Meeting the Challenge of
New Banking
Competing on a different level with innovative financial services
Presentation to investors on fiscal year ended March 31, 2005
Suruga Bank Ltd.
May 31, 2005
Viewpoints of the Program for Further Financial Reform
Social: Aging population
The Further Financial Reform Program
for the realization of a
Financial Services Nation
Economic: Globalization
Governmental:
Privatization/decentralization
Deregulation:
Breaking down of barriers to industries
Stringent regulation:
Compliance with international standards
Consumer protection
Social regulations
I T
- Beyond broadband
- Mobile
- Security etc.
- Specialization of functions by
combining industries
- Industry reform
Five points in the challenge moving
toward a Financial Services Nation
Emphasis on users' needs and thorough
implementation of user protection rules
Strategic use of IT for strengthening the
competitiveness of financial institutions and
further developing financial infrastructure
Further development of a financial system which is
internationally open and a financial administration
with an international perspective
Contributing to create a financial system
conducive to vibrant regional economies
- Increase of new market entrants
- Privatization of Japan's postal system
Industry
competitiveness
Customers
- Changes in priorities for choosing
a financial institution
(from all being the same to ''what's best for me')
- Information-aware, independent customers
Establishment of a reliable
financial administration
- Requiring more specialization
- Emphasis on reliability and security
- Better choice of channels
1
Fundamental Concept and Business Design
Concept of offering value
Business design
1. Offering heartfelt hospitality
By seeking the causes of customer
satisfaction, SURUGA can give
peaceof mind to its customers
-People living in affluent societies
regard service highly-
Targeted segments
Core business
Five-pillar approach
Major customers and markets
Three-pronged approach
and superior service
Direct Banking
Active nationwide
Personal Banking 1. Mortgage loans
The Greater Tokyo Area
2. The transition from money
2. Personal loans
changer to money producer
Providing optimal products and
services from a long-term
perspective
Expanding into card and personal
loans on the back of mortgage loans
-Full consulting service as financial professionals-
Community Banking
competition to add value
-Becoming a company selling value by offering
quality products and services at a fair price-
Organizational
support infrastructure
Values
Compliance
program
Round-up
system
Newly Affluent
3. Credit cards
Numazu, Shonan, Shizuoka
3. Rising above price
Interest and commissions
based on the financial service
provided
Working
Women
4. Wealth management
support
Using Suruga's alliance
strategy as a springboard
to increase scale and
product line-up
Management
quality
improvement
program
BSC goal
management
system
Meeting card and loan
needs on the back of wealth
management support
Retail
culture
A learning
organization
5.
Active Elderly
Small, medium
enterprises
Knowledge
management
system
Selfassessment
Concierge
academy
Human
resource
development
program
2
Net Interest Margin - Loan-deposit Margin
Overall net interest margin
Overall loan-deposit margin
Suruga
Suruga
All regional banks
