77 Bank, Ltd. · TSE:8341
77 Bank — The 77 Bank — FY2022 Earnings Presentation
57 slides from 77 Bank's earnings presentation, Jun 6, 2023
Slide 1: Results for the Fiscal Year Ended March 31, 2023 IR Presentation
Results for the Fiscal Year Ended March 31, 2023 IR Presentation Materials were prepared for the Bank’s presentation of its results for the fiscal year ended March 31, 2023 held on June 6, 2023. June 6, 2023
Slide 2: Table of Contents
Table of Contents 1. Financial Summary … 2 2. Projected Performance … 11 3. Business Strategy … 15 4. Sustainability … 47 5. References … 53 The 77 Bank, Ltd. | Fiscal Year Ended March 31, 2023 1
Slide 3: Financial Summary
01 Financial Summary The 77 Bank, Ltd. | Fiscal Year Ended March 31, 2023 2
Slide 4: Summary of profits and losses
Summary of profits and losses Non-consolidated FY2022 results In addition to an increase in interest income, factors such as decreases in expenses and credit-related expenses resulted in a record high for both ordinary income and net income. Income from customer services* Income from customer servic
Slide 5: Interest income
Interest income FY2021 FY2022 YoY change Change factors in interest income (Unit: JPY bn, %) Amount % Factors in securities (Unit: JPY bn) +3.1 Interest income 72.3 78.6 6.3 8.6 Factors in loans Yield Interest Investment income 72.9 79.8 6.9 9.4 +4.3 +3.0 income Average 78.6 (Interest on loans and b
Slide 6: Deposits/Loans and bills discounted
Deposits/Loans and bills discounted Corporate loans (yen-denominated/average balances) YoY change FY2021 FY2022 (Unit: JPY bn) (Unit: JPY bn, %) Amount % Deposits and certificates of 3,434.7 deposits (average balances) 8,624.8 8,842.8 218.0 2.5 3,068.5 3,188.8 Miyagi Prefecture (Retail deposits) 5,6
Slide 7: Securities (1)
Securities (1) Balance of marketable securities (on an amortized cost base) Total gains (losses) from securities (Unit: JPY bn) FY2022 YoY change FY2021 (Unit: JPY bn) (amount) 2,973.4 3,013.4 2,975.0 Interest and dividends on securities [A] 28.9 32.0 3.1 Stocks 75.6 2.6% 72.6 76.2 Interest on yen-d
Slide 8: Securities (2)
Securities (2) Yen-denominated bonds balance by remaining Gains (losses) from evaluation of securities period/modified duration (Unit: JPY bn) 5.74 5.59 Modified duration 5.02 2,206.7 2,202.1 Over 10 years 52.8 2,082.6 193.3 270.4 Over 5 years but no more than 10 889.8 years 893.6 779.8 Over 1 year
Slide 9: Fees and commissions
Fees and commissions Fees and commissions from corporate clients (Unit: JPY bn) 2.9 2.7 YoY change FY2021 FY2022 (Unit: JPY bn) (amount) Syndicate 1.0 loans, CL, etc. 2.0 1.2 Fees and commissions A 18.3 18.9 0.6 Business matchings 0.8 Fees and commissions from 0.9 8.6 8.2 (0.4) M&A payments 0.6 Priv
Slide 10: Expenses
Expenses Core OHR (Unit: JPY bn) YoY change (Unit: JPY bn) FY2021 FY2022 (amount) Core OHR 62.27% 58.22% 56.55% Expenses 49.3 48.5 (0.8) Core gross operating income Personnel expenses 25.5 26.2 (0.7) 84.6 85.8 80.6 Non-personnel expenses 19.9 19.8 (0.1) Expenses (of which system-related expenses) 8.
Slide 11: Credit-related expenses
Credit-related expenses Credit-related expenses YoY change FY2021 FY2022 (Unit: JPY bn) (amount) (Unit: JPY bn) 56.9 Credit-related expenses 4.6 1.2 (3.4) Provision of general reserve for loan 3.5 (3.0) (6.5) losses Bad debt disposals 1.1 4.2 3.1 7.3 7.6 of which provision of specific reserve 4.6 0.
Slide 12: Projected Performance
02 Projected Performance The 77 Bank, Ltd. | Fiscal Year Ended March 31, 2023 11
Slide 13: Summary of profits and losses
Summary of profits and losses Non- FY2023 YoY change FY2024 FY2022 consolidated (Forecast) Amount % (Simulation) (Unit: JPY bn, %) Gross operating income 78.9 83.8 4.9 6.1 86.4 Interest income 78.6 88.9 10.3 13.1 88.6 Fees and commissions 12.2 11.3 (0.9) (7.9) 11.5 Other operating income (11.9) (16.
