Earnings Presentation Material - Q1 FY12/2019 August 2019 J Trust Co., Ltd.

 
Earnings Presentation Material - Q1 FY12/2019 August 2019 J Trust Co., Ltd.
Q1 FY12/2019

Earnings Presentation Material

          August 2019
         J Trust Co., Ltd.

                      Copyright(C)2019 JTRUST Co.,Ltd. All Rights Reserved.
Earnings Presentation Material - Q1 FY12/2019 August 2019 J Trust Co., Ltd.
Table of Contents

    FY12/2019

    1. Summary of Consolidated Results in Q1
       FY12/2019

    2. Q1 Results by Segment

    3. Results Forecast and Status of Progress

    4. Future Outlook by Segment

                                                 1
Earnings Presentation Material - Q1 FY12/2019 August 2019 J Trust Co., Ltd.
Disclaimer

  •   In conjunction with the change in the accounting period, the current period will be nine months from
      April 2019 to December 2019.

  •   J Trust has classified the results of Highlights Entertainment, which it sold in FY03/2019, as discontinued
      operations and has similarly classified “operating revenue”, “operating profit” and “profit before tax” as
      such in year-on-year (“YOY”) comparisons.

  •   Information regarding forecasts listed in this document is estimated based on the knowledge, opinions
      and judgement of the company at the time of the document’s creation and contains underlying risks and
      uncertainties. Therefore, please understand that actual results and the forecast described here are
      subject to change greatly depending upon various factors such as the business environment.

  •   This document is intended to provide information about J Trust and is not intended to solicit investments
      in securities issued by the company.

  •   As a principle, the units listed on each page have been rounded down to the nearest unit of display. In
      addition, differences listed next to the charts and graphs illustrating YOY comparisons are calculated
      using the display unit of billions.

  •   This English-translated document was prepared solely for the convenience of English-speaking investors.
      If any discrepancies exist between this translation and the original Japanese document, the Japanese
      version always prevails. The Company shall not be liable for any damages or losses of profit arising from
      this translation.

                                                                                                                    2
Earnings Presentation Material - Q1 FY12/2019 August 2019 J Trust Co., Ltd.
1.Summary of Consolidated Results

   Deputy General Manager of Finance
              Department
           Keiichi Shimamura

                                       3
Earnings Presentation Material - Q1 FY12/2019 August 2019 J Trust Co., Ltd.
 Summary of Consolidated Results

                     Financial Business in Japan

          Financial Business in South Korea and Mongolia

      These two segments drove consolidated
                    results.

                                                           4
Earnings Presentation Material - Q1 FY12/2019 August 2019 J Trust Co., Ltd.
 Year-on-year, revenue increased while profit decreased.

                                                     Consolidated Results (YOY)

                                                       Q1 FY03/2019                      Q1 FY12/2019
                                                      (2018/4/1~2018/6/30)             (2019/4/1~2019/6/30)
                                                                                                              Difference

                                                            17.3 billion                       18.2 billion    +0.9 billion
   Operating Revenue
                                                 ※

                                                                    JPY                                JPY             JPY

                                                                                                                -0.4 billion
      Operating Profit
                                            ※
                                                      0.8 billion JPY                   0.4 billion JPY
                                                                                                                        JPY

                                                                                                                -1.8 billion
      Profit before tax
                                             ※
                                                      1.9 billion JPY                   0.1 billion JPY
                                                                                                                        JPY
  Profit attributable to
                                                                                               ‐0.1 billion     -1.5 billion
    owners of parent     1.4 billion JPY
                                                                                                       JPY              JPY

※ Operating revenue, operating profit and profit before tax do not include amounts resulting
  from discontinued operations.                                                                                                5
Earnings Presentation Material - Q1 FY12/2019 August 2019 J Trust Co., Ltd.
 Revenue increased due to M&A in General Entertainment Business.

