Resona Holdings, Inc. · TSE:8308
Resona — H1 FY2008 Earnings Presentation
54 slides from Resona's earnings presentation, Dec 1, 2008
Slide 1: Outline of the New Business Revitalization Plan and Financial Results for 1H of FY2008
Outline of the New Business Revitalization Plan and Financial Results for 1H of FY2008 - Aiming at Establishing True Retail Bank - RESONA December 1, 2008 @ Resona Holdings, Inc. RESONA
Slide 2: Contents
Note: In some pages of this material, names of Resona Group companies are shown in the CONTENTS following abbreviated form: RHD: Resona Holdings, RB: Resona Bank, SR: Saitama Resona Bank, KO: Kinki Osaka Bank, and RT: Resona Trust & Banking I. Outline of the New Business Revitalization Plan II. Outl
Slide 3: I. Outline of the New Business Revitalization Plan
I. Outline of the New Business Revitalization Plan II. Outline of the Business Results for the 1st Half of FY2008 [Reference Material (Business Revitalization Plan)] [Reference Material (Financial Results for 1H of FY2008) ] 2
Slide 4: Concept of the New Business Revitalization Plan
Concept of the New Business Revitalization Plan Viewpoints Areas Priority businesses to be strengthened further for re- of Focus to become the unrivaled leader in retail financial services classification Products and Loans to individuals Appropriate product proposal Transactions Strengthening of Sol
Slide 5: Becoming True Retail Bank through Establishment of Resona Style
Becoming True Retail Bank through Establishment of Resona Style Community Community Bank Bank Group Group Most Most Supported Supported by by True True Retail Retail Bank Bank Local Communities and Customers Local Communities and Customers “Resona” “Resona” as as aa firm firm brand brand of of retai
Slide 6: Securing Stable Bottom-line Profits Underpinned by Financial Soundness
Securing Stable Bottom-line Profits Underpinned by Financial Soundness Securing stable bottom-line profits underpinned by financial soundness Income structure less dependent on asset growth Increase fee income by strengthening personal banking business (Fee income ratio: FY2008 19％ → FY2011 22％）
Slide 7: Outlook for Major Management Indices in the New Plan Period
Outlook for Major Management Indices in the New Plan Period FY2007 FY2008 FY2011 (Total of Group Banks) (Actual) (Plan) (Plan) Actual Actual Net Net 337.8 bn. 315.0 383.0 bn. Actual Actual net net operating operating profit profit will will Operating Operating Profit Profit increase increase by
Slide 8: Outline of the Earnings Plan (Total of Group Banks)
Outline of the Earnings Plan (Total of Group Banks) Return to a stable growth trend again Underlying Underlying Scenario Scenario FY2007 FY2008 FY2009 FY2010 FY2011 Increase [Macro economy] (Amount in Billions of Yen) Plan Plan (Decrease) Actual Plan Plan Stagnation continues for a while. However,
Slide 9: How We Manage Loans and Deposits during the New Plan Period
How We Manage Loans and Deposits during the New Plan Period Aiming at securing stable interest income from employed assets Loan portfolio management in reference to RORA Strengthen housing and SME loans to which relatively [Total Assets 39.4] [Total Assets 40.6] law capital charge is applicable
Slide 10: Analysis on Top-line Income Growth during the New Plan Period
Analysis on Top-line Income Growth during the New Plan Period Planned top-line income growth during the New Plan period: ＋76.0 bn. Driver for top-line income growth is an increase in fee income of + 36.0 bn. Fee income ratio* will rise from 19.1% (FY2008) to 22.0% (FY2011) (0.5) +17.0 Other, net
Slide 11: Impact of Policy Rate Cut by the BOJ on the Earnings Plan
Impact of Policy Rate Cut by the BOJ on Oct. 31, 2008 on the Earnings Plan Underlying assumption of the policy rate (overnight call rate) FY2008 FY2009 FY2010 FY2011 Underlying policy rate 1.00％ assumption of the New Plan D 0.75％ Policy rate scenario modified to C reflect a rate cut on Oct.31, 200
