Hokuhoku Financial Group, Inc. · TSE:8377

Hokuhoku Financial — H1 FY2013 Earnings Presentation

41 slides from Hokuhoku Financial's earnings presentation, November 2013

  1. Slide 1: Investor Meeting: Interim Results for FY 2013

    Investor Meeting ～Interim Results for FY 2013～ (ended September 30, 2013) Ｈｏｋｕｈｏｋｕ Ｆｉｎａｎｃｉａｌ Ｇｒｏｕｐ，Ｉｎｃ．

  2. Slide 2: Table of Contents

    Ｈｏｋｕｈｏｋｕ Table of Contents Ｆｉｎａｎｃｉａｌ Ｇｒｏｕｐ，Ｉｎｃ． 【Interim Results for FY 2013】 【Management Strategy】 ・Summary of Interim Results ・・・ 1 ・Our Domestic Network ・・・ 16 ・Net Interest Income ・・・ 3 ・Our Overseas Network ・・・ 17 ・Loan Portfolio ・・・ 4 ・Individual Customers ・・・ 18 ・Securities Portfolio ・・・ 6 ・C

  3. Slide 3: Summary of Interim Results

    Ｈｏｋｕｈｏｋｕ Summary of Interim Results Ｆｉｎａｎｃｉａｌ Ｇｒｏｕｐ，Ｉｎｃ． （JPY Bn） 【Consolidated】 FY13 1H change FY12 1H 【Consolidated】 Net income: ¥12.3Bn Ordinary income 95.2 (10.4) 105.7 （+¥6.1Bn compared to FY12 1H） Ordinary profits 23.5 14.6 8.9 Net income ① 12.3 6.1 6.1 【Total of two banks】 Core net business p

  4. Slide 4: Summary of Interim Results (Hokuriku Bank, Hokkaido Bank)

    Ｈｏｋｕｈｏｋｕ Summary of Interim Results Ｆｉｎａｎｃｉａｌ Ｇｒｏｕｐ，Ｉｎｃ． Hokuriku Bank Hokkaido Bank （JPY Bn） FY13 1H change FY12 1H FY13 1H change FY12 1H Gross business profits 39.7 (8.4) 48.2 32.6 (1.9) 34.5 Net interest income 33.6 (2.0) 35.6 27.8 0.8 26.9 Net fees & commissions 4.5 (1.1) 5.6 4.2 0.7 3.5 Net tr

  5. Slide 5: Net Interest Income (Total of two banks)

    Ｈｏｋｕｈｏｋｕ Net Interest Income (Total of two banks) Ｆｉｎａｎｃｉａｌ Ｇｒｏｕｐ，Ｉｎｃ．  Average balances of loans increased, but average rate decreased as the result of decline in market interest rate and the increasing competition 【Breakdown of net interest income (domestic)】 （JPY Bn） Increase/decrease factors in

  6. Slide 6: Loan Portfolio

    Ｈｏｋｕｈｏｋｕ Loan Portfolio Ｆｉｎａｎｃｉａｌ Ｇｒｏｕｐ，Ｉｎｃ．  Loans +¥55.7Bn (+0.76%) compared to Sep-12  Loans to SMEs and consumers -¥78.7Bn (-1.67%) compared to Sep-12 【Balance of loans】 (JPY Bn) (JPY Bn) Hokuriku bank Total of two banks 4,109.2 4,205.7 4,245.5 4,271.2 7,236.1 7,313.8 7,369.6 6,966.7 2,801.8 2

  7. Slide 7: Loan Portfolio: Consumer and Housing Loans

    Ｈｏｋｕｈｏｋｕ Loan Portfolio Ｆｉｎａｎｃｉａｌ Ｇｒｏｕｐ，Ｉｎｃ．  Consumer loans +¥46.7Bn (+2.29%) compared to Sep-12  Housing loans +¥45.8Bn (+2.61%) compared to Sep-12 【Balance of consumer loans】 (JPY Bn) Total of two banks (JPY Bn) Hokuriku bank 2,034.0 2,080.8 1,974.3 1,995.3 1,050.7 1,077.8 1,128.9 1,033.5 282.0

