fiscal 2014 - 沖縄銀行 · 2016. 4. 15. · the bank of okinawa,ltd 2 people’s bank...
TRANSCRIPT
The Bank of Okinawa,Ltd1
Bank of Okinawa － Results BriefingFiscal 2014
The Bank of Okinawa,Ltd2
People’s Bank
Participant
Contents
Supplemental Materials
Business Strategies 28
41
The Business Environment in Okinawa
Outline of Business Results for FY2014
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11
President : Yoshiaki Tamaki
◉ Competitive Advantage of Okinawa’s Ideal Location◉ Okinawa International Hub Cluster Asian Market IN Strategy◉ Strategy for further development as international distributionbase◉ Population of Okinawa (Future Prospects)◉ Number of Visitors to Okinawa◉ Recent Economic Trends 1 (Official land prices, BOJ Tankan)◉ Recent Economic Trends 2 (Economic growth rate, Unemployment rate)
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◉ Highlights for FY2014◉ Earnings◉ Deposits (Average Balance)◉ Loans (Average Balance)◉ Loans to Individuals (Term-End Balance)◉ Fees and Commissions (Excluding Trust Fees)◉ Loan / Deposit Interest Margin (Domestic)◉ Loan / Deposit Spreads (Domestic)◉ Securities (Term-End Balance) ◉ Securities Allocation◉ Core OHR and Expenses◉ Capital Ratio (Basel III Standard)◉ Risk Management - Capital Allocation -◉ Credit Cost◉ Mandatory Disclosure of Bad Debt under the Financial Reconstruction Law◉ Our Share of the Market Served by the Three Okinawan Regional Banks (FY2014)
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◉ 17th Medium-Term Business Plan (From Customer Focused Operational Reforms to New Value Creation)◉ 17th Medium-Term Business Plan (Achievements of “Customer Focused”Strategy)◉ 17th Medium-Term Business Plan (Management Goal)◉ 17th Medium-Term Business Plan (Growth Strategy I: Expansion of Corporate (Business) Customers)◉ 17th Medium-Term Business Plan (Growth Strategy II: Expansion of Individual Customers)◉ 17th Medium-Term Business Plan (Initiative for the First Year, “Customer Focused” Operational Reform)◉ Business Performance Forecasts◉ Consumer Loans◉ Strategy for Assets in Custody◉ Aggressive Investment Strategy◉ Branch Network Strategy◉ Shareholder Returns
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◉ Business Performance◉ Term-End Balance, Average Balance, Yield, and Loan Balance by Industrial Segment◉ Changes in Loan Balance by Assets Category (FY2013 and FY2014)◉ Interest Sensitivity◉ Major Economic Indicators in Okinawa Prefecture
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The Bank of Okinawa,Ltd3
The Business Environment in Okinawa Prefecture
The Bank of Okinawa,Ltd4
People’s Bank
Amoy
Competitive Advantage of Okinawa’s Ideal Location
With major Asian cities within range of 4 hours, located in the heart of East Asia
Narita
Haneda
Nagoya
Kansai
Seoul
Tsingtao
Shanghai
Taipei
Hong Kong
BangkokO
kinawa Singapore
Amoy
Manila(From October 2015)
(From October 2015)
2h 10min
2h 50min
2h 5min
1h 30min
2h 35min
4h 25min
2h
3h
2h 25min
2h 20min
2h 15min
1h 50min
5h
(1)
Hanoi
VientianeMacau
BangkokPhnom Penh Ho Chi Minh
Kuala Lumpur
Singapore
Hong KongTaipei
Manila
Hangzhou
Shanghai
Tsingtao
Tianjin
BeijingDalianSeoul
Busan
Okinawa
Narita
KansaiNagoyaHaneda
Locations within 4-hour flight from
Okinawa
The Bank of Okinawa,Ltd5
People’s Bank
Okinawa International Hub Cluster Strategy for Asian Market
Source: International Hub Cluster Office
We will build a logistics and distribution channels innovation cycle for Asian economic zone to contribute to the development of an environment for B to B and B to C business of small and medium-sized businesses through opportunities such as business conventions by pursuing reduction in CIQ process load in trading business, while aiming to build development, processing, and production bases of high value-added products as “Central Kitchen” by concentrating nationwide foods and goods in Okinawa in order to export safe and trusted foods of Japan, according to the market needs. Furthermore, we will take initiative to develop systems to nurture human resources who would boldly challenge businesses in Asian region.
Asian economic zone Okinawa Nationwide
Purchase frequency
Product unit price
Frequency of visits
Regional characteristics
Number of purchase
itemsInventory
status
Time of purchase
Customer attribute
ID-POS data of Asian Markets
Just-in-time delivery Develop and process high value-added products by precisely capturing market needs and export them effectively Gather nationwide goods and foods in Okinawa
Place of production
Production in collaboration
Production skills
Technology
Inventory status
Production and processing
information of Japan
globally competent human resources
Simplification and optimization of CIQ
Product development using big data
Central Kitchen(cooking, processing, packaging, etc.)
