FY 2014

Consolidated Business Scale and Results・We
We positioned FY 2014 as a year for going “backback to basics,basics,” and prioritized the building of ourgovernance system to ensure future growth.

FY 2014
Results
Number of cardholders,consolidated

35.67 million+1,770 thousand

24 64 million
24.64+1,1901 190 thousand

4.32 million+640 thousand

3 242 4 billion
3,242.4+448.6448 6 billion

Domestic
AEON Bank accounts
Finance receivables(i l di securitized(includingiti d receivables)i bl )YoY

FY 2014
Results

YoYOrdinary income¥329.0 billion

115%+¥9.0 billion

Ordinary expenses¥275.9 billion

113%+¥6.9 billion

Ordinary profit¥53.0 billion

129%+¥2.0 billion

Net income¥30.4 billion

147%+¥3.9 billion¥60±¥0－Dividends

AEON Financial Service Co., Ltd.

Results for the Fiscal Year 2014

0

Results by Segment

Difference from forecast

AEON Financial Service Co., Ltd.

Results for the Fiscal Year 2014

Consolidated Balance Sheets(Billions of yen)(Billions of yen)

C dit
CreditOrdinary income
YoYFFeeB kiBankingO
Overseas

Adjustment

ConsolidatedT t lTotal

146.445.4

41.6

112.5

(16.9)

329.0

Cash and deposits

112%

124%

101%

123%

－115%

Loans and bills
discounted

114.2

43.5

41.7

90.4

(13.9)

275.9

111%

123%

106%

120%

－

113%

8.8

1.2

0

29.7

－

39.7

YoY

95%

393%

－

138%

－

126%

Ordinary profit

32.1

1.8

(0.03)

22.1

(3.0)

53.0

115%

159%

-

19
1.9

135%

－

129%

Loans and bills
discounted

380.6

18.5

880.0

257.3

－

1,474.2

Loan yield

14.5%

1.8%

1.5%

24.8%

－

9.0%

0.5%

0.9%

0.2%

4.0%

－

0.8%

14.0%

0.9%

1.3%

20.8%－8.2%

Ordinary expenses
Y Y
YoY
Bad debt allowance

YoY

Interest rate((interest expenses)p)Interest rate spread

AEON Financial Service Co., Ltd.

1

Results for the Fiscal Year 2014

2

Domestic
Cash advances &consumer loans

Overseas
Accounts receivable –installment

Results
467.7
1 474 2
1,474.2

Change from startof fiscal year

Consolidated+51.0 Deposits+197 4+197.4

I t
Interest-bearing
tb i ddebtbt

Results

Change from startof fiscal year

1,963.0+245.2

806 9806.9+169 7+169.7

435.9+106.1370.9

+63.5

4.8

+1.7

1,221.8+158.0

Domestic

416.4

+62.8

Overseas

257.3

+44.4

Allowance for loss onrefund of interest received

1,038.2+80.8

Accounts payable – tradeand other liabilities

306.1

-15.2

183.6

+7.2

[Call money][76.3][+71.4]

Customers’ liabilities for
acceptances and guarantees

183.6

+7.2

Acceptances andguarantees
gAllowance for
doubtful accounts(49.2)-1.7

Total liabilities

3,264.5+408.7

Securities and otherassets

474.9
9+91.4
9

Total net assets

324.9

+17.6
17.63,589.4+426.3

Total liabilities and netassets

3,589.4+426.38.2%* +0.4%

Shareholders’ equity ratio
Shareholders

8.1%- 0.9%

Total assets
Interest rate spread(domestic standard)*Change from previous fiscal year

AEON Financial Service Co., Ltd.

Results for the Fiscal Year 2014

3Funding

Forecast of Results for FY 2015

・Interest rates in Japan remain at historically low levels, allowing us to raise long-term funds at low rates.
・Given the risk of rising interest rates and refinancings
refinancings, we will raise longlong-termterm funds in the current low interest rate environment
environment.

5.00%
4 00%
4.00%
3.00%
2.00%
1 00%
1.00%
0.00%

Forecast of Results

1995

2000

Potential risks Interest rate rise

2015

2010

2005

Refinancings

Approach to Funds●Prioritize long-term funding at low interest

Short-term funds
・Deposits (Ordinary & fixed-term)
fixed term)
・Loans payable

Long-term funds
・Deposits
Deposits (Fixed-term)(Fixed term)
・Bonds・Loans payable＋
Short-term credit
facilities
・Securitization of credit card
shopping receivables (1 time)・Committed line of credit, etc.

＋Securitization
・Housing loans, etc.

AEON Financial Service Co., Ltd.

