Fukuoka Financial Group, Inc. · TSE:8354
Fukuoka Financial — Investor Presentation (March 2015)
57 slides from Fukuoka Financial's investor presentation, March 2015
Slide 1: Investor Presentation: FFG Growth Strategies
－ To be your Bank of choice － Investor Presentation FFG FFG Growth Growth Strategies Strategies 2015 March
Slide 2: Contents
－ To be your Bank of choice － Contents Part Ⅰ Main Presentation Part Ⅱ About Fukuoka Financial Group Page Page 4. An Overview of FFG 20. Corporate Data 5. Positioning of FFG 21. Corporate History 6. Business Results 22. Network of FFG 7. Business Environment Facing Regional Banks 23. Stock Data 8. S
Slide 3: Contents
－ To be your Bank of choice － Contents Part Ⅲ Financial Data Part Ⅳ Our Mother Market “ Kyushu ” Page Page 27. Financial results for FY2013 48. Feature of Kyushu Economy 28. Projections for FY2014 49. Financial Map of Kyushu 29. Transition of Core Business Profit 50. Business Conditions 30. Loans Gr
Slide 4: Part I Main Presentation
－ To be your Bank of choice － Part I Main Presentation Fukuoka Fukuoka Saga Oita Nagasaki Kyushu Sasebo(Nagasaki) Miyazaki Kumamoto Kagoshima
Slide 5: An Overview of FFG
－ To be your Bank of choice － An Overview of FFG f FFG is a total financial group that includes 3 regional banks based in Kyushu and a securities company. f Established the “Multiple Brands/Single Platform” management style best suited to the integration of Japanese regional banks. Company Outline
Slide 6: Positioning of FFG
－ To be your Bank of choice － Positioning of FFG ■ Loans as of September 30, 2014 (trillion yen) ■ Deposits as of September 30, 2014 (trillion yen) 12.0 14.0 *Deposits + CDs balance 9.9 9.7 12.4 11.6 10.0 12.0 10.6 10.5 8.3 7.5 7.3 8.9 8.8 10.0 8.0 7.6 6.1 7.1 5.7 5.5 8.0 6.5 6.5 6.0 4.9 4.7 6.0 4.0
Slide 7: Business Results
－ To be your Bank of choice － Business Results f Amid a tough business environment, FFG has strengthened profitability by improving efficiency through management integration and by expanding business. f Core business profit at regional banks has decreased almost 20% over six years. One factor has be
Slide 8: Business Environment Facing Regional Banks
－ To be your Bank of choice － Business Environment Facing Regional Banks f Declining birthrate in Japan is leading to a smaller and aging population. As a consequence, Japan’s domestic market is expected to contract and change. At the same time, earnings are under pressure from monetary easing and f
Slide 9: Strategies to be Taken by Regional Banks
－ To be your Bank of choice － Strategies to be Taken by Regional Banks f To achieve sustainable growth amid a tough business environment, each regional bank need to select an optimum strategy from among a variety of combinations based on its own unique factors. f Although various options are availab
Slide 10: FFG's Management Strategy
－ To be your Bank of choice － FFG’s Management Strategy f First, refine current business model. Then, work to significantly expand business base, by differentiating ourselves from other banks and reforming our earnings structure. f New management integration is also an option. But in order to reap t
Slide 11: Fourth Mid-Term Management Plan: ABC Plan II
－ To be your Bank of choice － Fourth Mid-Term Management Plan: ABC Plan II f Commenced a new mid-term management plan in April 2013, positioned as a Significant Growth Phase. f Goal is to be a total financial group with unwavering support from all over the Kyushu region. Fourth Fourth Mid-Term Manag
Slide 12: FFG's Goal of Expanded Business Base
