Fukuoka Financial Group, Inc. · TSE:8354
Fukuoka Financial — Investor Presentation (November 2022)
55 slides from Fukuoka Financial's investor presentation, Nov 22, 2022
Slide 1: Investor Meeting
Investor Meeting November 22, 2022 Fukuoka Financial Group
Slide 2: Contents
Contents Part I: Management Strategy Part III: FY2022 Interim Financial Results_Figures (Reference) Business Environment Surrounding FFG 3, 4 Average Balance of Loans (by Bank) 35 Overview of Interim Financial Results and Full-Year Earnings Projections 5 Average Balance of Loans (by Industry
Slide 3: Part I: Management Strategy
Part I: Management Strategy Fukuoka Financial Group
Slide 4: Business Environment Surrounding FFG (1)
Business Environment Surrounding FFG (1) Overall, the Kyushu economy is recovering from the COVID-19 pandemic and is continuing to move toward a moderate recovery. Although there are risk factors ahead, such as protraction of the COVID-19 pandemic, a weaker yen, and rising prices, no significant
Slide 5: Business Environment Surrounding FFG (2)
Business Environment Surrounding FFG (2) In the area in Kumamoto Prefecture in which TSMC is expanding operations, demand for funds has increased across a wide range of industries, including real estate, semiconductors, logistics, and commercial facilities. In Nagasaki Prefecture, occupancy rate
Slide 6: Overview of Interim Financial Results and Full-Year Earnings Projections
Overview of Interim Financial Results and Full-Year Earnings Projections Unit: \ bil. 1H YoY chg. 2H YoY chg. FY2022 YoY chg. Core business profit (3 banks total) Core gross business profit 111.7 +5.8 103.2 -3.8 214.9 +1.9 ▶ 1H results: YoY chg. +8.3 billion yen Net interest income 95.9 +3.4 89.3 -3
Slide 7: Full-Year Earnings Projections (Top Line and Bottom Line)
Full-Year Earnings Projections (Top Line and Bottom Line) Transition of top line [YoY chg.] (¥ bil.) Transition of bottom line [YoY chg.] (¥ bil.) Core business profit +6.5 Consolidated net income +2.9 [Compared to previous disclosure +4.0] [Compared to previous disclosure +0.0] 104.0 Net interest i
Slide 8: From the 6th Medium-Term Management Plan to the 7th Medium-Term Management Plan
From the 6th Medium-Term Management Plan to the 7th Medium-Term Management Plan The earnings effect of the polices for existing businesses which were the focus of efforts in the 6th Medium-Term Management Plan will grow in the current 7th Medium-Term Management Plan. Building on the profit growt
Slide 9: Sales Division (1)
Sales Division (1) In the 6th Medium-Term Management Plan, as an outcome of “operational reforms” and “integration of Juhachi-Shinwa Bank,” OTC operations and sales staff were streamlined. In the 7th Medium-Term Management Plan, we aim to increase Sales Division earnings by working on priority m
Slide 10: Sales Division (2)
Sales Division (2) Loans to SMEs Housing loans (3.3 %) (annual rate) (3.2%) (3.1%) (annual rate) (7.1%) (4.1%) (3.8%) (2.9%) (3.6%) (2.5%) (1.9%) Investment trusts (Unit: ¥ bil.) FY19 FY20 FY21 FY22 FY24 results results results projected projected Sales commission 2.2 3.4 5.6 4.9 6.0 Trust fees 2.8
Slide 11: DX Strategy (1)_FFG's DX Strategy: Overview
DX Strategy (1)_FFG’s DX Strategy: Overview FFG’s DX strategy aims to transform the very way of doing banking business and create new business value. In the 7th Medium-Term Management Plan, we will set operational reforms and sales reforms as the main scope of initiatives, and promote the DX of