Slide 12: Redefined Missions for Personal and Corporate Banking Businesses
Redefined Missions for Personal and Corporate Banking Businesses and Pursuit of Trust Synergies Personal Banking Corporate Banking Clearly redefined as division Division for sustained and stable that will lead growth earnings contribution Business offering solutions Life designing support business t
Slide 13: Outlook for the Priority Businesses in the New Plan Period
Outlook for the Priority Businesses in the New Plan Period FY2007 FY2008 FY2011 (Actual) (Plan) (Plan) (Total of Group Banks) Number Number of of Will Will Trusts Trusts 10,331 10,830 12,980 Cross-selling Cross-selling opportunities opportunities under under Custody Custody captured captured byb
Slide 14: Merger between Resona Bank and Resona Trust & Banking
Merger between Resona Bank (RB) and Resona Trust & Banking (RT) RB and RT plan to merge on April 1, 2009 Resona Bank is supposed to be a surviving company Set up “Merger Steering Committee” to realize merger effects at an early date Expected merger effects are as follows: 1.1. Strengthening St
Slide 15: Approach towards Repayment of Public Funds
Approach towards Repayment of Public Funds Aims at early repayments of public funds through the following approaches “Basic Policy toward Repayment of Public Funds” (Announced in May 2008) Secure a source of funds for repayment as soon as possible Maintain an appropriate capital adequacy ratio
Slide 16: Plan for Accumulating Retained Earnings
Plan for Accumulating Retained Earnings How we will build up funds for repayments during the new Business Revitalization Plan period Funds available for repayment are expected to exceed the infusion amount of public funds preferred shares issued and outstanding by the end of March 2011 Plan to b
Slide 17: Countermeasure for Possibility of Dilution Relating to the Early Strengthening Law Preferred Shares
Countermeasure for Possibility of Dilution Relating to the Early Strengthening Law Preferred Shares Intend to prevent dilution from taking place by the following countermeasures Basic policy of repurchase and cancellation remain unchanged Announced the following approaches as a countermeasure fo
Slide 18: II. Outline of the Business Results for the 1st Half of FY2008
I. Outline of the New Business Revitalization Plan II. Outline of the Business Results for the 1st Half of FY2008 [Reference Material (Business Revitalization Plan)] [Reference Material (Financial Results for 1H of FY2008) ] 17
Slide 19: Financial Results for the 1st Half of FY2008: General Overview
Financial Results for the 1st Half of FY2008: General Overview Posted consolidated net income of Y86.3 bn. Net income decreased by Y33.8 bn. (-28.1%) YoY and by Y63.7 bn. (-42.4%) compared with forecast Y104.4 bn. gain from the sale of Tokyo Head Officer building Net credit cost increased by Y
Slide 20: Outline of Financial Results for 1H of FY2008
Outline of Financial Results for 1H of FY2008 Resona Holdings Total of four banks Factors accounting (Consolidated) (Non-consolidated) Resona for the difference (A) - (B) (Approx. figures) Saitama Kinki (Amount in billions of yen) Difference Resona Trust & Resona Osaka Banking RC: Resona Card, RG: R
Slide 21: Analysis on YoY Change in Top-line Income (Total of Group Banks)
Analysis on YoY Change in Top-line Income (Total of Group Banks) Top-line income for 1H of FY2008 remained almost flat ( a decline of 0.8 bn. YoY) Fee income items such as investment trust sale and real estate brokerage fees slowed down Net gains on bonds recovered due to the absence of a loss p
Slide 22: Trend of Loan Business (Total of Group Banks)