All regional banks
0.99 %
1.77%
0.85
% %
0.78 %
1.41%
1.52 %
1.59 %1.64 %
0.55%
0.47%
0.49 %
0.43% 0.43 %
0.33%
Mar 01 Mar 02 Mar 03 Mar 04 Mar 05
0.67%
0.71%
0.78 %
0.82%
Mar 01 Mar 02 Mar 03 Mar 04 Mar 05
3
Status of Interest Margins
Average balance of outstanding loans (billion yen)
Consumer loans ratio
1,949.9
1,833.0
2,008.6 2,032.1
63.8%
51.2%
2,048.1
66.4%
69.1%
Yield on outstanding loans (domestic)
Yield on deposits (domestic)
3.06% 3.11%
0.08%
58.8%
Loan-deposit margin (domestic)
1.66%
1.77%
3.17% 3.19%
2.90%
0.14%
Mar 01 Mar 02 Mar 03 Mar 04 Mar 05
1.08%
0.24%
0.07%
0.05%
Mar 01 Mar 02 Mar 03 Mar 04 Mar 05
Expense ratio (domestic)
1.84%
1.43%
Mar 01 Mar 02 Mar 03 Mar 04 Mar 05
1.58%
1.47%
1.36% 1.32%
1.30%
Mar 01 Mar 02 Mar 03 Mar 04 Mar 05
4
Transition of Gross Operating Income
(billion yen)
Income from mortgage loan sales
Other operating income (except income from mortgage loan sales)
Net fees and commissions
Net interest income
58.5
54.2
0.3
1.7
52.1
0.8
8
2.5
25
55.2
58.5
68.2
3.5
1.6
2.5
68.0
0.7
3.3
2.6
58.1
60.4
63.9
-2.2
Mar 01
Mar 02
Mar 03
Mar 04
Mar 05
5
Status of Core Net Operating Income and Income from Yen Loan-deposits
Core net operating income
(billion yen)
Income from yen loan-deposits
(billion yen)
Second half
First half
First half
Income from sale of mortgage loans
Brackets indicate income after sale of mortgage loans
30.2
(26.6) 31.3
24.2
18.1
12.0
Mar 01
49.3
53.2
16.1
(14.0)
16.0
56.1
58.8
42.3
2.0
13.1
25.1
27.3
28.6
29.8
21.5
10.0
1.5
5.4
6.6
Second half
8.1
Mar 02
11.0
Mar 03
14.1
(12.5)
15.3
20.7
Mar 01
Mar 04
Mar 05
24.2
Mar 02
25.9
Mar 03
27.5
Mar 04
29.0
Mar 05
6
Status of Consumer Loan Balance
Consumer loan balance
Mortgage loan balance
(billion yen)
(billion yen)
1,299.5
1,180.2
1,472.7
1,377.8
1,127.4
1,001.5
4.8
+9
8.2
995.1
5.7
+9
838.4
.5
+7
8.7
9
+11
2.3
.3
6.7
7
+1
Mar 01
Mar 02
1,303.6
1,207.9
0
+8
3
+1
5
+1
Mar 03
Mar 01
Mar 04
Mar 05
Mar 02
Mar 03
Mar 04
Mar 05
7
Annual Outstanding Consumer Loan Amount
(billion yen)
Outstanding consumer loan amount
311.2
Consumer loan net increase
266.4
235.3
228.2
213.9
178.7
144.5
119.3
109.4
Mortgage loan
sale amount
31.2
Mar 01
Mar 02
Mar 03
94.8
78.2
Mar 04
Mar 05
8
Personal and Card Loan Status
Personal loans breakdown and average rates
As of March 31, 2005
Unsecured card loans and average rates
Average rate
100% = 169 billion Yen (7.9%)
Secured
personal loans
108.4 billion yen
Unsecured card loans
Balance (billion yen)
14.1% 14.5%
14.7%
12.8%
53.2
53.2 billion yen
48.0
(14.7%)
41.9
(4.6%)
29.3
Unsecured loans on deed
7.4 billion yen (7.0%)
Note: Percentages in brackets denote average interest rate
Mar 02
Mar 03
Mar 04
Mar 05
9
Consumer Loan Delinquency and Final Disposal Ratio
Repayment delinquency ratio
Final disposal ratio
2.0%
2.0%
1.61
Personal loans
Personal loans
Mortgage loans
Mortgage loans
1.5%
1.5%
0.92
1.0%
0.72
0.76
0.81
1.0%
0.55
0.5%
0.38
0.0%
0.22
0.27
0.29
0.32
Mar 01
Mar 02
Mar 03
Mar 04
Mar 05
Repayment delinquency ratio = amount 3 months or
more overdue remaining average amount of loan
0.5%
0.09
0.0%
Mar 01
0.45
0.03
Mar 02
0.58
0.54
0.17
0.19
0.35
0.08
Mar 03
Mar 04
Mar 05
Final disposal ratio = default ratio x (1- recovery ratio)
10
Fees & Commission - Status of Wealth Management Products
Commission from mutual funds and insurance products
