Fukuoka Financial Group, Inc. · TSE:8354
Fukuoka Financial — FY2020 Earnings Presentation
58 slides from Fukuoka Financial's earnings presentation, June 2021
Slide 1: Investor Meeting: Financial Results & Earnings Projections, Management Strategy, Minna Bank
Investor Meeting Financial Results & Earnings Projections Management Strategy Minna Bank June 2021
Slide 2: Contents
Contents Part I Financial Results & Earnings Projections Part III Minna Bank Summary of Financial Results for FY2020 3 Overview of Minna Bank 28 Transition of Top Line: FY2020 Results 4 Reaction following Announcement of Business Policy 29 FY2020 Consolidated Net Income: Factors Driving Ye
Slide 3: Part I Financial Results & Earnings Projections
Part I Financial Results & Earnings Projections
Slide 4: Summary of Financial Results for FY2020
Summary of Financial Results for FY2020 Profit & loss (3 banks total) (¥ bil.) 3 banks non- Bank of Fukuoka Kumamoto Bank Juhachi-Shinwa Bank consolidated total Point 1 Core business profit is 79.7 billion yen (non-consolidated) (non-consolidated) (non-consolidated) [Compared to projection of FY2020
Slide 5: Transition of Top Line: FY2020 Results
Transition of Top Line: FY2020 Results FY2020 full-year results [YoY chg.] (¥ bil.) Core business profit: +0.8 [compared to previous disclosure +3.2] Net interest income: +0.5 Non-interest income: -0.4 Domestic interest on deposits and loans: +1.0 +6.6 +0.3 -0.5 -0.1 +0.7 79.7 78.9 -5.9 -0.3 Domes
Slide 6: FY2020 Consolidated Net Income: Factors Driving Year-on-Year Change
FY2020 Consolidated Net Income: Factors Driving Year-on-Year Change FY2020 consolidated net income [YoY chg.] (¥ bil.) (¥ bil.) Integration FY 2019 FY 2020 YoY chg. expenses Before taxes -15.1 -9.3 +5.8 After taxes -11.0 -6.9 +.42 Related to FY 2019 FY 2020 YoY chg. Minna Bank After taxes -5.4 -5.0
Slide 7: Earnings Projections for FY2021
Earnings Projections for FY2021 Profit & loss (3 banks total) Profit & loss [by Bank] (¥ bil.) (¥ bil.) 3 banks non- Bank of Fukuoka Bank of Fukuoka Kumamoto Bank Juhachi-Shinwa Bank consolidated total (non-consolidated) (non-consolidated) (non-consolidated) P:FY2021 P:FY2021 P:FY2021 P:FY2021 YoY c
Slide 8: Transition of Top Line: FY2021 Projected
Transition of Top Line: FY2021 Projected FY2021 Projected [YoY chg.] (¥ bil.) Core business profit: +4.4 Net interest income: -1.5 Non-interest income: +2.4 • SMEs: +1.6 • Large- sized Domestic interest on deposits enterprises: -0.5 and loans: -1.4 • Retail: -2.0 • Public: -0.7 Interest on loans: -1
Slide 9: Earnings Projections for FY2021: Factors Driving Year-on-Year Change
Earnings Projections for FY2021: Factors Driving Year-on-Year Change FY2021 projected consolidated net income [YoY chg.] (¥ bil.) (¥ bil.) Integration FY 2020 FY 2021 YoY chg. expenses Before taxes -9.3 -2.1 +7.2 After taxes -6.9 -1.5 +5.3 Related to FY 2020 FY 2021 YoY chg. Minna Bank YoY chg. +5.3
Slide 10: Net Interest Income
Net Interest Income Net interest income in FY2021 is projected to be 177.5 billion yen, a decrease of 1.5 billion yen year-on-year. We plan to make up for the negative impact of redeeming domestic bonds with broader securities investment diversification, etc. Domestic deposit loan gross margin i
Slide 11: Loans
Loans Loans increased at an annual rate of +5.0% in FY2020, due to an increase in the balance of loans to SMEs. In FY2021, an annual rate of +3.3% is projected, due mainly to loans to SMEs. Loans (domestic + international) Loans (by segment) * Excluding loans to FFG and Government (annual rate)
Slide 12: Deposits & CDs
Deposits & CDs Deposits & CDs maintained an increasing trend in both retail and corporate segments The increasing trend is projected to continue in FY2021. Deposits and CDs (domestic + international) Deposits and CDs (by segment) (annual rate) 19,655.9 (¥ bil.) (annual rate) 19,655.9 (¥ bil.) 18
Slide 13: Securities
Securities Unrealized gain on securities as of March 31, 2021 is 159.7 billion yen, an increase of about 67 billion yen from March 31, 2020. Although domestic bond duration lengthened, the materiality test reference value for interest rate risk was low. Securities portfolio (FFG consolidated) Bo
Slide 14: Non-Interest Income
Non-Interest Income Non-interest income is projected to increase 1.7 billion yen year-on-year due to increases in asset management income and corporate-related fees. We will build asset management products sales through a portfolio-based business style unaffected by market fluctuations. Non-inte
