shinsei bank: institutional banking group evolution · shinsei bank: institutional banking group...

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Shinsei Bank:Institutional Banking Group Evolution

Merrill Lynch Japan ConferenceSeptember 9, 2005“Business and Financial Overview”

CLSA Investors' Forum 2006 Hong KongSeptember 14-15, 2006

Rahul GuptaSenior Managing Executive Officer

Chief Financial Officer

1

Forward Looking Statement

The following materials contain statements that constitute forward-looking statements, plans for the future, management targets, etc. relating to the Company and its subsidiaries. These forward-looking statements are based on current assumptions of future events and trends, which may be incorrect. Actual results may differ materially from those in the statements as a result of various factors.

Unless otherwise noted, the financial data contained in these materials are presented under Japanese GAAP. The Company disclaims any obligation to update or to announce any revision to forward-looking statements to reflect future events or developments. Unless otherwise specified, all the financials are shown on a consolidated basis.

Information concerning financial institutions other than the Company and its subsidiaries are based on publicly available information.

These materials do not constitute an invitation or solicitation of an offer to subscribe for or purchase any securities and neither this document nor anything contained herein shall form the basis for any contract or commitment whatsoever.

2

Agenda

Section 1: A Different Kind of Japanese Bank

Section 2: Financial Highlights

Section 3: The Three Strategic Business Pillars

» Institutional Banking» Consumer and Commercial Finance» Retail Banking

Section 4: Key Corporate Imperatives

Section 5: Conclusion

3

A Different Kind of Japanese Bank

• Balance sheet clean-up• Diversification of funding sources• State-of-the-art and cost-efficient

technology• Attracting and retaining talent• Creation of strategic business

model

Building the Platform

March 2000 February 2004 Current

• Revenue quality and diversification • Solutions to meet customer needs • Cross-selling initiatives• Business intelligence

Revenue Generation• Enhancing profitability and

diversification• Expanding the franchise• Product penetration• Customer segmentation• Strengthening the three strategic

business pillars

Now and Future

Sustainable Growth

0.3%

1.2%

0.0%

0.4%

0.8%

1.2%

1.6%

FY2000 FY2005

35

101

020406080

100120

FY2000 FY2005

582

855

0

200

400

600

800

1,000

3/2001 3/2006

6.6%

12.4%

0.0%

5.0%

10.0%

15.0%

FY2000 FY2005

IPOBirth of Shinsei

Strategic Transformation to a Leading Japanese Financial Services Company – One of the Most Impressive Turnaround Stories in Japan Strategic Transformation to a Leading Japanese Financial Services

Company – One of the Most Impressive Turnaround Stories in Japan

Return on Assets1,2

%Net Income1,2

JPY BillionShareholders’ EquityJPY Billion

Return on Equity1,2

%

1 Cash basis excluding amortization of total intangibles2 Excludes one-time gain from DIC equity portfolio (JPY 55Billion) in FY2000

4


Setting Shinsei Bank Apart Setting Shinsei Bank Apart

More Global ThanMore Global ThanLocal CompetitionLocal Competition

Innovative Products

Better Service

Open Thinking

Useful Network

Responsible toResponsible toShareholders andShareholders and

SocietySociety

Customer Customer FocusedFocused

More Local ThanMore Local ThanGlobal CompetitionGlobal Competition

Empowered

Value-Focused

Flexible

Open-Minded

Proud Heritage

Long-Term Approach

Decisions Made in Japan

Japan First and Last

Transparency

High Standards

Ethics and Integrity

Measures and Rewards

Long Term Profitable Growth Long Term Profitable Growth

Recognized Recognized and Appreciatedand Appreciated

Banking ApproachBanking Approach

Strong ResultsStrong ResultsDiversified IncomeDiversified IncomeGrowing ProfitableGrowing Profitable

Customer BaseCustomer Base

EstablishedEstablishedThree PillarThree Pillar

Strategic Business Model Strategic Business Model

5


A Business Model Organized Around The CustomerA Business Model Organized Around The Customer

