AEON Financial Service Co., Ltd.

1

Summary of consolidated results
1Q

2Q

3Q

4Q

FY2016（Unit：Billions of yen)

Results

YoY

Results

YoY

Results

YoY

Results

YoY

Results

YoY

Difference
fromforecast

Ordinary income

90.4

+6％

90.5

+3％

93.5

103％

100.6

+6％

375.1

+4％

-4.9

Ordinary expense

76.7

+6％

76.8

+3％

78.6

105％

81.3

+5％

313.5

+4％

-3.5

Ordinary profit

13.7

+9％

13.6

+3％

14.8

-9％

19.3

+13％

61.6

+4％

-1.4

△2.5

3.3

△1.7

10.8

△2.6

+0.8

①Securitization
2.9
+1.5
2.2
△0.5
2.3
receivables
Depreciation of securitization receivables profit (Yearly)
profit

-6.0② Recombination existing scheme of securitization for risk asset compress
Net income attributable toowners of the parent

8.9

+25％

8.0

+16％

8.8

-6％

5.6

－

5.6

13.5

+11％

39.4

Securitization
receivables profit①＋②＝¥16.5bn

+10％

+2.4

【Factor of difference from forecast】■ Ordinary income：¥375.1bn（+4％、 difference from forecast : +¥4.9bn）
・Credit business is led by “reward point” sales promotion in domestic andeffected of exchange rate in overseas: -¥16.1bn■ Ordinary profit：¥61.6bn（+4％、 difference from forecast : -¥1.4bn）
・Reduced personnel cost in overseas business andreduction of bad debt allowance is less from our expectation
・Refund of interest received : ¥3.9bn（+¥0.5bn） is covered by securitization receivables profit
from revolving payments credit purchase ¥2.7bn
・Recombination existing scheme of securitization for risk asset compress in Q4 : ¥5.6bn effected in ordinary profi＜Other difference ： Applied pro forma standard taxation to SGA（Tax +¥2.7bn）、
impacted of the strong yen（Overseas profit -¥3.3bn）＞■ Net income attributable to owners of the parent : ¥39.4bn（+10％、 difference from forecast : +¥2.4bn）
・Increased due to tax effects from AEON Bank Ltd. and AEON Product Finance Co Ltd. and reduced tax

AEON Financial Service Co., Ltd.

2

Consolidated Results of business scale
FY20152016 1H
Change fromstart of FY

Results

YoY

Results

37.22million+1.55

38.16million

25.88million+1.24➋ cardholders in domestic

Number of active

15.93million➌ AEON Bank accounts

Number of cardholders➊

Number of cardholders
in domestic

Results

YoY

+0.94

38.94million+1.72

26.44million+0.56

26.92million

+1.04

+0.68

16.37million+0.44

16.61million+0.68

4.93million+0.61

5.25million+0.32

5.55million

+0.62

3.56

+0.49

3.84

+0.28

4.08

+0.52

3,857.6bil+615.2

4,111.5bil+253.8

Number of AEON Card
SELECT members
Finance receivables

FY2016➊Number of cardholders in domestic
・Focused on card recruitment at Daiei and new
AEON Bank branches（3 at Grater Tokyo, out of 4)・Increased card holders and share of household
at Greater Tokyo(Unit：Thousand)Greater Tokyo

Results

5,695

YoY

+342

4,427.8bil +570.1
Share ofHouse-hold

YoY

33.5%

+1.6pt➋Number of active cardholders in domestic➌Number of AEON Bank accounts

・Encouraged usage rewarding double the point at AEON stores
・Web statement：4.15mn（YoY+0.92million, active rate/month 56％）⇒reduced posting cost ¥2bn per year
・Transaction Volume of Card Shopping:4,515.7bil（YoY+10％）

・Bank accounts are increased due to valuable
rate of AEON Card SELECT’s interest rate
・Balance of ordinary deposit： approx ¥1.4trn.
(YoY+¥727.8bil)

AEON Financial Service Co., Ltd.

3

Consolidated Results by Area
Topics ※（）:YoY

FY2016（Unit：Billions of yen）

Results

YoY

ChangeOrdinary income

375.1

+4％

+15.5

Domestic

267.0

+11％

+27.1

Overseas

113.2

-8％

-97

Share ofconsolidated

30％

-4％

-

Ordinary expense

313.5

+4％

+13.2

Ordinary profit

61.6

+4％

+2.2

Domestic

43.2

+14％

+5.3

Overseas

22.5

-6％

-1.4

Share ofconsolidated

37％

-4％

-

Net income attributable
39.4
+10％
to ownersbeforeof theinter-segment
parent*Results
eliminations

AEON Financial Service Co., Ltd.

