Resona Holdings, Inc. · TSE:8308
Resona — FY2007 Earnings Presentation
50 slides from Resona's earnings presentation, May 28, 2008
Slide 1: Business Results of FY2007 and Future Management Direction
Business Results of FY2007 and Future Management Direction — Maximizing Corporate Value through Sustained Growth - RESONA May 28, 2008 @ Resona Holdings, Inc.
Slide 2: Contents
Note: In some pages of this material, names of Resona Group companies are shown in the CONTENTS following abbreviated form: RHD: Resona Holdings, RB: Resona Bank, SR: Saitama Resona Bank, KO: Kinki Osaka Bank, and RT: Resona Trust & Banking Outline of Business Results for FY2007 Updates on Major Bus
Slide 3: Outline of Business Results for FY2007
Outline of Business Results for FY2007 Updates on Major Businesses: Results of FY2007 and Outlook for FY2008 Efforts to Build Solid Foundation for Sustainable Growth Pathway to Early Repayment of Public Funds <Reference Material> 2
Slide 4: Financial Highlights for FY2007
Financial Highlights for FY2007 (Billions of Yen) Posted consolidated net income of Y302.8 bn. Net income increased by Y72.8 bn. (31.6%) over forecast, Factors accounting for the year-on-year change in consolidated net income but decreased by Y362.0 bn. (-54.4%) yoy. Increase in DTAs relating t
Slide 5: Outline of P&L for FY2007
Outline of P&L for FY2007 Resona Holdings Total of four banks Factors accounting (Consolidated) (Non-consolidated) Saitama Kinki Resona for the difference (A) - (B) (Approx. figures) Resona Difference Resona Osaka Trust & Bank (Billions of yen) Bank Bank Banking RC: Resona Card, RG: Resona Guarantee
Slide 6: Analysis on YoY Change in Top Line Income
Analysis on YoY Change in Top Line Income (Total of Group banks) Top line income declined Y35.9bn primarily due to loss on sale of unlisted investment trust funds Income from loans and deposits increased Y14.8bn YoY driven by spread improvements Loss on sale of unlisted investment trust funds, s
Slide 7: Analysis on YoY Change in Net Income
Analysis on YoY Change in Net Income (Total of Group Banks) Net income declined by Y354.4bn YoY mainly due to losses on stocks and increase in income taxes Operating expenses increased YoY, but were lower than the forecast Net credit expenses decreased by Y8.1bn YoY, and Y11.2bn lower than the f
Slide 8: Measures to Enhance Financial Soundness: Loan Asset
Measures to Enhance Financial Soundness: Loan Asset NPL balance and NPL ratio (Total of Group Banks) Top 10 Borrowers Concentration (RB) Credit exposure to top 10 largest borrowers / Total claims (Y bn) Unrecoverable or valueless claims 6.74% 7% Risk claims 6.2% Special attention loans 6% 2,000 1,
Slide 9: Measures to Enhance Financial Soundness: Securities Portfolio
Measures to Enhance Financial Soundness: Securities Portfolio Maintained soundness of securities portfolio [Non-trading marketable securities available for sale] Securitized products [End of March 2007] Total Y6.8 tn (Balance of direct investments: Y323.9bn） Corporate Underlying assets for all pr
Slide 10: Capital Adequacy Ratio (RHD Consolidated Basis)
Capital Adequacy Ratio (RHD Consolidated Basis) RHD’s consolidated CAR [Mar. 31, 2007] 10.56% (Basel II SA) ⇒ [Mar. 31, 2008] 14.28% (Basel II F-IRB) 億円20/3末3FIRB増減自己資本比率TierⅠ比率自己資本額+31,965 YoY Change based on SA Change due to shift from SA to F-IRB (Mar. 31, 2008) (Ybn, %） (Ybn, %） Mar. 31,2007（
Slide 11: Earnings Forecasts for Fiscal Year 2008
Earnings Forecasts for Fiscal Year 2008 Resona Holdings (Consolidated) Resona Holdings (Non-consolidated) Change from Change from 1H FY 2008 Full year 1H FY 2008 Full year (Billions of Yen) the previous (Billions of Yen) the previous forecasts forecasts forecasts forecasts year year Consolidated ord
Slide 12: Analysis on Consolidated Net Income Forecast for FY2008
Analysis on Consolidated Net Income Forecast for FY2008 Consolidated net income forecast for FY2008 : Y250.0 bn. Recovering from the loss registered in the previous fiscal year relating to the net investment position Estimated future taxable income in more conservative manner, taking into consid
Slide 13: Updates on Major Businesses: Results of FY2007 and Outlook for FY2008
