Kyoto Financial Group,inc. · TSE:5844
Kyoto Financial Group,inc — FY2023 Earnings Presentation
48 slides from Kyoto Financial Group,inc's earnings presentation, May 2024
Slide 1: FY2023 Financial Results Briefing Session
FY2023 Financial Results Briefing Session May, 2024 (Securities code: 5844)
Slide 2: Index
Index 14. Impact of rising yen interest rate ･･･ 24 Ⅰ. Business performance overview 15. Reducing Securities Held for Strategic Equity ･･･ 25 1. Financial Summary of FY2023 ･･･ 3 16. Shareholder returns ･･･ 26 2. Financial Results Summary of FY2023 ･･･ 4 17. Capital Allocation ･･･ 27 3. Financial Re
Slide 3: Ⅰ. Business performance overview
Ⅰ. Business performance overview 2
Slide 4: 1. Financial Summary of FY2023
1. Financial Summary of FY2023 FY2024 FY2025 Targeted FY2022* FY2023 (Plan) (Targets) Levels Net income attributable to owners of the parent JPY27.2bn JPY31.5bn JPY33.0bn JPY30.0bn JPY50.0bn (consolidated net income) ROE (total net asset basis) 2.62％ 2.96% About 3.0% 3% 5％ ROE (total shareholder’s e
Slide 5: 2. Financial Results Summary of FY2023
2. Financial Results Summary of FY2023 (JPY bn) 【Kyoto FG consolidated】 FY2022 * FY2023 YoY Gross operating profit 93.5 97.2 3.7 Kyoto FG's consolidated net income increased significantly Ordinary profit 38.1 43.5 5.4 YoY due to higher contributions Net income attributable to owners from both Kyoto
Slide 6: 3. Financial Results Summary of FY2023 (Kyoto Bank, Non-consolidated)
3. Financial Results Summary of FY2023 (Kyoto Bank, non- consolidated) (JPY bn) FY2022 FY2023 YoY Increase in interest on loans, Gross operating profit 88.3 92.0 3.7 etc. Net interest income 78.5 79.8 1.3 Net fees and commissions 11.7 13.1 1.4 hitting a record highs for Other operating profit (1.9)
Slide 7: 4. Interest Income and Rate earned on Loans and Bills
4. Interest Income and Rate earned on Loans and Bills (Kyoto Bank, non- consolidated) Net Interest Income Domestic loans and Bills interest rates ＋1.5 ＋0.7 (JPY bn) (％) -0.2 -0.4 0.963 New loan interest rate -0.3 （for SMEs） 0.930 0.917 0.912 79.8 0.897 0.908 0.888 New loan interest rate 78.5 （Total）
Slide 8: 5. Net fees and commissions
5. Net fees and commissions (Kyoto Bank, Non-consolidated) Net fees and commissions (JPY bn) 13.2 10.9 11.7 9.7 8.4 (JPY bn) FY2019 FY2023 Syndicated loans 1.13 1.77 M&A 0.37 0.76 FY2019 FY2020 FY2021 FY2022 FY2023 Business matching 0.36 0.66 Details of fees and commissions (JPY bn) Breakdowns (Kyot
Slide 9: 6. Credit Costs and Disclosed assets
6. Credit Costs and Disclosed assets (Kyoto Bank, Non-consolidated) （JPY bn) Break down of credit costs FY2024 FY2019 FY2020 FY2021 FY2022 FY2023 (Plan) Net provision for allowance for specific loan losses 1.4 6.3 2.9 2.1 0.9 1.5 Disposal amount due to occurrence of new non-performing loans 2.8 7.4
Slide 10: 7. Financial results forecast for FY2024
7. Financial results forecast for FY2024 Both Group consolidated and Kyoto bank non-consolidated profits are expected to reach record highs Kyoto FG consolidated (JPY bn) FY2024 FY2023 (Plan) YoY Ordinary profit 43.5 46.2 2.7 Net income attributable to owners 31.5 33.0 1.5 of the parent Kyoto Bank n
Slide 11: Ⅱ. Management strategy
Ⅱ. Management strategy 10
Slide 12: 1. Progress of 1st Medium-Term Management Plan
1. Progress of 1st Medium-Term Management Plan ♦ The first medium-term management plan targeted for JPY 30.0 billion in net income attributable to owners of the parent in the final year of the plan (FY2025), and the target was achieved ahead of schedule in FY2023, the first year of the plan. ♦ In or
Slide 13: 2. Materiality Identification
2. Materiality Identification ♦ Identify six materialities for the Group ♦ Reflect the identified materialities in management strategies, and revise them as necessary in line with changes in social conditions and management plans, etc. Materiality Identification Process Materiality Thoughts of 4,000
Slide 14: 3. Actions to Achieve Management Conscious of Cost of Capital and Stock Price (1)
