Rakuten Bank, Ltd. · TSE:5838
Rakuten Bank — FY2023 Earnings Presentation
69 slides from Rakuten Bank's earnings presentation, May 2024
Slide 1: IR Presentation May 2024
IR Presentation May 2024 Rakuten Bank, Ltd. https: //www.rakuten-bank.co.jp/ *For detailed numerical data, please refer to the data book: https://www.rakuten-bank.co.jp/corp/investors/documents/doc/databook-20240513.xlsx
Slide 2: Contents
Contents 1 Rakuten Bank’s Corporate Profile 2 About Our Medium- to Long-Term Vision and Growth Strategy 3 Overview of FY2023 Financial Results 4 Topics 5 Appendix 2
Slide 3: Rakuten Bank's Corporate Profile
1 Rakuten Bank’s Corporate Profile 3
Slide 4: Corporate Profile
Corporate Profile Name Rakuten Bank, Ltd. In its aim to be the “safe, secure, and most convenient bank,” Rakuten Bank leverages the Rakuten Group’s strengths to develop a host of Established January 14, 2000 distinctive services. Capital JPY32,616mm* Employees 1,056* (consolidated) NBF Shinagawa Tow
Slide 5: Our Philosophy
Our Philosophy Rakuten Bank is aware of our public role and social responsibilities as a bank, and we strive to establish sound efficient business operations based on high self-discipline, to maintain society's unwavering trust and establish value. In addition, as a member of the Rakuten Group, we s
Slide 6: Rakuten Bank's History
Rakuten Bank’s History April 21, 2023 Sep. 2008 Listed on the Entered a capital and business Prime Market of alliance with Rakuten, Inc.*1 the Tokyo Stock October 2010 January 2021 Exchange Became a wholly owned Became the first May 2010 subsidiary of Rakuten, Inc.*1 digital bank*2 in Feb. 2024 Chan
Slide 7: Scale of Operations
Scale of Operations Promote account acquisition by leveraging the Rakuten Group’s customer base (such as increasing new accounts via Rakuten Securities by the new NISA system since January 2024) The total deposit balance is also driven partly by solid growth in the deposit balance per account, o
Slide 8: Three Business Pillars
Three Business Pillars Services for Individual Customers Services for Corporate Customers and Sole Proprietors Deposits/ Personal asset loans Transactions can be completed online anytime, anywhere management Transfers/ Enter- Loans Other remittances tainment Transfer Deposits services Comprehensive
Slide 9: About Our Medium- to Long-Term Vision and Growth Strategy
2 About Our Medium- to Long-Term Vision and Growth Strategy 9
Slide 10: Medium- to Long-term Vision
Medium- to Long-term Vision*1 With an eye to the arrival of the zero-cash era, in April 2022 a medium- to long-term vision was formulated, indexed to FY2020, in the aim of becoming a leading FinTech company. Consolidated Consolidated Number of accounts (non-consolidated) ordinary income ordinary p
Slide 11: Two Pillars of Earnings (Non-Interest Income/Interest Income)
Two Pillars of Earnings (Non-Interest Income/Interest Income) Growth in Non-Interest Income Growth in Interest Income ・Achieve further growth by acquiring main accounts*1 ・Produce of Group's proprietary assets to have a and through cross-selling balanced and diversified loan portfolio 37.9% of ・Bala
Slide 12: Robust Synergies with Unique Rakuten Ecosystem
Robust Synergies with Unique Rakuten Ecosystem Unique Ecosystem Trusted and Well-known Brand Customer Acquisition 70+ services*1 100mm+ membership*1*2 Leading web brand in Japan*3 Cross-selling Most Popular*4 Deep & Rich Data Point Program × Technology (in Japan) Origination of Unique 100mm+ members
Slide 13: Efficient Customer Acquisition through the Rakuten Ecosystem
Efficient Customer Acquisition through the Rakuten Ecosystem 100mm+ Rakuten membership*1 Money Bridge JPY 6.0tn SPU*3 (Point rewards ・ domestic e-commerce GMS*2 (Point rewards) favorable interest rate) 11.0ｍｍ accounts*6 41.5mm MAU*4*5 71.6% of new customers come via Rakuten Group channel*8 30.1ｍｍ Di
