Rakuten Bank, Ltd. · TSE:5838
Rakuten Bank — H1 FY2024 Earnings Presentation
71 slides from Rakuten Bank's earnings presentation, Nov 11, 2024
Slide 1: FY2024 First Half IR Presentation
FY2024 First Half IR Presentation Rakuten Bank, Ltd. https://www.rakuten-bank.co.jp/corp/english/investors/ *For detailed numerical data, please refer to the data book: https://www.rakuten-bank.co.jp/corp/investors/documents/doc/databook-20241111.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 Results for First Half of FY2024 4 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 1,105* (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 The number of accounts increased as we promoted account acquisition, leveraging the customer base of the Rakuten Group. The increase in total deposit balance (+16.4% YoY) outpaced the growth in the number of accounts (+12.6% YoY). Number of Bank Accounts Total Deposit Balance
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 ・Balanced expa
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 No.1 web brand in Japan*3 Cross-selling Most Popular*4 Deep & Rich Data Point Program × Technology (in Japan) Origination of Unique 100mm+ membership
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) (Point rewards ・ favorable interest rate) 11.3ｍｍ accounts*5 domestic e-commerce GMS*2 NISA’s Account 42.3mm No.1*6 69.8% MAU*4*5 of new customers come via Rakuten Gro
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 collatera
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 (Q2 FY2024) (As of Sep. 30, 2024) c. 4x c. 5x *1 Non-main accounts Main accounts 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: Creating Investment Opportunities through the Securitization Business
Non-Interest Interest Creating Investment Opportunities on Our Own through the Income Income Securitization Business that Utilizes Rakuten Trust Example of a scheme (simplified) Monetary claims Arranger • Rakuten Card trust beneficiary rights • Other credit card receivables • Accounts receivable, et
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 expand the advertising business and improve the marketing efficiency of our banking services Rich Data Targeting Reach Sales of advertising solutions to external 16.1mm accounts*1 (KYC completion) Precise target segme
Slide 21: Providing a New Customer Experience through BaaS
Providing a New Customer Experience through BaaS*1 Open API*2 Transportation 15.57 mm passengers per day*3 5.83 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 Results for First Half of FY2024
3 Overview of Results for First Half of FY2024 22
Slide 23: 1H FY2024 Financial Results
1H FY2024 Financial Results Key Financial and Other Data Ordinary Income Ordinary Profit Non-interest Income*1 ROE *2 (1H FY2024, consolidated) (1H FY2024, consolidated) Ratio (1H FY2024, annualized basis, 83.6 31.0 (1H FY2024, consolidated) consolidated) JPY +26.9% YoY bn JPY +37.8% YoY bn 33.4-6.1
Slide 24: Consolidated Statements of Income
Consolidated Statements of Income Interest income rose substantially, owing to the accumulation of investment assets and the Bank of Japan’s policy rate change. As a result, we saw significant growth in ordinary income , gross operating profit, ordinary profit, and profit attributable to owners of
Slide 25: Summary of Consolidated Financial Results
Summary of Consolidated Financial Results Driven by the increase in interest income, the YoY growth rates of ordinary income, ordinary profit, and net income significantly exceeded our forecasts. The progress rates against the performance forecasts for ordinary income, ordinary profit, and net inc
Slide 26: Revisions to the Consolidated Forecast for FY2024
Revisions to the Consolidated Forecast for FY2024 In light of our performance in 1H, we upwardly revised our consolidated forecast for FY2024, as shown below. (JPY bn, consolidated) FY2024 FY2024 FY2023 (Original (Revised (Results) forecast) forecast) Change YoY YoY (% change) Ordinary +16.0 Incom
