Slide 1: Management Report FY 2005
Management Report FY 2005 May 20 2005 Credit Saison Co., Ltd
Slide 2: AGENDA
AGENDA Financial Report for FY 2004 Overview of Business Progress Report on FY 2005 of Medium Term Business Plan Management Strategy for FY 2005 The figures contained in this document, which describe the outlook of business etc, are projected calculations based on conclusions and suppositions accord
Slide 3: Financial Report for FY 2004
Financial Report for FY 2004
Slide 4: CONTENTS
CONTENTS Financial Report for FY 2004 Overview of Business Highlights Operating Results Credit Risk Trends Financial Indices Main Indices (Non-Consolidated) CORPORATE STRATEGY CREDIT SAISON CO., LTD. 1
Slide 5: Highlights of FY 2004
Highlights of FY 2004 Non-consolidated Consolidated Began issuing Idemitsu “Maido Plus” Card; Pace swings to well above planned figures Agreement with Takashimaya for a strategic tie-up of their card business; Release of “TAKASHIMAYA SAISON CARD” in September First and Second Tie-up with Katakura In
Slide 6: Business Results
Business Results ( )=YOY Non-Consolidated Consolidated Operating FY2004 Actual ¥190.2 billion (108%) ¥240.4 billion (109%) revenues FY2005 Target ¥203.0 billion (107%) ¥252.0 billion (105%) Ordinary FY2004 Actual ¥47.0 billion (104%) ¥56.5 billion (107%) income FY2005 Target ¥50.0 billion (106%) ¥60
Slide 7: Results by Business Segment
Results by Business Segment Units: Billion yen % Operating revenues Operating income FY2003 FY2004 increase FY2003 FY2004 increase Credit & Finance 182.0 196.2 7.8% 46.8 48.2 3.0% Entertainment 15.6 17.0 8.9% 1.3 1.4 2.0% Real estate 1.10 13.4 22.0% 4.2 5.5 30.9% Lease 5.6 6.9 22.2% 1.9 2.6 36.6% Ot
Slide 8: Contribution to Consolidated Results
Contribution to Consolidated Results Consolidated Consolidated Trends Trends Contribution Contribution to to Consolidated Consolidated Results Results (Units: Billion yen; times) FY FY FY Main consolidated subsidiaries Contribution 2003 2004 2005 to ordinary (target) income Ordinary income Saison Fu
Slide 9: Operating Revenues (Consolidated/Non-Consolidated)
Operating Revenues (Consolidated/Non-Consolidated) Revenue increase from growth in Card business, Real Estate and Leasing businesses: Consolidated +9%, Non-Consolidated +8% Consolidated Non-Consolidated Unit: Billion yen Unit: Billion yen 300 300 252.0 240.4 250 250 214.8 212.2 220.3 203.0 190.2 200
Slide 10: Ordinary Income (Consolidated/Non-Consolidated)
Ordinary Income (Consolidated/Non-Consolidated) Despite higher strategic investment costs, easing of credit cost in ordinary income increase: Consolidated +9%, Non-Consolidated +8% Consolidated Non-Consolidated Unit: Billion yen Unit: Billion yen 59.6 56.5 60.0 60 60 51.0 52.9 47.0 50.0 45.0 50 50 4
Slide 11: Net Income (Consolidated/Non-Consolidated)
Net Income (Consolidated/Non-Consolidated) Due to asset impairment losses in the previous fiscal year, consolidated net income increased 42%. Non-consolidated income increased 6%. Consolidated Non-Consolidated Unit: Billion yen Unit: Billion yen 34.0 31.8 30.0 30 30 24.3 25.8 22.4 18.2 20 20 yen 12.