Slide 14: Full-fledged Digital Banking Services
Full-fledged Digital Banking Services... Deposits / Asset Management Loans Personal loan Deposits (JPY, foreign currency) Housing loan FX margin trading Education loan Personal financial management Reverse mortgage loan (“Money Support”) Investment property loans Real estate collat
Slide 15: Our Main Accounts' Growth Momentum
Non-Interest Interest Income Income Our Main Accounts’*1 Growth Momentum… Key Drivers of Main Account*1 Conversion Convert into Convenience main account*1 Full-fledged services Customer-centric first-class UI/UX Economic Benefit Open Rakuten Rakuten Bank Ecosystem account Rakuten Point rewards
Slide 16: Increases Our Per Account Earnings
Non-Interest Interest Income Income Increases Our Per Account Earnings Average Revenue per Account Average Deposit Balance per Account (Q4FY2023) (As of March.31, 2024) c. 3x c. 6x Non-main accounts Main accounts *1 Non-main accounts Main accounts *1 16 *1: Accounts that are used for direct debit or
Slide 17: Compelling Rakuten Card Securitization Scheme
Non-Interest Interest Income Income Compelling Rakuten Card Securitization Scheme One-stop securitization service Increasing Credit card shopping GTV*3 receivables (Trust) *2 Securitized Senior E-commerce Shopping portion Assets GMS*1 GTV*3 Shopping Funding through Subordinated Portion acceleration
Slide 18: Our Unique and Rakuten Group Originated Investments
Non-Interest Interest Income Income Our Unique and Rakuten Group Originated Investments Trust Beneficiary Rights of Personal Loans Rakuten Card • Bank card loans • Small loans with AI credit screening To leverage Rakuten Card’s shopping GTV To utilize rich data of 100mm+ Rakuten Group growth fueled
Slide 19: Data Technology to Enlarge Our Interest Income
Non-Interest Interest Income Income Data Technology to Enlarge Our Interest Income Improve accuracy Advanced Credit Scoring – Expand credit access EC – Drive loan growth Contents Travel – Reduce credit cost Sports Commu- FinTech nity Mobile Optimized Marketing – Accelerate customer acquisition – Enh
Slide 20: Promising Data Monetization Opportunities
Promising Data Monetization Opportunities Our unique advantages enable us to increase ad revenue and promote cross-use of our services Rich Data Targeting Reach 15.2mm accounts*1 (KYC completion) Precise target segmentation For advertisers Banking transaction data – AI technology Data-driven
Slide 21: Providing a New Customer Experience through BaaS
Providing a New Customer Experience through BaaS*1 Open API*2 14.59 mm passengers per day*3 Transportation 5.57 mm cardholders*4 （Launched May 9,2024） The Ogaki Kyoritsu Bank Entertainment Retail THE NISHI-NIPPON CITY BANK Real Estate/ Housing Other Regional Banks Life Insurance (“Rakuten Bank Dai-i
Slide 22: Overview of FY2023 Financial Results
3 Overview of FY2023 Financial Results 22
Slide 23: FY2023 Financial Results
FY2023 Financial Results Key Financial and Other Data Ordinary Income Ordinary Profit Non-interest Income*1 ROE *2 (FY2023, consolidated) (FY2023, consolidated) Ratio (FY2023, consolidated) (FY2023, consolidated) 137.9 JPY bn 48.3 JPY bn 38.0 % 14.1 % +14.5% YoY +24.8% YoY -4.1pts YoY +0.3pts YoY #
Slide 24: Consolidated Statements of Income
Consolidated Statements of Income Interest income rose, owing to the accumulation of investment assets. As a result, ordinary income and gross operating profit both grew by double digits, and ordinary profit rose 24.8% YoY. (JPY bn, consolidated) FY2022 FY2023 Change YoY Change in Ordinary profit
Slide 25: Summary of Consolidated Financial Results