Trend of Loan Business (Total of Group Banks) Trend of loan and deposit rates and spread Loan rate caught up with regional banks average (Domestic banking account) 2.2% Resona Group (3 banks) 2.5% Loan rate (left scale) 2.1% City Banks 2.4% Loan-to-deposit spread (left scale) 1.0% Regional Banks D
Slide 23: Trend of Major Fee Businesses
Trend of Major Fee Businesses Investment trusts Personal annuity （Y bn） （Y bn） （Y bn） （Y bn ） 50 Sale commission Related income 1,297.2 Trust fees 16 300 Amount sold (right scale) Amount sold (right scale) 1,200 14 40 228.4 979.1 12 858.0 900 204.2 197.0 200 30 10 18.1 8 25.8 600 20 543.9 6 120.0 1
Slide 24: Analysis on YoY Change in Consolidated Net Interim Income
Analysis on YoY Change in Consolidated Net Interim Income Consolidated net interim income declined by Y33.8 bn (28.1%) YoY Increase of net credit cost (+112.6 bn) is mostly attributable to 3 specified industries and certain large borrowers Sale of Tokyo HO bldg. contributed Y62.0 bn to consolida
Slide 25: Measures to Enhance Financial Soundness: Loan Asset
Measures to Enhance Financial Soundness: Loan Asset NPL balance and NPL ratio (Total of Group Banks) High reserve ratio against uncovered NPLs Collateral and guarantees(A) Loan loss reserve(B) ( Y bn) 0.7% 100% 100% 11.19% 12% 97.7% 12.5% 11.0% Unrecoverable or valueless claims 32.3% 31.3% 3,219.0
Slide 26: Measures to Enhance Financial Soundness: Credit Cost
Measures to Enhance Financial Soundness: Credit Cost New addition to specific reserve is mostly Credit costs for 1H FY 2008 (Total of Group banks) necessitated by “3 specified industries” （Billions of Yen） and certain large borrowers 1H FY'07 2H FY'07 1H FY'08 New addition to specific reserve by c
Slide 27: Measures to Enhance Financial Soundness: Securities Portfolio
Measures to Enhance Financial Soundness: Securities Portfolio Securities portfolio with minimized downside risks Non-trading marketable securities available for sale Unwinding of net investment Relationship-purpose equity holdings Significant reduction during position in response to poor Intensi
Slide 28: Capital Adequacy Ratio (RHD Consolidated Basis)
Capital Adequacy Ratio (RHD Consolidated Basis) RHD’s consolidated CAR [Mar. 31, 2008] 14.28% ⇒ [Sep. 30, 2008] 14.84% (+0.56%) 20/末 額 ierⅠ 3 + T 率 比 本 資 己 自 5 6 ,9 1 円 億 減 増 B IR 3F Capital adequacy ratio Primary factors for the change Change in capital adequacy ratio (Basel II, F-IRB basis) [Tot
Slide 29: Earnings Forecasts for Fiscal Year Ending March 31, 2009
Earnings Forecasts for Fiscal Year Ending March 31, 2009 (Revised in November 2008) Resona Holdings (Consolidated) Resona Holdings (Non-consolidated) Change Change from Change Change from 1H FY Full year 1H FY Full year (Billions of Yen) from initial the previous from initial the previous 2008 forec
Slide 30: Reference Material (Business Revitalization Plan)
I. Outline of the New Business Revitalization Plan II. Outline of the Business Results for the 1st Half of FY2008 [Reference Material (Business Revitalization Plan)] [Reference Material (Financial Results for 1H of FY2008) ] 29
Slide 31: Personal Banking Business (1): Estate Planning
Personal Banking Business (1): Estate Planning Strengthen personal banking business as a core growth area Acceptance of testamentary trusts as an opportunity Wills entrusted as of Mar. 2012 (Plan): Approx. 14,000 to initiate multiple related transactions 14,000 Wills entrusted to RB Strength
Slide 32: Personal Banking Business (2): Financial Product Sale
Personal Banking Business (2): Financial Product Sale Investment trusts Personal annuity Income for FY2011: 42.0bn (+14.1bn from FY2008) Income for FY2011: 22.0bn ( +6.1bn from FY2008) Recover Y1 trillion yen annual sale Close to Y400 billion annual sale is expected (Expect outstanding bal.
