JAPAN POST BANK CO., LTD. UNOFFICIAL TRANSLATION
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The revision of Medium-term Management Plan
（FY2022/3 through FY2026/3）
～ Deepening trust, and taking on the challenge for financial innovations～
May 15, 2024
Table of Contents
- Highlight
- About the revision of Medium-term Management Plan
Review of the First Three Years of the Medium-term Management Plan Change in Business Environment, Etc.
Key Points of the Review of Business Strategies
3. Medium-term Management Plan after the revision
Purpose, Management Philosophy, and Mission
Basic Policies of the Revised Medium-Term Management Plan Revised Financial Targets
Profit Roadmap, Assumptions for Profit Plan Medium- to Long-Term ROE Targets Retail Business Innovations
Market Business Enhancement Full-scale Launch of the ∑ Business Strengthening the Management Base Promotion of Sustainability Management Capital Policy
P3
P6
P7
P9
P10
P11
P12
P13
P14
P15
P17
P19
P23
P27
P29
P35
P39
2
1. Highlight
3
Medium-term Management Plan Review: Highlight (1)
1. Review of financial targets and various KPIs
- Net income for FY2025/3 is expected to increase from the year earlier to reach "¥365 billion or more." The net income projection for FY2026/3 was revised upward to "¥400 billion or more" from the "¥350 billion or more" assumed in the original Medium-TermManagement Plan (hereinafter referred to as "the Medium-termPlan"). Key KPIs were revised upward or newly established in accordance with the revised plan.
Financial | FY2024/3 Actual | FY2025/3 Targets | FY2026/3 Targets | ||
Targets | (after revision) | ||||
Net income | *1 | ¥356.1 bn | ¥365.0 bn | ¥400.0 bn | |
or more | or more | ||||
ROE | *1 | 3.74% | 3.77% | 4.0% | |
or more | or more | ||||
OHR*1 | 65.39% | 65% | 62% | ||
or less | or less |
*1 Consolidated basis; ROE is based on shareholders' equity; OHR includes gains (losses) from money held in trust, etc.
FY2026/3 Targets (before revision)
¥350.0 bn
or more
3.6%
or more
66%
or less
Main KPIs | FY2026/3 Targets | |
(after revision) | ||
No. of accounts registered in | 16 million accounts | |
Retail | the Yucho Bankbook App | |
business | ||
No. of NISA accounts | 940,000 accounts | |
Balance of risk assets | Approximately | |
Market | ¥114 trillion | |
business | ||
Balance in strategic | Approximately | |
investment areas | ¥14 trillion |
FY2026/3 Targets (before revision)
10 million accounts
ー
Approximately
¥110 trillion
Approximately
¥10 trillion
The plan calls for improving net income to ¥400.0bn in FY2026/3, on an increase in net fees |
and commissions, etc. in addition to an increase in income from the yen interest rate portfolio, |
credit assets, and PE (private equity), while gains from the sale of stocks and other securities |
∑ Business | GP*2 business-related | Approximately |
investments (based on | ¥400 billion | |
investment commitments) |
ー
associated with operations for risk controls are projected to decrease compared to FY2024/3. |
*2 GP (General Partner): Fund management entity responsible for selecting projects, making investment decisions, etc.
2. Medium- to long-term ROE targets
- Aiming to achieve ROE* of 4% or more during the current Medium-term Plan (through FY2026/3) and 5% or more* in excess of cost of shareholders' equity early in the next Medium-termPlan (from FY2027/3), and further improvement over the medium to long term.
* Net income in the order of ¥500 billion
3. Actual and estimated dividend per share
No change in shareholder return policy, aiming to increase dividends in line | ||||||
70 | ||||||
with profit growth | 400.0 | Targeting net | ||||
Net income | ||||||
356.1 | 365.0 | income of ¥500 | ||||
(¥bn) | 325.0 | billion in the early | ||||
stage of the next | ||||||
Medium-term Plan | ||||||
50 | 51 | 52 | ||||
Dividend per | Aiming to increase dividends in line with | |||||
profit growth | ||||||
share (yen) | FY2023/3 | FY2024/3 | FY2025/3 | FY2026/3 | ||
Actual | Actual | Targets | Targets | |||
Dividend | 57.5％ | 51.8％ | 51.5％ | |||
payout ratio |
Copyright© JAPAN POST BANK All Rights Reserved. | 4 |
Medium-Term Management Plan Review: Highlight (2)
４．Review of business strategies
- Revised the part of the plan covering the two years from FY2025/3 to FY2026/3 in light of changes in the business environment. While maintaining the basic direction of the Medium-term Plan, we revised the framework around three business strategies with a view to the next Medium-term Plan, accelerating transformation to a sustainable business model.