                                          Operating Revenue by Segment (YOY)

                                                      Q1 FY03/2019         Q1 FY12/2019             Difference
                                                    (2018/4/1~2018/6/30)   (2019/4/1~2019/6/30)

 Financial Business in Japan                             2.3 billion JPY     2.3 billion JPY      -0.0 billion JPY

 Financial Business in South
                             10.1 billion JPY                                9.7 billion JPY      -0.4 billion JPY
     Korea and Mongolia
       Financial Business in
                                                         3.1 billion JPY     2.7 billion JPY      -0.4 billion JPY
          Southeast Asia

       Investment Business                               0.2 billion JPY     0.2 billion JPY      -0.0 billion JPY

     Non-Financial Business                              1.2 billion JPY     3.0 billion JPY      +1.8 billion JPY

          Other operations                               0.2 billion JPY     0.1 billion JPY      -0.1 billion JPY

    Consolidated Operating
                                                      17.3 billion JPY      18.2 billion JPY      +0.9 billion JPY
           Revenue

Figures shown do not include amounts from discontinued operations.
                                                                                                                     6
Earnings Presentation Material - Q1 FY12/2019 August 2019 J Trust Co., Ltd.
 Financial Business in South Korea and Mongolia made up for results of
  Financial Business in Southeast Asia.

                                          Operating Profit by Segment (YOY)

                                                      Q1 FY03/2019         Q1 FY12/2019
                                                    (2018/4/1~2018/6/30)   (2019/4/1~2019/6/30)
                                                                                                    Difference

 Financial Business in Japan                             0.9 billion JPY     1.0 billion JPY      +0.1 billion JPY

 Financial Business in South
                                                         1.4 billion JPY     2.5 billion JPY      +1.1 billion JPY
     Korea and Mongolia
    Financial Business in
                                                       -0.7 billion JPY     -1.8 billion JPY      -1.1 billion JPY
       Southeast Asia
       Investment Business                               0.1 billion JPY    -0.5 billion JPY      -0.6 billion JPY

     Non-Financial Business                            -0.0 billion JPY      0.0 billion JPY       0.0 billion JPY

          Other operations                             -0.0 billion JPY     -0.1 billion JPY      -0.1 billion JPY

        (Adjustments, etc.)                            -1.0 billion JPY     -0.6 billion JPY      +0.4 billion JPY
    Consolidated Operating
                                                         0.8 billion JPY     0.4 billion JPY      -0.4 billion JPY
            Profit

Figures shown do not include amounts from discontinued operations.
                                                                                                                     7
Earnings Presentation Material - Q1 FY12/2019 August 2019 J Trust Co., Ltd.
2.Results by Segment
2-1.Financial Business in Japan

                                  8
Earnings Presentation Material - Q1 FY12/2019 August 2019 J Trust Co., Ltd.
 J Trust maintained a steady operating revenue.
 Collections on receivables purchased in Q4 of FY03/2019
  also contributed to operating profit.

            Operating Revenue                          Operating Profit
            2.3                2.3                                 Unit: Billions of yen

                                                                      1.0
                                                     0.9

         1Q FY03/2019       1Q FY12/2019         1Q FY03/2019     1Q FY12/2019

                                                                                      9
 Net increases in guarantee balance totaled 6.0 billion yen.

                                                                             Unit: Billions of yen
                                            Guarantee balance

      Light color=Condominium loan guarantees
      Dark color = Other guarantees

                                                                                   208.9

                                                        159.7

                                                                                     157.7

     85.9                                               116.5

     47.2

                                                         43.2                        51.2
     38.7

     2017/                                      2018/                     2019/
      03         06         09         12        03      06     09   12    03         06

                                                                                               10
 Purchases of NPLs continued to be successful.
                                                                                            Unit: Billions of yen

                       Balance of claimed receivables in servicer business

                                                                                  Total:
                                                                                900+ billion
                                                            Approx.   Approx.     Approx.
                                                                                                  Off-balance
                                                 Approx.                150         150
                            Approx.                           140                                 (claimable) receivables
        Approx.                                     140                                           at Nihon Hoshou
                               110                                                                acquired from
           110
                                                                                                  Takefuji Corporation

        730.6                759.2                772.3     783.3     782.8       787.4           Balance of
                                                                                                  claimed receivables
                                                                                                  handled by
                                                                                                  Partir Servicer

         2017/                                    2018/               2019/
           03                   09                  03        09        03          06