Customers

Implementation of Shinsei’s expertise Synergies with Institutional / Retail Banking businessesOrganic growth and opportunistic strategic acquisitions

Unique hybrid banking modelValue-added solutionsIntegrated product specialists and relationship manager teams providing innovative solutions

Attractive and innovative value propositionStrong brand recognitionHighly efficient and effective “bricks and clicks”distribution model

Risk Management Corporate Governance Technology Platform

InstitutionalBanking

41%1, 2 RetailBanking

15%1

Consumerand

CommercialFinance

44%1

Revenue

1 Percentage of total revenue contribution for the fiscal year ended March 31, 2006, management accounting basis2 Includes revenue (losses) of ALM/Corporate/Other

6


World-class Corporate Governance and Management World-class Corporate Governance and Management

Board of DirectorsBoard of Directors

Executive Directors

Thierry PortéPresident, CEO, Shinsei Bank, Limited

Junji SugiyamaChairman, Shinsei Bank, Limited

Non-executive International Directors Non-executive Domestic DirectorsMichael J. Boskin Professor, Stanford University

Emilio Botín Chairman, Grupo Santander

Timothy C. Collins CEO, Ripplewood Holdings, LLC

J. Christopher Flowers Chairman, J.C. Flowers & Co., LLC

Fred H. Langhammer Chairman, Global Affairs, The EstéeLauder Companies, Inc.

Lucio A. Noto Former Vice Chairman, Exxon Mobil Corporation

John S. Wadsworth, Jr. Advisory Director, Morgan Stanley

Shigeru Kani Former Director, Administration Department, The Bank of Japan Professor, Yokohama College of Commerce

Minoru Makihara Senior Corporate Advisor, Mitsubishi Corporation

Yasuharu Nagashima Lawyer

Nobuaki Ogawa Lawyer

Hiroyuki Takahashi Former Director, Japan Corporate Auditors Association

Teruaki Yamamoto President, APLUS Co., Ltd.

Senior AdvisorsSenior Advisors

Takashi ImaiJohn S. ReedPaul A. VolckerMasamoto Yashiro

Senior Advisor, Honorary Chairman, Nippon Steel CorporationFormer Chairman, Citigroup Inc.Former Chairman, Board of Governors of the Federal Reserve SystemFormer Chairman, CEO, Shinsei Bank, Limited

7


Growing Recognition and CredibilityGrowing Recognition and Credibility

Shinsei Bank RecognitionShinsei Bank Recognition

Best Bank in Japan 2004 and 2006 (Euromoney)#1 Financial Institution in Corporate Governance 2005 ranked by The Japan Corporate Governance Research Institute Inc. IPO of the Year 2004 (Thomson DealWatch)Bank of the Year for Japan 2003 (The Banker)Best Local Bank Japan 2002 (FinanceAsia)

Securitization Deal of the Year, Japan, 2003, 2004 (Asiamoney) Japanese Securitization of the Year 2004 (IFR)Deal of the Year, Japan, 2004 (ISR)Most Innovative Deal, 2004 (FinanceAsia)Deal of the Year, Japan, 2003 (Thomson DealWatch)

Institutional Banking RecognitionInstitutional Banking Recognition

#1 in Customer Satisfaction Ranking 2004, 2005 and 2006 (Nihon Keizai Shimbun)Best Retail Bank, Japan, 2004, 2005 and Excellence in Internet Banking Awards 2005 (The Asian Banker)Good Design Award 2005 for “32 Color Cash Cards”

Retail Banking RecognitionRetail Banking Recognition

8

Financial Highlights

178

273

0

100

200

300

FY2004 FY2005

Strong FY2005 Results Validate our Business ModelStrong FY2005 Results Validate our Business Model

Total Revenue 1JPY Billion

FY 2005 Highlights (All figures compared to FY2004)