Slide 15: Overhead Expenses
Overhead Expenses In FY2020, while tax increased as a result of increases in consumption tax and integration investment, controlled personnel expenses and general expenses resulted in overhead expenses decreasing by 0.7 billion yen. In FY2021, overhead expenses are projected to decrease by 3.4 b
Slide 16: Credit Cost & NPL
Credit Cost & NPL In FY2020, we recorded a transfer of 0.3 billion yen to credit cost due to utilization of a forward-looking provision. In FY2021, a transfer of 5.8 billion yen is projected. Reserve for possible loan losses is expected to exceed 200 billion yen, while the reserve ratio will rem
Slide 17: Part II Management Strategy
BROWS ho cFF@ SKBDAF YW INT Part Il Management Strategy
Slide 18: Business Environment Surrounding FFG
Business Environment Surrounding FFG In FY2021, Kyushu is expected to experience moderate economic recovery on the back of an upswing in external demand and a softening financial environment. FFG will work to establish a solid management base capable of sustainable growth even in a highly uncert
Slide 19: Response to COVID-19
Response to COVID-19 In FY2020, we prioritized financing support, etc. and provided a total of 750 billion yen across 29,000 loans related to COVID-19. Providing support to customers affected by COVID-19 will remain an important issue to be addressed in FY2021. [COVID-19 related loans] COVID-19
Slide 20: Investment Effects of Key Measures
Investment Effects of Key Measures In FY2021, the peak of the cost burden for key measures will be passed, and some benefits will be realized. Effects associated with the key measures will be fully realized in the next mid-term plan. Investment effects of key measures (image) Initiatives for key
Slide 21: Strengthening Cost Competitiveness
Strengthening Cost Competitiveness By working on a Group-wide review of overhead expenses, we will enhance our cost competitiveness and secure a competitive advantage. Combined with the effects of key measures, we will improve consolidated core OHR to about 60% in FY2024. Group project for OHR s
Slide 22: Response to Environmental Changes 1: Market Operation
Response to Environmental Changes 1: Market Operation We will build a portfolio responsive to changes in the market environment and capable of efficiently capturing the fruits of economic growth. We will aim to secure returns that are stable over the long term, while diversifying investment risk
Slide 23: Response to Environmental Changes 2: Supply of Risk Money
Response to Environmental Changes 2: Supply of Risk Money FFG supports the creation of new services and new industries through venture investment. Our vision is to revitalize local economies through the supply of risk money. Venture investment X-Tech Matchup As of Mar. 2021 An event to match u
Slide 24: Response to Environmental Changes 3: Promotion of Sustainability
Response to Environmental Changes 3: Promotion of Sustainability In April this year, we established a subsidiary supporting the SDGs. Its mission is to support local companies and communities to quickly initiate and to maintain management/actions based on the keyword of “sustainable.” FFG is als
Slide 25: Response to Environmental Changes 4: Challenge in New Business Areas
Response to Environmental Changes 4: Challenge in New Business Areas We will expand our solutions function by anticipating future environmental changes and local customer needs and by taking on new business areas. Challenge to open up new business areas Recent initiatives Mega trends (impact on lo
Slide 26: Profit Growth of FFG
Profit Growth of FFG In FY2021, the effects of key measures will gradually be realized, and both core business profit and consolidated net income are projected to increase. In the next mid-term plan, in addition to the full implementation of key measures, we will achieve sustainable growth by pr
Slide 27: Capital Policy & Shareholder Returns
Capital Policy & Shareholder Returns Based on the premise of maintaining capital soundness, we strive for balanced capital management, making returns to shareholders and growth investments aimed at improving corporate value. Capital adequacy ratio (FFG consolidated)(¥ bil., %) Capital policy Bas
Slide 28: Part III Minna Bank
BROWS ho cFF@ SKBDAF YW INT Part Ill Minna Bank
Slide 29: Overview of Minna Bank