  8. Slide 8: Securities Portfolio (Total of two banks)

    Ｈｏｋｕｈｏｋｕ Securities Portfolio (Total of two banks) Ｆｉｎａｎｃｉａｌ Ｇｒｏｕｐ，Ｉｎｃ．  Total balance of securities grew owing to increase in stocks  Unrealized gains on available-for-sale securities increased 【Balance of securities】 【Valuation difference】 (JPY Bn) 2,497.8 2,540.4 (JPY Bn) 2,471.8 2,315.1 106.4

  9. Slide 9: Deposits & NCDs

    Ｈｏｋｕｈｏｋｕ Deposits & NCDs Ｆｉｎａｎｃｉａｌ Ｇｒｏｕｐ，Ｉｎｃ．  Deposits and NCDs +¥301.8Bn (+3.08%) compared to Sep-12  Individuals +¥117.0Bn (+1.71%) compared to Sep-12 【Balance of deposits & NCDs】 (JPY Bn) (JPY Bn) Hokuriku bank Total of two banks 5,541.2 5,796.8 5,292.6 5,416.5 10,089.4 9,534.7 9,787.6 9,223.9

  10. Slide 10: Interest Margins (Total of two banks)

    Ｈｏｋｕｈｏｋｕ Interest Margins (Total of two banks) Ｆｉｎａｎｃｉａｌ Ｇｒｏｕｐ，Ｉｎｃ．  FY13 1H Loans rate 1.47% (-0.07% compared to FY12)  FY13 1H Deposits rate 0.05% (-0.02% compared to FY12) 【Interest rate of yen dominated loans and deposits】 (%) 1.74 (%) 1.64 1.54 1.65 1.66 1.63 1.61 1.58 1.55 1.47 Spread 1.52 1

  11. Slide 11: Net Fees and Commissions Income (Total of two banks)

    Ｈｏｋｕｈｏｋｕ Net Fees and Commissions Income (Total of two banks) Ｆｉｎａｎｃｉａｌ Ｇｒｏｕｐ，Ｉｎｃ．  Sales of investment trusts increased while sales of insurance decreased 【Fee revenue】 【Net fees and commissions】 (JPY Bn) (JPY Bn) FY13 1H change FY12 1H 9.2 9.1 9.1 8.7 0.9 1.1 0.9 1.1 ① Net fees and commissions 8.

  12. Slide 12: G&A Expenses (Total of two banks)

    Ｈｏｋｕｈｏｋｕ G&A Expenses (Total of two banks) Ｆｉｎａｎｃｉａｌ Ｇｒｏｕｐ，Ｉｎｃ．  G&A expenses decreased due to the decrease in investment in IT system 【G&A expenses and OHR】 【Increase/decrease factors in G&A expenses】 (JPY Bn) (JPY Bn) FY13 1H FY12 FY10 FY11 64.37% 65.37% 66.87% FY13 1H change FY12 1H 63.47% OHR 1

  13. Slide 13: Net Credit Costs (Total of two banks)

    Ｈｏｋｕｈｏｋｕ Net Credit Costs (Total of two banks) Ｆｉｎａｎｃｉａｌ Ｇｒｏｕｐ，Ｉｎｃ．  Net credit costs decreased due to the decrease in specific allowance of loan losses 【Increase/decrease factors in net credit costs 】 (JPY Bn) Increase/decrease factors in specific FY13 1H change FY12 1H allowance for loan losses (

  14. Slide 14: Non-Performing Loan

    Ｈｏｋｕｈｏｋｕ Non-Performing Loan Ｆｉｎａｎｃｉａｌ Ｇｒｏｕｐ，Ｉｎｃ．  NPL ratio 2.85% (-0.26% from Mar-13) 【Balance of non-performing loan】 (JPY Bn) Total of two banks (JPY Bn) Hokuriku bank 3.53% 3.34% 3.28% 3.06% 3.17% 3.11% 18.4 26.7 18.8 2.96% 19.3 2.85% NPL ratio 89.6 96.4 103.4 236.8 236.7 89.9 220.5 216.1 50.5