Cash basis net income increased by 36%Total revenue increased by 54%

7467 76

101

0

30

60

90

120

FY2004 FY2005

Net Income (Reportedand Cash Basis 2) JPY Billion

Ordinary business profit increased by 68% Earning assets increased by 27%

81

137

0

50

100

150

200

FY2004 FY2005

Ordinary Business Profit 1

JPY Billion

5,3156,749

0

2000

4000

6000

8000

FY2004 FY2005

Earning AssetsJPY Billion

1 Management accounting basis2 Cash basis excludes amortization of total intangibles

9


Low-cost and Stable Funding from Growing Retail Customer BaseLow-cost and Stable Funding from Growing Retail Customer Base

Customer Funding Composition and Average Cost of Interest Bearing Liabilities Customer Funding Composition and Average Cost of Interest Bearing Liabilities

8%18%

33% 39%49%

61%

19%20%

16%16%

12%9%73%

63%51% 45% 39% 30%

0.67%

1.20%

0.88%

0.69%

0.64% 0.66%

0%

20%

40%

60%

80%

100%

FY2000 FY2001 FY2002 FY2003 FY2004 FY20050.0%

0.3%

0.6%

0.9%

1.2%

1.5%

Retail Deposits Retail DebenturesInstitutional Deposits/Debentures Average Cost of Interest Bearing Liabilities

10


Increasing Levels of Profitability and Returns Increasing Levels of Profitability and Returns

ROE (diluted)1 and Equity

JPY Bn %

ROE (diluted)1 and Equity

JPY Bn %

ROE (diluted)Equity

ROA2 and Total Assets

JPY Bn %

ROA2 and Total Assets

JPY Bn %

ROATotal Assets

855

786

730

679

9.4%8.1%

9.8%

12.4%

500

600

700

800

900

1,000

FY2002 FY2003 FY2004 FY20050%

3%

6%

9%

12%

15%

6,706

8,5769,405

6,343

1.0%

0.7%

1.0%

1.2%

3,000

5,000

7,000

9,000

11,000

13,000

15,000

FY2002 FY2003 FY2004 FY20050.0%

0.3%

0.6%

0.9%

1.2%

1.5%

1 Equity includes preferred shares. Cash basis ROE (diluted) for FY2004 and FY20052 Cash basis ROA for FY2004 and FY2005

11


Healthy Balance Sheet Healthy Balance Sheet

NPL Coverage Ratio / NPL Ratio

As of March 2006 %

NPL Coverage Ratio / NPL Ratio

As of March 2006 %

77%71% 73%

91%

2.1%1.7%

1.0%1.4%

0%

20%

40%

60%

80%

100%

Shinsei MUFG Mizuho SMFG0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

Reduction of NPLs1

JPY Bn %

Reduction of NPLs1

JPY Bn %

1,865

1,2961,114

233435297

20.0%

1.0%

19.0%

5.7%2.8%

22.0%

1.4%

0

500

1,000

1,500

2,000

2,500

3/2000 3/2001 3/2002 3/2003 3/2004 3/2005 3/20060%

5%

10%

15%

20%

25%

NPL Amount NPL Ratio NPL Coverage Ratio NPL Ratio

3 42

Source: Company disclosure

1 Based on Financial Revitalization Law (Non-consolidated)2 Bank of Tokyo-Mitsubishi UFJ, Mitsubishi UFJ Trust and Banking Corporation, “MUSP”, “UFJTE”3 Mizuho Bank, Mizuho Corporate Bank, Mizuho Trust & Banking and Revitalization subsidiaries4 SMBC (Non-consolidated)

12


Capital Ratios and Quality of Capital – Ahead of Top Peers Capital Ratios and Quality of Capital – Ahead of Top Peers

