Rakuten Bank, Ltd. · TSE:5838
Rakuten Bank — Investor Presentation (November 2023)
61 slides from Rakuten Bank's investor presentation, November 2023
Slide 1: IR Presentation
IR Presentation November 2023 Rakuten Bank, Ltd. https://www.rakuten-bank.co.jp/english/
Slide 2: Contents
Contents 1 Rakuten Bank’s Corporate Profile 2 About Our Medium- to Long-Term Vision and Growth Strategy 3 Overview of Results for First Half of FY2023 4 Appendix 2
Slide 3: Rakuten Bank's Corporate Profile
１ Rakuten Bank’s Corporate Profile 3
Slide 4: Corporate Profile
Corporate Profile In its aim to be the “safe, secure, and most convenient Name Rakuten Bank, Ltd. bank,” Rakuten Bank leverages the Rakuten Group’s strengths to develop a host of distinctive services. Established January 14, 2000 Capital JPY32,616mm*1 Employees 1,001*2 (consolidated) NBF Shinagawa T
Slide 5: Our Philosophy
Our Philosophy 1. Mission: Contribute to society by creating value through innovation and entrepreneurship Empowering people to realize their hopes and dreams, embracing new thinking, Rakuten Bank changes the world through innovation 2. Vision: Global Innovation Company We drive disruptive innov
Slide 6: Rakuten Bank's History
Rakuten Bank’s History Sep. 2008 Entered a capital and business alliance with Rakuten, Inc.*1 October 2010 January 2021 April 21, 2023 Became a wholly owned Became Japan’s first Listed on the Prime May 2010 subsidiary of Rakuten, Inc.*1 digital bank*2 to surpass Market of the Tokyo Change of corpora
Slide 7: Scale of Operations
Scale of Operations Number of Bank Accounts Total Deposit Balance (As of Sep. 30, 2023, non-consolidated) (As of Sep. 30, 2023, non-consolidated) 14.37 ｍｍ Japan’s No. 1 digital bank (As of Jun. 30, 2023)*1 JPY 9.5 tn Japan‘s No. 1 digital bank (As of Jun. 30, 2023) *1 (mm) 14.37 (JPY tn) +13.7％YoY 9
Slide 8: Three Business Pillars
Three Business Pillars Services for Individual Customers Services for Corporate Customers and Sole Proprietors Deposits/ Personal asset loans Transactions can be completed online anytime, anywhere management Transfers/ Enter- Loans Other remittances tainment Transfer Deposits services Comprehensive
Slide 9: About Our Medium- to Long-Term Vision and Growth Strategy
2 About Our Medium- to Long-Term Vision and Growth Strategy 9
Slide 10: Medium- to Long-term Vision
*1 Medium- to Long-term Vision With an eye to the arrival of the zero-cash era, in April 2022 we formulated a medium- to long-term vision, indexed to FY3/21, in the aim of becoming a leading fintech company. Consolidated Consolidated Number of accounts (non-consolidated) ordinary income ordinary p
Slide 11: Two Pillars of Earnings (Non-Interest Income/Interest Income)
Two Pillars of Earnings (Non-Interest Income/Interest Income) Growth in Non-Interest Income Growth in Interest Income ・Achieve further growth by acquiring main accounts*1 ・Produce of Group's proprietary assets to have a and through cross-selling balanced and diversified loan portfolio 39.4% of ・Bala
Slide 12: Interest and Non-Interest Income (Non-Consolidated)
Interest and Non-Interest Income (Non-Consolidated) Interest and Adjusted Non-Interest Income*1 (JPYbn, non-consolidated) 117.6 % of total 104.7 99.1 49.4 42.0％ YoY 39.2 44.4 64.1 57.1 % of total +12.0% % of total 25.2 39.4％ 24.2 42.4％ +4.1% 67.6 57.5％ 59.3 59.6 32.7 57.2％ 38.6 60.2％ +17.9% FY2020 F
Slide 13: Robust Synergies with Unique Rakuten Ecosystem
Robust Synergies with Unique Rakuten Ecosystem Unique Ecosystem Trusted and Well-known Brand Customer Acquisition 70+ services*1 100mm+ membership*1*2 No.1 web brand in Japan*3 Cross-selling Most Popular*4 Deep & Rich Data Point Program × Technology (in Japan) Origination of Unique 100mm+ membership
Slide 14: Full-fledged Digital Banking Services