3. Actions to Achieve Management Conscious of Cost of Capital and Stock Price (1) ♦ Improve ROE by leveraging the company's solid financial strength to substantially increase risk-weighted assets and make inorganic investments. Efforts to improve ROE Reference page RORA improvement ■ Significant acc
Slide 15: 4. Actions to Achieve Management Conscious of Cost of Capital and Stock Price (2)
4. Actions to Achieve Management Conscious of Cost of Capital and Stock Price (2) ♦ While striving to increase ROE through sustainable growth, we also want to reduce the cost of shareholders' equity, which should lead to an increase in PBR. Initiatives to reduce cost of equity Reference page Practic
Slide 16: 5. Group-wide Strategy (Group solutions)
5. Efforts to Improve ROE ～Group-wide Strategy (Group solutions) ♦ Continue “Expansion of solution functions” and “expansion of new business domains” to achieve both sustainable growth for our customers and our group. Stages of Establishment period Growth period Stabilization period Period of declin
Slide 17: 6. Group-wide Strategy (Regional Future Co-Creation Project)
6. Efforts to Improve ROE ~ Group-wide Strategy (Regional Future Co-Creation Project) NEW PROJECT Aiming to become a corporate group in which the challenge to change corporate culture is a chain of challenges! Set up “Regional Future Co- JPY 100 billion fund Starts in April 2024 creation Office” 16
Slide 18: 7. Group-wide Strategy (implementation of “WILL”)
7. Efforts to Improve ROE ~ Group-wide Strategy (implementation of “WILL”) NEW PROJECT New Business Creation Project An initiative to create new businesses by soliciting wisdom and thoughts from all executives and employees! Selected candidates engaged in New business Startedcreation in April 2024 c
Slide 19: 8. Progress of Asset Strategy
8. Efforts to Improve ROE ~ Progress of Asset Strategy ♦ Plan to increase asset balance to JPY1.2 trillion or more and risk assets to JPY 500 billion or more in the three years from FY2023 to FY2025 ♦ Progress over the par-play level of JPY 1.2 trillion and JPY 500 billion in the first year of the p
Slide 20: 9. Asset Strategy (Structured Finance)
9. Efforts to Improve ROE ~ Asset Strategy (Structured Finance) ♦ Both balance and revenue increased due to aggressive efforts in structured finance (SF) ♦ The loan portfolio is diversified, and the currency is mainly JPY-denominated, promoted with appropriate consideration and soundness in mind SF
Slide 21: 10. Venture and Business Succession
10. Efforts to Improve ROE ~ Venture and Business Succession ♦ Implementing support for venture and business succession through Group functions, Kyoto Capital Partners is now fully operational and providing support through funds. ♦ The sales area provides an environment in which the Group can expand
Slide 22: 11. Results of Corporate Consulting
11. Efforts to Improve ROE ~ Results of Corporate Consulting ♦ Establishment of profitable sales activities such as service transactions for syndicated loans, business matching, private placement bonds, M&A, etc. ♦ Kyoto Soken Consulting has also been steadily increasing the number of contracts sinc
Slide 23: 12. Results of Individual Customer Consulting
12. Efforts to Improve ROE ~ Results of Individual Customer Consulting ♦ Provide all customers with consulting services through “Banking, Securities, and Trust” to achieve the best profit for customers ♦ Aim for assets under Group custody of JPY 1 trillion by the end of FY2025 Aiming to be the Custo
Slide 24: 13. Market Operations
13. Efforts to Improve ROE ～ Market Operations ♦ Building a portfolio with an awareness of “the world with interest rates.” In domestic bonds, purchase bonds prudently, while controlling interest rate risk. The balance will be increased in anticipation of a future rise in interest rates. In fore
Slide 25: 14. Impact of rising JPY interest rate
