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OMC Card, Inc.
October 12, 2006October 12, 2006OMC Card, Inc.OMC Card, Inc.
OMC Card, Inc.
OMC Card, Inc.
P/L (Consolidated)Unit: billions of Yen
Mar-Aug, 2006Change vs.Mar-Aug, 2005(base:100%)
Change vs.Mar-Aug, 2005(amount)
Transaction volume 848.6 29.8 103.6%
Operating revenues
Operating expenses(excl. provision of
credit losses)
77.8 5.4 107.4%
60.0 3.9 107.0%42.6 2.2 105.4%
Operating income17.8 1.4 108.7%
Ordinary income 18.0 1.4 108.3%
Net income 10.9 1.4 115.3%
OMC Card, Inc.
Transaction volume (Consolidated)Unit: billions of Yen
Mar-Aug, 2006 % oftotal
Change vs.Mar-Aug, 2005(base:100%)
Change vs.Mar-Aug, 2005(amount)
Credit card contracts 463.1 54.6% 24.4 105.6%
Cash advances 255.6 30.1% 15.3 106.4%
Other 29.9 3.4% -4.9 86.0%
Loan agency 33.6 4.0% -13.1 72.0%
Acquiring service 60.0 7.1% 7.7 114.7%
TOTAL 848.6 100.0% 29.8 103.6%
Merchandise sales 6.3 0.8% 0.4 106.3%
OMC Card, Inc.
Operating revenues (Consolidated)Unit: billions of Yen
※ ( ) = amounts before securitization
※ ※
Mar-Aug, 2006 % oftotal
Change Vs Mar-Aug, 2005 (base:100%)
Change Vs Mar-Aug, 2005 (amount)
Credit card contracts※
13.0 (13.0) 16.7% 0.7 (0.5) 106.1% (103.8%)
※※Cash advances
※
57.4 (58.6) 73.7% 5.8 (6.0) 111.2% (111.4%)
TOTAL 77.8 100.0% 5.4 107.4%
Other 6.0 7.7% -1.0 85.5%
Loan agency 0.4 0.5% -0.2 71.2%
Insurance 1.0 1.3% 0.1 105.3%
Financial transactions0 0.0% -0 51.0%
OMC Card, Inc.
Operating expenses (Consolidated)Unit: billions of Yen
Selling expenses 12.9 1.0 108.2%Salaries and fringebenefits
General andadministrative expenses
8.6 0.7 109.2%
14.7 2.1 116.9%
Equipment expenses 1.0 ▲0.7 58.0%Provision of credit losses
Financial expenses
17.4 1.8 111.3%
5.3 ▲0.9 85.3%
TOTAL 60.0 3.9 107.0%42.6 2.2 105.4%(excl. provision for credit losses) )
Mar-Aug, 2006Change vs.Mar-Aug, 2005(base:100%)
Change vs.Mar-Aug, 2005(amount)
OMC Card, Inc.
4.1
0.1Extraordinary income
Provision for operating receivables (1.7)
(0.8)Losses on sales of fixed assets
(0.6)One-time payment on change of retirement system
(1.0)Other
Extraordinary losses
Extraordinary income & losses (Consolidated)Unit: billions of Yen
Aug, 2006
OMC Card, Inc.
Main indicators
Card user rate 65.0% ▲0.2% -
Affiliated stores 358 +5 101.5%
Applications 951 126 115.3%
Issuances 773 86 112.5%
Cardholder 8,463 683 108.8%
CD & ATM machines 132 ▲1 98.9%
Mar-Aug, 2006Change vs.Mar-Aug, 2005(base: 100%)
Change vs.Mar-Aug, 2005(amount)
Unit: in thousand
*The calculation logic has been adjusted to the method most commonly used by the retail credit card companies.
◆◆ Achieved allAchieved all--time record high number of solicitationstime record high number of solicitations through aggressive expansion of MSPthrough aggressive expansion of MSP--type solicitations type solicitations
OMC Card, Inc.