 Balance includes both purchased and claimed receivables.
 Balance includes some on-balance receivables.                                                                      11
 Leases and credit receivables make up more than half of Partir Servicer’s receivables
  collections.
 Demonstrating its unique aptitude for collections, Partir continued to purchase and
  collect those types of receivables.
                                  Breakdown of receivables handled by servicers

                              Overall Industry                                                     Partir Servicer
Securitized                    Indemnities,                                         Securitized
  claims                            etc.                                              claims
  0.01%                           7.65%                                               0.00%
                                                                                                  Indemnities,
 Receivables                                                                                          etc.
 related to…                                                                                        15.93%
                                                                             Receivables
                                                                                                                   Bank loans
                                                                              related to
                                                                                                                    29.27%
                                                                             bankruptcy
               Lease and credit-                                                0.17%
                      related
                                                   Bank loans
                     33.76%
                                                     58.31%                                         Lease and credit-
                                                                                                         related
                                                                                                         54.63%

   ※ Industry data (as of December 31st, 2018) is taken from the Ministry of Law.
   ※ Partir Servicer data was sampled on June 30th, 2019.                                                                       12
2.Results by Segment
2-2.Financial Business in
 South Korea and Mongolia

                            13
 Operating revenue decreased due to a decrease in average loan interest rates.
 Operating profit increased due to a decrease in reserves against potential
  loan losses and gains booked from the sale of NPLs.
                                                                         Unit: Billions of yen

            Operating Revenue                               Operating Profit

            10.1
                                 9.7

                                                                          2.5

                                                      1.4

          1Q FY03/2019        1Q FY12/2019         1Q FY03/2019        1Q FY12/2019

                                                                                          14
 J Trust worked toward accumulating stable assets while
 focusing on the level of asset “quality”.
                        Loan balance and balance of loans delinquent over 90 days at
                          JT Savings Bank, JT Chinae Savings Bank and JT Capital
Unit: Billions of yen
400                     Secured corporate loans                                                                                  20.00%

                        Unsecured corporate loans                                                                        340.3   18.00%
350                                                                                            324.1
                        Secured consumer loans                                                                                   16.00%
300
                        Unsecured consumer loans                                                                         102.1
                                                                                               86.9                              14.00%

250
                                                                                                                                 12.00%
                                                                                               13.3                       13.8

200                                                                                                                              10.00%
                                                                                                                          90.4
                                                                                               103.1
                                                                                                                                 8.00%
150

                 5.0%                                                                                                            6.00%
100                                                                                                                3.9%
                                                                                                                                 4.00%
                                                                                               120.7                     134.0
 50
                                                                                                                                 2.00%

   0                                                                                                                             0.00%
         2016/                                    2017/                                2018/                     2019/
           03           06     09        12        03         06        09        12    03      06     09   12    03       06

  Combined total of JT Chinae Savings Bank, JT Savings Bank and JT Capital
  Figures are displayed in local currency and multiplied by the following rate:
  1 KRW=0.0933 JPY(Closing rate as of June 30th 2019)
                                                                                                                                    15
 Purchases of receivables in the servicer business also went well.
単位:億円
                                                                                                         Unit: Billions of yen

                              Balance of receivables at TA Asset Management

                                                                                                              29.8

                                                                                23.3

     17.7

     2017/                                                       2018/                           2019/
       03             06             09              12             03           06    09   12    03            06

 Figures are displayed by multiplying local currency with the following rate:
 1 KRW=0.0933 JPY (Closing rate as of June 30th)
                                                                                                                          16
2.Results by Segment
2-3.Financial Business in Southeast Asia

                                           17
 Year-on-year, revenue and profit decreased.

       Operating Revenue                            Operating Profit

                                                                Unit: Billions of yen
           3.1

                              2.7

                                            -0.7

                                                                -1.8
        1Q FY03/2019       1Q FY12/2019   1Q FY03/2019        1Q FY12/2019

                                                                                  18
2.Results by Segment
2-4.Investment Business

                          19
 SG&A expenses increased due to an increase in litigation fees.
                                                                Unit: Billions of yen

       Operating Revenue                          Operating Profit

           0.2             0.2
                                            0.1

                                                                -0.5
        1Q FY03/2019    1Q FY12/2019     1Q FY03/2019         1Q FY12/2019

                                                                                  20
2.Results by Segment
2-5.General Entertainment Business/
      Real Estate Business

                                      21
(General Entertainment Business)
                                                                       ※
 M&A of companies such as allfuz and Foolenlarge                          contributed to
  both revenue and profit.