Outline of Business Results for FY2007 Updates on Major Businesses: Results of FY2007 and Outlook for FY2008 Efforts to Build Solid Foundation for Sustainable Growth Pathway to Early Repayment of Public Funds <Reference Material> 12
Slide 14: Trend of Loan Business
Trend of Loan Business (Total of Group Banks) Trend of loan and deposit rates and spread Loan rate caught up with regional banks average 2.2% 2.3% Resona Group (3 banks) 2.23% Loan rate (left scale 2.1% City Banks 1.0% 2.2% Loan-to-deposit spread (left scale) Regional Banks Deposit rate (right sca
Slide 15: Loan Plan for FY2008 (1): Loans to Corporations
Loan Plan for FY2008 (1): Loans to Corporations Average balance of loans to corporations (Group banks total) Measures to increase high-quality loan assets 15.0 13.98 Cross-selling empowered by solution 13.19 13.37 13.06 offering capabilities 12.86 12.5 Pursuing group synergies (Also see page 21)
Slide 16: Loan Plan for FY2008 (2): Loans to Individuals
Loan Plan for FY2008 (2): Loans to Individuals Housing Loan Other Consumer Loans (Strategic Products) Balance at the end of March 2008: Y11.5 tn. Strategic loan products* are on a steady rise (Housing loan ratio: 44.1%) Total balance increased Y17.6bn YoY Flat 35 12 Proper housing loans 0.28 8
Slide 17: Sale of Financial Products
Sale of Financial Products Investment Trusts Personal annuity Income for FY2007 : Y37.2bn ( -Y4.0bn YoY） Income for FY2007: Y9.7bn ( - Y0.6bn YoY) Amount sold: Y858.0bn, Term-end Bal.: Y2,396.9bn Amount sold: Y197.0bn Trust fees Sale commission Amount sold (right scale) 16 50 Related income
Slide 18: Real Estate, Pension and Securities Trust Businesses
Real Estate, Pension and Securities Trust Businesses Real estate business (RB) Pension and securities trust business (RT) Income for FY2007: Y15.7bn (-Y4.2bn YoY) Gross operating profits for FY2007: Y31.0bn Commission income: Y14.5bn (- Y0.5bn YoY) Pension trust business: Y22.4bn (+Y0.9bn Y
Slide 19: Efforts to Build Solid Foundation for Sustainable Growth
Outline of Business Results for FY2007 Updates on Major Businesses: Results of FY2007 and Outlook for FY2008 Efforts to Build Solid Foundation for Sustainable Growth Pathway to Early Repayment of Public Funds <Reference Material> 18
Slide 20: Realignment of Area Management (Resona Bank)
Realignment of Area Management (Resona Bank): 7 Areas and 3 RUs Top-line Branch Loan Deposit [Before] [After] Offices (¥ tn) (¥tn) Income Objectives of the Alignment (¥ bn) Capital [Capital Central] Tokyo Central 15 3.39 4.02 83.4 Branches mostly transacting with Central large corporates are gathe
Slide 21: Introduction of New Branch Office Management Structure
Introduction of New Branch Office Management Structure Redefined roles for “business promotion” and “administration & internal control” divisions Old Management Structure New Management Structure Division of labor for accumulation of expertise Branch Customer BranchGM GM Business Business Customer
Slide 22: Pursuit of Group Synergies
Pursuit of Group Synergies Realizing group synergies making the most use of the trust functions Corporate Pension Business Real Estate Business Huge unexplored market （4,000 target companies) Increase in division staffs: +18 during FY2007 # of new entrustments： FY2006: 54 → FY2007: 169 Mar. ‘0
Slide 23: Consumer Banking Business to Become Genuine Retail Bank
Consumer Banking Business to Become Genuine Retail Bank Approach to mass retail customers Approach to private banking customers Distribution network satisfying both “low-cost” Begin to actively promote PB business after introduction and “high touch” of new branch management system “Lifestyle s
Slide 24: Brand Restoration: Efforts to Improve Customer Services
Brand Restoration: Efforts to Improve Customer Services Primary Measures Rankings in Nikkei Financial Institutions Survey [Nikkei Shimbun (Dec 12, 2007), Nikkei Kinyu Shimbun (Dec. 13, 2007) ] Improvements in rankings in the Nikkei Survey (Dec. 2007) Zero Zero Waiting Waiting Time Time Campaign Ca
Slide 25: Operational Reform: Achievements and Outlook
Operational Reform: Achievements and Outlook for the Future Resona’s Operational Reform Business Process Reengineering Quick Navi (New Teller Terminals) Three Pillars of Operational Reform Back to the basic of services industry Business Collaborations between tellers and customers ＝ Redefined
Slide 26: Other Initiatives