24%
19%
29%
0
100
200
300
400
500
Aug, 04 Aug, 05 Aug, 06
1.7%
2.2%
2.7%
0
20
40
60
80
100
Aug, 04 Aug, 05 Aug, 06
21%26%
38%
0
200
400
600
800
1,000
Aug, 04 Aug, 05 Aug, 06
YoY(99.3%) (127.8%) (123.0%)
YoY(92.7%)
(73.8%)
(93.5%)
(89.7%)
(84.7%)(86.5%)
(110.7%) (111.4%) (112.1%)
(112.5%) (104.2%) (108.0%)
(94.7%)(84.6%)
(83.4%)
Card Application
Transaction Volume of Credit Card Contract
Operating Revenues
Steady Expansion of Non-Daiei Channels
Steady Expansion of Steady Expansion of NonNon--Daiei ChannelsDaiei Channels
▲
Daiei channel
Daiei Share
Non-Daiei channel
Unit: in thousand Unit: ¥bn
Unit: ¥bn
Daiei channel
OMC Card, Inc.
4.5% 4.5%
3.7%3.2% 3.1%
3.9%
5.2%5.8%
6.7%
0.0%
2.0%
4.0%
6.0%
8.0%
Feb, 05 Feb, 06 Aug, 06
◆◆ Risk asset volume stable, continued conservative provisioningRisk asset volume stable, continued conservative provisioning
Credit Situation
Write-off rate
Reserve rate
Delinquency rate
OMC Card, Inc.
Unit: billions of Yen
Long-term debt 347.2 85.0% 336.5 80.2% ▲10.7
Short-termborrowings 61.1 15.0% 83.0 19.8% +21.9
TOTAL 408.3 100.0% 419.5 100.0% +11.2
Feb. 2006 % oftotal Aug. 2006 % of
totalVariation(amount)
Interest-bearing debt (Consolidated)
◆◆ Continued shift towards stable longContinued shift towards stable long--term funding term funding
OMC Card, Inc.
Main financial indicators
※ incl. Securitization
Feb. 2006 Aug. 2006 Change vs.Feb, 2006
Direct financing ratio 25.4% 23.8% ▲1.6%
Fixed-interestdebt ratio
60.8% 62.1% +1.3%
Long-termfinancing ratio
88.8% 84.9% ▲3.9%
OMC Card, Inc.
9.2%
12.2%13.2%
0.0%
5.0%
10.0%
15.0%
Feb, 2005 Feb, 2006 Aug, 20060
20
40
60
80
100
Stockholders’ Equity
Equity Ratio
Unit: ¥bnTrend of equity ratio
Financial position
◆◆ StockholdersStockholders’’ Equity Ratio steadily increased Equity Ratio steadily increased
OMC Card, Inc.
OMC Card, Inc.
Perception of the environment
【【Downside RiskDownside Risk】】
・Revision of industry laws
Platform
Solicitation capability
Processing
Marketing 【【Turn UpTurn Up】】
◆◆Using our strengths to turn change to our advantage Using our strengths to turn change to our advantage
・Demands for excess interest repayments
・End of zero interest rates
Marketing capability
Risk management capability
Processing capability
OMC Card, Inc.
【New office】
・Efficient allocation of management resources ・Enhanced execution capability
Enhanced productivity and brand power
Reformed corporate cultureReformed corporate culture
【New operational structure】
-Reform of management structure -
-Revitalised spirit, slimmer organization -
・Decisions on management strategy ・Supervision and Direction of Executive Officers
♦♦Rapid and flexible management structure put in placeRapid and flexible management structure put in place
Corporate governance strengthened to deal with changes in environment, intensified competition
- Clear division between management and execution
Shareholders
Chairman & CEO
President & COO
Corporate &Financial
Planning Div.
AdministrativeManagement
Div.
Business & SalesDiv.
CustomerServices &
Operations Div.
Business ProcessOutsourcing
Promotion Div.
OMC Card, Inc.
Market risks ・Lower profitability ・Market shrinkage
Going ConcernGoing Concern
◆Increase business volumes
◆ Strategies to encourage card usage
◆ Third-party card processing business
AGENDAAGENDA
Maximise efficiencies
Higher volumes
♦♦Business model to maintain growth at 20% interest ratesBusiness model to maintain growth at 20% interest rates
[Adapting to changes in environment]
Maintain / expand profit levels
OMC Card, Inc.
Increase business volumes
OMC Card, Inc.
