Q1 2013 Shinsei Bank Ltd Earnings Conference Call
Jul 31, 2012 AM EDT
8303.T - Shinsei Bank Ltd
Q1 2013 Shinsei Bank Ltd Earnings Conference Call
Jul 31, 2012 / 12:00PM GMT
==============================
Corporate Participants
==============================
* Shigeru Tsukamoto
Shinsei Bank Ltd - CFO
==============================
Conference Call Participants
==============================
* Dan Ha
US Trust, Bank of America - Analyst
==============================
Presentation
------------------------------
Operator [1]
------------------------------
Good day and good evening, everyone, and welcome to today's fiscal year 2012 first quarter financial results conference call for Shinsei Bank Limited. Today's call is being recorded. At this time I would like to turn the call over to your moderator Mr. Shigeru Tsukamoto, Senior Managing Executive Officer, Chief Financial Officer. Please go ahead sir.
------------------------------
Shigeru Tsukamoto, Shinsei Bank Ltd - CFO [2]
------------------------------
(Interpreted). Thank you very much. This is Tsukamoto of Shinsei Bank speaking, and I would like to report to you the results of the first quarter ended June 30 this year.
First of all, consolidated reported basis net income was JPY16.4b while consolidated cash basis net income was JPY18.8b. Non-consolidated net income of JPY7.4b was recorded.
Against the consolidated net income target of JPY51b, and non-consolidated target of JPY22b, we were able to record this result in the initial quarter.
To give you some of the significant features that led to this performance in the initial quarter, we saw none of the one-time off factors; non-recurring factors that had been impacting our financial results in the past fiscal year.
Secondly, as far as loans are concerned, after bottoming out in December 2011, we began to see steady increase in loan balance and this trend has continued into the first quarter.
Thirdly, non-interest income, which had declined in the final quarter of the previous fiscal term, had begun to recover in the initial quarter.
Now, let us look at the individual items one by one.
First of all, top line revenue. As already indicated, because of the absence of one-time off factors, we were able to achieve 24% of our full fiscal year target. In other words, JPY52b of top line revenue.
Expenses were up JPY0.6b to JPY31.7b yet, however, even if we annualize this JPY31.7b of expenses, it still falls beneath the full year target of JPY133b.
Now our net credit costs were on the negative side in the previous fiscal year. However, in this initial quarter we were able to record gains.
Now this JPY0.6b of gains in terms of net credit related cost includes the JPY2.8b of recoveries of written-off claims. However, even if we exclude this amount, it still falls at JPY2.2b, which is a recovery.
As a result of these factors, we were able to achieve approximately 30% of the full year target.
Now, in terms of capital adequacy, total consolidated capital adequacy ratio stood at 10.93%, while Tier 1 capital ratio was 9.17%. Both had been improvements against the capital ratio achieved at the end of the previous fiscal year.
And we maintain ample liquidity position of approximately JPY1.1 trillion in cash.
That wraps up the highlights of the performance in Q1. We'll be most happy to take your questions.
==============================
Questions and Answers
------------------------------
Operator [1]
------------------------------
Thank you. (Operator Instructions). And we'll take our first question from Dan Ha, with US Trust.
------------------------------
Dan Ha, US Trust, Bank of America - Analyst [2]
------------------------------
Hi, thank you very much. Can you hear me well?
------------------------------
Shigeru Tsukamoto, Shinsei Bank Ltd - CFO [3]
------------------------------
(Interpreted). Yes, we can.
------------------------------
Dan Ha, US Trust, Bank of America - Analyst [4]
------------------------------
Can you elaborate a little more on the non-interest income side of the -- for the quarter; the primary drivers for an increase? I see that over the increased quarter over quarter, just -- in the environment, and the drivers for that portion of the business, please. Thank you.
------------------------------
Shigeru Tsukamoto, Shinsei Bank Ltd - CFO [5]
------------------------------
(Interpreted). There might have been some misunderstanding and, therefore, let me clarify. We have not yet reached year on year increase in the non-interest income. In the same period, previous year, there had been a one-time-off gain of JPY6b and, if we exclude that extraordinary [factor] that had been achieved in the previous fiscal year, we would have increased the non-interest income in the current year.
