Mid-Term Management Plan

Transcription

1 Mid-Term Management Plan Progress of Mid-Term Management Plan 215 Create the Future with Local Communities Mid-Term Management Plan 215 Create the Future with Local Communities (FY215 FY217) Three Pillars of the Mid- Term Management Plan 1. Fulfill the financial intermediary function to generate a virtuous circle where we can sustainably grow with our local customers 2. Create new added value to improve corporate value 3. Active commitment to regional revitalization Targets for FY217 Profit attributable to owners of the parent 27. billion Consolidated capital adequacy ratio 11% or more ROE 6% or more Core Over Head Ratio High 5s% [Our Goal with the Three Pillars of the Mid-Term Management Plan] Expansion of customer base Provide financial products and services truly beneficial to customers 3. Active commitment to regional revitalization 2. Create new added value 1. Fulfill the financial intermediary function Generating a virtuous circle Benefit from the fruits of growth in both customers and the local economy (securing stable profit) Growth of customers Growth of local economy (1 years later) Aim to become a bank with total assets of 1 trillion Expansion in both quality and volume Expansion of business fields Strategies in the Mid-Term Management Plan Under the mid-term management plan, we are working to further enhance profitability and our management foundation pivots on six strategies. Main Points in Each Strategy 1. Marketing Strategy 2. Human Resource Strategy 3. ALM/Securities Strategy 4. Operational Streaming Strategy 5. IT Strategy 6. Group Strategy ( i ) Enhance approaches to the personal market (ii) Enhance consulting sales (iii) Active efforts for regional development (iv) Realize channel cooperation (omni-channel retailing) ( i ) Nurture human resources that contribute to the development of local communities by creating and providing new value (ii) Develop a corporate culture in which a diverse range of people can play active roles ( i ) Enhance profitability through alliances with asset management companies (ii) Enhance profitability of the portfolio through proper risk-taking (iii) Appropriate and effective practice of ALM ( i ) Drastic streamlining in preparation for an increase in the amount of activity (ii) Streamline the administrative sector ( i ) Study next generation systems while enhancing and nurturing IT personnel responsible for the future (ii) Active utilization of IT to realize various strategies and measures ( i ) Maximize synergy effects by enhancing Group governance (ii) Expand business fields (challenge new businesses) Steady increase of internal reserves through profitability enhancement Enhance the management foundation 6 HIROSHIMA BANK ANNUAL REPORT 216

2 Enhancement of Approaches to the Personal Market» Promotion of Consumer Loans Given the prevailing low-interest environment, we are focused on further promoting consumer loans, which offer relatively high returns. We were able to significantly increase both the balance of consumer loans and the amount of consumer loans executed by working to strengthen promotion of card loans, for example through television ads, and by making inroads into the loan counter market. In the fiscal 216, we will work to further promote consumer loans by introducing new loan products such as loans with an online application process and card loans that do not require a repayment account. Trend of average balance of consumer loans (avg.) Trend of the amount of consumer loans executed 8 Annualized +9.% 15 Annualized +24.7% FY212 FY213 FY214 FY215 FY212 FY213 FY214 FY215 Card loans Loans for specified use Others» Promotion of Card Business Hiroshima Bank handled the e-money premium coupon card HIROCA, the first of its kind with a local focus. Through its compatibility with the e-money format, HIROCA returned a premium to people in the region at a rate of 25%, which exceeded the 2% premium rate for transactions with the paper version of the coupons. Moreover, HIROCA performed strongly in stimulating local consumer activity during the usage period from November 215 to February 216, with a transaction amount of 3.98 billion and a usage rate of 99.9%. We began handling HIROCA as a form of local e-money in April 216, and as we work to promote HIROCA, we will also expand platforms for personal transactions to continue enhancing convenience for customers while contributing to the vitality of the local economy. Outline of the e-money premium coupon card Outline of local e-money HIROCA (from April 11, 216) As HIROCA becomes more widespread as a form of local e-money, deposits are expected to flow into Hiroshima Bank as its settlement counter and associated transactions are also expected to increase. (As of March 31, 216) Can be used at approx. 65 affiliated stores Stores in shopping streets, etc. Name Charge limit Premium amount Premium coupon card HIROCA* *Usage period as a premium coupon card (Until February 28, 216) 5, (per person) 25% of the charge amount; 2% by other local governments Covering the entirety of Hiroshima Prefecture HIROSHIMA BANK ANNUAL REPORT 216 7

