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Videos, materials and other details for the latest and past earnings presentation

Q1/3M FY03/2019 Webcast & Presentation

Schedule

August 13, 2018

Venue

Otemachi 1st square

Note:
Webcast & Presentation in this site are prepared to provide information to facilitate greater understanding of the Company. It is not intended for use in soliciting investments in the securities issued by the Company or its subsidiaries. The information published in this material, including forecasts, is recognition, opinion, judgment or projection of the Company at the time of creation of this material and the Company does not guarantee its achievement. As such, please be aware that actual results may differ from the forecasts provided in this material as a result of various factors.

Presenter

Director, Executive Officer, General Manager of General Accounting Department Taiji Hitachi
Director, Executive Officer, General Manager of PR & IR Division, Corporate Planning Department Takehito Yamanaka
Deputy General Manager, PR & IR Division, Corporate Planning Department Hidehiko Hombu

Summary of Q1/3M FY03/2019

Operating revenue for the current fiscal year increased by 1.0% to 17,834 million yen YOY because loan increased mainly for companies in savings banks in South Korea; interest income grew with increased securities in the banking business and also interest income rose by changing the presentation of revenue on purchased receivables in TA Asset Management. Operating profit decreased by 75.9% to 593 million yen over a year earlier with the followings: operating expense increased as a result of an increase in provision for doubtful accounts upon the introduction of IFRS 9 from FY03/2019; and increases in M&A and litigation costs or others in the savings banks in South Korea and J Trust Bank Indonesia.

The segment names were changed from Domestic financial Business and Financial Business in South Korea to Financial Business in Japan and Financial Business in South Korea and Mongolia, respectively.

Please scroll horizontally to see this figure.

Q1 FY03/2018 Q1 FY03/2019 Difference
Financial business in Japan 1.1 billion yen 0.9 billion yen (0.2) billion yen
Financial business in South Korea and Mongolia 1.6 billion yen 1.4 billion yen (0.2) billion yen
Financial business in Southeast Asia 0.1 billion yen (0.7) billion yen (0.8) billion yen
Investment business 0.2 billion yen 0.1 billion yen (0.1) billion yen
Non-financial business (0.2) billion yen (0.2) billion yen ±0.0 billion yen
Other business (0.0) billion yen (0.0) billion yen (0.0) billion yen
Consolidated operating profit 2.4 billion yen 0.5 billion yen (1.9) billion yen

Financial Business in Japan

In Credit Guarantee Business, the guarantee balance for Q1 FY03/2019 increased by 62% to 159.7 billion yen YOY due to new credit guarantee schemes such as Real Estate-Backed Card Loan (Reverse Mortgage Type) and Overseas Real Estate Secured Loans in addition to the existing guarantee for condominium loan. In Receivable Collection Business, NPL purchase was also successful in Servicer Business; off-balanced claimable receivables succeeded from Takefuji increased to 140 billion yen in Nihon Hoshou; and the total claimable receivables exceeded 900 billion yen in Financial Business in Japan. Subsequently, segment revenue was 2,370 million yen, remained unchanged from the previous term and segment profit decreased by 13 % to 970 million yen over a year ago because operating expense increased by reason of an increase in provision for doubtful accounts by reviewing the future cash flows of purchase receivables.

Financial Business in South Korea and Mongolia

The total loan balance of Savings Banks and Capital Company recorded 3,484.7 billion won by steadily increasing their balances although loan portfolios were reshuffled. The delinquency ratio remains stable at a lower level of 4.77%. In Receivable Collection Business, the balance of claimable receivables for Q1 FY03/2019 increased by 37% to 250.4 billion won year on year due to successful purchase of receivables last year. Consequently, segment revenue increased by 15% to 10,172 million yen over a year earlier because interest revenue increased due to the followings: an increase in loan; growth in securities in the banking business; and a change in the method of presenting revenue. Segment profit decreased by 14% to 1,458 million yen because operating expense increased as a result of an increase in provision for doubtful accounts upon the introduction of IFRS 9.

Financial Business in Southeast Asia

The total loan balance in the banking business increased to 12,212.5 billion rupiah by reason of growth in small-amount/retail loans while large-amount loans declined with the loan portfolio reshuffle.
Accordingly, segment revenue decreased by 12% to 313.9 billion yen over a year ago because the interest revenue was stagnant along with the drop in the average lending interest rate although loan in the banking business is gradually increasing. Segment loss of 783 million yen was posted because provision for doubtful accounts increased with the downgraded credit rating of receivables upon the adoption of IFRS 9.

Investment Business

Segment revenue decreased by 54% to 266 million yen YOY due to a decrease in interest income in J Trust Asia. Segment profit declined by 36% to 186 million yen over a year earlier because SG & A expenses increased along with an increase in litigation cost on Group Lease.