Full-fledged Digital Banking Services... Deposits / Asset Management Loans Personal loan Deposits (JPY, foreign currency) Housing loan FX margin trading Education loan Personal financial management Reverse mortgage loan (“Money Support”) Investment property loans Real estate collat
Slide 15: Our Main Accounts' Growth Momentum
Non-Interest Interest Income Income Our Main Accounts’*1 Growth Momentum… Key Drivers of Main Account*1 Conversion Convert into main account*1 Convenience Full-fledged services Customer-centric first-class UI/UX Economic Benefit Open Rakuten Rakuten Bank Ecosystem account Rakuten Point rewards
Slide 16: Our Main Accounts' Growth Momentum
Non-Interest Interest Income Income Our Main Accounts’*1 Growth Momentum… 31.4% 31.1% 30.6% 29.3% 24.6% 20.2% 16.6% 14.5% 18-Mar 19-Mar 20-Mar 21-Mar 22-Mar 23-Mar 22-Sep 23-Sep Main accounts Main account ratio YoY Main accounts*1: 0.9mm 1.2mm 1.7mm 2.5mm 3.6mm 4.1mm 3.9mm 4.5mm +12.9% Total account
Slide 17: Increases Our Per Account Earnings
Non-Interest Interest Income Income …Increases Our Per Account Earnings Average Revenue per Account Average Deposit Balance per Account (1H 2023) (As of Sep. 30, 2023) c. 3x c. 6x Non-main accounts Main accounts *1 Non-main accounts Main accounts *1 17 *1: Accounts that are used for direct debit or
Slide 18: Structural Tailwind from Potential Interest Rate Increases
Non-Interest Interest Income Income Structural Tailwind from Potential Interest Rate Increases*1 Balance Sheet Breakdown of Interest Rate Type (Sep. 2023, non-consolidated) (Sep. 2023, non-consolidated) Assets Deposits Loans Loans + Monetary Claims Bought Fixed 6% JPY 3.90 tn Fixed 25% Monetary Clai
Slide 19: Compelling Rakuten Card Securitization Scheme
Non-Interest Interest Income Income Compelling Rakuten Card Securitization Scheme One-Stop Securitization Service Increasing Credit card shopping GTV*3 receivables (Trust) *2 Securitized Senior E-commerce Shopping portion Assets GMS*1 GTV*3 Shopping Funding through Subordinated Portion acceleration
Slide 20: Our Unique and Rakuten Group Originated Investments
Non-Interest Interest Income Income Our Unique and Rakuten Group Originated Investments Trust Beneficiary Rights of Rakuten Personal Loans Card • Bank card loans • Small loans with AI credit screening To leverage Rakuten Card’s shopping GTV growth To utilize rich data of 100mm+ Rakuten Group fueled
Slide 21: Data Technology to Enlarge Our Interest Income
Non-Interest Interest Income Income Data Technology to Enlarge Our Interest Income Improve accuracy Advanced Credit Scoring – Expand credit access EC – Drive loan growth Contents Travel – Reduce credit cost Sports Commu- FinTech nity Mobile Optimized Marketing – Accelerate customer acquisition – Enh
Slide 22: Promising Data Monetization Opportunities
Promising Data Monetization Opportunities Our unique advantages enable us to increase ad revenue and promote cross-use of our services Rich Data Targeting Reach 14.3mm accounts*1 (KYC completion) Precise target segmentation For advertisers Banking transaction data – AI technology Data-driven
Slide 23: Providing a New Customer Experience through BaaS
Providing a New Customer Experience through BaaS*1 14 mm passengers per day*3 Open API*2 Transportation 5.5 mm cardholders*4 (announced in Dec 2022) The Ogaki Kyoritsu Bank Automobile Retail THE NISHI-NIPPON CITY BANK Residence Other Regional Banks Life Insurance (“Rakuten Bank Dai-ichi Life Insuran
Slide 24: Overview of Results for First Half of FY2023
3 Overview of Results for First Half of FY2023 24
Slide 25: Ordinary Profit Growth in 1H in Line with Company Plan
Ordinary Profit Growth in 1H in Line with Company Plan Key Financial and Other Data Ordinary Income Ordinary Profit Non-interest Income*1 Ratio ROE *2 (1H FY2023 consolidated, JPY bn) (1H FY2023 consolidated, JPY bn) (1H FY2023, consolidated) (1H FY2023, annualized basis, consolidated) 65.9 22.5 39.