Slide 33: Personal Banking Business (3): Loans to Individuals
Personal Banking Business (3): Loans to Individuals Housing loans Other consumer loans ( strategic products) Balance at the end of March 2012: 12.3 tn. Strengthen core focus products* further HL balance 1.6 118.0 1.5 120 15.0 HL origination （right scale） 1.5 102.0 1.3 1.3 1.2 87.0 90 12.3 11.8 1
Slide 34: Corporate Banking Businesses (1): Loans to SMEs
Corporate Banking Businesses (1): Loans to SMEs Transformation to business providing customers with Loans to SMEs solutions to management challenges Increase loans to SMEs by Y450 bn Fees from corporate solutions* : + 4.4bn Mar. 31, 2008: Y10.0 tn ⇒ Mar. 31, 2012: Y10.5 tn FY 2008: 7.2bn ⇒ FY 20
Slide 35: Corporate Banking Business (2): Real Estate, Pension and Securities Trust
Corporate Banking Business (2) : Real Estate, Pension and Securities Trust Real estate business (RB) Pension and Securities trust business （RT） Income from real estate business to exceed Y20.0 bn Entrusted pension assets to increase by Y1 tn Securities trusts to exceed Y40 tn 25 Income from e
Slide 36: Reference Material (Financial Results for 1H of FY2008)
I. Outline of the New Business Revitalization Plan II. Outline of the Business Results for the 1st Half of FY2008 [Reference Material (Business Revitalization Plan)] [Reference Material (Financial Results for 1H of FY2008) ] 35
Slide 37: Management Accounting by Business Lines
Management Accounting by Business Lines Management Accounting by Group Business Lines (1H FY2008) “RAROC” and “RVA” as management indicators to measure profitability to allocated capital (Y bn., %) Net Operating Profit after Deduction of Credit Cost *1 Management Indices Gross Operating Credit Ope
Slide 38: Capital Adequacy Ratio (RHD and Subsidiary Banks)
Capital Adequacy Ratio (RHD and Subsidiary Banks) Sep. 30, 2008 [Preliminary] 20/末 額 ierⅠ 3 + T 率 比 本 資 己 自 5 6 ,9 1 円 億 減 増 B IR 3F RHD (Consolidated) RB (Consolidated) Japanese Domestic Standard Mar. 31,2008 Sep. 30, 2008 Mar. 31,2008 Sep. 30, 2008 (Billioons of Yen) F-IRB F-IRB F-IRB F-IRB Act Ac
Slide 39: Risk Buffer
Risk Volume Relative to Capital (End of September 2008) Primary risks such as credit, market and operational risks are controlled within Tier 1 limit Risk buffers comprising of excess Tier 1 and Tier 2 are provided against the risk volume [億円] (Ybn) assumed under a stress scenario or the risks d
Slide 40: Securities Portfolio
Securities Portfolio Net unrealized gains on available-for-sale securities (RHD consolidated basis) as of the end of September 2008 amounted to ¥100.4bn. Stocks Bonds (Available-for-sale securities, RHD Consolidated) [Balance of Securities Held (Non-consolidated Basis) ] (Ybn) No Within 1 1 to 5 5
Slide 41: Shareholdings by Industry (End September 2008, Resona Bank)
40 22% 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% Services Real estate Other financial services Insurance Securities, commodities TOPIX Banking Shareholdings by Industry (End September 2008, Resona Bank) Retail Wholesale Information, telecommunication Resona Bank Warehouse, transportation Air transport
Slide 42: Maturity Ladder of Deposits and Loans (Resona Bank, Domestic Operations)
Maturity Ladder of Deposits and Loans (Resona Bank, Domestic Operations) Loans and Bills Discounted Deposits [End of March 2008] [End of March 2008] Within 6M 6 to 12M 1 to 3Y Over 3Y Total Within 6M 6 to 12M 1 to 3Y Over 3Y Total Fixed rate 4.1% 4.0% 7.2% 8.0% 23.3% Liquid deposits 43.8% 2.1% 8.2
Slide 43: Swap Positions by Remaining Periods (Resona Bank)
Swap Positions by Remaining Periods (Resona Bank) Notional amounts of interest rate swaps by remaining period (Billions of Yen) End of September, 2008 End of March, 2008 Within 1 year 1 to 5 years Over 5 years Total Within 1 year 1 to 5 years Over 5 years Total Receive fixed rate/Pay floating rate
