Credit Saison Co., Ltd. · TSE:8253
Credit Saison — H1 FY2006 Earnings Presentation
44 slides from Credit Saison's earnings presentation, Nov 20, 2006
Slide 1: Management Report Interim FY2006
Management Report Interim FY2006 2006.11.20 CREDIT SAISON CO., LTD. CORPORATE STRATEGY ２００６ CREDIT SAISON CO., LTD.
Slide 2: Agenda
AGENDA ◆Management Report Interim FY 2006 Ⅰ．Overview of Business ◆Management Strategy Ⅱ．Progress for First Half of FY2006 Ⅲ．Key Strategy for Second Half of 2006 The figures contained in this document, which describe the outlook of business etc, are projected calculations based on conclusions and sup
Slide 3: Interim Financial Report for FY 2006
Interim Financial Report for FY 2006 CORPORATE STRATEGY ２００６ CREDIT SAISON CO., LTD. 2
Slide 4: Contents: Financial Report for Interim FY 2006
CONTENTS ◆ Financial Report for Interim FY 2006 Ⅰ．Overview of Business １．Highlights ２．Operating Results ３．Main Indices (Non-Consolidated) ４．Revised business results (allowance for interest repayment losses, etc.) CORPORATE STRATEGY ２００６ CREDIT SAISON CO., LTD. 3
Slide 5: Highlights of First Half of FY 2006
１．Highlights of First Half of FY 2006 ◆Non-consolidated ☆Consolidated ◆Aired new TV commercials featuring Brazilian soccer star Ronaldinho First and Second Quarter ◆Started issuing “Kawatoku Card” under alliance with Kawatoku Co., Ltd. (department store) ◆Started issuing “SEIBU Prince Card” ◆Started
Slide 6: Business Results
２．Business Results ( )=YOY Consolidated Non-Consolidated Operating First Half of ¥127.8 billion (109%) ¥100.0 billion (108%) FY 2005 revenues First Half of FY 2006 ¥165.6 billion (129%) ¥131.8 billion (131%) First Half of Ordinary FY 2005 ¥35.0 billion (125%) ¥24.9 billion (109%) income First Half o
Slide 7: Results by Business Segment
Results by Business Segment Units: Billion yen % Operating revenues Operating income First Half First Half of First Half of First Half of FY 2005 FY 2006 YOY FY 2005 of FY 2006 YOY （百万円） Credit & Finance 104.7 138.1 31.8% 27.7 29.6 7.1% Entertainment 8.8 9.4 6.7% 1.2 1.3 12.5% Real estate 8.4 12.2 4
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) Main consolidated subsidiaries Contribution First First FY to ordinary Half of Half of 2006 income FY 2005 FY 2006 (targe
Slide 9: Operating Revenues (Consolidated/Non-Consolidated)
Operating Revenues (Consolidated/Non-Consolidated) ◆ Ended up ¥1.0 billion over original fiscal year plan due to integration with UC CARD and strong performance of real estate business Unit: Billion yen 【 Consolidated 】 Unit: Billion yen 【Non-Consolidated】 400 300 Revised number Second half-year Sec
Slide 10: Ordinary Income (Consolidated/Non-Consolidated)
Ordinary Income (Consolidated/Non-Consolidated) ◆Revised earnings upward from original projection by ¥4.0 billion (consolidated) and ¥1.0 billion (non-consolidated) due to contributions from solid card business and strong real estate business Unit: Billion yen 【 Consolidated 】 Unit: Billion yen 【Non
Slide 11: Net income (Consolidated/Non-Consolidated)
Net income (Consolidated/Non-Consolidated) ◆Recorded extraordinary loss on provision for loss on interest repayments and other items Unit: Billion yen 【 Consolidated 】 Unit: Billion yen 【Non-Consolidated】 Revised number 42.2 9.4 45 12.2 Reviced number Second half-year 35 Second half-year First half-
Slide 12: Credit Risk Trends ①
３．Credit Risk Trends① ■Delinquent receivables of over 90 days is stable. *Delinquency rate: Percentage of total receivables past due 90 days or more. 【 Consolidated 】 【 Non-Consolidated 】 2.8% 2.8% Cash advances 2.77% 2.6% 2.6% 2.41% delinquency rate 2.34% 2.33% 2.4% 2.4% 2.48% Total credit card 2.3