Slide 26: Consolidated Statements of Income
Consolidated Statements of Income FY2022 FY2023 Interest income rose substantially, owing to the (JPY bn, consolidated) 1H 1H Change YoY accumulation of investment assets. As a result, ordinary Ordinary income 58.3 65.9 +7.5 +12.8% income and gross operating profit both grew by double digits, and
Slide 27: Business Expansion Driving Further Profit Growth
Business Expansion Driving Further Profit Growth Profit rose, due to a major increase in adjusted net interest income IPO-related expenses declined ¥0.11 billion YoY, contributing to decrease in other ordinary expenses Ordinary Profit Waterfall (JPY bn, consolidated) +4.5 0.4 (0.7) (0.3) 5.3 22.
Slide 28: Our Growth Trajectory and Targets – Topline and Profit
Our Growth Trajectory and Targets – Topline and Profit Ordinary Income Ordinary Profit Net Income *1 Forecasts for the FY2023 (JPY bn, consolidated) (JPY bn, consolidated) (JPY bn, consolidated) (JPY bn, consolidated) + 12.8% Progress FY2022 FY2023 YoY rate(1H) Ordinary Income 120.4 134.8 +11.9% 48.
Slide 29: Credit Costs (Non-Consolidated)
Credit Costs (Non-Consolidated) Credit costs rose due to an increase in non-guaranteed card loans and overall expansion of investment assets, while the credit cost ratio remained at a low level Credit Costs*1 (JPY mm, non-consolidated) 159 (148) (458) (410) (657) (876) (1,297) (0.01%) 0.00% 0.02%
Slide 30: Adjusted Net Interest Income and Net Non-Interest Income
Adjusted Net Interest Income and Net Non-Interest Income (Non-Consolidated) Owing to a substantial increase in net interest income, adjusted Gross operating profit rose 14.4% YoY. Adjusted Gross Operating Profit*1 (JPY bn, non-consolidated) YoY 43.2 +14.4% 37.7 31.4 15.8 15.5 +1.9% 13.1 27.3 22.2
Slide 31: Interest Income (Non-Consolidated)
Interest Income (Non-Consolidated) Interest income rose 17.9% YoY, owing to an increase in investment assets (interest on loans and interest on monetary claims bought both grew steadily) Interest Income Others (JPY bn, Non-Consolidated) +17.9% 38.6 2.1 32.7 +11.3% 29.4 1.0 10.1 Interest on 0.2 8.2
Slide 32: Non-Interest Income (Non-Consolidated)
Non-Interest Interest Non-Interest Income (Non-Consolidated) Income Income A solid rise in total settlements led to an 11.3% YoY increase in exchange/settlement commissions FY2022 FY2023 Breakdown of Non-Interest Income*1 (JPY bn, non-consolidated) 1H 1H Change YoY (1H/FY2023, non-consolidated) No
Slide 33: Topic: Leveraging the New NISA Tailwind to Expand Our Customer Base
Non-Interest Interest Topic: Leveraging the New NISA Tailwind to Expand Our Customer Base Income Income (Leveraging the Rakuten Ecosystem) Rakuten Securities’ customer base is growing, owing to demand for securities trading accounts in the runup to the January 2024 start of the new NISA system, an
Slide 34: Balance Sheets (Non-Consolidated)
Non-Interest Interest Balance Sheets (Non-Consolidated) Income Income Deposits and investment assets (loans + monetary claims bought) both grew steadily (deposits: +13.7% YoY; investment assets: +19.2% YoY) 貸借対照表 Balance Sheet Loans and Monetary Claims Bought (Non-consolidated, end-Sep. 2023) 5.84
Slide 35: Breakdown of Loans and Monetary Claims Bought
Non-Interest Interest Breakdown of Loans and Monetary Claims Bought Income Income We saw a balanced increase in diversified loans and monetary claims bought Change from (JPY bn, non-consolidated) Mar. 31, 2021 Mar. 31, 2022 Mar. 31, 2023 Sep. 30, 2023 Mar. 31, 2023 Loans 1,895.6 2,942.5 3,769.0 3,
Slide 36: Medium- to Long-term Vision: Expand Investment Assets/Net Interest Income
Non-Interest Interest Medium- to Long-term Vision Income Income Expand Investment Assets/Net Interest Income Expansion of middle-risk assets drove growth in net interest income Total for Categories That Include Middle-Risk Assets Monetary claims bought: (JPY bn, non-consolidated) others ABL (Asset
Slide 37: Topic: Improved Spreads on the Card Loans (Personal Loans)
Non-Interest Interest Income Income Topic: Improved Spreads on the Card Loans (Personal Loans) Effective yields on Card loans (Personal Loans) comprise two layers. Non-guaranteed balance: yield - ratio of allowance for loan losses = (1) effective yield on non-guaranteed personal loans Balance with
Slide 38: Sufficient Capital Adequacy with Disciplined Management
Sufficient Capital Adequacy with Disciplined Management The capital adequacy ratio increased, owing to the application of STC securitization exposures, and we secured a capital base sufficient for further business expansion through a public offering Capital Adequacy Ratio*1 Since Sep. 30, 2022 Inc