YoYResults[Japan] 10-Year JGB Yield

Ordinary income¥380.0 billion

116%

Ordinary profit¥61.0 billion

115%

Net income¥33.0 billion

108%¥166.09112%

rates to address potential risks

Net income per share

・Invest funds raised in higher-yield instruments
・Improve balance sheet efficiency by moving longterm receivables off the balance sheet

I t iInterim

FY 2015 planForecast

・Long-term receivables: ¥520 billion
・Securitization of receivables: ¥350-400 billion
・Impact on profit: Approx.
Approx ¥10 billion ((- ¥50billion YoY)
Results for the Fiscal Year 2014

Dividend
forecast
4YYearenddForecast

YoY

YoYF ll year
FullForecast

YoY

PPayoutt ratio
tiForecast

YoY¥28 +¥3 ¥38 +¥3 ¥66 +¥6 39.7% +0.4%

AEON Financial Service Co., Ltd.

Results for the Fiscal Year 2014

5Positioning of FY 2014
・We positioned FY 2014 as a year for going “back to basics” with an eye on medium-to-long-term
growth.
・We standardized domestic and overseas business resources with a global perspective.

FY 2014Progress since the Management Integration

AEON Financial Service Co., Ltd.

Results for the Fiscal Year 2014

“Back toBasics”

6

・A bank holding company based on the retailindustry
・Standardized
St d di d bbusinessiresources withith a global
l b lperspective
・Focused on building the governance system

FY 2013・First year of management integration(“SecondFounding”)

Started using a new business model

AEON Financial Service Co., Ltd.

Results for the Fiscal Year 2014

7

Progress and Remaining Issues

ResultsSynergy

Governance“Back to Basics” Initiatives (Okinawa Rycom Branch)
・The Okinawa Rycom branch, which opened on April 25, was designed based on the concept at the time ofAEONO Bank’s’ establishment.

Progress

Remaining Issues

・Achieved record ordinary profit and net
income・Establish models for making instore branches and ATMb ibusinesses
profitable
fit blMore convenient financing
・Increased unsecured loans(up ¥155.5¥155 5 billion in two years)

・Increase number of users of
unsecured loans
・RefineRefine screening criteria

Stronger marketing power
・Started building a foundation for bigdata・Improve customer analysis skills,
address shortage of analysts

Stronger overseas business・Business scale and results grewsteadily mainly at the three listed
steadily,subsidiaries

・Shift profit structure away fromhigh dependence on loans

Stronger sales force and higher
productivity
py・Integrated head office functions andshifted staff to sales departments

・Cross-sell financial services ofgroup companies

・Strengthened governance and audit
systems in Japan and overseas

・Further strengthen governancesystem for growth

AEON Financial Service Co., Ltd.

8Results for the Fiscal Year 2014

AEON Financial Service Co., Ltd.

Results for the Fiscal Year 2014

“Back to Basics” Initiatives (Okinawa Rycom Branch)“Back to Basics” Initiatives (Kamatori Branch)

・The branch promotes cross-selling and up-selling with easy-to-understand, convenient and speedy operation.

・We revitalized the Kamatori branch with a renovation reflecting
g the location’s characteristics.

Card display

Appointment system

An attractive display of actual cards
helps to build the brand image
image.

Consumers can shop while waiting,without wasting time
time.

Digital signage

Internet banking

Before renovation
Cross-selling with displays
ffeaturingt i details
d t il on variousifinancial products.

AEON Financial Service Co., Ltd.

9After renovation

The branch promotes an online-tooffline
ffli strategy
t tandd paperlesslbanking.
Results for the Fiscal Year 201410

AEON Financial Service Co., Ltd.

Results for the Fiscal Year 201411

Initiatives for Growth
Global-minded
human resources

Enhancements

Global nextnext
generation
investment
Priority Investment
ThemesEnhancegovernance

Structural reform

Growth strategy
gyDigital
Marketing

Synergy creation
・Establishment of business models for ISB
and ATM businesses

Resolve issues

F tFutureDirections
Diti・Shift away from loan-centric profit structure overseas
・Business
Business process and operational reforms

Overseas

Improvement of results

Expand profits

Internal reserve

Reinvestment(Stronger financial base)

AEON Financial Service Co., Ltd.

Shareholder
returns
Results for the Fiscal Year 2014

12

AEON Financial Service Co., Ltd.

Results for the Fiscal Year 2014

Credit Card Business (1)Credit Card Business (2)・ Strengthen and expand the components of the Credit Card Business.

・ Enhance p
promotions to inbound and outbound travelers using
g the AEON Group’sp retail network.