Develop products capturing customer needs for each region through data analysis of Asian markets, establish direct sales system for purchasers
Contents utilization
(EC site)
Okinawa International Hub Cluster
Study of simplification and optimization of CIQ (Customs, Immigration, and Quarantine)
- Development of high value-added products- Establishing structure for efficient and stable supply- Manufacturing under JAPAN brand
International business convention / exhibition
(Okinawa Great Trade Fair)
The Bank of Okinawa,Ltd6
People’s Bank
Strategy for further development as international logistics hub point
◆ Parts center for electronic components
◆ EC inventory control center for Asia
(1) Completion of logistics center (2015)
◆ Gather nationwide foods and goods in Okinawa to build a business model to expand into Asia
(2) Collaboration with other regions in Japan
(3) Development of large-scale MICE facility with capacity of around 20,000 people (2020)
For company meetings
For exhibitions /trade fairs
For trainings / incentive travels
For domestic / international meetings
< Example of collaborated business between Okinawa and other regions (budgeted by METI, etc.)>Product development using commercial products of Okinawa (Hokkaido x Okinawa)Project to develop food market in Middle Eastern Gulf area (Hokkaido x Kyushu x Okinawa)Global collaboration project of agriculture, commerce and industry (Hokkaido x Okinawa)Global collaboration project of agriculture, commerce and industry (Mie x Okinawa)Okinawa International Hub Cluster Project (Okinawa x wider region)Asia global human resource development project (Okinawa x Kyushu)Regional brand overseas development project (Okinawa x Hokkaido x other regions)
The Bank of Okinawa,Ltd7
People’s Bank
Population of Okinawa (Future Prospects)
Projected population
The population of Okinawa is expected to take a downward turn in and after 2025.Population is on the increase at this stage, but active steps towards population
growth are being taken now.
(2100)2,030
(2100)
840
◆ Elimination of childcare waining list◆ Promotion of “health and longevity in Okinawa” campaign
(2050)
1,610(2135)
1,540(2024)
1,440
Efforts to facilitate natural increase in population
(Creation of a society that allows people to marry, give birth to and raise children without undue worries)
◆ Job creation and securing diverse human resources◆ Addressing to increase tourists and visitors
Efforts to enhance growth of society
(Creation of a dynamic society that is open to the world)
◆ Improvement of conditions for long-term residence◆ Industrial development by demonstrating attractive regional characteristics
Aims to resolve challenges faced by isolated islands and
depopulated regions(Creation of a society that delivers well-balanced and
sustainable population growth)
(in thousands)
The Bank of Okinawa,Ltd8
People’s Bank
Number of Visitors to Okinawa
FY2014 marked a record 7.16 million tourists visiting OkinawaThe number of overseas tourists was 980,000 (up 57% YoY), reaching a record high
(¥ billion)(in thousands)
Number of port call by cruise ships in 2014: 162
Scheduled number of port call in 2015: 212 (up 30%)
Number of visitors in FY2014
7,160,000
2003 14131205 100908070604 11 2015 2021
Japanese visitors(left axis)
Overseas visitors(left axis)
Tourism revenues(right axis)
600
500
400
300
200
100
(fiscal year)
The Bank of Okinawa,Ltd9
People’s Bank
Recent Economic Trends 1
Highest value on record
¥817,000/sqm
Highest value on record
¥211,000/sqm
BOJ TankanOfficial land prices
(%)
(%)
Source: BOJ Naha BranchSource: Ministry of Land, Infrastructure, Transport and Tourism
20152014201320122011
Okinawa
Fukuoka
KumamotoNational average
Okinawa
Fukuoka
KumamotoNational average
20142013201220112010Mar. 2012 Mar. 2013 Mar. 2014 Mar. 2015Sep. 2012 Sep. 2013 Sep. 2014
Okinawa
National average
The Bank of Okinawa,Ltd10
People’s Bank
Unemployment rate
Recent Economic Trends 2
◆ Okinawa has maintained higher rates of economic growth than the national average◆ In the past, Okinawa suffered nearly twice the unemployment rate of the national average,
but the rates have steadily fallen, becoming closer to the national level.