Summary of Consolidated Financial Results FY2023 consolidated results exceeded our revised forecast disclosed on February 13, 2024. Earnings continued to rise, with ordinary income, ordinary profit, and net income delivering double-digit year-on-year increases Ordinary Income Ordinary Profit Net
Slide 26: Progress of Medium- to Long-term Vision
Progress of Medium- to Long-term Vision Number of Bank Accounts Ordinary Income CAGR+10.0% （mm, non-consolidated） （JPY bn, consolidated） （Target: >+10%） CAGR +13.1% （Target: >+15%） 200.0 25.0 137.9 15.2 103.3 10.5 FY2020 FY2023 FY2026 FY2020 FY2023 FY2026 Target Target Total Deposit Balance Ordinary
Slide 27: The Consolidated Forecast for FY2024
The Consolidated Forecast for FY2024 The consolidated forecast in FY2024 is as follows. (JPY bn, consolidated) (JPY bn, consolidated) FY2022 FY2023 FY2024 （Actual) (Actual) (Forecast) YoY Change YoY Change Change % Change % Ordinary Income 120.4 137.9 +17.5 +14.5% ⇒ 162.5 +24.5 +17.8% Ordinary Pro
Slide 28: Interest and Non-Interest Income (Non-Consolidated)
Interest and Non-Interest Income (Non-Consolidated) The ratio of interest income to non-interest income has thus far trended at around 6:4. However, given that the Bank of Japan ended its negative interest rate policy, we recognize that interest income will grow at a faster rate than non-interest
Slide 29: Interest Income (Non-Consolidated)
Non-Interest Interest Income Income Interest Income (Non-Consolidated) Interest income grew +21.6% YoY, owing to the steady expansion of investment assets, etc. This figure outpaces the growth rate of +13.4% in FY 2022 (Interest on both loans and monetary claims bought grew steadily) Interest Inco
Slide 30: Breakdown of Loans and Monetary Claims Bought
Non-Interest Interest Breakdown of Loans and Monetary Claims Bought Income Income Diversified portfolio of loans and monetary claims bought increased in a well-balanced manner. Change from （JPY bn, non-consolidated） Mar.31, 2022 Mar.31, 2023 Mar.31, 2024 YoY Mar.31, 2023 Loans 2,942.5 3,769.0 4,02
Slide 31: Expand Investment Assets/Net Interest Income
Non-Interest Interest Medium- to Long-term Vision Income Income Expand Investment Assets/Net Interest Income Expansion of middle-risk assets drove growth in net interest income. Total for Categories That Include Middle-Risk Assets Monetary claims bought: others (JPY bn, non-consolidated) ABL (Asse
Slide 32: Balance Sheet Summary
Non-Interest Interest Balance Sheet Summary Income Income Of investment assets, 78% are based on floating rates, and floating rates are mostly based on TIBOR, so benefit from a structural tailwind*1 is expected when interest rates rise. (March 31, 2024, non-consolidated) Loans + monetary claims bo
Slide 33: Trend of market interest rates and asset-side and liability-side rates
Trend of market interest rates and asset-side rates and liability-side rates Liability-side rate Asset-side rate（Our housing loan variable rate） (Our ordinary deposit interest rate for individual) 1.600% 0.300% 1.400% 0.250% 1.200% 0.200% 1.000% 0.800% 0.150% 0.600% Jan. 2016 Mar. 19, 2024 0.100% De
Slide 34: Status of Marketable Securities Investment
Status of Marketable Securities Investment*1 Non-Interest Interest Income Income Considering forthcoming interest rate conditions, we plan to gradually expand loans to Ministry of Finance and purchase of marketable securities for investment income purposes. Loans to Ministry of Finance • Until Q
Slide 35: Non-Interest Income (Non-Consolidated)
Non-Interest Interest Non-Interest Income (Non-Consolidated) Income Income A solid rise in total settlements led to an 11.1% YoY increase in exchange/settlement commissions FY2022 FY2023 Change YoY Breakdown of Non-Interest Income*1 (FY2023, non-consolidated) Non-interest income*1 49.4 50.8 +1.4 +