Regulatory Capital Ratio

As of March 2006 %

Regulatory Capital Ratio

As of March 2006 %

15.5%

12.2% 11.6% 12.4%

10.3%6.8% 5.9% 7.1%

0.0%

4.0%

8.0%

12.0%

16.0%

20.0%

Shinsei MUFG Mizuho SMFG

Tier I Ratio Total Capital Ratio

Net DTAs1 / Tier 1 Capital

As of March 2006 %

Net DTAs1 / Tier 1 Capital

As of March 2006 %

21.6%

6.4%8.3%

2.2%0%

10%

20%

30%

40%

Shinsei MUFG Mizuho SMFG2 3 4

Source: Company disclosures Source: Company disclosures

1 Deferred Tax Assets2 Mitsubishi UFJ Financial Group and UFJ Holdings Inc (consolidated basis)3 Mizuho Bank, Mizuho Corporate Bank, Mizuho Trust & Banking and Revitalization subsidiaries (consolidated basis)4 Sumitomo Mitsui Financial Group (consolidated basis)

13


Moody’s Rating History

Long-term Senior Debt BFSR1

Moody’s Rating History

Long-term Senior Debt BFSR1S&P Rating History


S&P Rating History


DD

DD--

E+E+

Baa1Baa1

Baa2Baa2

Baa3Baa3

Moody’s upgraded its ratings on Long-term Senior Debt and BFSR (February 3, 2006)S&P revised the outlook on long-term debt to positive from stable (January 24, 2006)

(March 10, 2000)(August 12, 1998)

(July 10, 2001)(January 12, 1999)

(December 12, 2003)

(February 3, 2006)

(December 12, 2003)BBB+BBB+

(December 17, 2004)

BBBBBB(June 9, 2003)

BBBBBB--(March 2, 2000)

Outlook PositiveOutlook Positive(January 24, 2006)

C+C+(July 11, 2005)

Shinsei’s Credit Ratings have been Improving …..Shinsei’s Credit Ratings have been Improving …..

(February 3, 2006)A3A3 D+D+

1 Bank Financial Strength Rating2 Bank Fundamental Strength Rating

14

Commencement of Resolution of Public Funds Commencement of Resolution of Public Funds

Public Funds

Changes in Number of Shares (on fully-diluted basis) (Million Shares)

Before July 31, 2006 Conversion on July 31, 2006

Reset on August 1, 2006

Repurchase on August 17, 2006

269 269

163

Common 1,358 1,558 1,558 1,558

of Which, Treasury2 175

Total on Fully-diluted Basis (net of Treasury) 2,027 2,027 1,990 1,815

Government Ownership on Fully-diluted Basis (%) 33.0% 33.0% 31.8% 23.8%

DescriptionGovernment converted half of Class B at JPY 599.9 conversion price

Conversion price for Class B was reset to JPY 735

Shinsei repurchased 175 million shares from government

163

269

200

269

400

Class A1

Class B1

Target Tier 1 Capital Ratio: 7% - 8%Target Share Count Reduction: 5% - 6%

1 Number of shares for Class A and Class B are number of shares on fully –diluted basis (number of common shares after conversion).2 Treasury stock arising from the share repurchase.

15

The Three Business Pillars

Strong Ordinary Business Profit Growth in all Business LinesStrong Ordinary Business Profit Growth in all Business Lines

OBP

97.0116.6

59.177.5

0.0

20.040.0

60.080.0

100.0120.0

140.0

119.7

43.259.3

17.10.0

20.040.060.080.0

100.0120.0140.0

Customers 6%251% 2, 3

InstitutionalBanking

41%1, 3 RetailBanking

15%1

43%2

Consumerand

CommercialFinance

44%1

Revenue

42.437.57.65.9

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

FY2004 FY2005

FY2004 FY2005

FY2004 FY2005

Revenue (JPY Bn)

Ordinary business profit (JPY Bn)

1 Percentage of total revenue contribution for the fiscal year ended March 31, 2006, management accounting basis2 Percentage of OBP contribution for the fiscal year ended March 31, 2006, management accounting basis3 Includes revenue (losses) of ALM/Corporate/Other

