Slide 1: Management Report FY2008
A LEADING – EDGE SERVICE PROVIDER CREDIT SAISON CO., LTD. Management Report FY2008 May 18, 2009
Slide 2: Agenda
AGENDA ◆ FY2008 Highlights ･･･ 1 ◆ FY2008 Financial Report ･･･ 5 ◆ FY2008 Management Strategy ･･･ 20 ◆ Prospects for the Card Market ･･･ 41 This report contains forward-looking statements that reflect our plans and expectation. These forward-looking statements are not guarantees of future performanc
Slide 3: FY2008 Highlights
FY2008 Highlights ★April: Qubitous Co., Ltd. became Credit Saison’s subsidiary, jointly managed with Mizuho Bank, Ltd. ◇April: Business alliance with Shinhan Card Co., Ltd. (Korea) ◇May: Started accepting applications for “Credit nimoca” card. ◇June: Entered into rental business by forming alliance
Slide 4: Focus on FY2008: Qubitous Co., Ltd. as a Subsidiary
Focus on FY2008 (1) Qubitous Co., Ltd. as a Subsidiary Qubitous became a subsidiary company on April 1, as we spun off our card processing division and transferred 2,000 staff to Qubitous. 1. Acquisition of 51% to made it a subsidiary Overview of Kansai Ubiquitous (49% owned by Mizuho bank.) Locatio
Slide 5: Collaboration with Mizuho Bank and Yamada Denki
Focus on FY2008 (2) Collaboration with Mizuho Bank and Yamada Denki 2.38 million MMC cards, 1.38 million LABI cards ～ The two cards account for 14% of all cards issued by our company and 33% of newly-issued cards. ～ (1) MMC card: Extensive services and functions (1) LABI card new applications [1] Su
Slide 6: LAWSON CS Card Merger
Focus on FY2008 (3) LAWSON CS Card Merger ■2002: LAWSON CS Card Co., Ltd. established. (30% Saison, 50% Lawson, 20% Mitsubishi Corporation) Started issuing LAWSON PASS. ■2004: Started issuing LAWSON PASS VISA. ■Apr. 2008: LAWSON CS Card became a 100% subsidiary (acquisition price: 670 million yen) ■
Slide 7: FY2008 Financial Report
FY2008 Financial Report 1. Operating Results 2. Results by Business Segment 3. Contributions to Consolidated results 4. Main Indices (Non-Consolidated) 5. Credit Risk Trends 6. Financial Indices 7. Dividend Status 8. Revised Forecasts and Actual Results CORPORATE STRATEGY ２００9 CREDIT SAISON CO., LTD
Slide 8: Operating Results
1.Operating Results (¥ billion) FY2009 FY2007 YoY (%) FY2008 YoY (%) YoY (%) (Estimate) Operating 345.5 103.6 327.0 94.6 316.0 96.6 revenues Ordinary 58.1 72.5 30.9 53.3 36.0 116.3 Consolidated income Net income 26.7 180.5 (55.5) － 17.0 － Earnings per share (¥) 148 179.7 (308) － 94 － Operating Non-c
Slide 9: Results by Business Segment
2.Results by Business Segment (¥ billion) Operating revenues Operating income (loss) FY2007 FY2008 YoY (%) FY2007 FY2008 YoY (%) Credit Service 254.7 254.7 0.0% 30.5 25.6 (16.0%) Finance 44.3 46.7 5.3% 11.2 10.5 (6.3%) Real Estate- related 37.9 18.5 (51.1%) 22.7 0.6 (97.3%) Entertainment 14.3 15.5 7
Slide 10: Contribution to Consolidated Results
3.Contribution to Consolidated Results Ordinary Ordinary income: income: Difference Difference between between Non-consolidated Consolidated Difference consolidated consolidated and and non- non -consolidated figures non-consolidated figures Ordinary ¥32.2 ¥30.9 (¥1.2) income billion billion billion
Slide 11: Main Indicators (Non-consolidated)
4.Main Indicators (Non-consolidated) FY2007 FY2008 FY2009 YoY (%) YoY (%) (Estimate) YoY (%) New applications (millions) 3.38 79.0 2.93 86.7 2.7 89.4 New card issued (millions) 2.84 78.9 2.52 88.7 2.2 87.3 Total cardholders 26.01 104.4 27.57 106.0 27.40 99.3 (millions) [+1.1] [+1.56] [(0.17)] Active
Slide 12: (Reference) Share of Cards
（Reference）Share of Cards Transaction volume and number of premium cards are 5 times higher than other cards Number of 《Saison》 Affinity cardholders increased due to acquisition of Lawson CS Cards 【Share of total cardholders】 【Share of shopping transaction volume】 （total：275.7 billion） （total：¥3,891
Slide 13: Credit Risk
5.Credit Risk (%) Delinquency of over 90 days Write-off rate Y-o-Y Y-o-Y Consolidated 2.80 (0.01) 2.97 +0.28 Credit Card 2.89 +0.14 3.49 +0.13 Card Shopping 2.10 +0.14 1.95 +0.16 Cash advances 4.12 +0.21 5.81 +0.17 ※Delinquency rate: Percentage of total receivables 90days or more past due date ※Deli