Strategies to increase cardholder numbers
Customers
Affiliated stores
Overwhelming solicitation capability
DM (analysis) capability
Promotions capability
CRM alliances achieve Win-win-win results
(1) Launch co-branded cards
♦♦““MSP alliance modelMSP alliance model”” rooted in CVC conceptrooted in CVC concept
・Gain stable high-quality customers・Expand sales・Propose and implement ideal sales strategies
・Wants and needs satisfied・ Enhanced convenience
Offering of CRM cycleTools for communicating with customers
・Acquire new cardholders・Increase transaction volume
OMC Card, Inc.
2.5
9.2
2.4
12.2
1
3
5
7
9
11
13
15
1Q_05 2Q_05 3Q_05 4Q_05 1Q_06 2Q_06
HIMARAYA Card
MrMax Card
[Main MSP co-branded card results]
※ Indexed to 1 at Q1 05
◆◆Making OMC a widelyMaking OMC a widely--used used ““Main CardMain Card””
Increased cardholder nos. x increased usage = steady growth in transaction volumes
No. of solicitations this term: 123,000 (+57% yoy)No. of cardholders at term-end: 314,000 (+107,000 yoy)First day usage rate: 65.4%First 90-day usage rate: 71.3%
No. of solicitations this term: 128,000 (+46% yoy)No. of cardholders at term-end: 303,000 (+110,000 yoy)First day usage rate: 81.3%First 90-day usage rate: 86.2%
Growth in cardholder usage by channel (HIMARAYA, MrMax)
Blue line: HIMARAYA,Orange line: MrMax(Dotted lines: use at alliance partners / Solid lines: other usage)
OMC Card, Inc.
◆◆Developing strategies to maintain/expand cardholder nos., Developing strategies to maintain/expand cardholder nos., starting in regions withdrawn from by Daieistarting in regions withdrawn from by Daiei
(2) Regional strategy
「「egaoegao CardCard」」 from Jul, 06「「MARUHON MARUHON COWBOY CardCOWBOY Card」」 from Jul, 06
Steadily forging new alliancesSteadily forging new alliancesRegions withdrawn from by Daiei
New releases planned
「「Sun Plaza CardSun Plaza Card」」 from Sept, 06
「「FRESTA FRESTA Smile Credit CardSmile Credit Card 」」 from Oct, 06
Alliances under negotiation
Region No. of stores
Hokkaido & Tohoku 7Kanto 9Chubu 6Kinki 12Chugoku & Shikoku 9Kyushu 10Total 53
FY05 Daiei store closures
FY05Share of solicitations, card shopping :c. 2%
「「JOWJOW--PLA CardPLA Card」」 from May,06
OMC Card, Inc.
♦Increase in new customers♦Expansion in profits from
new business♦Move into credit business
♦Increase in new customers♦Expansion of finance business♦Improved services to
cardholders etc.
Functions offeredExpansion in finance business
Development of new products & servicesIncrease in new customers
Development of new products & servicesExpansion in business profits
Credit / loan guarantee functions New types of loans, Co-branded cards
Enhancing Web-site, Mobile application Cards business
Debit cards
Account-holder confirmation, instant payments
24-hour fund transfers
Internet financial institutions
Building out financial businesses
◆◆Forming alliances with internet financial institutionsForming alliances with internet financial institutions
Functions offered
OMC Card, Inc.
Strategies to encourage card usage
OMC Card, Inc.
CS CC Insurance CVC Daiei MSP Postal savings
Products Customer affiliations
Customer
Customer
Customer
【Total Marketing 】【Products Marketing】
【Dグループ】【Cグループ】
【Bグループ】【Aグループ】
Aiming to produce a new approach to card-holders
Portfolio ManagementPortfolio Management
Building model which maximizes cardholder value
◆◆ Strategic systematization of customer management methodsStrategic systematization of customer management methods
OMC Card, Inc.
