Thoughts of a Mother TurtleBy Chie TenganWinner of the 22nd (fiscal 2013) Bingata Design Contest presented by the Bank of the Ryukyus
Bank of the RyukyusManagement Briefing for FY2013
11
The Financial and Economic Environment of Okinawa Prefecture
22
■Overview of Okinawa Prefecture
(Source: Okinawa Prefecture)
Natural Environment
AreaApproximately 2,276 km2 (around 0.6% of Japan’s total land area, the smallest proportion after Kagawa, Osaka, and Tokyo; 18.4% of Okinawa’s main island is used as a U.S. military base)
Geographical features Comprised of 160 small and large islands (49 of which are inhabited)
ClimateAverage annual temperature 22.7ºC; average annual rainfall surpasses the national average by around 26%
Population
Population Approximately 1,420,000 (estimate as of March 2014)
Households Approximately 550,000 (estimate as of March 2014)
Total fertility rate 1.79 persons (highest in Japan as of 2009)
Ratio of juvenile population
17.89% (highest in Japan as of 2010)
Population growth rate 0.60% (highest in Japan as of 2010)
IndustryNumber of
tourists each year6,410,000 (2013)
Gross production by industry
Primary: 2.0%; secondary: 12.4%; tertiary: 85.5% (fiscal 2010)
Forecast rate of economic growth
1.07% (highest in Japan: 2007-2020 forecast rate of real economic growth (Japan Center for Economic Research))
Okinawa
Within a four-hour traveling distance by air
(Source: ALL NIPPON AIRWAYS CO., LTD)
-60
-50
-40
-30
-20
-10
0
10
20
30
40
Feb-1992 Feb-1993 Feb-1994 Feb-1995 Feb-1996 Mar-1997 Mar-1998 Mar-1999 Mar-2000 Mar-2001 Mar-2002 Mar-2003 Mar-2004 Mar-2005 Mar-2006 Mar-2007 Mar-2008 Mar-2009 Mar-2010 Mar-2011 Mar-2012 Mar-2013Mar-2014
( Business condition diffusion index: Strong-Week) Bank of Japan Tankan
Japan Okinawa
33
■Economic Trends (Bank of Japan Tankan)Business confidence at a high level for the first time in 22 years
+28
+12
+22
44
■Trends in Land PricesUpward trend in prices within the Prefecture for both commercial- and residential-use land
Commercial-use land (YoY)
-12.00%
-10.00%
-8.00%
-6.00%
-4.00%
-2.00%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
Jan-1991 Jan-1994 Jan-1997 Jan-2000 Jan-2003 Jan-2006 Jan-2009 Jan-2012
Japan Okinawa
+0.5%
-0.5%
Residential-use land (YoY)
-12.00%
-10.00%
-8.00%
-6.00%
-4.00%
-2.00%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
Jan-91 Jan-94 Jan-97 Jan-00 Jan-03 Jan-06 Jan-2009 Jan-2012
Japan Okinawa
+0.1%
-0.6%
(Source: Land prices published by Japan’s Ministry of Land, Infrastructure, Transport and Tourism)
55
■Employment Conditions
Trends in the overall unemployment rate
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%
1991 1992 1993 1994 1995 1996 1997 1998 19999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Japan Okinawa
5.7%
4.0%
Improvement in employment conditions with a year-on-year decline in the unemployment rate of 1.1 percentage points
(Source: Labor force survey by Japan’s Ministry of Internal Affairs and Communications)
(Annual average)
66
■Projected Population
Projected Population
100.0 101.0
100.0
103.5
106.9109.4
110.7 111.3 111.0 110.3 109.2107.5
101.7 101.9 100.898.8
92.8
89.2
85.4
96.0
65
75
85
95
105
115
1995 2000 2005 2010 2015 2020 2025 2030 2035 2040
Japan Okinawa
(1995=100)
(Source: Prepared from census figures provided by Japan’s Ministry of Internal Affairs and Communications through to 2010 as well as estimates for 2015 and beyond provided by the National Institute of Population and Social Security Research)
Okinawa Prefecture’s population is projected to increase for the foreseeable future
Peak
10 Years
77
■Estimates of the Number of Households
Estimates of the Number of Households
100.0
106.5100.0
110.3
120.8
128.9
135.1139.6
143.0145.5
111.7114.5 115.2 114.8
111.1113.5
65
75
85
95
105
115
125
135
145
1995 2000 2005 2010 2015 2020 2025 2030
Japan Okinawa(1995=100)
(Source: Prepared from estimates as of March 2014 prov ided by the National Institute of Population and Social Security Research)
Continued increase in the number of households
Peak
88
■Tourism
Trends in the Number of Inbound Tourists andRevenues from Tourism
407.0390.4
436.4
373.4390.5
6,046
5,4155,650
5,855 5,835
6,413
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
2008 2009 2010 2011 2012 2013
(Thousands)
0
100
200
300
400
500
600
(Billions of Yen)
Revenues from tourism (Right scale)Number of inbound tourists (Left scale)
Record number of inbound tourists resulting from a variety of factors including the impact of LCCs and new Ishigaki Airport
◆LCCs commence services across 15 routes
●Peach Aviation (7)Naha⇔Taipei (2), Naha⇔Kansai (3), Naha⇔Ishigaki (1), Ishigaki⇔Kansai (1)
●Jetstar (5)Naha⇔Narita (4), Naha⇔Kansai (1)
●Vanilla Air (3)Naha⇔Narita (3)
* Number in parentheses represent the number or return flights in one day
◆Naha Airport International terminal operations commenced in February 2014
(Source: Statistical overview of the number of tourists entering Okinawa Prefecture)
◆Painushima Ishigaki Airport opened in March 2013
(Source: ISHIGAKI AIR TERMINAL CO., LTD.