Before
revision
- Retail business innovations
- Work reforms and productivity improvements
- Enhancing funds flow to regional communities and the regional relationship functions
- Deepening market operations and risk management
- Strengthening the management base
Looking back on the past three years
Expand digital services that are easy for all customers to use, such as the Yucho Bankbook App
Steadily reduce workload through operational reforms using digital technology
Launched Σ Business and established a promotion system with a pilot period through September 2024
Build up the risk asset balance and strategic investment area balance while fortifying stress tolerance
Practice customer-oriented business operations; implement smooth renewal of core systems
After
revision
- Retail business innovations
- Market business enhancement
- Full-scalelaunch of the ∑ Business (a corporate business for creating futures for societies and local communities through investment)
- Strengthening the management base
AdvancingDX | Promotion of | ||
sustainability | |||
management | |||
Key points of the revision
Enhance strategy for complementarity between the physical and digital/remote channels
Pursue an optimal investment portfolio that combines the yen interest rate portfolio with risk assets, while strengthening risk management
Realize "co-creation platform" with regional financial institutions, etc. (promotion of "Japan Post Bank's unique GP business" with a subsidiary as the core)
Continue to practice customer-oriented business operations Promote human capital management
Promote strategic IT investments
Improve company-wide work efficiency with the use of AI and other technologies
(Reference) Achievement of Medium-Term Plan Goals (up through FY2024/3)
-
Net income for FY2024/3 was ¥356.1 bn.
In addition to achieving the FY2024/3 financial targets set forth in the Medium-term Plan, the FY2026/3 targets were achieved ahead of schedule. Progress has been smooth, in general, for each KPI related to priority strategies.
Financial | Main KPIs | FY2026/3 | ||||||||
FY2022/3 (Actual) | FY2023/3 (Actual) | FY2024/3 (Actual) | FY2024/3 | FY2026/3 | FY2024/3 (Actual) | |||||
targets | (Medium-term Plan*) | (Medium-term Plan) | (Medium-term Plan) | |||||||
Number of accounts registered in | 10.4 million | |||||||||
Net income | ¥355.0 billion | ¥325.0 billion | ¥356.1 billion | 10 million accounts | ||||||
¥280.0 billion or more | ¥350.0 billion or more | |||||||||
the Yucho Bankbook App | accounts | |||||||||
¥107.4 trillion | Approximately | |||||||||
ROE | 3.80% | 3.44% | 3.74% | Balance of risk assets | ||||||
3.0% or more | 3.6% or more | |||||||||
¥110 trillion | ||||||||||
OHR | 67.52% | 67.15% | 65.39% | Balance in strategic | ¥12.1 trillion | Approximately | ||||
72% or less | 66% or less | |||||||||
investment areas | ¥10 trillion |
- FY2024/3 targets announced in May 2021; FY2024/3 forecast announced in May 2023 was for ¥335.0 billion.
Copyright© JAPAN POST BANK All Rights Reserved. | 5 |
2. About the revision of Medium-term Management Plan
6
Review of the First Three Years of the Medium-term Management Plan: (1) Financial Targets
- Net income for FY2024/3 was ¥356.1bn. In addition to achieving the FY2024/3 financial targets set forth in the Medium-term Plan, the targets for FY2026/3 were also achieved ahead of schedule.
Profitability
Efficiency
Soundness
Achievement of targets | Achievement of targets | |||||||||||||||
(¥bn) | ROE | 3.6% or | (¥bn) 72.34% | OHR | ||||||||||||
3.80% | 72% or less | |||||||||||||||
3.74% | (Including gains (losses) on | |||||||||||||||
3.44% | more | money held in trust, etc.) | ||||||||||||||
3.0% or | 67.52% | |||||||||||||||
3.06% | ||||||||||||||||
more | ||||||||||||||||
Net income | 67.15% | 66% or less | ||||||||||||||
65.39% | ||||||||||||||||
General and | ||||||||||||||||
350.0 | 1,009.3 | -25.0 | ||||||||||||||
administrative | ||||||||||||||||
355.0 325.0 | 356.1 | or more | 981.4 | expenses | -55.0 | |||||||||||
280.1 | -81.5 | |||||||||||||||
280.0 | ||||||||||||||||
or more | 924.7 | 927.8 | ||||||||||||||
Maintain target levels
Capital adequacy ratio
(Domestic standards)
15.53% 15.56% 15.53%
15.01%
14.09% 14.23% 14.01%
13.23%
CET1 ratio
(International standards)
(Excluding unrealized gains on available-for-sales securities)
Target level in normal times:
approximately 10%
FY2024/3* | |||||||||||||||||
20 | 21 | 22 | 23 | FY2024/3* | FY2026/3 (FY) | 20 | 21 | 22 | 23 | FY2026/3 (FY) | |||||||
March 31, | March 31, | March 31, | March 31, | ||||||||||||||
23中計 | 25中計 | 23中計 | 25中計 | ||||||||||||||
Medium-term | Medium-term | Medium-termMedium-term | 21/3末 | 22/3末 | 23/3末 | 24/3末 | |||||||||||
Plan | Plan | Plan | Plan | 2021 | 2022 | 2023 | 2024 |
* FY2024/3 targets announced in May 2021 ; FY2024/3 forecast announced in May 2023 was for ¥335.0 billion.