－ To be your Bank of choice － FFG’s Goal of Expanded Business Base f The most important factor for sustaining growth potential is the expansion of a quality business base. f FFG will continue to expand and deepen its business base in Kyushu (our mother market) by increasing customer numbers and cros
Slide 13: Targets & Strategies
－ To be your Bank of choice － Targets & Strategies FFG’s FFGのcustomer customer base base Consulting retail Business corporations Individuals 210,000 5,400,000 f Proceed to expand and deepen Wealthy business base, targeting all individual Deposits only Large enterprises Loans 160,000 50,000 250,000 a
Slide 14: Improving Business Productivity
－ To be your Bank of choice － Improving Business Productivity f Accelerate reform of marketing style, by utilizing sales support tools and new CRM system. f Link to expansion of business base by raising business productivity. *CRM = Customer Relationship Management Sales support tools New CRM system
Slide 15: Progress of ABC Plan II
－ To be your Bank of choice － Progress of ABC Plan II Loans Deposits + CDs Initial plan 12,460.5 12,400.0 Initial plan 11,984.3 10,160.0 11,271.0 (4.0%) 9,791.4 (6.3%) 9,380.8 (3.6%) 8,989.1 (4.4%) 10,880.2 (4.3%) 674.2 Initial plan 8,659.4 (3.8%) (¥ bil.) Initial plan 112.4 12,000.0 (¥ bil.) 192.2
Slide 16: Outlook for Net Interest Income
－ To be your Bank of choice － Outlook for Net Interest Income f Outlook for interest on loans and discounts is for a turnaround in final year of ABC Plan II. f Decreasing cost of financing debt externally is also supporting net interest income. Net interest income (3 banks' total) Domestic interest
Slide 17: Credit Cost
－ To be your Bank of choice － Credit Cost f In FY2013, we strengthened reserve for obligors needing attention, maintaining a high level of reserve in accordance with conservative reserve policy. f Initial planned credit cost in FY2014 was ¥8.0 billion, same level as FY2013. Based on the first half p
Slide 18: Projections for FY2014
－ To be your Bank of choice － Projections for FY2014 f In FY2014, Core business profit is projected at ¥72.0 billion, and net income at ¥36.0 billion. f 3Q results of FY2014 is progressing well, reaching 86% of projected net income. Actual Planned Actual (¥ bil.) YoY <Key Points> 3 banks’ total FY20
Slide 19: Dividend Policy
－ To be your Bank of choice － Dividend Policy f Adopting a performance-based dividend formula, a dividend table has been set based on a dividend payout ratio of about 30%. f Annual dividend for FY2014 expected to be 12 yen. 20 573.7% Dividend Dividend Policy Policy (Common stock, yen) Dividend 18 pa
Slide 20: Part II About Fukuoka Financial Group
－ To be your Bank of choice － Part Ⅱ About Fukuoka Financial Group
Slide 21: Corporate Data
－ To be your Bank of choice － Corporate Data Corporate Governance 【Senior Management】 General Meeting of Masaaki Tani Takashige Shibato Shareholders Audit & Supervisory FFG Chairman FFG President Board 4 (3 external members) Bank of Fukuoka Bank of Fukuoka Board of Directors 14 Chairman President
Slide 22: Corporate History
－ To be your Bank of choice － Corporate History Main Event Stage Basic Concept / Theme 2007 Apr. Establishment of FFG New Growth Strategy Preparation for growth Oct. Integration of Shinwa Bank 2008 management Run-up Phase Broad-Area Preparation of management based infrastructure Sep. Collapse of Leh
Slide 23: Network of FFG
－ To be your Bank of choice － Network of FFG Domestic network Overseas network Overwhelming network covers all of Kyushu 6 overseas representative offices primarily in China and ASEAN Fukuoka Nagasaki Bank of Fukuoka Fukuoka 152 Kyushu 12 Dalian Shinwa Bank Other 6 Nagasaki 76 Shanghai Oita Kyushu 1
Slide 24: Stock Data