(Source: NAHA AIRPORT BUILDING CO., LTD.)
99
■Monthly Trends in Inbound Tourism
Monthly Trends in Inbound Tourism
-25%
-15%
-5%
5%
15%
25%
EndJan2011
EndJan2012
EndJan2013
EndJan2014
(YoY)
Continuous year-on-year increase for 19 consecutive months
(Source: Statistical overview of the number of tourists entering Okinawa Prefecture)
+9.5%
◆Naha Cruise Ship Terminal Building operations commenced in March 2014
Breakdown of inbound tourists by region and nationality (fiscal 2013)
Impact of the earthquake
Positive correction
Breakdown of domestic travelers by region
Tokyo
Kansai
Fukuoka
Nagoya
Others
Breakdown of foreign travelers by nationality
TaiwanOthersUSA
Hong Kong
China
Korea(Photo Source: Naha City)
1010
■Measures for Promoting Okinawa
Okinawa Development and Promotion Special Promotion Subsidy (soft)
Okinawa Development and Promotion Public Investment Subsidy (hard)
Budget amount ・¥82.6 Billion ・¥93.2 Billion
Details ・Establish as an independent Okinawa program targeting “soft” businesses
・Simplify and streamline wherever possible all implementation procedures
・Establish while increasing existing Okinawa development and promotion voluntary strategy subsidies and expanding the scope of application specific to Okinawa
Subject businesses
・“Soft” businesses and other ・Social capital improvement, etc.
Okinawa Development and Promotion Lump Sum Subsidy(¥175.9 Billion)
Amount other than the lump sum subsidy(¥174.2 Billion)
Business name Budget amount
Public works-related expenses, etc. ¥138.2 Billion
(portion applicable to public works to expand runway services at Naha Airport) ¥33.88 Billion
Okinawa Institute of Science and Technology Graduate University-related expenses
¥19.8 Billion
Business to develop and promote the northern territories ¥5.1 Billion
Basic expenses in connection with steps to consider the introduction of railway and other services
¥0.2 Billion
Budget trends for the department responsible forOkinawa within Japan’s Cabinet Office
136.2 138.8174.2
157.5 161.3
175.9229.7 230.1
293.7 300.1
350.1
0
50
100
150
200
250
300
350
400
FY2010 FY2011 FY2012 FY2013 FY2014
(Billions of Yen)
Lump sum subsidy
(Source: Japan’s Cabinet Office)
Excerpt from a comment by Prime Minister Shinzo Abe on December 24, 2013
Secured an annual budget of more than ¥300 billion to help develop and promote Okinawa throughout the current Okinawa development and promotion plan period (fiscal 2012 to fiscal 2021)
Construction of a 2,700m second runway; operations to commence in 2020
Excerpt from a comment by Ichita Yamamoto, state minister for Okinawa affairs on December 24, 2013
[Northern territories development and promotion business] Continue business activities of at least ¥5 billion each year throughout the current Okinawa development and promotion plan period
[Public works to expand runway services at Naha Airport] Completion of construction by the end of 2019 in accordance with the agreement between Japan’s Minister of Finance and Minister of Land, Infrastructure, Transport and Tourism
1111
Trends in new housing starts in the Prefecture
2.3 1.0
0.8
1.5
0.9
3.93.42.72.42.32.3
7.5 8.2
7.3
7.5
8.2
10.7
1.8
11.7 11.812.7
16.6
10.7
12.3
0
2
4
6
8
10
12
14
16
18
2008 2009 2010 2011 2012 2013
(Thousands)
Owned houses Leased houses Condominiums, etc.