(billion yen)
Private annuity insurance commission
2.055
Mar 05 total
Fire insurance commission
Mar 04 total
Mutual funds sales commission
Mutual funds trust commission
1.190
1.028
0.889
0.394
0.258
0.504
0.364
0.296
0.380
0.118
0.080
0.197
0.073
0.162
0.112
0.225
Mar 02
Mar 03
Mar 04
Mar 05
140.4
84.5 (7.1)
(billion yen)
5%
(61.5)
(5.7)
7%
(25.1)
(33.3) 44%
(3.1)
18 % (15.2)
6 % (11.2) 39%
18% (12.0)
Private annuity 22%
insurance
24%
Mutual funds
Mar 03 total
1.460
0.306
Breakdown of wealth management products
50.8
Safe custody of JGBs
Foreign currency
deposits
(24.4) 48%
(30.2)
36%
(46.5)
33%
11
Fees & Commission - Status of Private Annuity Insurance Sales
Annual sales of private annuity insurance
Annual breakdown of product sales
Fixed
annuity insurance
Investment-type
annuity insurance
29.62
(billion yen)
Platinum Life Avancer
NEW Adagio VA
Dream Select 90
Platinum Investment
Sirius Dual
Sonata
Fixed Annuity S
Dream Pass
(billion yen)
6.45
22.70
3.88
20.12
11.30
11.81
7.51
3.39
2.48
0.13
3.30
1.91
5.94
5.35
Mar 03
10.89
9.49
Mar 04
Mar 03
Mar 05
Ratio of investment-type
annuity insurance sales
FY2002:
FY2003:
FY2004:
11.18
52.6%
52.0%
67.9%
(As of Mar 2005)
0.33
6.09
1.68
3.10
Mar 04
1.45 1.02
4.16
0.31
4.19
0.82
Mar 05
*Platinum Life Avancer includes Platinum Life
*NEW Adagio VA includes Adagio SR
*Dream Select 90 includes Dream Select
*Sirius Dual includes Sirius and Sirius Plus
*Fixed Annuity S includes Yumehiko
12
Disposal of Non-performing Loans and Credit Costs
Non-performing loan disposal
(billion yen) Loss from
16
sale of loans
0.1
Loss from
sale of loans
0.1
14
12
10
Net transfer to
specific reserve
for loan losses
0
-2.6
Collection of
claims written off
1.0
6.3
Actual credit costs ratio
(actual credit costs / average loan balance annual basis)
(billion yen)
2.00%
45
2.00%
39.0
40
1.75%
35
2.4
Write-off
of loans
Actual credit costs (credit costs - collection of claims written off)
Reversal of
general reserve
7.3
Revised collateral
evaluation etc.
6
2
Core net operating income
9.7
8
4
Change in debtors'
classification
Credit costs
Change in debtors'
classification
(Bankruptcy etc.)
30.2
30
Actual
credit costs
12.5
4.6
Revised collateral
evaluation
5
1.7
(Actual credit costs =Transfer to general reserve + Amount for
non - performing loan disposal - Collection of claims written off)
24.2
18.1
20
10
0
1.50%
1.25%
25
15
31.3
12.0
0.53%
0.52%
9.6
10.6
1.00%
0.66% 0.61% 0.75%
13.4
12.5
Mar 01 Mar 02 Mar 03 Mar 04 Mar 05
0.50%
0.25%
0.00%
13
Interest Margin After Credit Costs
Comparison with the top 10 regional banks
Loan-deposit margin after actual credit costs and average loan increase ratio
Suruga: Loan-deposit margin - Actual credit costs ratio
1.01%
1.06%
(%)
1.30
Top 10 regional banks: Loan-deposit margin
- Actual credit costs ratio
1.16%
Loan-deposit
margin after
actual
credit costs
1.10
0.90
0.99%
0.70
0.72%
(2004/9)
0.30% 0.31%
0.50
0.38%
0.30
0.10
Mar 01
Mar 02
Mar 03
Mar 04
Mar 05
-5.00
-0.10
0
5.00
10.00
15.00
-0.30
Average loan increase ratio
-0.50
(for the previous three years)
-0.54%
14
Breakdown of Problem Assets based on the Financial Rehabilitation Law
Debtor
classification
Claims against
bankrupt and
substantially
bankrupt obligors
Claims with
collection risk
Claims for
special
attention
Sub-total
Normal
assets