－ To be your Bank of choice － Stock Data as of September 30, 2014 Share Information Major Shareholders （thousands of shares） Type1 Major Shareholders Shares held Ratio* Common stock preferred stock Japan Trustee Services Bank,Ltd.（Trust account) 64,149 7.30％ Number of authorized shares 1,800,000
Slide 25: Market Share of Subsidiary Banks
－ To be your Bank of choice － Market Share of Subsidiary Banks Fukuoka Prefecture Kumamoto Prefecture Nagasaki Prefecture 35% 50% 40% Bank of Fukuoka Higo bank 18 bank 31.7% 45% 35% 33.6% 30% 40% 30% Share of loans 25% 35% Nishi-nippon City Bank 30% 25% Shinwa bank 20% Savings Unions Mega & Major 25
Slide 26: Comparison with major regional banks
－ To be your Bank of choice － Comparison with major regional banks ■ Core Business Profit FY2013 (¥ bil.) ■ Net Income FY2013 (¥ bil.) 140 70 Before amortization of goodwill 60.7 （¥9.2bil per year） 113.5 120 60 46.7 46.4 100 50 45.3 74.9 36.2 80 65.6 62.8 40 25.0 60 30 34.7 40 20 20 10 0 0 Yokohama
Slide 27: Part III Financial Data
－ To be your Bank of choice － Part Ⅲ Financial Data
Slide 28: Financial results for FY2013
－ To be your Bank of choice － Financial results for FY2013 Point1 Core Business Profit decreased Profit & Loss (3 banks’ total) (¥ bil.) in three accounting period, 3 banks non- exceed the projection Bank of Fukuoka Kumamoto Bank Shinwa Bank consolidated total (non-consolidated) (non-consolidated) (
Slide 29: Projections for FY2014
－ To be your Bank of choice － Projections for FY2014 Profit & Loss (3 banks’ total) (¥ bil.) Profit & Loss (By bank) 3 banks non- (¥ bil.) Bank of Fukuoka Kumamoto Bank Shinwa Bank consolidated total (non-consolidated) (non-consolidated) (non-consolidated) Bank of Fukuoka Core business profit P:FY14
Slide 30: Transition of Core Business Profit
－ To be your Bank of choice － Transition of Core business profit (¥ bil.) Core business profit -1.9 Core business profit -2.9 Net interest income -2.5 Net interest income –4.4 Domestic loan -5.7 Domestic loan –3.7 ＋5.3 -11.0 zDecline in interest expense for subordinated loan +0.8 zInterest on a depo
Slide 31: Loans Growth
－ To be your Bank of choice － Loans Growth FFG (¥ bil.) Bank of Fukuoka Demerger +1.4 6,202.5 6,363.0 6,546.7 6,783.1 （3.6％） 7,029.3 （3.6％） trillion yen 5,656.3 （2.6％） （2.9％） 9,380.8 5,519.4 （2.5％） （9.7％） 8,989.2 （4.4％） 8,659.5 （3.8％） 8,228.8 8,384.7 （3.3％） 8,068.9 7,917.4 （1.9％） （2.0％） （1.9％） Kumam
Slide 32: Loans (By Bank)
－ To be your Bank of choice － Loans (By Bank) Bank of Fukuoka Kumamoto Bank Shinwa Bank * Excluding loans to FFG * Excluding subordinated beneficial interests * Excluding subordinated beneficial interests 1,370.7 6,549.5 6,759.5 6,759.5 1,370.7 6,107.1 6,348.5 6,549.5 6,348.5 974.4 974.4 1,276.0 1,2
Slide 33: Loan Portfolio (Classified by Industry)
－ To be your Bank of choice － Loan Portfolio (Classified by Industry) (¥ bil.) Sep. 30, 2014 Change from Mar. 31, 2014 Total BOF KMB SWB Total BOF KMB SWB Classification by industry 9,861.0 100.0% 7,410.9 100.0% 1,049.9 100.0% 1,400.1 100.0% 176.2 165.7 20.1 -9.7 Manufacturing 699.1 7.1% 522.1 7.0%
Slide 34: Deposits & CDs Growth
－ To be your Bank of choice － Deposits & CDs Growth (¥ bil.) FFG Bank of Fukuoka +1.7 8,537 7,794 8,073 7,334 7,648 （5.8％） trillion yen 11,984.3 6,993 7,189 （3.6％） （2.8％） （2.0％） （4.3％） （1.9％） （6.3％） 11,271.1 10,651.5 10,880.3 （3.6％） 10,242.9 10,218.5 10,299.9 （3.4％） （2.1％） （-0.2％） （0.8％） Kumamoto Ba
Slide 35: Deposits & CDs (By Bank)
－ To be your Bank of choice － Deposits & CDs (By Bank) Bank of Fukuoka Kumamoto Bank Shinwa Bank 8,456.6 8,456.6 2,171.2 2,171.2 8,004.2 1,244.1 Average deposit balance 7,724.3 8,004.2 1,244.1 2,012.1 7,583.8 7,583.8 7,724.3 539.8 1,112.6 1,149.5 1,149.5 1,944.4 2,012.1 1,891.7 1,944.4 by customer s
