Fukuoka Financial Group, Inc. · TSE:8354
Fukuoka Financial — Investor Presentation (June 2020)
49 slides from Fukuoka Financial's investor presentation, June 2020
Slide 1: Investor Meeting: Financial Results & Earnings Projections, Management Strategy
Investor Meeting Financial Results & Earnings Projections Management Strategy June 2020
Slide 2: Contents
Contents Part I Financial Results & Earnings Projections Part III [Reference] Figures Summary of Financial Results for FY2019 3 Average Balance of Loans (by Bank) 28 Earnings Projections for FY2020 4 Average Balance of Loans (by Industry) 29 Factor Analysis of Top Line & Bottom Line 5–8
Slide 3: Part I Financial Results & Earnings Projections
Part I Financial Results & Earnings Projections
Slide 4: Summary of Financial Results for FY2019
Summary of Financial Results for FY2019 Profit & loss (4 banks total) (¥ bil.) 4 banks non- Bank of Fukuoka (non- Kumamoto Bank (non- Shinwa Bank Eighteenth Bank (non- [Compared to projection consolidated total consolidated) consolidated) (non-consolidated) consolidated) Point 1 Core business profit
Slide 5: Earnings Projections for FY2020
Earnings Projections for FY2020 Profit & loss (3 banks total) Profit & loss [by Bank] (¥ bil.) (¥ bil.) 3 banks non- Bank of Fukuoka Core business profit Bank of Fukuoka Kumamoto Bank Juhachi-Shinwa Bank consolidated total Net income (non-consolidated) (non-consolidated) (non-consolidated) P:FY2020
Slide 6: Transition of Top Line: FY2019 Results
Transition of Top Line: FY2019 Results Net interest income decreased 3.6 billion yen year-on-year, primarily due to redemption of public loans and government bonds. Non-interest income decreased 0.2 billion yen year-on-year, with the decrease in investment trust and insurance commissions being o
Slide 7: FY2019 Consolidated Net Income: Factors Driving Year-on-Year Change
FY2019 Consolidated Net Income: Factors Driving Year-on-Year Change Excluding the following factors Consolidated net income (¥ bil.) YoY chg. -8.7 (after taxes) YoY chg. +54.7 (after taxes) 55.9 -3.8 -8.3 +4.9 -1.2 47.2 profit Core business +0.7 -1.0 110.6 amortization ) adjustments, etc. Consolidat
Slide 8: Transition of Top Line: FY2020 Projected
Transition of Top Line: FY2020 Projected The projection for core business profit is 78.6 billion yen, on par with the previous year, with the downward pressure on earnings attributable to the redemption of public loans and government bonds, etc. countered by an increase in loans balance and an inc
Slide 9: FY2020 Earnings Projections: Factors Driving Year-on-Year Change
FY2020 Earnings Projections: Factors Driving Year-on-Year Change Excluding the following factors Consolidated net income (¥ bil.) YoY chg. +5.2 (after taxes) +8.8 -1.4 -1.0 YoY chg. -70.6 (after taxes) -1.5 +0.3 52.4 47.2 -0.1 +8.4 -20.5 Credit cost / extraordinary loss Other operating loss profit C
Slide 10: Net Interest Income
Net Interest Income Regarding net interest income, we plan to make up for any decrease in earnings attributable to redemption of domestic bonds with broader securities investment diversification and improved procurement costs in the international division, etc. Despite the decrease due to redemp
Slide 11: Loans
Loans Loans increased at an annual rate of +3.0% in FY2019, due to an increase in the balance of loans to SMEs. In FY2020, annual rate is projected to remain on par with previous year, due to increases in balance of loans to SMEs and to retail. Loans (domestic + international) Loans (by segment)
Slide 12: Deposits & CDs
Deposits & CDs Deposits & CDs maintained an increasing trend, backed by expansion of customer base. Increasing trend is projected to continue in FY2020 Deposits and CDs (domestic + international) Deposits and CDs (by segment) (Annual rate) (¥ bil.) (Annual rate) 17,713.0 16,824.3 17,252.0 (¥ bil
