Business and Financial Highlights First Quarter Ended June 30, Shinsei Bank, Limited August 2017

Transcription

1 Business and Financial Highlights First Quarter Ended June 30, 207 Shinsei Bank, Limited August 207

2 Table of Contents Key Points P3 QFY207 Financial Results P4 Financial Update P5 Unsecured Loans, Structured Finance P Interest Repayment (Kabarai) P3 Supplemental Information P4 2

3 Key Points 2 Net income resulted in 2% progression toward FY207 full year forecast Ordinary Business Profit (OBP) in QFY207 totaled JPY 2.9 billion (YoY+9%); 26% progression toward FY207 full year forecast of JPY 85 billion Net income in QFY207 totaled JPY 0.9 billion (YoY+35%); 2% progression toward FY207 full year forecast of JPY 5 billion Operating asset balance in growth business areas grew at 3% Unsecured loan balance increased by 2% from June 30, 206 (FY207 full year growth forecast at 8%) Structured finance asset balance increased by 3% from June 30, 206 (FY207 full year growth forecast at 0%) In core revenue areas, recovery of income from sales of asset management products in the Retail Banking is slower than initial expectation 3 Annual shareholder return plan is underway Improvement of the shareholder return remains one of our most important management issues The Bank intends to maintain or improve the total payout ratio 3

4 QFY207 Financial Results Consolidated Q FY206 (Actual) Q FY207 (Actual) YoY (%) B(+)/W(-) Progress (%) FY207 (Plan) Key Points Total Revenue: JPY 57.8 billion, Progression 25%, YoY+4% Net Interest Income: JPY 3.9 billion, YoY+5% Noninterest Income: JPY 25.9 billion, YoY+3% Net Interest Income Noninterest Income Total Revenue Expenses Ordinary Business Profit Net Credit Costs OBP after Net Credit Costs Others Expenses: JPY 35.9 billion, Progression 25%, YoY-% Expense-to-revenue ratio: 62.% (63.7% in QFY206) OBP: JPY 2.9 billion, Progression 26%, YoY+9% Net Credit Costs: JPY 9. billion, Progression 28%, YoY -4 % Unsecured Loans: JPY 6.6 billion APLUS FINANCIAL: JPY 2.6 billion OBP after Net Credit Costs: JPY 2.7 billion, Progression 24%, YoY+5% Others: JPY -.8 billion, Progression 90%, YoY +54% Income tax etc.: Substantially improved to JPY -.2 billion in QFY7 from JPY -2.4 billion in QFY206 Net Income: JPY 0.9 billion, Progression 2%, YoY+35% Net Income

5 Financial Update: Recurring Profits, Operating Assets Recurring profits for QFY207 totaled JPY 5.9 billion (increase by approx. 60% compared to QFY206) In the growth areas, unsecured loans balance increased by 2% and structured finance assets balance increased by 3% from June 30, 206 Recurring Profits Operating Assets 40 8,000 7, ,000 5, ,000 3,000 Stable revenue areas and others FY6 First Quarter 5.9 FY7 Second, Third and Fourth Quarters 2,000, % +3% Growth area (Unsecured loans) Growth area (Structured finance) Net income excluding non-recurring profits such as markets related profits from Treasury, one-off/highly volatile profits, grey zone provisions 5

6 Financial Update: Net Interest Income, NIM Increase in the unsecured loan balance reflected steady growth in net interest income. NIM improved to 2.46% 40 Net Interest Income Net Interest Income Of which, Structured Finance Of which, Unsecured Loans (Shinsei Bank Lake, Shinsei Financial, NOLOAN, Shinsei Bank SmartCard Loan Plus) Net Interest Margin (NIM) Yield on Interest Earning Assets Net Interest Margin(NIM) Rate on Interest Bearing Liabilities (including Subordinated Bonds etc.) Includes income on leased assets and installment receivables 2 Excludes one time gain factors 3 Disclosed basis % 2.66% 2.64% 2.25% % % 2.7% 2.40% 2.4% 2.46% % 0.26% 0.22% 0.25% 0 Q FY6 2Q FY6 3Q FY6 4Q FY6 Q FY7 6 FY4 FY5 FY6 Q FY7 (2 mos) (2 mos) (2 mos) (3 mos, annualized)

