Shinsei IR Day Shopping Credit, Credit Cards, Settlement and Loan - - PowerPoint PPT Presentation

Shinsei IR Day Shopping Credit, Credit Cards, Settlement and Loan Businesses

APLUS FINANCIAL Co., Ltd February, 2017

2

APLUS Group in the Strategy Map

Low Mid High Growth Areas Stable Revenue Areas Strategic Initiative Areas Curtailment Areas

 Asset Management Consulting

Latent Needs, Market Growth Potential Unsecured Loans Structured Finance High

 Loans to Overseas Nonfinancial Corporates  Overseas Expansion Support

 Shopping Credit  Credit Cards  SME/Small Business Solutions

 Collaboration with regional financial institutions  Business Succession Finance  Settlement

 Corporate Market Solutions

 Credit Trading

 Loans to local governments

Excluding basic banking services such as funding, loans, etc.

Shinsei Bank Group Expertise/Differentiation

Mid

• 1. Business Strategy Vision within the 3rd MTMP

3

APLUS Group in the Strategy Map

Low Mid High

Growth Areas Stable Revenue Areas Strategic Initiative Areas Curtailment Areas

Latent Needs, Market Growth Potential

• 1. Business Strategy Vision within the 3rd MTMP

High

 Shopping Credit  Credit Cards  SME/Small Business Solutions

 Settlement

Excluding basic banking services such as funding, loans, etc.

Shinsei Bank Group Expertise/Differentiation

Mid

APLUS Group Business Areas

4 0% 10% 20% 30% 40% Other Settlements Loans Credit Card Shopping Shopping Credit

• 2. APLUS Group Businesses

Introduction of Key Businesses

FY2016_3Q Total Gross Revenue JPY 53.0 billion



The APLUS Group primarily engages in 4 key businesses in the provision of credit facilities (personal credit) and related business areas.



The APLUS Group is comprised of APLUS Co., Ltd. (general credit company), Zen-nichi Shinpan Co., Ltd., which operates primarily in the Chugoku and Shikoku regions (installment credit) and Alfa Servicer Co., Ltd. (servicing). Gross Revenue Components (FY2016 3Q) Major Products /Services Automobile credit (new/used automobiles) Shopping credit (living/non-auto) Partner credit cards (T Card Plus/Luxury Card, etc) Proper credit cards (Shinsei APLUS Card, etc) Housing related loans/Credit card cashing/Loan card Settlement service for automatic withdrawal, payment at convenience stores, monthly rent payment Subsidiaries i.e. Alfa Servicer

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Basic Policy

Outline

Acceleration of growth through the pursuit of higher profitability Enhancement of backup frameworks which support growth ① Expansion of shopping credit and credit card businesses which emphasize customer convenience, profitability and efficiency ② Further expansion of customer base by leveraging T point functions ③ Providing settlement solutions, primarily those associated with the EC market ④ Engage in meticulous business efforts to meet financial needs in the housing market ⑤ Realization of business collaboration and promotion of new business through unified Group management

① Operation Framework ② Risk Management Framework ③ Information Technology Framework ④ Compliance and Human Resources Framework

Financial target: ROA1.0％～1.2％

Medium- to Long-Term Vision

Through group integration, providing the innovative financial service, seeking the realization of lean operations and outstanding productivity and efficiency Increase corporate value by realizing industry-leading performance in every area

• 2. APLUS Group Businesses

APLUS Group Medium-Term Management Plan

6 21.6 23.2 24.0 14.7 15.7 16.4 8.3 8.8 9.0 8.5 7.8 8.4 0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 Shopping Credit Credit Card Shopping Settlement Loan

Current MTMP Term Expansion of IT infrastructure

* Figures in the chart above do not match consolidated figures due to the exclusion of Zen-nichi Shinpan.

Gross Revenue of Key 4 Businesses

Re-engineering Development of credit card system Construction of system supporting business strategy Collections Operations



After loan business gross revenue bottomed out in FY2015, gross revenue of all the key businesses expected to increase.