3 » Expansion of Customer Base in Collaboration with Insurance Companies As we work to enhance consulting sales based on customers life stages, we are steadily increasing individual custody assets by developing new channels in collaboration with insurance companies, in addition to conventional sales channels. With regard to premium-level insurance, sales volume increased through alliances with American Family Life Assurance Company of Columbus (Aflac) and Zurich Insurance Group Ltd. (Zurich). In our nine-month results for fiscal 215, we ranked third among first-tier regional banks. Going forward, we will continue to strengthen these collaborations and work to broaden our customer base, which is vital for raising the individual custody asset balance. Promotion of premium-level insurance in collaboration with Aflac and Zurich Established insurance call center (from April 215) Aflac Collaboration Use of direct mail (from September 214) Hiroshima Bank Trend in the number of sales of premium-level insurance* (Sales) 6, 48, 36, 24, The number of our sales in FY215 (for 9 months) ranked third among first-tier regional banks. 16,655 24,562 32, ,836 sales (annualized +42.5%) 46,47 Zurich Collaboration Hiroshima Bank 12, * Accumulated number of sales (As of March 31) Enhancement of Consulting Sales» Promotion of Business for Elderly Clients As the population continues to age, customer needs related to asset and business inheritance have increased each year, and contracts in our business for elderly clients have increased substantially. In order to meet the needs of these clients, in January 216, we established a new calendar-year gift trust called the <HIROGIN> OMOI TSUZUKU Trust a first for a regional bank. We successfully concluded over 1 contracts in approximately three months after its launch. Based on this performance when handled exclusively by the headquarters, we began making the trust available at all of our branches. Going forward, we intend to continue to broadly develop products matched to customer needs, identify underlying needs and further expand the business for elderly clients. Trend of contracts for elderly clients (inheritance-related) (Contracts) 1,2 1, 8 6 Sept. 213 Invested in Asahi Trust Co., Ltd. Jan. 214 Business alliance with Yamada Escrow and Trust Co., Ltd. First for a regional bank June 214 Began handling <HIROGIN> Asset Trust, a specified money trust with a special agreement Sept. 214 Began handling <HIROGIN> KAZOKU TSUNAGU Trust (testamentary substitute trust) 1, Products matched to customer needs First case for a regional bank Jan. 216 Started handling the calendar-year gift trust <HIROGIN> OMOI TSUZUKU Trust [Product handled exclusively by Private Banking Business Promoting Office (headquarters)] Apr. 216 Began handling the <HIROGIN> OMOI TSUZUKU Trust at all branches to identify underlying needs Relationship between the number of applications for financial products and custody asset balance at Hiroshima Bank The number of applications for financial products by wealthy people with the largest amount of retail assets is relatively small at present Enough room to explore underlying needs Major target customers (in their 8s) FY211 FY212 FY213 FY214 FY215 Property succession Estate liquidation Calendar-year gift trust Testamentary trust Testamentary substitute trust Main prospective customers for the sales of financial products Age 6 74 Average deposited assets per person Number of financial products acquired by age group Wealthy prospective customers with the largest amount of retail assets in their 8s (Age) 8 HIROSHIMA BANK ANNUAL REPORT 216

4 Active Efforts for Regional Development One of the three main pillars in Hiroshima Bank s mid-term management plan is active commitment to regional revitalization, and last fiscal year we provided recommendations and proposals at advisory council meetings held by local public organizations to help them formulate Regional Comprehensive Strategies, and we actively provided solutions for the development of work, people and communities. Director and staff in charge of regional revitalization were appointed in April 216 to further strengthen our system for engaging in this process in an integrated manner while drawing on our existing relationships with local public organizations. Under this structure, we will actively promote measures developed mainly by local public organizations and initiatives for regional revitalization, based on the Regional Comprehensive Strategies.» Regional Issues Population decline and aging, declining birthrates, and regional economic contraction» Hiroshima Bank s Vision for Regional Revitalization Develop communities with appeal as places to live Develop work: Raise productivity Develop communities and people: Develop people-friendly