7 Financial Update: Noninterest Income Recovery of income from sales of asset management products in the Retail Banking is slower than initial expectation 40 Noninterest Income Noninterest Income Of which, asset management products related income in Retail Banking Of which, Global Markets Of which, APLUS FINANCIAL Retail: Quarterly Sales of Asset Management Products 25 Mutual Funds Insurance Structured Bonds Structured Deposits Q FY6 2Q FY6 3Q FY6 4Q FY6 Q FY7 7 0 Q FY5 2Q FY5 3Q FY5 4Q FY5 Q FY6 2Q FY6 3Q FY6 4Q FY6 Q FY7

8 Measurements toward Productivity Enhancement Topics Established Shinsei Bank Group Headquarters to commence integrated management of head office functions in each of the Group entities Accelerated streamlining operations leveraged by systems and AI (processes in call centers and housing loan) Determined relocation and consolidation of a part of branch networks in the group entities (Shinsei Financial, APLUS FINANCIAL) Announced business consolidation across the Group Consolidation of the servicer business (Alfa Servicer, Shinsei Servicing & Consulting) Consolidation of the real estate business (Shinsei Investment & Finance, Shinsei Property Finance) Continuing feasibility study and impact analysis for the part 2 of productivity enhancement projects Anticipating an expense benefit of JPY 5 billion (FY208 single year basis, vs. FY205) Part Part 2 Consolidation of head office functions of the Group entities Streamlining of call centers in the Group entities Reduction of back office nonpersonnel expenses; Centralization of procurement Enhanced efficiency of installment sales processes, etc. Enhanced efficiency of housing loan processes Optimization of branch networks Rationalization of product portfolio in each business Optimization of IT procurement costs 8

9 Financial Update: Net Credit Costs Increase of net credit cost was caused by the increase of operational assets in unsecured loans as well as APLUS FINANCIAL and by the change in reserve ratio for unsecured loans in QFY207 Progression rate of net credit costs is in line with the plan Recoveries Net Credit Costs Unsecured Loans (Shinsei Bank Lake, Shinsei Financial, NOLOAN, Credit Guarantees, Shinsei Bank SmartCard Loan Plus) APLUS FINANCIAL Retail Banking etc. Institutional Business, etc. (Institutional + Global Markets Businesses) Consumer Finance: Net Credit Costs Ratio Unsecured Loans: Net Credit Costs Ratio (annualized basis ) Unsecured Loans: Net Credit Costs Ratio (normalized impact of change in the reserve ratio) APLUS FINANCIAL: Net Credit Costs Ratio (annualized basis ) 5.4% 4.7% 4.6% 4.3% 4.5% Q FY6 2Q FY6 3Q FY6 4Q FY6 Q FY7 4.0% 4.3% 4.2% 4.5% 4.5% %.%.0%.0%.% Costs Q FY6 2Q FY6 3Q FY6 (6 mos) (9 mos) 4Q FY6 (2 mos) Q FY7 Net Credit Costs Ratio = Calculated by annualizing the following formula : (Net Credit Costs Average of Beginning and End of Period Operating Assets Balances)

10 Financial Update: Capital CET ratio of 2.2% as of June 30, 207 reflects slight increase in risk assets resulting from growth of operating assets Common Equity Tier Ratio Amounts of Capital.9% 2.9% 2.3% 2.2%,500 International Standard; Fully Loaded Basis Common Equity Tier ,000 Risk Capital ,68.9 5,692. 6,22.9 6, Common Equity Tier Ratio (International Standard; Fully Loaded Basis) Risk Assets (International Standard; Fully Loaded Basis) Common Equity Tier Capital (Regulatory Capital) Risk Capital 0