Slide 36: Our Main Accounts' Growth Momentum
非金利収益 金利収益 Our Main Accounts’*1 Growth Momentum Our number of main accounts, which tend to have higher deposit balances and be more profitable, is increasing faster than the number of total accounts Number of Total accounts and main accounts*1 （mm、rounded down less than display units） YoY 15.2 +10
Slide 37: Leveraging the New NISA Tailwind to Expand Our Customer Base
Non-Interest Interest Income Income Topic: Leveraging the New NISA Tailwind to Expand Our Customer Base (Leveraging the Rakuten Ecosystem) The start of the new NISA in January 2024 created greater demand for securities trading accounts. Accordingly, the pace of bank account openings via Rakuten Se
Slide 38: Sufficient Capital Adequacy with Disciplined Management
Sufficient Capital Adequacy with Disciplined Management Sufficient capital was secured by public offering for further business expansion. We maintained the capital adequacy ratio at a sound level, while actively accumulating investment assets after public offering. Capital Adequacy Ratio*1 Since
Slide 39: General and Administrative Expenses (Non-Consolidated)
General and Administrative Expenses (Non-Consolidated) An expanded scale of business boosted management efficiency, and our G&A Expense Ratio reached 42.5% improving 3.2pts from FY2022. General and Administrative Expenses and G&A Expense Ratio* (Non-Consolidated) (JPY bn, amounts truncated after t
Slide 40: Credit Costs (Non-Consolidated)
Credit Costs (Non-Consolidated) Credit cost ratio remained at a low level, while credit costs rose due to an increase in card loans. In the case of non-guaranteed card loans, the increase in gross profit significantly exceeds the increase in credit costs. Credit costs*1 （JPY mm, non-consolidated
Slide 41: Roadmap to Achieve Higher ROE
Roadmap to Achieve Higher ROE Further Business Expansion with Unique Rakuten Ecosystem Aiming for Non-Interest Income Growth ROE*1 further increases • Further growth through main account*2 acquisition and cross-selling 14.1% 13.8% Enhance Risk/Return Profile • Produce of Group‘s proprietary asse
Slide 42: Our Dividend Policy
Our Dividend Policy Our Thoughts on Capital and View on the Capital Adequacy Ratio Prioritize further growth over dividends for the near term To achieve the targets in our Medium- to Long-Term Vision, the accumulation of (%) risk assets is intended to control within – Intend to keep capital adequacy
Slide 43: Implementation of Shareholder Benefit Program
Implementation of Shareholder Benefit Program（Announced February 22, 2024） Newly introduced a shareholder benefit program, based on which we also expect an increase in salary receiving accounts, one of the important factors toward achievement of our medium- to long-term vision. Purpose of Sharehol
Slide 44: Topics
4 Topics 44
Slide 45: Launch of JRE BANK service with JR East Group
Launch of JRE BANK service with JR East Group Realize a new financial service experience by providing benefits that take advantage of the assets and business areas of the JR East Group through the BaaS initiative ー Launched on May 9, 2024 Connections between Customers and JR East Group 40％ discoun
Slide 46: FinTech Reorganization - Announced on April 1st, 2024
FinTech Reorganization - Announced on April 1st, 2024 Rakuten Bank, Ltd. and Rakuten Group, Inc. entered into an MoU*1 to initiate discussion on integration of the entire FinTech business*2 into one group to further expand our FinTech Ecosystem with innovative services and deeper data collaboratio
Slide 47: Appendix
５ Appendix 47
Slide 48: Strong Commitment by Experienced Management