Slide 12: DX Strategy (2)_DX of Consumer/Corporate Businesses
DX Strategy (2)_DX of Consumer/Corporate Businesses In the DX of consumer business, we will renew our banking apps for retail customers and transform ourselves to also be the Bank of choice in the digital world. In the DX of corporate business, we will develop a portal site for corporate custome
Slide 13: Minna Bank (1) | Progress of Key Figures and Future Developments
Minna Bank (1) | Progress of Key Figures and Future Developments The balance of deposits and loans is steadily increasing as of Sep. 30, 2022, but further accumulation is necessary to achieve the FY2022 plan. To achieve the FY2022 plan, we will implement marketing and functional improvements aim
Slide 14: Minna Bank (2) | Future Outlook of the BaaS Business
Minna Bank (2) | Future Outlook of the BaaS Business Working with our partner companies in the B2B2X business, we will expand the customer base of Minna Bank, increasing the number of accounts and balance of loans. We will complete development of the BaaS business infrastructure and systems befo
Slide 15: Market Operation
Market Operation Unrealized losses increased (-54.9 billion yen after considering hedges) mainly on high credit quality domestic and foreign bonds, such as Japanese government bonds and U.S. government bonds, due to the effects of rising interest rates. In the first half of FY2022, we reduced ou
Slide 16: Profit Trends
Profit Trends Although the impact of rising interest rates overseas was expected to cause net interest income of the International Division to be lower than planned, this could be offset to a certain extent by: (1) a review of the portfolio following the sale of foreign bonds, and (2) the volume o
Slide 17: Capital Policy (Basic Policy)
Capital Policy (Basic Policy) We will continue to manage capital in a way that balances shareholder returns with growth investments based on the premise of maintaining capital soundness. FFG consolidated capital adequacy ratio Capital policy Capital adequacy ratio at end of March 2023 in the low
Slide 18: Business Integration with the Fukuoka Chuo Bank
Business Integration with the Fukuoka Chuo Bank We will continue to discuss and examine business integration with the Fukuoka Chuo Bank in order to contribute to the sustainable economic development of Fukuoka Prefecture. Purpose of business integration Effects after business integration With a vi
Slide 19: (Reference 1) Building of Next-generation Mission Critical Systems
(Reference 1) Building of Next-generation Mission Critical Systems We will continue promoting the DX strategy and building next-generation mission critical systems in collaboration with IBM Japan, the current vendor of our mission critical systems. In the 1st phase, we will work on the functiona
Slide 20: (Reference 2) Domestic Interest Rate Sensitivity
(Reference 2) Domestic Interest Rate Sensitivity Changes in policy, such as revision of yield curve control and lifting of negative interest rates, will have a positive impact on the net interest income of FFG’s domestic divisions. FFG’s balance sheet (image) Breakdown of loans, deposits and secur
Slide 21: Part II: Financial Results & Earnings Projections (Reference)
Part II: Financial Results & Earnings Projections (Reference) Fukuoka Financial Group
Slide 22: Summary of Interim Financial Results for FY2022