Slide 14: Interest income
Interest income FY2023 YoY change FY2024 FY2022 (Unit: JPY bn, %) (Forecast) Amount % (Simulation) Interest income 78.6 88.9 10.3 13.1 88.6 Investment income 79.8 89.6 9.8 12.2 89.5 (Interest on loans and bills discounted) 46.6 49.4 2.8 5.9 50.4 (Interest and dividends on securities) 32.0 39.5 7.5 2
Slide 15: Expenses
Expenses FY2023 YoY change FY2024 FY2022 (Unit: JPY bn) (Forecast) (amount) (Simulation) Expenses 48.5 49.4 0.9 49.5 Personnel expenses 25.5 25.7 0.2 25.2 Non-personnel expenses 19.8 20.6 0.8 21.2 Tax 3.2 3.1 (0.1) 3.1 Key change factors in FY2023 (Forecast) Core OHR (Unit: JPY bn) Change factor Amo
Slide 16: Business Strategy
03 Business Strategy The 77 Bank, Ltd. | Fiscal Year Ended March 31, 2023 15
Slide 17: Vision 2030
“Vision 2030” “Vision 2030” sets forth our ideal image for the future of the 77 Bank Group and provides guiding principles for all officers and employees of the Group to come together and work toward, as we look to achieve the management philosophy (Mission) stated in the Bank Creed. 1. Revitalizati
Slide 18: Vision 2030 – Purpose of Formulation and Background
“Vision 2030” – Purpose of Formulation and Background – The The 77 Bank, Ltd. | Fiscal Year Ended March 31, 2023 17
Slide 19: Vision 2030 – Our Target Form
“Vision 2030” – Our Target Form – ® The 77 Bank, Ltd. | Fiscal Year Ended March 31, 2023 18
Slide 20: Vision 2030 – The 77 Bank Group Direction
“Vision 2030” – The 77 Bank Group Direction – The 77 Bank, Ltd. | Fiscal Year Ended March 31, 2023 19
Slide 21: Vision 2030 – Basic Strategies to Achieve Our Target Form
“Vision 2030” – Basic Strategies to Achieve “Our Target Form” – ® The 77 Bank, Ltd. | Fiscal Year Ended March 31, 2023 20
Slide 22: Consulting Initiative (1)
Top customer Double Consulting Initiative (1) satisfaction strategy productivity strategy Regional growth Corporate culture strategy reform strategy “Finance & Consulting” Deal with diversified needs of customers by consulting Leverage our unique customer base to grow with local companies throug
Slide 23: Consulting Initiative (2)
Top customer Double Consulting Initiative (2) satisfaction strategy productivity strategy Regional growth Corporate culture strategy reform strategy Creation of opportunities for consultation, increase in activities Utilization of business evaluation Number of visits to clients Change in number
Slide 24: Consulting Initiative (3)
Top customer Double Consulting Initiative (3) satisfaction strategy productivity strategy Regional growth Corporate culture strategy reform strategy Structured finance Number of cases, etc. Structured finance (average balances) (since the establishment of the Structured Finance (Unit: JPY bn) Se
Slide 25: 77 Digital Solutions
Top customer Double Support for clients’ issue-solving (1) satisfaction strategy productivity strategy Regional growth Corporate culture strategy reform strategy Establishment of a subsidiary to support digitalization Company name: 77 Digital Solutions Co., Ltd. July 2023 Ownership: Wholly-owned
Slide 26: Support for clients' issue-solving (2)
Top customer Double Support for clients’ issue-solving (2) satisfaction strategy productivity strategy Regional growth Corporate culture strategy reform strategy Establishment of subsidiary that operates human Establishment of a management company for a healthcare resource-related businesses fund sp
Slide 27: Support for clients' issue-solving (3)
Top customer Double Support for clients’ issue-solving (3) satisfaction strategy productivity strategy Regional growth Corporate culture strategy reform strategy Group companies Earnings position of Group companies (FY2022) Non-financial Group companies were established to (Unit: JPY bn) support c
Slide 28: Expansion of customer networks
Top customer Double Expansion of customer networks satisfaction strategy productivity strategy Regional growth Corporate culture strategy reform strategy Number of corporate lending clients outside Miyagi Prefecture Establishment of Utsunomiya Corporate Sales Office (Vs. FY2020) The 77 Bank will res
Slide 29: Retail sales (1)
Top customer Double Retail sales (1) satisfaction strategy productivity strategy Regional growth Corporate culture strategy reform strategy Formulation of Retail Sales Policy The Retail Sales Policy is formulated, as it is necessary for officers and employees to tackle retail sales with the same p