Total
Mar 05
credit
balance
25.0
69.7
43.2
138.0
Proportion
Consumer
Corporate
Consumer
8.3
Corporate
Total
collateral
& Collateral Guarantees Coverage Reserve
Proportion
ratio
guarantees
(billion yen)
Reserved
ratio
Total
coverage
ratio
6.2
4.5
1.6
74.65 %
2.1 100.00 % 100.00 %
16.7
2.48 % 13.5
6.8
6.7
80.92 %
3.1 100.00 % 100.00 %
Consumer
10.0
0.68 %
4.9
3.8
1.0
49.51 %
3.8
76.66%
88.21%
Corporate
59.7
8.86% 29.7
18.2
11.4
49.79 %
15.9
53.31 %
76.56 %
Consumer
8.3
5.9
5.3
0.6
71.59%
0.7
31.16 %
80.44%
Corporate
34.9
5.18 % 12.5
12.2
0.2
35.82 %
6.5
29.35 %
54.65%
Consumer
26.6
1.81 % 17.1
13.7
3.3
64.23 %
6.7
70.54%
89.46 %
Corporate
111.4
16.52% 55.8
37.3
18.4
50.09 %
25.7
46.34 %
73.22 %
1.167 %
3.248 %
2.012%
6.427 %
0.56 %
0.56%
Consumer
1,447.3 98.19 %
Corporate
563.0 83.48 %
Consumer
1,474.0 100.00 %
Corporate
674.4 100.00%
2,010.4 93.573%
2,148.4 100.000%
Covered by collateral and guarantees
Coverage ratio:
Reserved for unsecured portion
Reserved ratio:
Total coverage ratio: Covered by collateral, guarantees and reserves
NOTE: The guarantee is not provided by SURUGA. The guarantee is extended
by a third party, who serves as a joint-guarantor to the borrower.
15
Ratio of Loans Disclosed Under the Financial Rehabilitation Law
Disclosed assets
Ratio of disclosed assets
Ratio of disclosed assets
Deduction of reserves basis
Reserves
Collateral and guarantees
(billion yen)
189.9
9.37%
Deduction of reserves, collateral,
and guarantees
Deduction of reserves,
collateral and guarantees basis
8.52%
174.9
38.8
32.7
33.2
98.8
16.7
117.2
7.46%
142.7 138.0
32.4
4.99%
103.3
6.93%
72.9
4.14%
1.67% 1.89% 1.63% 1.51%
74.7
Mar 01
6.42%
5.23% 4.91%
75.3
7.3
6.82%
33.8
38.7
34.1
32.6
Mar 02
Mar 03
Mar 04
Mar 05
0.37%
Mar 01
Mar 02
Mar 03
Mar 04
Mar 05
16
Securities Investments
Interest and dividends / return on securities
(billion yen)
Unrealized gains (losses) on securities
(billion yen)
Interest and dividends
1.58%
8.1
7.9
Return on securities
8.1
5.1
1.3
8.3
0.8
0.4
2.2
1.2
1.1
Mar 01 Mar 02 Mar 03 Mar 04 Mar 05
-0.8
0.74%
0.62%
0.50%
3.6
2.2
0.35%
-3.2
-3.2 -3.3-3.1
-4.1
-1.9 -3.7
3.0
Stocks
Bonds
1.7
-10.2
-12.8
Other
Unrealized
gains (losses)
Mar 01 Mar 02 Mar 03 Mar 04 Mar 05
17
Status of Expenses and OHR
(billion yen)
OHR (%)
77.4%
Taxes
Non-personnel expenses
Personnel expenses
41.9
2.0
39.6
1.9
67.7%
22.6
21.9
17.3
15.7
36.7
1.7
20.7
36.4
1.8
20.4
Mar 02
2.0
20.3
62.7%
14.1
14.2
53.4%
Mar 01
36.0
Mar 03
Mar 04
13.6
52.9%
Mar 05
18
Status of Owned Capital
Capital adequacy ratio
Core net operating income and deferred tax assets
BIS standard (consolidated)
Deferred tax assets (billion yen)
Domestic standard (non-consolidated)
Core net operating income (billion yen)
10.73%
Amount of owned capital (billion yen)
53.6
49.8
9.93 %
9.60%
Deferred tax assets / Tier I ratio
10.14 %
8.97%
8.70%
8.32%
8.93%
9.46%
46.8%
24.2
137.4
Mar 01
Mar 02
37.4
8.50%
148.0
123.6
38.4
Mar 03
43.2 %
18.1
146.4
12.0
29.1%
27.7%
124.1
30.2
31.3
28.3
20.6 %
Mar 04
Mar 01
Mar 05
Mar 02
Mar 03
Mar 04
Mar 05
19
FY2004 Results and FY2005 Forecast
Forecasting premises
FY2005
FY2003
Results
(A)
FY2004
Forecasted
(B)
3M TIBOR
10Y JGB
0.09%
1.40%
FY2004
Results
(C)
Increase or
decrease
(C-A)
FY2004
Forecast
comparison
(C-B)
(billion yen)
FY2005
Forecast
68.2
66.5
68.0
-0.2
1.5
69.5
36.4
37.0