■ConstructionSubstantial increase in both housing starts and public works
(Source: Japan’s Ministry of Land, Infrastructure, Transport and Tourism)
Trends in orders received for public works projects
77.0 78.3
46.4 55.4 52.565.6
77.1
73.5
84.9
81.2 88.6
102.2
18.9
25.2
16.6 19.3
22.6
96.784.9
76.2
81.386.0
75.6
14.8
285.2
233.7 237.6254.5
224.0
266.7
0
50
100
150
200
250
300
350
2008 2009 2010 2011 2012 2013
Central government Okinawa PrefectureMunicipalities Others
(Billions of Yen)
(Source: West Japan Construction Surety Co., Ltd.)
1212
■Second Runway at Naha AirportAdditional construction of a 2,700m runway to address the increase in air travel demand
Total project expenses Commencement of construction Completion of construction
About ¥198 Billion January-2014 December-2019
(Source: Okinawa Prefecture)
Airport name Operating hours Number of service routes
Flight/Day
Tokyo International
24Hours 49 1,082
Naha 24Hours 27 137
Fukuoka 7:00~22:00 26 175
New Chitose 24Hours 26 164
OsakaInternational
7:00~22:00 24 158
Chubu CentrairInternational
24Hours 16 67
KansaiInternational
24Hours 12 59
Narita International
6:00~23:00 11 287
Second highest number of domestic service routes after Haneda Airport
Additional construction of a 2,700m runway
Proposed site of control tower
Domestic passengerterminal
International passenger terminal
Cargo terminal
Additional construction of a new runway●Address the growing air travel demand●Upgrade and expand infrastructure to help establish Naha Airport as an international logistics base
■Naha Airport runway construction
Current runway 3,000m
1313
■Okinawa Institute of Science and Technology Graduate University (OIST)
Positioned as a future silicon valley and research hub of Asia
OIST
In addition to 50 senior research officials, approximately 300 research associates conduct research across a variety of specialist fields related to Okinawa Prefecture.
Technology Innovation Economic Zone
OISTUniversity
of the Ryukyus
Promote the formation of a global intellectual and industrial cluster with such institutions as OIST at the center to pursue world-class advanced interdisciplinary research. (Council on Economic and Fiscal Policy “Large-Boned Policy”)
Excerpt from a comment by Ichita Yamamoto, state minister for Okinawa affairs on December 24, 2013Consideration will be given to a variety of issues including the need to secure essential financial resources and to maintain the appropriate level of quality from a broad perspective. These efforts are geared toward expanding the scale of OIST research and operations.
(Source: OIST homepage)
Activities also include the presentation of papers and observation of coral and marine conditions on a real-time basis.
Senior officials from 13 of Japan’s leading pharmaceutical companies toured OIST and exchanged opinions with pharmaceutical-related companies within the Prefecture in December 2013
Okinawa Discovery Tour (organized by the Cabinet Office)
Research institutions
Private-sector companies
Outside the Prefecture
Research institutions
Within the Prefecture
Private-sector companiesCollaborationCollaboration
1414
■Okinawa Bridging Asia (Okinawa International Logistics Hub)Geographic competitive advantage due to its position at the heart of AsiaCenter of a massive market with a population of two billion
Okinawa relay model
Within a four-hour traveling distance by air
Okinawa
Order from New Chitose Airport
HanedaAirport arrival
Haneda Airport departure
Naha Airport arrival
(Late-evening) customs clearing
Naha Airport departure
Hong Kong Airport arrival
Delivery
Next day delivery through the use of 24-hour customs clearing and relay functions
Okinawa inventory model
Order (overseas, domestic)
(Late-evening) customs clearing
Next morning local airport arrivalDelivery on the day
Establish a logistics base in Okinawa and promote a variety of business models(Source: Okinawa Prefecture)
Okinawa→Narita 2 hours and 25 minutes Okinawa→Seoul 2 hours and 10 minutes Okinawa→Hong Kong 2 hours and 35 minutesOkinawa→Haneda 2 hours and 20 minutes Okinawa→Tsingtao 2 hours and 50 minutes Okinawa→Bangkok 4 hours and 25 minutes Okinawa→Nagoya 2 hours and 15 minutes Okinawa→Shanghai 2 hours and 5 minutesOkinawa→Kansai Int. 1 hours and 50 minutes Okinawa→Taipei 2 hours and 25 minutes
Japan 130 million
China 1.3 billion
ASEAN 600 million
Center of a massive market with a population of 2.0 billion
1515
■Substantial Expansion of Okinawa’s Regional and Economic Zone Systems
(Source: Cabinet Office department responsible for Okinawa affairs)
Okinawa boasts a variety of incentive programs including an extremely favorable tax deduction and allowance system that is not available in other prefectures. In fiscal 2014, the Prefecture also took steps to substantially improve the availability and use of various systems following the full-fledged reform of the following economic zone and regional systems.