Other Initiatives Relocation of Tokyo Head Office Renovation of Kinki Osaka Bank’s System [Assignment and Relocation of Tokyo Head Office] [Outline of Systems Renovation at Kinki Osaka Bank] Sold Tokyo Head Office at a price of ¥162.6bn Schedule: July 2008 Plan to relocate Tokyo Head Office to
Slide 27: Pathway to Early Repayment of Public Funds
Outline of Business Results for FY2007 Updates on Major Businesses: Results of FY2007 and Outlook for FY2008 Efforts to Build Solid Foundation for Sustainable Growth Pathway to Early Repayment of Public Funds <Reference Material> 26
Slide 28: Capital Policy Directed toward Early Repayment of Public Funds
Capital Policy Directed toward Early Repayment of Public Funds Progress in FY2007 Basic Policy toward Repayment of Public Funds (Announced in May 2006) [Accumulation of Funds for Repayments] (1) Secure a source of funds for repayment as soon as possible Funds available for repayments*1 increased Y
Slide 29: List of Public Funds Still Outstanding and Approaches for Repayments
List of Public Funds Still Outstanding and Approaches for Repayments List of remaining public funds and approaches for repayments Mandatory Amount Amount Time of Issue Conversion Sep. 30, '03 Mar. 31, '08 Amount repaid Subordinated Loans (Billions of Yen) (First Call) (1) (2) (2) - (1) Total public
Slide 30: Reference Material
Outline of Business Results for FY2007 Updates on Major Businesses: Results of FY2007 and Outlook for FY2008 Efforts to Build Solid Foundation for Sustainable Growth Pathway to Early Repayment of Public Funds <Reference Material> 29
Slide 31: Management Accounting by Business Lines
Management Accounting by Business Lines Management Accounting by Group Business Lines (Provisional Calculation for FY2007) “RAROC” and “RVA”*1 as management indicators to measure profitability to allocated capital （Y bn., ％） Net Operating Profit afer a Deduction of Credit Cost *2 Management Indice
Slide 32: Capital Adequacy Ratio (RHD and Subsidiary Banks)
Capital Adequacy Ratio (RHD and Subsidiary Banks) Mar. 31, 2008 [Preliminary] 億円20/3末3FIRB増減自己資本比率TierⅠ比率自己資本額+31,965 RHD (Consolidated) RB (Consolidated) Japanese domestic standard Mar. 31, 2007 Mar. 31, 2008 Mar. 31, 2007 Mar. 31, 2008 SA SA F-IRB SA SA F-IRB (Billions of Yen) Act Act YoY Act Act
Slide 33: Risk Volume Relative to Capital
Risk Volume Relative to Capital (End of March 2008) Primary risks such as credit, market and operational risks are controlled within Tier 1 limit Risk buffers comprising of excess Tier 1 and Tier 2 are provided against the risk volume assumed under a stress scenario or the risks difficult to mea
Slide 34: Securities Portfolio
Securities Portfolio Net unrealized gains on available-for-sale securities (RHD consolidated basis) as of the end of March 2008 amounted to Y171.6bn. Stock Portfolio Bond Portfolio (Available-for-sale securities, RHD Consolidated) [Balance of Securities Held (Non-consolidated Basis) ] (Ybn) (Ybn)
Slide 35: Shareholdings by Industry
34 22% 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% Services Real estate Shareholdings by Industry (End of March 2008, Resona Bank) Other financial services Insurance Securities, commodities Banking Retail Wholesale Information, telecommunication Warehouse, transportation Air transport Marine transport TO
Slide 36: Maturity Ladder of Deposit and Loans
Maturity Ladder of Deposit and Loans (Resona Bank, Domestic Operations) Loans and Bills Discounted Deposits [End of March 2007] [End of March 2007] Within 6M 6 to 12M 1 to 3Y Over 3Y Total Within 6M 6 to 12M 1 to 3Y Over 3Y Total Fixed rate 4.5% 4.5% 10.1% 6.5% 25.6% Liquid deposits 45.9% 2.4% 8.1%
Slide 37: Policy on Provision of Loan Loss Reserves and Trend of Credit Costs
Policy on Provision of Loan Loss Reserves and Trend of Credit Costs High reserve ratio against uncovered NPLs Trend of credit costs (Total of group banks) (Ybn.) Collateral and guarantees (A) Loan loss reserve (B) 100 0.30% Business Revitalization Plan 0.22% Uncovered portion (C) (B)/{(B)+(C)} 0.17%
Slide 38: Swap Positions by Remaining Periods
Swap Positions by Remaining Periods (Resona Bank) Notional amounts of interest rate swaps by remaining period * (Billions of Yen) End of March 2008 End of March 2007 Within 1 year 1 to 5 years Over 5 years Total Within 1 year 1 to 5 years Over 5 years Total Receive fixed rate/Pay floating rate 372