+3.6

・Affiliated merchant fee ：¥67.3bn（+¥5.3bn）
・Cash advance revenue：¥63.2bn(+4¥.8bn）→Active card：1.23mn（Change from start of FY +50K）
Balance/person ：¥315,000（ Change from start of FY +¥9,000)

・Effect of exchange rate ： -¥16.1bn
・Financial expenses：¥5.2bn（-¥1.0bn）
・Operating expenses：¥172.4bn（+¥15.5bn）→Personnel expenses：¥45.8bn（+¥3.5bn、as of % of ordinary income17％）→Advertising and promotion expenses：¥40.4bn（+¥2.4bn）<Point expenses：¥22.5bn（+¥6.2bn）, other advertisingexpenses ：¥17.9bn（-¥3.8bn)>→Apply Pro Forma Standard Taxation：Tax ¥9.1bn（+¥2.7bn）
・Provision for loss on interest repayment：¥3.9bn（+¥0.5bn）
・Securitization Receivables profit：¥16.5bn（+¥3.0bn）→Housing loan：¥6.6bn、revolving payments credit purchase ：¥2.7bn
Auto loan：¥3.8bn、 Studio Condominium loan：¥3.3bn
・Personnel expenses：¥17.1bn（-¥1.1bn、 as of % of ordinary income 15％）・Bad debt allowance：¥29.2bn（-¥1.9bn、 as of % of ordinary income 26％）
・ Effect of exchange rate ： -¥3.3bn

4Results by Segments
FY2016(Unit :Billions of yen)

Creditbusiness

+9％

+14.5

Ordinary profit

40.3(23.0%)+9％(+0.1%)+3.4(-)

Ordinary income

53.1

+13％

+6.2

Ordinary profit

0.5(1.1%)-49％(-1.4%)-0.5(-)

Ordinary income

113.2

-8％

-9.7

Ordinary profit

22.5(19.9%)-6％(+0.4%)-1.4(-)

Ordinary income

54.0

+9％

+4.4

Ordinary profit

4.3(8.0%)+6％(-0.2%)+0.2(-)

Ordinary income

-21.2

-

+0

Ordinary profit

-6.2

-

+0.6

Ordinary income

375.0

+4％

+15.4

Ordinary profit

61.6(16.4%)+4％(-0.1%)+22(-)

Ordinary profit ratio (%)

Feebusiness,
etc.

Ordinary profit ratio (%)

Adjustment

Total

Change175.8

Ordinary profit ratio (%)

Overseasbusiness

YoY

Ordinary income

Ordinary profit ratio (%)

Bankingbusiness

Results

Topics ※（）:YoY

Ordinary profit ratio (%)

AEON Financial Service Co., Ltd.

・Card shopping transaction volume：Increased after promoting double the point campaign→1Q+8％、2Q+9％、3Q+12％、4Q+11%
・Installment sales volume：¥234.6bn（+17％）
・Balance of cash advance：¥431.6bn（ +¥26.0bn)
・Provision of allowance for doubtful account of credit
card：¥15.6bn(+¥2.9bn) →Write off rate(including
securitized receivable) : 0.9%(+0.0%)
・Amount of Housing loan：¥351.4bn（-3％）→1Q+26％、2Q-10％、3Q-16％、4Q-14%
・Balance of small consumer loans：¥75.8bn（ Change from start of FY +¥13.9bn)
・Amount of securitization of Housing Loans: ¥280.0bn → funding long-tem fund from un ALM
perspective.
・Hong Kong：decrease in income and increase in profit（local currency based）
Ref : P35
→Controlled SGA and bad debt allowance for the results・Thailand： increase in income and decrease in profit（local currency based） → Bad debt allowance arebottomed out in Q3, profit are tend to increase
・Malaysia： increase in income and profit （local currency
based） →Expanded transaction volume and controlled
costs. Increase in profit in Yen based as well.
・E-money transaction volume：¥2,138.8bn(+4％)
・Expense for transfer Flat 35 business is covered byconsolidated ACS Leasing Co., Ltd. and WAONPOINT
processing business5Consolidated balance sheet
Consolidated Results(Unit : Billions of yen)

Results

Change fromstart of FY

Topics ※（）:Change from start of FY・Balance in domestic：¥505.0bn（+¥85.5bn）→Needs usage of housing loan and cash advance

534.6

+89.7

Loans and bills discounted

1,864.9+190.9Accounts receivable –installment

1,182.1+159.8

Allowance for doubtful
accounts

-50.3

-0.8

Other assets

655.8

+2.1

Total assets

4,187.2+441.7・Balance in domestic：¥963.3bn（+¥147.1bn）→card shopping：¥728.9bn（+¥119.1bn）→Installment sales：¥234.4bn（+¥28.0bn）

Deposits

2,542.0+389.1・Balance in overseas：¥218.7bn（+¥12.6bn)

759.0

-1.6

3.8

-0.3

Other liabilities

479.5

-7.3

Total liabilities

3,786.0+381.4

401.1

+60.2

4,187.2+441.7・ Balance in overseas ：¥389.6bn（+¥12.8bn）+1.17%

・Risk asset compress for securitization, etc.