Summary of Interim Financial Results for FY2022 Profit & loss (FFG Profit & loss (3 banks total) (¥ bil.) consolidated) 3 banks non- Bank of Fukuoka Kumamoto Bank Juhachi-Shinwa Bank Interim consolidated total [Compared to the projection of YoY chg. (non-consolidated) (non-consolidated) (non-consoli
Slide 23: Transition of Top Line: Interim Results
Transition of Top Line: Interim Results Core business profit in the first half of FY2022 increased 8.3 billion yen year-on-year and 6.5 billion yen compared to the previous disclosure to 56.3 billion yen. Non-interest income increased 2.3 billion yen year-on-year mainly due to an increase in gai
Slide 24: Transition of Bottom Line: Interim Results
Transition of Bottom Line: Interim Results Consolidated interim net income in the first half of FY2022 increased 2.8 billion yen year-on-year and 2.8 billion yen compared to the previous disclosure to 30.8 billion yen. Despite a decrease in profit (loss) on securities, the upward swing in core b
Slide 25: Earnings Projections for FY2022
Earnings Projections for FY2022 Profit & loss (3 banks total) Profit & loss [by bank] (¥ bil.) (¥ bil.) 3 banks non- Bank of Fukuoka Kumamoto Bank Juhachi-Shinwa Bank consolidated total (non-consolidated) (non-consolidated) (non-consolidated) Bank of Fukuoka [Compared to the projection of May 2022]
Slide 26: Transition of Top Line: FY2022 Revised Projection
Transition of Top Line: FY2022 Revised Projection Full-year core business profit for FY2022 is projected to increase 6.5 billion yen year-on-year and 4.0 billion yen compared to the previous disclosure to 104.0 billion yen. Although higher overseas interested rates are expected to cause a declin
Slide 27: Transition of Bottom Line: FY2022 Revised Projection
Transition of Bottom Line: FY2022 Revised Projection FFG consolidated net income for FY2022 is projected to increase 2.9 billion yen year-on-year to 57.0 billion yen (as initially planned). FY2022 projected [YoY chg.] (¥ bil.) Consolidated net income +2.9 [Compared to previous disclosure +0.0] 57.
Slide 28: Net Interest Income
Net Interest Income Net interest income (3 banks total) Domestic deposit loan gross margin (3 banks total) * Domestic loans... Excluding loans to FFG and Government * Domestic loans... Excluding loans to FFG and Government * Domestic funds... Domestic deposits + CDs (¥ bil.) * Domestic funds... Dome
Slide 29: Loans
Loans Loans (domestic + international) Loans (by segment) * Excluding loans to FFG and Government (annual rate) (¥ bil.) * Excluding loans to FFG and Government (annual rate) (¥ bil.) 14,598.1 14,629.4 14,701.7 14,433.4 14,598.1 14,629.4 14,701.7 3 banks total 14,433.4 3 banks total (3.2%) (1.4%) (0
Slide 30: Deposits + CDs
Deposits + CDs Deposits and CDs (domestic + international) Deposits and CDs (by segment) (Annual rate) (¥ bil.) (Annual rate) (¥ bil.) 20,813.2 20,884.1 20,884.1 20,084.0 20,813.2 19,914.4 (4.5%) (4.0%) 19,914.4 20,084.0 3 banks total (5.0%) (4.5%) (4.0%) (7.9%) 3 banks total (7.9%) (5.0%) (17.3%) (
Slide 31: Securities
Securities Securities portfolio (FFG consolidated) Bond duration & materiality test reference value [¥ bil.] * Bond duration: After considering hedges 6.94 6.52 Unrealized 5.95 years gain (loss) 5.74 4,023.6 4,108.5 Domestic bonds FFG 3,952.0 (+84.9) consolidated 3,760.0 (+71.6) 2.73 (+192.0) 3.44 (
Slide 32: Non-Interest Income
Non-Interest Income Asset management product sales Non-interest income (3 banks total + FFG Securities) (3 banks total + FFG Securities) * Excluding gains (losses) on bonds (¥ bil.) * Figures for FFG Securities are the total sales of investment trusts and bonds (¥ bil.) 17.5 16.6 15.8 FFG total 15.6