Economic growth rate (actual)
Comparison of economic growth rate -Okinawa vs. National average
Trends in unemployment rates
Okinawa National average
Okinawa National average
Difference
(%) (%)
Source: Okinawa Prefecture, Cabinet Office, Government of Japan Source: Okinawa Prefecture, Ministry of Internal Affairs and Communications
20102009 2011 2012 2013 forecast 2011 2012 2013 2014 Mar. 2015 2021
The Bank of Okinawa,Ltd11
Outline of Business Results for FY2014
The Bank of Okinawa,Ltd12
People’s Bank
Highlights for FY2014
(¥ billion)
Non-consolidatedFY14 FY13
YoY changeOrdinary income 36.4 37.1 (0.7)Gross business profit 30.5 30.0 +0.4
Interest income 27.8 27.3 +0.4Fees and commissions 2.3 2.5 (0.2)
Fees and commissions (excluding trust fees) 2.0 2.0 (0.0)Trust account services 0.3 0.4 (0.1)
Other business profit 0.3 0.1 +0.2Gains (losses) on bond trading 0.2 (0.0) +0.3
Expenses (excluding non-recurrent items) 19.7 19.9 (0.2)Business profit on core banking operations 10.6 10.1 +0.4
Provision of general allowance for possible loan losses (0.3) 0.6 (1.0)Net business profit 11.2 9.4 +1.7
Non-recurrent tems (1.2) (0.9) (0.3)Net gains (losses) on equity securities 0.1 1.0 (0.8)Bad debt disposal (non-recurrent items) 1.9 2.2 (0.2)
Ordinary profit 9.9 8.5 +1.3Extraordinary gains (losses) (0.1) (0.0) (0.0)
Bad debt disposal (reversal of extraordinary losses) － － －
Net income 6.7 4.5 +2.1
Credit costs 1.6 2.8 (1.2)Non-performing loan ratio 1.61% 1.72% (0.11)%Capital ratio 11.13% 11.66% (0.53)%
(¥ billion, %)Average balance Yield Interest
Loans and bills discounted
+54.0[+52.9]
(0.14)[(0.13)]
(0.5)[(0.5)]
Securities (15.9) +0.14 +0.7
Deposits +77.3[+67.5]
(0.02)[(0.01)]
(0.1)[(0.1)]
Others - - +0.0[+0.0]
Total - - +0.4[+0.3]
■ Year-on-year changes
Net gains on securities are posted as +¥0.3 billion
■ YoY comparison of business profit on core banking operations
Interest on securities
0.5
Interest paid on deposits
OthersCommissions
ExpensesTrust account
services
Interest on loans and bills discounted
IncreaseDecrease
Total 1.10.6
0.1
0.2
0.7
0.00.0
0.0
Note) Figures in square brackets include trust accounts.
Ordinary income decreased due to decreases in interest on loans and bills discounted and net gains (losses) on equity securities (decreased revenues)
Ordinary profit increased mainly due to an increase in interest on securities and a decrease in credit costs (increased earnings)
The Bank of Okinawa,Ltd13
People’s Bank
Business profit on core banking operations increased due to increases in interest on securities and dividends
Interest income
Business profit on core banking operations
Net income
Business profit on core banking operations was¥10.6 billion (The highest level since FY2009)
25.626.9 27.3 27.8
9.1
5.1 5.4 4.56.7
10.3 10.1 10.6
FY11 FY12 FY13 FY14
30.0
25.0
20.0
15.0
10.0
5.0
(¥ billion)
The Bank of Okinawa,Ltd14
People’s Bank
Deposits (Average Balance)
Deposits by corporations rose by ¥47.5 billion (+9.9%)Deposits by individuals rose by ¥17.1 billion (+1.5%)
Total deposits rose by ¥67.5 billion (+3.8%) to ¥1,813.1 billion
Deposits by corporations
Deposits by individuals
Increased liquidity in deposits due to enhanced
function to trace funds
Increased liquidity in deposits due to opening of new salary payment and pension accounts
(¥ billion)
* Including trust accounts
1,800
1,600
1,400
1,200
1,000
800
600
400
200
FY11
1,670.4
149.2
433.5
1,071.8
1,706.515.8 158.2
441.1
1,100.0
1,745.6
134.6
479.5
1,124.2
1,813.1
128.7
527.1
1,141.4
7.0 7.3
FY12 FY13 FY14
The Bank of Okinawa,Ltd15
People’s Bank
Loans (Average Balance)
Business loans rose by ¥25.4 billion, loans to individuals rose by ¥28.7 billionTotal loans and bills discounted rose by ¥52.9 billion (+4.4%) to ¥1,254.9 billion
Local government bodies and other public
organizations
(¥ billion)
Business loansFactors for increase
in loans:Apartment loans
Loans to individualsFactors for increase
in loans:Mortgage loans
* Including trust accounts
1,200
1,000
800
600
400
200
1,121.7
607.1
1,154.7
101.3
624.7
428.6
1,202.0
100.8
649.4
451.8
1,254.9
99.6
480.6405.6
Individuals
674.8
Corporations
109.1
FY11 FY12 FY13 FY14
The Bank of Okinawa,Ltd16
People’s Bank
Loans to Individuals (Term-End Balance)
Mortgage loans rose by ¥26.4 billion, other loans rose by ¥0.5 billionLoans to individuals rose by ¥27.0 billion (+5.1%) year on year to ¥556.8 billion
(¥ billion)
Mortgage loans
Other loans
* Including trust accounts
500
400
300
100
200
473.2
61.1
412.1
496.8
63.5
433.3
529.8
65.2
464.6
556.8
65.7
491.0
FY11 FY12 FY13 FY14
The Bank of Okinawa,Ltd17
People’s Bank
Fees and Commissions (Excluding Trust Fees)
(¥ billion)
Fees and commissions remained flat overall・Increased fees due to increased
assets in custody・Increased premium expense for creditor group insurance due to
increased mortgage loans
2.5
2.0
1.5
0.5
1.0
1.51.8
2.0 2.0
FY11 FY12 FY13 FY14
The Bank of Okinawa,Ltd18
People’s Bank
Loan / Deposit Interest Margin
Loan / Deposit Interest Margin (Domestic)
Loan / Deposit Interest Margin
Expense ratio
Yield on loans
(%)
Yield on deposits
FY11 FY12 FY13 FY14
The Bank of Okinawa,Ltd19