Slide 27: Interest and Non-Interest Income (Non-Consolidated)
Interest and Non-Interest Income (Non-Consolidated) The ratio of interest income to non-interest income trended at around 6:4 under the Bank of Japan’s negative interest rate policy. Since the lifting of this policy, our interest income has grown at a faster pace than non-interest income, and its
Slide 28: Interest Income (Non-Consolidated)
Non-Interest Interest Income Income Interest Income (Non-Consolidated) Interest on loans, interest on monetary claims bought, and others (interest on due from banks, interest and dividend on securities, etc.) all increased thanks to the accumulation of investment assets. The Bank of Japan’s policy
Slide 29: Breakdown of Loans and Monetary Claims Bought
Breakdown of Loans and Monetary Claims Bought Non-Interest Income Interest Income Each category of the loans and the monetary claims bought increased in a well-balanced manner. YoY vs23/9（12M） QoQ vs24/3（6M） （JPY bn, non-consolidated） Mar. 31, 2023 Mar. 31, 2024 Sep. 30,2023 Sep. 30,2024 (Amount)
Slide 30: Expand Investment Assets/Net Interest Income
Non-Interest Interest Medium- to Long-term Vision Income Income Expand Investment Assets/Net Interest Income Middle-risk assets increased by 296 billion yen over the past year (+13.6% YoY). Total for Categories That Include Middle-Risk Assets (JPY bn, non-consolidated) Monetary claims bought: othe
Slide 31: Balance Sheet Summary
Non-Interest Interest Balance Sheet Summary Income Income Since 78% of our investment assets adopt floating rates, which are mostly based on TIBOR, we have already advantageously benefited from the interest rate increase in 1H FY2024. (Sep. 30, 2024, non-consolidated) Loans + monetary claims bough
Slide 32: Status of Investment in Marketable Securities, etc.
Status of Investment in Marketable Securities, etc.*1 Non-Interest Interest Income Income To improve the yields on our investments using surplus funds, we gradually expanded loans to the Ministry of Finance along with investments in marketable securities, while securing liquidity. (Sep. 30, 2024,
Slide 33: Non-Interest Income (Non-Consolidated)
Non-Interest Income (Non-Consolidated) Non-Interest Interest Income Income The number of payments steadily increased, and exchange/settlement commissions, direct debit fees, and debit card commissions all achieved YoY double-digit growth. FY2023 FY2024 Breakdown of Non-Interest Income*1 (JPY bn, n
Slide 34: Our Main Accounts' Growth Momentum
Non-Interest Interest Income Income Our Main Accounts’*1 Growth Momentum Main accounts*1 , which tend to have higher deposit balances and be more profitable, increased at a faster pace than the number of total accounts Number of Total accounts and main accounts*1 （mm、rounded down less than display
Slide 35: Sufficient Capital Adequacy with Disciplined Management
Sufficient Capital Adequacy with Disciplined Management Following our capital increase through public offerings in April and May 2023, we actively accumulated investment assets. Meanwhile, our capital adequacy ratio remained at a sound level. Capital Adequacy Ratio*1 (JPY bn, consolidated) Since
Slide 36: General and Administrative Expenses (Non-Consolidated)
General and Administrative Expenses (Non-Consolidated) The business scale expansion boosted our management efficiency, and our G&A Expense Ratio reached 37.7%, improving 5.8pts from FY2023 1H. General and Administrative Expenses and G&A Expense Ratio* (Non-Consolidated) *G&A Expense ratio: General
Slide 37: 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 non-guaranteed personal loans. Credit costs*1 *2 （JPY mm, non-consolidated） Credit costs Reversal of credit costs Credit cost ratio 159 (148) (657) (876) (1,297) (1,442) (2,102)
Slide 38: Roadmap to Achieve Higher ROE