11 Unsecured Loans Unsecured loan balance totaled JPY billion (increase by 2% from June 30, 206) Approval ratio of Shinsei Bank Lake improved by optimizing credit scoring model through disciplined operations Balance P&L % from June 30, Shinsei Bank Smart Card Loan Plus Credit Guarantee NOLOAN Shinsei Financial Shinsei Bank Lake and Shinsei Financial Q FY6 Q FY7 YoY(%) B(+)/W(-) Net Interest Income % of which, Shinsei Bank Lake % of which, NOLOAN.6.5-6% Noninterest Income % Total Revenue % Expenses % Ordinary Business Profit % Net Credit Costs % OBP after Net Credit Costs % Includes net interest income of Shinsei Bank Smart Card Loan Plus Shinsei Bank Lake: New Customers ( 000 s); Approval Rate 34.8% 34.7% 33.9% 33.3% 30.0% 32.6% 33.3% 35.5% 36.3% 36.6% Shinsei Bank Lake

12 Structured Finance Structured finance asset balance totaled JPY,326.6 billion (increase by 3% from June 30, 206) New disbursements in the domestic real estate nonrecourse finance performed well in QFY207 New commitments in the project finance in QFY207 decreased compared to QFY206 as a large number of new projects were committed in QFY206. Numerous project finance transactions are still in the pipeline Operating Asset Balance,83.2, Balance +3% from June 30, 206, , Specialty Finance (LBO, Shipping etc.) Project Finance Structured Finance P&L Q FY6 Q FY7 YoY(%) B(+)/W(-) Net Interest Income % Noninterest Income % Expenses % Ordinary Business Profit % Net Credit Costs % OBP after Net Credit Costs % Real Estate Companies; REITs Real Estate Nonrecourse Finance New Commitments; New Disbursements Project Finance New Commitments Real Estate Nonrecourse Finance New Disbursements Overseas Domestic Q FY6 Q FY7 Q FY6 Q FY7

13 Interest Repayment (Kabarai) The number of disclosure claims, as a leading indicator, declined approx. 40% compared to QFY206. We continue to closely monitoring the trend Total actual repayments of the Group declined 36% compared to QFY206. Total grey zone reserve stands at JPY 94.6 billion, a sufficient level from a Group-wide perspective Annual Trend Recent Quarterly Trend (Unit: JPY billion) Number of Disclosure Claims 2 (RHS) Actual Repayments Amounts 2 (LHS) Grey zone reserve : Shinsei Personal Loan (LHS) Grey zone reserve : APLUS FINANCIAL (LHS) Grey zone reserve : Shinsei Financial (LHS) (Unit: thousands) (Unit: JPY billion) Number of Disclosure Claims 2 (RHS) (Unit: thousands) Actual Repayments: Shinsei Personal Loan (LHS) Actual Repayments: APLUS FINANCIAL (LHS) Actual Repayments: Shinsei Financial (LHS) Grey Zone Reserve Actual repayments include grey zone claims for Shinsei Financial indemnified by GE until March Shinsei Financial, Shinsei Personal Loan and APLUS FINANCIAL combined

14 Supplemental Information 4

15 Net Interest Income, Noninterest Income Net Interest Income: Segment YoY Others (Showa Leasing, Global Markets, Treasury, Principal Transactions, Corporate/Others etc.) APLUS FINANCIAL Corporate Business Structured Finance Retail Banking Noninterest Income: Segment YoY Others (Unsecured loans, Corporate/Others etc.) Principal Transactions Corporate Business Showa Leasing Structured Finance Treasury % % Unsecured Loans (Shinsei Bank Lake, Shinsei Financial, NOLOAN, Shinsei Bank SmartCard Loan Plus) Global Markets Retail Banking..3 APLUS FINANCIAL Q FY6 Q FY7 Q FY6 Q FY7 5