Economic zone
Economic and financial revitalization zone
Designate one region within the prefecture (Nago City currently designated as a financial zone)
(Businesses covered)Existing finance sector⇒Expand to industries identified by the governor
In addition to the below-mentioned, application of the substantially liberalized angel tax system
International logistics zone
Four existing locations of Naha District, Nakagusuku Harbor (new port zone), Naha Airport District, and Naha Port District⇒Districts designated by the governor
(Businesses covered)Manufacturing, packaging, warehousing, and other sectors⇒Addition of the aircraft maintenance sector
Information and communication industrialdevelopment district
24 municipalities⇒Districts designated by the governor
(Businesses covered)Information recording
devicemanufacturing, telecommunications, software, call center, movie,video, broadcasting, and other sectors
Information and communication zoneNaha and Urasoe District, Nago and Ginoza District, Uruma District⇒Districts designated by the governor
(Businesses covered)Data center, provider, backup center, etc.⇒Addition of the information and communication equipment interconnection verification sector
Tourist site formation and promotion district, industry innovation district
All areas in Okinawa Prefecture(Tourism-related facilities)Sports and recreation, education and culture, relaxation, convention, and sales facilities⇒Removal of floor area and other requirements with respect to facilities covered
(Types of sectors covered by industry innovation)Manufacturing, packaging, warehousing, wholesale, product inspection and other sectors
Regional zone
Overview of measuresTax deductions and allowances(only economic zones)
40%, 10 years(Selection system with investment tax and other credits on the right)
※Several requirements including the location of a head office or principal business base within the economic zone or a company ofless than 10-years standing established within the economic zone
※Substantial liberalization of the required number of full-time employees
Investment tax and other credits (common throughout economic zones and regions)
Machinery, etc. 15%, buildings and other 8%Substantially lower than the minimum acquisition cost of subjectassets (above ¥10 million ⇒ above ¥1 million)
Extraordinary depreciation (machinery, etc. 50%, buildings and other 25%)※Economic and financial revitalization zone, international logistics zone, industry innovation district (machinery, etc. 34%, buildings and other 20%); Selection system with income and investment tax credits
Other support measures
・Provide a variety of incubation facilities in such cities as Nago and Uruma as well as lots for sale and leased factories・Business, real estate acquisition, fixed property, and other tax relief measures・Okinawa – information and communication expense support between the main island・Okinawa youth employment promotion subsidy and other support・Low-interest finance provided by the Okinawa Development Finance Corporation
1616
■Major Projects within the Prefecture
Awase land readjustment project (approx. ¥5.9 billion) *
Residential development comprising over 1,000 dwellings led by AEON Mall Okinawa Rycome, Okinawa’s largest shopping center, and Chubu Tokushukai Hospital
Okinawa Electric LNG Power Station (approx. ¥100 billion)
Units 1 and 2 online; units 3 and 4 scheduled to come online from fiscal 2022 after taking into consideration the status of electricity supply
Fishing harbor development project (approx. ¥4 billion)
Development of a 346-room hotel and commercial facility adjacent to the American Village; Hilton Okinawa ChatanResort scheduled to commence operations in September 2014
Project to extend the Okinawa Municipal monorail (approx. ¥35 billion)
Project to extend the Urasoe Line by 4.1 km; targeting an opening date of spring 2019
Onna Communication Squadron site resort plan (approx. ¥50 billion)
Construction of a 209-room hotel, 20 villas, a spa, and chapel by a Malaysia-based company; targeting a completion date of 2016
Project to develop the Naha City Agricultural Market disaster prevention district (approx. ¥20 billion)
Development of a range of facilities including a market, hotel, and residential area; scheduled for completion in fiscal 2017
Plan to utilize a vacant lot within the Gimbaru Training Area (approx. ¥15 billion)
Construction completed on a regional medical facility, health care center, fitting center, thalassotherapy children’s rehabilitation center in March 2014
Plan to utilize a vacant lot within the Gimbaru Training Area (approx. ¥80 billion)
Hotel development project undertaken by a Malaysia-based company; operating contract with Hilton for a 190-room hotel; targeting a startup date of 2016
◆Hotel Orion Motobu Resort & Spa (approx. ¥9 billion)
Construction of a resort hotel adjacent to the Okinawa Churaumi Aquarium; operations scheduled to commence in July 2014
:Private-sector businesses :Public works ( ):Total project costs
* Investments by such private-sector businesses as AEON Mall and Chubu Tokushukai Hospital not included in total project expenses
Development of a heavy particle beam cancer treatment and additional facilities at a site in west Futenma (approx. ¥16 billion)
Open selection of an operating company from fiscal 2015; targeting the commencement of use in fiscal 2019
1717
Financial Results for FY2013
1818
■Financial Summary (Non-Consolidated)
FY2013 FY2012 Change
Ordinary revenue 37.9 37.5 +0.4
Business gross profitExpenses
30.2
21.7
29.3
21.4
+0.9
+0.3
Real net business profit 8.5 7.8 +0.7
Net credit costsOther extraordinary gain/loss
2.5
0.3
2.8
-0.4
-0.3
+0.7
Ordinary profit 6.3 4.5 +1.8
Total income taxes 2.8 2.0 +0.8
Net income 3.4 2.4 +1.0
(Billions of Yen)
*Increase and decrease is presented on a financial statement basis.
