77bank IR Presentation ¢â‚¬› ... ¢â‚¬› pdf ¢â‚¬› 2018_06_ir_ IR Presentation Results for Fiscal

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  • Materials were prepared for the Bank’s presentation of its results for the fiscal year ended March 31, 2018 held on June 5, 2018.

    IR Presentation Results for Fiscal Year Ended March 31, 2018

    June 5, 2018

  • Fiscal Year Ended March 31, 2018

    I. Financial Summary II. Overview of Medium-term Management Plan

    III. Projected Performance

    Contents

    Summary of profits and losses 1

    Interest income 2

    Loans and bills discounted 3

    Deposits and certificates of deposits 4

    Securities 5

    Assets in custody 6

    Credit-related expenses/capital adequacy ratio/credits disclosed under the Financial Reconstruction Law 7

    Results of previous Medium-term Management Plan

    “VALUE UP: Challenge Value Creation” 8

    Bank Image Sought by The 77 Bank and Action Guidelines 10

    Basic Policies 11

    Targets / KPIs 12

    Key Strategies 13

    Key Strategy 1: Growth strategy —Strengthening of profitability— 14

    Key Strategy 2: Regional economy vitalization strategy —Enhancement of value of the region— 21

    Key Strategy 3: Productivity enhancement strategy —Effective and efficient allocation of resources— 23

    Key Strategy 4: Governance strategy —Strengthening of governance for sustainable growth— 25

    Quantitative plan 27

    Projected performance for FY2019 29

  • Both ordinary income and net income increased because securities-related income and gains on reversal of reserve for possible loan loss increased.

    Core operating income increased because of an increase in interest income due to increases in interest on loans and dividends on securities and a decrease in expenses mainly due to decrease in labor cost through working style reform.

    (JPY bn, %)

    Summary of profits and losses (Non-consolidated) FY2017 FY2018

    YoY change Increase/ decrease

    Rate of change %

    Gross operating income 69.2 67.7 (1.5) (2.1) [Core gross operating income] [ 73.7 ] [ 75.9 ] [ 2.2 ] [ 3.0 ] Interest income 67.6 69.6 2.0 2.9 Fees and commissions 9.4 9.3 (0.1) (1.4) Other operating income (7.8) (11.2) (3.4)

    Gains (losses) on bonds (4.5) (8.2) (3.7) Gains (losses) on forex transactions (2.6) (3.6) (1.0)

    Expenses 53.2 52.8 (0.4) (0.7) Operating income before provision of general reserve for possible loan losses 16.0 14.9 (1.1) (6.7)

    [Core operating income] [ 20.5 ] [ 23.1 ] [ 2.6 ] [ 12.8 ] Provision of general reserve for possible loan losses - - -

    Operating income 16.0 14.9 (1.1) (6.7) Special income and losses 5.6 8.4 2.8 Bad debt disposals (-) 0.4 0.5 0.1 Gains on reversal of reserve for possible loan loss 2.0 2.8 0.8 Gains (losses) on stocks 1.9 2.7 0.8 Gains (losses) on investments in money held in trust 2.5 4.0 1.5 Ordinary income 21.6 23.3 1.7 7.9 Extraordinary income - - -

    Extraordinary loss 0.5 0.7 0.2 Income taxes (incl. deferred taxes) 4.5 5.9 1.4 Net income 16.6 16.7 0.1 0.7

    Credit-related expenses (1.6) (2.3) (0.7)

    FY2017 FY2018

    Consolidated ordinary income 23.8 25.7

    Net income attributable to owners of the

    parent 16.1 18.3

    Summary of profits and lossesI. Financial Summary

    1

    (JPY bn)

  • +1.3

    (1.1) (1.3)

    +3.3

    (0.0) (0.0) (0.2)

    2

    FY2017 Interest income 67.6

    Factors in loans +0.2

    Other

    FY2018 Interest income 69.6

    (JPY bn)

    Average balances

    Yield

    Factors in securities +2.0

    Yield

    Average balances

    Average balances

    Trends of market interest rates

    Interest income

    Factors in deposits (0.0)

    (JPY bn)

    FY2017 FY2018 FY2019 (Plan)YoY change YoY change Interest income 67.6 69.6 2.0 64.0 (5.6)

    Investment income 70.4 72.7 2.3 (Interest on loans and bills discounted) 41.2 41.4 0.2 (Interest and dividends on securities) 29.0 31.0 2.0 Fund procurement costs 2.8 3.1 0.3 (Interest on deposits) 1.5 1.5 0.0

    (JPY bn)

    Major accounts (average balances) FY2017 FY2018 YoY change

    Loans and bills discounted 4,355.1 4,494.0 138.9 Securities 3,214.2 3,078.1 (136.1 ) Deposits and certificates of deposits 7,727.7 7,761.0 33.3

    (%)

    Interest rates/ Interest margin FY2017 FY2018 YoY change

    Loans and bills discounted interest rate 0.94 0.92 (0.02 ) Securities interest rate 0.90 1.00 0.10 Interest rate on deposits 0.01 0.01 0.00 Interest rate spread 0.84 0.86 0.02 Net interest margin 0.16 0.19 0.03

    * Figures in YoY change (increase/decrease) show percentage points.

    (%) FY2017 FY2018 YoY change

    JPY TIBOR (3 months) 0.06 0.06 0.00

    5-year JGBs (0.18 ) (0.10 ) 0.08

    10-year JGBs (0.05 ) 0.05 0.10

    I. Financial Summary

    Yield

    Interest income increased JPY 2.0 billion year- on-year due to increased interest on loans and bills discounted as a result of rebalancing of loan assets and increased dividends on securities.