16 Yield on Interest Earning Assets, Funding Costs (Unit: %) Net Interest Margin Yield on Loans, Securities Rate on Deposits, Borrowed Money, Corporate Bonds 2.66% 2.64% 2.7% 2.82% 2.72% 2.7% 2.40% 2.4% 2.46% 2.20% 0.26% 0.22% 0.25% 0.99% 0.8%.24% 0.62%.03% 0.97% 0.46% 0.45% 0.5% 0.3% 0.4% FY5 FY6 Q FY7 (2 mos) (2 mos) (3 mos, annualized) Yield on Interest Earning Assets Net Interest Margin Rate on Interest Bearing Liabilities (including Subordinated Bonds etc.) FY5 FY6 Q FY7 (2 mos) (2 mos) (3 mos, annualized) Yield on Loans and Bills Discounted Yield on Securities FY5 FY6 Q FY7 (2 mos) (2 mos) (3 mos, annualized) Rate on Corporate Bonds Rate on Borrowed Money Rate on Deposits, including NCDs Includes income on leased assets and installment receivables 6

17 Expenses Expenses, Expense-to-Revenue Ratio Expenses: Segment YoY 63.7% Personnel Expenses Nonpersonnel Expenses 62.4% 6.2% Expense-to-Revenue Ratio 62.% 62.% Others (corporate/others etc.) Treasury Global Markets Principal Transactions Corporate Business Showa Leasing Structured Finance Retail Banking Unsecured Loans (Shinsei Bank Lake, Shinsei Financial, NOLOAN, Shinsei Bank SmartCard Loan Plus) APLUS FINANCIAL Q FY6 2Q FY6 3Q FY6 4Q FY6 Q FY7 Q FY6 Q FY7 7

18 Unsecured Loans: Market Unsecured Loan Market: Growth Rate Unsecured Loan Market: Size (Unit: JPY trillion) 20% 0% 0% 4% -2% 9% % 0% 9% 7% 8% 8% 3% 3% 2% % 5-20% -30% -40% (Data Source) Bank of Japan, Japan Financial Service Association YoY: Bank Card Loan Growth Rate YoY: Unsecured Loan Market Growth Rate YoY: Nonbank Unsecured Loan Growth Rate Unsecured card loan market = Bank card loan balance + Nonbank unsecured loan balance Bank card loan balance : Statistics aggregated by the Bank of Japan; Balance of consumer card loans extended by domestic banks and credit unions Nonbank unsecured loan balance : Statistics aggregated by the Japan Financial Services Association; Unsecured personal loans (consumer finance sector) month end balance (excludes housing loans) (Data Source) Bank of Japan, Japan Financial Service Association Bank Card Loan Balance Nonbank Unsecured Loan Balance

19 Structured Finance: Portfolio (as of June 30, 207) Project Finance Real Estate Finance Balance: project type Balance: asset type Thermal power biomass 6% Wind power 0% Thermal power coal, gas 8% Japan Mega solar 76% Thermal power plan 9% Wind power plant 9% Others 2% Gas etc. 32% Overseas PPP 28% Land, Development 8% Nursing home etc. 9% Hotel % Industrial, Warehouse Residential 5% 7% Japan Nonrecourse Office 28% Retail 2% U.K. 4% Europe, Overseas transactions: Mainly to participate in the syndication arranged by major banks Mostly to structure not affected by changes in market price or credit guaranteed by ECA (Export Credit Agency) etc. Balance: regions, includes commitment basis U.S. 0% Others 0% Asia, Australia 5% Japan 5% Balance: regions in nonrecourse, real estate companies and REITs Asia, Australia 0% U.K. 7% U.S. % Japan 82% Nonrecourse finance accounts for more than half of the Japanese exposure. Public Private Partnership 9

20 Retail Banking Housing Loan : Balance Retail Deposits : Balance by Product,260.8,340.5, , , , ,239.,278.,29.2 FCY Deposits JPY Structured Deposits JPY 2-week Maturity Deposits Retail Banking Q FY6 Q FY7 YoY (%) B(+)/W(-) Net Interest Income % of which, from Loans % of which, from Deposits, etc % Noninterest Income % of which, from Asset Management Products.7.5-2% 2,97.2 3, ,049.5 JPY SA, JPY TD, Others of which, Other fees (ATM, FT, FX etc.) % Expenses % Ordinary Business Profit % Net Credit Costs % OBP after Net Credit Costs % 20