[Minna Bank] Overview of Minna Bank Overview of Minna Bank, Japan’s first digital bank Launch of commercial operations: May 28, 2021 Mission Deliver valuable connections to everyone ■ To provide minimalist financial services that cater to the sensibilities, behaviors, and needs of digital natives (a
Slide 30: Media coverage of business launch announcement
Reference [Minna Bank] Media coverage of business launch announcement ● Awareness and recognition of Minna Bank has increased since the January 14th “Japan’s first digital bank” press release. Examples of domestic media coverage Example of international media coverage Outlets: Nikkei xTECH / NewsP
Slide 31: Service overview and roadmap
[Minna Bank] Service overview and roadmap ● Deliver the “digital wallet”, the integration of banking and wallets on the smartphone. ⇨ Full digitalization enables the complete redesign of: (1) the concept of time (instant completion), (2) the concept of things (completed on smartphone), (3) the conce
Slide 32: Key Features of Each Service
[Minna Bank] Key Features of Each Service Account Opening Box Accounts can be opened any time, Savings account opened simultaneously 24/7 with ordinary deposit account No paper process (application Deposits can be managed for specific entirely completed on smartphone) purposes using up to 20 “Bo
Slide 33: Premium Service (Subscription)
[Minna Bank] Premium Service (Subscription) ● A subscription-based premium service combining multiple services in an integrated package with 1-year free trial. Enhanced convenience Features 1. Batch updating function in Record Only 600 yen per month Free trial Transaction data linked in Record can b
Slide 34: Target Segments
[Minna Bank] Target Segments ●Unique “Core Target” and “Communication Target” segments have been defined based on various statistical data. ●The Core Target persona is for product / service design, and the Communication Target is for planning customer acquisition tactics. Breakdown of target segment
Slide 35: Marketing Plan for User Acquisition
[Minna Bank] Marketing Plan for User Acquisition ● Leveraging knowledge obtained from iBank*, which is mainly engaged in data marketing, we have developed a plan for user acquisition that combines digital advertising and a referral program. ● We will promote new users to open accounts by optimizing
Slide 36: Primary Metrics
[Minna Bank] Primary Metrics ● Number of customers is projected to reach 400,000 with 70 billion yen in deposits in the first year, reaching 1.2 million customers with 220 billion yen in the third year. We also expect to acquire 80 billion yen in consumer loans, which will be launched in the second
Slide 37: Social Media Presence
Reference [Minna Bank] Social Media Presence Social Media Accounts Twitter Facebook Instagram note 36
Slide 38: Part IV [Reference] Figures
BROWS ho cFF@ SKBDAF YW INT Part IV [Reference] Figures
Slide 39: Average Balance of Loans (by Bank)
Average Balance of Loans (by Bank) Bank of Fukuoka (domestic, non-consolidated) Kumamoto Bank (domestic, non-consolidated) Juhachi-Shinwa Bank (domestic, non-consolidated) * Excluding loans to FFG and Government * Excluding loans to Government * Excluding loans to Government by customer segment Aver
Slide 40: Average Balance of Loans (by Industry)
Average Balance of Loans (by Industry) Mar. 31, 2021 Change from Mar. 31, 2020 3 banks 3 banks total % Fukuoka % Kumamoto % Juhachi-Shinwa % total Fukuoka Kumamoto Juhachi-Shinwa Domestic loans (excluding the special international 17,294.6 100.0% 11,282 100.0% 1,882 100.0% 4,131 100.0% 1,010.1 465.3
Slide 41: State of Apartment Loans
State of Apartment Loans Balance of apartment loans State of apartment loans (loans not involving guarantee companies) (loans not involving guarantee companies) [Annual rate] (¥ bil.) Screening stance Assessed comprehensively, verifying both debtor attributes and Former financed property Eighteent
Slide 42: Average Balance of Deposits & CDs (by Bank)
Average Balance of Deposits & CDs (by Bank) Bank of Fukuoka (domestic, non-consolidated) Kumamoto Bank (domestic, non-consolidated) Juhachi-Shinwa Bank (domestic, non-consolidated) Average deposit balance by customer segment Public Corporate Retail (¥ bil.) Average deposit balance CDs by deposit typ
Slide 43: Interest Rates on Loans (by Segment)
Interest Rates on Loans (by Segment) 3 banks total * Excluding loans to FFG and Government (%) Retail Loan overall Corporate Public 42
Slide 44: Interest Rates on Loans and Deposits & CDs (by Bank)