Increase in revenue and earnings for the first time in nine years
* Real net business profit = Business gross profit – Expenses
1919
■Financial Summary (Consolidated)Increase in revenue; substantial increase in earnings due mainly to an increase in the ratio of voting rights in subsidiary company Ryugin Hosho Co., Ltd.
FY2013 FY2012 Change
Consolidated ordinary revenue 39.9 39.3 +0.6
Consolidated ordinary profit 7.4 5.6 +1.8
Consolidated net income 4.9 2.7 +2.2
(Billions of Yen)
Company NameNet income
(FY2013)Net assets (as of March 31, 2014) Ratio of voting rights
Impact on consolidated profit as a result of an increase in the ratio
of voting rights
Ryugin Hosho Co., Ltd. 0.3 2.25.00%⇒96.15%
※From March 19, 2014
1.1(Gain on negative goodwill)
Ryukyu Leasing Co., Ltd. 5.0 3.7
4.98% (Share held by the Bank)0.4
(Equity in net income of affiliates)15.21%(Share held by Ryugin Hosho Co., Ltd.)
【Details of subsidiaries in which the Bank has increased its ratio of voting rights and other matters】
* Bank of the Ryukyus, Ltd. acquired additional shares in Ryugin Hosho Co., Ltd., which holds a portion of the shares of Ryukyu Leasing Co., Ltd., effectively increasing its ratio of voting rights in March 2014* Bank of the Ryukyus, Ltd. acquired additional shares in Ryukyu Leasing Co., Ltd., an affiliated company accounted for by the equity method, in April 2014. Having increased its ratio of voting rights to 49.96%,
the Bank included Ryukyu Leasing Co., Ltd. in its scope of consolidation as a consolidated subsidiary.* Increase and decrease is presented on a financial statement basis
(Billion of Yen)
2020
■Factors Behind the Change in Net Income (Non-Consolidated)
Factors Behind the Change in NetIncome (Non-Consolidated)
3,414
689
349
500893
2,474
294
End Mar14Net income
End Mar13Net income
(Mi l l i ons of Yen)
Increase in total income taxes
Increase in real net business profit
Improvem
ent in gains/losses on shares
Decrease in net credit costs
Other
Increase in net income largely attributable to the increase in real net business profit
Net Income
3.4
2.42.3
4.24.4
3.3
0
1
2
3
4
5
6
End Mar09 End Mar10 End Mar11 End Mar12 End Mar13 End Mar14
( Billions ofYen)
2121
■Factors Behind the Change in Real Net Business Profit (Non-Consolidated)
Real Net Business Profit
8.5
7.4
9.4
7.0 7.27.8
0
1
2
3
4
5
6
7
8
9
10
End Mar.2010 Mar.2011 Mar.2012 Mar.2013 Mar.2014 Mar.2015
( Billions ofYen)
Increase in real net business profit largely attributable to the increase in service profit and decrease in interest on deposits
Factors behind the year-on-year changein real net business profit
851
384
51
7,875 8,564
676
885
286
End March14
Real net business profitEnd March13
Real net business profit
( Millions of Yen)
Increase in service profit
Decrease in interest on deposits
Incre
ase
in
in
terest
an
d
divid
end
in
com
e on s
ecu
rit
ies
Decrease in interest on loans and bills discounted
Increase in expenses
Others
2222
■Loans (Non-Consolidated)
Loans (Non-Consolidated)
121.1
649.1494.9 518.7 540.3 572.3 611.1
559.7573.2
566.0 542.3529.7
520.7
115.1 124.7 127.9 114.5 109.7
1,330.0
1,241.61,183.3 1,209.5 1,210.6 1,216.6
7.11%
0.49%0.09%
2.05%
2.21%1.74%
0
200
400
600
800
1,000
1,200
1,400
End Mar2009 End Mar2010 End Mar2011 End Mar2012 End Mar2013 End Mar2014
( Billions of Yen)
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
Individuals Corporations Local public authorities and other Rate of increase (Compared with the end of the previous period:Right scale)
Increase in loans to individuals, corporations, and local public authorities; the balance of loans tops ¥1,300 billion
* Rates of increase are presented on a financial statement basis
2323
■Trends in Economic Conditions and the Bank’s Lending Activities
The Bank’s lending activities closely linked to economic conditions within the prefecture
-10.00%
-8.00%
-6.00%
-4.00%
-2.00%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
-30
-20
-10
0
10
20
30
40
Feb-
1992
Feb-
1993
Feb-
1994
Feb-
1995
Feb-
1996
Mar-
1997
Mar-
1998
Mar-
1999
Mar-
2000
Mar-
2001
Mar-
2002
Mar-
2003
Mar-
2004
Mar-
2005
Mar-
2006
Mar-
2007
Mar-
2008
Mar-
2009
Mar-
2010
Mar-
2011
Mar-
2012
Mar-
2013
Mar-
2014
Bank of Japan Diffusion Index (Okinawa)
Rates of loan increase and decrease (year on year; right axis)
+7.1%
2424
■Business Loans (Non-Consolidated)
Business Loans (Non-Consolidated)
246.0 265.9 298.7 320.7