Slide 13: Credit Risk Trends ②
Credit Risk Trends ② ■Credit Costs （ ）First half year 【 Consolidated 】 【 Non-Consolidated 】 Billion yen Consolidated figures are aggregate delinquency costs. Billion yen 60 50 Write-off Write-off 46.4 Net increase in allowance for bad dept 3.2 50 37.3 39.9 （1.4） 40 36.3 3.7 1.7 （1.4） 40 5.9 28.3 30
Slide 14: Financial Indices
４．Financial Indices Ratings Trends of Shareholders’ equity ratio / ROE R&I A+ S&P A- Fitch A （ ）First half year 【 Consolidated 】 【 Non-Consolidated 】 25% Shareholders’ equity ratio 25% 22.7% 19.9% 23.0% 18.4% 23.1% 20% 17.5% 20% 19.1% 16.50% 22.7% Shareholders’ equity ratio 18.20% 15% 12.8% 株主資本比率
Slide 15: Funding Structure ①
Funding Structure ① 【 Consolidated 】 【 Non-Consolidated 】 Corporate Bond CP Securitization Dept Corporate Bond CP Securitization Dept 100% 100% 80% 80% 50% 57% 59% 60% 59% 64% 66% 64% 63% 68% 60% 60% 40% 13% 11% 40% 12% 12% 15% 14% 13% 9% 16% 10% 15% 19% 20% 7% 7% 7% 9% 5% 6% 9% 8% 20% 15% 17% 16% 1
Slide 16: Funding Structure ②
Funding Structure ② 【 Consolidated 】 【 Non-Consolidated 】 Long-term ratio Fixed ratio Long-term ratio 80% 80% 72% 70% 68% 70% 70% 61% 62% 62% 61% 56% 55% 60% 60% 62% 49% 57% 58% 50% 50% 51% 40% 40% 46% 30% 30% FY2002 FY2003 FY2004 FY2005 Sep 2006 FY2002 FY2003 FY2004 FY2005 Sep 2006 CORPORATE STRATE
Slide 17: Main Indices for First Half of FY 2006
５．Main Indices for First Half of FY 2006 ( )=YOY First Half of FY 2006 FY2006 Target ① New applications 2.45 million (176%) 4.20 million(130%) ② New cards issued 2.14 million (183%) 3.65 million(135%) ③ Total card members 24.1 million(＋1.3 million) 24.8 million(+2.0million) ④ Active card members 12.
Slide 18: New applications
① New applications 2.45 million new applications in first half as a result of integration with UC CARD and expansion of alliances; revised fiscal year target upward by 200,000 cards Units: Million 4.5 4.2 First half-year Second half-year Reversed Number 4 0.2 3.5 3.2 3 1.6 2.7 2.5 2.4 2.5 1.8 2.1 1.
Slide 19: New cards issued
② New cards issued Revised target for new cards issued upward by 250,000 due to growth of MMC Card and other affinity cards Units: Million 4 First half-year Second half-year Reversed Number 3.6 3.5 0.2 3 2.7 1.3 2.3 2.5 2.1 1.8 2 1.2 1.5 1.2 1.5 ,0 00 5 0.9 ＋9 YO Y 2.1 % 1 18 1 1.1 1.0 1.2 0.5 0.9 0
Slide 20: Total card members & Active card members
③Total card members & ④ Active card members Broke the 2.4 million mark in total cardholders as card applications steadily increased Units: Million 30 Total card members Revised number 24.2 24.9 Active card members 25 55 22.8 ,0 00 20 , 370 16.9 17.5 ＋1 16.4 15 11.7 12.1 12.6 15 8.6 8.8 9.2 10 ,0 00
Slide 21: Transaction volume
⑤ Transaction volume Steady increase due to integration of UC CARD and expansion of recurring payments such as public utilities Units: Billion 5,000 Total card members Active card members 4,444 4,500 4,000 3,500 2,352 3,146 3,000 2,409 2,596 1,761 2,343 2,500 Y YO 4% 2,000 13 1,203 1,232 1,342 1,500
Slide 22: For reference: Share of Cards
For reference : Share of Cards UC brand expanded share with MMC Card and Yamada; department store card transaction volume increased 【会員数シェア】 【ショッピング取扱高シェア】 《セゾン》 UC SAISON SAISON 《セゾン》 20.2% プロパー UC 25.0% プロパー 23.3% 22.2% 《セゾン》 SAISON Saibu 西武 アフィニティ SOGO そごう Saibu AFINITY Takashimaya 髙島屋 SAISON 《セゾ
Slide 23: Credit loan outstanding
⑥ Credit loan outstanding Revolving balances for credit-card shopping and cash advances steadily expanded Units: Billion 1,000 Cash advance ABS (Cash Shopping ABS (Shopping) 900 advance) 823 804 10 800 771 23 40 n 700 i l li o 617 771 8 .6b YOY 204 223 591 178 ＋ % 600 40 10 4 40 30 30 30 500 137 143