16

Profit Trend 1 JPY BillionProfit Trend 1 JPY Billion

Institutional Banking

59.1

77.5

116.6

89.197.0

51.4

0

20

40

60

80

100

120

FY2003 FY2004 FY2005Total RevenueOrdinary Business Profit

Shinsei continues to evolve to a Hybrid BankShinsei continues to evolve to a Hybrid Bank

Number ofCustomers

Variety of Products

Japanese Mega Banks

Commodity

SmallLarge

Regional Banks

Foreign Investment

Banks

Hybrid

Shinsei

Success Driven by Hybrid Innovative Solutions to Meet Customer Needs Success Driven by Hybrid Innovative Solutions to Meet Customer Needs

1 Management accounting basis

17


Targeted Product Penetration Through Cross-sell Using Business Intelligence

Targeted Product Penetration Through Cross-sell Using Business Intelligence

Revenue Composition by Products 1

FY2005

Revenue Composition by Products 1

FY2005Effective Cross-selling of ProductsEffective Cross-selling of Products

Corporates Financial Institutions

Real Estate, Hotel,

Construction

Public Sector

Universe of Relationships

Credit Trading

Non-recourse Loans

Securitization

Asset Management

Wealth Management

Capital Markets Distribution

Loan Syndication

New Securitization Asset Classes

Stab

le B

ase

Gro

wth

Are

as

Principal Investment

5%

CreditTrading

13%

Forex, Derivatives,

Equity-related

27%

Non-recourse Lending

17%Corporate Loans

15%

Securitization13%

Others3%

Other Capital Markets

6%

1 Management accounting basis

18


Focusing on Growth Businesses and Customer Relationships Focusing on Growth Businesses and Customer Relationships

Key Cost Key Cost DriversDrivers

Use of Technology to EnhanceOperational Efficiency

Maintain Expense Ratio atLow Levels

Key RevenueKey RevenueDriversDrivers

Build Product Offering inCapital Markets and Securities Firms

Increase Products per Corporate Customer Relationship

Expand Product OfferingTo Public Sector

Leverage Financial Ties for Third Party Distribution of Shinsei

Products and Capabilities

ChallengesChallenges

Lack of Market Pricing Disciplinefor Corporate Loans

Evolve Business Model as Core Product Growth Decelerates

Timely Execution of Future KeyBusiness Franchises

(M&A, Asset/Wealth Management)

Hire and Retain Quality Staff

Extend Core Competencies Overseas

19

Consumer and Commercial Finance

Leveraging Shinsei Expertise to Build an Effective Consumer and Commercial Finance Business Pillar

Leveraging Shinsei Expertise to Build an Effective Consumer and Commercial Finance Business Pillar

Profit Trend 4

JPY Billion

Profit Trend 4

JPY BillionOverviewOverview

Consumer Solutions

New Products

Sales Force Management

Brand / PR

Underwriting

Risk Analysis

IT Migration to Flexible and

Open Architecture

People Development

Career Mobility

Platform Expansion

Major Alliances

Funding Expertise

Expense Control

FINANCE RISKMARKETING IT/OPS HR M&A

(SHINKI 2)

(APLUS1) (SHOWA LEASING)

(Shinsei Business Finance)

(Life Housing Loan)

(Shinsei Property Finance)

JPY1,822Billion JPY574Billion JPY126BillionTotal Assets 3

5.5

119.7

2.5

17.1

59.3

43.2

0

20

40

60

80

100

120

FY2003 FY2004 FY2005Total RevenueOrdinary Business Profit

Small & MediumBusiness Solutions

Specialty PropertySolutions

1 Shinsei Sales Finance was assigned from Shinsei Bank to APLUS in the 1st Quarter of FY20062 Shinki is an equity-method affiliate3 Total assets are the sum of companies grouped together around “Consumer”, ”Commercial” and “Specialty Property” as of March 31, 20064 Management accounting basis

20


Successful Integration of Recent Acquisitions Greatly Expand Consumer and Commercial Finance Opportunities