21 APLUS FINANCIAL, Showa Leasing APLUS FINANCIAL: Operating Assets Balance Showa Leasing: Operating Assets Balance ,05.8, Housing Related Loans, etc Automobile Credit Credit Cards Shopping Credit (excl. Automobile) APLUS FINANCIAL Q FY6 Q FY7 YoY(%) B(+)/W(-) Showa Leasing Q FY6 Q FY7 YoY(%) B(+)/W(-) Net Interest Income % Noninterest Income..3 +2% Expenses % Ordinary Business Profit % Net Credit Costs % OBP after Net Credit Costs % Includes credit guarantee business 2 Net Interest Income % Noninterest Income % Expenses % Ordinary Business Profit % Net Credit Costs n.m. OBP after Net Credit Costs %

22 Corporate Business, Global Markets Corporate Business: Operating Assets Balance Global Markets: Revenue from Derivative Business,682.6,680.6, Others (Public Companies, Financial Institutions, etc.) 7.8 Others (Asset Management, Shinsei Securities, Wealth Management, Investment Business etc.),250.7,253.0,205.4 Corporate Derivative Business Institutional Business Q FY6 Q FY7 YoY(%) B(+)/W(-) Net Interest Income % Noninterest Income % Expenses % Ordinary Business Profit % Net Credit Costs n.m. OBP after Net Credit Costs % FY5 FY6 Q FY5 Q FY6 Q FY7 (2mos) (2mos) Global Markets (3mos) Q FY6 (3mos) Q FY7 (3mos) YoY(%) B(+)/W(-) Net Interest Income % Noninterest Income % Expenses % Ordinary Business Profit % Net Credit Costs % OBP after Net Credit Costs % 22

23 Segment P&L and Operating Assets Balance OBP after Net Credit Costs Operating Assets 2 + ALM Assets Segment Q FY207 Amounts Weight (%) Individual Business.3 0% Retail Banking % Shinsei Bank Lake and Shinsei Financial.8 4% APLUS FINANCIAL.9 5% Others 0.5 4% Institutional Business % Corporate Business 2. 7% Structured Finance 2.3 8% Principal Transactions 3.9 3% Showa Leasing.0 8% Global Markets Business.3 0% Markets.4 % Others % Corporate/Other 0.6 5% Treasury 0.7 6% Corporate/Other (excluding Treasury) -0. -% Total % Includes NOLOAN and Shinsei Bank Smart Card Loan Plus 2 Includes insurance not requiring funding (customers liabilities for acceptances and guarantees) 23 7, , ,253.2, ,354.8,338.,680.6, ALM Assets (Gov t Bonds, etc.) Others (Global Markets etc.) Principal Transactions Structured Finance (Real Estate Finance, Project Finance, Specialty Finance) Unsecured Loans, etc. (Shinsei Bank Lake, Shinsei Financial, NOLOAN, Credit Guarantees, Shinsei Bank SmartCard Loan Plus etc.) APLUS FINANCIAL Showa Leasing Retail Banking (Housing Loans, etc.) Corporate Business

24 Segment P&L (Quarterly Trend) OBP after Net Credit Costs FY205 FY206 FY Individual Business Retail Banking Shinsei Bank Lake and Shinsei Financial APLUS FINANCIAL Others Institutional Business Corporate Business Structured Finance Principal Transactions Showa Leasing Global Markets Business Markets Others Corporate/Other Treasury Corporate/Other (excluding Treasury) Total Includes NOLOAN and Shinsei Bank Smart Card Loan Plus 24