Cash and deposits

Interest-bearing debt
Allowance for loss on refundof interest received

Total net assets
Total liabilities and net assets

自 己 資 本 比 率

己 内
資 equity
本
率
（自
国
基 比
準
Shareholders’ratio ）（[domestic
国 内
基 準 ）
standard]・ Balance in domestic ：¥1,617.7bn（+¥182.0bn）→unsecured loan：¥507.5bn（+¥40.0bn）※Housing loan（Including securitized receivables）：¥1,408.0bn（+¥251.9bn）
・Balance in overseas：¥252.1bn（+¥8.8bn）

・Customer’s liabilities for acceptance and guarantees：¥138.7bn（-¥339.9bn）
・Ordinary deposits：¥1,444.9bn（+¥728.7bn）
・Time deposits：¥1,097.1bn（-¥339.9bn）
・ Balance in domestic ：¥369.3bn（-¥14.4bn）→Long-term loans payable：¥23.6bn（-¥46.3bn）
Shifting to ordinary deposit

（※）

8.59%

AEON Financial Service Co., Ltd.

6

Improve profitability of asset ～Capital efficiency by securitization～■Reduction of capital requirement…Risk asset compress for securitization and acquisition of credit-rating■Increase of capital turnover…Securitize long-term duration loans then shift to short-term loans■improve yields…Securitize loans with low yields then shift to loans with higher yields【 Including securitized receivables】①
Receivables Amount ofloans（Unit : Billions of yen)②
Risk Asset（①×70％）【Excluding securitizedreceivables】 （Unit : Billions of yen)③
CapitalRequirement（②×8％）

Housing loan
Installment sales

Credit card

3,280.0

Yield
Housingloan

2,300.0
CapitalTurnover(Amount of loans
× Yield / Capital
Requirement

1.0％

0.18

Installment
sales

3.4％

0.37

Credit card

11.4％

1.90

AEON Financial Service Co., Ltd.

180.0
Securitization andacquisition of credit
rating is performed④
Amount ofloans⑤
Risk Asset

2,100.0

1,500.0（④×70％）⑥
CapitalRequirement（⑤×8％）

120.0※Risk asset is calculated assumingthat average risk weight is approx. 70%※Requited capital is calculatedusing 8% of equity ratio.

Compress to ２/３
・ Securitize housing loans with long-term duration.

invest ・Invest loans with higher yield and high turnoverratio ( short term) using raised fund by securitization.

7

Improve profitability of asset -Increase turnover ratio and yield■ Long-term duration and low yield housing loans are securitized to be invested ininstallment sales finance with short-term duration and higher yield■ Hold a position as a originator to maintain relation with customer
Ex : scheme of securitization
EffectHousing Loan

Recognition of future
profitYield : 1%
Term : 10yr

Reduction offunding risk

Securitization

Re-invest with sales
proceedReinvest asset securitization（Reduction of Interest-Bearing debt）

Recognition a part of
future profit
Excess profit¥100bnIn case※ ｂ：（２４-１２）／（Ａ＋Ｂ：２００＋１００）＝４％

Ａ

１ Dividend income

Amount ofinvestment¥20bn

Funding¥８０bn

Approx. １％（+¥0.2bn/annual avg）

Profit+¥2bn

Securitization¥90bn
IncaseAEON Financial Service Co., Ltd.

１０yr（-¥0.2bn/annual avg）

DisposeFunding¥80bn
Amount ofinvestment
¥10bn

Ｂ

Amortization

ａ： １

Purchase

Auto Loan
Reform Loan
Yield : 3%
Term :5yr

２

Profit
+¥6bn

３

0

２

Excess profit
Amortization

５yr（-１.２bn/annual avg)

４ Dividend income

Approx. ２.７％（+¥２.４bn/annual avg）

ｂ： ４

３

12
8

Our task to challenge■Promote sharing of information and utilize Artificial Intelligence(AI) for addressing
customer’s various needs by construct a structure
Needs in support
Expenditure

Saving

Discount/
Reward point

Preferential
interest

Needs in poor support
Borrowing
Interest/
Discount

Investment

Preparation for
the future

AssetManagement

Investment

Insurance

Trust

Change of external environment
Stiff competition, Digitalization, Population movement, Negative interest rate, Economic fluctuation

Database of Financial Information and POS Data × Linkage of Fin-Tech and AI＝Providing financial services to customer’s needs in each life-stage that have real
relevance in customer’s daily lives
Improve convenienceand labor productivity： Provide a product s and channels set of measures.