Gross Revenue of Key Businesses

• 2. APLUS Group Business

(Unit: JPY Billion)

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Through group integration, providing the innovative financial service, seeking the realization of lean operations,

• utstanding productivity

and efficiency

Challenges towards FY2017 <Enhancement of backup frameworks which support growth>

• Integration of operation and collection centers
• Expansion of IT infrastructure

Complete shift to open system Enhancement of the credit card infrastructure through compliance with the PCDISS security standard

• Re-organization of subsidiaries

Integration of Zen-nichi Shinpan Expansion of Alfa Servicer business <Acceleration of growth through the pursuit of higher profitability>

• Shopping credit

Differentiation by T points and e-Order Invite more credit card applications at the time of shopping credit application

• Credit card shopping

Lead customers to apply via smart phone Enlarge new card issuances in collaboration with partnered companies

• Settlements

Promote an increase in member merchants accepting WeChat Pay, GAICA and e-Gate

• Loans

Capture housing related needs, and continue engaging in meticulous business efforts

• 2. APLUS Group Business

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Shopping Credit Market



Market scale contraction resulting from the effects of regulatory changes has bottomed out. The market is exhibiting signs of gradual expansion for the past several years as a result of new market development, etc.



While the automobile sector accounts for more than 60% of the market on a value basis, competition is intensifying and differentiation is challenging.

*(Data Source) “Japanese Credit Statistics”, Japan Consumer Credit Association * Method of calculation changed in 2013

2,000 4,000 6,000 8,000 10,000 2009 2010 2011 2012 2013 2014 2015

• 13.0%
• 9.6%
• 0.9%

1.5% 13.1% 6.8% 3.3%

• 15.0%
• 10.0%
• 5.0%

0.0% 5.0% 10.0% 15.0% 2009 2010 2011 2012 2013 2014 2015 Shopping Credit Market (Volume) Market Growth Rate (Y-O-Y)

(Unit: JPY Billion)

• 3. Market and Business

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Shopping Credit Business



Develop and introduce “T point shopping credit” to differentiate from aggressive competitors.



Achieve rapid credit screening and operational efficiency through expansion of the online application channel “e-Order” introduced in FY2012.



Improve profitability through focus on shopping credit (non-auto). While volume has remained flat, gross revenue on a growth trend.

69 104 126 158 168 162 283 297 213 165 160 160 100 200 300 400 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 Shopping Credit (non-auto) Automobile Credit

Volume Gross Revenue, T Point Shopping Credit Volume Growth Rate

* Automobile Credit volume decreased due to dissolution of alliance with BMW in October 2012

0% 100% 200% 300% 400% 500% 600% 5 10 15 20 25 30

FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 Automobile Credit Shopping Credit (non-auto) T Point Shopping Credit Volume （FY2012=100%)

• 3. Market and Business

(Unit: JPY Billion)

10

Credit Card Shopping Market

Anticipating high growth in the market due to:



Continuous growth in the credit card shopping market due to the expansion

• f the EC market and the undertaking
• f utility payments.



Market (value) increased 7.7% Y-O-Y in 2015 and approaches the 50 trillion yen level.



Infrastructure development has been further advanced by movement toward the cashless society proposed in the “Japan Revitalization Strategy.”

* Card Payment Ratio=Market scale of Credit Card Shopping/Private Final Consumption * (Data Source) Market scale of Credit Card Shopping: ”Japanese Credit Statistics”, Japan Consumer Credit Association * (Data Source) Private Final Consumption: “National Accounts of Japan”, Cabinet Office * Method of calculation changed in 2013

Credit Card Shopping Market (Volume)

0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% 10,000 20,000 30,000 40,000 50,000 60,000 2010 2011 2012 2013 2014 2015 Credit Card Shopping Volume Card Payment Ratio （%) (Unit: JPY Billion)

• 3. Market and Business

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Credit Card Shopping Business



While a slight decline has been observed in the total volume of the credit card shopping business, due in part to the effects of the decline in prices of high profit margin gasoline, the expansion of the revolving credit volume has resulted in increased revenues. Revolving credit volume is increased due to the introduction of a default revolving credit setting of new credit cards and outbound marketing.