AEON Card (Disney design)
Cultivate younger customer segment

Components

GG AEON Card
Response to shift to senior customers

13

Global Approach

Inbound Plan

Number ofcardholders

Activity rate
In-store
Instore tablet sign-up
sign up
Faster screening

Affiliated merchants

Total
Smartphone payment terminals
Faster screening

Overseas

11.03
million

35 67
35.67
millioncardholders

Japan

24.64
millionScreening/collection

SystemFinancial asset data
AEON Financial Service Co., Ltd.

C t
Customer
ddatabaset b

Initiative with Thai Airways
・Distribute
Distribute discount coupons for domestic
AEON stores at boarding gates.

C dit cardCreditd datad t
Results for the Fiscal Year 201414

AEON Financial Service Co., Ltd.

・Provide the same benefits to AEON
cardholders in all countries
Results for the Fiscal Year 201415

Fee BusinessBanking Business (1)・ Roll out call centers in each country to collect vast amounts of customer feedback.
・ Improve efficiency with state-of-the-art systems and training of call center staff.

・ Assemble information obtained from various channels in a database and conduct area analysis.
・ Provide intensive employee education at training facilities
fto improve the level off customer service.

In-storebranches
Accumulate
・ Customer
feedback
・ Know-how

Call centers

WebATMs

Education and training
Thailand (450 desks)

Enhanced convenience

Enhanced convenience

Cross-selling
Up-selling

Expansion of usage
Reduced costs

Customer needs

Expanded ATM lineup

Area analysis

Area analysis

Shenzhen (500 desks)

Share a common
perspective
throughout thegroupJapan (1,060 desks)

Database
Malaysia (160 desks)

AEON Financial Service Co., Ltd.

Results for the Fiscal Year 201416

AEON Financial Service Co., Ltd.

Results for the Fiscal Year 201417

Banking Business (2)Overseas Business (Greater China)

・Begin providing a range of financial services made possible by the management integration.
・Offer products after clarifying targets from financial needs of customers based on their life plans and lifestyles.

・Strengthen affiliated merchant development and collaboration with local AEON stores in Hong Kong to expand
creditdi cardd shoppinghi andd ffee iincome.
・In China, promote co-development of systems with Hong Kong and share screening and debt collection
know-how.

20s
SaveCustoomers

Aftermanagement
integration

30s

40s

50s

60+Key Initiatives

Deposits (ordinary/fixed-term)

Grow

Investment trust

PrepareInsurance
Housing loans

Borrow

Auto loans■ Ordinary Income in Greater China

AEON Financial Service Co., Ltd.

2014
Results

Credit card (shopping, cash advances)
Ordinary
incomeSmall consumer loans

Results for the Fiscal Year 2014

・Expand the sales network
・Enhance benefits to steer
customers to affiliatedmerchants

Strengthen
collaboration
with AEON

・Analyze sales plan data
・Develop sales promotions
based on analysis results toexpand transaction volume at
AEON stores

Strengthen
Chinabusiness・Share screening and debt
collection know-how
・Co-develop systems(Billions of yen)

Renovation/solar power loans

Beforemanagement
integration

Strengthen
affiliatedmerchantdevelopment

1822.1

2015
PlanYoY

27.0 122%

AEON Financial Service Co., Ltd.

Results for the Fiscal Year 201419

Overseas Business (Greater Mekong Subregion)

Overseas Business (Malay Subregion)

・In Thailand, strengthen cultivation of a new customer base (by expanding sign-ups at BTS) and target themiddle-income segment in regional cities.
・In neighboring countries, develop a plan for profitability in Myanmar, following Vietnam and Cambodia.

・In Malaysia, promote comprehensive financial service business initiatives integrated with retailers.
・Increase investment in Indonesia, India and the Philippines, which have larger markets than Malaysia.

Key Initiatives

Key Initiatives

Cultivate new ・Cultivate younger customer
segment by boosting sign-ups forcustomer base co-branded card with BTS【AEON Rabbit Member Card】■ Ordinary Income in Greater Mekong
Subregion

Results

63.4

2015
PlanYoY

72.0 113%

・With the credit card tax eliminated,
expand sign-ups for credit cards withreward points

Promotecomprehensive ・Strengthen initiatives with AEON
financial service ・Introduce
Introduce new payment functions
initiatives

・Expand sales network to matchdevelopment of regional cities■ Ordinary Income in Malay Subregion(Billions of yen)(Billions of yen)

2014
Ordinary
incomeExpandoperations inThailand

Increase thenumber ofcardholders

Apply knowknow
how fromThailand
across theregioni

2014
Results

・Invest management resources inVietnam, Cambodia, Myanmar
and Laos

AEON Financial Service Co., Ltd.

Results for the Fiscal Year 2014

Ordinary
income2033.82015
PlanYoY

41.0 121%

Expandinvestment inneighboringcountries

・Expand business by strengthening
collaboration between operations inMalaysia and surrounding countries

AEON Financial Service Co., Ltd.