Slide 24: Revision of Results: Major Revised Items
4．Revision of Results ■Major Revised Items 【Allowance for Interest Repayment Losses】 Reason: The Company changed its estimation method in accordance with the “Accounting Treatment for Calculation of Reserves Relating to Losses at Consumer Finance Companies Resulting from Interest Repayment Claims”an
Slide 25: Calculation of Allowance for Interest Repayment Losses ①
Calculation of Allowance for Interest Repayment Losses ① 【Decide reasonable estimation periods according to average usage period】 Make conservative loss estimates within a reasonable scope to ensure sufficient allowance Billion yen Projected Trend of Overpayment Refund Claims (Consolidated) 60 6 FY0
Slide 26: Calculation of Allowance for Interest Repayment Losses ②
Calculation of Allowance for Interest Repayment Losses ② ■Allowance for Interest Repayment Losses (Billion yen) Parentheses indicate 48.4 (42.7) non-consolidated figures Allowance -2.5 (-2.3) Reversal -3.2 (-2.9) for Interest Repayment 45.9 (40.4) Losses Provision 0.7 (0.6) Allowance 40.9 (35.6) for
Slide 27: Management Strategy for FY 2006
Management Strategy for FY 2006 - Progress of 1H and Point of 2H - CORPORATE STRATEGY ２００６ CREDIT SAISON CO., LTD. 26
Slide 28: Contents: Management Strategy
CONTENTS ◆ Management Strategy For reference: Changes in U.S. and JAPAN card industry Ⅱ．Progress of Management Strategy for FY 2006 １． Implementation of branding strategy ２．Effects of the Integration with UC cards ３．Promotion of strategic alliances CORPORATE STRATEGY ２００６ CREDIT SAISON CO., LTD. 27
Slide 29: Changes in U.S. card industry
For reference: Changes in U.S. card industry ■ Trends in share of debt balance by issuer for general-use cards 【FY1995】 【FY2005】 US Bancorp Wells Fargo 1.5% 2.4% Citibank 12.0% Washington その他 Mutual 12.3% Bank of Discover 2.7% America 7.4% 20.2% HSBC その他 MBNA 3.7% 44.4% 6.8% Discover AMEX 6.0% JPMor
Slide 30: Changes in JAPAN card industry
For reference: Changes in JAPAN card industry 【FY2000】 【FY2005 estimated】 JCB・G Targeted Share ３０％ SAISON 13.9 10.9 UC 当社 6.4 JCB 当社 出資 親密先 0.7 6.4 三井住友G 9.6 提携先 3.6 UFJ JCB親 密 先 4.5 10.2 NICOSG 三井住友 その他 UFJニ コ ス 14.4 その他 5.7 8.6 三井住友 33.9 41.9 DC 2.2 親密先4.5 UFJﾆｺｽ/ DCｸﾞﾙｰﾌﾟ 3.7 ニコス ニコス JCB 関係会社 8.2
Slide 31: Reorganization of the Credit Card Industry
２－３． Reorganization of the Credit Card Industry Mizuho FG Credit Saison Affiliations Resona H Sumitomo Mitsui FG @ Loan Orient Resona Card Sumitomo Corporation Mitsui Promise Card JCB LAWSON Takashimaya Idemitsu CS Card Credit Credit Aeon Credit Sanyo Shinpan Pocket SofttBank Finance Card Other Card
Slide 32: Implementation of branding strategy
１．Implementation of branding strategy Expand recognition of SAISON brand 89.2％ FY 2007 87.5％ FY 2005 85.7％ FY 2002 Use No.1 athletes to build image as the No.1 credit-card company Boost recognition through unpredictability and “Many Techniques, One Card” continuity ※Recognition rate ＝ according to c
Slide 33: Benefits of Integration with UC CARD
2．Benefits of Integration with UC CARD ■Promotion of Integration of Organizations & Services ◇ Completed integration of credit organizations ～ Integration of screening,credit, and debt management divisions (September) ◇ Accelerated service integration ～ Integration of marketing divisions / Restructu
Slide 34: Use of the UC Brand
Use of the UC Brand 【Progress of alliance with Yamada Denki Co., Ltd.】 Yamada Denki Co., Ltd. 66% invest Soliciting members, etc., for ment “ Yamada LABI Card ” Credit Saison Co., Ltd. 34% Yamada Financial Co., Ltd. invest Provides services such as Credit card business ment “Yamada Points” of Yamada