[ETC Card] Highly rated for overwhelming solicitation power
[Utility payments] Working steadily to make it customers’ “main card”
On-site issuance
One-stop service
Core competence
On-site card issuance
Simultaneous card-reader installation
Card solicitation
+
Unique
Expansion in registered bill payments
◆◆Increasing volumes by locking in regular usageIncreasing volumes by locking in regular usage
0
10
20
30
40
50
1H_05 2H_05 1H_06
OtherUtility bills
Telecoms
Registered payment transaction volumes
Developed proactive approach Developed proactive approach aimed at growth marketsaimed at growth markets
Unit: ¥bn
◆Metropolitan Expressway AssociationIssued co-branded “SHUTOKO Card”“
◆West Nippon Expressway Co. Ltd.Selected us as partner to promote spread of ETC
◆Central Nippon Expressway Co. Ltd.Acquired right to offer one-stop solicitations
No. of cardholders at end-Aug 06570,000 (*including SHUTOKO Card)
% registered for utility payments:
11%Spend per shopping transactionof registered vs. non-registered
cardholders:
(Cardholder performance )(Areas covered )
•5 electric power companies•3 gas companies•NHK•Telecom companies
3X
OMC Card, Inc.
Card-based Membership Business(1) Steady growth
◆◆ Aiming to be a partner to cardholders throughout their livesAiming to be a partner to cardholders throughout their lives
AllianceAlliancePartnersPartners
<Products & Services CVC >
<Financial CVC >
OMCCard
Member
OMCCard
Member
CVCビジネスモデル
Life stage
Partner cos. at end-Aug 06234 cos.
CVC business model
Student
Findingjob
MarriageFamily
Matureyears
Silver
Offer “lifetime value” in responseto cardmember needs
・Car-related ・Education ・Health-related・Fashion/beauty ・Housing・Shopping/dining ・Telecoms
Expanded to 4 partner companies
5 shops now open
・Securities brokerage business・Insurance agency
Develop walk-in insurance shops
(¥bn)
6.9
10.010.9
23.4
0
5
10
15
20
25
8/03 8/04 8/05 8/06
CVC transaction volume
+114.5% yoy
OMC Card, Inc.
(2) Developing new areas◆◆ Steady growth in financial CVCSteady growth in financial CVC
2.3
1
2
3
4
5
6
7
8
Feb, 06 Aug, 06 Feb, 07(target)
Up 7x
※ Indexed to 1 at end-Feb 06
Growth in assets in custody
Started business partnership with Daiwa Securities Co. Ltd.
05/88/05
06/77/06
10/06~
[Securities brokerage (started Aug 05)]
Now 4 partner companies
Nikko Cordial Securities Inc.
NETWING Securities Co., Ltd.
ACE Securities Co., Ltd.
Daiwa Securities Co. Ltd.
OMC Card, Inc.
-4.4%
+5.0%
+0.7%
-10.0%
-5.0%
0.0%
+5.0%
+10.0%
1Q/05 2Q/05 3Q/05 4Q/05 1Q/06 2Q/06
Credit card for revolving payments only
Announcement “It’s easy with everything revolving”
Enhanced menu NewNew
Aiming for large increase in revolving credit balances
Select payment method by transaction
Fix payment amount after receiving bill
++
++
※Both services introduced in pilot version in Aug 06 ⇒ full introduction Mar 07
・Enhanced customer convenience•Reduced resistance to revolving credit etc…
Step.1 Specify payment method
Step.3 Change after use
Step.2 Use pre-registration
It’s easy with revolving
Strengthening product & service capabilities(1) Expansion in shopping-related revolving credit balance
◆◆ Pursuing potential business by offering more payment methods Pursuing potential business by offering more payment methods
Yoy growth in average CSRV balance
“Decide later” plan
OMC Card, Inc.
0
50
100
150
Feb,05 Aug,05 Feb,06 Aug,06
[Thousands]
Concept: Stylish and leadingConcept: Stylish and leading--edgeedge
End-Aug 06
120,000
<Function >
Minimum payment
<Associated image >
Making it our new flagship card
Collaboration with 10 popular artists
Profitability
First limited-edition artist card
(2) Strengthening strategic branded card “Jiyu!da!”◆◆ Aiming to create new corporate image Aiming to create new corporate image
No. of Jiyu!da! cardholders Share of shopping-related revolving credit: c. 3%
OMC Card, Inc.
