Aeon Financial Service Co., Ltd. · TSE:8570
Aeon Financial Service — Q2 FY2018 Earnings Presentation
28 slides from Aeon Financial Service's earnings presentation, Nov 20, 2018
Slide 1: Financial Results Briefing introduction
Thank you for coming to our Financial Results Briefing. I am Wakabayashi, and I’m in charge of corporate management. Nice to meet you. I will talk about our business outline and results, and our efforts for capital efficiency through securitization in the 2nd quarter of fiscal year 2018. 1
Slide 2: Consolidated business outline
First, let us talk about consolidated business outline. In Japan, transaction volume with external merchants grew due to promotional tie-ups with affiliated companies resulting in credit card transaction volume up 8% year on year. As for cash advance, due to the increase in the number of cardholders
Slide 3: Consolidated and segment results
Next us go to consolidated and segment results on page 3. Take a look at the right hand slide of the chart, which is consolidated total. The aggregate of the 2nd quarter shows increase in income for 7 terms in a row. Ordinary income, ordinary profit, and profit attributable to owners of the parent a
Slide 4: Domestic and Global segment ordinary income changes
Next, let us look at Domestic and Global segment results by graph on page 4. It shows main reasons for increase and decrease of ordinary income. Please refer to this diagram for details. 4
Slide 5: Consolidated balance sheet
Next look at consolidated balance sheet. For cash and deposits, we have implemented securitization near the end of the fiscal year and it increased 24.3 billion yen from the start of the fiscal year. As we add up the loan and bills discounted and account receivables for instalment, it increased 150.
Slide 6: Capital efficiency by securitization
Next, let me talk about capital efficiency by securitization, what measures we worked on in the first half. As I already told you, in order to deal with the expanding financial receivables, we have conducted securitization regularly, to improve yield and duration gap between investment and funding,
Slide 7: Main initiatives for FY2018
Let me elaborate on this year’s main initiatives for FY2018, for both first half and the second. As you can see, this year, we promote digital shift and strengthen our efforts to meet our customer needs. We also plan to speed up growth of our global business once again. 7
Slide 8: Summary of initiatives for the first half of FY2018
Summary of initiatives for the first half of FY2018 AEON Financial Service Co., Ltd.
Slide 9: Domestic FinTech and paperless initiatives
First, let us look at the initiatives for the first half of the year 2018. As for our domestic business, we are working on taking advantage of FinTech. In our efforts to go paperless, we worked on making e-statements available on our smartphone app ‘AEON Wallet’, as well as distributed coupons throu
Slide 10: ATM card magnetic stripe repair function
Next, let me talk about our new ATM function: repair of card magnetic stripe. Let me give you an example. This is a low-key type of innovation. However, it is highly wanted by our customers. From this June, we have been providing a service to repair the magnetic stripe on the surface of AEON cards a
Slide 11: AEON Card transaction volume increase
Next, let me elaborate on the transaction volume increase of AEON Card as a result of making it to be the main card of our customers. The left hand side chart shows the transactions inside and outside the AEON group stores. As you can see, the transaction volume within the group has steadily increas
Slide 12: AEON Bank retail banking ranking
As you may already know, AEON Bank, established in 2007, finally came in first out of 116 banks in the 14th retail banking service power survey conducted by the Nikkei (Japan economic newspaper). AEON Bank is traced back to AEON retailer, so AEON Bank members feel strongly that they are retail custo
Slide 13: Global business: Philippines auto loans and Cambodia e-money
Next, I will talk about our global business. Regarding the auto loan service utilizing IoT in the Philippines launched in July 2017, so far, in addition to tricycles, our service has been expanded to four-wheeled taxis and EV three-wheeled taxis. This expands our business. Furthermore, toward realiz
Slide 14: Malaysia customer acquisition in higher income segments
In global business, backed by economic growth of Southeast Asian countries, the income level of people in the region is rising. In this situation, in Malaysia, we will make effort to acquire good customers by issuing AEON Platinum cards for high- income earners, developing loan products with interes
Slide 15: Global ordinary income and cardholders
Moving on. This slide shows ordinary income and number of cardholders in our global business. As you can see, by issuing co-branded cards with leading local companies and enriching privileges, the number of cardholders has been steadily growing. Besides, boosted by strong public consumption in South
Slide 16: Quarterly KPI figures
The next slide shows our quarterly KPI figures from the first half of fiscal year 2016. While the topline progresses well, through refinement of credit screening and credit collection policies and systems, as the line graph shows, bad debt expenses against finance receivables balance decreased from
Slide 17: System and IT investments
In the next slide I’m going to explain the progress of system/IT investments, the plan for this fiscal year, and the investment details of the first half. In this fiscal year, in order to grow digital products and services, strengthening credit management, and back-office consolidation and automatio
Slide 18: Initiatives from the second half of FY2018
Now, I would like to move on to the initiatives from the second half of fiscal year 2018. 18
Slide 19: New co-branded cards in domestic business
About domestic business, to expand new customer base, we are issuing new co- branded cards. From November 11, we began to accept applications of AEON NEXCO Nishi-nihon cards. By this, from east Japan through west Japan, customers can us the cards at ETC, service areas and parking areas countrywide.
Slide 20: Promotion of cashless payments
I’d like to explain promotion of cashless payments in the domestic business. We are introducing contactless payment function to match international standards. We believe this will improve service for foreigners coming to Japan as we become closer to the upcoming 2020 Tokyo Olympics. In response to r
Slide 21: Digital initiatives in Malaysia and India
Next, I will talk about our plan for the second half of the fiscal year and after. Regarding our initiative making use of smartphone digital technologies, in Malaysia, in October this year, we began QR code payment service and accepting cardholder applications of Malaysian version of AEON Wallet sma
Slide 22: Catering to customer segments globally
Next, I will explain catering to various customer segments in global business. In Thailand, from this month we started to issue J-Premier Platinum cards. Cardholders have advantages mainly in AEON stores. The target group consists of higher income earners who travel to Japan and young people. The ca
Slide 23: FY2018 business plan
With regard to the business plan of fiscal year 2018, we will steadily implement the plans for the second half and introduce new products and services into the market. By doing that, we will achieve the annual target. 23
Slide 24: FY2018 forecast and dividend
Finally, concerning forecast of consolidated results for fiscal year 2018 and dividend forecast, there is no change in the numbers announced at the beginning of the year. In the second half, domestically, we will continue to strengthen the credit card business. And in the banking business, by promot
Slide 25: Questions and Answers
Questions and Answers Daiwa Securities Q1: Is your current merchant network management system technically capable of adjusting towards the 2% point rebate measure planned by the Government in view of promoting cashless payments along with the upcoming consumption tax hike? A: There is no issue in te
Slide 26: Questions and Answers (continued)
Q5: Is it possible to expect that the reduction of risk assets will become more effective in the second half of the fiscal term through getting external rating on securitized finance receivables? A: This is one method to reduce the level of risk assets and since the quality of our assets is good, we
Slide 27: Questions and Answers (continued)
organizational structure did not allow for all branches to sell the same full range of products despite the introduction of a new foreign currency deposits service from this May. Moreover, the sales trend of investment trusts is determined by the trend of the stock price, and these mixes are the mos
Slide 28: Questions and Answers: Citigroup Securities
Citigroup Securities Q1: What kind of progress did you see for the first half of the credit card business cost compared to the full-year budget? I would like to know the efficiency of the point promotion. A: Transactions in the AEON Group make up less than 30% of the total card shopping transactions
Aeon Financial Service — Q2 FY2018 Earnings Presentation on 6ix