Roadmap to Achieve Higher ROE Aiming for Further Business Expansion with Unique Rakuten Ecosystem ROE*1 further increases Non-Interest Income Growth • Further growth through main account*2 acquisition and cross-selling 16.2% Enhance Risk/Return Profile • Produce of Group‘s proprietary assets to
Slide 39: 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 40: Cancellation of FinTech Reorganization
Cancellation of FinTech Reorganization- Announcement of Changes as of Sep. 30, 2024 On April 1, 2024, Rakuten Bank and the Rakuten Group signed an MoU to initiate discussions on the reorganization of Rakuten’s entire FinTech business*1 (aiming for the reorganization to take effect in October 2024)
Slide 41: Appendix
4 Appendix 41
Slide 42: Strong Commitment by Experienced Management
Strong Commitment by Experienced Management*1 Mika Matsumoto Kenji Takeuchi Tatsuya Misawa Takuya Mizuno Tamaki Kasuya Masato Tarukado Kosho Ito Executive Manager: General Manager: Executive Manager: Executive Manager: Executive Manager: General Manager: General Manager: • Customer Support • Data In
Slide 43: 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 44: 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 • Host seminars for financial education positions*1: People • A member of “Children’s Smile Movement” - Reached our initial targe
Slide 45: Digital Bank Share
Japan – Dawn of Banking Digitalization Japan Cashless Payment Ratio*2 Japan Post Bank 80% 4 20% (aiming to be the global highest level) % Promoted by Japanese Government Digital Bank ~40% 39% Share*1 Mizuho Bank 29% MUFG Bank (deposit balance) 16% 22% … … … SMBC 2020 2023 2025 Long- 17% term Actual
Slide 46: Rakuten Bank's Ability to Lead Digitalization
Rakuten Bank’s Ability to Lead Digitalization A corporate mindset of specializing in digital and cashless (1) Impact on earnings improvement No possession of legacy assets (branches/own ATMs) Utilization of state-of-the-art technology Service creation with an in-depth understanding of custom
Slide 47: 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 is more favo
Slide 48: 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 48
Slide 49: Providing JRE BANK service jointly with JR East Group
Providing JRE BANK service jointly 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％
Slide 50: 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 51: Rakuten Card (originator)
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 31 million cards issued.* In general, when the holder of a credit card uses their
Slide 52: Number of Accounts, Deposit Balance (Non-Consolidated)
Number of Accounts, Deposit Balance (Non-Consolidated) Number of Accounts (Non-Consolidated) Deposit Balance (Non-Consolidated) (Millions of accounts, amounts truncated after the digit shown) (JPY bn, amounts truncated after the digit shown) 18.00 12,000 11,119.0 Total 16.19 10,540.2 94.4 88.2 148.9
Slide 53: 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 54: Quarterly Consolidated Financial Summary
Quarterly Consolidated Financial Summary FY2023 FY2024 YoY (JPY bn, consolidated) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Ordinary income 32.6 33.2 35.1 36.8 40.8 42.8 +25.0% +28.7% Interest income 19.2 20.3 21.8 23.0 26.1 29.2 +35.8% +43.5% Non-interest income 13.2 12.8 13.1 13.2 14.4 13.4 +9.1% +4.8%
Slide 55: Financial Summary – Consolidated Balance Sheets
Financial Summary – Consolidated Balance Sheets (JPY bn, consolidated) Mar. 31, 2022 Mar. 31, 2023 Mar. 31, 2024 Sep. 30, 2023 Sep. 30, 2024 Total assets 9,490.6 11,589.5 13,480.4 12,170.8 14,222.7 (incl.) Cash and due from banks 3,649.1 4,050.2 4,791.0 4,153.6 4,970.4 (incl.) Monetary claims bought
Slide 56: Quarterly Non-consolidated Financial Summary
Quarterly Non-consolidated Financial Summary FY2023 FY2024 YoY (JPY bn, consolidated) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Ordinary income 31.7 32.3 34.1 35.8 39.5 41.3 +24.3% +27.9% Interest income 18.7 19.8 21.2 22.3 25.3 28.2 +34.7% +42.3% Non-interest income 12.8 12.4 12.7 12.8 14.0 12.9 +8.9% +4