36.0
-0.4
-1.0
36.5
Net operating income
35.7
29.5
34.6
-1.1
5.1
33.0
Core net operating income
30.2
29.5
31.3
1.1
1.8
33.0
Ordinary profit
17.4
17.0
18.3
0.9
1.3
20.5
8.7
9.5
10.4
1.7
0.9
12.0
Actual credit costs
13.4
12.0
12.5
-0.9
0.5
12.0
ROE (%) (net income basis)
7.26
7.40
8.12
0.86
0.72
8.30
33.41
36.00
39.70
6.29
3.70
45.75
5.0
5.0
5.0
0.0
0.0
6.0
Gross operating income
Operating expenses
Net income
EPS (Yen)
Dividends (Yen)
20
VISA Principal Membership Acquired and Future Market Domination
What principal membership means for the future
VISA with repayment freedom
Revolving credit with multiple
repayment options to meet
various customer needs
Repayment possible 24-hours,
365 days via PC or mobile phones
A shopping card that can be used
while there is a positive account
balance
Customer
convenience
Highly
profitable
Forecast payment options
Customer
benefits
Customers adverse to credit and
tied to cash can now make use
of this service
Wallet ATM
As convenient as carrying
around an ATM
Used often
Cash
Credit cards
Debit cards
Suica
VISA debit (check) cards
Convenience
stores
COD
Bank
transfer
Edy
Actual
Internet banking transfer
Virtual
J-Debit
(EFTPOS)
Cyber money
Net debit
Used rarely
21
Credit Card Business, a Comparison Between Japan, Europe and the U.S.
The major obstacle for Japanese banks trying to develop their consumer
lending business is their way of carrying out internal operations
Europe & Banks offering a wide variety of
:
The U.S. consumer finance
Japan : Many organizations offering
consumer finance
Consumer
finance
Consumer
finance
HIGHER
INTEREST
Shimpan
(Consumer credit)
Product
diversification
Credit cards
Revolving credit
Auto loans
Card loans
Mortgage
loans
Collateral-based
Perosnal loans Perosnal loans
with restricted usage with set usage with free usage
LOWER
INTEREST
Mortgage
loans
Collateral-based
Personal loans Personal loans
with restricted usage with set usage with free usage
Mainly banks
offering the service
Non-bank loans
Size of the circle
indicates the size
of the market
22
Credit Card Business, a Comparison Between Japan, Europe and the U.S.
Japan
Europe and the U.S.
Revolving credit products
Payment
method
A statement is sent with a fixed amount
(in effect an invoice).
Payment by monthly account transfer
After statement is sent,
customer chooses
how much to pay and when
Payment
amount
Balance slide revolving method
Minimum payment method
(payment amount fixed)
(Customers are able to pay more
than minimum amount)
Payment
date
Fixed (monthly)
Any day before due date
Low profit structure
Highly profitable business
Profitability of
card business
Most are one-off payments
Revolving credit rare
Income sourced from merchant
commission only
(Basis of retail finance)
Revolving credit common
Interest large source of income
Merchant fees kept low
23
The Key to Success in the Credit Card Business
Causes for revolving credit not taking hold
Suppliers with low revolving credit structure
Credit card companies and banks establish a
mode of operations based on automatic debit
Many payment restrictions for consumers
=> Time, place and amount
1. Payment method must be specified at time of purchase
EX 2.Cannot change payment method or amount
3.Amount known only after receiving statement
Is Japan really a cash-based society???