[Thousands]
Concept: Stylish and leadingConcept: Stylish and leading--edgeedge
<Function >Minimum payment
<Associated image >
Making it our new flagship card
Collaboration with Collaboration with the artist & novelist,the artist & novelist,
Mr. Lily Mr. Lily FrankyFranky
Profitability
Second limited-edition artist card
(2) Strengthening strategic branded card “Jiyu!da!”◆◆ Aiming to create new corporate image Aiming to create new corporate image
No. of Jiyu!da! cardholdersShare of shopping-related revolving credit: c. 3%
Jiyu!da!カード会員数推移
0
60
120
180
Feb,05 Aug,05 Feb,06 Aug,06 Feb,07
+
・Real-time remittances and withdrawals
・Point usability・Interest rate flexibility
End-Feb 07
140,000
Strengthening functions this term
No. of Jiyu!da! cardholders
OMC Card, Inc.
UsabilityUsabilityConvenience of repayments
Flexible PricingFlexible PricingPricing precisely matched to customer riskPricing precisely matched to customer risk
AgilityAgilityImmediate credit check On-site issuanceImmediate transfers
(3) Timely approach focused on speed
♦♦All interest rate needs met by one cardAll interest rate needs met by one card
FY06 New accounts with balances
150,000
OMC Card, Inc.
(4) Moving into new types of loan product
◆◆ Aiming to develop new customer bases by moving into new productsAiming to develop new customer bases by moving into new products
Release: Sept 06Interest rate range: 8%-25%Credit limits: ¥200,000-¥3mnTarget: Low-medium risk bracket
[“For Life DX” Card]
Targets for this termAccounts gained: 10,000End-term balance: ¥3bn
Market potential
Potential customers
Sleepers
Accounts with
balances
OMC Card, Inc.
Third-party card processing business
OMC Card, Inc.
ABPS 2+ABPS 2+
Primary servicer rating
Processing quality
◆◆ High processing qualityHigh processing quality
OMC Card, Inc.
Marketing Solutions
Marketing Solutions
Business platform
Business platform
Risk management infrastructure
Risk management infrastructure
◆◆ Using our highly flexible processing infrastructureUsing our highly flexible processing infrastructure
“DEAR”Core credit system
Initial credit checking・Minimum 5 minutes,
maximum of 20,000/day
Credit monitoring & control・Credit extended to maximize customer
profits・Management of card / store fraud
Collection・Automated legal recovery process
Automatic verification & evaluation system・Built test marketing system
Marketing tools・Achieved “one-to-one” marketing -Personal messages–
Campaigns system・Advanced initiatives
(joint development with JSIP)
Leading company Leading
company
Processing quality
Processing quality
OMC Card, Inc.
MCS Loan Management
and Recovery‘
途上与信管理Credit
monitoring債権回収Collection
In-sourcing of on-site issuance function
‘
from Nov 03
会員管理Cardholder
administration
Major shoppingcenters
Major department stores
審査Assessment
♦♦Aiming to inAiming to in--source processing businesssource processing business
from Oct 06
from Sept 03 IY Card Service
from Mar ‘06
Call centre function
Credit monitoringfunction
Back-up servicing functions
OMC’s platform
124 companies outsourcing to us as at end-Aug 2006
MARUI
OMC Card, Inc.
Aiming to build third force
♦♦Need for an alliance of retailNeed for an alliance of retail--related cardsrelated cards
Assembling a third forceAssembling a third force
International brands
Bank-affiliated
Customer-first philosophy・Concept grounded in retail・Lifetime partner・One-to-one approach
Sanyo ShinpanFinance
OMC Card, Inc.
OMC Card, Inc.
Main operating indicators
8,600,000 Cardholders
1,800,000 New Applications
Year-end Target:
Annual Target:
OMC Card, Inc.
Unit: billions of Yen
Feb. 2007forecast
Change vs.Feb. 2006(base:100%)
Change vs.Feb. 2006(amount)
1,664.0 33.2 102.0%
156.5 10.5 107.2%
40.0 4.4 112.4%
21.0 2.6 114.4%
Transaction volume
Operating revenues
Ordinary income
Net income
P/L target for February 2007
OMC Card, Inc.
12.2%
30.0%
24.4%
3.2%
14.2%
28.2%
25.6%
3.7%ROA
ROE
Stockholders’equity ratio
Ordinary income per operating revenue
Feb. 2006results
Feb. 2007forecast
Main indicators for February 2007