Successful Integration of Recent Acquisitions Greatly Expand Consumer and Commercial Finance Opportunities

APLUS: Strong Customer BaseAPLUS: Strong Customer Base SHOWA LEASING: Attractive PlatformSHOWA LEASING: Attractive Platform

– JPY 2 trillion transaction volume– 5 million card holders– 800 co-branded cards in

conjunction with high-profile partners

– JPY 2 trillion transaction volume– 5 million card holders– 800 co-branded cards in

conjunction with high-profile partners

– JPY 350 billion leasing and rental assets 1

– Continuous relationship with Resona while adding Shinsei network to diversify customer base

– JPY 350 billion leasing and rental assets 1

– Continuous relationship with Resona while adding Shinsei network to diversify customer base

Credit Rating (R&I) Credit Rating (JCR)BBB+ / —

(December 2004)A- / a-1

(December 2005)— / NJ

(January 2005)A- / J-1

(March 2005)

Cross-selling to customers/partners Continuously improving risk management

1 As of March 31, 2006

21


APLUS & SHOWA LEASING - Significant Contribution to Shinsei GroupAPLUS & SHOWA LEASING - Significant Contribution to Shinsei Group

4.66.86.1

64.773.4 76.8

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

6 months endedMar. 2005

6 months endedSep. 2005


0.0

20.0

40.0

60.0

80.0

100.0Income before income tax Shareholders' Equity

APLUS Key Disclosed Financials after Shinsei’s Acquisition JPY Bn

APLUS’ Updates:Japan’s #5 Shinpan in terms of pre-tax earnings, #9 consumer finance company by outstanding assets of JPY 1.6 trillionCredit card growth continues since acquisition, up approx. 20% to over 5 millionAcquisition of Zen-Nichi Shinpan (March 2006) as the first major acquisition with APLUS platformNote: All figures presented above are APLUS’ disclosed financials (consolidated basis) and

are before consolidation to Shinsei’s financials.

3.2 2.8

29.733.8

0.0

2.0

4.0

6.0

8.0

6 months endedSep. 2005


0.0

20.0

40.0

60.0Income before income tax Shareholders' Equity

Note: All figures presented above are SHOWA LEASING’s non-consolidated financials and are before consolidation to Shinsei’s financials.

SHOWA LEASING Key Financials after Shinsei’s Acquisition JPY Bn

SHOWA LEASING Updates:Mid-sized leasing company providing leasing, installment finance and rental In FY2005, annual lease origination amount (kenshu-daka) increased approximately 12% compared to FY2004 (non-consolidated basis)

22


Transforming Mature Platforms for Sustainable Growth Transforming Mature Platforms for Sustainable Growth

Key Cost Key Cost DriversDrivers

Effective ALM Management toMinimize Interest Rate Exposure

Development of More Productive Risk Models

Standardization, Simplification and Long-term Automation

of Operations


Expand Value Delivered to Clientsthrough APLUS and SHOWA

Increase Cross-selling & ProductCollaboration between Shinsei

and CCF companies andwithin Target Markets

Improve Effectiveness of Core Sales Force

Extend Business Platforms through New Product Development,M&A, Joint Ventures and Alliances


Full Entry of Mega-banks into Consumer and Commercial

Finance Markets

Scale

Grey Zone Issues

Product Scope

23

Retail Banking

Increased Diversification of Revenue SourcesIncreased Diversification of Revenue Sources

Revenue Breakdown by Products

FY2004 vs. FY2005 JPY Bn

Revenue Breakdown by Products

FY2004 vs. FY2005 JPY Bn

Note: Management accounting basis

Deposit and Debentures Net Interest Income up 33.2%1

Loans up 63.5%

Deposit Related Non-InterestIncome up 11.1%

37.5

1 Related to both customer deposits and debentures

1.9 3.26.0

7.4

12.913.3

16.518.3

0

10

20

30

40

50

FY2004 FY2005

Asset Management up 22.6%

FY2005 Highlights

Revenue DriversDouble digit year-on-year growth in all sectors backed by

Strong deposit growth of 33.2% to over JPY 3.0 trillion

Asset management products (Mutual funds and Variable annuities)