Slide 13: Securities
Securities While decreasing on a year-on-year basis, unrealized gain on securities as of March 31, 2020 is 92.9 billion yen, and maintains a reasonable level. Although domestic bond duration lengthened, the materiality test reference value for interest rate risk was low. Securities portfolio (FF
Slide 14: Non-interest Income
Non-interest Income Non-interest income is projected to increase, primarily in fees for asset management products and corporate-related fees. We will build asset management products sales through a portfolio-based business style unaffected by market fluctuations. Non-interest income (4 banks tot
Slide 15: Overhead Expenses
Overhead Expenses In FY2019, while the reversal of salaries for seconded employees increased and advertising costs reduced, overhead expenses increased by 1.2 billion yen due to increases in integration expenses and strategic investment. In FY2020, overhead expenses are projected to increase by
Slide 16: Credit Cost & NPL
Credit Cost & NPL In FY2019, we recorded a transfer of 61.4 billion yen to credit cost partly due to the introduction of a forward- looking provision. In FY2020, a transfer of 5.8 billion yen is projected. Credit cost (4 banks total) Non-performing loans & ratio (4 banks total) 61.4 (¥ bil.) * A
Slide 17: Part II Management Strategy
FFD Fukuoka Financial Group Part Il Management Strategy
Slide 18: Business Environment Surrounding FFG
Business Environment Surrounding FFG Kyushu has recently seen a decrease in consumer spending and production because of the spread of COVID-19. Inbound demand, which had been strong, has decreased significantly because of immigration restrictions imposed by Japan and other countries and regions.
Slide 19: FFG's Growth Strategy
FFG’s Growth Strategy In FY2020, we will build foundations for achieving strong, sustainable competitive and growth potential, based on the vitally important strategies of: Rebuilding of business processes; Establishment of new investment trust business; Minna Bank; and Merger of the Eighteenth Ba
Slide 20: Key Measure I: Rebuilding of Business Processes
Key Measure I: Rebuilding of Business Processes Simultaneously achieve greater business efficiency and customer convenience, by successfully eliminating paper documents, personal seals and clerical operations, and accelerating the shift toward self-services and digitization, taking account of chan
Slide 21: Key Measure II: Establishment of New Investment Trust Business
Key Measure II: Establishment of New Investment Trust Business Realize “stable earnings for FFG” and “expansion of customer base,” by providing highly specialized services tailored to customer needs and supporting stable asset building through long-term relations. 1. Reform business style Establ
Slide 22: Key Measure III: Business Integration with the Eighteenth Bank
Key Measure III: Business Integration with the Eighteenth Bank This fiscal year, we will steadily implement the merger and integration of administration/IT systems, laying the foundations for the new bank. As for synergistic effects, although integration expenses are incurred until this fiscal y
Slide 23: Key Measure IV: Minna Bank
Key Measure IV: Minna Bank From a zero base, we will build a business model unique to Minna Bank with an aim of opening during FY2020. Returning/sharing the fruits generated by the new bank will help to accelerate/realize the overall DX of FFG. Overview of business model Synergies for existing b
Slide 24: Earnings Effect of Key Measures (Image)