Slide 57: 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 Sep. 30, 2023 Sep. 30, 2024 Total assets 9,647.7 11,694.2 13,527.6 12,245.4 14,257.6 (incl.) Cash and due from banks 3,645.1 4,039.7 4,782.3 4,145.7 4,960.1 (incl.) Monetary claim
Slide 58: Accountholder Demographics
Accountholder Demographics By Age By Region By Occupation Hokkaido Under 20s 4% Company Others 4% executive 4% Tohoku 2% Kyushu, 6% Okinawa Unemployed 60s and 20s 10% 4% over 13% Chugoku, Student 14% Shikoku 5% 7% Housewife 7% 50s Kansai Company employee 21% 17% Kanto, (general) 30s Koshinetsu Part-
Slide 59: 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 60: Implementation of Shareholder Benefit Program
Implementation of Shareholder Benefit Program（Announced August 26, 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 Shareholde
Slide 61: Organizational Chart of Rakuten Group
Organizational Chart of Rakuten Group*1 Rakuten Group, Inc. (TSE: 4755) Internet Services business 49.26% FinTech 100% 100% Mobile 100% FinTech business Rakuten Bank, business business Rakuten Other domestic Rakuten Card Rakuten Mobile, and overseas Ltd. 4.72% Co., Ltd. Securities Holdings, Inc. Inc
Slide 62: 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 63: Measures to Avoid Conflicts of Interest in FinTech Reorganization
Measures to Avoid Conflicts of Interest and Ensure Fairness in Relation to FinTech Reorganization Rakuten Group, Inc. Rakuten Bank, Ltd Rakuten Group, Inc. Rakuten Bank, Ltd *1 Rakuten Bank’s Advisor Board of directors Financial Advisor： Advice, etc. • Daiwa Securities Co. Ltd. Negotiation From the
Slide 64: Rakuten Card: Driving the Rakuten FinTech Ecosystem
Rakuten Card: Driving the Rakuten FinTech Ecosystem with a Huge Customer Base *１：Calculated by Rakuten Group, Inc. based on “Ministry of Economy, Trade and Industry, Specified Service Industry Statistics Survey, Credit Card （https://www.meti.go.jp/statistics/tyo/tokusabido/result/result_1.html） 64
Slide 65: Rakuten Securities: Achieving 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 5.3mm accounts (YoY +24.8%) Automatic deposit “Money Bridge” deposit balance JPY 5.9tn (YoY +18.0%) makes up 53.1%*2 of Raku
Slide 66: Rakuten Payment: Developing Leading Services in Japan
Rakuten Payment :Developing Leading Services in Japan Centered on Payment and Marketing Service Lineup Rakuten Payment Revenue*2 (JPY bn) Cashless payment service (QR code/barcode/touch payment/Suica/ Online payment,etc.) Common point service IC type electronic money Online electronic money Number o
Slide 67: The opinions and forecasts stated in this document reflect the Bank's judgment at the
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.
Slide 68: Appendix: Happy Program (Customer Loyalty Program)
Appendix：Happy Program (Customer Loyalty Program ) A customer loyalty program which offers customers a variety of benefits for linking their bank accounts to their Rakuten member information. 1. Customers are assigned a membership tier based on either their Rakuten Bank account balance or the number
Slide 69: Appendix: Net Interest Margin (Interest Spread)
Appendix：Net Interest Margin (Interest Spread) 69
Slide 70: Revision of Interest Rates for Yen Ordinary Deposits
Regarding the Revision of Interest Rates for Yen Ordinary Deposits Effective from September 1, 2024 (Announced on August 23, 2024) ※Before tax Before Revision After Revision （～August 31, 2024） (September 1, 2024～) *1 *2 Interest Rates for Yen Ordinary Deposits (Both Individual and Corporate 0.02% pe
Slide 71: Revision of Interest Rates for Yen Term Deposits
Regarding the Revision of Interest Rates for Yen Term Deposits Effective from September 1, 2024 (Announced on September 1, 2024) ※Before tax 期間 Before Revision After Revision 7-Day 0.02％ 0.105％ 14-Day 0.02％ 0.105％ 1-Month 0.02％ 0.105％ 3-Month 0.02％ 0.105％ Rate of 6-Month 0.02％ Increase 0.110％ 1-Year