Key to success
Creating value from
customer standpoint
Offering products and services with
a high level payment freedom
Customer can choose time,
place and amount
1. Payment possible 24 hours, 365 days
1. Consumer finance market expands
2. Mobile phone, Internet, ATM
payments possible
2. Revolving credit still new, with customer
3. Freedom to change payment amount
-Payment methods similar to U.S. revolving credit
knowledge lacking
24
CRM and Cross-selling
Contact and communication
Categorizing contact types and frequency
Contact
Seminar
invitations
Management reports
Letters
Visits
3.70
3.50
Greeting
cards
Communication
Meetings
Number of products for each customer
Phone
3.30
3.10
Birthday cards
Mail drops
2.90
Most important customers
have an average of
2.70
per person
7.5 products
2.50
1999 2000 2001 2002 2003 2004 2005
Term deposits Direct banking Credit Cards
Normal account (Lotto accounts etc)
Phone Internet Suruga Other
Card Loans
Mortgage Loans Payment of Utilities Investment Trusts
HL
Wide Mobile Power GB's Shares
Customer A
Customer B
Customer C
Customer D
Customer E
Strong relationship
Services and products used
Products and services to be promoted
25
Anchor Strategy: Mortgage Loans + Credit Cards + Debit Cards
Maximization of lifetime value
New payment methods
Payment freedom
From cash to cards
Minimum payment system
Abolishing dislike of credit
Gateway
Credit cards
(for accountholder,
family and friends)
Managed products
Gateway
Anchor
Debit cards
(Mortgage loans)
Deposits
Share
investments
Foreign
currencies
Regular savings
Expansion areas after deregulation
JGBs
Real estate
Loan products
(for accountholder,
family and friends)
Products limited
to borrower
Family loans
Home equity
Small guaranteed
loans
Business loans
New value-added
New value-added
service A
service C
New value-added
service B
Life insurance
P&C insurance
Shares
Trusts
26
Net Branches and Community Branches - Catering to Differing Market Segments
Net branches
Large
Opinion leaders
Interest in technology
SOHO
Post Office
ATMs
Convenience
store ATMs
SE
Online Techno / silver
Investors
Trendy
youth
Concept
Internet
banking
Area
Shibuya (Mark City), Shinjuku (L Tower)
Yokohama East Exit (Sky Bldg.),
Nihonbashi
Target
No cap on wealth management products.
Customers who understand
and want to share Suruga’s values
Small
businesses
Early majority
Women
Enjoying life
Business bank
Branch/
Money Concierge
Personal
Corporate
Small
Mobile phone
banking
Consulting service with
emphasis on privacy
Access center
(call center)
Protecting assets
Increasing assets
Asset
A
sseet management
ss
manag
ageement proposal
proposal tool
too
ooll
Dre
Dream
reaam Asset
Asset Navigator
Nav
aviiga
gattor
HLC/Dream Plaza
Actual branches
In close contact with all customers
to become a reliable partner
Palm-recognition
Palm-recognition
biosecurity
b
iosec
ecu
urity accounts
acc
cco
oun
untts
Telephone
banking
The human
The
human touch
touch
27
Direct Banking Overview
March 31, 2005
Direct banking accounts
Softbank branch
Ordinary branches
41 %
24 %
100 % = 537,855 Accounts
2004/3 449,374 Accounts
Other
net branches
7%
Dream Direct
branch 19 %
Direct One branch
32 %
Other
net branches
4%
ANA branch
5%
So-net branch
3%
Deposits
Loans
134.5
214.8
168.5
163.7
137.7
110.8
Mar 03
Softbank branch
Average monthly hits on top page
Loan & deposit balances
(billion yen)
9%
Number of hits to direct banking website
Ordinary branches
Performance of net branches
51 %
Mar 04
Ordinary profit (Managed accounting basis)
(billion yen)
100% = 675,533 Hits
2004/3 465,765 Hits
Mar 05
2.6
2.7
Mar 03
Mar 04
3.2
Dream Direct
branch 2 %
Direct One branch
3%
Mar 05
28
Family Value Chain: Parent-child Market
Balanced package (from Oct 2004) Parent-help loan (from Mar 2005)
Background social changes
1. Ageing population
2. Nuclear families increasing
3. People migrating to Tokyo
- New parent-child relationships emerging
- New households
- New parent-child bonds
Offering new value to families
Balanced package
Parent-help loan
(from Oct 2004)
- Giving parents in the countryside a better lifestyle
Product design