People’s Bank
Loan / Deposit Spreads
Loan / Deposit Spreads (Domestic)
(%) Bank of Okinawa
Average of regional banks Difference
FY11 FY12 FY13 FY14
The Bank of Okinawa,Ltd20
People’s Bank
Securities (Term-End Balance)
Term-end balance and average duration Yield on securities
(¥ billion)
Duration
* The value of duration includes floating rate JGBs
Average of regional banks
Bank of Okinawa
(%)
FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15Plan
JGBs
Prefectural / municipal
bonds
Bonds
Others
Stocks
0.78%
600
500
400
300
200
100
700
FY11 FY12 FY13 FY14
360.4 362.5311.1 292.7
108.4 114.6123.5 120.2
32.476.9
95.395.8
18.1
20.921.6 27.520.3
25.125.8 69.1539.9
600.2 577.3605.5
The Bank of Okinawa,Ltd21
People’s Bank
Securities Allocation
Pursuing higher yields through rebalancing from yen bond holdings (such as JGBs)
Stocks
Prefectural / municipal bonds
Foreign securities
JGBs
Bonds
Other securities
Investments to be emphasized in the future
Mar. 2016 PlanMar. 2010 Mar. 2011 Mar. 2012 Mar. 2013 Mar. 2014 Mar. 2015
The Bank of Okinawa,Ltd22
People’s Bank
Core OHR and Expenses
Increase in gross business profit on core banking operations (¥0.2 billion), decrease in expenses (¥0.2 billion)
Core OHR was 64.9%, down 1.2 points
(¥ billion) (%)
Decrease in business consignment expenses
Decrease in depreciation and
amortization expenses(down ¥0.4 billion)
Personnel expenses was
flat
Non-personal expenses
Personnel expenses
Core OHR28.0
24.0
20.0
16.0
12.0
8.0
4.0
18.80.9
8.5
9.3
19.20.9 0.9
8.7
9.5
9.3
19.9
9.69.6
19.71.0
8.9
FY11 FY12 FY13 FY14
The Bank of Okinawa,Ltd23
People’s Bank
Full application based capital ratio
Capital Ratio (Basel III Standard)
Capital ratio (domestic standard) at 11.13%
Outlier Ratio
Total interest rate risk Outlier ratio
End of March 2015
¥5,321 million 4.44%
Yen: 1 percentile, Foreign currencies: 99 percentile
Core deposits are assumed to be 50% of the term-end balance of liquid deposits.The average maturity is assumed to be 2.5 years.
Capital ratio Tier I ratio
Average capital ratio of regional banks in the term ended March 2015 (domestic standard): 10.59%
Core capital
Calculated by new standard
(%)
Source: Bank of Okinawa
(Non-consolidated) 10.93%11.13%
FY11 FY12 FY13 FY14
The Bank of Okinawa,Ltd24
People’s Bank
Risk Management - Capital Allocation -
Controlling risks within the scope of allocated economic capital
Credit risk Market risk Loan / deposit interest risk Operational risk
Holding period 1 year
Strategic share holdings:1 yearOthers:1 month
1 yearBasic indication approach (BIA)Confidence
interval 99% 99% 99%Observation
period 1 year 1 year 1 year
■ Basis for risk calculation
Buffer
Unallocated capital
Allocated risk capital
(¥ billion)
Operational risk
Loan / deposit interest risk
Market risk
Credit risk
120
100
80
60
40
20
112.0
40.0
20.0
52.0
52.05.012.0
19.0
16.0
4.424.1
3.08.77.9
Breakdown of risk capital in FY14
Risk amount(end of FY14)
Allocated economic capital
The Bank of Okinawa,Ltd25
People’s Bank
Credit Cost
Reflecting a drop in historical loan loss rates, total credit costs amounted to ¥1.6 billion (down ¥1.2 billion YoY)
(¥ billion)
Provision of general allowance for possible loan losses
Credit cost ratio
(%)
(0.3)
Bad debt disposal
Reversal of general allowance for possible loan losses
3.0
2.5
2.0
1.5
1.0
0.5
1.1
1.6
2.8(2.2+0.6)
2.21.9 2.0
1.6(1.9-0.3)
Plan
FY15FY12 FY13 FY14
The Bank of Okinawa,Ltd26
People’s Bank
Mandatory Disclosure of Bad Debt under the Financial Reconstruction Law
¥21.4 billion (1.61%)Non-performing loan (NPL) ratio down 0.11% reflecting a decrease in bankrupt and quasi-bankrupt assets
(¥ billion) (%)
Assets requiring supervision
Bankrupt and quasi-bankrupt assets
NPL ratio
Doubtful assets
30.0
20.0
10.0
11.5
6.7
1.5
10.9
6.4
3.0
9.9
8.2
3.6
21.4
5.8
10.3
5.2
21.0
FY15 FY14 FY13 FY12 FY11
19.8 20.5 21.7
NPL ratio(regional bank average,
source: Bank of Okinawa)
The Bank of Okinawa,Ltd27
People’s Bank Our Share of the Market Served by the Three Okinawan Regional Banks (FY2014)
Deposits (average balance)
(%)(%)
Loans: 42.24% Loans: 42.24% (down 0.50 points YoY)(down 0.50 points YoY)
Deposits: 42.10% Deposits: 42.10% (up 0.13 points YoY)(up 0.13 points YoY)
Deterioration in shares of loans; increase in shares of deposits
Loans (average balance)
FY11 FY12 FY13 FY14 FY11 FY12 FY13 FY14
The Bank of Okinawa,Ltd28
Business Strategies
The Bank of Okinawa,Ltd29
People’s Bank
From Customer Focused Operational Reforms to New Value Creation1. Outline of Medium-Term Business Plan “CHANGE FOR VALUE – Three Years of New Value Creation –” (1)
17th Medium-Term Business Plan CHANGE FOR VALUE - Three Years of New Value Creation - April 2015 to March 2018 (3 years)
- From “Customer focused operational reforms (change)” to “Customer focused new value creation” -We will continue to grow together with regional customers as the “PEOPLE’S BANK,” most loved by people in Okinawa, by materializing
“operational reforms (change)” for the new era with our customer focused attitude that we have built to create and offer “customer focused new value” based on the well-established attitude.
