Slide 28: Stepping up efforts in asset management business

    Financial Policy & Mid-term Management Plan Financial Report ESG related Capital Policy Progress & Future Initiatives Ⅰ. Growth Strategies and Structural Reform in the Payment Business ~ 5. Creation of new businesses and enhancement of digital marketing Asset ① Stepping up efforts in asset managemen

29. Slide 29: Improving members' QoL through digital x service

    Financial Policy & Mid-term Management Plan Financial Report ESG related Capital Policy Progress & Future Initiatives Ⅰ. Growth Strategies and Structural Reform in the Payment Business ~ Insurance Loan Asset 5. Creation of new businesses and enhancement of digital marketing Settlement Management ② I

30. Slide 30: Further expansion of Finance Business as a non-bank

    Financial Policy & Mid-term Management Plan Financial Report ESG related Capital Policy Progress & Future Initiatives Loan Ⅱ. Further expansion of Finance Business as a non-bank Asset Management ＜Announced in May 2019＞ Strengthening relationships with partners Outline of main initiatives in mid-term

31. Slide 31: Flat 35 & other housing-related services, Lease & Rental

    Financial Policy & Mid-term Management Plan Financial Report ESG related Capital Policy Progress & Future Initiatives Loan Ⅱ. Further expansion of Finance Business as a non-bank Asset Management Flat 35 & other housing-related services Lease & Rental  Acquisition of a new customer base and expansio

32. Slide 32: Expanding the earnings base of global business

    Financial Policy & Mid-term Management Plan Financial Report ESG related Capital Policy Progress & Future Initiatives Ⅲ. Expanding the earnings base of global business with a view to the future ＜Announced in May 2019＞ Transition from “sowing” to “harvesting” stage in operation countries Outline of m

33. Slide 33: Kisetsu Saison Finance Pvt Ltd, India

    Financial Policy & Mid-term Management Plan Financial Report ESG related Capital Policy Progress & Future Initiatives Ⅲ. Expanding the earnings base of global business with a view to the future Kisetsu Saison Finance Pvt Ltd India With the management vision of “Realizing financial inclusion by utili

34. Slide 34: ESG ~Environment~

    Financial Policy & Mid-term Management Plan Financial Report ESG related Capital Policy Progress & Future Initiatives ESG(Sustainable enhancement of corporate value) ~Environment~ Promoting environmental conservation by the operation of Akagi Nature Park, use of environment-friendly materials, and p

35. Slide 35: ESG ~Social~: Social infrastructure and contribution

    Financial Policy & Mid-term Management Plan Financial Report ESG related Capital Policy Progress & Future Initiatives ESG(Sustainable enhancement of corporate value) ~Social~ We carry out social contribution activities in regard that, companies do not only fulfill their responsibilities in terms of

36. Slide 36: ESG ~Social~: Growth framework and engagement

    Financial Policy & Mid-term Management Plan Financial Report ESG related Capital Policy Progress & Future Initiatives ESG(Sustainable enhancement of corporate value) ~Social~ Credit Saison promotes diversity and inclusion to cultivate a corporate culture which the employees take on the challenge of

37. Slide 37: ESG ~Social~: Work-style reform

    Financial Policy & Mid-term Management Plan Financial Report ESG related Capital Policy Progress & Future Initiatives ESG(Sustainable enhancement of corporate value) ~Social~ Credit Saison promotes diversity and inclusion to cultivate a corporate culture which the employees take on the challenge of

38. Slide 38: ESG ~Social~: Local governments and education

    Financial Policy & Mid-term Management Plan Financial Report ESG related Capital Policy Progress & Future Initiatives ESG (Sustainable enhancement of corporate value) ~Social~ ■Partnership agreements with local governments ■Education for the Next-Generation and Credit Saison concluded a partnership

39. Slide 39: (Reference) Diversity- and Human Resources-related Data

    Financial Policy & Mid-term Management Plan Financial Report ESG related Capital Policy Progress & Future Initiatives (Reference) Diversity- and Human Resources-related Data Ratio of female Ratio of female Ratio of using system No. using short work employees managers for childcare leave hours as a c

40. Slide 40: ESG ~Governance~

    Financial Policy & Mid-term Management Plan Financial Report ESG related Capital Policy Progress & Future Initiatives ESG (Sustainable enhancement of corporate value) ~Governance~ Recognizing the importance to ensure management transparency and strengthen management supervisory functions to achieve

41. Slide 41: (Reference) Credit Saison's competitive advantage / core value

    (Reference) Credit Saison’s competitive advantage / core value ■Summary on main payment tools and methods Main payment Payment by E-money tools Card code NFC Credit Card <postpaid> QR code IC card Main Prepaid Card <prepaid>  <register on credit card> payment <advance payment> methods Barcode <link

42. Slide 42: (Reference) Comparison of Share for Payment Methods in Japan and the U.S.

    (Reference) Comparison of Share for Payment Methods in Consumer Spending in Japan and the U.S. Japan (FY 2018) U.S.A. (FY2017 → FY2022 forecast) ※ YoY in ( ) ※share forecast of FY2022 in ( ) Pay-Easy Convenience store Prepaid card, other 6.8% (+0.9p) payment 3.8% (FY2022：3.5%) 4.0% (+0.1p) Check 7.5

43. Slide 43: (Reference) Domestic Market Share (Shopping Transaction Volume)

    (Reference) Domestic Market Share (Shopping Transaction Volume) Aplus, 1.1% Credit Saison Group 13.4% Seven Card Service 1.4% Regional Banks CS(non- FC/BC, Others consolidated) MI Card 1.9% 10.6% 8.4% Affiliated Epos Card 3.3% Companies 5.0% Orico 3.8% Sumitomo Mitsui FG VIEW Card 3.5% 14.3% Toyota

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