Non-Financial Business

In General Entertainment Business, segment revenue increased through the effects of sales campaign, etc. by excluding the vauation loss on inventory in Highlights Entertainment while some detached housing deliveries were postponed to July or later, which led to a decrease in revenue in Real Estate Business and segment revenue decreased to 1.6 billion yen over a year ago in Non-financial Business.

Summary of Q&A session

Summary of Q&A session at Earnings Presentation for Q1/3M FY03/2019 (HTML)
(Please click the text above. Details are displayed below.)

Q1 Please let me know how J Trust has been expanding guarantees for condominium loans under tighter lending environments.
A1 Nihon Hoshou’s loan guarantee origination is growing thanks to a tie-up with housing developers that are involved with a lot of construction projects. To manage basic risks, both Nihon Hoshou and partner financial institutions carefully run credit checks of investors (property owners). Also, we refrain from any sublease agreements and carefully select only newly-built and high-occupancy properties to provide guarantee services. Other than this, we are not doing anything special.
Q2 Are there any specific financial institution or housing developers in expanding guarantees for condominium loans?
A2 So far, we have partnered with a limited number of financial institutions and the longest relationship has been established with the Saikyo Bank. For housing developers, we have dozens of partners. Among them, top 10 companies account for relatively high percentage.
Q3 Condominium loan guarantee businesses have had zero defaults so far. Are your guarantee fee rates under contracts adequate to cover costs in the event of occurrence of defaults in the future?
A3 Contract details could vary in an arrangement with partner. However, fee rates are adjusted depending on the quality of receivables.
Q4 What is the market size of Olympindo and its expected profit contribution after joining the Group, as well as a timing when J Trust Bank Indonesia restores profitability?
A4 (For market size and others, please refer to Slide 57.)
Given the size of Olympindo, huge profit contributions are unlikely to be expected; however, we will put a priority on growing assets by further expanding financing for agricultural equipment and used car loans along with an increase in the number of alliances.
As for the timing when J Trust Bank Indonesia resumes profitability, as Mr. Hombu explained, up to now, there still may be up and down on a monthly basis. Since we have just started implementing countermeasures, it may yet be difficult to give a clear-cut answer at this moment.
Q5 Are you considering releasing a new medium-term business plan?
A5 Currently, we have no official announcements; however, in order to help investors understand the Company and its prospects, we are discussing whether we should announce the target figures in a form other than the medium-term business plan.

Videos, materials and other details for the latest and past earnings presentation

Q4/Full-Year FY03/2018 Webcasts & Presentations

Schedule

May 15, 2018

Venue

Otemachi 1st square

Please note that figures of Net Income (Profit/ (loss) attributable to owners of the parent company) on chapter 5 and 25 revised as of May 21, 2018.
Please click here for details.

Presenter

Representative Director, President & Chief Executive Officer Nobuyoshi Fujisawa
Representative Director, Senior Managing Executive Officer Nobuiku Chiba
Director Executive Officer, General Manager of General Accounting Department Taiji Hitachi
Executive Officer  PR & IR Division, Corporate Planning Department Takehito Yamanaka
General Manager PR & IR Division, Corporate Planning Department Hidehiko Hombu

Highlights of Q4/Full-Year FY03/2018 Results

The operating revenue for FY03/2018 increased by 14.8% to 76,266 million yen compared to FY03/2017, because of stable growth in Domestic Financial Business, and Financial Business in South Korea, and recorded operating revenue as a result of re-classification of receivables from GL upon cancellation of their CDs.
The operating profit for FY03/2018 increased by 288.3% to 2,355 million yen compared to FY03/2017, because the operating revenue increased although there was an impairment loss on holding shares of GL and cancellation of CDs of GL caused a realized loss corresponding to the derivative component of CDs.

Please scroll horizontally to see this figure.

FY2017 FY2018 Difference
Domestic Financial Business 5.5 billion yen 4.1 billion yen (1.4) billion yen
Financial Business in South Korea 3.1 billion yen 3.5 billion yen 0.4 billion yen
Financial Business in Southeast Asia (3.9) billion yen 1.5 billion yen 5.4 billion yen
Investment Business (0.1) billion yen (2.8) billion yen (2.7) billion yen
Non-Financial Business (0.3) billion yen (1.7) billion yen (1.4) billion yen
Others (3.7) billion yen (2.3) billion yen 1.4 billion yen
Total 0.6 billion yen 2.3 billion yen 1.7 billion yen

Domestic Financial Business

In Credit Guarantee Business, the amount of guarantee for FY03/2018 increased by 65% to 144.1 billion yen compared to FY03/2017 through promoting new credit guarantee products, such as Real Estate-Backed Card Loan (Reverse Mortgage Type) and Overseas Real Estate Secured Loans in addition to the existing Apartment Loan. In Servicer Business, the amount of receivables / NPLs are increasing and off-balanced assets, worth 140 billion yen approx., succeeded from Takefuji to Nihon Hoshou increased as well. The total claimable receivables exceeded 900 billion yen in Domestic Financial Business.