14. Efforts to Improve ROE ～ Impact of rising JPY interest rate ♦ Depending on the situation of rising interest rates, we expect an increase in net interest income to have an effect of JPY 10-19 billion ♦ Acquire highly stable deposits and negotiate appropriate interest rates to improve ROE JPY curr
Slide 26: 15. Reducing Securities Held for Strategic Equity
15. Efforts to Improve ROE ～ Reducing Securities Held for Strategic Equity ♦ Policy to reduce the book value of strategic investment securities (listed) by JPY 16 billion over the three years from FY2022 to FY2024 (announced on May 25, 2022). ♦ Reduction of JPY 12.5 billion (progress rate: 78%), inc
Slide 27: 16. Shareholder returns
16. Efforts to Improve ROE ～ Shareholder returns ♦ Achieve a high level of shareholder return of 92% in FY2023, far exceeding the total payout ratio of more than 50% in our shareholder return policy ♦ We plan to increase the annual dividend for FY2024 by JPY 5 to JPY 60, and both the total dividend
Slide 28: 17. Capital Allocation
17. Capital Allocation ♦ Reduce the Equity-to-asset ratio to the 11% range as a level that can withstand unexpected crises in the future by actively investing in risk assets that will lead to future growth and providing appropriate shareholder returns. Capital Allocation Image ［Risk Asset Image］ Cum
Slide 29: 18. Practicing Sustainability Management (1)
18. Initiatives to reduce cost of equity ~ Practicing Sustainability Management (1) ♦ CO2 reduction efforts are expected to achieve the FY2030 target of 50% reduction (Scope 1 and 2) ahead of schedule ♦ Continue efforts to promote sustainability in the region Hold a seminar on practical sustainabili
Slide 30: 19. Practicing Sustainability Management (2)
19. Initiatives to reduce cost of equity ~ Practicing Sustainability Management (2) ♦ Supporting customers’ sustainability management by establishing a support system for sustainability management ♦ Sustainable finance is being promoted toward the goal of executing JPY 1 trillion by FY2030 Sustainab
Slide 31: 20. Dialogue with Shareholders and Investors
20. Initiatives to Reduce Cost of Equity ~ Dialogue with Shareholders and Investors ♦ Emphasize dialogue with shareholders and investors in IR and SR activities, and significantly increase opportunities for interviews in FY2023 ♦ Individual shareholders increased significantly as a result of the sto
Slide 32: 21. Human Resources Strategy (Human Capital Management) (1)
21. Human Resources Strategy (Human Capital Management) (1) ♦ Virtuous cycle of “practice of engagement management investment in human capital improvement of human capital value” ♦ Encourage a hand-raising culture to support and motivate all employees in their career development Expansion of op
Slide 33: 22. Human Resources Strategy (Human Capital Management) (2)
22. Human Resources Strategy (Human Capital Management) (2) ♦ Further increase the amount of human capital investment, and strengthen human resource development leading to improved consulting and coordination capabilities ♦ Revise the personnel system to create an environment in which all employees,
Slide 34: 23. DX Strategy
23. DX Strategy ♦ The Group will deepen its existing businesses and create new businesses and services by building an infrastructure for high-speed, high-precision analysis of data that is centrally managed and aggregated from a variety of data, including data owned by the Group. ♦ Increased number
Slide 35: Ⅲ. Reference material
Ⅲ. Reference material 34
Slide 36: 1. Our History (Outline: Establishment to Heisei Eras)
1. Our History (Outline: Establishment to Heisei Eras) Expansion of branch network In Kyoto City, financial difficulties for small and Kyoto Osaka Shiga Nara Hyogo Aichi Tokyo total medium-sized enterprises March were a problem. 105 9 0 0 0 0 1 115 2000 March 111 31 14 7 8 2 1 174 2020 ＋51％ Human Re
Slide 37: 2. Outline of Kinki Region