Slide 39: General and Administrative Expenses (Non-Consolidated)
General and Administrative Expenses (Non-Consolidated) An expanded scale of business boosted management efficiency, and our G&A Expense Ratio reached 43.5% (improving 4.1pts YoY) General and Administrative Expenses and G&A Expense Ratio* (Non-Consolidated) (JPY bn, amounts truncated after the digi
Slide 40: Roadmap to Achieve Higher ROE
Roadmap to Achieve Higher ROE Further Business Expansion with Unique Rakuten Ecosystem Non-Interest Income Growth ROE*1 • Further growth through main account*2 acquisition and cross- 13.8% selling 13.2% 13.7％ Enhance Risk/Return Profile • Produce of Group‘s proprietary assets to have a balanced
Slide 41: Our Dividend Policy
Our Dividend Policy Our Thoughts on Capital and Prioritize further growth over dividends View on the Capital Adequacy Ratio for the near term To achieve the targets in our Medium- to Long-Term Vision, we aim to control the accumulation of risk assets to an – Intend to keep capital adequacy to achiev
Slide 42: Appendix
4 Appendix 42
Slide 43: Rakuten International Commercial Bank in Taiwan
Rakuten International Commercial Bank in Taiwan Company Overview Group Structure RAKUTEN INTERNATIONAL COMMERCIAL BANK CO., LTD. (Joint Company Name Venture) Establishment May 18, 2020 Rakuten Card Co., Ltd. IBF Financial Holdings Co., Ltd. 50% 1% 49% Operation Since January 19, 2021 Electronic bank
Slide 44: Strong Commitment by Experienced Management
Strong Commitment by Experienced Management*1 *1: As of Sep. 2023. *2: Executive Vice President. 44
Slide 45: Disciplined Corporate Governance
Disciplined Corporate Governance*1 3 Outside Directors out of 5 Directors Banking Regulations Hiroshi Mikitani Hiroyuki Nagai Chairman President & CEO Group Arm’s- Synergies Length Eiji Ebinuma Michio Kayano Masatsugu Nagato Outside director Outside director Outside director 3 Outside Auditors out o
Slide 46: Our "SDGs" Initiatives
Our “SDGs” Initiatives Contributing to a healthy and economically prosperous society through “SDGs” “SDGs” × Gender “SDGs” × Education • Percentage of women in managerial positions*1: • Construction of elementary school in Cambodia - Reached our initial target of more than 25% by People (2006) and P
Slide 47: Digital Bank Share
Japan – Dawn of Banking Digitalization Japan Cashless Payment Ratio*2 Japan Post Bank 80% 2 16% (aiming to be the global highest level) % Promoted by Japanese Government MUFG Bank 15% Digital Bank ~40% Share*1 36% 24% (deposit balance) … … SMBC 12% 2018 2022 2025 Long-term Mizuho Bank (Actual) (Actu
Slide 48: Banking in a Cashless Era
Banking in a Cashless Era The industry’s widest range of instruments for cashless payment Debit Cards Prepaid Cards Direct Payment Using R-Pay App Rakuten Bank Card Service Linkage with Rakuten Card via Direct Debit (Rakuten Card Combined with Cash Card) Interest on ordinary deposits double the us
Slide 49: Our Unique Service Offering through One App
Our Unique Service Offering through One App… Full-Fledged Digital Banking Services Rakuten Ecosystem Deposits / Asset Management Loans Transfer Payment Entertainment Single integrated app comprehensively covering individuals’ everyday life 49
Slide 50: Rakuten Card (originator)
Scheme for the Liquidation of Rakuten Card’s Credit Card Receivables Non-Interest Income Interest Income (Trust Beneficiary Rights) Rakuten Card Co., Ltd. is one of Japan’s largest credit card companies, with more than 29 million cards issued.* In general, when the holder of a credit card uses their
Slide 51: Number of Accounts, Deposit Balance (Non-Consolidated)
Number of Accounts, Deposit Balance (Non-Consolidated) Number of Accounts (Non-Consolidated) Deposit Balance (Non-Consolidated) (Millions of accounts, amounts truncated after the digit shown) (JPY bn, amounts truncated after the digit shown) 10,000 9,550.0 16.00 9,129.8 88.5 14.37 9,000 94.1 125.4 8
Slide 52: Quarterly Consolidated Financial Summary
Quarterly Consolidated Financial Summary FY2022 FY2023 YoY (JPY bn, consolidated) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Ordinary income 29.0 29.3 30.7 31.3 32.6 33.2 +12.2% +13.5% Interest income 16.3 16.9 17.6 18.0 19.2 20.3 +17.6% +20.5% Non-interest income 12.5 12.3 13.0 12.8 13.2 12.8 +5.3% +3.9%
Slide 53: Financial Summary – Consolidated Balance Sheets
Financial Summary – Consolidated Balance Sheets (JPY bn, consolidated) As of Mar 31, 2021 As of Mar 31, 2022 As of Mar 31, 2023 As of Sep 30, 2022 As of Sep 30, 2023 Total assets 6,486.8 9,490.6 11,589.5 10,713.4 12,170.8 (incl.) Cash and due from banks 2,682.9 3,649.1 4,050.2 4,003.7 4,153.6 (incl.