Slide 36: Interest Rate (Domestic Loan)
－ To be your Bank of choice － Interest Rate (Domestic loan) 3 banks’ total （％） 2.65 Retail 2.58 2.48 2.39 2.30 2.22 2.13 2.01 2.04 Loan 1.96 1.97 Overall 1.88 1.90 1.80 1.83 Corporate 1.79 1.91 1.75 1.85 1.69 1.79 1.63 1.59 1.72 1.52 1.65 1.46 1.59 1.41 1.38 Public 1.53 1.45 1.38 1.40 1.32 1.31 1.32
Slide 37: Interest Rates (By Bank)
－ To be your Bank of choice － Interest Rates (By Bank) Bank of Fukuoka Kumamoto Bank Shinwa Bank 2.54 2.86 Interest rates on loans 2.39 2.72 Retail 2.64 2.23 2.48 2.46 2.06 2.49 2.21 2.14 2.28 1.88 1.91 2.53 2.35 2.11 Overall 1.75 1.97 1.64 2.35 2.18 1.98 1.85 1.79 1.53 1.82 Corporate 1.42 2.12 2.02
Slide 38: Breakdown of Loans and Deposits & CDs By Interest Rate
－ To be your Bank of choice － Breakdown of Loans and Deposits & CDs By Interest Rate Domestic Loans (As of Sep. 30, 2014) Domestic Deposits (As of Sep. 30, 2014) 3 banks’ Bank of Kumamoto Shinwa 3 banks’ Bank of Kumamoto Shinwa total Fukuoka Bank Bank total Fukuoka Bank Bank Based on short- Interest
Slide 39: Securities
－ To be your Bank of choice － Securities Securities portfolio (3 banks total) Bond duration (¥ bil.) (years) Valuation difference 131.1 Domestic Bonds 109.1 116.2 4.67 102.6 4.52 4.04 3.98 3.73 2,825.6 3 Banks Total 2,659.9 （+165.7） 2,566.7 （+432.4） 3.00 3.07 3.15 （YoY Change） 2.98 2.93 （-98.3） 252.
Slide 40: Non-interest Income
－ To be your Bank of choice － Non-interest Income Non-interest income (3 banks & Fukuoka Securities total) Factor of increasing and decreasing for FY2013(YoY change) (¥ bil.) * Excluding profit(loss) on bond and marketable product YoY Item Factor of increasing and decreasing change * Fukuoka Securit
Slide 41: Asset Management Products
－ To be your Bank of choice － Asset Management Products Number of NISA account and active account ratio Sales of asset management products （accounts,%） (¥ bil.) FFG total 104,356 123,504 149,000 3 banks total 340.9 570 388.1 395.7 401.4 478.1 528.7 （YoY change） （＋47.2） （＋7.7） （+5.6） （+76.7） （+50.6）
Slide 42: Overhead Expenses
－ To be your Bank of choice － Overhead Expenses (¥ bil.) FFG 57.8% 61.3% Bank of Fukuoka 53.8% 53.6% 51.0% 48.5% 50.2% 72.8 74.1 73.1 68.0% 71.1 69.2 65.1 65.4 62.5% OHR 58.9% 57.8% 55.8% 55.6% 118.1 117.7 Overhead 118.1 53.4% 113.8 Expenses 110.7 107.8 73.6% Kumamoto Bank 68.6% 70.1% 68.7% 70.8% 69
Slide 43: Status of reserves & coverage: Bank of Fukuoka
－ To be your Bank of choice － Status of reserves & coverage：Bank of Fukuoka Under Watch Obligors zCovered ratio for claims disclosed pursuant to the Financial Reconstruction Act : 76.8% Sep 30, 2014 ( ) : March 31, 2014 (¥ bil.) Reserved ratio for Reserved ratio for Covered Collateral Uncovered clai
Slide 44: Status of reserves & coverage: Kumamoto Bank
－ To be your Bank of choice － Status of reserves & coverage：Kumamoto Bank Under Watch Obligors zCovered ratio for claims disclosed pursuant to the Financial Reconstruction Act : 77.0% Sep 30, 2014 ( ) : March 31, 2014 (¥ bil.) Reserved ratio for Reserved ratio for Covered Collateral Uncovered claims
Slide 45: Status of reserves & coverage: Shinwa Bank
－ To be your Bank of choice － Status of reserves & coverage：Shinwa Bank Under Watch Obligors zCovered ratio for claims disclosed pursuant to the Financial Reconstruction Act : 83.2% Sep 30, 2014 ( ) : March 31, 2014 (¥ bil.) Reserved ratio for Reserved ratio for Covered Collateral Uncovered claims u
Slide 46: Capital Adequacy Ratio