Three basic strategies to undertake in “Three Years of New Value Creation”
“Customer focused”operational reforms “Customer focused” new value creation Productivity improvement using strategic information
- Operational reforms materializing “customer’s point of view”(Delegation of power, downsizing, streamlining)
- Initiative toward fundamental improvement of customer waiting time
- Establishing sales structure which customers can feel the “attraction”
- Establish and put into practice the PDCA cycle for high quality humanresource development
- Expand service value at “customer contact point (sales base)”
- Materialize new services combined with our brand strategy
- Materialize PDCA that is backed by information
- Build strategies to utilize IT, which the value will be
acknowledged by customers(Shift from using IT for streamlining to value creation)
Materialization of a new sustainable business model which the value will be recognized by customers
Contribute to revitalization of regional communities as the No.1 bank in the region
The Bank of Okinawa,Ltd30
People’s Bank
Achievements of “Customer Focused” Strategy - Clarifying the Top Priorities to Address -
Clarify that “customer satisfaction” and “employee satisfaction” are the top priority issues for building a sustainable business model
Medium-Term Business Plan - CHANGE FOR VALUE -Past priority order
Priority
1. CustomersEmployees
1. Soundness 1. Profitability
1. Scale / share
Priority Basic concept
1. Customer satisfactionThe significance of our existence is “customer satisfaction” through implementation of “management philosophy (deeply rooted in the community/contribution to the community),” and we define this as the top priority in order to survive the era of great competition.
2. Employee satisfactionWe will realize the “PEOPLE’S BANK,” loved by people in Okinawa, filled with motivation and dynamics of our employees, by putting into practice that “customer satisfaction” is the true reward for working
3. Profitability Complete operational reforms to strengthen the top line revenue backed by customer satisfaction
4. Soundness Maintain the No.1 soundness within the prefecture and contribute to continued development of Okinawa
5. Scale / share in prefecture Steadily expand our customer base by being chosen by the customers, through increase of customer satisfaction level
The Bank of Okinawa,Ltd31
People’s Bank
Management Goal = Expansion of Client Base Through Improvement of Customer Satisfaction
Management numerical targets to aim by achieving “customer focused operational reform”
Medium-Term Business Plan - CHANGE FOR VALUE -
Profitablity
Growth potential
Soundness
(1) ROE for consolidated net income
(2) Business profit on core banking operations
Management numerical targets FY2017
6.00% - 6.99%
Around ¥11.0 billion
(3) Number of major corporate customers (Current) 5,700
25% increase in the number of customers (FY2017) Around 7,000
(4) Number of major individual customers (Current) 278,000
25% increase in the number of customers (FY2017) Around 350,000
(5) Non-performing loan ratio
(6) Capital ratio
Around 2%
Around 11%
[Target in growth potential]Build steady business base through expansion of the number of our customers by improving customer satisfaction.
■Major corporate customers / major individual customers
Corporate and individual (including business) customers using us as their main bank (defined by the Bank).
The Bank of Okinawa,Ltd32
People’s Bank
Growth Strategy I: Expansion of Corporate (Business) Customers
Evaluation of business potentials:Financial institutions should facilitate the growth of companies and industries based
on an assessment of borrower companies’ business profiles and growth potential (evaluation of customers’ business potentials), providing financing and advice without overly relying on financial data, collateral and guarantees.(Excerpt from the Financial Monitoring Policy for 2014-2015)
Life cycle
Mission of Corporate Sales Division
[Life cycle of corporate customers]
Foundation Growth Downturn Recovery Stabilization Transition Growth
Foundation support
Sales channels expansion supportMatching
We will expand corporate (business) customers who would use us as their main bank by offering services by utilizing “consulting functions” according to the life cycle of corporate (business) customers.
Business revitalization supportManagement restructuring plan
Business successionM&As
Sales channels expansion supportMatching
Capital for foundation /
new businessWorking capital / Capital expenditure EXIT financing
Capital expenditure /
working capital
Exercising of consulting functions
[Building a new business model]ALL OKIGIN FOR OKINAWA
Collaboration with 21st Century Vision of Okinawa
Overseas development support
Continued support for Okinawa Great Trade
Fair
Growing industries support
PFI promotion
Syndication
Financial analysis Management plan formation support
Exercising of investment target spotting function
Evaluation of
business potentials
Implement activities to
increase sales to SR by 5%
The Bank of Okinawa,Ltd33
People’s Bank
Growth Strategy II: Expansion of Individual Customers
We will expand individual customers who would use us as their main bank by promptly offering appropriate financial services according to the life cycle of individual customers.