Earnings Effect of Key Measures (Image) We will build up earnings by utilizing the earnings effect of key measures to make up for any downward pressure on earnings attributable to lower yields, etc. By the final year of the next mid-term plan, we aim to achieve an earnings effect of about 30 bil
Slide 25: 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 1,000
Slide 26: Impact of COVID-19
Impact of COVID-19 Despite the negative impact associated with the stagnation of economic activity, corporate demand for funds will increase significantly. Impacts on credit costs that are envisaged at this point in time have been incorporated into the financial data for FY2019. Possible key imp
Slide 27: Response to COVID-19
Response to COVID-19 We are providing customers with reliable financing support, while thoroughly implementing measures to prevent the spread of infection. We will achieve strong, sustainable competitive and growth potential, by incorporating post-COVID-19 action into our structural reforms curr
Slide 28: Part III [Reference] Figures
Part III [Reference] Figures
Slide 29: Average Balance of Loans (by Bank)
Average Balance of Loans (by Bank) Bank of Fukuoka Kumamoto Bank Shinwa Bank The Eighteenth Bank (domestic, non-consolidated) (domestic, non-consolidated) (domestic, non-consolidated) (domestic, non-consolidated) * Excluding loans to FFG and Government * Excluding loans to Government ※劣後受益権除く * Excl
Slide 30: Average Balance of Loans (by Industry)
Average Balance of Loans (by Industry) Mar. 31, 2020 Change from Mar. 31, 2019 4 banks 4 banks total % Fukuoka % Kumamoto % Shinwa % Eighteenth % total Fukuoka Kumamoto Shinwa Eighteenth Domestic loans Classification by industry (excluding the special international financial 16,284.5 100.0% 10,816.9
Slide 31: Balance of Apartment Loans
Balance 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 1,343.2 1,346.6 1,362.4 1,365.0 1,380.8 Assessed comprehensively, verifying both debtor attribu
Slide 32: Average Balance of Deposits & CDs (by Bank)
Average Balance of Deposits & CDs (by Bank) Bank of Fukuoka Kumamoto Bank Shinwa Bank The Eighteenth Bank (domestic, non-consolidated) (domestic, non-consolidated) (domestic, non-consolidated) (domestic, non-consolidated) 10,654.3 10,268.8 2,652.6 2,686.2 9,973.3 1,465.1 2,324.2 2,311.2 2,317.0 Aver
Slide 33: Interest Rates on Loans (by Segment)
Interest Rates on Loans (by Segment) 4 banks total * Excluding loans to FFG and Government 1.83 (%) 1.82 1.81 1.80 Retail 1.77 1.75 1.19 1.18 Loan 1.15 1.13 Overall 1.10 1.09 Corporate 1.00 0.98 0.96 0.94 0.92 0.91 Public 0.68 0.63 0.55 0.51 0.45 0.44 1H/FY17 2H/FY17 1H/FY18 2H/FY18 1H/FY19 2H/FY19
Slide 34: Interest Rates on Loans and Deposits & CDs (by Bank)
Interest Rates on Loans and Deposits & CDs (by Bank) Bank of Fukuoka Kumamoto Bank Shinwa Bank The Eighteenth Bank (domestic, non-consolidated) (domestic, non-consolidated) (domestic, non-consolidated) (domestic, non-consolidated) * Excluding loans to FFG and Government * Excluding loans to Governme
Slide 35: Breakdown of Loans and Deposits & CDs by Type
Breakdown of Loans and Deposits & CDs by Type Domestic loans (As of Mar. 31, 2020) Domestic Deposits (As of Mar. 31, 2020) 4 banks Shinwa / 4 banks Shinwa / total Fukuoka Kumamoto total Fukuoka Kumamoto Eighteenth Eighteenth Based on short-term 22.6% 18.6% 28.3% 30.8% Interest 56.5% 58.2% 54.6% 53.5
Slide 36: Securities (by Bank)
Securities (by Bank) Bank of Fukuoka Kumamoto Bank Shinwa Bank The Eighteenth Bank * Consolidated ※15年変国は、12/9末まで理論値採用 * Consolidated ※15年変国は、12/9末まで理論値採用 Unrealized 156.1 gain (loss) 129.7 27.5 89.1 20.8 25.4 25.7 6.9 12.8 2,281.6 2,320.6 5.7 Securities balance Foreign 3.3 bonds, etc. 2,042.0 692.7
Slide 37: Non-interest Income / Asset Management Products Sales (by Bank)