Copyright© JAPAN POST BANK All Rights Reserved. | 7 |
Review of the First Three Years of the Medium-term Management Plan: (2) KPIs
- Progress toward achieving the KPIs*1 for the major strategies set forth in the Medium-term Plan is generally proceeding smoothly. For some items, FY2026/3 targets were achieved two years ahead of schedule.
Key strategic points
Retail business innovations
Work reforms and productivity improvements
Enhancing funds flow to regional communities and the regional relationship functions
Deepening market operations and risk management
FY2021/3 Actual
2.83 million
accounts
130,000
accounts
―
32 cases
(cumulative)
- financial institutions
¥91.1 trillion
¥4.2 trillion
-8.2%
¥1.2 trillion
FY2024/3 Actual
10.4 million
accounts
370,000
accounts
-1,850
employees
51 cases
(cumulative)
5 financial institutions
(cumulative)
¥107.4 trillion
¥12.1 trillion
-50.8%
(FY2023/3 actual results)
¥4.6 trillion
FY2026/3 Targets
10 million accounts
400,000 accounts
-3,000 employees
50 cases
(cumulative)
Evaluation
- Achievedschedule FY2026/3 target two years ahead of
- Steady growth in the number of active accounts
- Meanwhile, the workforce was reduced by 2,810 on the back of a decrease in work volume resulting from work reformsThe increase of 960 employees in strengthened areas was largely in line with the plan
- Achievedschedule FY2026/3 target two years ahead of
- Trended below initial expectations due to changes in the social environment, such as the introduction of "eL-QR" code
- Steady growth in balances, especially in investment grade area
-
Steadily expanding balances while making selective investments Achieved FY2026/3 target ahead of schedule
Completed transition to renewable electricity for company-owned - facilities
Target raised from -46% to -60% in March 2023 - Steadily expanding investment balance
Target raised from ¥2 trillion to ¥4 trillion in March 2022
Promotion of sustainability management
*1 KPI＝Key Performance Indicator
15.7% | 18.4% | 20% | ○ | Steadily increasing the percentage toward | ||
(As of April 2021) | (As of April 2024) | (Target by April 2026) | achieving the target by April 2026 | |||
Noticeable increase in the number of days of childcare leave taken | ||||||
99.5% | 100% | 100% | ○ | |||
by male employees (65% took leave for 4 weeks or more) | ||||||
2.74% | 2.7% or more | |||||
2.94% | ○ | Maintaining employment rate above KPI | ||||
(As of June 2020) | (As of June 2023) | (Target by June 2025) | ||||
*2 Due to the NISA system revision in January 2024, "FY 2024/3 | Actual" includes the number of the NISA monthly investment account. | |||||
Copyright© JAPAN POST BANK All Rights Reserved. | 8 |
Change in Business Environment, Etc.
- Since the formulation of the Medium-term Plan (May 2021), the business environment surrounding the Bank has changed significantly.
- Although demand is increasing for the Bank to take action to implement management that is conscious of the cost of capital and stock price, the Bank's ROE (return on equity) stands below cost of shareholders' equity and the PBR (price book value ratio) remains below 1x. It is necessary to sustainably improve ROE while responding to changes in the business environment.