Slide 14: Financial Indices
6.Financial Indices (¥ billion) Consolidated Non-consolidated Y-o-Y Y-o-Y Shareholders’ equity 318.3 (67.9) 304.2 (57.2) Total Assets 2,407 (43.5) 2,220.7 +154.2 Shareholders’ equity ratio 13.2% (2.6%) 13.7% (3.8%) ※1 ROE 5.3% (3.9%) 5.8% (0.4%) ※2 ROA 1.3% (1.0%) 1.5% (0.2%) ※1 ROE is calculated to
Slide 15: Dividends
7.Dividends Dividends FY2007 FY2008 FY2009 (Estimate) Dividend per share ¥28 ¥30 ¥30 Total cash ¥5.0 billion ¥5.4 billion ¥5.5 billion dividend Payout ratio 18.8％ － 31.8％ (consolidated) 13
Slide 16: (Reference) Fund Structure
(Reference) Fund Structure ( ¥ billion) [Consolidated] [Non-consolidated] Total balance: 1,893 Total balance: 1,748 Corporate Corporate bond 社債 bond 281 270 CP CP 160 160 Liquidation of 借入金 Debts 借入金 Debts Liquidation of receivables 1,189 債権流動化 receivables 1,056 262 262 Long Term Ratio：71% Long Term
Slide 17: Revised Forecast and Actual Results
8. Revised Forecast and Actual Results Selling, general and administrative expenses (consolidated/non-consolidated) Provision for losses on interest repayment: ¥10.0 billion Extraordinary gains (consolidated/non-consolidated) Gain on sale of investment securities (VISA stock): ¥11.3 billion Extraord
Slide 18: Reasons for Increasing the Provision for Loss on Interest Repayment
8-1．Reasons for Increasing the Provision for Loss on Interest Repayment Increasing occurrence of Provision for loss on This trend is expected to credit handling by lawyers interest repayment was and other parties continue for some time. increased by ¥10 billion. ■ Trends in new interest repayment cl
Slide 19: Atrium Support Scheme
8-2．Atrium Support Scheme ■Details of financial support Step 1 Indemnifying debt assumption and other financial support Indemnifying assumption of ¥90.6 billion in debt consolidates the approximately ¥124.1 billion in Atrium interest-bearing liabilities at Credit Saison. Acquisition of the guarantor
Slide 20: Atrium Reconstruction Plan
8-3．Atrium Reconstruction Plan Selection and concentration of business Specialization Withdrawal Liquidation of real estate Loan guarantee business Servicing business Strategic investment business Strengthening financial foundation by slimming-down the balance sheet and restructuring finances Earl
Slide 21: (Reference) Changes in Atrium Group Results
(Reference) Changes in Atrium Group Results Changes in Atrium Group sales and ordinary income Sales (¥ billion) Ordinary income (¥ billion) 150 121.3 45 105.1 35 FY2004 - 2008 100 (past 5 years) 73.9 24.2 71.4 25 Total sales: ¥427.4 billion 55.7 Total ordinary income:¥48.2 billion 50 13.8 15 8.7 4
Slide 22: Management Strategy
Management Strategy I. Changes in the Business Environment and Their Impact on the Company II. Verifying Our Competitive Superiority and Applying Our Strengths III. Management Strategy for the Credit Saison Group IV. FY2009 Priority Policies CORPORATE STRATEGY ２００9 CREDIT SAISON CO., LTD. 20
Slide 23: Changes in the Business Environment and Their Impact on the Company
I. Changes in the Business Environment and Their Impact on the Company ■Changes in the external environment ・Global recession which began with the financial crisis in the U.S., and its effects on the real economy in Japan ・ Shrinking markets due to the accelerating graying of society, increased unem
Slide 24: Verifying Our Competitive Superiority and Applying Our Strengths
II. Verifying Our Competitive Superiority and Applying our Strengths (1) Customer base of 33 million cardholders Strong customer base with two brands, SAISON and UC, containing credit and operation results (including from contracted agents) from 33 million cardholders, and with high value in attribu
Slide 25: Credit Saison Group Management Strategy
III. Credit Saison Group Management Strategy Structural reform and giving shape to innovation (1) Reconstruction of the Group management ① Establishment of a Group management mechanism ② Simplification of the head office mechanism at each company ③ Human resource training through personnel rotation
Slide 26: Reform of the Card Business and Internet Business Expansion