Slide 12: Credit Risk Trends
Credit Risk Trends The trend has cooled down in delinquent receivables of over 90 days. *Delinquency rate: Percentage of total receivables past due 90 days or more. Consolidated Non-Consolidated 2.8% 2.8% Cash advances 2.52% 2.6% 2.6% delinquency rate 2.41% 2.4% 2.4% 2.48% Total credit card 2.36% de
Slide 13: Credit Risk Trends: Trend of Write-offs
Credit Risk Trends *Write-off rate: Amount of receivables written off during the year as a percentage of Trend of Write-offs total receivables at the end of the period. Consolidated Non-Consolidated 5.5% 5.5% 5.0% 5.0% 4.5% 4.5% Cash advances 4.06% 4.0% 4.0% write-off rate 3.5% 3.5% 2.88% 2.98% 3.0%
Slide 14: Credit Risk Trends: Credit Costs
Credit Risk Trends Credit Costs Consolidated Non-Consolidated Consolidated figures are aggregate delinquency costs. Billion yen Write-off Net increase in allowance for bad debt Billion yen 45 45 40 40 36.3 37.3 1.7 35.7 5.9 1.6 35 35 28.3 30 30 4.5 25 25 21.4 41.2 43.8 41.0 20 20 3.3 31.1 34.6 31.4
Slide 15: Financial Indices
Financial Indices Stability Shareholders’ equity ratio steady Ratings R&I A+ Profitability Reached medium-term target of 10% consolidated ROE S&P BBB+ Consolidated Non-Consolidated 25% 25% Shareholders’ equity ratio 22.5% 21.9% 18.4% 19.9% 23.0% 22.7% 23.1% 20% 20% 19.1% Shareholders’ equity rat
Slide 16: Funding Structure
Funding Structure Ratio of Interest-bearing Liabilities Consolidated Non-Consolidated Corporate Bond CP Securitization Debt Coreporate Bond CP Securitization Debt 100% 100% 80% 50% 80% 52% 57% 59% 60% 59% 64% 66% 60% 60% 10% 13% 40% 40% 15% 15% 11% 16% 12% 16% 13% 19% 9% 8% 15% 20% 6% 20% 7% 5% 22%
Slide 17: Funding Structure
Funding Structure Long-term/Short-term Debt Ratio and Fixed Ratio Consolidated Non-Consolidated Short-term Long-term 80% 100% Fixed ratio Long-term ratio 68% 69% 80% 70% 49% 56% 62% 61% 60% 56% 55% 60% 46% 57% 50% 56% 40% 49% 51% 51% 44% 40% 46% 20% 39% 39% 0% 30% FY2002 FY2003 FY2004 FY2000 FY2001
Slide 18: Main Indices Credit Saison Non-Consolidated
Main Indices Credit Saison Non-Consolidated ( )=YOY FY2004 Actual FY2005 Planned New applications 2.41 million (115%) 2.70 million New cards issued 2.09 million (112%) 2.35 million Total cardmembers 16.9 million( 1,030,000) 18.2 million Active cardmembers 8.8 million ( 420,000) 9.2 million Transacti
Slide 19: New applications & New cards issued
New applications & New cards issued Aiming for 2.7 million new applications through the start of new alliance cards Units: Million Applications Cards issued 3 2.8 2.7 2.5 2.5 2.4 2.4 2.5 2.3 2.1 2.1 1.9 2 ,0 00 1.5 30 Y YO % 115 1 0 00 23, Y 0.5 YO % 112 0 FY2001 FY2002 FY2003 FY2004 FY2005(projecte
Slide 20: Total cardmembers & Active cardmembers
Total cardmembers & Active cardmembers Aiming for 18.2 million total cardmembers and 9.2 million active cardmembers Unit: Million Active cardmembers Total cardmembers 18.2 20 16.9 18 15.9 14.9 n 16 13.4 i llio m 1. 0 Y 14 YO % 106 12 9.2 8.8 10 8.1 8.4 7.5 8 6 i l lion 4 m 0.4 YOY % 2 105 0 FY2001 F
Slide 21: Transaction volume
Transaction volume Shopping transactions approaching double-digit growth Billion yen 2,850 3,000 Shopping Cash advances 2,596 2,343 2,408 2,500 518 550 2,121 496 2,000 534 Y 492 YO % 104 1,500 2,300 1,000 1,912 2,078 1,629 1,809 500 YOY % 109 0 FY2001 FY2002 FY2003 FY2004 FY2005(proje cte d) CORPORA
Slide 22: Credit loans outstanding
Credit loans outstanding Aiming for 6% growth by building up quality receivables Billion yen Cash advances ABS(Cash advance) Shopping ABS(Shopping) 630 592 600 542 40 ABS (Shopping) 517 40 500 466 40 40 138 147 Shopping 40 125 30 ABS (Cash advan 400 116 Y 30 103 YO 1 07% 300 413 Cash advances 384 20
Slide 23: II. Progress of Medium-Term Management Plan
II. Progress of Medium-Term Management Plan (Million people, Billion yen) FY2005 Achievement Target FY2005 FY2000 Medium- rate Growth Actual term plan Projected (Based on Rate projection) target Total cardmembers 11.4 49% 17.0 18.2 107% Active cardmembers 6.5 54% 10.0 9.2 92% Ordinary 37.0 35% 50.0
Slide 24: Management Strategies FY 2005
Management Strategies FY 2005 Shifting to 21st Century Management CORPORATE STRATEGY CREDIT SAISON CO., LTD.