  15. Slide 15: Capital

    Ｈｏｋｕｈｏｋｕ Capital Ｆｉｎａｎｃｉａｌ Ｇｒｏｕｐ，Ｉｎｃ．  Capital adequacy ratio 12.04% (+0.16% from Mar-13) 【Capital and risk-weighted assets】 【Capital adequacy ratio】 (JPY Bn) (JPY Bn) Consolidated 13/9 change 13/3 Consolidated Total capital 569.3 5.0 564.2 Capital 12.04% Tier1 capital 403.2 13.9 389.3 11.72% 11.88

  16. Slide 16: Forecasts

    Ｈｏｋｕｈｏｋｕ Forecasts Ｆｉｎａｎｃｉａｌ Ｇｒｏｕｐ，Ｉｎｃ． 【Earnings forecasts for FY2013】 【Dividend forecasts for FY2013】 (JPY Bn) FY2013 FY2013 Change from Consolidated Interim Year-end Anuual 1H Forecasts FY2012 Ordinary income 95.2 187.0 (12.1) Dividend per common share ― ¥3.75 ¥3.75 Ordinary profits 23.5 33.5 4.1

  17. Slide 17: Management Strategy

    Ｈｏｋｕｈｏｋｕ Ｆｉｎａｎｃｉａｌ Ｇｒｏｕｐ，Ｉｎｃ． Management Strategy 15

  18. Slide 18: Our Domestic Network

    Ｈｏｋｕｈｏｋｕ Our Domestic Network Ｆｉｎａｎｃｉａｌ Ｇｒｏｕｐ，Ｉｎｃ．  Management integrated in 2004 for broader branch network and higher efficiency (fourth biggest in asset among regional banks after integration)  329 branches extended in Hokkaido, Hokuriku and three major metropolitan areas  Lower system related

  19. Slide 19: Our Overseas Network

    Ｈｏｋｕｈｏｋｕ Our Overseas Network Ｆｉｎａｎｃｉａｌ Ｇｒｏｕｐ，Ｉｎｃ．  Support clients’ business development by our overseas representative offices and alliance with other financial institutions  Offer various services such as information sharing and fundraising  Expand overseas network • 9 overseas representative

  20. Slide 20: Individual Customers (Investment Products)

    Ｈｏｋｕｈｏｋｕ Individual Customers (Investment Products) Ｆｉｎａｎｃｉａｌ Ｇｒｏｕｐ，Ｉｎｃ．  Turn around fees and commissions from investment products from the bottom in 1st half of FY2013 【Sales of investment products】  Shared MCIF* system （2013/3） • Enable effective sales promotion by using (JPY Bn) nationwide dat

  21. Slide 21: Individual Customers (Consumer Loans)

    Ｈｏｋｕｈｏｋｕ Individual Customers (Consumer Loans) Ｆｉｎａｎｃｉａｌ Ｇｒｏｕｐ，Ｉｎｃ．  Promote sales of consumer loans by extending various products and taking aggressive sales marketing measures in line with customer demands 【Avg. balance and rate of housing loans】  Housing loans • Active use of Housing Loan Plaza

  22. Slide 22: Corporate Clients (Business Support)

    Ｈｏｋｕｈｏｋｕ Corporate Clients (Business Support) Ｆｉｎａｎｃｉａｌ Ｇｒｏｕｐ，Ｉｎｃ．  Increase contact with customers for comprehending their business problems and strengthen business relationship through working together for solution  Raise customer satisfaction by our unique measures 【Overseas business support】 【

  23. Slide 23: Corporate Clients (Solution Offering)

    Ｈｏｋｕｈｏｋｕ Corporate Clients (Solution Offering) Ｆｉｎａｎｃｉａｌ Ｇｒｏｕｐ，Ｉｎｃ．  Work together for solutions of clients’ business problems  Maintain positive function to clientsʼ management improvement support after expiration of Financial Facilitation Act 【Business succession , M&A】  Promote support of busi