Interest Rates on Loans and Deposits & CDs (by Bank) Bank of Fukuoka (domestic, non-consolidated) Kumamoto Bank (domestic, non-consolidated) Juhachi-Shinwa Bank (domestic, non-consolidated) * Excluding loans to FFG and Government * Excluding loans to Government * Excluding loans to Government Intere
Slide 45: Securities (by Bank)
Securities (by Bank) Bank of Fukuoka Kumamoto Bank Juhachi-Shinwa Bank * Consolidated * Consolidated Unrealized gain (loss) Securities balance Foreign bonds, etc. Corporate bonds Local government bonds Government bonds (¥ bil.) Stocks Bank of Fukuoka Kumamoto Bank Juhachi-Shinwa Bank * Consolidated
Slide 46: Non-Interest Income / Asset Management Products Sales (by Bank)
Non-Interest Income / Asset Management Products Sales (by Bank) Bank of Fukuoka Kumamoto Bank Juhachi-Shinwa Bank * For all 3 banks, excluding gains (loss) on bond and on marketable products Others Non-interest income Domestic exchange Foreign exchange derivatives Investment trusts (¥ bil.) Insuranc
Slide 47: Overhead Expenses / Credit Cost (by Bank)
Overhead Expenses / Credit Cost (by Bank) Bank of Fukuoka Kumamoto Bank Juhachi-Shinwa Bank Core OHR Overhead expenses Tax & core OHR General expenses Personnel expenses (¥ bil.) * Core OHR = Overhead expenses / (Gross business profit - Gains (losses) on bonds) Credit cost ratio Credit cost Rating c
Slide 48: Non-Performing Loans / Capital Adequacy Ratio (by Bank)
Non-Performing Loans / Capital Adequacy Ratio (by Bank) Bank of Fukuoka Kumamoto Bank Juhachi-Shinwa Bank * After partial write-off * After partial write-off * After partial write-off Ratio Non-performing loans & ratio Substandard Doubtful Bankrupt & quasi-bankrupt (¥ bil.) Bank of Fukuoka (consolid
Slide 49: Part V [Reference] Kyushu Economy
Part V [Reference] Kyushu Economy
Slide 50: Market Share
Market Share Number of Number of Fukuoka Population business Loans Deposits Population business Loans Deposits Pref. Pref. Oita establishments establishments Kitakyushu Bank 22.1 37.2 1.4 trillion yen 3.4 7.8 5,060,000 223,000 19368322 1,150,000 54,000 trillion yen trillion yen Bank of Fukuoka trill
Slide 51: Economic Trends
Economic Trends Bank of Japan’s Tankan Projection Business conditions D.I. Fukuoka Fukuoka region* Projection Kitakyushu Japan * Fukuoka region: Fukuoka Prefecture plus Saga Prefecture, excluding Kitakyushu Projection Kumamoto Kyushu Projection Nagasaki Source: Bank of Japan 50
Slide 52: Industrial Production Trends
Industrial Production Trends Industrial production index (FY2015 = 100) [Kyushu ] Main industry trends (Million pieces) Integrated circuits (%) Quantity YoY chg. (right axis) Japan (Thousand vehicles) Passenger cars (%) Kyushu Quantity YoY chg. (right axis) Source: Kyushu Bureau of Economy, Trade an
Slide 53: Capital Investment / Housing Investment
Capital Investment / Housing Investment Capital investment: Bank of Japan’s Tankan (YoY Housing starts chg.) (Thousand) (%) Projection Estimate Japan Japan Number of houses Mar. YoY chg. (right axis) (Thousand) (%) Kyushu Kyushu Number of houses Mar. YoY chg. (right axis) Source: Bank of Japan Sourc
Slide 54: Land Price Trends
Land Price Trends Volatility of standard land prices <Ministry of Land, Infrastructure and Transport: 2021 outline of results of posted Major cities in Fukuoka Pref. land prices survey> (%) ○ Japan: There have been falls for the first time in 6 years for all uses, 5 years for residential lands, and
Slide 55: Corporate Bankruptcies
Corporate Bankruptcies (¥ bil.) (Number) Number of bankruptcies and total liabilities Left axis: Total liabilities (bar graph) Fukuoka (¥ bil.) (Number) Right axis: Number of bankruptcies (line graph) Japan Kumamoto (¥ bil.) (Number) Kyushu Nagasaki Source: Tokyo Shoko Research 54
Slide 56: Loans
Loans (%) Rate of increase of bank loans (YoY chg., monthly) (%) 6.1 Fukuoka (%) 5.0 Japan 4.8 Kumamoto 5.3 Kyushu Nagasaki 3.4 Source: Bank of Japan 55
Slide 57: Deposits
Deposits (%) Rate of increase of bank deposits (YoY chg., monthly) 12.3 (%) Fukuoka 11.2 Japan 10.2 Kumamoto 9.0 Kyushu 9.1 Nagasaki Source: Bank of Japan 56
Slide 58: Contact for further inquiries
Contact for further inquiries: Public Relations Group, Corporate Planning Division Fukuoka Financial Group Phone: +81 - 92 - 723 - 2255 E-mail: ffg-ir@fukuoka-fg.com Website: https://www.fukuoka-fg.com This document has been prepared solely for the purpose of providing information and does n
Fukuoka Financial Group — FY2020 Earnings Presentation on 6ix