Slide 33: Overhead Expenses
Overhead Expenses By category / OHR* * OHR = Overhead expenses / Gross business profit Unit: ¥ bil. (YoY chg.) Consolidated OHR 64.6% 62.3% (-2.3%) 3 banks total OHR 56.3% 52.4% (-3.9%) 3 banks total 115.4 110.9 (-4.5) 57.9 57.5 55.4 (-2.5) 55.5 (-2.0) 55.0 52.9 (-2.1) Personnel expenses 27.2 27.8 2
Slide 34: Credit Cost & Disclosed NPL Ratio
Credit Cost & Disclosed NPL Ratio Credit cost (3 banks total) Disclosed non-performing loans & ratio (3 banks total) (¥ bil.) (¥ bil.) 3 banks total Disclosed NPL (Credit cost ratio) (8bp) ratio * Excluding loans to Government, etc. Total Juhachi-Shinwa (0bp) Substandard Kumamoto (1bp) (0bp) Fukuoka
Slide 35: Part III: FY2022 Financial Results_Figures (Reference)
Part III: FY2022 Financial Results_Figures (Reference) Fukuoka Financial Group
Slide 36: Average Balance of Loans (by Bank)
Average Balance of Loans (by Bank) Bank of Fukuoka (domestic, non-consolidated) Kumamoto Bank (domestic, non-consolidated) Juhachi-Shinwa Bank (domestic, non-consolidated) * Excluding loans to Government, etc. * Excluding ※劣後受益権除く loans to Government * ※劣後受益権除く Excluding loans to Government by custo
Slide 37: Average Balance of Loans (by Industry)
Average Balance of Loans (by Industry) Sep. 30, 2022 Change from Mar. 31, 2022 3 banks total Fukuoka Kumamoto Juhachi-Shinwa 3 banks total Fukuoka Kumamoto Juhachi-Shinwa % % % % Classification by industry Domes tic l oa ns (excluding the special 17,370.9 100.0% 11,460.4 100.0% 1,932.8 100.0% 3,977.
Slide 38: Interest Rates on Loans (by Segment)
Interest Rates on Loans (by Segment) 3 banks total * Excluding loans to Government, etc. (％) Retail Loan overall Corporate Public 37
Slide 39: Average Balance of Deposits & CDs (by Bank)
Average Balance of Deposits & CDs (by Bank) Bank of Fukuoka (domestic, non-consolidated) Kumamoto Bank (domestic, non-consolidated) Juhachi-Shinwa Bank (domestic, non-consolidated) Average deposit balance by customer segment Public Corporate Retail (¥ bil.) Average deposit balance CDs by deposit typ
Slide 40: Interest Rates on Loans and Deposits & CDs (by Bank)
Interest Rates on Loans and Deposits & CDs (by Bank) Bank of Fukuoka (domestic, non-consolidated) Kumamoto Bank (domestic, non-consolidated) Juhachi-Shinwa Bank (domestic, non-consolidated) * Excluding loans to Government, etc. * Excluding loans to Government * Excluding loans to Government Interest
Slide 41: Breakdown of Loans and Deposits & CDs by Type
Breakdown of Loans and Deposits & CDs by Type Domestic loans (as of Sep. 30, 2022) Domestic deposits & CDs (as of Sep. 30, 2022) 3 banks Juhachi- 3 banks Juhachi- total Fukuoka Kumamoto total Fukuoka Kumamoto Shinwa Shinwa Based on short-term prime rate 20.8% 15.4% 33.9% 29.3% Interest 60.8% 61.6% 6
Slide 42: Securities (by Bank)
Securities (by Bank) Bank of Fukuoka (consolidated) Kumamoto Bank Juhachi-Shinwa Bank ※15年変国は、12/9末まで理論値採用 ※15年変国は、12/9末まで理論値採用 Unrealized gain (loss) Securities balance Other Foreign bonds Domestic bonds (¥ bil.) Stocks 6.08 5.85 Bond duration 5.38 5.47 Domestic bonds Foreign bonds 3.14 2.76 2.86 2
Slide 43: Non-Interest Income / Asset Management Product Sales (by Bank)
Non-Interest Income / Asset Management Product Sales (by Bank) Bank of Fukuoka Kumamoto Bank Juhachi-Shinwa Bank * For all 3 banks, excluding gains (losses) on bonds Non-interest income Others Domestic exchange Foreign exchange derivatives Investment trusts (¥ bil.) Insurance * For all 3 banks, sale