  24. Slide 24: G&A Expenses

    Ｈｏｋｕｈｏｋｕ G&A Expenses Ｆｉｎａｎｃｉａｌ Ｇｒｏｕｐ，Ｉｎｃ．  Expenses related to systems are to be peaked out after starting of MEJAR in May 2011  Pursue further cost reduction corresponding to the increase in consumption tax rate 【OHR , Non-personnel expenses】 (JPY Bn) 66.87% 63.47% 64.37% 65.37% 54.37% 58.68% OH

  25. Slide 25: Capital Policy

    Ｈｏｋｕｈｏｋｕ Capital Policy Ｆｉｎａｎｃｉａｌ Ｇｒｏｕｐ，Ｉｎｃ．  Target Figures during the period of current management plan (FY 2013 to 2015) • Consolidated Capital adequacy ratio ： 10％or above (domestic standards) • Dividend payout ratio for common shares : 30% or above 【Capital adequacy ratio】 【Shareholder returns

  26. Slide 26: Medium-Term Management Plan “GO for IT !”

    Ｈｏｋｕｈｏｋｕ Medium-Term Management Plan “GO for IT !” Ｆｉｎａｎｃｉａｌ Ｇｒｏｕｐ，Ｉｎｃ． 【The progress from April-2013 to September-2013 】 FY12 FY13 1H FY15 Plan Avg. balance of Deposits 9,790.3 Bn 10,109.0 Bn 10,110.0 Bn Avg. balance of Loans 7,277.8 Bn 7,327.1 Bn 7,480.0 Bn Core net business profits 50.3 Bn 23.7 B

  27. Slide 27: Appendix

    Hokuhoku Financial Group,Inc. Appendix 25

  28. Slide 28: About Hokuhoku FG ①: Outline of Hokuhoku FG and Two Banks

    About Hokuhoku FG ① Hokuhoku Financial Group,Inc. Outline of Hokuhoku FG and Two Banks (As of September 30, 2013） Hokuhoku FG Hokuriku Bank Hokkaido Bank Date of establishment September 26, 2003 July 31, 1943 March 5, 1951 （Started business in 1877） Location of head office 1-2-26 T sutsumicho-dori,

  29. Slide 29: About Hokuhoku FG ②: History of Hokuhoku FG

    About Hokuhoku FG ② Hokuhoku Financial Group,Inc. History of Hokuhoku FG Hokuriku area Hokkaido area 1877 Established in Ishikawa Prefecture Ishikawa 1878 Fukui Trade between Hokkaido and Hokuriku area Established in Fukui Prefecture flourished in the 19th century, and a lot of people immigrated fro

  30. Slide 30: Historical Data (Hokuhoku FG)

    About Hokuhoku FG ③ Hokuhoku Financial Group,Inc. Historical Data (Hokuhoku FG ) （JPY Bn） FY2008 FY2009 FY2009 FY2010 FY2010 FY2011 FY2011 FY2012 FY2012 FY2013 <Consolidated> Full year Interim Full year Interim Full year Interim Full year Interim Full year Interim Ordinary income 239.6 114.3 226.7 1

  31. Slide 31: Historical Data (Hokuriku Bank)

    About Hokuhoku FG ④ Hokuhoku Financial Group,Inc. Historical Data (Hokuriku Bank ) （JPY Bn） FY2008 FY2009 FY2009 FY2010 FY2010 FY2011 FY2011 FY2012 FY2012 FY2013 Full year Interim Full year Interim Full year Interim Full year Interim Full year Interim Ordinary income 124.2 57.5 113.7 55.0 108.8 54.0

  32. Slide 32: Historical Data (Hokkaido Bank)

    About Hokuhoku FG ⑤ Hokuhoku Financial Group,Inc. Historical Data (Hokkaido Bank ) （JPY Bn） FY2008 FY2009 FY2009 FY2010 FY2010 FY2011 FY2011 FY2012 FY2012 FY2013 Full year Interim Full year Interim Full year Interim Full year Interim Full year Interim Ordinary income 94.3 46.9 93.7 44.8 87.0 43.2 87