Salary payment deposit / pension
Tablet strategy(loans / assets in custody)
Variety of mortgage loans(proper / comprehensive guarantee / health care
service)
New products including reverse
mortgagesCredit card
strategyProvision of
services according to the customer’s
life cycle
Automobile loan, mortgage loan, education loan, renovation loan
Salary payment deposit, asset building, accumulation savings
Investment trust, JGBs, foreign-currency depositsWhole life insurance, personal pension insurance, medical insurance, educational endowment insurance
Pension insurance
Borrow
Save
Increase
Prepare
Leave
Life cycle 20’s 30’s 40’s 50’s 60’s 70’s and after
Mission of Individual Sales Division
[Life cycle of customers]
Employment Marriage Home purchase
Car purchase Childbirth and parentingChildren’s higher
education/marriage
Satisfying retirement life (trips, hobbies, etc.)
Nursing care
ALL OKIGIN FOR OKINAWA(Enhance collaboration with credit card /
guarantee subsidiaries in particular)
The Bank of Okinawa,Ltd34
People’s Bank
Initiative for the First Year, “Customer Focused” Operational Reform
Concept of the first year (operational reforms) of Medium-Term Business Plan
Restructuring of human resource portfolio
Project to support females in workforce
Improve CS by enhancing the potential in the field through promotion of females in workforce
Design combinations of optimum types of human resources
“Customer focused”
operational reforms
HQ structural reforms(Placement of staff in sales branches)
Concentrated investment to promote operational reforms
(utilize net gains on securities)
Delegate authorities to executive officers, general managers and sales branch managers
Operational reform project(Sales branch operational reforms)
Put top priority on core banking system hardware renewal (secure structure to continue operation) and perform the above operational reforms.
We will strive for operational reforms eliminating prerequisites in the first year (FY2015) in order to successfully achieve theMedium-Term Business Plan.We will aggressively invest in introduction of IT in operations and improvement of efficiency in order to ensure the achievementof operational reforms.
The Bank of Okinawa,Ltd35
People’s Bank
Business Performance Forecasts
Non-consolidatedFY14 FY15 YoY
change
Ordinary income 36.4 36.7 +0.2
Gross business profit 30.5 30.6 +0.0
Interest income 27.8 27.6 (0.1)
Fees and commissions 2.3 2.3 +0.0Fees and commissions (excluding trust fees) 2.0 2.0 +0.0
Trust account services 0.3 0.3 (0.0)
Other business profit 0.3 0.6 +0.2
Gains (losses) on bond trading 0.2 0.6 +0.3
Expenses (excluding non-recurrent items) 19.7 20.8 +1.0
Business profit on core banking operations 10.6 9.2 (1.4)
Provision of general allowance for possible loan losses (0.3) 0.0 +0.3
Net business profit 11.2 9.8 (1.3)
Non-recurrent items (1.2) (1.2) +0.0
Net gains (losses) on equity securities 0.1 0.4 +0.2
Bad debt disposal (non-recurrent items) 1.9 2.0 +0.0
Ordinary profit 9.9 8.5 (1.3)
Extraordinary gains (losses) (0.1) (0.0) 0.0
Net income 6.7 5.6 (1.1)
Credit costs 1.6 2.0 +0.3
Average balance Yield Interest
Loans and bills discounted
+68.8[+67.6]
(0.12)[(0.12)]
(0.2)[(0.3)]
Securities +4.7 +0.02 +0.1
Deposits +76.1[+76.5]
(0.00)[(0.00)]
(0.0)[(0.0)]
Others - - (0.0)[(0.0)]
Total - - (0.1)[(0.2)]
■ Year-on-year changes forecast(¥ billion)
■ YoY comparison of business profit on core banking operations
Note) Figures in square brackets include trust accounts.
Interest on securities
0.2
Interest paid on deposits
Others
Commissions
Expenses
Trust account services
Interest on loans and bills discounted
IncreaseDecrease
Total1.5
0.1
0.1
1.0
0.0
0.0
0.10.0
(¥ billion, %)
The Bank of Okinawa,Ltd36
People’s Bank
Strategy for Consumer Loans
Mortgage loans ¥20.0 billion, Other loans ¥4.0 billionConsumer loans ¥580.7 billion (+4.2% YoY)
(¥ billion)
◆ Solid housing demand
◆ Higher personal spending on the back of improving economic outlook
Mortgage
Other loans
100
200
300
400
500
600
700
473.261.1
412.1
496.863.5
433.3
529.865.2
464.6
556.865.7
491.0
580.769.7
511.0
FY15 FY11 FY12 FY13 FY14
The Bank of Okinawa,Ltd37
People’s Bank
Strategy for Assets in Custody
Boost sales focusing mainly on pension insurance and investment trusts
(¥ billion)
Investment trusts
Targeted sales volume¥21.0 billion
Investment trust
Targeted sales volume¥25.0 billion
Pension insurance
* Pension insurance totals are cumulative sums sold.* Sales target added to the balance as of the end of the previous fiscal year for the fiscal year ending March 31, 2015 excludes contract and other cancellations.