Slide 35: Promotion of strategic alliances
３．Promotion of strategic alliances Strengthen existing businesses to respond to diversifying customer needs, while reinforcing our card operation through mergers, acquisitions and alliances , taking advantage of Credit Saison’s strengths, including UC brand Operations IT Finance CORPORATE STRATEGY ２
Slide 36: Contribution of capital alliance card companies
Contribution of capital alliance card companies – Progress of strategic alliance strategy Group objective: Raise number of new cards issued annually to the 5 million level! LAWSON Idemitsu Resona Takashimaya YAMADA shizugin Daiwahouse CS Card Credit Card Credit Financial saisoncard Financial Conveni
Slide 37: Management Strategies: Key Strategies in the Second Half
CONTENTS ◆ Management Strategies Ⅲ．Key Strategies in the Second Half １．Card Loan Initiatives ２．Return to Focus on Card Shopping ３．Respond to Restructuring Associated with Industry Reorganization ４．Secure Revenue from New Businesses ５．Pursue Economics of Scale ６．Strengthen New Group Formation and Tot
Slide 38: Card Loan Initiatives
1．Card Loan Initiatives ■Start aggressive approaches to cardholders Phase 1 Phase 2 (’06/3-10) “SAISON Loan Card” (’06/11~ ) Product promotion ・Set new interest rates with mass advertising 8 - 18% Balance Balance ↓ ・Effectively segment our target targetin in55 24 million existing Boost recognition a
Slide 39: Return to Focus on Card Shopping
2．Return to Focus on Card Shopping ■Implementation of Promotion Alliances ・Alliance schemes that can contribute to retail sales ⇒ Raise mutual transaction volume (Sales= Card Transaction volume) ・Limitation of cash advance-dependent alliances ⇒ Shift to focus on shopping services (long-term revenue
Slide 40: Respond to Restructuring Associated with Industry Reorganization
3．Respond to Restructuring Associated with Industry Reorganization ■Expansion of agency services business～Create a new business model Growing Opportunities from Industry Expansion through Alliances Reorganization ・Existing Alliance Partners ・Greater competition due to industry reorganization LAWSON
Slide 41: Secure Profits from New Businesses
4．Secure Profits from New Businesses ■Startup of Online Shopping Mall “Eikyu Fumetsu.com” SAISON Permanent Points (“Eikyufumetsu Point”) for Net Answer members Up to 19 times bonus points Opened EC shops in a range of categories 300 shops planned within 3 years ・Expand Net Answer membership to 2 mil
Slide 42: Pursue Economics of Scale
5．Pursue Economics of Scale ■Development of Next-Generation System ～ by 2010 ・Reduction of operation costs ・Accommodating expansion of agency services business ・Establishing hegemony in processing industry as medium-term concept ■Take flexible stance toward new M&A ・Application of flexible ideas to
Slide 43: Strengthen New Group Formation and Total Group Synergy
6． Strengthen New Group Formation and Total Group Synergy ◆FY2006 1H Results of Capital Alliance Partners (some estimated) (10,000 cards・10,000 people・Billion yen) Card transaction Operating Applications Total cardholders Operating income volume revenues Credit Saison Co., Ltd. 245 2,416 20,916 ― ―
Slide 44: Strengthen Total Group Synergy
Strengthen Total Group Synergy Maximize business opportunities by recruiting and making use of cardholders, the management resources of alliance partners and human resources ( )=YoY Comparsion Operating revenues FY2005 FY2006 (est.) Lease ¥7.2 billion (105%) ¥8.0 billion (111%) Credit Guarantee ¥ 3.