114.1 108.9 104.2102.2
105.976.6 69.3 62.5
60.459.853.4 52.0 53.8
49.661.869.8 67.7 65.0 50.252.5
175.9 163.8 153.6 144.3151.6
254.6
752.5705.6705.3716.5736.0
-1.56%
-2.64%
6.64%
0.04%
2.02%
0
100
200
300
400
500
600
700
800
900
End Mar2010 End Mar2011 End Mar2012 End Mar2013 End Mar2014
( Billions of Yen)
-4.00%
-2.00%
0.00%
2.00%
4.00%
6.00%
8.00%
Real estate, rental and leasing Wholesale and retail Construction Medical and welfare Manufacturing Others Rate of business loans
* Change in sector classifications from September 2009
* Individual business loans are handled in a different manner and as such data does not reconcile with data for loans to corporations on page 22
Increase mainly in loans to the real estate sector including apartment loans as well as the medical and welfare sector
* Rates of increase are presented on a financial statement basis
(Compared with the end of the previous period: Right scale)
2525
■Consumer Loans (Non-Consolidated)
Consumer Loans (Non-Consolidated)
347.1370.4
390.7
58.658.8
58.6
60.3
64.1
356.4369.4
382.2
406.2
430.7
454.9
310.6323.6
297.7
59.0
2.54%
4.33% 4.18%
7.26%6.71%
5.48%
2.26%
0.34%
-0.34%
0.68%2.20%
6.30%
0
50
100
150
200
250
300
350
400
450
500
End Mar2009 End Mar2010 End Mar2011 End Mar2012 End Mar2013 End Mar2014
( Billions of Yen)
-1.00%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%
10.00%
Mortgage loans Other loans Rate of mortgage loan increase Rate of other loan increase
* Data does not include individual business loans and as such does not reconcile with data for loans to individuals on page 22
Robust trends in mortgage, card, automobile, and educational loans
* Rates of increase are presented on a financial statement basis
(Compared with the end of the previous period: Right scale)
1,882.8
2626
■Deposits (Non-Consolidated)
Deposits (Non-Consolidated)
97.9126.2
141.0
165.2129.3
161.9
12,262
1,199.6
1,155.91,087.21,021.7965.9
494.6468.8
437.7412.4
376.1356.5
1,758.91,640.7
1,524.11,420.4
1,797.8
0.45%
2.21%
4.72%
7.20%
7.65%7.30%
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
End Mar2009 End Mar2010 End Mar2011 End Mar2012 End Mar2013 End Mar2014
( Billions of Yen)
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%Individuals Corporations Public funds (year-end balance) Rate of deposits
Continued robust trends in deposits from individuals and corporations; increase attributable to the shift in designated financial institution regarding public funds
* Rates of increase are presented on a financial statement basis
(Compared with the end of the previous period: Right scale)
2727
■Assets in Custody_(Non-Consolidated)
Assets in Custody(Non-Consolidated)
81.9 79.0
45.5 38.0
77.7 79.9
70.2
62.066.8
61.5
32.8 36.9
40.7
47.0 57.0
55.569.7
77.0
176.6169.4164.6
180.7
195.9
192.5
-7.04%
4.25%
2.91%
-8.90%
-7.75%
1.76%
0
50
100
150
200
250
End Mar2009 End Mar2010 End Mar2011 End Mar2012 End Mar2013 End Mar2014
( Billions of Yen)
-10.00%
-8.00%
-6.00%
-4.00%
-2.00%
0.00%
2.00%
4.00%
JGBs Investment trusts Single-premium insurance Rate of assets in custody
* Single-premium insurance: Contract value of single-premium individual pension insurance, single-premium whole life insurance, and single-premium medical care insurance
Robust trends in insurance sales; increase in the balance of assets in custody
* Rates of increase are presented on a financial statement basis
(Compared with the end of the previous period: Right scale)
2828
■Earnings Forecasts for FY2014 (Non-Consolidated)
(Billions of Yen)
While yields on loans are projected to decline, net income is expected to remain in line with FY2013 due mainly to an increase in service profit
FY2014 FY2013 Year-on-yearchange
Business gross profitExpenses
29.5
22.2
30.2
21.7
-0.7
+0.5
Real net business profit 7.3 8.5 -1.2
Net credit costs 2.5 2.5 0
Ordinary profit 5.3 6.3 -1.0
Total income taxes 1.9 2.8 -0.9
Net income 3.3 3.4 -0.1
*Increase and decrease is presented on a financial statement basis
2929
■Earnings Forecasts for FY2014 (Consolidated)
Substantial increase in revenue due mainly to the inclusion of Ryukyu Leasing Co., Ltd. in the scope of the Bank’s consolidation as a consolidated subsidiary; narrowing of the decline in net income due mainly to a decrease in extraordinary gain/loss
FY2014 FY2013 Year-on-yearchange
Ordinary revenue 52.2 39.9 +12.3
Ordinary profit 6.7 7.4 -0.7
