Slide 1: FY2023 Third Quarter IR Presentation Material
This is an abridged translation of the original Japanese document and is provided for informational purposes only. If there are any discrepancies between this and the original, the original Japanese document prevails FY2023 Third Quarter IR Presentation Material January 11, 2024 Stock Listing: Tokyo
Slide 2: Contents
Contents １ Financial Results Highlights ２ Earnings and Dividend Forecasts ３ Priority Measures Appendix AEON Financial Service Co., Ltd. 2
Slide 3: 1 Financial Results Highlights
1 Financial Results Highlights AEON Financial Service Co., Ltd. 3
Slide 4: Summary of Financial Results
Summary of Financial Results (１) Despite the decline in sales and profits, business performance bottomed out ▻ Consolidated operating profit of ￥26.1 bｎ yen (YoY 63%), while transaction volume and operating receivables outstanding increased steadily ▻ Strengthening cost control in Japan by selecting
Slide 5: The Highlights of the Consolidated Results
The Highlights of the Consolidated Results [Domestic] : Profit decreased due to an increase in bad debt related expenses, the accumulation of outstanding receivables and sales promotion expenses in the 1H to expand the customer base [Global] : Topline expands steadily, but bad debt related expenses
Slide 6: The Highlights of the Consolidated Results -3Q Fiscal Quarter
The Highlights of the Consolidated Results -3Q Fiscal Quarter [Domestic] : The growth rate of operating revenue increased, but OP was negative due to an increase in expenses related to bad debts in line with increased outstanding receivables [Global] : Despite increased revenue and profits in the Ch
Slide 7: [Domestic] Breakdown of Operating Profit
[Domestic] Breakdown of Operating Profit • With the revitalization of consumption, the use of credit card and cash advances has expanded. The effects of balance recovery also gradually contribute to revenues • Although there was a partial deviation from the previous year, sales promotion exp. were s
Slide 8: [Domestic] Shopping Transactions and Receivables
[Domestic] Shopping Transactions and Receivables • Transaction volume was driven by travel and leisure as daily consumption recovered, but it was also affected by consumers are refraining from buying • Revolving balances continue to grow at double-digit rates YoY. The repayment simulation function a
Slide 9: [Domestic] Cash advance transaction volume and receivables balance
[Domestic] Cash advance transaction volume and receivables balance • A continuous approach to meet the recovery of funding needs has been successful, and transaction volume has increased steadily • The outstanding amount of receivables also turned positive from the same period of the previous year f
Slide 10: [Domestic] Revolving Credit and Cash Advances, and Bad Debt Related Expenses
［Domestic］ Revolving Credit and Cash Advances, and Bad Debt Related Expenses • The ratio of bad debt-related expenses to outstanding receivables remains low at less than 1% • Although the rapid increase in the no. of users has come to an end, the YoY increase has been maintained, and the amount of o
Slide 11: [Domestic] Housing Loan Transaction and Receivables Balance
[Domestic] Housing Loan Transaction and Receivables Balance • Appealing for merits such as the expansion of AEON Select Club benefits has come to fruition, and the cumulative total of YoY transactions has also turned positive • The number of pre-applications has been hovering over 130% in YoY, and w
Slide 12: [Domestic] Status of ID Expansion
[Domestic] Status of ID Expansion • Promote the efficiency of the cost of acquiring new members by reviewing campaigns for new members, etc. • By improving initial operation and promoting the use of gold cards, we aim to improve the utilization rate and make them the main card （Unit ： Bn JPY） 70.0%
Slide 13: Global Business by Segment 3Q Performance Highlights
Global Business by Segment 3Q Performance Highlights • Cumulatively, operating revenue increased in all three areas. The China Area continued to increase sales and profits, reaching a record high in the 3Q （Unit ： Bn JPY） 3Q China area YoY Mekong area YoY Malay area YoY cumulative period Operating r
Slide 14: [Global] 3Q Operating Profit Breakdown
[Global]3Q Operating Profit Breakdown • The main reason for the decline in the previous FY was an increase in bad debt. • The impact of temporary government policy in Malaysia for the FY2022 1Q resulted in a provision reversal for bad debts of approximately 3 billion yen. 14
Slide 15: [Global] Operating Receivables and NPL of ACS Asia (HK)