Non-interest Income / Asset Management Products Sales (by Bank) Bank of Fukuoka Kumamoto Bank Shinwa Bank The Eighteenth Bank * For all 4 banks, excluding gains (loss) on bond and on marketable products 18.6 3.7 2.3 18.0 17.0 1.8 Others 3.1 5.2 0.6 1.4 1.0 0.1 2.9 1.8 Non-interest income 3.6 1.5 0.6
Slide 38: Overhead Expenses / Credit Cost (by Bank)
Overhead Expenses / Credit Cost (by Bank) Bank of Fukuoka Kumamoto Bank Shinwa Bank The Eighteenth Bank 52.4% 72.6% 81.5% 81.3% 50.7% 51.3% 71.4% 71.6% 72.6% 74.7% 76.3% Core OHR 67.6 67.7 Overhead expenses 66.8 21.5 21.9 13.9 13.9 13.6 20.0 19.7 19.9 Tax 6.4 6.3 6.5 1.5 1.6 & core OHR 1.1 1.1 1.1 1
Slide 39: Non-Performing Loans / Capital Adequacy Ratio (by Bank)
Non-Performing Loans / Capital Adequacy Ratio (by Bank) Bank of Fukuoka Kumamoto Bank Shinwa Bank The Eighteenth Bank * After partial write-off * After partial write-off * After partial write-off * After partial write-off Non-performing loans & ratio 2.33% 2.32% 2.32% 2.26% 1.61% 1.58% 2.14% Ratio 1
Slide 40: Part IV [Reference] Kyushu Economy
Part IV [Reference] Kyushu Economy
Slide 41: Market Share
Market Share Oita Pref. Fukuoka Number of business Number of business Population establishments Loans Deposits Population Loans Deposits establishments Pref. Kitakyushu Bank 21.5 35.9 1.3 trillion yen 3.4 7.7 5,060,000 223,000 1,150,000 54,000 trillion yen trillion yen Bank of Fukuoka trillion yen t
Slide 42: Economic Trends
Economic Trends Bank of Japan’s Tankan 25 20 Projection Business conditions D.I. 15 Fukuoka 10 25 5 0 -5 Fukuoka region* Projection 20 - 10 Kitakyushu - 15 Japan 15/3 16/3 17/3 18/3 19/3 20/3 15 * Fukuoka region: Fukuoka Prefecture plus Saga Prefecture, excluding Kitakyushu 30 Projection 10 20 Kumam
Slide 43: Industrial Production Trends
Industrial Production Trends Industrial production index (FY2015 = 100) [Kyushu] Main industry trends (Million pieces) (%) 115 Integrated circuits 1,000 50 40 800 30 Japan 600 20 110 10 400 0 - 10 200 105 Quantity - 20 YoY chg. (right axis) 0 - 30 15/3 16/3 17/3 18/3 19/3 20/3 (Thousand vehicles) (%
Slide 44: Capital Investment / Housing Investment
Capital Investment / Housing Investment Capital investment: Bank of Japan’s Tankan (YoY chg.) Housing starts 30 (Thousand) (%) 1,200 20 Projection Estimate 1,000 10 20 800 0 Japan Japan 600 - 10 400 - 20 10 Number of houses Mar. 200 - 30 YoY chg. (right axis) 0 - 40 15 16 17 18 19 20 0 (Thousand) (%
Slide 45: Land Price Trends
Land Price Trends Volatility of standard land prices <Ministry of Land, Infrastructure and Transport: 2020 Outline of results of land prices survey> Major cities in Fukuoka Pref. ○ Japan: Residential lands have risen for 3rd consecutive year, all uses and commercial (%) lands have risen for 5th cons
Slide 46: Corporate Bankruptcies
Corporate Bankruptcies (Number) (¥ bil.) Unica Number of bankruptcies and total liabilities 20 Kurosaki Mate 50 15 40 Fukuoka Left axis: Total liabilities (bar graph) (¥ bil.) (Number) Right axis: Number of bankruptcies (line graph) 30 1,600 900 10 Takata 20 1,400 Corporation 5 10 1,200 800 0 0 Japa
Slide 47: Loans
Loans (%) 8 Rate of increase of bank loans (YoY chg., monthly) 6 (%) Fukuoka (%) 6 4 2.9 2 0 -2 Japan 4 -4 10/3 12/3 14/3 16/3 18/3 20/3 8 2.8 6 Kumamoto 4 5.2 2 2 2.1 0 -2 0 -4 10/3 12/3 14/3 16/3 18/3 20/3 8 Kyushu 6 4 Nagasaki -2 2 0 1.3 -2 -4 -4 -6 10/3 12/3 14/3 16/3 18/3 20/3 10/3 12/3 14/3 16
Slide 48: Deposits
Deposits (%) 6 Rate of increase of bank deposits (YoY chg., monthly) 5 (%) Fukuoka 4 3.7 10 3 2 1 8 Japan 0 10/3 12/3 14/3 16/3 18/3 20/3 12 6 10 Kumamoto 8 6 4 4 2 3.0 1.7 0 -2 2.8 10/3 12/3 14/3 16/3 18/3 20/3 2 6 Kyushu 5 4 Nagasaki 3 0 2 1 1.0 0 -1 -2 -2 10/3 12/3 14/3 16/3 18/3 20/3 10/3 12/3 1
Slide 49: 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
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