Improve profitability ofasset： Review Receivables and construct a system of collection of debt

Re-growth in overseas
business： Reduce bad debt and labor cost

AEON Financial Service Co., Ltd.

9

Future Direction

AEON Financial Service Co., Ltd.

10

Our Vision “Asia’s No.1 Retail Financial Service Company”
MISSION ： Enriches daily lives of customers through providing financial service
PROCESS ： Contributing to our customers’ all life stages and life styles
Using data based marketing to our Asian subsidiaries
Providing our group’s synergy for strengthening financial services
Settlements

Prepaid
Cards

Investment
Product

Needs
Web

Use of DB・AI
Insurance

Customers

AffiliatedMerchants
Call
Centers

MobileApps
Shops

AEON Financial Service Co., Ltd.

11

Our Vision ～Domestic Business～

Expanding Transaction Volume■Taking in all financial needs from our group using Aeon group’s platform■Analyzing data, which is accumulated by expanding our group’s transaction volume, andusing it to develop external affiliated merchants and providing services to our customers,
which will eventually raise our transaction
・Analyzing multiple data
（Customer’s information ×POS data ×
Financial Information）
・Seizing targeted area and people’s purchasing
trends using merchandise sales and productdeveloping・By analyzing data providing financial products
and services which are based on clients' needs

Cashless Payments,
Insurance, Hire Purchase,
Asset management,
Guarantee, Leasing, etc.

Employee
400,000

Our Members
Approx. 28.5
MillionSupport developing
affiliated merchants

Aeon visiting
customers

Aeon Group
Retail shops approx 13,700（※）

External AffiliatedMerchants※As of the end of Feb. 2017. Including retail financial companies, services and other businesses ONLY.

Expanding Sales Platform
AEON Financial Service Co., Ltd.

12

Our Vision ～Overseas Business～■ Accelerate shifting from loans to goods and sale, refining screening and ,Promote use of system in collection■ By improving productivity, we expanded the share of overseas business to approximately 50% ofconsolidated ordinary profit
Bad debt allowance and personnel expenses
as a percentage of overseas ordinary income

Percentage of consolidated ordinary profit

1500（ Billions of yen ）Domestic

Overseas100%¥123.0bn¥113.2bn

80%

1000

53％

63％

57％

37％

43％

47％

2016

2017

2018 （Year）（Plan）（Plan）

60%

500

0

40%
Personnel
expenses15％

Bad debt
allowance

25％

15％

11％

26％

20％

20%
0%

2015

2016

2018 （Year）（Plan）AEON Financial Service Co., Ltd.

13

IT / System investment : Area ・ Amount · Schedule
Area

System （IT）
investment¥100 Billion

Improveconvenienceand labor
productivity

Improve
profitabilityof asset

Domestic realization →Re-growth in overseas business

Objective‘ Effect・Improvecorrespondence level（ strength in proposal,
speed ）

・Respond to customer's
financial needs, any
time any where
・Improve collection
efficiency
・Reduction of credit risk
・Refine screening

AEON Financial Service Co., Ltd.

Over
seas
30%

2017

Field
Dom
estic
70%

2018

Replace New
40%
60%

2019

Data integration, business support related ・ ¥10bn
Product development / proposal etc. using AI ・ ¥11bn
Mobile application development, point related ・ ¥10bn

The next credit card system, deteriorated system,
security measures etc. ・ ¥36bn
Collection of debt related ・ ¥9bn

14

Improve Ordinary Income Ordinary Profit Rate
■Consolidated ordinary revenue for FY2018 plans to grow by more than 10% compared to FY2017■In addition to improve profitability of asset, expanding fee revenue by promoting cross-selling■Improve bad debt allowance and labor share of income and increase ordinary profit ratio
through digitization investment
Consolidated ordinary revenue （Left axis）

Compared to FY 2017
Ordinary revenue Ordinary profit ratio （Right axis） + 10% or more
（Billions of yen）

400

¥390.0bn¥359.6bn¥375.1bn(YoY +4.0％）（YoY +4.3％）（YoY +9.3％）

17.0%

16.7％

16.5％
16.4％

300

Increase in fee revenue

16.5%

Improve profitability of asset
Improvement of labor share of income

0200

Reduction of bad debt allowance

2015
AEON Financial Service Co., Ltd.

2016

2017

2018

（Plan）（Plan）

16.0%
15

Key Initiatives for FY 2017
■ Improving Convenience and Productivity■ Improve profitability of asset■ Re-growth in overseas business

AEON Financial Service Co., Ltd.