- Packaged product combining mortgage loans and wealth management
- Preferential interest rates according to balance of managed assets
Normal interest rate
Mortgage
loans
(from Mar 2005)
preferential interest rates
for matching balances
Renovation
loan
Example
Ordinary deposits
Term deposits
Foreign currency
deposits
Finance focused
on parents
and children
Parents
Friends
Siblings
Mortgage loan customers
- Rebuilding for single-level, all electronic,
floor heating etc. type housing
<Finance needs>
Children want to pay renovation costs
for their elderly parents
- Bringing parents closer
- Managed asset products include borrower, family and friends
Grandparents
- For people living in the Greater Tokyo Area who
want to give their parents a better way of life
Second house
loan
- Working in the Greater Tokyo Area with no time to
go back home
- Concerned about parents in home town
- Living together not the solution
- Experiencing the convenience of inner city apartments
<Finance needs>
Purchase a nearby apartment for parents
Finding existing needs for the parent-child market !
29
New Product: Mortgage Loans for Foreigners
Registered foreigners in Japan
Breakdown of foreign workers
Huge potential market
Number of people
An excellent growth market
(22.4% increase on previous year)
1,800,000
1,600,000
Directly employed foreigners
= 179,966 people(2004)
1,400,000
1,200,000
Specialists,
technicians,
professionals
19.1%
1,000,000
800,000
600,000
400,000
200,000
0
1980
from
from Feb
Feb 2005
2005
1985
1990
1995
1999
2000
2001
Source: Registered foreigners statistics
(Immigration Bureau Ministry of Justice)
Professors, artists, journalists,
investors, managers, lawyers,
accountants, medical
technicians,researchers,
educators, engineers,
humanities and international
business, transferees
Offering unique services
Concept
Supporting the housing finance needs of
foreigners currently active in Japan,
and wishing to continue to play a major role
Material available in English, Chinese,
Portuguese, Spanish, Korean
Source: Foreigners in the workplace report
(Ministry of Health, Labour and Welfare)
User characteristics
Professional with a high level of expertise
Finance
IT
Consulting
Creative
Artists
Suruga's main
target
New
Business
Owners
Newly
Affluent
30
Customer Segments of the Consumer Market
LOHAS
A lifestyle compatible with health and the environment
What is LOHAS? In the U.S. in 1998 sociologists and psychologists
announced the existence of people living with a
new set of values
Conventional
values
Money,
possessions
Collapse
of the bubble
In search of
new values
Shutting out a society
at too fast a pace
LOHAS
Slow
life
Married couples
Background to LOHAS in Japan
Family Standard
...Lifestyles Of Health And Sustainability
Multi-household
New lifestyle emerging
LOHAS
commuting from Karuizawa
Family
structure
Suburb, houses
resort, second house
Power
white collar
Young families
Suburbs apartments
Newly-weds, DINKS
City,
Suburbs apartments
Younger affluent
Japan's LOHAS
Regardless of age or generation, people who care about health,
the environment and self-growth are LOHAS
Newly affluent and similar, which SURUGA is targeting
Singles
Segment
Suburb houses,
rebuilding renovating
Career DINKS
City apartments,
suburb houses,
investment apartments,
renovation
Power
Semi-retired senior couples
City
City
apartments,
apartments, suburb houses,
suburb houses,
resort
resort
second house,
second house
investment
apartments
LOHAS
life seniors
Future values
Approx 29.3% are LOHAS in Japan
Especially people in their 50s and 60s, approx. 40% LOHAS
Power
middle
City, apartments, City houses,
suburb houses, suburb houses,
apartment
resort
second house administration
Achieving personal goals while
fulfilling social responsibilities
Market (LOHAS consumer survey)
Golden 60
City, investment type
apartments
Young successful
LOHAS
Resort houses,
city second house,
renovation
City apartments
Suburb houses,
renovation
City resort life
City apartment,
houses,
investment apartments,
apartment
administration
LOHAS
smart women
City apartments
Young
Middle
Life stage