25 Key Data Balance Sheet (Unit: JPY billion) Loans and bills discounted 4,39.8 4,46.2 4, , ,859.7 Securities,557.0,477.3,227.8,04.6,099.9 Lease receivables/ leased investment assets Installment receivables Reserve for credit losses Deferred Tax Assets Total assets 9,32. 8, , , ,378.6 Deposits including negotiable certificates of deposits 5, , , , ,905.8 Borrowed money Corporate bonds Grey zone reserves Total liabilities 8, ,36.0 8,35.6 8, ,550.3 Shareholders equity Total net assets Expense-torevenue ratio Financial Ratios FY3 FY4 FY5 FY6 QFY7 65.4% 60.2% 64.9% 62.3% 62.% Loan-todeposit ratio 73.8% 8.8% 78.7% 82.4% 82.3% ROA 0.5% 0.7% 0.7% 0.6% 0.5% ROE 6.5% 9.8% 8.% 6.3% 5.3% RORA 0.7%.2%.% 0.8% 0.7% NPL Ratio 2 3.8%.42% 0.79% 0.22% 0.20% Core Capital Ratio % 4.86% 4.20% 3.06% 2.98% Per Share Data (Unit: JPY) FY3 FY4 FY5 FY6 QFY7 BPS EPS Credit Ratings R&I BBB+ BBB+ BBB+ BBB+ A- JCR BBB+ BBB+ BBB+ BBB+ BBB+ S&P BBB+ BBB+ BBB+ BBB+ BBB+ Moody s Baa3 Baa3 Baa3 Baa2 Baa2 Annualized basis 2 NPL ratio based on Financial Revitalization Law (Nonconsolidated) 3 Domestic Standard; Grandfathered Basis

26 Appendix 26

27 Corporate Governance 7% of the directors are external directors in the Board Through Company with an Audit & Supervisory Board, the Board of Director has authority and responsibility for the execution of businesses and the Audit & Supervisory Board undertakes the auditing function of the Board of Directors Name Title Reason for Nomination (As of June 30, 207) Hideyuki Kudo Shinsei Bank Representative Director, President & CEO Yukio Nakamura Shinsei Bank Representative Director, Deputy President J. Christopher Flowers External Managing Director and CEO, J. C. Flowers & Co. LLC His experience and expertise in the financial service industry as a whole Board of Directors Ernest M. Higa Shigeru Kani External External Chairman President & CEO, Higa Industries Co., Ltd. Former Director, Administration Department, The Bank of Japan Specially Appointed Professor, Yokohama College of Commerce His experience and deep insight of business for consumers His expertise in the risk management area and his extensive knowledge concerning banking operations Jun Makihara External Director, Monex Group, Inc. Director, Philip Morris International Inc. His extensive knowledge of finance and his domestic and international experience Ryuichi Tomimura External Executive Vice President, Director, SIGMAXYZ Inc. His extensive experience and wide range of knowledge including information systems as a management executive and a consultant Audit & Supervisory Board Members Shinya Nagata Shinsei Bank Audit & Supervisory Board Member Michio Shibuya External Certified Public Accountant His long years of business experience in the areas of finance and accounting at Shinsei Bank His expertise and extensive experience as a certified public accountant, and knowledge regarding corporate governance based on experience as an Audit & Supervisory Board Members at a listed company Kozue Shiga External Lawyer Her expertise and extensive experience as a lawyer 27