Net income 4.6 4.9 -0.3
(Billions of Yen)
*Increase and decrease is presented on a financial statement basis
3030
Bank of the Ryukyus Strategy
3131
■Positioning of the FY2014 Short-Term Management Plan
FY2013
Break Through 2012—Aiming to become the bank of preference for the citizens of Okinawa—
Toward the next medium-term
management plan
FY2011 FY2012
Sowing seeds Sprouting
FY2014
Blossoming
Ⅱ. Hire and train highly specialized staff
Ⅰ. Support development of the regional economy
Ⅱ. Strengthen marketing capabilities in the retail banking and fee businesses
Current trends and issuesHigh potential within Okinawa Prefecture
Gradual decrease in top line revenue
Three arrows of IT innovation
Establish three Loan Promotion groups and an Assets in Custody promotion team ONE to ONE marketing
Provide services that match the needs of
each customer
Become the bank of choice
Solution
New stage of growth
Set up new branches
Streamline branch operations
Enhance Ryugin Financial College
Expand business financing to the medical treatment and nursing care sectors as well as such infrastructure as solar power generation facilitiesMake all necessary preparations following determination of the Financing Facilitation ActIntroduce a T-Point serviceCommence the handling of insurance at loan centers
Core StrategiesGrowth Strategies
Ⅰ. Reform our marketing system
3232
Pursue work-style reformFoster human resources
Develop highly motivated workplaces
FY2014 management target: Become the bank of preferenceIncrease earning capacity
ONE to ONE marketingProvide services that match the needs of each customer/strengthen non-price competitiveness
Adhere strictly to a policy of compliance/strengthen risk management
■Basic Approach Toward the FY2014 Short-Term Management Plan
Expand service revenue
Strengthen assets in custody activities
Buildup the balance of loans
Strengthen activities in growth fields
Undertake more effective securities investment
Diversify securities investment methods
Leverage the collective strengths of the Group
Strengthen consolidated earning capacity
Identify new earning opportunities
Engage in more sophisticated revenue and ALM management
Core StrategiesGrowth Strategies
3333
■Core Strategy I (Reform our marketing system)
Realize increased operating efficiency
and speed
Improve the convenience of online communicationIntegrate retrieval of overall systemsComputerize draft and report workflows
Computerize customer information inquiries and household management cardsCentralize processes for managing the progress of projects and activity resultsIncrease the efficiency of assets in custody sales
Computerize workflows relating to the retail credit operations of the Bank and Ryugin Hosho Co., Ltd.
Increase the efficiency and speed of loan screening and assessmentReview rules and communication
Increase the efficiency of service operationsReview rules and communication
Reform meeting proceduresPromote paperless operationsConsolidate frequently asked questions
Communication tool (Intranet)
Reform over-the-counter procedures
Reform head office operations
“Loan navi” (Automated screening system)
Bank Neo (Marketing support system)
Reform loan operations
Pursue work-style reform
Three arrows of IT innovation; reform branch and head office processes
3434
■Core Strategy II (Hire and train highly specialized staff)Develop specialized staff
A record high 25 individuals accredited as property assessment advisors across all financial institutions
Increased the balance of loans backed by collateral (ABLs) including trade accounts receivable and property (merchandise, raw materials, machinery and equipment)
Accreditation certificate presentation ceremony
A second Bank of the Ryukyus staff member is accredited as a 2nd grade medical management specialist
Medical care and welfare promotion groups with their own designated management consultants worked in unison with branches to bolster the promotion of financeTrends in the balance of loans to the medical care and
welfare sectors
53,40152,042
53,859
49,625
61,861
40,000
45,000
50,000
55,000
60,000
65,000
70,000
End Mar2010 End Mar2011 End Mar2012 End Mar2013 End Mar2014 End Mar2015
( Millions of Yen)Established a medical care and welfare promotion group in December 2012
Colle-ju, a loan offered exclusively to homes for the care of the elderly
Doctors’ Support Loan
Improving expertise!