Senior
31
Analysis of the Senior Market
Current senior characteristics
Doing away with conventional senior paradigms
Life stage
Society, Environment
Retired, free time, affluent
family changes
Social security system,
employment changes
children marrying later,
parasite singles
(children independent,
grandparents, caregivers)
Lifestyle
Baby-boomers, the beatles
Retiring-happily generation
Advanced Backwards
Generation
Currently most
seniors
General image of
the elderly
Passive
Mind
Strategy for the senior market
Senior market approach vector
Unique values
An approach taking age
into consideration
Active
Active mature
consumer approach
Extensive
experience
Considerate Quieting unease
High quality,
the real thing
Grasping the true needs of seniors
by overcoming conventional mindsets
32
New Management System Introduced
SURUGA adopts IBM's next generation system - NEFSS
(NEFSS: Next Evolution in Financial Services Systems)
System Evolution
More sophisticated
customer services
=
Management Evolution
Sophisticated consulting and scenario creation
Strengthening solutions by customizing products
Timely offering alliance products and services
Providing unique
products
and services
Providing new products and services for each customer using CRM
Improving marketing through integrated DWH
Providing ubiquitous financial services through channel tie-ups
Providing secure
and reliable
services
Cost-cutting and industry-leading quick service
Operating reliably 24 hours, 365 days a year
Improved high-level security and protection
33
New Branch System Entering Second Phase
Aiming for maximum functionality at branches by expanding marketing capabilities
CRM - Web
Branch
Automated
Tie-up
Networked
Terminals
Palm Sensor
Account
Transactions
Open
Input
Router
Wide Area Ethernet
Router
Control
Center
Enhanced marketing by new
products and upgrade of
CRM functions
Biosecurity Accounts
Biosecurity Mutual Funds
Exchange OCR System
Notification System
Third Seal System
Marketing capacity
expanded by
more efficient operations
Data processing server
Remote Authorization System
Monitoring system
Accounting
CRM
Added functions in second phase
Security bolstered and
marketing performance
maintained by
focused checking protocols
34
Exchanging values at SURUGA
Implementing optimal exchanging of values with stakeholders
SURUGA is growing by improving the exchange of values with
stakeholders in a well-balanced approach
Growing as a
company with a
mission
Shareholders
Improving mission goals highly focused on society
=Enhancing social value
Employees
(Group)
SURUGA's Mission
Helping to give shape and timeframe for
customers' dreams as
a life and business concierge
Customers
Management
C Culture-oriented
P People-based
S Social-perspective
Other
stakeholders
Supporting culture
nationally and regionally
Focuing on
human capital
Aiming to enhance
social contributions
C P S Management
35
Measures to Protect Personal Data
New
information
Phone
DM
Mail drop
C
u
s
t
o
m
e
r
s
Fax
When receiving customer information,
the objective for acquiring that information
must be notified to the customer
Delete
Customer information cannot be used in
any form other than the notified objectives
Information cannot be given to any third parties
including alliance companies without the
customer's express permission
- Customer / market analysis
- Information transfer /
media management
- Creating demand
- Acquiring customer
information
Sales
Meetings
Offer
Marketing
Web
E-Mail
Store
Use, modify
Customer service
New
information
Management -Invoices and payment
Customer
information
database
- Finding potential customers
- Consultation
- Contracts
Alliance
Companies
-Follow-up service
-Responding to enquiries
or complaints
-Maintaining customers
Group
Companies
Outsourcing
Companies
Usage
SURUGA maintains information management
to ensure customer information is up to date
and held securely
Customer information is deleted
in accordance with customer wishes
36
For further details regarding the above, please contact
IR & PR Office, Suruga Bank
Tel: +81-3-3279-5536
e-mail: ir.koho@surugabank.co.jp