Strong Commitment by Experienced Management*1 *1: As of Mar.31, 2024 *2: Executive Vice President. 48
Slide 49: Disciplined Corporate Governance
Disciplined Corporate Governance*1 3 Outside Directors out of 5 Directors Banking Regulations Hiroshi Mikitani Hiroyuki Nagai Chairman President & CEO Group Arm’s- Synergies Length Eiji Ebinuma Michio Kayano Masatsugu Nagato Outside director Outside director Outside director 3 Outside Auditors out o
Slide 50: Our SDGs Initiatives
Our “SDGs” Initiatives Contributing to a healthy and economically prosperous society through “SDGs” “SDGs” × Gender “SDGs” × Education • Percentage of women in managerial • Construction of elementary school in positions*1: People Cambodia (2006) and Philippines (2008) - Reached our initial target of
Slide 51: Digital Bank Share
Japan – Dawn of Banking Digitalization Japan Cashless Payment Ratio*2 Japan Post Bank 80% 3 21% (aiming to be the global highest level) % Promoted by Japanese Government Digital Bank ~40% 39% Share*1 Mizuho Bank 29% MUFG Bank (deposit balance) 15% 22% … … … SMBC 2020 2023 2025 Long- 17% term Actual
Slide 52: Banking in a Cashless Era
Banking in a Cashless Era The industry’s widest range of instruments for cashless payment Debit Cards Prepaid Cards Direct Payment for code payment Rakuten Bank Card Service Linkage with Rakuten Card via Direct Debit (Rakuten Card Combined with Cash Card) Interest on ordinary deposits double the u
Slide 53: Our Unique Service Offering through One App
Our Unique Service Offering through One App… Full-fledged Digital Banking Services Rakuten Ecosystem Deposits / Asset Management Loans Transfer Payment Entertainment Single integrated app comprehensively covering individuals’ everyday life 53
Slide 54: Rakuten International Commercial Bank in Taiwan
Rakuten International Commercial Bank in Taiwan Company Overview Group Structure Company RAKUTEN INTERNATIONAL COMMERCIAL BANK CO., LTD. Name (Joint Venture) Establishment May 18, 2020 Rakuten Card Co., Ltd. IBF Financial Holdings Co., Ltd. 50% 1% 49% Operation Since January 19, 2021 Electronic bank
Slide 55: Rakuten Card (originator) Securitization Scheme
Scheme for the Liquidation of Rakuten Card’s Credit Card Non-Interest Income Interest Income Receivables (Trust Beneficiary Rights) Rakuten Card Co., Ltd. is one of Japan’s largest credit card companies, with more than 30 million cards issued.* In general, when the holder of a credit card uses their
Slide 56: Number of Accounts, Deposit Balance (Non-Consolidated)
Number of Accounts, Deposit Balance (Non-Consolidated) Number of Accounts (Non-Consolidated) Deposit Balance (Non-Consolidated) (10 thousand accounts, amounts truncated after the digit shown) (JPY bn, amounts truncated after the digit shown) * Except for the canceled account 10,540.2 1,600 1,523 88.
Slide 57: Improved Spreads on the Card Loans (Personal Loans)
Non-Interest Interest Income Income Improved Spreads on the Card Loans (Personal Loans) Effective yields on Card loans (Personal Loans) comprise two layers. Non-guaranteed balance: yield - ratio of allowance for loan losses = (1) effective yield on non-guaranteed personal loans Balance with extern
Slide 58: Quarterly Consolidated Financial Summary
Quarterly Consolidated Financial Summary FY2022 FY2023 YoY (JPY bn, consolidated) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Ordinary income 29.0 29.3 30.7 31.3 32.6 33.2 35.1 36.8 +12.2% +13.5% +14.3% +17.7% Interest income 16.3 16.9 17.6 18.0 19.2 20.3 21.8 23.0 +17.6% +20.5% +23.9% +27.2% Non-interest i
Slide 59: Financial Summary – Consolidated Balance Sheets
Financial Summary – Consolidated Balance Sheets (JPY bn, consolidated) Mar. 31, 2022 Mar. 31, 2023 Mar. 31, 2024 Total assets 9,490.6 11,589.5 13,480.4 (incl.) Cash and due from banks 3,649.1 4,050.2 4,791.0 (incl.) Monetary claims bought 1,680.5 2,103.0 2,550.8 (incl.) Marketable securities 578.0 7