Slide 25: CONTENTS
CONTENTS III Management Strategies for FY2005 1. Restructuring of the Sales Organization 2. Strengthening Alliance Partner Card Business 3. Mobilizing the Group’s Full Power 4. Innovation of the Personnel System CORPORATE STRATEGY CREDIT SAISON CO., LTD. 21
Slide 26: 1. Restructuring of the Sales Organization
1. Restructuring of the Sales Organization Maximizing our retail strengths with a boundaryless organization Sales Division Strengthen area marketing functions We will reorganize the Eastern & Western Japan business divisions and 12 branch offices and the Sales Planning Department that manages them S
Slide 27: Boundaryless Structure
1. Restructuring of the Sales Organization “Three-in-One” structure Stronger organization Sales Division Boundaryless Structure Use of regional characteristics Shift to business division structure Nurturing of managers Credit Card Division Sales planning and execution by client integration Aim to be
Slide 28: Two new innovative ideas Enhanced service
1. Restructuring of the Sales Organization Two new innovative ideas Enhanced service No annual membership fees Permanent Clients Linkage of points 5 pillars of the preferred services card business Service Self-setting of Opening of Ubiquitous credit limits credit center CORPORATE STRATEGY CREDIT SAI
Slide 29: Start of operations at new Ubiquitous credit center
1. Restructuring of the Sales Organization Start of operations at new Ubiquitous credit center Protect Promotion Inbound Outbound Control ES, CS Management Philosophy Functional Leading edge Comfortable service provider Rational New credit center in Nakano-ku, Tokyo CORPORATE STRATEGY CREDIT SAISON
Slide 30: Shifting our focus from control to customer needs
1. Restructuring of the Sales Organization Shifting our focus from control to customer needs When card is issued Self-setting of shopping credit limit Select shopping revolving payment Focus on “what the customer wants” Set by customer option only When card is used Flexible response tailored to the
Slide 31: Strengthening Alliance Partner Card Business
2. Strengthening Alliance Partner Card Business Aiming for the top share in the industry We are strengthening marketing to build the card business and activate card use through collaborative business with clients Opening of Sogo Shinsaibashi store/ Issue of MMC SAISON Card / Co-marketing with client
Slide 32: Start of card business in the banking channel
2. Strengthening Alliance Partner Card Business Start of card business in the banking channel Credit Saison Resona Bank Resona Card SAISON SAISON Card Service functions Mizuho Bank Credit Saison Mizuho Mileage Club Cash Card SAISON Card Card SAISON MMC Plan Targets Cumulative new MMC (UC) applicatio
Slide 33: Business Alliance with UC Card
2. Strengthening Alliance Partner Card Business Business Alliance with UC Card Integration benefits Stronger Competitiveness Expand cardmembers by combining SAISON Card & UC Card Integrate service and capitalize on retail and banking brand value Greater Business Efficiency Concentrate member store o
Slide 34: 3. Mobilizing the Group's Full Power
3. Mobilizing the Group’s Full Power Amid the changing competitive landscape brought on by realignment of the financial industry, we will strengthen our business foundation as an integrated finance company and promote business diversification, including the alliance strategy. Leading edge Credit Car
Slide 35: Mobilizing the Group's Full Power: Credit Card Business
3. Mobilizing the Group’s Full Power Credit Card Business While implementing the alliance strategy, we will enhance measures to raise the value of our cards. T&E Insurance Securities Investment Securities intermediary ¾MONEX securities account opening Since the start of service in mid-December, abou
Slide 36: Mobilizing the Group's Full Power: Finance Related Business
3. Mobilizing the Group’s Full Power Finance Related Business Strengthening our finance businesses to meet market needs Leasing business Corporate market Home equity loan Credit guarantee business business Consumer Consumer credit and market finance business Targets of each business *SF: Saison Fund
Slide 37: Businesses that Raise Asset Value
3. Mobilizing the Group’s Full Power Businesses that Raise Asset Value Expand business opportunities by effectively deploying people, goods, know-how and other assets The Credit Saison Group will deploy its people, goods, know-how and other assets to create a business portfolio based on affinity wit
Slide 38: 4. Innovation of the Personnel System
4. Innovation of the Personnel System Policies to use employees who generate new ideas 1. Introduce a new personnel system that accommodates all employment patterns. 2. Use a small number of employees targeted for long-term development and employees with specialized skills and the flexibility to res
Slide 39: Use of Younger Employees and Female Employees
4. Innovation of the Personnel System Use of Younger Employees and Female Employees Male/Female Ratio at Division Male/Female Ratio at Section Manager Level Manager Level Percentage of women at Division Manager Level in Percentage of women at Section Manager Level in Age Japanese companies Age Japan