communities» Regional Revitalization Overview and Hiroshima Bank Initiatives April 215 April 216 Promote National Comprehensive Strategies (5 years) Formulate Regional Comprehensive Strategies (5 years) Execute Regional Comprehensive Strategies with local public organizations Participated and made recommendations and proposals as a member of advisory committees for 2 of 24 local public organizations in Hiroshima Prefecture Hirogin Research Institute contracted to formulate population vision as regional comprehensive strategy (Onomichi, Seracho) Concluded comprehensive partnership agreements with Hiroshima, Kure, Fuchu (August 215) and Fukuyama (April 216) Began dispatching personnel to Hiroshima and Fukuyama (October 215) Measures New Provided startup support loans Performed feasibility studies to help local companies grow Director responsible for regional revitalization (executive in charge of Public Services Business Division) Established regional revitalization support loans Hiroshima Bank Development of work Handled premium coupons (paper based) (19 local public organizations) Handled premium coupon cards (HIROCA) New Formed support organization for tourism DMO project Coordinated with Setouchi Brand Promotion Association Strengthened promotion system Staff in charge of regional revitalization (members of Public Services Business Division) Development of communities and people Measures Partnerships related to looking after elderly residents (Fukuyama, Onomichi, Kumanocho, Sakacho, Seracho) Created support plan for vacant houses ( Family Loan ) Established childcare facilities in Hiroshima Prefecture government offices Conducted a childcare support campaign (childcare support loans, time deposits with preferential interest rates for babies) Mission of Staff in Charge of Regional Revitalization 1) Promotion and management 2) Creation of new business models 3) Effective information dissemination, etc. HIROSHIMA BANK ANNUAL REPORT 216 9

5 » Promotion of Feasibility Studies Feasibility studies involve banks and other institutions performing qualitative analysis of external conditions and internal information to appropriately evaluate customers businesses and growth potential, without relying excessively on financial data or collateral and guarantees. The studies are used to provide both financing and consulting services. In conducting feasibility studies, Hiroshima Bank closely examines customers business characteristics, growth potential and other elements; shares information on issues; and provides consulting for solutions. These activities contribute to revitalizing the regional economy. In fiscal 215, we conducted feasibility studies based on qualitative analysis for 634 client companies. Feasibility Study Process <Qualitative Analysis> 1 Analysis of external conditions (competitive environment) 2 Analysis of internal information (hearing survey on 25 items) <Sales Capability> Sales capability Customer base capability Distribution Chart <Creation Capability> Products and services Production capability Corporate Group Chart Technological development capability <Organizational Capability> Organizational management capability Business Model Overview <Flow> Hearing survey Understand the situation Feedback to management Share issues with management Collect information (share with branches) Promote loans Provide solutions FY215: Feasibility studies based on qualitative analysis performed for 634 clients (35% of the mid-term management plan (FY215 FY217) target of 1,8 clients) Effects of feasibility studies based on qualitative analysis (Number of loans executed) Quantitative aspects FY213 FY214 Value of loans executed (right) FY215 Number of loans (left) Qualitative aspects Fosters trust Deepens understanding of the actual situation Differentiates from other banks Identifies customers needs Further improves connoisseurship» Revitalization of the Setouchi Tourism Industry Foreign tourists to Hiroshima Prefecture and tourism-related consumption in the seven prefectures of the Setouchi region have been increasing each year, creating an appealing regional market. A tourism industry revitalization plan for the Setouchi region has been created and the Promotion System for the Setouchi Brand (Setouchi DMO) has been developed through an alliance with government agencies, tourism-related companies, and financial institutions. Amid these developments, in April 216, Hiroshima Bank, along with financial institutions in the Setouchi region and corporations inside and outside the region, invested in Setouchi Brand Corporation, which provides dedicated management support and financing for tourism-related companies. We also teamed up with financial institutions in the Setouchi region and Development Bank of Japan to form the Setouchi Tourism Revitalization Fund. Going forward, we intend to accelerate these initiatives for making Setouchi a region of choice for large numbers of tourists and business operators. Trend in the number of foreign tourists to Hiroshima Prefecture and the amount of tourism consumption in the seven prefectures of the Setouchi region 2,4 2, 1,6 1, Appealing Market 487 1, , ,456.4 HIROSHIMA BANK ANNUAL REPORT 216 1,47 1,776.7 (Thousands) 1,2 FY212 FY213 FY214 FY215 Total tourism consumption in the seven Setouchi prefectures (Hiroshima, Okayama, Yamaguchi, Ehime, Tokushima, Kagawa, Hyogo) (left) Foreign tourists to Hiroshima Prefecture (right) (Source: Japan Tourism Agency; 214 tourism consumption figures for Hiroshima Prefecture have not been released by the Japan Tourism Agency, so they are figures disclosed on Hiroshima Prefecture s website.) 