28 Group Governance Effectively centralizing all administrative functions in the Group leads to ) enhanced and optimized administrative functions for strengthening Group governance and 2) improve productivity and efficiency through centralization of functions duplicated in the group companies Till March 207 Each member company retains full suite of administrative functions A business holding company structure with Shinsei Bank at the top APLUS FINANCIAL Absorbed into the Group in Sep Listed on the st section of the TSE Overseen by Individual Business Shinsei Bank Shinsei Financial Absorbed into the Group in Sep Became a whollyowned subsidiary in Oct. 205 Overseen by Individual Business Showa Leasing Absorbed into the Group in Mar Became a wholly-owned subsidiary in Dec. 206 Overseen by Institutional Business Establishment of Group Headquarters (April 207 onward) April 207: Established a virtual Group headquarters within Shinsei Bank October 207: Complete migration from the partially-remaining by-company line system to a by-function line system Shinsei Bank Group headquarters functions HR Shinsei Bank (Business) Legal Compliance Financial APLUS FINANCIAL Risk General Services Shinsei Financial IR & Comm. Others Showa Leasing Future Organization Restructuring businesses in a customer centric manner Group headquarters functions Institutional Business (Equity/Debt Financing, Derivatives, Leasing, Fund Management) Customer centrically restructuring businesses by function Individual Business (Financing / Credit, Asset Formation / Asset Management) Project based Business(Real Estate, Infrastructure / Energy, Shipping / Airplane, Trust / Securities) Business for SMEs / Small Business Owners (Financing/ Business Succession) 28 Advanced Banking Interface (Internet / Smartphone Banking, Settlements)

29 Comparative Advantages Information Technology Retail Businesses Leveraging Scientific/Statistical Approaches Financial Technology High Added Value Financial Services Made Possible Through Tailor-Made Services Unsecured Loans Settlement Credit Card Asset Management Consulting Markets Solutions Structured Finance Multi/Omni Channel Retail banking Principal Investments 29

30 Strategic Mapping Businesses Proactively allocating management resources to Unsecured Loan and Structured Finance businesses as growth areas Selectively addressing in other business areas by converting strengths and optimizing resources Latent Needs, Market Growth Potential High Growth Area Core Revenue Area Strategic Initiative Area Curtailment Area Unsecured Loans Structured Finance Mid Loans to Overseas Nonfinancial Corporates Overseas Expansion Support Shopping Credit Credit Cards SME/Small Business Solutions Corporate Market Solutions Settlement Collaboration with regional financial institutions Business Succession Finance Asset Management Consulting Excluding basic banking services such as funding, loans, etc. Loans to local governments Credit Trading Low Mid High Shinsei Bank Group Expertise/Differentiation 30

31 Current Income Tax (Consolidated Tax ) JPY -2.0 billion of taxable income (loss) was recorded for FY206, after deducting taxable write-offs on securities and reserve for interest repayment etc. from income before income taxes Temporary differences in association with valuation losses and impairment losses on securities totaled JPY 68.9 billion Tax loss carry-forward at March 3, 207 totaled JPY billion. Of this amounts, JPY 07.4 billion of the tax loss carryforward is to expire on March 3, (0) (20) Income before Income Taxes vs. Taxable Income 56.6 Income before income taxes 0. Reserve for credit losses -8.2 Valuation losses and impairment losses on securities Reserve for interest Others Taxable repayment income Breakdown of Temporary Differences and DTA Item Temporary Differences DTA Tax loss carry-forwards Reserve for credit losses Valuation losses and impairment losses on securities Reserve for interest repayment Others Total Schedule of Tax Loss Carry-forward (NOL) Year of Generation Date of Expiry Amounts FY2008 March FY200 March FY20 March FY202 March FY203 March FY204 March FY205 March FY206 March Total Shinsei Bank consolidated tax group includes Shinsei Financial, Shinsei Personal Loan, and Showa Leasing, but does not include APLUS FINANCIAL

32 Deferred Income Tax; Effective Tax Rate (Consolidated Tax ) We are classified under the Type 4 of the ASBJ 2 Guidance No. 26 Implementation Guidance on Recovery of Deferred Tax Asset One year is applied to calculate the projection of deferred tax assets Conditions: Material tax loss carry-forwards incurred in the past three years Taxable income for next year as estimated before adjusting for the temporary differences The effective statutory tax rate was 30.8%, and actual effective tax rate was 2.7% in FY206 Deferred Income Tax Effective Tax Rate Item Temporary Differences DTA 40% Tax loss carry-forwards: (A) Temporary differences: (B) % 20% 33.0% 30.8% 30.8% Sub total: (C=A+B) Estimated realizable amounts in the tax schedule: (D) Projected taxable income before adjustment for FY7: (E) DTA (F: lower of either (D) or (E)) 9.7 Valuation allowance (G=C-F) DTL (H) 7.5 Net of DTA as of March 207 (I=F-H) 2.2 0% 0% -0% 2.7% -.3% FY5 FY6 FY7 Effective Statutory Tax Rate Actual Effective Tax Rate Net of DTA as of March 206 (J).8 Deferred Income Tax for FY206 ((+):profits, (-) :expenses) (I-J) Shinsei Bank consolidated tax group includes Shinsei Financial, Shinsei Personal Loan, and Showa Leasing, but does not include APLUS FINANCIAL 2 Accounting Standards Board of Japan