Trends in the number of ABLs handled
14
69
6435
0
5
10
15
20
25
30
FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014
(Number of ABLsHandled)
3535
■Growth Strategy I (Support development of the regional economy)
Became the first financial institution in Okinawa Prefecture to form an alliance with the Okinawa
Agriculture Credit Fund Association
Help expand marketing channelsHeld a business forum to promote the appeal of Okinawa
Launched Ryugin agriculture loans
Bank of the
Ryukyus, Ltd.
The Okinawa
Kaiho Bank, LTD.
Koza
Shinkin Bank
Agricultural and marine products; foods Buyers (top ranked restaurants and
hotels in Japan and overseas)
Support renowned chefs prepare recipes as a
business meeting tool
Support agricultural businesses
Working and capital finance essential to
agricultural operations and management
Up to a maximum amount of ¥10
million
Held agricultural business revitalization seminarsBusiness alliance
(Moku Moku Tezukuri Farm) (Nomura Agri Planning & Advisory Co., Ltd.)
47 business partners
3636
■Growth Strategy II (Strengthen marketing capabilities in the retail banking and fee businesses)
Strategies to forge a principal bank position and build a stronger corporate imageIntroduced a T-Point service
Designate the account into which
salaries are to be credited200 points
Salary transfer + Savings fund 5 points (per savings of ¥5,000)
Salary transfer + DC Card 60 points (end of January each year)
The rate of T-Point membership in Okinawa is the highest in Japan Capture the young generation
Third financial institution to
introduce the T-Point service after Suruga
Bank Ltd. and ShinseiBank, Limited
Launched the Shiawase Free Loan
Unrestricted useUp to a maximum
amount of ¥5 million
Targeting such customers as part-time workers and
full-time homemakers
Balance of loans to individuals excluding mortgage loans
58,802 58,647 59,04760,379
64,175
52,000
54,000
56,000
58,000
60,000
62,000
64,000
66,000
68,000
70,000
End Mar2010 End Mar2011 End Mar2012 End Mar2013 End Mar2014 End Mar2015
(Millions of Yen)
Opened the Chatan Loan Center
Loan centers in seven locations throughout
the prefecture (open seven days a week
including Saturdays and Sundays)
Received the Gold Award from the Okinawa Advertising Association
A finalist at the ACC CM Festival
“Children and Philosophy”educational loan commercial
Ryugin Mortgage Loan Transform commercial
3737
■Hold Sixth Industrialization Seminars (Proposal)Overview (Proposal)
Dates (planned) Locations (planned) ParticipantsJuly 11, 2014 (Friday): 14:00 – 18:00 Hotel to other location within Kumejima ・Farmers
・The general public interested in agriculture
・Public and administrative officers (regional and municipal offices)
July 14, 2014 (Monday): 14:00 – 18:00 Hotel Yugafu Inn OkinawaJuly 15, 2014 (Tuesday): 14:00 – 18:00 Okinawa Kariyushi Urban Resort NahaJuly 17, 2014 (Thursday): 14:00 – 18:00 Hotel KyowaJuly 18, 2014 (Friday): 14:00 – 18:00 Hotel within Ishigakijima
Event Program (Proposal)
Details
Educational seminar
Theme (provisional): Taking up the challenge of the Moku Moku Tezukuri FarmLecturer: Osamu Kitamura, Representative Director
Theme (provisional): The expanding Halal market and the potential of OkinawaLecturer: Akio Tanaka, Director, Brand Research Institute, Inc.
Explanatory meetings
About agricultural funds: Overview of funds and case studies regarding their applicationLecturer: a-five or Nomura Agri Planning & Advisory Co., Ltd.
About the Ryugin Agri Loan Lecturer: Bank of the Ryukyus, Ltd.
About the Sixth Industrialization Support Center Lecturer: Sixth Industrialization Support Center
Consultation meetings
Individual consultation meetings conducted by planners and other appropriate personnel
Part 1
Part 2
Part 3
3838
Bank of the Ryukyus is committed to fostering a close affinity with customers and to become the bank of preference.
Thank you for your kind attention.