1, Promotion System for the Setouchi Brand (Setouchi DMO* 1 ) National government (Cabinet Office, Japan Tourism Agency), Prefectures (7 Setouchi Prefectures) Promotion Setouchi Tourism Promotion Committee* 2 Customers Setouchi DMO Setouchi Brand Corporation Management support, funds provision Tourism-related companies Financial Institutions (Executive office: Hiroshima Bank) Management support, funds provision *1 Organizations that conduct integrated strategy formation, surveys, marketing, product development, promotion, etc. Primarily seen in the U.S. and Europe. *2 General incorporated association with the objective of establishing the Setouchi brand with representatives from the private sector and directors from the seven prefectures in the Setouchi region.

6 Fintech Initiatives As a part of initiatives to Create new added value to improve corporate value as stated in our mid-term management plan in December 215, we began full-fledged activities in financial technology through a partnership with the fintech venture freee Co., Ltd. Also, in June 216, we formed a business alliance with TKC Corporation, and we are working jointly to strengthen the management capabilities of small-and medium-sized companies utilizing fintech services developed by TKC. Going forward, we plan to combine our own products and services with advanced information technology in order to further strengthen new financial services. * Fintech is an abbreviation for financial technology; it refers to financial services that utilize information technology. Main Fintech Fields Remittance and settlement (mobile, online settlement, etc.) Financing (P2P lending, cloud financing, etc.) Personal asset management (household bookkeeping functions, etc.) Management and administrative support (cloud accounting, etc.) Asset management support (robo-advisor, etc.) Virtual currencies Security (biometric authentication, etc.) December 215, alliance with freee Co., Ltd. one of Japan s leading fintech companies June 216, business alliance with TKC Corporation Enhance customer convenience Expand client businesses Revitalize regional economies Realization of Channel (Omni-Channel) Hiroshima Bank is working to increase contact with customers by strengthening coordination between face-to-face and nonface-to-face channels. In fiscal 215, we worked to communicate with customers one-to-one, meaning we provided information to individual customers through our website, personal Internet banking service, and ATMs, as well as conducting telemarketing and other initiatives utilizing customer responses on personal Internet banking and ATMs. In addition to these measures, we are also planning to strengthen one-to-one sales utilizing points of contact with customers, to increase contact with customers utilizing new channels specifically social media and smartphone apps, and to enhance channel functions utilizing fintech and other approaches. Going forward, we will actively develop these measures to be a bank that allows customers to perform transactions or have consultations using their preferred channel whenever and wherever they want. Implemented Measures One-to-one communications ➀ on our website and personal Internet banking (began July 215) ➁ One-to-one communications on ATMs (began Jan. 216) Grasp customer needs at ➂ branches (CRM) and utilize in sales (began July 215) Telemarketing utilizing customer responses on personal Internet ➃ banking, ATMs, etc. (began Sept. 215) <Measures Being Planned> More sophisticated call center Strengthen channel coordination Strengthen one-to-one sales using customer contact points Strengthen customer contact utilizing new channels (social media, smartphone apps) Acquire individual middle-mass class customers by realizing channel coordination Smartphone app Social media Direct mail/ Website, personal Internet banking Website views, Internet banking transactions Measure ➀ Communication Information provision Measure ➃ Approach Telemarketing Response Customers Inquiries Toll-free dial Call center Deposit/ withdrawal transactions Replies Transactions/ procedures Measure ➁ ATMs Consulting/transactions Measure ➂ Approach Approach Telephone banking Branches (CRM) Disseminate information in anticipation of needs Mutually complementary information Acquire behavioral information More advanced, mutually complementary marketing Headquarters (marketing system) Launched from July 215 Strategic use of information Attribute information (age, gender, etc.) Transaction information (deposits, withdrawals, card usage, etc.) Behavioral information (access logs, customer response, etc.) Provide product/service information expected by customers via the optimal channel and timing HIROSHIMA BANK ANNUAL REPORT