  33. Slide 33: Market Share in Our Home Market (Loans, Mar-13)

    About Hokuhoku FG ⑥ Hokuhoku Financial Group,Inc. Market Share in Our Home Market (Loans, Mar-13) Hokuriku Area Hokkaido Area Shinkin Banks HFG Shinkin Banks HFG 18.9% 24.5% 27.2% 25.2% Other Banks Other Banks 31.2% Main Competitor 9.4% Main Competitor 22.7% 40.9% S.B HFG HFG S.B 17.4% S.B 15.3% HFG

  34. Slide 34: Market Share in Our Home Market (Deposits, Mar-13)

    About Hokuhoku FG ⑦ Hokuhoku Financial Group,Inc. Market Share in Our Home Market (Deposits, Mar-13) Hokuriku Area Hokkaido Area Shinkin Banks HFG HFG 22.8% 28.3% Shinkin Banks 22.8% 31.5% Other Banks Main Competitor Main Competitor 30.2% 18.7% Other Banks 33.6% 12.1% HFG HFG S.B S.B 14.1% 16.1% S.B

  35. Slide 35: Lending in the Region by Industry (Sep-13)

    About Hokuhoku FG ⑧ Hokuhoku Financial Group,Inc. Lending in the Region by Industry (Sep-13) Hokuriku Bank Hokkaido Bank Manufacturing Others Others 7.6% 0.6% Manufacturing 0.6% 12.5% Construction 3.7% Construction Communication・ 4.8% Transportation Individual Individual 3.8% 35.2% Communication・ 37

  36. Slide 36: Financial Institutions in Japan

    About Japanese Regional Banks ① Hokuhoku Financial Group,Inc. Financial Institutions in Japan Source: Home page of Japanese Bankers Association of Japan 1 Central Bank - Bank of Japan Hokuhoku Financial Group 2 Private Financial Institutions (Hokuriku Bank, Hokkaido Bank) City banks Banks Regional b

  37. Slide 37: Outline of Regional Banks

    About Japanese Regional Banks ② Hokuhoku Financial Group,Inc. Outline of Regional Banks Outline of Regional Banks Leading Banks in the Regions The 64 regional banks in Japan consistently The regional banks have formed a dense enjoy wide patronage as banks that develop branch network in the regions,

  38. Slide 38: Characteristics of Our Main Business Area

    The Present Condition of the Regional Economy ① Hokuhoku Financial Group,Inc. Characteristics of Our Main Business Area Data from Ministry of Internal Affairs and Communications Population and Square Measure Scale matching for Toyama Ishikawa Fukui Total Hokkaido Osaka! Total Prefecture a Prefecture

  39. Slide 39: Economic Conditions

    The Present Condition of the Regional Economy ② Hokuhoku Financial Group,Inc. Economic Conditions Monthly Economic Report Regional Economic Report October-13 (By the Cabinet Office) (By Bank of Japan) All Japan Hokuriku Area Hokkaido Area Economic Recovering moderately Picking up steadily Recovering

  40. Slide 40: Big Projects in Hokuriku and Hokkaido Area

    The Present Condition of the Regional Economy ③ Hokuhoku Financial Group,Inc. Big Projects in Hokuriku and Hokkaido Area Hokkaido ◎Construction of the Hokkaido Shinkansen Constructing a 360 KM line from Shin-Aomori Station to Sapporo Station. Expected to be completed in FY 2015 （Shin-Aomori Station

  41. Slide 41: Inquiries related to this presentation

    Inquiries related to this presentation should be addressed to Hokuhoku Financial Group, Inc. Planning Group TEL(81)76-423-7331 FAX(81)76-423-9545 E-MAIL:honsha2@hokuhoku-fg.co.jp http://www.hokuhoku-fg.co.jp/ This document may not be reproduced or distributed to any third party without prior approva

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