Slide 54: Quarterly Non-consolidated Financial Summary
Quarterly Non-consolidated Financial Summary FY2022 FY2023 YoY (JPY bn, non-consolidated) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Ordinary income 28.5 28.6 29.9 30.4 31.7 32.3 +11.2% +12.9% Interest income 16.1 16.5 17.2 17.6 18.7 19.8 +16.2% +19.6% Non-interest income 12.2 11.9 12.6 12.4 12.8 12.4 +4.8
Slide 55: Financial Summary – Non-consolidated Balance Sheets
Financial Summary – Non-consolidated Balance Sheets (JPY bn, non-consolidated) As of Mar 31, 2021 As of Mar 31, 2022 As of Mar 31, 2023 As of Sep 30, 2022 As of Sep 30, 2023 Total assets 6,684.6 9,647.7 11,694.2 10,843.9 12,245.4 (incl.) Cash and due from banks 2,681.3 3,645.1 4,039.7 3,996.5 4,145.
Slide 56: Accountholder Demographics
Accountholder Demographics (As of Sep. 30, 2023) By Age Under 20s By Region Kyushu, Hokkaido 4% Okinawa 4% Chugoku, 10% 60s and Tohoku 20s Shikoku over 5% 13% 8% 13% 50s 21% Kansai 30s 18% Kanto, 24% Koshinetsu Tokai 42% 11% 40s 25% Hokuriku 2% Student Others By Occupation 6% 4% By Gender Housewife
Slide 57: Organizational Chart of Rakuten Group
Organizational Chart of Rakuten Group*1 Rakuten Group, Inc. (TSE: 4755) Internet Services business 49.27% FinTech 100% FinTech 100% Mobile 100% business business business Rakuten Bank, Rakuten Card Rakuten Securities Rakuten Mobile, Co., Ltd. Inc. Ltd. 4.72% Holdings, Inc. 95.28% 100% 50% Payment 10
Slide 58: Rakuten Card: Driving the Rakuten FinTech Ecosystem
Rakuten Card: Driving the Rakuten FinTech Ecosystem with a Huge Customer Base Cards Issued Shopping GTV GTV Share*1 Jun. 2023 29.24 mm LTM 19.8 tn yen May 2023 Target 23.6 % *2 M ayQ1/23 2023 *2 Q1/23*2 *2 Q1/23*2 5.2 tn yen 4.9 tn Dec. 2012 5.8% 2008 2022 2008 2022 2012 2022 *1 Calculated based on
Slide 59: Achieving High Customer Loyalty through "Money Bridge"
Achieving High Customer Loyalty through “Money Bridge” How Money Bridge Works Huge Presence and Rapid Growth of Money Bridge (non-consolidated) Transaction JPY 5.0tn (YoY +12.0%) Automatic deposit 4.1mm accounts (YoY +16.1%) 52.4%*3 of Rakuten Bank’s total Automatic deposit balance withdrawal Favora
Slide 60: Rakuten Payment – Developing Leading Services in Japan
Rakuten Payment – Developing Leading Services in Japan Centered on Payment and Marketing Rakuten Payment Revenue*3 Service Lineup (JPY bn) Smartphone payment service (QR code/barcode/touch payment/Suica, etc.) Common point service CY18-22 IC type electronic money CAGR 22.6% + 51 Online electronic mo
Slide 61: The opinions and forecasts stated in this document reflect the Bank's judgment at the
The opinions and forecasts stated in this document reflect the Bank's judgment at the time these materials were prepared. The Bank does not guarantee the accuracy of the information contained herein. Please note that actual performance and results may differ significantly due to various factors.