2. Outline of Kinki Region ♦ Although ranked 13th in terms of economic scale, the Kinki region (Kyoto, Osaka, Hyogo, Shiga, and Nara prefectures), which has a network of stores, has a large economy. ♦ Demand for commercial land in Kyoto and Osaka prefectures is high, and land prices are above the na
Slide 38: 3. Attraction of Kyoto Prefecture
3. Attraction of Kyoto Prefecture ♦ Kyoto’s unique and attractive industrial structure is also related to our Group’s business and will lead to business opportunities Kyoto has many technologically advanced high-tech industries. High-tech Industry-university cooperation Industry: Many manufacturing
Slide 39: 4. Deposits and negotiable certificates of deposit
4. Deposits and negotiable certificates of deposit (Kyoto Bank, Non-consolidated) Deposits and negotiable certificates of deposit(term-average) Results of FY2023 (YoY change) Results of FY2023 (YoY change) Corporations +JPY173.3bn, Kyoto+JPY336.1bn, Osaka･Hyogo+JPY26.6bn, Individuals+JPY175.7bn, Shi
Slide 40: 5. Loans and bills discounted
5. Loans and bills discounted (Kyoto Bank, Non-consolidated) Loans and bills discounted(Term-average) Results of FY2023 (YoY change) Results of FY2023 (YoY change) Corporations＋JPY233.0bn, Individuals＋JPY15.1bn, Kyoto＋JPY66.1bn, Osaka・Hyogo＋JPY66.6bn, Local governments, Financial institutions –JPY29
Slide 41: 6. Expenses and OHR
6. Expenses and OHR Expenses and OHR (Consolidated) Expenses and OHR (Kyoto Bank, non-consolidated) 67.65 68.91 64.11 (%) 65.45 60.02 59.70 59.17 60.75 60.16（％） 58.28 OHR OHR (JPY bn) 58.3 58.0 56.1 55.9 56.9 55.7 54.6 55.3 (JPY bn) 53.5 53.6 Personnel 31.1 31.0 30.7 30.5 30.7 expense Non- 21.3 20.6
Slide 42: 7. Comprehensive Risk management
7. Comprehensive Risk management Status of Comprehensive Risk Amount (As of the end of March 2024) Interest rate risk in the banking book （As of the end of March 2024） As part of the Risk Appetite Framework, the company confirms that Delta EVE risk-taking (amount of integrated risk) is at an accepta
Slide 43: 8. Outline of the Holding Company
8 . Outline of the Holding Company <About the logo> Dry landscape gardens (karesansui) are a familiar sight in Kyoto. The design was inspired by the ripple pattern represented in the sand pattern of a karesansui. The three ripples forming the logo represent “our customers,” “the local community,” an
Slide 44: 9. Group Companies
9. Group Companies Main Business Kyoto Financial Group, Inc. Business management of group companies The Bank of Kyoto, Ltd. Banking Kyoto Guaranty Service Co., Ltd. Credit guarantee （100% owned by The Bank of Kyoto） Sky Ocean Asset Management Co., Ltd. Investment management (The Bank of Kyoto’s Equi
Slide 45: 10. Management Principle
10. Management Principle Kyoto Financial group’s management principle and management policy is inherited from the Bank of Kyoto’s principle and policy, and the Group’s action guidelines for the realization of the principle and policy will be newly established on the occasion of the incorporation of
Slide 46: 11. Governance Structure
11. Governance Structure The Holding Company will be a “company with an audit and supervisory committee” to enable highly effective supervision of management and prompt decision-making as we aim to expand into new business areas and achieve independent business operations for each group company, the
Slide 47: 12. 1st Medium-Term Management Plan
12. 1st Medium-Term Management Plan 1st Medium-Term Management Plan” (From October 2023 to March 2026) Comprehensive solutions provider that drives community growth and What we aim for creates the future together. Positioning of the Medium- A period in which we take a strong first step toward creati
Slide 48: Inquiries
This material has been translated from the Japanese-language original for reference purposes only. In the event of any conflict or discrepancy between this document and the Japanese-language original, the Japanese-language original shall prevail in all respects. And This material contains descriptio