[Global] Operating Receivables and NPL of ACS Asia （HK） • Steady expansion in both users and transaction volume by supporting smartphone payment services (UnionPay QR and NFC compatible) • Receivables increased steadily by 135% YoY to maximize profits while taking appropriate risks （Unit ：Bn JPY） Ex
Slide 16: [Global] Operating Receivables and NPL of AEON Thana Sinsap
[Global] Operating Receivables and NPL of AEON Thana Sinsap • Promote digitalization, such as expanding the functions of smartphone apps and AI appraisals for collateral loans for automobiles • Although the NPL ratio continue to rise, we reduce the ratio of bad debt-related expenses by improving cre
Slide 17: [Global] Operating Receivables and NPL of ACS Malaysia
[Global] Operating Receivables and NPL of ACS Malaysia • Improved convenience, such as the provision of instant credit and the expansion of online support, continued to drive high growth in the top line • Despite steady growth in receivables, NPL ratio remained stable （Unit ：Bn JPY） External environ
Slide 18: [Global] Ratio of delinquent loans (Thailand, Malaysia)
[Global] Ratio of delinquent loans (Thailand, Malaysia) • The ratio of delinquent loans is on a downward trend, and we will continue to control receivables that serve as a reserve for long-term delinquent loans Ratio of delinquent loans Ratio of delinquent loans Ratio of delinquent loans of AEON Tha
Slide 19: 2 Earnings and Dividend Forecasts
2 Earnings and Dividend Forecasts AEON Financial Service Co., Ltd. 19
Slide 20: FY2023 earnings forecast, dividend forecast
FY2023 earnings forecast, dividend forecast • There is no change in the dividend forecasts Consolidated YoY Domestic YoY Global YoY Operating ¥480.0 bn １０6 ％ ¥290.0 bn １０3 ％ ¥190.0 bn １12 ％ Revenue Operating ¥61.0 bn 104 ％ ¥19.0 bn 11１ ％ ¥43.０ bn 101 ％ Profit Ordinary Dividend per share Payout ratio
Slide 21: 3 Priority Measures
3 Priority Measures AEON Financial Service Co., Ltd. 21
Slide 22: Review our business portfolio
Review our business portfolio • Review our business portfolio through “selection and concentration“ in view of changes of business environment • Allocate resources to the domestic payments which is our core business and overseas which is a growth business "Selection and Concentration" for the optima
Slide 23: Review our business portfolio－APF's Share Transfer
Review our business portfolio－APF's Share Transfer- • Decided that it would be optimal to transfer AEON Product Finance(APF) to Orient Corporation, which has strengths in BtoB, and make use of our know- how ✓ Nationwide bases ✓ Industry-leading know-how ✓ Human resources with ✓ BtoB network sales sk
Slide 24: Considering collaboration with Orient Corporation
Considering collaboration with Orient Corporation • Utilizing the management resources of both companies to maximize the value proposition in Japan and other Asian countries • Consider collaboration in a wide range of businesses and fields, such as mutual customer referrals and joint utilization of
Slide 25: Strengthen Core Business
Strengthen Core Business AEON Financial Service Co., Ltd. 25
Slide 26: [Domestic] Expanding AEON Pay touchpoints
[Domestic] Expanding AEON Pay touchpoints • AEON Pay membership expanded to 9.5 million as of the end of November • Use of small payments and companies outside the Group has also increased due to an increase in the number of places of use and the expansion of functions, Jun. 2023 Nov. 2023 9.5 mn Wh
Slide 27: [Domestic] Providing comprehensive financial apps and promoting cross-selling
[Domestic] Providing comprehensive financial apps and promoting cross-selling • AEON Wallet app was renewed as a comprehensive financial app in Sep. 2023 • Improvements to the app's UI and UX have led to an increase in the number of applications for each service via the app AEON Pay No. of applicati
Slide 28: [Domestic] Expansion of economic zones (strengthening regional cooperation)
[Domestic] Expansion of economic zones (strengthening regional cooperation) • Collaboration with FeliCa Pocket Marketing, which was consolidated from the second quarter, on local government projects • Taking advantage of the connections with both local governments, we will expand our business in col
Slide 29: [Domestic] Strengthening the foundation of the credit card business
[Domestic] Strengthening the foundation of the credit card business • Strengthening the system to eliminate customers "negative“ aspects • Expand revenue through attentive customer support and reduce costs by consolidating distributed operations Maintenance Center Promotion Center Security Center Op
Slide 30: [Domestic] Started providing partnership services with Monex, Inc.