  • Loans and bills discounted

    (JPY bn)

    3,505.8

    Loans and bills discounted balances

    Loans and bills discounted balances by region (JPY bn)

    4,227.7 4,357.9

    Share in the loans in Miyagi Pref. (end of Mar. 2018)

    77 BANK

    * Excludes agricultural and fishery cooperatives

    43.0%

    Average balances increased 3.1% year-on-year on average due to an increase chiefly in corporate loans centered in SMEs, and in retail loans centered in loans, and the term-end balance increased 3.9%

    +2.3%

    YoY growth +3.9%

    +8.5%

    +2.6%

    Tohoku region

    Miyagi Pref. Sendai City

    2011/3 2015/3 2016/3

    +6.1%

    YoY growth +6.2%

    +7.6%

    2017/3

    3,089.6 3,224.4

    4,450.3

    3,368.6

    (JPY bn, %)

    Loans and bills discounted (average balances)

    FY2017 FY2018 FY2019 (Plan)YoY change YoY change

    Loans and bills discounted 4,355.1 4,494.0 3.1 4,601.0 2.3 Corporate loans 2,691.3 2,789.7 3.6 [Excl. spread loans] 1,509.5 1,656.5 9.7 [Spread loans] 1,181.8 1,133.2 (4.1) Retail loans 962.8 1,056.3 9.7 [Housing loans] 922.2 1,006.9 9.1 Loans for local governments 701.0 648.0 (7.5)

    4,627.1

    2018/3 2015/3 2016/3 2017/3 2018/3

    I. Financial Summary

    3,578.1

    3

    0 (Immediately after the earthquake)

  • Deposits and certificates of deposits

    (JPY bn)

    5,636.4

    Deposits and certificates of deposits balances

    7,854.9 7,971.2

    Share in deposits in Miyagi Pref. (end of Mar. 2018)

    * Excludes Japan Post Bank and agricultural and fishery cooperatives

    77 BANK 55.5%

    ▲4.1%

    YoY growth +1.8%

    +3.4%

    +2.8%

    Services to expand the customer base (from Jan. 2018)

    7,821.4

    Average balance increased 0.4% year-on-year, due to increases in retail and corporate deposits, despite a decline in public deposits. The term-end balance increased 1.8%

    (JPY bn, %) Deposits and certificates of

    deposits (average balances)

    FY2017 FY2018 FY2019 (Plan)YoY change YoY change Deposits and certificates of deposits 7,727.7 7,761.0 0.4 7,739.5 (0.2)

    Retail deposits 4,700.0 4,845.4 3.0 Corporate deposits 1,755.1 1,797.2 2.3 Public deposits 1,243.8 1,070.3 (13.9)

    2011/3 2015/3 2016/3 2017/3 2018/3

    •Handling of “electronic delivery service” (Launched in Mar. 2018) •Viewing of documents on deposits, investment trust, etc. (investment trust account statement, etc.) is made available via online banking service, instead of delivery by postal mail

    •Opening of a coupon site “77 Coupon” (Launched in Apr. 2018)

    •Handling of “Online Bankbook” (Launched in Apr. 2018)

    •Environmental consideration and promotion of paperless •Prevention of losing bankbooks and illegal use due to theft

    •Websites offering coupons by category (restaurants, leisure, etc.) are available on the Bank’s website and in the 77 Bank app.

    I. Financial Summary

    7,964.3

    4

    (Immediately after the earthquake)

  • Yields and modified duration of yen-denominated bonds *Yen-dominated bonds other than investment trusts

    Securities

    Composition ratio by type (on an amortized cost base)Balance of securities (based on market value)

    End-Mar. 2016

    End-Mar. 2017

    End-Mar. 2018

    End-Mar. 2019 (Plan)

    National gov. bonds 46.2% 39.2% 33.0% 25.1%

    Local gov. bonds 6.7% 7.9% 12.7% 18.4%

    Corporate bonds 29.4% 31.4% 32.1% 33.1%

    Others 15.8% 19.2% 19.9% 21.1%

    Investment trusts, etc. 8.6% 12.0% 13.9% 14.9%

    Foreign bonds 7.2% 7.2% 6.0% 6.2%

    Stocks 1.9% 2.3% 2.3% 2.3%

    (JPY bn)

    End-Mar. 2016

    End-Mar. 2017

    End-Mar.

    2018

    Gains (losses) from evaluation end-Mar. 2018

    Change from end-Mar. 2017

    YoY change

    Securities 3,478.9 3,242.6 3,126.0 (116.6) 162.8 6.6

    Bonds 3,353.7 3,091.6 2,966.5 (125.1) 73.0 (4.6) National gov. bonds 1,560.9 1,225.5 988.5 (237.0) 10.9 (6.2) Local gov. bonds 229.0 246.9 381.9 135.0 4.5 0 Corporate bonds 997.2 983.2 960.2 (23.0) 9.9 (4.0)

    Others 566.6 636.0 635.9 (0.1) 47.7 5.6 Investment trusts, etc. 327.8 414.7 461.9 47.2 49.4 5.7 Foreign bonds 238.8 221.3 174.0 (47.3) (1.7) (0.1)

    Stocks 125.2 151.0 159.5 8.5 89.8 11.2

    I. Financial Summary

    5

    ○ Balance of marketable securities decreas