               Operating Revenue                                                Operating Profit
                                                                                            Unit: Billions of yen
                                                     1.7

                                                                                                   0

                  0.5

                                                                           -0
             1Q FY03/2019                       1Q FY12/2019           1Q FY03/2019          1Q FY12/2019

 ※ Foolenlarge changed its name to United Productions on August 1st.
                                                                                                                    22
(Real Estate Business)
 Year-on-year, operating revenue increased, while operating profit
  decreased due to an increase in costs of sales.
                                                               Unit: Billions of yen

        Operating Revenue                         Operating Profit

                         1.3

         1.1
                                             0

                                                                -0
      1Q FY03/2019    1Q FY12/2019       1Q FY03/2019        1Q FY12/2019

                                                                                23
3.Results Forecast for FY12/2019

                                   24
 Prior conditions for consolidated results forecast

  •   J Trust adopts the average exchange rates from the time when the company
      entered each country until the end of March 2019.
      1SGD :82.63 JPY           1IDR :0.0084 JPY           1 MNT:0.0437 JPY
      1KRW:0.093 JPY            1USD:110.99 JPY

  •   Furthermore, rates from the end of June are as follows:
      1SGD:79.68 JPY            1IDR :0.0077 JPY           1MNT:0.0405 JPY
      1KRW: 0.0933 JPY          1USD:107.79 JPY

  •   Figures for Investment Business only reflect those gains and losses which
      normally occur.

                                                                                  25
 Results Forecast and Status of Progress by Segment

                        Operating Revenue and Operating Profit by Segment
                                                            FY12/2019             Q1 FY12/2019
                                                             Forecast                Results            Progress
                                                            ※9 mos. from           ※3 mos. from
                                                             4/1~12/31              4/1~6/30
                                            Operating
                                                                6.9 billion JPY      2.3 billion JPY          33%
                                            Revenue
      Financial Business in Japan
                                         Operating Profit       2.9 billion JPY      1.0 billion JPY          34%
                                            Operating
                                                              28.9 billion JPY       9.7 billion JPY          34%
 Financial Business in South Korea and      Revenue
                Mongolia
                                         Operating Profit       3.3 billion JPY      2.5 billion JPY          76%
                                            Operating
                                                              12.9 billion JPY       2.7 billion JPY          21%
                                            Revenue
 Financial Business in Southeast Asia
                                         Operating Profit      -1.7 billion JPY      -1.8 billion JPY              -
                                            Operating
                                                                1.0 billion JPY      0.2 billion JPY          20%
                                            Revenue
         Investment Business
                                         Operating Profit      -0.6 billion JPY      -0.5 billion JPY              -
                                            Operating
                                                              14.4 billion JPY       3.1 billion JPY          22%
                                            Revenue
          Adjustments, etc.
                                         Operating Profit      -3.8 billion JPY      -0.7 billion JPY              -
                                            Operating
                                                             64.3 billion JPY      18.2 billion JPY           28%
                                            Revenue
                Total
                                         Operating Profit     0.0 billion JPY       0.4 billion JPY                -

                                                                                                                       26
4.Outlook by Segment

          Managing Director,
         Executive Officer and
General Manager of Finance Department
            Ryuichi Atsuta

                                        27
 Reexamining what makes J Trust interesting

        Mainly engages in finance with banking, nonbank and servicer businesses as
              its core business

            (Host countries: South Korea, Singapore, Indonesia and Mongolia)

              A solid financial base
               •    Total assets:624 billion JPY
                               ※1
               •    Net worth :109.6 billion JPY
                                ※2
               •    Equity ratio :16.3%
        In Q4 FY03/2019, booked reserves against potential loan losses as insurance
              against underlying risks and minimized additional future risks

              Plans to acquire a Cambodian bank in good standing

              Have reformed management structures in each location to establish a first-
              rate organization

 ※1 Net worth:Equity attributable to owners of parent
 ※2 Equity ratio: Proportion of equity attributable to owners of parent                     28
 Looking back on J Trust’s ten years of growth

    Since the takeover bid in 2008, J Trust has expanded its operations.