Targeted sales volume¥0.1 billion
JGBs
250
50
100
150
200
123.3
52.4
39.0
31.9
139.4
69.7
45.2
24.4
150.7
90.1
40.3
20.1
110.8
46.7
16.8
174.4
220.4
135.8
67.7
16.9
Plan
JGBs
Pension insurance
FY15 FY11 FY12 FY13 FY14
The Bank of Okinawa,Ltd38
People’s Bank
Aggressive Investment Strategy
Details of increased expenses (¥1.4 billion) in FY2015
Renewal, etc., of core banking system hardware
Introduction of tabletsOpen-type automatic teller machineEnhancement of ATM functions
Haebaru BranchNago BranchItoman Branch
The Bank of Okinawa,Ltd39
People’s Bank
Branch Network Strategy
Efficient branch allocation through area marketingSetting up branches focusing on customer convenience
◆ October 2014 Yamauchi Branch (former Moromi Branch) relocated and re-opened for business
◆ April 2015 Haebaru Branch relocated and re-opened for business
◆ July 2015 Nago Branch scheduled to relocate, be newly built and re-opened for business
Yamauchi Branch Haebaru Branch Nago Branch
The Bank of Okinawa,Ltd40
People’s Bank
Shareholder Returns
FY11 FY12 FY13 FY14 FY15(forecast)
Payout ratio (%) 22.4 22.3 25.0 19.4 23.4 Total return ratio (%) 30.8 34.1 36.4 33.7Dividend (yen) 65 65 65 70 70Share buy back
(million yen) 498 700 602 1,055 －
Up ¥2.5 for the interim dividend for FY2014 (up ¥5 annually)Shareholder returns with stable dividend and flexible share buy back
Ordinary shares issued (excluding treasury shares)Purchase of treasury shares
Total return ratio (%)Payout ratio (%)
FY15 forecast
FY14FY13FY12FY11FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
The Bank of Okinawa,Ltd41
Supplemental Materials
The Bank of Okinawa,Ltd42
People’s Bank
Business PerformanceNon-consolidated FY11 FY12 FY13 FY14 YoY changeOrdinary income 36.8 36.8 37.1 36.4 (0.7)Gross business profit 28.5 30.2 30.0 30.5 +0.4
Interest income 25.6 26.9 27.3 27.8 +0.4Fees and commissions 2.0 2.4 2.5 2.3 (0.2)
Fees and commissions (excluding trust fees) 1.5 1.8 2.0 2.0 (0.0)Trust account services 0.4 0.5 0.4 0.3 (0.1)
Other business profit 0.8 0.8 0.1 0.3 +0.2Gains (losses) on bond trading 0.6 0.7 (0.0) 0.2 +0.3
Expenses (excluding non-recurrent items) 18.8 19.2 19.9 19.7 (0.2)Business profit on core banking operations 9.1 10.3 10.1 10.6 +0.4
Provision of general allowance for possible loan losses (1.5) (0.0) 0.6 (0.3) (1.0)
Net business profit 11.2 11.0 9.4 11.2 +1.7Non-recurrent items (2.9) (1.7) (0.9) (1.2) (0.3)
Net gains (losses) on equity securities (0.6) (0.5) 1.0 0.1 (0.8)Bad debt disposal (non-recurrent items) 2.5 1.6 2.2 1.9 (0.2)
Ordinary profit 8.3 9.3 8.5 9.9 +1.3Extraordinary gains (losses) (0.0) (0.0) (0.0) (0.1) (0.0)
Bad debt disposal (amounts posted under extraordinary gains (losses) ) - - - - -
Net income 5.1 5.4 4.5 6.7 +2.1
Credit costs 1.0 1.6 2.8 1.6 (1.2)
Non-performing loan ratio 1.63% 1.64% 1.72% 1.61% (0.11)%
Capital ratio (calculated under Basel III Standard for FY13) 12.25% 11.88% 11.66% 11.13% (0.53)%
(¥ billion)
The Bank of Okinawa,Ltd43
People’s Bank Term-End Balance, Average Balance, Yield, and Loan Balance by Industrial Segment
Term-end balance / Average balance / Yield Loan balance by industrial segment
FY11 FY12 FY13 FY14
Loans
Term-end balance 1,197.1 1,236.2 1,251.4 1,313.8
Average balance 1,121.7 1,154.7 1,202.0 1,254.9
Yield 2.44 2.32 2.17 2.03
Securities
Term-end balance 539.9 600.2 577.3 605.5
Average balance 509.6 581.8 583.6 551.7
Yield 0.61 0.56 0.62 0.76
Deposits
Term-end balance 1,714.8 1,789.8 1,755.1 1,865.4
Average balance 1,670.4 1,706.5 1,745.6 1,813.1
Yield 0.26 0.14 0.11 0.09
* Term-end and average balances are calculated on the basis of loan/deposit balances of the banking and trust accounts.
* Yields on loans and deposits are those used for domestic operations only.