Results for the Fiscal Year 2014

Strengthen Screening and Credit Management

Standardize Systems

・Improve the efficiency of screening and receivables management by applying know-how from Japan.
・Grow outsourcing business based on data and know-how accumulated in each country.

・Accelerate growth in Japan and overseas by consolidating and standardizing system infrastructure in eachcountry.

Total

Greater
China

Greater
China

Screening: 130 people
Receivables management:220 people

System staff: 730

Staff: 100Japan

JJapanScreening: 590 people
Receivables management:
750 people

Staff: 150

Philippines

Greater Mekong
Subregion
Screening: 880 people
Receivables management:
3,580 people

Greater MekonggSubregion

Screening: 500 people
Receivables management:
950 people

AEON Financial Service Co., Ltd.

Screening

2,100 people

Receivables
management

5,500 people

Results for the Fiscal Year 2014

Staff: 260

Staff: 120

Total
Malay
Subregion

21

Malay Subregion*

Staff: 360* Malaysia, Indonesia, India and Philippines

22

AEON Financial Service Co., Ltd.

Results for the Fiscal Year 201423

(Reference) Allowance for Possible Credit Losses and Allowance for Loss on
Refund of Interest Received■ Consolidated Results of AEON Credit Service (Asia) Co., Ltd.

■ Allowance for Possible Credit Losses (Domestic Credit Card Business)
CreditFee(Reference) FY 2014 Results (Hong Kong, Thailand and Malaysia)(Billions of yen)

BankingOverseas

FY 2013

Total

Allowance for possible credit losses,b i i off period
beginningi d29 9
29.9

28
2.8

33
3.3

11 4
11.4

47 5
47.5

Provision for possible credit losses

8.8

1.2

0.0

29.7

39.7Write-offWrite
off of credit losses(including transferred debt)

12.6

0.90.224.3

38.0

Allowance for possible credit losses,
end of period

26.1

3.1

3.1

16.8

49.2

Results

3.7

3.0

Provision for loss on refund of interest received

2.8

5.8

Interest refunded(Sums refunded and appropriation of interest to principal)

3.5

4.0

Allowance for loss on refund of interest received, end ofperiod

3.0

4.8

AEON Financial Service Co., Ltd.

18 1
18.1

122%

Ordinary profit

3.594%

4.8138%Net income

2.891%

3.9139%Exchange rates
・2013: HKD 1 = JPY 12.83
・2014：HKD
2014：HKD 1 = JPY 14.04
14 04

FY 2014
YoYResults

YoY

Ordinary income

48.9150%

57.6118%

Ordinary profit

10.0160%

10.1101%

Net income

808.0171%808.0101%■ Results of AEON Credit Service (M) Berhad

FY 2013
Results

Results for the Fiscal Year 2014

YoY

126%

FY 2013

FY 2014

Allowance for loss on refund of interest received, beginningof period

Results

14 914.9

Results(Billions of yen)

FY 2013

YoY

Ordinary income■ Consolidated Results of AEON THANA SINSAP (THAILAND) PLC. (Billions of yen)

(Domestic subsidiaries) AEON Bank: ¥3.2 billion, AEON Product Finance: ¥4.7 billion, AEON Housing Loan Service: ¥1.2 billion■ Allowance for Loss on Refund of Interest Received(Billions of yen)

FY 2014

Exchange rates
・2013: THB 1 = JPY 3.21
・2014: THB 1 = JPY 3.35

(Billions of yen)

FY 2014
YoY

Results

YoY

Operating income

22.2

167%

28.3

128%

Operating profit

73
7.3

151%

94
9.4

129%

Net income

5.4153%7.0128%Exchange rates
・2013: MYR 1 = JPY 31.30
・2014: MYR 1 = JPY 32.58

24

AEON Financial Service Co., Ltd.

Results for the Fiscal Year 2014

2526

AEON Financial Service Co., Ltd.

Results for the Fiscal Year 2014

27(Reference) FY 2015 Business Plan (Domestic)

FY 2014
Results
Number of cardholders

FY 2015PlanYoY

24.64 million

26.00 million+1.36 million

Card shopping transaction volume¥3,821.0 billion¥4,200.0 billion

109.9%

E-money transaction volume¥1,986.0 billion¥2,281.0 billion

114.8%

Balance of cash advances¥370.4 billion¥400.0 billion +¥29.6 billion

Balance of small consumerloans¥45.9 billion¥80.0 billion +¥34.1 billion¥416.4 billion¥480.0 billion +¥63.7 billion

Balancea a ce oof u
unsecuredsecu ed loans
oa s

AEON Financial Service Co., Ltd.

Results for the Fiscal Year 2014