16

Key Initiatives for FY2017 Improving Convenience and Productivity• AEON Wallet: Going card-less （Application, Payment, Point
management）• Going paperless: Digital signage, electronic (web) statements,
branch operations• Marketing: Strengthening sales promotion, Sales consulting withparticipating merchants

Digitalization

FY2016FY2017

Results

Forecast

Making use of Business Intelligence (BI) and AI tools tostrengthen comprehensiveness of sales consulting withparticipating merchant stores
Increasing staff for the widening of participating merchantstores network through redeployment of business structure

Number of
Cardholders(Domestic)

26,920,000

28,000,000

YoY＋1,040,000＋1,080,000

Card
shopping
transaction
volume¥4,515.7 bn¥5 trn

YoY

+10%

+11%

Steady increase in number ofcardholders and transactions volume
AEON Financial Service Co., Ltd.

Widening participating stores network throughdigitalization and expansion of staff pool
17

Key Initiatives for FY2017 Improving Convenience and Productivity
Focus onGreater Tokyo• Enhance business in the Jyonan Area using AEON Himonya Branch as a model• Card member recruitment efforts through the use of tablets installed in booths
set up in small-scale shops within the AEON Group ; Expansion of ATM tenants
Capital Area: Tokyo, Kanagawa, Chiba, Saitama

Tapping on Youth
Customer Class• Introduction of new Disney-design credit cards , issuance of new cobranded cards‣ Possible card member
recruitment areas

AEON Itabashi Branch・No. of stores in capital area
My Basket: 650
USMH: 392

AEON MinamisunaBranch・No of stores in Kanto area
USMH：509

AEON
Kasai
BranchAEON
Shinonome SC
AEON Style
HimonyaBranchAEON Shinagawa
Seaside Branch

Expanding market share with
Jyonan area as a starting point
AEON Financial Service Co., Ltd.

Introduction ofother new cobranded cards

Co-branded cards
18

Key Initiatives for FY2017 Improving Convenience and Productivity• Integration of domestic head office business functions through theevolution of business structure• Collaboration with other companies while making use of our sales
channels (E.g. Insurance business)• Refinement of business segments, clarification of roles andresponsibilities to cater to reality

Evolution ofBusiness Model

New structure

Current structure●Change in business segments from FY17 Q1
CreditCredit Card

Hire PurchaseBank
Deposits・
Housing
Loans・
Investment
and Trustt・
Insurance

Domestic Business

Fee
E-Money

Apartment
Loans

Bank Agency

Servicer

Processing

Insurance

Overseas

Overseas Business

Payment Solutions

AEON CREDIT SERVICE (ASIA) province

Banking Business with focus on
Credit Cards, Insurance Business

AEON THANASINSAP (THAILAND) province

Installment sales finance etc.

AEON CREDIT SERVICE (MALAYSIA) provice

AEON Financial Service Co., Ltd.

Adjustment
Head Office

Adjustment
Head Office

19

Key Initiatives for FY2017

Improvisation of Asset Profitability■Review receivables portfolio（Domestic: Shift to high-return receivables, Overseas: Shift to highly safe receivables）■Control bad debt allowance through the review of screening standards based oneach country’s market situation and customer characteristics■Construction of a shared debt collection system among group companies in Asia
●Construction of credit collection system・Improving productivity in collections– ACS CREDIT MANAGEMENT CO., LTD.－
FY2016
Completed

FY2017
Key Initiatives

Initiatives from
FY2018SystemIntroduction/
Policy・Credit Analysis
・PL System
・Credit collection trial

・Audio Data Mining
・Transaction Analysis

・Policy on Evaluationof Operator Training
Quality

AnalysisTarget Analysis

Collection Activity
Analysis

Operator Analysis

Implementation
Details・Scoring
・Generation of Future
Expected Collection
・Selection of Target
Initiatives

・Action-Impact Analysis
・Improvement of
Negotiation Quality
・Selection of Initiative
Content

・Allocation ofcollection staff
・Targeted skillstraining

FY2016(Results)

FY2017(Forecast)

9.6%

37.1%

Collection amount/
Total Investments
AEON Financial Service Co., Ltd.

・Integrated
Collections
Process through AI
technology
・Systemconstruction・Big data
conversion

Expansion
to overseas
20Key Initiatives for FY2017

Re-growth in overseas business■AEON CREDIT SERVICE (ASIA)＜Hong Kong＞

・Increase number of new sign-ups through the introduction of co-branded cards targeting youth
・Promotion of instant card issuance in AEON Store Branch; Co-promotion with AEON Group・Facilitation of outbound expansion towards Japan by rewarding extra points for card usage in Japan
・Card usage history, coupons/points management though the use of a mobile app
・Early reinstatement of profitability in China region【New co-branded cards with popularcharacters designs】
New co-branded
cards【Current co-branded card】

Co-Branded Cards Targeted at Youth
Efforts toIncrease
Transaction
VolumeDevelopment of the AEON Wallet App

Promotion for out bound usage

AEON Financial Service Co., Ltd.