7 Development of a Corporate Culture in which a Diverse Range of People Can Play Active Roles To enable female employees to demonstrate their abilities to the maximum extent, Hiroshima Bank is constantly working to enhance its organizational capabilities by actively holding career support seminars and promoting women to managerial and supervisory positions. We have over 1 female managers and supervisory officers as of March 31, 216. We are also actively recruiting lawyers, IT personnel and other mid-career personnel in specialized fields in an effort to diversify our talent pool even further. Moreover, beginning in July of this year, we will reform our personnel system and establish a new career track for highly specialized personnel. This will strengthen our system for accommodating specialized personnel and contribute to the construction of career paths that allow individual employees to demonstrate their abilities. Trend in number of female managers and supervisory officers (Persons) Target number of female managers/ supervisory officers in mid-term management plan: Female supervisory officers Female managers (As of March 31) Active hiring of career-track personnel FY Number hired Active hiring of lawyers, IT FY personnel and other mid-career FY personnel in specialized fields Reform personnel system for highly specialized personnel Establish S*-course (from July 216) * Special Reform objectives Create career paths that enable highly specialized personnel to further enhance specialization in their respective fields and demonstrate their abilities [S-course specialized qualifications] Professional field Required qualifications IT Pass applied IT tech professional exam Acquire financial planner level 1 certification and any of the following: Registered real estate broker Private banking Certified small/medium-sized Strengthen system for enterprise consultant accommodating specialized Securities analyst personnel Market-related Securities analyst Enhancement of Profitability in Collaboration with Asset Management Companies Regarding the conditions surrounding fund management by banks, we believe that the importance of forward-looking market analysis and flexible asset allocation is going to steadily increase due to declining market interest rates and the influx of cash into loan and asset markets following monetary easing. Also, with respect to customer asset management, we expect even higher demand for financial products and services tailored to diversifying life plans and life stages with continued population aging, lower birthrates, and an uncertain social insurance outlook. Given these conditions, Hiroshima Bank has invested in All Nippon Asset Management Co., Ltd. and has temporarily assigned employees there in order to acquire advanced expertise in fund management, develop unique products in line with customer needs, and further develop market division personnel. We will continue to work to secure stable profits in fund management through further strengthening this alliance. Bank: Fund management aspect Customers: Asset management aspect External environment (background) Declining market interest rates Declining financial institution investment returns Influx of cash to loan and asset markets due to monetary easing Concerns about increasing market volatility Increasing importance of forward-looking market analysis, flexible asset allocation, etc. Aging population and declining birthrates Increase in customers with safety orientation (seniors) Uncertain social insurance outlook Increasing asset formation needs for retirement Increasing demand for financial products/ services in line with diversifying life plans and life cycles Objectives Investment in, and employee assignment to, All Nippon Asset Management Co., Ltd. Company name All Nippon Asset Management Co., Ltd. (location: Tokyo) Date established December 215 Seven regional banks, Development Bank of Japan Inc. Investors Seven regional banks, including Hiroshima Bank, Tokai Tokyo Financial including Hiroshima Bank Tokai Tokyo Financial Holdings, Inc. Holdings, Inc., and Development Bank of Japan Inc. Paid-in capital 1.25 billion ( 1 million investment from Hiroshima Bank) Asset management, product development, Investment, employee assignment Investment Business Investment management, investment consulting and brokerage services, specialized personnel development type-2 financial product transactions, etc. Start of operations April 216 All Nippon Asset Management Co., Ltd. 12 HIROSHIMA BANK ANNUAL REPORT 216