                               Growth since 2008

                    March 31st, 2008                  June 30 th, 2019

      Asset size     12.1 billion JPY

     Employees            81

     Companies             2

     Number of
     countries in          1
       Group

                                                                            29
 J Trust plans to acquire a commercial bank in Cambodia,
      which boasts a GDP of nearly 7%.
      ANZ Royal Bank’s asset size is in the Top 10 out of 42 Cambodian
       commercial banks.
      ANZ Royal has already recorded a high revenue and an operating
       profit of 3.1 billion yen in 2018.

                                                                                                              Unit: Billions of yen

                        Profits (over five years)
         Operating revenue                           Operating profit                Distribution of
  Other revenue Net interest income                                              94.3 billion JPY assets
                                                                                   (As of Dec. 31st, 2018)
          5.4                     5.4                                                      1
 5.2              5.2     5.1                                             3.1             10
                                                     3.0            2.9
                                             2.8            2.8                                              Other assets
                                  1.6
 1.9      2.0     1.9     1.8                                                                                Statutory deposits
                                                                                         43.7
                                                                                                             Loans

                                  3.8                                                                        Deposits/Placements
 3.2      3.3     3.2     3.2
                                                                                         28.3
                                                                                                             Cash deposits

                                                                                         11.3
 2014    2015    2016    2017     2018      2014    2015    2016   2017   2018

※Data taken from the National Bank of Cambodia’s 2018 Annual Report
Financial Highlights are taken from ANZ Royal Bank’s 2018 Annual Report
Reference rate:1USD=107.79 JPY (Closing rate as of June 30th)
                                                                                                                                  30
 Experts at bank management have been dispatched from J Trust.

     ANZ Royal Bank’s forte is corporate transactions.
     J Trust will combine its expertise in retail finance with ANZ Royal Bank’s
      achievements.
     Once J Trust’s advancement into Cambodia is established, Cambodia will
      become the sixth country to host J Trust’s business.

       Toru Myochin                   Makoto Kurokawa

                                                                          (※ Logo and design
                                                                              undetermined)

  Mr. Myochin joined Dai-Ichi      Mr. Kurokawa joined Sanwa
  Kangyo Bank (now Mizuho          Bank (now MUFG Bank) in
  Financial Group) in 1988. He     1979. He then worked at
  then held important positions    foreign-owned security firms
  at Shinsei Bank and joined the   and joined the J Trust Group in
  J Trust Group in 2015.           2012.

                                                                                         31
 Financial Business in Japan:
  J Trust will continue to diversify its guarantee products.
     Nihon Hoshou launched guarantees on crowdfunded products as a
      form of new guarantees. The company released two types of
       guarantees for mortgages, which are its forte.
     The number of banks that partner with Nihon Hoshou for guarantees
      on overseas mortgages increased to three.

                           •      Began accepting
                                 applications on May 10th, 2019
                           •      Application limit:
                                 13 million JPY
                                (Full amount raised)
                           •      Sold out in roughly 40 min.

                           •      Began accepting applications on
                                 June 4th, 2019
                           •      Application limit:
                                23 million JPY
                               (Full amount raised)
                           •      Sold out in roughly 10 min.

                                                                          32
 Financial Business in South Korea and Mongolia: recorded high
  profitability despite strict caps on maximum interest rates

          Introduced CSS (automatic totaling and self learning functions) to provide
           highly accurate credit lines to prevent the occurrence of NPLs
          Conducted effective business operations through marketing and brand strategy
           to draw in highly creditworthy customers

                                                                    7,000 people are currently participating in the
                       Added machine learning                       Group’s golf championship.
                    capabilities to our credit scoring
                                  system

Customer info
  Loan amount
  Delinquency
      record
   Attributes
 Ability to repay               CSS
    +
 Other info                   Automatic              Provides
   Real estate               totaling and         highly accurate
     market
                             self learning           credit lines
 Market situation
according to each              functions
    industry

            More detailed scoring (screening) can be
             achieved through the use of Fintech.