Slide 44: Composition of Loan Portfolio by Corporate/Individual Customers (RB)
Composition of Loan Portfolio by Corporate/Individual Customers (RB) Loans to corporations *Market rate-linked loans (corporate) include the fixed-rate (spread) loans maturing in less than one year. [End September 2007] [End March 2008] [End September 2008] Fixed Rate Fixed Fixed 14% Rate Rate Prim
Slide 45: Composition of Deposits by Corporate/Individual Customers (RB)
Composition of Deposits by Corporate/Individual Customers (RB) Corporate Deposits [End September 2007] [End March 2008] [End September 2008] Time Time Time Deposits Deposits Deposits 28% 28% 27% Liquidity Liquidity Liquidity Deposits Deposits Deposits 68% 68% 67% Individual Deposits [End March 200
Slide 46: Migrations of Borrowers (RB, 1H of FY2008)
Migrations of Borrowers (RB, 1H of FY2008) Exposure amount basis （Migration during the 1H of FY2008） End of September 2008 Upward Downward Special Quasi- Migration Migration Normal Other Watch Doubtful Bankrupt Other Attention Bankrupt Collection, Assignments, Repayments Sale Normal 95.2% 3.0% 0.4%
Slide 47: Trend of Long-term Senior Debt Rating (RB)
Trend of Long-term Senior Debt Rating (RB) 2003 2004 2005 2006 2007 JCR 2/28 5/19 9/22 1/20 12/17 1/31 6/8 4/10 6/9 3/30 5/5 9/18 MDY S&P 2/3 1/24 R&I 2/4 A1 A+ A2 A A3 A- Baa1BBB+ Baa2 BBB R&I S&P Baa3 BBB- Moody's JCR Ba1 BB+ 46
Slide 48: List of Preferred Shares Issued by RHD (1)
List of Preferred Shares Issued by RHD (1) [As of the End of November 2008] Class B Preferred Shares Class C Preferred Shares Class E Preferred Shares Class F Preferred Shares Distinction between public and private funds Public Fund Public Fund Public Fund Public Fund Original issuer and name of sec
Slide 49: List of Preferred Shares Issued by RHD (2)
List of Preferred Shares Issued by RHD (2) [As of the End of November 2008] Class 1 Preferred Shares Class 2 Preferred Shares Class 3 Preferred Shares Class 4 Preferred Shares Class 5 Preferred Shares Class 9 Preferred Shares Distinction between public and private fund Public Fund Public Fund Public
Slide 50: Class 9 Preferred Shares: Structure that Embodies Basic Policies toward Repayments
Class 9 Preferred Shares: Structure that Embodies “Basic Policies toward Repayments” Designed in such a way to ensure high capital eligibility and to avoid dilution All shares will be allotted and subscribed to by Merrill Lynch Limitation on exercise of Acquisition Rights Japan Finance Acquisitio
Slide 51: Class 9 Preferred Shares: Acquisition Right and Acquisition Clause
Class 9 Preferred Shares: “Acquisition Right” and “Acquisition Clause” 1Y 5Y 8Y Acquisition Right Not Conditionally exercisable* (Preferred Shareholders) Exercisable* (If MV of ordinary shares exceeds the Acquisition Exercisable Rights Threshold Price for a certain period) Acquisition Clause Conditi
Slide 52: Class 9 Preferred Shares: Comparison with Public Fund Preferred Stocks
Class 9 Preferred Shares: Comparison with Public Fund Preferred Stocks Financial Function Early Deposit Insurance Class 9 Preferred Shares Strengthening Law Law Preferred Dividend Rate Fixed rate (1.06% to 1.48%) 1y¥Libor +50bps Fixed rate (0.93%) Initial Exchange Premium N.A. N.A. 15％ Start of the
Slide 53: Business Revitalization Plan: Earnings Plan
Business Revitalization Plan: Earnings Plan (Total of Four Banks) FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 (Billions of Yen) (Actual) (Plan) (Plan) (Plan) (Plan) (Billions of Yen) (Actual) (Plan) (Plan) (Plan) (Plan) Gross operating profit 700.0 684.0 690.0 721
Slide 54: Forward-looking statements
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