Housing loan balance grew 57.1% to JPY 454.5 billion

Expense to revenue ratio82.0% in FY2005 from 84.3% in FY2004

42.4

24

Retail Banking

High Level of Brand Recognition and Outstanding Customer Satisfaction

High Level of Brand Recognition and Outstanding Customer Satisfaction

Brand Awareness

%

Brand Awareness

%

Customer Satisfaction Ranking

%

Customer Satisfaction Ranking

%

2004 2005 2006

1st

Bank of Tokyo-Mitsubishi UFJ 1 N/A N/A 11th

3rd

16th

28th

1st 1st

Citibank 13th 13th

Sumitomo Mitsui Banking Corporation 16th 21st

Mizuho Bank 25th 28th

0

20

40

60

80

100

Shinsei Bank Bank ofTokyo-

Mitsubishi

Citibank Sony Bank

Nov-01 Jun-05

Source: Nihon Keizai Shimbun October 5, 2004, August 24, 2005 and August 24, 20061 Bank of Tokyo-Mitsubishi and UFJ Bank merged in January 2006

- Bank of Tokyo-Mitsubishi ranked 10th in 2004 and 6th in 2005- UFJ Bank ranked 34th in 2004 and 20th in 2005

Source: Asatsu-DK Survey

25

Retail Banking

Focus on Enhancing Customer Base Profitability Focus on Enhancing Customer Base Profitability

Key Cost DriversKey Cost Drivers

Delivery Effectiveness Emphasizing Synergy between Physical and Remote Channels

Targeted Direct Marketing EffortUsing Analytic Tools

Internet as a Low Cost Revenue Generator

Lower Expense Ratio


Resource and Capacity Leverage

Customer Acquisition via Active Branding

Increased Number of Cross Sell Products Aligned to

Customer Needs

Increased Number of ProfitableCustomers Driven bySegmentation Model


Physical Presence

Resource Constraints

Competitor Activity

Innovative Product Development Supported by Advanced

Business Intelligence

26

First Quarter FY2006 Financial Highlights

On Track to Meet FY2006 Financial Targets On Track to Meet FY2006 Financial Targets

First Quarter FY2006 (All figures compared to the first quarter of FY2005)

Total revenue grew 5.6% to JPY 68.1 billion

Ordinary Business Profit after net credit costs increased 8.6% to JPY 27.0 billion

Net Income increased 10.2% to JPY 19.2 billion

Cash basis Net Income increased 4.9% to JPY 24.5 billion

ROA of 0.8% (Cash basis ROA of 1.1%)

ROE (diluted) of 9.0% (Cash basis ROE (diluted) of 11.6%)

Expense to revenue ratio of 54.8%

27

Pursuing Long-Term Sustainable GrowthPursuing Long-Term Sustainable Growth

Key Corporate Imperatives

Increase ROA to 1.5% on cash basis

Total Capital Ratio of 12%

Revenues to grow faster than Expenses

Achieve ROE of 14% oncash basis

Expense / Revenue Ratio < 50%

The Five KeyCorporate ImperativesFY2006-2008

28

Conclusion

– The three pillar business strategy to pursue sustainable and diversified growth– State-of-the-art cost-efficient infrastructure– Advanced risk management capability– World-class corporate governance and control

– Attractive fundamentals– Diversified and growing revenue– Disciplined cost management– Improving profitability and returns– High quality assets and balance sheet– Stable capital base and capital quality – Enhanced funding mix– Secure operating cash flow

A Different Kind of Japanese BankA Different Kind of Japanese Bank

Financial Position and Performance on TrackFinancial Position and Performance on Track

Clear financial objectives for long-term profitable growth Clear financial objectives for long-term profitable growth

shinsei bank: institutional banking group evolution · shinsei bank: institutional banking group...

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