                                                                                            Brand marketing and CSR activities
                                                                                           that utilize the Group’s brand mascots

                                                                                                                             33
 General Entertainment Business: The Group will improve managerial
  efficiency by organizing its businesses.

    Consolidated allfuz and KeyStudio on July 1st
    Consolidated KeyProduction and Foolenlarge as well as changed the
     company name to United Productions on August 1st

                                                               JASDAQ:4712

     Advertisement        Pop idol group          Video production        Live entertainment
                                                                                               Real estate business
       business        production business            business                 business

    Consolidated on   Changed company name
        July 1st            on July 1st       Consolidated and changed
                                             company name on August 1st

                                                                                                                      34
Current Condition of Financial Business in
Southeast Asia (Indonesia) and Strategy for
              Future Growth

   Representative Senior Managing Director
            and Executive Officer
                Nobuiku Chiba

                          Copyright(C)2019 JTRUST Co.,Ltd. All Rights Reserved.   35
Thankful for
the raging
waves…
               36
 Reserves against potential loan losses were booked due to processing of NPLs.

     J Trust Bank Indonesia(BJI): Revenue decreased due to decreased assets
     J Trust Investments Indonesia (JTII): Booked reserve against potential
      loan losses for the NPLs which were transferred from BJI

             Financial Business in Southeast Asia: Summary for each company
                                                                                                                              Unit: Billions of yen
                                                                                JT
          1Q FY12/2019                         J Trust Bank                                           JT Olympindo Segment total
                                                                           Investments
                                                                2.2                           0                        0.4                  2.7
                                                                                                  ※
  Operating revenue
  Operating expenses                                            0.1                         4.4                        0.3                  4.8
   Expenses related to
  bad debt                                                    -2.9                          4.4                        0.1                  1.5
  SG&A fees                                                     1.0                          0                        0.3                  1.4
  Other revenue                                                 1.6                          0                          0                  1.7
  Other expenses                                                  0                          0                          0                    0
  Operating profit                                              2.6                       -4.5                       -0.2                 -1.8
 Reference rate: 1 IDR=0.0077 JPY (Closing rate as of 30th)
 ※ J Trust Investment’s operating revenue is 67 million yen.
 Individual figures for each company are found under Financial Data at: https://www.jt-corp.co.jp/en/ir/library/ir_data_00/                      37
Root Causes of BJI’s Problems and Countermeasures

  In this quarter, J Trust worked on “building a foundation”.

What were the causes of
                                      What does it mean to “build a foundation”?
     our mistakes?
                             I.   Reshuffling personnel and organizations
                                • Dispatched elite group members to Indonesia
                             II. Enhancing risk management
                               • Enhanced risk management structure and screening
 ① Insufficient              III. Improvements
                                   dept.           to IT
    employees’ skills           • Development of mobile banking and efforts to achieve
                                   digital banking
 ② Risk                      IV. Improvements to COF(Cost of Funds)

    Management                   Reductions to interest on deposits and adequate control
                                  •
                                 of deposit (amounts)
 ③ IT system                  + Accumulation of quality assets
                               • Accumulate assets mainly through JTO
                                 Business deals with Japanese, South Korean and highly-
                                 rated companies

                                                                                           38
1.Reshuffling personnel
  and organizations

                          39
 1.Reshuffling personnel and organizations/ Strengthening management

  To rebuild the bank’s foundation, we dispatched an elite team who
   had rebuilt a failed South Korean bank to Indonesia.
  In addition, we dispatched specialists in areas such as screening,
   sales, and auditing.

                                     Ritsuo Fukadai         Jo Wonjun      Toshio Yasumatsu       Masayoshi
        Nobuiku Chiba               President Director        Director      Executive Officer     Kobayashi
 Representative Senior Managing                                                                 Executive Officer
   Director, Executive Officer

                                  Kazuyuki Matsuoka      Teruhiko Miwa        Yoshihiko         Tomohide
         Nobiru Adachi              Representative        Vice President       Kusubae          Takayama
    Senior Managing Director,          Director                            President Director    Director
        Executive Officer