Slide 60: Quarterly Non-consolidated Financial Summary
Quarterly Non-consolidated Financial Summary FY2022 FY2023 YoY (JPY bn, non-consolidated) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Ordinary income 28.5 28.6 29.9 30.4 31.7 32.3 34.1 35.8 +11.2% +12.9% +13.8% +17.4% Interest income 16.1 16.5 17.2 17.6 18.7 19.8 21.2 22.3 +16.2% +19.6% +23.4% +26.7% Non-in
Slide 61: Financial Summary – Non-consolidated Balance Sheets
Financial Summary – Non-consolidated Balance Sheets (JPY bn, non-consolidated) Mar. 31, 2022 Mar. 31, 2023 Mar. 31, 2024 Total assets 9,647.7 11,694.2 13,527.6 (incl.) Cash and due from banks 3,645.1 4,039.7 4,782.3 (incl.) Monetary claims bought 1,641.5 2,077.0 2,498.8 (incl.) Marketable securities
Slide 62: Accountholder Demographics
Accountholder Demographics (Mar.31, 2024) By Age Under 20s By Region Kyushu, Hokkaido 4% Okinawa 4% Chugoku, 10% 60s and Tohoku 20s Shikoku over 5% 14% 8% 13% 50s 21% Kansai 17% Kanto, 30s Koshinetsu 23% 42% Tokai 12% 40s 25% Hokuriku 2% Company executive Others By Occupation 2% 4% By Gender Unemplo
Slide 63: Organizational Chart of Rakuten Group
Organizational Chart of Rakuten Group*1 Rakuten Group, Inc. (TSE: 4755) Internet Services business 49.26% FinTech 100% FinTech 100% Mobile 100% business business Rakuten Bank, business Rakuten Card Rakuten Rakuten Mobile, Ltd. 4.72% Co., Ltd. Securities Holdings, Inc. Inc. （TSE: 5838） 95.28% 100% 50
Slide 64: Collaboration between banks and FinTech businesses
Collaboration between banks and FinTech businesses Rakuten FinTech Ecosystem Collaboration between FinTech businesses other than banks 60 JPY . tn SPU*4 (Point rewards) Direct Payment No.1 QR code payment domestic service in loyalty and customer e-commerce expectations*7 GMS*2*3 Direct Debit (Point
Slide 65: The history of the FinTech segment within the Rakuten Group
The history of the FinTech segment* within the Rakuten Group September 2004 April 2013 Rakuten fully acquires Rakuten Group rebrands Aozora Card Co., Ltd. AIRIO Life Insurance as (currently known as Rakuten Life Insurance Co., Rakuten Card Co., Ltd.). Ltd. (Life Insurance) June 2005 Rakuten commence
Slide 66: Rakuten Card: Driving the Rakuten FinTech Ecosystem
Rakuten Card: Driving the Rakuten FinTech Ecosystem with a Huge Customer Base Cards Issued *1 Shopping GTV GTV Share*2 目標 Dec.2023 30.1 ｍｍ LTM 21.1 tn yen Nov. 2023 23.2 % *１：As of Dec.31, 2023. . From Financial Data Sheet 2023 Q4 disclosed by Rakuten Group, Inc. Feb.14, 2024. *２：Calculated by Rakut
Slide 67: Rakuten Securities: High Customer Loyalty through Money Bridge
Rakuten Securities: Achieving High Customer Loyalty through “Money Bridge” How Money Bridge Works Huge Presence and Rapid Growth of Money Bridge (non-consolidated) Transaction JPY 5.7tn (YoY +23.5%) Automatic deposit 4.9mm accounts (YoY +23.8%) 54.3%*2 of Rakuten Bank’s total deposit balance Automat
Slide 68: Rakuten Payment: Developing Leading Services in Japan
Rakuten Payment :Developing Leading Services in Japan Centered on Payment and Marketing Service Lineup Rakuten Payment Revenue*3 (JPY bn) Cashless payment service (QR code/barcode/touch payment/Suica/ Online payment,etc.) Common point service IC type electronic money Online electronic money Poikatsu
Slide 69: Disclaimer on opinions and forecasts
The opinions and forecasts stated in this document reflect the Bank's judgment at the time these materials were prepared. The Bank does not guarantee the accuracy of the information contained herein. Please note that actual performance and results may differ significantly due to various factors.