Invite to famous facilities as a reward

21

Key Initiatives for FY2017

Re-growth in overseas business■AEON THANASINSAP (THAILAND)□Thailand:

・Issuance of co-branded credit cards through collaboration with Big C・Reduction of allowance for doubtful accounts amount via the introduction of a shared credit
management system and the refinement of credit analysis process・Control personnel expenses through reallocation of roles and improvement of job productivity
・Enhancement of convenience and reduction of call-center enquiries via the development ofsmartphone application□Cambodia: Expansion of credit card business and introduction of e-money business□Myanmar: Expansion of existing business and new acquisition of finance license

Development of Smartphone App

Credit Card

Member Card

■Main Privileges
・ 3％ cashback for payments with Big C credit card
・Rewards and benefits at AEON’s exclusive
participating merchants /stores etc

Relocation and Expansion of
Operation Center

Issuance of co-branded cards
with Thailand’s large-scale retail group Big C
AEON Financial Service Co., Ltd.

22

Key Initiatives for FY2017

Re-growth in overseas business■AEON CREDIT SERVICE (MALAYSIA)□Malaysia ・Issuance of prepaid cards partnered with international brands
・ Entrustment of points business to AEON Malaysia
・Insurance brokerage business, Trustee insurance business, Insurance targeting tenants・Introduction of personal insurance
・Introduction of Purpose Loans to corral new demands and acquisition of affiliated stores□Indonesia: Expansion of fee business profits through the introduction of mobile payment□Philippines: Introduction of credit management system to improve productivity

Credit Card

Member Card

Issuance of Prepaid Cards Partnered with International Brands

AEON Financial Service Co., Ltd.

23

Forecast of Results for FY2017■ Domestic：Continual growth in card shopping transaction volume■ Overseas：Reduction of bad debt allowance and labor cost

Forecast of Results
Results

YoY

Ordinary income¥390.0 billion+4.0％

Ordinary profit¥65.0 billion+5.5％

Net income attributable toowners of the parent¥40.0 billion+1.4％¥185.43-2.3％

Net income per share

第2四半期末Interim
Forecast
Dividend forecast

¥29

YoY

±¥0

Year End
Forecast

¥39

YoY

±¥0

Full Year
Forecast¥68

Payout Ratio

YoY

Forecast±¥036.7% +0.9%

YoY

・Commemorative dividend “¥2” on previous fiscal year is replaced by the dividend.

AEON Financial Service Co., Ltd.

24

AEON Credit Service (M) BHD
FYE2017 (as at February 2017) Overview

AEON Financial Service Co., Ltd.

25

FYE2017 Performance Highlights■Sales expanded by Credit Card , MEP and Personal Finance■Impairment loss provision vs. operating income recorded 25%, improved 2% vs. LY(Unit: RM Mil)FYE2016

FYE2017

vs. LY

Credit Card

947.7

1,106.9

117

General Easy Payment

367.3

354.4

96

Motorcycle Easy Payment

500.5
376.2
735.1
674.8

582.0
375.1
688.1
887.3

116
100
94
131

Total Transaction Volume3,615.9

4,014.7

111

Total Income

1,055.2

1,222.2

116

Total Expenses

753.6

871.0

116

Profit Before Tax

301.6

351.2

116

Corporate Tax

73.4

86.1

117

Net Profit

228.2

265.2

116

Superbike Easy Payment
Automobile Financing
Personal Financing

AEON Financial Service Co., Ltd.

26

FYE2017 Summary of Statement of Financial Position(Unit: RM Mil)

29 Feb 201628 Feb 2017

vs. LY

Credit Card

538.7

586.7

47.9

General Easy Payment

464.6

424.9

(39.7)

Motorcycle Easy Payment

899.1

984.9

85.9

Superbike Easy Payment

767.1

897.5

130.3

Automobile Financing

1,579.6

1,957.2

377.6

Personal Financing

1,194.6

1,626.7

432.1

Financing Receivables

5,496.7

6,534.5

1,037.9

Impairment Loss Provision(137.9)(152.2)(14.3)

Other assets

738.8

889.7

150.9

Total Assets

6,097.5

7,272

1,174.6

Total Liabilities

5,036.7

6,041.1

1,004.4

Shareholders’ Funds

1,060.8

1,230.9

170.2

Total Equity and Liabilities

6,097.5

7,272.1

1,174.6

AEON Financial Service Co., Ltd.