Slide 30: Retail sales (2)
Top customer Double Retail sales (2) satisfaction strategy productivity strategy Regional growth Corporate culture strategy reform strategy Development of support programs and promotion/management systems Sales commissions of assets in custody Bank (non- (Unit: JPY bn) Enhancement and strengthenin
Slide 31: Initiatives for digitalization (1)
Top customer Initiatives for digitalization (1) satisfaction strategy Double productivity strategy Regional growth strategy Corporate culture reform strategy Digital technology reforms for the banking business Strengthening of initiatives for areas using data Status of initiatives for digital stra
Slide 32: Initiatives for digitalization (2)
Top customer Double Initiatives for digitalization (2) satisfaction strategy productivity strategy Regional growth Corporate culture strategy reform strategy Expand non-face-to-face channels Start of the 77 Business Portal operations Renewal of the top screen of the 77 Bank app - Creating new no
Slide 33: Initiatives for paperwork-free
Top Corporate Top customer Double Double Regional Initiatives for paperwork-free Customer satisfaction Satisfaction strategy productivity Productivity strategy Growth strategy culture Regional growth Corporate reform culture strategy reform Strategy Strategy Strategy strategy Effects of paperwork-fr
Slide 34: Rebalancing of management resources
Top customer Double Rebalancing of management resources satisfaction strategy productivity strategy Regional growth Corporate culture strategy reform strategy Branch strategy Number of uses of contact points (in Miyagi Characteristics of markets and actual situation of Prefecture/daily average)
Slide 35: Revitalizing regional industry, economy and tourism
Top customer Double Regional vitalization satisfaction strategy productivity strategy Regional growth Corporate culture strategy reform strategy Regional vitalization mission Four key items of implementation Promotion of urban development projects Support for founding and new businesses Particip
Slide 36: Support for growth of regional businesses
Top customer Double Support for growth of regional businesses satisfaction productivity Regional growth Corporate culture strategy reform strategy strategy strategy Support for founding and new businesses Founding of 77 Startup Members Cases of growth support for founders - Events and seminars f
Slide 37: Collaboration with local governments
Top customer Double Collaboration with local governments satisfaction strategy productivity strategy Regional growth Corporate culture strategy reform strategy Miyagi Wide-area PPP Platform Formation of the Miyagi Wide-area PPP Major MAPP activities in FY2022 Platform (MAPP) • Holding of PPP/PFI s
Slide 38: Increased value of human capital
Top customer Double Increased value of human capital satisfaction strategy productivity strategy Regional growth Corporate culture strategy reform strategy Establishment of challenging corporate culture Key words for establishment of challenging corporate culture Challenge Establish an ambitious c
Slide 39: Development of human resources
Top customer Double Development of human resources satisfaction strategy productivity strategy Regional growth Corporate culture strategy reform strategy Development of human resources that Development of human resources with expertise contribute to corporate reform Development of digital technolo
Slide 40: Marketable securities trading
Marketable securities trading FY2023 marketable securities trading policy Structure for trading Restructuring of yen-denominated bond portfolio capturing changes in interest rate levels Treasury Div. (31 members) (Front department) Reinforcement of interest and dividend revenue by Market Plannin
Slide 41: Strengthen financial foundation (key factors)
Strengthen financial foundation (key factors) FY2021 FY2022 FY2023 FY2030 Results Results Target Vision Net income (consolidated) JPY 22.2 bn JPY 25.1 bn JPY 25.5 bn JPY 28.0 bn (of which credit-related expenses) (JPY 4.6 bn) (JPY 1.2 bn) (JPY 1.5 bn) (JPY 8.0 bn) Capital adequacy ratio 10.27% 11.23
Slide 42: Progress status of KPI (Let's Try!)