[Domestic] Started providing partnership services with Monex, Inc. • Beginning of business alliance with Monex, Inc. on 4th of Jan,2024 • Expand the lineup of products that we can provide to our customers with the start of the new NISA Customer AEON Bank Monex, Inc. Opening and Customer info applyin
Slide 31: Business Growth and Expansion
Business Growth and Expansion AEON Financial Service Co., Ltd. 31
Slide 32: Global / Vietnam
Global / Vietnam AEON Financial Service Co., Ltd. 32
Slide 33: [Global/Vietnam] Acquisition of PTF
[Global/Vietnam] Acquisition of PTF • Announced an agreement to acquire an equity stake in PTF (subsidiary) on October 20 • New financial services such as personal loans can be provided in the Vietnamese market Company outline （FY2022） Name of Post and Telecommunication Up to now company Finance Com
Slide 34: [Global/Vietnam] Market size
[Global/Vietnam] Market size • Vietnam's consumer credit market is expected to continue to grow in response to population and economic growth • In particular, the number of credit cards issued, payment transaction volume, and loan balance have a high growth rate, making it a promising product ２０２２ ２
Slide 35: [Global/Vietnam] Business directionality
[Global/Vietnam] Business directionality • Establishing a data infrastructure, expanding the AEON Living Zone, and promoting the use of financial services throughout Vietnam Community- No. of members based Location ： ２３３ customer ： 670K （FY２０２２ ） base AEON Group （FY２０２２ ） Transaction data (purchase
Slide 36: Global / Malaysia
Global / Malaysia AEON Financial Service Co., Ltd. 36
Slide 37: [Global/Malaysia] Digital bank
[Global/Malaysia] • Obtained permission from central bank of Malaysia to start operations of digital bank • Deposits, payments, loans, remittances, etc. are completed through the app. New Businesses Contribute to LTV Expansion and Financial Inclusion ※Images shown is Members promoting digital bank f
Slide 38: [Global/Malaysia] Development of new business models
[Global/Malaysia] Development of new business models • The know-how accumulated through the digital bank will be horizontally deployed to each country, and it will be a starting point for future business model transformation for the entire Group Japan China Hong Kong India Myanmar Lao The Philippine
Slide 39: [Our Purpose]
［Our Purpose］ AEON Financial Service Co., Ltd. 39
Slide 40: Appendix
Appendix AEON Financial Service Co., Ltd. 40
Slide 41: Consolidated Balance Sheet
Consolidated Balance Sheet （Unit ： FY 2023 （Unit ： FY 2023 billions of yen 3Q Results YTD billions of yen 3Q Results YTD Cash and deposits 444.6 ▲ 397.9 Deposits 4,480.7 +82.7 Accounts Operating Loans 940.8 +95.5 payable-trade 311.1 +55.4 Loans and bills Interest-bearing discounted for 2,321.8 +161.
Slide 42: Results by Segment
Results by Segment （Unit ： Domestic Global Consol. billions of yen） Total ※1 China Mekong Malay Retail Solutions Total ※1 Total ※2 Area Area Area Operating 213.7 127.0 138.6 143.3 22.1 67.5 53.6 355.7 Revenue YoY ※3 103％ 104％ 105％ 114％ 135％ 105％ 120％ 107％ Operating ▲0.5 ▲0.3 0.9 26.4 6.3 10.1 9.9 26
Slide 43: Results by Area
Results by Area Transaction Operating (Unit ： billions of yen) YoY receivables YTD volume (Before securitization) Credit card ５,５43.0 109% 1,756.9 +164.2 Shopping 5,257.1 109% 1341.1 +143.7 Domestic Cash advances 285.9 112% 415.8 +20.5 Installment finance 154.4 105% 740.6 +17.5 Housing loan 424.2 11
Slide 44: 3Q Cumulative Results of Overseas Listed Companies (Local Currency)
3Q Cumulative Results of 3 Overseas Listed Companies (Local Currency) FY 2022 FY 2023 Results Results YoY AEON Revenue 887,361 1,192,889 134% CREDIT SERVICE Profit before tax 299,664 339,443 113% (ASIA) HK$’000 Profit for the period 250,314 282,263 113% AEON Revenue 16,779,572 16,540,572 99% THANA S
Slide 45: 3Q Cumulative Results of Overseas Listed Companies (Yen conversion)
3Q Cumulative Results of 3 Overseas Listed Companies （Yen conversion） FY 2022 FY 2023 Exchange rates Results Results YoY Operating 15.1bn 21.6bn 143% AEON Income （JPY / HKD） CREDIT Operating 5.1bn 6.1bn 121% ・ FY2022 3Q ： ¥17.05 SERVICE Profit ・ FY202３ 3Q ： ¥18.16 (ASIA) Net Income 4.2bn 5.1bn 120%
Slide 46: Transaction Volume and Operating Receivables of Global Business
Transaction Volume and Operating Receivables of Global Business China Area Mekong Area Malay Area Global Business (Hong Kong) (Thailand) （Unit : billions of yen) YoY YoY YoY YoY (Change) (Change) (Change) (Change) Transaction volume 162.2 125% 218.3 110% 44.7 121% 425.4 117% Credit card Operating Re
Slide 47: Allowance for Doubtful Accounts and Provision for Loss on Interest Repayment by Segments
Allowance for Doubtful Accounts and Provision for Loss on Interest Repayment by Segments [Allowance for Doubtful Accounts ] Domestic Global Consol. （Unit ： billions of yen） China Mekong Malay Total Retail Solutions Total Area Area Area Total Allowance for doubtful accounts balance at 57.1 3.8 53.7 6
Slide 48: Forward-looking statements
Statements contained in this report with respect to the Company’s management strategies, business policies and results forecasts are forward- looking statements about the future performance of the Company, which are based on the assumptions and beliefs in light of the information currently available