FY11 FY12 FY13 FY14
Manufacturing 40.5 37.9 36.6 37.0
Agriculture and forestry 0.5 0.4 0.5 0.8
Fishery 0.5 0.5 0.5 0.5
Mining and quarrying of stone and gravel 3.9 1.5 1.9 1.7
Construction 49.7 47.3 44.7 42.0
Electricity, gas, heat and water supply 4.0 2.5 3.5 6.8
Telecommunications 10.0 7.9 7.2 8.9
Transport and postal activities 16.4 15.0 14.8 16.6
Wholesaling and retailing 116.4 115.7 114.8 107.1
Finance and insurance 18.9 22.1 25.0 26.3
Real estate, and goods rental and leasing 227.4 261.9 294.8 326.3
Miscellaneous services 137.1 137.2 129.5 142.9
Local government bodies 123.8 127.3 98.3 99.9
Others 447.3 458.4 478.6 496.4
Total 1,197.1 1,236.2 1,251.4 1,313.8
* Including trust accounts
(¥ billion, %) (¥ billion)
The Bank of Okinawa,Ltd44
People’s Bank Changes in Loan Balance by Assets Category (FY2013 and FY2014)
Loan balance by assets category at the end of March 2014
Loan balance by assets category at the end of March 2015 (¥1,325.1 billion)
Normal assets
Assets requiring cautionPotentially bankrupt assets
Bankrupt and effectively
bankrupt assetsOther assets
requiring caution
Assets requiring
supervision
Normal assets 1,082.9 1,057.6 26.8 0.3 0.2 0.2
Assets requiring caution
Other assets requiring caution 156.5 18.9 118.2 2.9 4.4 0.9
Assets requiring supervision 4.7 0.0 0.2 2.5 1.2 0.0
Potentially bankrupt assets 8.2 0.0 0.5 0.2 4.1 0.3
Bankrupt and effectively bankrupt assets 9.9 0.1 0.2 0.2 0.1 4.2
New borrowers - 75.8 3.9 0.0 0.0 0.0
Total 1,262.4 1,152.6 149.9 6.3 10.3 5.8
(¥ billion)(¥ billion)
The Bank of Okinawa,Ltd45
People’s Bank
Interest Sensitivity
Loans Deposit
High
Low
High
Low
Total loans: ¥1,251.6 billionTotal deposits: ¥1,865.4 billion
Time deposits(over 1 year)
5.6%
Loans on bills / bills discounted(fixed portion)
8.6%
Current account deposits51.8%
Fixed interest32.9%
Time deposits(up to 1 year)
and money in trust42.6%
The Bank of Okinawa,Ltd46
People’s Bank
Major Economic Indicators in Okinawa Prefecture
Unit FY11 FY12 FY13 FY14 FY14(nationwide) Source
Population (Persons) 1,406,260 1,408,133 1,420,005 1,426,097 126.91million Okinawa Prefecture, Ministry of Internal Affairs and Communications (estimated population)
Number of households (Households) 533,982 541,280 551,381 561,242 55.57million Okinawa Prefecture, Ministry of Internal Affairs and Communications (The nationwide figure is as of March 2013)
GDP (nominal) (¥ billion) 3,795.5 3,806.6 3,922.6 3,986.8 ¥491 trillion Okinawa Prefecture, (estimates for FY2013 and FY2014)
New car registration (Units) 38,170 44,696 50,686 51,069 5,296,993 Japan Automobile Dealers Association Value
Value of contracts for public works (¥ million) 210,803 279,505 263,352 324,694 14,522,243 Hosho Jigyo Kaisha Kyokai (Association of guaranty
companies)
Housing starts (Houses) 11,737 12,713 17,173 15,022 880,470 Ministry of Land, Infrastructure, Transport and Tourism
Number of tourists to the prefecture (Persons) 5,528,000 5,924,700 6,580,300 7,169,900 13,413,467 Okinawa Prefecture, Japan National Tourism Organization
Industrial production index (prior to seasonal adjustment)
(2010=100) 92.9 98.0 99.0 101.5 98.5 Okinawa Prefecture (Average for 11 months between Apr. 2014 to Feb. 2015), Ministry of Economy, Trade and Industry
Job offers-to-seekers ratio (Times) 0.31 0.46 0.57 0.73 1.11 Okinawa Labor Bureau, Ministry of Health, Labour and
Welfare
Land price change (residential land) (%, YoY) (1.1) (0.6) 0.1 0.6 (0.4) Ministry of Land, Infrastructure, Transport and Tourism
Land price change (commercial land) (%, YoY) (1.4) (0.4) 0.5 0.8 0.0 Ministry of Land, Infrastructure, Transport and Tourism
* The number of tourists for FY2014 (nationwide) is the visitors from abroad (total number).
The Bank of Okinawa,Ltd47
Statements contained in these materials regarding forecasts of future events are based on information known to the management at the time of writing, and do not constitute any form of guarantee of the business performance of the Bank of Okinawa. These materials have been prepared to serve as a report on the settlement of accounts of the Bank for the fiscal 2014 term, ended March 2015, as well as to provide an explanation of the Bank’s future management vision: they are not intended as a solicitation of business.
For further details, please contact:The Bank of Okinawa, Ltd. General Planning Division,
Management Planning Group
Tel: 81-98-869-1253 / Fax: 81-98-869-1464