(3) Reform of the card business ① Greater multi-function capabilities for branch operations ② Clarification of the card plan strategy ③ Verifying progress of the next-generation system, and streamlining of Qubitous operations ④ Development of plans in cooperation with the clients ⑤ Implementation of
Slide 27: FY2009 Priority Policies
IV. FY2009 Priority Policies 1. Measures for Expanding the Profitability of the Card Business 2．Measures for Expanding the Profitability of Business Utilizing the Internet 3．Development of the Financial Business CORPORATE STRATEGY ２００9 CREDIT SAISON CO., LTD. 25
Slide 28: Structural Changes in the Consumer Market
[Chart (1)] Structural Changes in the Consumer Market ■Changes in the domestic household final consumption expenditures by consumption item (¥100s billion) *Created from the Cabinet Office Annual Report on National Accounts FY1997 FY2002 FY2007 2007/1997 Expenditure item （%） Expenditure % of total E
Slide 29: Structural Changes in the Consumer Market (2)
[Chart (2)] Structural Changes in the Consumer Market (2) ■ Changes in sales at large-scale retailers (department stores, supermarkets) Department stores Supermarkets 14.0 13.0 12.0 Sales (\100s billion) 11.0 10.0 9.0 8.0 7.0 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Slide 30: Structural Changes in the Consumer Market (3)
[Chart (3)] Structural Changes in the Consumer Market (3) ■ Changes in sales at large-scale retailers Total (department stores, supermarkets) (year-on-year) Department stores Supermarkets 104.0 102.0 100.0 Year-on--year (%) 98.0 96.0 94.0 92.0 90.0 06 06 06 06 07 07 07 07 08 08 08 08 20 20 20 20 20
Slide 31: Collaboration with department store businesses
1. Measures for Expanding the Profitability of the Card Business (1) Measure ➊ Collaboration with department store businesses A recovery of sales at department stores is an important issue for our company's cards, which account for a high share of department store customers. ■ Creation of joint meas
Slide 32: Collaboration with allied large-scale retailers
1. Measures for Expanding the Profitability of the Card Business (2) Measure ➋ Collaboration on preferential treatment plans with allied large- scale retailers ■Application of the client alliance expertise which we have developed as a retail-based card company ・Joint operations with new retail busin
Slide 33: Image of Preferential Alliance with Large-Scale Retailers
[Reference] Image of Preferential Alliance with Large-Scale Retailers Allied companies... Allied large-scale retailers ・Provide preferential treatment and special services to our cardholders. Dept. Super- Shopping SPA ・Achieve lower expenses for attracting stores markets centers ･･･ customers. Speci
Slide 34: Joint Operation with Mizuho Bank
1. Measures for Expanding the Profitability of the Card Business (3) Measure ➌ Joint Operation with Mizuho Bank ① Expanded issuing of MMC card ・Customers obtain MMC card at same time when a new bank FY2009 MMC card target account is opened. (Strengthen issuing via the internet.) New cards issued: 23
Slide 35: 2009 Mizuho Platinum Card Plan
[Reference] 2009 Mizuho Platinum Card Plan Strengthening efforts aimed at the Mizuho Bank wealthy client market [Mizuho Bank customers] Mizuho Saison Platinum American Express Card ・EikyuFumetsu points (double) ・Favorable exchange rate for ANA miles ・Automatic provision of domestic and overseas trav
Slide 36: Expanding premium cards, centered on AMEX cards
1. Measures for Expanding the Profitability of the Card Business (4) Measure ➍ Measures for expanding premium cards, centered on AMEX cards ① “AMEX + GOLD” card (ASSOCIE card) program ・Issue an AMEX-GOLD with ¥2,000 annual fee to Proper 2009 ASSOCIE cards Gold cardholders (from December). issued ・Pl
Slide 37: 2009-2012 AMEX+GOLD card plan
[Reference] 2009 - 2012 AMEX+GOLD card plan Annual shopping 2002 transaction volume ¥1,300.0 billion 2.80 million persons ¥1,350.0 billion 2009 ¥1,200.0 billion ¥950.0 billion 2008 (up 12% YoY) CS 1.98 million persons CS ¥1,050.0 billion ¥850.0 billion GOLD 1.62 million persons GOLD ¥900.0 billion ¥
Slide 38: Expanding corporate business and cost cutting