Financial Business in South Korea

Total loan balance of Savings Banks and Capital Company recorded 3,340 billion won, and is steadily increasing under tighter regulations. The delinquency ratio remain stable at a lower level of 5.18%. In Servicer Business, claimable receivables in TA Asset Management's FY03/2018 increased by 36% to 35.8 billion yen compared to FY03/2017. They successfully purchased three different receivables, which contributed to increase in the amount.

Financial Business in Southeast Asia

Total loan balance of J Trust Bank recorded 11,745 billion rupiah by changing the loan portfolio mix from large corporate loans to concentrate primarily on smaller commercial loans between the amount of 100 and 500 million yen.
The delinquency ratio remains at lower level at 3% by changing the loan portfolio mix.

Investment Business

6.4 billion-yen investment loss in Group Lease PCL caused a huge impact. However, as announced in Q3 FY03/2018, as a result of re-classification of receivables from GL upon cancellation of their CDs, no gain or loss on the derivative component of the CDs will occur in the future.

Non-Financial Business

Recorded an operating loss of 1.7 billion yen, caused mostly by the changes in regulations in marketing and sale of recreational arcade machines by Highlights Entertainment, however, it is expected to be improved in the future.

Summary of Q&A session

There were no questions.

Q3/9M FY2018 Webcasts & Presentations

Schedule

February 14, 2018

Venue

Otemachi 1st square

Presenter

Representative Director & Senior Managing Executive Officer Nobuiku Chiba
Director, Executive Officer & General Manager of General Accounting Department Taiji Hitachi
General Manager, PR & IR Division, Corporate Planning Department Hidehiko Honbu

Highlights of Q3/9M FY2018 Results

Operating revenue for Q3/9M FY2018 increased by 5% to 66.8 billion yen YoY owing to the strong performance of operations in Domestic Financial Business (Japan) and Financial Business in South Korea. It was also generated as a result of re-classification of receivables from Group Lease (GL) upon cancellation of their convertible debentures (CDs).
Operating revenue decreased by 64.7% to 2.6 billion yen because of the impairment loss on holding shares of GL and cancellation of CDs of GL that caused a realized loss corresponding to the derivative component of CDs.

Please scroll horizontally to see this figure.

Q3/9M FY2017 Q3/9M FY2018 Difference
Domestic Financial Business 4.0 billion yen 3.4 billion yen (0.6) billion yen
Financial Business in South Korea 1.9 billion yen 3.0 billion yen 1.1 billion yen
Financial Business in Southeast Asia (3.4) billion yen 1.1 billion yen 4.5 billion yen
Investment Business 7.7 billion yen (2.7) billion yen (10.4) billion yen
Non-Financial Business 0.1 billion yen (0.4) billion yen (0.5) billion yen
Others (2.7) billion yen (1.8) billion yen 0.9 billion yen
Total 7.6 billion yen 2.6 billion yen (5.0) billion yen

Domestic Financial Business

For Credit Guarantee Business, we focus on Apartment Loans and the amount of guarantee is steadily increased by 69% to 128.8 billion yen YoY owing to selecting of areas, properties that are within 10 min's walk to the nearest stations, and well-selecting housing developers. The occupancy rate is 98% and there are no defaults on the loans.
For Servicer Business, it has acquired purchased receivables well and amount of the claim receivables increased by 2.5% to 766.4 billion yen YoY.

Financial Business in South Korea

In 2017, the regulation for maximum loan amount was implemented and it had to reserve more provision for doubtful accounts. In 2018, introducing IFRS 9, changed the scheme of individual rehabilitation claims and reduced the maximum interest rate. Under those tighter regulations, the amount of loans is 3.2 trillion won and steadily increasing. Also, the avg. lending interest rate is decreasing by shifting the loan portfolio from consumer to corporate loans, but the assets and net interest income are increasing.

Financial Business in Southeast Asia

3 years have passed since acquiring J Trust Bank Indonesia (BJI). To enhance the financial health, BJI has reserved more provision for doubtful accounts, reduced staffs and merged some branches, and has made a strong business foundation to shift the earnings structure that will generate more profits from banking business.
BJI recorded 1.1 billion yen of operating profit in IFRS however, BJI has been profitable in local Indonesian accounting standards since 2017.
J Trust Investment Indonesia, one of our Servicer business, recorded 300 million yen of operating loss because of the impairment loss on purchased receivables, but this loss however was absorbed by BJI and closed the segment quarter in the black.