Volume expected to bottomed out as a result of increased new card issuances in cooperation with partnered companies and by promoting credit card use through campaigns, etc.

Volume

100 200 300 400 500 600 700 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 0% 50% 100% 150% 200% 250% 300% 350% 400% 450% 500% 2 4 6 8 10 12 14 16 18 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 Gross Revenue Revolving Balance Rate（FY2010=100％）

(Unit: JPY Billion)

• 3. Market and Business

Gross Revenue, Revolving Balance Growth Rate

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Settlements Market



EC market has continued to grow due to proliferation of smart phones.



Settlement methods in EC market include credit card, carrier settlements and e-money.



APLUS is engaged in the EC market by providing various settlement means such as credit cards, convenience store payment collections and settlements of automated account transfers (auto- net) either individually or as a comprehensive package.

2.8% 3.2% 3.4% 3.8% 4.4% 4.8% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 2010 2011 2012 2013 2014 2015 EC Market Scale (billion) EC Ratio （%）

* EC Ratio (%) : EC/All commercial transactions in product sales area * (Data Source) “FY2015 E-Commerce Market Survey”, Ministry of Economy, Trade and Industry

EC Market

(Unit: JPY Billion)

• 3. Market and Business

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Settlement Business

200 400 600 800 1,000 1,200 1,400 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015

Volume Operating Revenue

(Unit: JPY Billion)

• 3. Market and Business



In addition to the existing settlement service (e.g. auto-net), APLUS is developing new settlement services, developing merchant networks for “GAICA” (foreign currency prepaid cards) and of WeChat Pay (China-based mobile settlement service).

7.3 7.4 7.8 8.1 8.8 9.0 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 10.0 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015

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Loan Market



New lending of housing loan remains largely stable despite the effects of the consumption tax rate hike.



Housing loan market is expected to shrink due to a decline in new housing starts.



APLUS engages in the market through the provision of “My Home Plan,” loans for initial expenses related to the purchases of new homes and “investment loans” for high quality second hand apartments, primarily located in the Tokyo area.

5,000 10,000 15,000 20,000 25,000 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015

Housing Loan New Lending

* (Data Source) “Housing Loan New Lending”, Japan Housing Finance Agency

(Unit: JPY Billion)

• 3. Market and Business

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Loan Business



Following a portfolio review, housing loan volume has significantly increased and loan revenue has returned to growth in FY2015 (Y-O-Y).



APLUS seeks to continue engaging in meticulous business efforts to capture housing related needs.

0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0 100.0 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 Housing Loan Loan Card Card Cashing 0.0 5.0 10.0 15.0 20.0 25.0 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 Housing Loan Loan Card Card Cashing

Volume Gross Revenue

• 3. Market and Business

(Unit: JPY Billion)

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Disclaimer

• The preceding description of Shinsei Bank Group’s Medium-Term Management Plan contains

forward-looking statements regarding the intent, belief and current expectations of our management with respect to our financial condition and future results of operations. These statements reflect our current views with respect to future events that are subject to risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, our actual results may vary materially from those we currently anticipate. Potential risks include those described in our annual securities report filed with the Kanto Local Finance Bureau, and you are cautioned not to place undue reliance on forward-looking statements.

• Unless otherwise noted, the financial data contained in these materials are presented under

Japanese GAAP. The Company disclaims any obligation to update or to announce any revision to forward-looking statements to reflect future events or developments. Unless otherwise specified, all the financials are shown on a consolidated basis.

• Information concerning financial institutions other than the Company and its subsidiaries are

based on publicly available information.

• These materials do not constitute an invitation or solicitation of an offer to subscribe for or

purchase any securities and neither this document nor anything contained herein shall form the basis for any contract or commitment whatsoever.