Progress status of KPI (Let’s Try!) FY2021 FY2022 FY2023 FY2030 Results Results Target Vision Proportion of companies in Miyagi Prefecture 56% 56% 57% 62% whose main bank is the 77 Bank Number of corporate lending clients outside 1.07x 1.21x 1.23x 1.5x Miyagi Prefecture (Vs. FY2020) Proportion of ho
Slide 43: Measures aimed at enhancing corporate value (1)
Measures aimed at enhancing corporate value (1) Approach aimed at enhancing corporate value Enhance corporate value through “Vision 2030” measures Implement approaches from both P/L and B/S sides to improve the levels of ROE and PBR (Price Book-value Ratio) Create abundant local The 77 Bank Grou
Slide 44: Measures aimed at enhancing corporate value (2)
Measures aimed at enhancing corporate value (2) Enhanced profitability “Vision 2030” has set such targets as “capital adequacy ratio (consolidated),” “net income (consolidated)” and “core OHR” based on the balance between soundness and efficiency among others. Policy to improve the ROE level thr
Slide 45: Measures aimed at enhancing corporate value (3)
Measures aimed at enhancing corporate value (3) Preservation of soundness Preserve the soundness from normal times in order to fully fulfill social infrastructure functions Effectively use capital for shareholder returns and growth investment presupposing strengthened financial foundations (Unit
Slide 46: Measures aimed at enhancing corporate value (4)
Measures aimed at enhancing corporate value (4) Return of profits to shareholders Dividend payout ratio has been gradually improved through increased dividends based on the Policy of Return of Profits to Shareholders formulated in January 2022 Shareholder returns will continue to be strengthened
Slide 47: Measures aimed at enhancing corporate value (5)
Measures aimed at enhancing corporate value (5) Measures to address cross-shareholdings Policy of reducing cross-shareholdings, as a general rule Continuation of measures based on the standards for judging appropriateness of reduction such as capital costs Ratio to (Unit: tickers, JPY bn) consol
Slide 48: Sustainability
04 Sustainability The 77 Bank, Ltd. | Fiscal Year Ended March 31, 2023 47
Slide 49: Identification of materiality
Identification of materiality 77 Bank Group’s materiality and 77 Bank Group SDG Declaration From the perspective of strengthening sustainability initiatives, the 77 Bank Group has identified materiality based on the implementation of internal questionnaire surveys, discussions at the Sustainability
Slide 50: Spread of sustainability
Spread of sustainability Promotion of sustainable finance Total cumulative sustainable finance executed Enhancement of sustainability-related products (Unit: JPY bn) • 77 sustainability-linked loans Sophistication of • 77 green loans 1,200.0 management • 77 social loans Target setting • 77 Seven G
Slide 51: Response to environmental issues
Response to environmental issues Initiatives for carbon neutrality Aiming to realize carbon neutrality by FY2030 - Revised reduction targets CO₂ emissions (Unit: t-CO2) CO2 (Initial target) rate of reduction by 46% reduction from FY2013 level 16,795 CO₂ 10,331 (Revised target) emissions 9,264 9,10
Slide 52: Development of work environment
Development of work environment Support for balancing work and childrearing Promotion of the active participation of women Rate of taking paternity leave, etc. Proportion of female managers (Unit: people) 108.1% Take-up 97.6% 98.8% 30.0% rate 81 85 67 Number of 16.0% 17.0% people taking 13.4% 14
Slide 53: Advancing corporate governance
Advancing corporate governance Diversity of the Board of Directors Skills matrix In-house Outside Management strategy/ Compliance/ Sales/Regional International/ Human resource Corporate management/ Risk DX Sustainability revitalization Market operation development management Directors not Serving
Slide 54: References
05 References The 77 Bank, Ltd. | Fiscal Year Ended March 31, 2023 53
Slide 55: Management environment
Management environment Potential of Miyagi Prefecture (Unit) Miyagi Prefecture (Reference) Tohoku region total Total area (km2) 7,282 66,948 (thousand Population people) 2,268 8,519 (thousand Number of households households) 1,023 3,501 Gross prefectural product (nominal) (JPY bn) 9,829.4 35,158.7 N
Slide 56: Deposits and loans and bills discounted
Deposits and loans and bills discounted Deposits Average balances of deposits Share within Miyagi Prefecture (End-Sept. 2022) (Unit: JPY bn) +13.9% Others 6.3% The 77 +12.4% 8,842.8 Bank 7,761.0 Shinkin banks 6,900.6 9.4% Second-tier 56.7% regional banks 9.7% Regional banks 4.5% Trust banks 3.8%
Slide 57: Japanese-English translation notice
This is a Japanese-English translation of the presentation material for your convenience. In the case that there is any discrepancy between the Japanese and English versions, the Japanese version is assumed to be correct. Please note that the projections described in this document do not guarantee f