Major changes in the business environment since the formulation of the Medium-term Plan
Change in the BOJ's monetary policy (lifting of negative interest rate policy, removal of yield curve control, etc.), higher domestic interest rates
External | Overseas interest rates rose sharply due to inflation overseas and | |
monetary tightening by the US Fed and European Central Bank, | ||
whereas, interest rate cuts are expected to begin in 2024 | ||
The digitalization of society progressed even more after the Covid-19 | ||
environment | pandemic; digital technologies, such as generative AI, are evolving | |
rapidly | ||
Government promotion of "Policy Plan for Promoting Japan as a | ||
Leading Asset Management Center" and launch of the new NISA | ||
system | ||
Increasing demand for action to implement management that is | ||
conscious of the cost of capital and stock price | ||
Increasing demand for the Bank to address and promote information | ||
disclosure on sustainability management and human capital | ||
Internal | management matters | |
| Enhancement of functionality of digital services and increase in the | |
number of users | ||
Expansion in the risk asset balance and strategic investment area | ||
environment | balance | |
and increase in the number of general shareholders | ||
| Launch of Σ Business (a corporate business for creating futures for |
societies and local communities through investment)
Decrease in the shareholding ratio of Japan Post Holdings (from 89.0% to 61.5%) due to a secondary offering of the Bank's shares,
ROE and PBR
7.0% | ROE | |||||
Cost of shareholders' equity: approx. 5%*1 | ||||||
6.0% | ||||||
5.0% | 3.80% | 3.74% | ||||
4.0% | 2.97% | 3.03% | 3.06% | 3.44% | ||
3.0% | ||||||
ROE | ||||||
2.0% | ||||||
1.0% | ||||||
0.0% | ||||||
FY2019/3 | FY2020/3 | FY2021/3 | FY2022/3 | FY2023/3 | FY2024/3 | |
18年度 | 19年度 | 20年度 | 21年度 | 22年度 | 23年度 |
1.0 (x) | PBR*2 |
Reference: Banking industry PBR*3 on March 31, 2024
0.8 ・ Simple average of the banking industry: 0.49x
0.6 | ・ Weighted average of the banking industry: 0.82x | 0.61 | ||||
0.42 | 0.41 | |||||
0.40 | 0.35 | 0.36 | ||||
0.4 | ||||||
0.2 | ||||||
0.0 | ||||||
March 31, | March 31, | March 31, | March 31, | March 31, | March 31, | |
18年度末 | 19年度末 | 20年度末 | 21年度末 | 22年度末 | 24年2月末 | |
2019 | 2020 | 2021 | 2022 | 2023 | 2024 |
*1 Based on CAPM (Capital Asset Pricing Model)
Calculated based on risk free rate (10-year JGB yield) + adjusted beta (set based on the return of the TOPIX and the Bank's stock price over the last 60 months) x market risk premium (expected return on the stock market - 10-year JGB yield)
*2 Excluding treasury stock
*3 Prepared by the Bank based on each company's financial data, etc. (average of bank stocks included in the TOPIX)
Copyright© JAPAN POST BANK All Rights Reserved. | 9 |
Key Points of the Review of Business Strategies
- Based on changes in the business environment since the Medium-term Plan was formulated, revisions were made for the two years from FY2025/3 to FY2026/3 (the plan for the period through FY2026/3 remains unchanged).
- While maintaining the basic direction of the Medium-term Plan, and looking ahead to the next plan, the framework was revised to focus on the three strategic areas (retail business, market business, and Σ (sigma) Business) that leverage the Bank's unique strengths. Accelerate the transformation to a sustainable business model.
Medium-term Plan before the revision
"Deepening trust, and taking on the challenge for financial innovations" Innovating our business model and enhancing business sustainability
Medium-term Plan after the revision
"Deepening trust, and taking on the challenge for financial innovations" | No change |
Innovating our business model and enhancing business sustainability | |
- Retail business innovations
- Work reforms and productivity improvements
- Enhancing funds flow to regional
communities and the regional relationship functions
- Deepening market operations and risk management
- Strengthening the management base
Review of the past three years
Expand digital services that are easy for all customers to use, such as the Yucho Bankbook App
Steadily reduce workload through operational reforms using digital technology
Launched Σ Business and establish a promotion system with a pilot period through September 2024
Build up the risk asset balance and strategic investment areas while fortifying stress tolerance
Practice customer-oriented business operations; implement smooth renewal of core systems
(1) Retail business innovations
(2) Market business enhancement
(3) Full-scale launch of the ∑ Business (a corporate business for creating futures for societies and local communities through investment)
- Strengthening the management base
AdvancingDX | Promotion of | ||
sustainability | |||
management | |||
Key points of the revision
Enhance strategy for complementarity between the physical and digital/remote channels
Pursue an optimal investment portfolio that combines the yen interest rate portfolio with risk assets, while strengthening risk management
Realize "co-creation platform" with regional financial institutions, etc. (promotion of "Japan Post Bank's unique GP business" with a subsidiary as the core)
Continue to practice customer-oriented business operations Promote human capital management
Promote strategic IT investments
Improve company-wide work efficiency with the use of AI and other technologies
Shareholder return policy
Aim to increase dividends in line with profit growth, in accordance with a basic policy for a dividend payout ratio of approximately 50%
Shareholder return policy | |
Aim to increase dividends in line with profit growth, in accordance with a | No change |
basic policy for a dividend payout ratio of approximately 50% | |
Strengths unique to Japan Post Bank
The largest customer base of any Japanese bank | Most extensive and stable deposit base in Japan | Nationwide network covering |
120 million | ¥192 trillionin deposits, | every corner of the country |
ordinary deposit accounts | centered on retail banking customers | Network of approx. 24,000post offices |
Copyright© JAPAN POST BANK All Rights Reserved. | 10 |
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Japan Post Bank Co. Ltd. published this content on 15 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 15 May 2024 11:39:15 UTC.