                                                                                                              40
2.Enhancing Risk Management

                              41
 Enhancing risk management/Enhancing compliance system and screening process

       Will place Japanese specialists as heads of departments and make improvements
  Risk Management: Prevent future risks before they occur by detecting risks early through a “checking
  function” and “visualization” of the risk as well as enhancement and continuation of monitoring functions
  Screening: Reevaluate existing loans, increase the collateral coverage ratio required for loans, and
  disperse risks by using a joint finance scheme

   Category                Issue                                 Future plan for improvement
                                                  Place quality control supervisors in all locations one by one and
                  •   Governance                   monitor the situation 24/7
                                                  Establish a system to report problems when detected even if they
                  •   Slow to respond              occur in a different department
     Risk
                      when problems occur,        Increase monitoring through daily reports and regularly scheduled
  management
                      and no prevention            meetings by the risk management committee
                      measures are being                                      ↓
                      taken                                Making risks “visible” allows us to nip them in the bud.
                                                 Anticipating future risks allows us to prevent problems before they occur.

                                                  Stop giving out loans that are at high risk for default
                                                 (We will continue to only provide loans to companies with good standing such
                                                  as state-run agencies, conglomerates and banks)
                  •   Lax screening system        Set standards for all loans to determine whether or not they will
                                                   be renewed upon completion of contracts
      Screening
                  •   Low collateral              Increase the collateral coverage ratio
                      coverage ratio              Utilize the joint finance scheme operated by BJI and JTO
                                                                                ↓
                                                                     Minimize and disperse risks
                                                                        Portfolio diversification

                                                                                                                            42
3.Improvements to IT

                       43
 Introducing mobile banking
       Will obtain approval from Central Bank on August 2 nd and begin notifying
      general customers throughout August.
       We expect that drawing creditworthy customers and luring deposits will lead
      to lower costs of maintaining deposits.

42% of Indonesians use smartphones.
Even with simple calculations, that
equals over 100 million people.                                                                   Screen which
                                                                                                    displays
                                                                Log-in screen accessible           remaining
                                              Icon menu                                    Menu      balance
                                                                  with fingerprint ID

 ※ Source:Pew Research Center, Spring 2018 Global Attitudes Survey
                                                                                                                 44
 Opening bank accounts online (A three-year plan)

    In a country like Indonesia that is so spread out, there is a strong interest in
   opening bank accounts without having to interact with someone face-to-face.
    Adopt the most attractive approach for people without bank accounts.

                                                                                        45
 Estimated schedule for digital banking

                            1st Year                  2 nd Year                3 rd Year

                        Build Integrated
                            Platform
          Build
     Infrastructure
                                             Improved Risk Management

     Extend Various
       Customer                                  Integration with E-
        Channels      Supply Chain Finance             Money              SNS Hub Banking

                                       Further implementation of chat bots
   Improve Customer
    Service Quality    Opening savings accounts without       Applying for loans without face-
                           face-to-face interaction                 to-face interaction

                                                                                                 46
4.Improving Cost of Funds

                            47
 Cost of Funds
       Introduce mobile banking ⇒ Increase deposits ⇒ increase percentage of ordinary
      deposits ⇒ Lower cost of funds
       Deposits are decreasing because deposit amounts are being controlled amid
      regulations on loans (which will lead to lower costs)

                          Balance of deposits and cost of funds (deposit costs)
 Unit: Billions of yen
                                                  Deposit balance              COF(AVG.Balance)
   105                                                                                                            7.60%
              7.39%
                                                                                                                  7.40%
   100                                                                                    7.20%
                                                                                                                  7.20%

                                                                                                                  7.00%
     95

                                                                                                                  6.80%
              101.4
     90
                                                                                                                  6.60%
                                                                                                    6.59%
                                                                                                                  6.40%
     85                                                                                    89.7
                                                                                                                  6.20%

     80                                                                                                           6.00%
                             2019/                                                                   2019/
                 12            01            02            03             04        05      06    12 (Forecast)

 ※ Figures shown have been multiplied by local currency using the following rate:
 1 IDR=0.0077 JPY(Closing rate as of June 30th)                                                                           48
+. Accumulating good-quality assets

                                      49
 Accumulating good-quality assets

         First work to reduce NPLs, including accounts at risk for NPLs
         Using joint finance with JTO, increase secured loans which have
        convertibility (such as vehicles and farm equipment).
         Lend to or invest in bonds from highly reliable companies such as
        Japanese, state-owned, conglomerates and banks.
                           Conceptual time for accumulating good-quality assets
 250
Unit: Billions of yen
                                                                                                         197.0
 200
                                                                                                 162.3            Other