33 Corporate Information (As of March 3, 207) Name Established Representative Director & President Listed on Code Corporate Information Shinsei Bank, Limited December, 952 President & CEO Hideyuki Kudo (Appointed June 7, 205) Tokyo Stock Exchange (Listed on February 9, 2004) 8303 History December 952 Established The Long-Term Credit Bank of Japan, Limited (LTCB) under the Long-Term Credit Banking Law October 998 Commenced special public management under the Financial Revitalization Law, delisted from TSE and OSE June 2000 Changed name from The Long-Term Credit Bank of Japan, Limited (LTCB) to Shinsei Bank, Limited February 2004 Listed the Bank's common shares on the First Section of the Tokyo Stock Exchange September 2004 Acquired a controlling interest in APLUS Co., Ltd. (Changed company name to APLUS Financial Co., Ltd. on April, 200) March 2005 Acquired a controlling interest in Showa Leasing Co., Ltd. No. of outstanding shares issued No. of employees 5,360 (Consolidated basis), 2,207 (Nonconsolidated basis) No. of branches Large Shareholders Ratings information (as of April 30, 207) 2,750,346,89 (Including treasury shares) 28 branches including head office and 7 annexes J.C.F Flowers&Co.LLC (including its affiliates) Government (the Deposit Insurance Corporation and the Resolution and Collection Corporation) Rating & Investment Information, Inc. (R&I) Japan Credit Rating Agency (JCR) Standard & Poor's (S&P) Moody's 553,663,57 469,28,888 Long-term A- Long-term BBB+ Long-term BBB+ Long-term Baa2 (2.39%) (8.2%) Short-term a- Short-term J-2 Short-term A-2 Short-term Prime 2 December 2007 Acquired a controlling interest in SHINKI Co., Ltd. (Changed company name to Shinsei Personal Loan Co., Ltd.) February 2008 Completed a tender offer bid for the Bank's common shares and a third-party allotment of new common shares of the Bank (in the total value of 50 billion yen) September 2008 Acquired GE Consumer Finance Co., Ltd. (Changed company name to Shinsei Financial Co., Ltd. on April, 2009) April 200 Launched the First Medium-Term Management Plan March 20 Issued 690 million new shares through international common share offering October 20 Commenced card loan service under the Lake brand in Shinsei Bank April 203 Launched the Second Medium-Term Management Plan April 206 Launched the Third Medium-Term Management Plan 33

34 Disclaimer The preceding description of Shinsei s Medium-Term Management Plan contains forwardlooking statements regarding the intent, belief and current expectations of our management with respect to our financial condition and future results of operations. These statements reflect our current views with respect to future events that are subject to risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, our actual results may vary materially from those we currently anticipate. Potential risks include those described in our annual securities report filed with the Kanto Local Finance Bureau, and you are cautioned not to place undue reliance on forward-looking statements. Unless otherwise noted, the financial data contained in these materials are presented under Japanese GAAP. The Company disclaims any obligation to update or to announce any revision to forward-looking statements to reflect future events or developments. Unless otherwise specified, all the financials are shown on a consolidated basis. Information concerning financial institutions other than the Company and its subsidiaries are based on publicly available information. These materials do not constitute an invitation or solicitation of an offer to subscribe for or purchase any securities and neither this document nor anything contained herein shall form the basis for any contract or commitment whatsoever. 34