－ To be your Bank of choice － Capital Adequacy Ratio Capital adequacy ratio (FFG consolidated) Breakdown of the capital (FFG consolidated) (¥ bil.) (¥ bil. %) Items Sep.14 Basel II Basel III Fundamental items 759.0 800 Capital stock (Common stock) 577.5 Capital Reserves 14.7 700 adequacy 12.26 Trans
Slide 47: Consolidated Balance Sheets
－ To be your Bank of choice － Consolidated Balance Sheets （￥billion） Mar-14 Sep-14 Comparison Mar-14 Sep-14 Comparison Loans and bills discounted 9,596 9,762 ＋166 Deposits and NCD 12,238 12,382 ＋144 Domestic floating Domestic short-term loan 1,581 1,589 ＋7 deposits 6,856 6,853 ▲3 Domestic time and s
Slide 48: Part IV Our Mother Market Kyushu
－ To be your Bank of choice － Part Ⅳ Our Mother Market “Kyushu”
Slide 49: Feature of Kyushu Economy
－ To be your Bank of choice － Feature of Kyushu Economy Well-Balanced Well-Balanced 10% 10% of of Japan’s Economy Japan’s Economy ( ): share in Japan Industry Industry Grouping Grouping GDP Population Number of Businesses ￥43.8 trillion 13.3 million 600,157 North （9％） (10％） （10％） Center of “ Car Isl
Slide 50: Financial Map of Kyushu
－ To be your Bank of choice － Financial Map of Kyushu (Regional Bank & Regional Bank Ⅱ) Number of Number of Fukuoka Population business deposits Oita Population business deposits establishments establishments pref. 5,050,000 225,000 31.0 The Bank of pref. 1,190,000 56,000 7.0 people establishments t
Slide 51: Business Conditions
－ To be your Bank of choice － Business Conditions Tankan ( Short-Term Economic Survey in Japan) 30 20 20 10 0 Fukuoka -10 10 Forecast -20 Japan -30 -40 0 -50 08/3 09/3 09/9 10/03 10/09 11/03 11/09 12/3 12/9 13/3 13/9 14/3 14/9 15/3 Forecast 20 10 -10 0 Kumamoto -10 Forecast -20 -20 -30 -40 -50 Kyush
Slide 52: Capital Investment & Housing Investment
－ To be your Bank of choice － Capital Investment & Housing Investment Capital Investment (Tankan : Bank of Japan) Housing Investment (Housing starts) ( YoY Chg. ,% ) （％） 50 1,200,000 15 10 1,000,000 5 40 800,000 0 Japan -5 600,000 30 -10 400,000 -15 -20 20 200,000 the number of houses -25 YoY Chg. 0
Slide 53: Land Price Trends
－ To be your Bank of choice － Land Price Trends Volatility of standard land prices in major cities in Fukuoka Pref. Volatility of standard land prices Residential land Commercial land <Published Land Prices for 2014> 2013 2014 2013 2014 (Unit: %) Fukuoka City 0.7 1.8 2.3 3.4 Residential land Commerc
Slide 54: Corporate Bankruptcies
－ To be your Bank of choice － Corporate Bankruptcies (¥bil.) (Number) Left Axis ：The total debts / Bar graph 30 50 Right Axis：The number of bankruptcies / Line graph 45 40 (¥bil.) (Number) Fukuoka 1000 1200 20 35 30 25 1100 20 800 10 15 10 1000 5 Japan 600 0 0 900 12/1 12/7 13/1 13/7 14/1 14/7 400 8
Slide 55: Loans
－ To be your Bank of choice － Loans 6.0 (%) Rate of increase of Bank Loans （YoY Change, Monthly) 4.0 3.0 6.0 3.0 Fukuoka 2.0 0.0 -2.0 4.0 3.3 3.3 -4.0 -6.0 Japan 08/1 08/7 09/1 09/7 10/1 10/7 11/1 11/7 12/1 12/7 13/1 13/7 14/1 14/7 1.9 2.0 1.9 6.0 4.0 Kumamoto 2.0 0.0 0.0 2.6 2.6 -2.0 -4.0 -2.0 -6.0
Slide 56: Deposits
－ To be your Bank of choice － Deposits 6.0 (%) Rate of increase of Bank Deposits （YoY Change, Monthly) 5.0 5.0 4.0 2.9 Fukuoka 3.0 2.0 1.0 4.0 0.0 -1.0 Japan 2.4 -2.0 3.0 08/1 08/7 09/1 09/7 10/1 10/7 11/1 11/7 12/1 12/7 13/1 13/7 14/1 14/7 2.2 5.0 4.0 2.0 0.8 Kumamoto 3.0 2.0 1.0 1.0 0.0 -1.0 -2.0
Slide 57: Forward-Looking Statements
－ To be your Bank of choice － Forward-Looking Statements We need to remind you of the risks involved in forward-looking statements as a legal requirement. The statements in this presentation, including certain statements made in response to questions, regarding FFG’s projected financials, operationa
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