Investment Business

J Trust Asia recorded 2.7 billion yen of operating loss by generating the operating revenue as a result of re-classification of receivables from Group Lease (GL) upon cancellation of their convertible debentures (CDs), causing a realized loss corresponding to the derivative component of the CDs, and loss on GL's holding shares.

Non-Financial Business

Recorded 400 million yen of operating loss mainly because of the weak performance in sales of Adores and delayed recognition of revenue after recognition of cost in advance, by adopting renting method for sales of new amusement machine.

Summary of Q&A session

There were no questions.

Q2/H1 FY2018 Webcasts & Presentations

Schedule

November 14, 2017

Venue

Otemachi 1st square

Presenter

Representative Director, President & Chief Executive Officer Nobuyoshi Fujisawa
Representative Director & Senior Managing Executive Officer Nobuiku Chiba
Director, Executive Officer & General Manager of General Accounting Department Taiji Hitachi
General Manager, PR & IR Division, Corporate Planning Department Hidehiko Honbu

Highlights of Q2/H1 FY2018 Results

Financial businesses in Japan, South Korea and Indonesia performed well and consolidated operating revenue recorded 41.4 bn yen and has increased 6% YoY in H1 FY2018. Financial businesses in Japan and South Korea are growing steadily and consolidated profit recorded 4.1 bn yen which is a twenty-fold increase YoY.

Please scroll horizontally to see this figure.

H1 FY2017 H1 FY2018 Difference
Domestic Financial Business 2.6 billion yen 2.4 billion yen (0.2) billion yen
Financial Business in South Korea 1.2 billion yen 2.4 billion yen 1.2 billion yen
Financial Business in Southeast Asia (2.8) billion yen (0.2) billion yen 2.6 billion yen
Investment Business 0.6 billion yen 1.0 billion yen 0.4 billion yen
Non-Financial Business 0.3 billion yen (0.2) billion yen (0.5) billion yen
Others (1.7) billion yen (1.3) billion yen 0.4 billion yen
Total 0.2 billion yen 4.1 billion yen 3.9 billion yen

Domestic Financial Business

In credit guarantee business, we have focused on Apartment loan and the amount stood at 112.1 bn yen as of the end of September, 2017. This represents an increase, YoY, of 72%.
We only deal with reliable property management firms, extremely selective in our choice of properties which situated in major urban area with direct access to public transportation, etc.
The occupancy rates in excess of 98 % and we don't have any default on the guaranteed loans. The Servicer business is going well and we managed to purchase a bulk of receivables from a credit card company. The claimable loan amount is 759.2 bn yen or 5 % increase YoY.

Financial Business in South Korea

The operating profit was 2.4 bn yen which included 600 million yen of provision for doubtful accounts of FY 2017 returned on Q1 FY2018. Even we exclude the reversals, generated healthy profit.
That indicates an increasingly profitable and sustainable model. The loan balance is more than 300 bn yen worth which is a ten-fold comparing with 5 years ago when JT Chinae started its operation.
Own screened receivables increased and the NPL ratio is at the low as 5.47%. The actual figure is a lot lower, because debt consolidation through the court bankruptcy process which will be repaid in the future are counted as a de bt delinquency event. If it excludes these, the effective rate is just below 3%. There are plans to lower the ceiling on interest rates charged by banks, from 27.9% to 24% by February 2018. We believe that we can utilize our experience and expertize of Japan to the change.

Financial Business in Southeast Asia

As it pertains to operating profit, we registered a loss of 200 million yen, which, while still a loss, represents an improvement of 2.6 billion yen YoY. This 200 million loss during Q2 FY2018 is due to a non-recurring event involving a downward adjustment to JTII’s book value by having reviewed the collection plan with our auditor. The operating profit of BJI has been improved 2.6 bn yen YoY and it recorded 200 million yen or 90 bn rupiah (900 million yen) under the Indonesian accounting standards. The banking business is improved significantly. COF has been steadily going down to 7.19%, which is the lowest its started and the number of POS of GLFI and its loan balance is growing healthy.

Investment Business

Reported 1.1 billion yen in operating profit. The progress towards to the full-year forecast is 41%. The P/L will be impacted by Group PCL. Mr. Fujisawa, President & CEO is addressing concerns in his presentation. Please watch the webcast.

Non-financial Business

Posted a 200 million yen loss. This was caused by a delay in the release of the line of amusement machines, but we gradually seeing a return to profitability going into H2 of the fiscal year of 2018.

View on Group Lease PCL.

Mr. Fujisawa, President & CEO is addressing concerns about Group Lease PCL. in his presentation. Please watch the webcast.