However, we did achieve gains against the fourth quarter of the previous term and, therefore, my comment pertaining to the positive result for the non-interest income for the current quarter was against the comparison of the final quarter in the previous term.
But to explain to you the factors behind the increase, if we exclude those one-time off factors on year on year basis, first of all, although the degree had been slight, we did see some increase in trading profit. Further, this was driven by ForEx gains, options, derivatives, commissions, so those were the factors behind the positive achievement in non-interest income.
And to explain why we fared well in Q1 in comparison to the fourth quarter of the previous term, conversely-speaking, in the fourth quarter in the previous term there had been impairment losses incurred for our security holdings. So there had been a negative one-time off factor in the fourth quarter of the previous term.
So we believe that the non-interest income achieved in the first quarter offered a yardstick, or benchmark of business as usual profitability in this area. Even if we annualize the JPY23.8b of non-interest income recorded in Q1, we will still fall short by JPY8b as the annualized full year target and, therefore, we will have to increase our profits during the next three subsequent quarters in order to achieve a full term target.
------------------------------
Dan Ha, US Trust, Bank of America - Analyst [6]
------------------------------
Okay, thank you very much.
------------------------------
Operator [7]
------------------------------
(Operator Instructions). Mr. Tsukamoto, there are no further questions today. So at this time I'd like to turn the conference back over to you for any additional or closing remarks.
------------------------------
Shigeru Tsukamoto, Shinsei Bank Ltd - CFO [8]
------------------------------
(Interpreted). Thank you very much for joining us today. It was only today that we had announced the first quarter results. Should you have any follow up questions, please do not hesitate to contact our Investor Relations and Communications people. Thank you very much, once again, for joining us.
------------------------------
Operator [9]
------------------------------
Thank you. That concludes today's conference. Thank you for your participation and you may now disconnect.
------------------------------
Editor [10]
------------------------------
Portions of this transcript that are noted Interpreted were interpreted on the conference call by an Interpreter present on the live call. This interpreter was provided by the Company sponsoring this Event.
------------------------------
Definitions
------------------------------
PRELIMINARY TRANSCRIPT: "Preliminary Transcript" indicates that the
Transcript has been published in near real-time by an experienced
professional transcriber. While the Preliminary Transcript is highly
accurate, it has not been edited to ensure the entire transcription
represents a verbatim report of the call.
EDITED TRANSCRIPT: "Edited Transcript" indicates that a team of professional
editors have listened to the event a second time to confirm that the
content of the call has been transcribed accurately and in full.
------------------------------
Disclaimer
------------------------------
Thomson Reuters reserves the right to make changes to documents, content, or other
information on this web site without obligation to notify any person of
such changes.
In the conference calls upon which Event Transcripts are based, companies
may make projections or other forward-looking statements regarding a variety
of items. Such forward-looking statements are based upon current
expectations and involve risks and uncertainties. Actual results may differ
materially from those stated in any forward-looking statement based on a
number of important factors and risks, which are more specifically
identified in the companies' most recent SEC filings. Although the companies
may indicate and believe that the assumptions underlying the forward-looking
statements are reasonable, any of the assumptions could prove inaccurate or
incorrect and, therefore, there can be no assurance that the results
contemplated in the forward-looking statements will be realized.
THE INFORMATION CONTAINED IN EVENT TRANSCRIPTS IS A TEXTUAL REPRESENTATION
OF THE APPLICABLE COMPANY'S CONFERENCE CALL AND WHILE EFFORTS ARE MADE TO
PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS,
OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE CONFERENCE CALLS.
IN NO WAY DOES THOMSON REUTERS OR THE APPLICABLE COMPANY ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER
DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN
ANY EVENT TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S
CONFERENCE CALL ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE
MAKING ANY INVESTMENT OR OTHER DECISIONS.
------------------------------
Copyright 2017 Thomson Reuters. All Rights Reserved.
------------------------------