1. Measures for Expanding the Profitability of the Card Business (5) Measure ➎ Expanding corporate business utilizing our nationwide branch sales network ① Multifront corporate sales FY2009 plan ・Company cards, corporate cards, intercorporate transactions (B to B) New company Cross-sales for lease a
Slide 39: Minimizing negative effects from total lending restriction
1. Measures for Expanding the Profitability of the Card Business (6) Measure t Minimizing negative effects from the “total lending restriction” in the Money Lending Business Control Law ① Cashing loan balances which will be affected ・Portions which overlap with other company cards and consumer Keep
Slide 40: Expanding profitability of business utilizing the internet
2. Measures for expanding the profitability of business utilizing the internet Expand internet cardholders in order to: reform the card business profit profile and construct infrastructure for new business. ① Low-cost operations using the internet ・ Achieve large-scale reductions in personnel costs,
Slide 41: Schematic of Internet Business
[Reference] Schematic of Internet Business Expansion of profits 永 久 不 滅 .com Cost reductions ・Contingency fee revenue ・Internet statements Customers get Eikyufumetsu ・Internet news ・Advertising revenue points by online shopping, ・Expansion of internet ・Internet news posting requesting document, or c
Slide 42: Development of the financial business
3. Development of the financial business Product lineup with the focus on risk control ① Credit guarantee business ・Promotion of new alliances with close-knit local and outwardly- FY20009 new expanding financial institutions. guarantee alliances: ・Negotiations to revise economic conditions according
Slide 43: Prospects for the Card Market
(Additional Information) Prospects for the Card Market 1. Share of the Global Card Market by Brand 2. Share and Growth Potential by Area 3. Changes in the U.S. Market Share 4. Changes in U.S. Settlement Method and Forecast 5. Reorganization of the Domestic Credit Card Industry CORPORATE STRATEGY ２００
Slide 44: Share of the Global Market by Brand
1. Share of the Global Market by Brand ■Changes in transaction volume share for each ％ international brand <2007 shares of global transaction volume> 70 JCB DINERS 0.9% 0.5% 60 AMEX 10.5% VISA 50 MASTER AMEX 40 JCB DINERS 30 MASTER 28.0% VISA 60.1% 20 10 0 2000 2001 2002 2003 2004 2005 2006 2007 * S
Slide 45: Share and Growth Potential by Area
2. Share and Growth Potential by Area ■Changes in transaction volume ％ share by area <2007 transaction volume shares by area> 70 Other 1.8% 60 50 Asia- N./S. America Pacific Europe 15.4% 40 Asia-Pacific Other 30 North/South America 52.9% 20 Europe 29.9% 10 0 2000 2001 2002 2003 2004 2005 2006 2007 *
Slide 46: Changes in U.S. Market Share
3. Changes in U.S. Market Share JPMorgan Chase, which purchased Washington Mutual, holds the top share, and further concentration is continuing. Citi and Amex were hurt by the financial crisis and both their balance and share dropped. ■Loan balance share by issuer ■Ranks by cards issued (10,000s car
Slide 47: Changes in U.S. settlement method and forecast
4. Changes in U.S. settlement method and forecast ■Changes in shares of major methods of settlement in household consumption [Trend development 2002 - 2012] 40 ％ 100% Electronic Cash 6 settlement Checks 17 Credit cards Debit cards Other 30 75% 33 Card settlement 54 20 50% 60 25% Paper-based 10 settl
Slide 48: Reorganization of the domestic credit market
5. Reorganization of the domestic credit market Credit Saison Mitsui- Mizuho FG Risona Sumitomo FG HD Mitsui Risona Sumitomo Cedyna Orico Cardﾞ Card Takashimaya Yamada Idemitsu Credit Credit Financial Postal Bank Shizugin Aeon Daiwa House YM Sanyo At Loan Pocket SAISON Promise Credit Card Financial
Slide 49: Change of domestic market share
6. Change of domestic market share (shopping transaction volume) Credit Saison G Mitsubishi UFJ 【FY2000】 JCB G 10.1% 【FY2007】 14.3% NICOS G 20.3% Credit Saison Mitsui Sumitomo G Credit Saison Co. intimacy 6.5% JCB with UC 9.9% 9.7% JV 0.5% 6.6% Co. intimacy with Card Co. Orico JCB Others 4.1% 2.6% 3