 150                                                                                     132.2                   Joint finance
                                                                              108.0                               with multi-
                                                                                                                    finance
 100      84.6                                                                                                    companies
                                                                 71.8
                                                   65.1                                                          Loans for good-
                                                                                                                      quality
  50                                                                                                             companies and
                                                                                                                       bond
                                                                                                                   investments
    0
          2018/ 2019/                                            2019/         2020/     2021/   2022/   2023/
           12     01     02     03     04     05     06            12               12    12      12      12

 ※ Figures shown have been multiplied by local currency using the following rate:
 1 IDR=0.0077 JPY(Closing rate as of June 30th)                                                                                  50
5.Missions for JTO and JTII

                              51
 Missions for JTO and JTII

   J TRUST OLYMPINDO:Accumulate a large amount of secured loans
  which have convertibility, such as loans for cars and farm equipment
   J TRUST INVESTMENTS: Collect receivables transferred from BJI

                           三位一体の経営体制を確立

          Bank                   Multi-finance              Servicer

                                                                         52
 JTO will aim to increase its balance by collaborating with BJI
              The balance decreased temporarily as a result of the long holiday taken by
               dealers for Lebaran in June 2019, but July figures largely exceeded figures from
               May, and are now reaching a new record high.
              JTO will work more closely with dealers and try to expand its network even
               further.

                                 Monetary amount and number of new loans at JTO
Unit: Billions of yen                                                                                       Unit: Number of loans

1.2                                                                                               1,141                    1200
                                                                                                                  1,047
                Amount from new loans(Bar graph, left axis)
 1                                                                                         950                             1000
                Number of new loans (Line graph, right axis)                                              874
                                                                                    799
                                                            748          720
0.8                                                                                                                        800
                                              615
                                  577
0.6                 519                                                                                                    600
        427                                                                                                        0.97
                                                                                                  0.89
0.4                                                                                 0.80   0.81                            400
                                                            0.67         0.66
                                  0.53         0.54                                                       0.56
0.2     0.40         0.43                                                                                                  200

 0                                                                                                                         0
        2018/
          09           10           11

 ※ Figures shown have been multiplied by local currency using the following rate:
 1 IDR=0.0077 JPY(Closing rate as of June 30th)
                                                                                                                               53
      JTII will use the expertise it has gained in the 3.5 years since its establishment and work to expand
       receivables collections.

              Obtain profit (a revenue opportunity) as the first servicer business of its kind in the
               Indonesian market, where there are a lack of specialized collection vendors
              Combine the expertise gained in Japan and South Korea and work to expand collections

                                               Principle amount claimed (Bar graph, left axis)
    Unit: Millions of yen
                                               Actual amount collected (Line graph, right axis                                 Unit: Millions of yen

40,000                                                                                                                                           120
                                                                                                      101
35,000                                                                                                                                  32,620
                                      Since the                                                                                                  100
30,000                         reorganization, we have
                                boosted the amount of                                                                                            80
25,000                               collections.
                                                                             60                                                          61
20,000                                                                                                                                           60
                                                                                            36                                     45
15,000                                                                                                      Ave.42
              10,939                                                                                                                             40
                                                                                                                     29   26
10,000         29
                                                   16                                                         16
                                                                                                                                                 20
    5,000                        4         8                5                          6
                           5                                         5
                                        Ave.10
         0                                                                                                                                       0
                2018/                                                                        2019/
                  04      05       06      07       08      09       10      11        12        01   02      03     04   05       06     07

    ※ Figures shown have been multiplied by local currency using the following rate:
    1 IDR=0.0077 JPY(Calculated on June 30th)                                                                                                        54
 “Issues” to address in the Indonesian business

    Increasing net worth

    Determining how many creditworthy customers there are for
     whom we can make loans

    Legal stability/Heavy restrictions on foreigners/Resolving
     inconsistent judgement/Figuring out how to improve the
     Indonesian business segment and help it grow

                                                                  55
Q&A Session

              56
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