27

Key activities of FYE2017① – Value Chain Transformation
Improved Branch staff productivity and operating cost by Branch Transformation■ Expand Cashless Operation Branch in nationwide, 62 out of 64 branches successfully converted.
■ Branches are equipped with tablets for applications and other service enquiries

BeforeBranch Operation Cost
FYE2017 vs. FYE 2016 (%)
Overtime Expenses▲9%

Money Collection
expenses▲41%

Counter payment Volume▲48%

CDM Transaction

+ 88%

After

Personal Finance Sales
Credit Card Sales

PF: 121%
CC: 118%

Cashless Branch Transformation completed in 1st half of 2017, effects can be witnessed in FYE2018

AEON Financial Service Co., Ltd.

28

Key activity of FYE2017① – Value Chain Transformation
e-Biz Portal (Web Application)■ Merchant web application (Easy Payment Scheme) & Customer web application (PF and CC)■ Productivity increased by 80%, turn-around-time reduced by 27%, and cost saving by 20% (per 1
application)

Web Application Movement
80,000100.0%

Customer Web
Application

Web Application CountWeb Application %60,000

71.8%

57.8%

40,00020,000

77.4%

75.5%

80.0%

60.0%

40.0%

26.5%

0

20.0%
Apr

May

Jun

Jul

Aug

2016

Sep

Oct

Nov

AEON Financial Service Co., Ltd.

Dec

Jan

Feb

2017

Mar

Merchant Web
Application

29

Key activity of FYE2017 ② – Optimize income for Existing Stock business■ Improved collection operation and reviewed assessment by customer attribution & profile.
■ Revenue for AF improved compared to last year although sales was lower due to thechanges in assessment – assess by merchant grouping which based on default ratio（RM Mil)【Operating income / IL】
60%

Operating Income
Impairment Loss Provision
IL/Operating income

400

7,000

300
28.7% 28.4% 28.8%

28.1%
22.7% 24.6%

200（RM Mil) 【Non-Performing Loan Movement】

50%

6,000

40%

5,000

24.4% 23.5% 30%

4,000

Cu-D2 Receivable
D3+ Receivable
D3+ Receivable /Total Receivable

3.7%
3.5%

3.50%

3.3%

3.21%

3,000

3.05%

20%

3.02%

3.1%

2,000

100
10%
0%

0
1Q

2Q

3Q

4Q

1Q

2Q

FYE20162015年度FYE20172016年度Product
Auto Financing

3Q

4Q

2.9%

1,000
0

2.7%
1Q

2Q

3Q

FYE20162015年度

4Q

1Q

2Q

3Q

4Q

FYE20172016年度Action・ Diversified portfolio mixed between local maker and foreign maker

Motorcycle Easy Payment ・ Expanded premium motorcycle sales, sales increased +17% vs. LY
AEON Financial Service Co., Ltd.

30

FYE 2018 Key Activity

AEON Financial Service Co., Ltd.

31

Expand Settlement Business/Fee Business and AEON Group Synergy■ Absorb group retail cash transaction by New VISA prepaid Card
■ Established Digital Marketing to integrate Group customer database and group marketing■ Expand group synergy, drive customers to ACS Finance products and services

Drive Customer to Group Stores

Drive Customer to Financeproducts

Utilize AEON Group Customer
Database

AEON Financial Service Co., Ltd.

32

Value Chain Transformation■ Continue branch transformation, tablet utilization, proceed cashless operations,digital advertisement and multi-tasking training■ Launch instant credit card to improve customer experience – improve convenience■ Complete digitalization for application process to improve efficiency of work
■ Developing merchant management system – for Auto Finance Hire Purchase

AEON Financial Service Co., Ltd.

33

3 Years Investment Planning■ To accelerate Digital theft , Established IT R&D department■ Increase investment for Settlement business expansion■ Investment for improve Productivity and working efficiency for Branch and Operation Centre

2017

2018

2019

E-money(Aeon Member Plus)

Settlement
Business
Expansion

Overseas On-us

Online Payment Gateway / E-Commerce
Mobile Payment / e-Wallet
MEPS / ATM Acquiring
Remittance Biz Support System
SAS for CAG / CMG

Productivity &Service Level
Improvement

Web RTC (Real Time Communication), AI for Call Center Operation Support System

Branch Digitalization
Common Customer Database

CommonPlatform

Common Infrastructure, AFS Oversea Network
Common Security Standard (PCIDSS, Visa/Master compliance)

AEON Financial Service Co., Ltd.