Slide 39: Composition of Loan Portfolio by Corporate/Individual Customers
Composition of Loan Portfolio by Corporate/Individual Customers (Resona Bank) Loans to corporations *Market rate-linked loans (corporate) include the fixed-rate (spread) loans maturing in less than one year. [End March 2007] [End September 2007] [End March 2008] Fixed Fixed rate rate Fixed 13% 14%
Slide 40: Composition of Deposits by Corporate/Individual Customers
Composition of Deposits by Corporate/Individual Customers (Resona Bank) Corporate Deposits [End March 2007] [End September 2007] [End March 2008] Time Deposits Time Time 24% Deposits Deposits 28% 27% Liquidity Liquidity Liquidity Deposits Deposits Deposits 72% 68% 68% Individual Deposits [End Marc
Slide 41: Migrations of Borrowers (1H of FY2007)
Migrations of Borrowers (Resona Bank, 1H of FY2007) Exposure amount basis （Migration during the 1H of FY2007） End of September 2007 Upward Downward Special Quasi- Migration Migration Normal Other Watch Doubtful Bankrupt Other Attention Bankrupt Collection, Assignments, Repayments Sale Normal 95.3% 3
Slide 42: Migrations of Borrowers (2H of FY2007)
Migrations of Borrowers (Resona Bank, 2H of FY2007) Exposure amount basis （Migration during the 2H of FY2007） End of March 2008 Upward Downward Special Quasi- Migration Migration Normal Other Watch Doubtful Bankrupt Other Attention Bankrupt Collection, Assignments, Repayments Sale Normal 97.6% 1.8%
Slide 43: Trend of Long-term Senior Debt Rating of Resona Bank
Trend of Long-term Senior Debt Rating of Resona Bank 2003 2004 2005 2006 2007 JCR 2/28 5/19 9/22 1/20 12/17 1/31 6/8 4/10 6/9 3/30 5/5 9/18 MDY S&P 2/3 1/24 R&I 2/4 A1 A+ A2 A A3 A- Baa1BBB+ Baa2 BBB R&I S&P Baa3 BBB- Moody's JCR Ba1 BB+ 42
Slide 44: List of RHD's Preferred Shares (1)
List of RHD’s Preferred Shares (1) [As of April 30, 2008] Class B Preferred Shares Class C Preferred Shares Class E Preferred Shares Class F Preferred Shares Distinction between public and private funds Public Fund Public Fund Public Fund Public Fund Original issuer and name of securities Daiwa Bank
Slide 45: List of RHD's Preferred Shares (2)
List of RHD’s Preferred Shares (2) [As of April 30, 2008] Class 1 Preferred Shares Class 2 Preferred Shares Class 3 Preferred Shares Class 4 Preferred Shares Class 5 Preferred Shares Class 9 Preferred Shares Distinction between public and private fund Public Fund Public Fund Public Fund Private Fund
Slide 46: Class 9 Preferred Shares: Structure Embodying Basic Policies toward Repayments
Class 9 Preferred Shares: Structure that Embodies “Basic Policies toward Repayments” Designed in such a way to ensure high capital eligibility and to avoid dilution All shares will be allotted and subscribed by Merrill Lynch Limitation on exercise of Acquisition Rights Japan Finance Acquisition R
Slide 47: Class 9 Preferred Shares: Acquisition Right and Acquisition Clause
Class 9 Preferred Shares: “Acquisition Right” and “Acquisition Clause” 1Y 5Y 8Y Acquisition Right Not Conditionally exercisable* (Preferred Shareholders) Exercisable* (If MV of ordinary shares exceeds the Acquisition Exercisable Rights Threshold Price for a certain period) Acquisition Clause Conditi
Slide 48: Class 9 Preferred Shares: Comparison with Public Fund Preferred Stocks
Class 9 Preferred Shares: Comparison with Public Fund Preferred Stocks Financial Function Early Deposit Insurance Class 9 Preferred Shares Strengthening Law Law Preferred Dividend Rate Fixed rate (1.06% to 1.48%) 1y¥Libor +50bps Fixed rate (0.93%) Initial Exchange Premium N.A. N.A. 15％ Start of the
Slide 49: Business Revitalization Plan: Earnings Plan
Business Revitalization Plan: Earnings Plan (Total of Four Banks) FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 (Billions of Yen) (Actual) (Actual) (Actual) (Plan) (Plan) (Billions of Yen) (Actual) (Actual) (Actual) (Plan) (Plan) Gross operating profit 693.6 735.9 7
Slide 50: Forward-looking statements
The forward-looking statements contained in this presentation may be subject to material change due to the following factors. These factors may include changes in the level of stock price in Japan, any development and change related to the government’s policies, laws, business practices and their in