Slide 44: Overhead Expenses / Credit Cost (by Bank)
Overhead Expenses / Credit Cost (by Bank) Bank of Fukuoka Kumamoto Bank Juhachi-Shinwa Bank Overhead expenses & Core OHR core OHR Tax General expenses Personnel expenses (¥ bil.) * Core OHR = Overhead expenses / (Gross business profit ｰ Gains (losses) on bonds) Collateral decline New Credit cost ban
Slide 45: Non-Performing Loans / Capital Adequacy Ratio (by Bank)
Non-Performing Loans / Capital Adequacy Ratio (by Bank) Bank of Fukuoka Kumamoto Bank Juhachi-Shinwa Bank Non-performing loans & ratio NPL ratio Substandard Doubtful Bankrupt and quasi-bankrupt (¥ bil.) Bank of Fukuoka (consolidated) Kumamoto Bank Juhachi-Shinwa Bank Credit risk measurement: Advance
Slide 46: Part IV: Kyushu Economy (Reference)
Part IV: Kyushu Economy (Reference) Fukuoka Financial Group
Slide 47: Market Share
Market Share Oita Pref. Fukuoka Number of business Number of business Population Loans Deposits Population Loans Deposits Pref. establishments establishments Kitakyushu Bank 23.5 40.6 3.5 8.4 5,040,000 223,000 1.5 trillion yen 1,130,000 54,000 trillion yen trillion yen Bank of Fukuoka trillion yen t
Slide 48: Economic Trends
Economic Trends Bank of Japan’s Tankan Business conditions D.I. Fukuoka Projection Projection Japan * Fukuoka region: Fukuoka Prefecture plus Saga Prefecture, excluding Kitakyushu Kumamoto Projection Kyushu Nagasaki Projection Source: Bank of Japan 47
Slide 49: Industrial Production Trends
Industrial Production Trends Industrial production index (FY2015 = 100) [Kyushu] Main industry trends (Million pieces) Integrated circuits (%) Japan (Thousand vehicles) Passenger cars (%) Kyushu Source: Kyushu Bureau of Economy, Trade and Industry 48
Slide 50: Capital Investment / Housing Investment
Capital Investment / Housing Investment Capital investment: Bank of Japan’s Tankan (YoY change) Housing starts (Thousand) (%) Projection Estimate Japan Japan As of Sep. (Thousand) (%) Kyushu Kyushu As of Sep. Source: Bank of Japan Source: Ministry of Land, Infrastructure and Transport 49
Slide 51: Land Price Trends
Land Price Trends Volatility of standard land prices <Ministry of Land, Infrastructure and Transport: 2022 Outline of Land Price Surveys Conducted by Prefectural Governments> (%) Major cities in Fukuoka Pref. (%) ○ Japan: There have been increases for the first time in 2 years for the average of all
Slide 52: Corporate Bankruptcies
Corporate Bankruptcies (¥ bil.) (Number) Number of bankruptcies and total liabilities Fukuoka Left axis: Total liabilities (bar graph) (¥ bil.) (Number) Right axis: Number of bankruptcies (line graph) Japan Kumamoto (¥ bil.) (Number) Kyushu Nagasaki Source: Tokyo Shoko Research 51
Slide 53: Loans
Loans (％) Rate of increase of bank loans (YoY change, monthly) (％) Fukuoka (％) 3.8 Japan Kumamoto 3.9 2.6 3.0 Kyushu Nagasaki 0.9 Source: Bank of Japan 52
Slide 54: Deposits
Deposits (％) Rate of increase of bank deposits (YoY change, monthly) (％) Fukuoka 3.1 Japan Kumamoto 2.9 3.3 2.9 Kyushu Nagasaki 2.8 Source: Bank of Japan 53
Slide 55: Contact for further inquiries
Contact for further inquiries: Public Relations Group, Corporate Planning Division Fukuoka Financial Group Phone: +81 - 92 - 723 - 2255 Email: 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 no
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