34

(Reference) FY 2016 Results (Hong Kong, Thailand, Malaysia)
FY2015Results

FY2016
YoY

Results

YoY

Revenue

1,258,854-3%

1,228,100-2%

Operating income

1,174,260-3%

1,145,752-2%

Profit before tax

307,355-11%367,234+20%

Profit for the period
attributable to :Owners of the Company

249,967-11%

298,796+20%

Total Revenues
Income before
income tax expense
Net profit for theperiod17,835,461-

17,759,345-

3,270,658-

3,012,802-

2,607,753-

2,418,066-

AEON
CREDITSERVICE(M) Berhad

Revenue
Profit fromoperations
Profit before taxation

965,234+11%

1,101,955+14%

464,821+9%551,209+19%

301,591+4%

351,162+16%(RM$’000)

Profit for the period

228,222+6%

265,027+16%

AEON
CREDITSERVICE(ASIA)(HK$’000)

AEON
THANA
SINSAP(THAILAND)(BAHT’000)

Source: Data released by each company. Figures for Hong Kong and Thailand are consolidated.

AEON Financial Service Co., Ltd.

35

(Reference) FY 2016 Results (Hong Kong, Thailand, Malaysia)■ Consolidated Results of AEON Credit Service (Asia) Co., Ltd.

FY 2015(Unit : Billions of yen)

FY 2016

Results

Results

Exchange rates: HKD 1・2015: ¥15.54
・2016： ¥14.09

YoY

Ordinary income

20.5

18.4

-10%

Ordinary profit

4.7

5.1

+8%

Net income

3.8

4.2

+8%

■ Consolidated Results of AEON THANA SINSAP (THAILAND) PLC.

FY 2015(Unit : Billions of yen)Exchange rates: THB 1・2015: ¥3.48
・2016: ¥3.10

FY 2016

Results

Results

YoY

Ordinary income

60.2

55.0

-11%

Ordinary profit

11.3

9.3

-18%

Net income

9.0

7.4

-17%

■ Results of AEON Credit Service (M) Berhad

Fiscal period
・2015： Feb. 21 - Feb. 29
・2016： Mar. 1 - Feb. 28(Unit : Billions of yen)

FY 2015

FY 2016

Results

Fiscal period
・2015：Mar. 1- Feb. 29
・2016：Mar. 1- Feb. 28

Results

Exchange rates: MYR 1
・3Q 2015： ¥30.34
・3Q 2016： ¥26.14

YoY

Ordinary income

29.2

28.8

-2%

Ordinary profit

9.1

9.1

0%

Net income

6.9

6.9

0%

Fiscal period
・2015： Mar. 1- Feb. 29
・2016： Mar. 1- Feb. 28

Note: Results for fiscal 2015 have been retroactively adjusted.

AEON Financial Service Co., Ltd.

36

(Reference) Allowance for Doubtful Accounts and Allowance for Loss on
Refund of Interest Received by Segment■ Allowance for Doubtful Accounts (by Segment)
Credit(Unit : Billions of yen)

Banking

Overseas

Fee

Total

Allowance for doubtful accounts,
beginning of period

27.5

3.2

15.0

4.2

49.4

Provision of allowance for doubtful
accounts

15.6

-0.4

29.2

1.8

46.2

Write-off of doubtful accounts(including transferred debt)

13.7

0.8

29.5

1.0

45.3

Allowance for doubtful accounts,
end of period

29.3

1.8

14.7

5.0

50.3

(Domestic subsidiaries) AEON Bank: ¥1.8 billion, AEON Product Finance: ¥4.3 billion, AEON Housing Loan Service: ¥1.2 billion■ Allowance for Loss on Refund of Interest Received(Unit : Billions of yen)

FY 2015

FY 2016

Allowance for loss on refund of interest received,
beginning of period

4.8

4.2

Provision for loss on refund of interest received

3.3

3.9

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

3.9

4.3

Allowance for loss on refund of interest received, endof period

4.2

3.8

AEON Financial Service Co., Ltd.

37

(Reference) FY 2017Business Plan (Domestic)

FY 2016
Results
Number of cardholders

Card shopping transaction volume

26.92 million

FY 2017
YoY+1.04 million

Results

YoY¥4,515.7 billion+10.0%

Results

Plan
28.00 millionPlan¥5,000.0 billion

YoY+1.08 million

YoY+10.7%

Change from start
of FY

Plan

Change from startof FYBalance of cash advances¥431.6 billion+¥26.0 billion¥460.0 billion+¥28.3 billion

Balance of small consumer loans¥75.8 billion+¥13.9 billion¥90.0 billion+¥14.1 billion¥507.5 billion+¥40.0 billion¥550.0 billion+¥42.4 billion

Balance of unsecured loans

AEON Financial Service Co., Ltd.

38

Statements contained in this report with respect to the Company’s
management strategies, business policies and results forecasts are forwardlooking statements about the future performance of the Company, which are
based on the assumptions and beliefs in light of the information currently
available. These forward-looking statements involve various uncertain
factors including known and unknown risks such as economic trends,
industry competition, market demand, exchange rates, tax and othersystems that may cause the Company’s actual results, performance or
achievements to differ materially from the expectations expressed herein.

AEON Financial Service Co., Ltd.

39